LivingSocial CEO: Groupon is a copycat

July 27, 2011, 6:57 PM UTC

Both daily deal sites are thriving, but as Tim O’Shaughnessy sees it, LivingSocial outpaces Groupon where it matters most: innovation.

From left to right: Shopkick CEO Cyriac Roeding, LivingSocial CEO Tim O'Shaughnessy. Photo: Kevin Moloney/Fortune Brainstorm TECH

FORTUNE – Few areas in tech are more buzz-worthy than the daily deals space right now. Groupon, often dubbed the world’s “fastest-growing company,” recently filed for an IPO, while LivingSocial, which reportedly picked a team of underwriters for its own public offering, isn’t far behind.

But as LivingSocial CEO Tim O’Shaugnessy sees it, there’s one crucial area where Groupon lags: creativity. During last week’s Brainstorm Tech conference in Aspen, Colo., O’Shaughnessy took a few a swipes at his biggest competitor.

Here’s an edited portion of his comments:

The concept of aggregating a lot of people together in order to get discounts from a business, whether it’s large or small, is not novel and has been around forever. But I think a couple of things have happened that have allowed this aggregation to occur in a pretty short period of time. Even five, 10 years ago, you couldn’t go to Google (GOOG), you couldn’t go to Facebook social ads and actually target people at scale in a particular metropolitan area. You can do that now, so you can actually aggregate that user base.

We’re about four years old. We’ve been playing around in the online to offline world for most of those four years. (From a daily deals perspective, it’s been about two.) Recently, we did a dollar lunch day around a new product called Living Social Instant, and a real-time product where you as a consumer are going to go grab lunch somewhere.

There are probably 30 places you could go within three blocks of where you live, and right now there’s no incentive for you to go to one place over another.  So we’re providing the ability for merchants to bid for your business, and they can do it in a way where, if their lunch rush is slow, they can actually put something live at that point in time.

So we launched LivingSocial Instant, and Groupon launched their clone of that later [Groupon Now].  We launched LivingSocial Escapes; they just launched Getaways, their clone of that, following that. … We launched LivingSocial Instant and we launched LivingSocial Escapes, and they’ve since launched — subsequently launched competing products.

We’re continuing to build new product releases, and really be that connective tissue, and I think at the end of the day, we’re pretty much focused on operating and bridging that gap, and we can do that successfully.

For  full transcript of the conversation, please click here.