I think that if the valuation for companies, which have been overvalued corrects itself, that is ultimately a good thing for the industry and society at large. It means that resources are being freed up to work on more valuable things. It is also another case study from which this young industry can learn.
As for the employee and investors, they have taken a deliberate bet on the company and lost their stakes. This is what you sign up for when you decide to work for / invest in a start up.
I like your perspective on this. It is impossible to see the 'damage' done by capital applied (or over applied) to the wrong thing. So people don't really think about it. What great things were NOT created by the great people LivingSocial hired.
I think that if the valuation for companies, which have been overvalued corrects itself, that is ultimately a good thing for the industry and society at large. It means that resources are being freed up to work on more valuable things. It is also another case study from which this young industry can learn.
As for the employee and investors, they have taken a deliberate bet on the company and lost their stakes. This is what you sign up for when you decide to work for / invest in a start up.