HIRING

How to Staff Up in a Hurry

How LivingSocial went from 30 employees to 350 in just eight months

Mario Wagner


Tim O'Shaughnessy of LivingSocial

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It's never easy to find good employees -- so imagine having to find more than 300 of them in a matter of months. That has been the situation at LivingSocial, a Washington, D.C.-based company that offers daily discounts online. In the first eight months of this year, the company went from 30 employees to 350 employees. And LivingSocial plans to increase its head count to more than 500 by the end of the year. "It's been a crazy growth spurt in so many ways," says Tim O'Shaughnessy, the company's 28-year-old co-founder and CEO.

Hiring at such a rapid pace has created multiple challenges and required LivingSocial to develop new hiring systems and strategies. "We created this fantastic entrepreneurial culture when we founded the company," says O'Shaughnessy. "But when you add so many people in such a short period of time, you're forced to find creative ways to keep that culture intact and make sure you're building the company to its fullest potential."

LivingSocial is in a hot industry. The three-year-old company, which started out as a developer of Facebook apps, now competes with Groupon and other businesses in offering daily discounted deals -- say, a coupon for 50 percent off a massage at a local spa -- to customers who purchase them within a fixed period of time. LivingSocial shares the proceeds with the local businesses that participate. The market for these sorts of daily-discount services is growing fast, with many new competitors entering the space.

LivingSocial raised $44 million in venture funding this year to fuel an expansion, which has included opening sales offices in some 80 cities in North America, as well as one in London. Each office needs local employees who can pitch LivingSocial's services to the city's small-business owners and devise daily offers that will appeal to LivingSocial's local customers. About two-thirds of the company's new job postings have been for positions outside of D.C.

Finding employees on the other side of the country who meshed well with LivingSocial's culture proved difficult, says O'Shaughnessy. At first, the company worked with recruiters to line up five to 10 candidates for a position in, say, Phoenix. Then, after a round of phone calls to screen for the best candidates, a team of three or four LivingSocial managers would fly from D.C. to interview the finalists in person.

The problem, says Alan Clifford, LivingSocial's human resources manager, was that sometimes the recruiters didn't have a good handle on the company's informal, entrepreneurial culture. A few times, the LivingSocial managers didn't like any of the candidates and had to make the trip more than once. "We weren't moving fast enough," says Clifford. "That's when we changed our approach and said, 'Let's bring everyone to us instead.' "

Now, after undergoing three to six screening calls, potential hires are flown to D.C. on LivingSocial's dime. Once they arrive, candidates spend the bulk of the day being interviewed not only by their prospective department head but also by five or six representatives from other departments. Although conducting interviews is time-consuming, O'Shaughnessy says it's worthwhile. Clifford uses an online tool called Jobvite as well as e-mailed spreadsheets to schedule interviews and record employees' opinions of candidates.

Every candidate is also interviewed by at least one member of a team of what one might call the cultural police, early employees who know the company well. "We found that certain people have a knack about what works and what doesn't when it comes to fitting in with our culture," O'Shaughnessy says. "People don't get hired unless one of these people gives the thumbs-up. We give them veto power."

One of those gatekeepers is Jake Maas, the company's CFO, who was the fifth employee hired by LivingSocial. "I target people who have the same entrepreneurial philosophy that the founders have," says Maas. "We want to recruit team players who want to make a big impact."

The shift in how the company interviews candidates has been an expensive one -- LivingSocial's travel budget has increased by a factor of 10. But, Maas says, if the company can minimize its turnover rate by making the right hires, it will save money in the long run. "I believe we have found the most cost-effective way to grow our business, because it allows us to both scale quickly and hire better," he says.

Even after getting the right people in the door, LivingSocial faces another challenge: helping new hires -- including those based in other cities -- feel like part of the team. It's something that O'Shaughnessy takes very seriously. LivingSocial often flies new hires into D.C. for training and meetings, and every other week, O'Shaughnessy takes a group of eight or so new employees out to lunch to get to know them better.

The CEO also tried another trick: ice cream. O'Shaughnessy recently installed a freezer in his office filled with ice cream sandwiches. It's an idea he borrowed from his college days -- one of his professors had used the tactic to encourage students to visit his office. "We have so many new employees," says O'Shaughnessy. "I want them to feel like I'm accessible. Otherwise, people may feel intimidated and won't ask for a meeting." Laura Kennedy, who joined LivingSocial's business development team in April, says O'Shaughnessy's tactics are working. "I was in Tim's office on my second day," she says. "While I was there, I gave him a couple of ideas, and he told me who was working on similar things and to go explore them."

Employees in distant cities can't really drop by for ice cream, but O'Shaughnessy hosts a webcast every Friday afternoon. After each department head gives a five- to 10-minute update, O'Shaughnessy and his managers field questions from employees. "We get at least 15 to 30 minutes' worth of questions each week," says O'Shaughnessy. "It's our way of making those people who work outside of D.C. feel a part of the home office when they physically aren't here."

To further unify the team, LivingSocial held its first national sales meeting in July, flying every employee to D.C. to discuss strategies for the next six months. Then, in August, the company hosted the LivingSocial Olympics. All of the D.C. employees, most of whom are in their 30s, met at an off-site campground to eat barbecue and to compete in a series of events. There was a pie-eating contest, a long-distance Frisbee toss, and a biathlon that required contestants to navigate an obstacle course while using water pistols to knock down plastic bottles.

O'Shaughnessy says that events like that one make for both a tight-knit team and a better place to work. "The most important factor in making this work is that people enjoy what they're doing," he says. "That's what's really going to make us a success in the long run."

Last updated: Nov 1, 2010

DARREN DAHL

Darren Dahl is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.




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