LivingSocial, one of the best organizational list tools on Facebook, has raised $14 million just six weeks after they closed $25 million in funds. The application has long served a niche for connecting people with similar interests and helping them connect to the products they like, and with this new investment we can see that LivingSocial has a rapidly growing valuation. Are group buying sites and applications like LivingSocial the next hot Facebook trend?
LivingSocial has a fairly diverse set of products, and they all boast impeccable implementation. Their Facebook offering consists of a series of applications that allow users to ‘pick 5′ of their favorite items in a certain genre, say video games’, and have them saved to their ‘list’ of favorites which anyone can then see. They are then encouraged to rate the items, view other people’s ratings, look at overall ratings, and browse video games using their application. It becomes a user-generated directory of information about your favorite hobby, with a wide array of options to help share, connect and explore the hobby.
Their other big service is their ‘daily deal’ service available at livingsocial.com, and I suspect that this may be more important than the Facebook applications. This is because the most prominent group buying site, GroupOn, just raised $135 million at a valuation of over $1 billion recently. That pretty much kicked off the group buying frenzy, and it seems to make sense to most people, because the service is very interesting and makes sense to customers. The way group buying sites work is that a company will offer an incredible deal (usually once a day) and if a certain number of people go for it, the deal gets even better, and better. This promotes a kind of ‘virality’ about a specific deal and product, and is likely one of the best ways for businesses to leverage virality directly for profit.
In any case, we’ll see how this progresses, as LivingSocial is one of those companies that seems to be aggressively innovating in an interesting space. They are moving into the ‘hyperlocal’ deals sector soon, which means that you’ll now be able to look at deals by your neighborhood rather than city. If they succeed at that, they’d be one of the first companies to do anything on the web by neighborhood.