By Adam Satariano and Douglas MacMillan

LivingSocial.com Founder Tim O'Shaughnessy waited tables at Ruby Tuesday in college—not a typical background in a field whose entrepreneurs often spend their formative years crafting software code.

O'Shaughnessy says he learned much about running a business from serving demanding customers in an overbooked restaurant. "It was like this game to figure out what's the best way to manage nine tables all by yourself," he says in an interview in Washington, where LivingSocial is based.

O'Shaughnessy, 29, has used his unconventional pedigree to transform the startup into the second-biggest provider of digital deals. The four-year-old company has more than 1,500 employees, up from 33 in early 2010, and expects to generate $1 billion in sales this year, double the forecast in January.

LivingSocial must tackle bigger challenges now. The company lags behind Groupon in the U.S. daily-deal market, which BIA/Kelsey predicts will more than quadruple from last year, to $3.9 billion by 2015. Chicago-based Groupon boasts a staff of more than 7,000 and its 2011 sales are projected to surge to a range of $3 billion to $4 billion, people familiar with the matter said in March.

Another pressing need for LivingSocial is to stand out in a field that has lured more than 480 competitors, including Facebook, the No. 1 social network, and Google (GOOG), the top search engine. "If two years ago—or even a year ago—you had said that 'your competitive set could in a very real way include Facebook and Google,' first I probably would have jumped for joy and then I probably have told you that I don't believe you," O'Shaughnessy says in an office above a Fuddruckers in Washington's Chinatown district, one of three in the capital.

Special Packages and Exclusive Events

LivingSocial, like Groupon, has raised venture funding to add sales employees, who persuade local merchants to offer discounts on such products as meals and weekend getaways. LivingSocial operates in 12 countries and has 29 million users, while Groupon operates in more than 44 countries with a base of more than 50 million people. O'Shaughnessy aims to help his company stand out with hard-to-copy offerings. These include deals tailored for families: vacation packages, which often include a variety of activities for a flat price; and exclusive events such as the recent "Become a Canadian For a Night," which featured broom ball, curling lessons, Canadian beer, and ice dancing to music from artists like Bryan Adams.

A graduate of Georgetown University with degrees in information management and in marketing and operations, O'Shaughnessy sports carefully parted hair and a uniform of khakis and button-up shirts that make him look at home on Capitol Hill. He oversaw product launches at AOL when it was owned by Time Warner (TWX) and led the consumer products team at Revolution Health, which helps users find doctors, check symptoms, and get tips for staying healthy. Such business chops are uncommon among startup founders, who typically specialize in building technology products and setting strategy, but often must lean on a deputy to handle day-to-day operations—the way Facebook Chief Executive Officer Mark Zuckerberg depends on Sheryl Sandberg, or Groupon CEO Andrew Mason until recently relied on Rob Solomon.

By John Brandon
 

Light bulb moments happen frequently in the tech world. You might be driving home from a day job and think: what if I created a social network for dog owners? Or how could I capitalize on the iPhone's popularity and build my own app?

Unlike some other industries, costs for starting a tech company can inflate quickly -- for Web hosting, servers, and hiring a staff. Yet, these brand new tech start-ups took a brilliant idea and turned it into a fledgling company that is ready to take on the world. Here's how each business owner started their company, how the technology works, and their projections for success.

ThredUP

ThredUP started in October 2009 as the brainchild of James Reinhart (his official bio says he is the "Chief Knitwit"). Initially, the site allowed you to send in a shirt you didn't want anymore and receive a shirt in the mail at a low cost -- almost like a NetFlix for clothes. Reinhart says, around the time he and his wife were expecting their first child, he kept hearing from customers who wanted a service for swapping out kid's clothing. The site re-focused and revamped, then re-launched in April 2009. The idea is that you first pick a box of used clothing in the size your child needs and pay $5 plus shipping. Then, you pack up about 15 clothing items (ThredUP provides the box for free) and send that in. When someone else orders your box, you receive the clothes you picked initially. Reinhart says the company is considering a swap system for maternity clothes and just added discussion forum feature.

Thuuz.com

"Edge-of-your-seat" moments in sports are rare -- few football matches end in a nail-biter, and some college basketball games are total routs. Since most of us are too busy to watch these games live, and the latest DVRs can record hundreds of shows, it's easier to just record and forget them. Yet, knowing which games are worth watching and deliver the thrills is often difficult. Warren Packard realized this while watching a dull Chicago Bears game last fall, one that ended in a 10-6 defeat. During the game, he decided to figure out a way to cull only the best moments in recent sporting events, then post the details about the game online. For example, one posting instructs site visitors to watch only the last five minutes of an Georgia Bulldogs college game. His site, called Thuuz.com,uses an algorithm he invented that tracks up to 200 statistics in a game, such as long passes and touchdown runs. The site does not show any video clips or scores, but lists the portion of the game that is the most exciting with an overall rating about its entertainment value. This year, they plan it include soccer and NHL games.

Chocri

Sometimes, love can make you do some crazy things. It can also lead to some brilliant entrepreneurial ideas. About two years ago, German entrepreneur Franz Duge was selling chocolate fountains on eBay to make extra money as a college student. At the time, he couldn't find the right gift for his girlfriend, so he devised a way to order a chocolate bar made with custom ingredients and toppings. At the site, you can choose from four base chocolates and from 100 different toppings like basil and strawberry. Carmen Magar, who is the CEO for the US version of Chocri, says the company can produce as many as 50,000 custom bars per month -- and they are all handmade. She says one of the challenges they have is in scaling the company. "In order to scale up, we just received an investment from Ritter, which bought a third of our shares for a low seven digit figure. We are investing that in our production to automate more elements of the process to be able to scale more," says Magar.

Twisplays

Chris Anderson, the author of the book Free and Wired's editor-in-chief, says we're in a transition from physical atoms to digital bits. Don't tell that to Joshua Persky. The former NYC banker kept getting light bulb moments about an LED display that shows Twitter feeds. These 140-character messages can include weather info, status updates, sports scores, or anything you can find on Twitter. Persky had a banking client who created plasma TV advertising for a local bar. He is an MIT graduate so he already gets the technology, including networking aspects and costs. He also heard about another business that uses LED signs on vending machines and had seen Twitter feeds on massive signs in Times Square. He built a prototype Twisplay and friends on LinkedIn.com said they loved the idea. Persky said he had orders waiting before the product was even ready for launch. The displays measure 26"x4"x1.5" so they are small enough to sit in the back of a conference room or in your cubicle. To use them, you connect the display to your laptop, which provides the Internet connection. (Some models connect to a cell phone network.) "My business plan is to sell 1,000 signs by November 2011, putting Twisplays' revenues at $300,000 to $500,000. We just sold three customized ten-foot Twisplays to a social media restaurant in NYC and are in negotiations with a large telecom for a 100-site college campus network," says Persky.