Posts tagged Foursquare
Local Search Battle Heats Up: Can Yelp Fight Off Facebook & Foursquare?
May 17th
Is Facebook – and to a lesser extent Foursquare – becoming more Yelp-like, and thus a threat? Some might believe the answer is an obvious yes, but it’s worth looking at some of the moats Yelp has built in local search that won’t make it so easy.
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5 Reasons Foursquare Is Losing The Social Local Mobile Revolution
Apr 22nd
Foursquare has been the darling of the burgeoning “SoLoMo“(social-local-mobile) revolution ever since the company burst onto the scene at South by Southwest (SXSW) in 2009. The company’s financial fortunes, however, have not been so sweet. According to BusinessWeek, Foursquare brought in a paltry $2 million in revenue for all of 2012. Perhaps that’s why after raking in $71 million in three major funding rounds, Foursquare’s lastest funding comes in the form of $41 million in debt.
Still, that’s a lot of money, and with the new cash stash, the company is shifting its business focus away from “check-in’s” toward selling its trove of user location and behavior data to businesses, ad exchanges and others. This may be the company’s last, best chance to succeed.
What went wrong?
I see five primary reasons why Foursquare failed to capitalize on the disruptive market potential of social-local-mobile – despite its early mover advantage.
1. Gamification Doesn’t Scale
From the beginning, Foursquare incorporated gamification elements deep within the user experience. Users could earn virtual points, garner “badges” and become, say, the “mayor” of the local donut shop.
Gamification, according to Wikipedia, is the use of “game thinking and game mechanics in a non-game context in order to engage users and solve problems.” But Foursquare showed that gamification may not terribly relevant to smartphone users – nor much of a revenue generator. In its latest iteration, Foursquare has shifted the user focus away from the app’s traditional gamification elements to make local search and discovery more prominent.
2. The Business Model Remains Elusive
What is Foursquare? Does the company itself know, even now?
Foursquare currently bills itself as…
“a free app that helps you and your friends make the most of where you are. When you’re out and about, use Foursquare to share and save the places you visit. And, when you’re looking for inspiration for what to do next, we’ll give you personalized recommendations and deals based on where you, your friends, and people with your tastes have been. Whether you’re setting off on a trip around the world, coordinating a night out with friends, or trying to pick out the best dish at your local restaurant, Foursquare is the perfect companion.”
That’s a lot of different things. Which ones are going to pay the bills?
Foursquare, an early mover in social-local-mobile, is still searching for proven business model. And numerous companies now focus on this space. Google, Facebook, Yelp, Path, Groupon, LivingSocial and a slew of others are all aggressively seeking to profit from the ongoing integration of offline and online retail, marketing and advertising, and the merging of social, local and mobile data. Google offers Reviews, Google+ recommendations and advertised links within Maps, along with search. Facebook’s local Check-In feature has no doubt already limited Foursquare’s potential.
How is Foursquare going to compete? The company has long allowed select businesses to buy promoted listings and sponsor special offers inside the app. Now, the company is allowing any merchant to purchase an ad. If users check-in to a coffee shop, for example, they may receive an ad from a competing establishment. Foursquare’s unique user behavior and location data make this possible, but users may find these kinds of ads intrusive. And both consumers and marketers now have plenty of alternatives.
3. Yelp Is Better
Foursquare’s new direction takes it into direct competition with Yelp - a battle Foursquare will have trouble wining. Yelp simply does a better job at gauging and responding to real-time, location-based user intent. Yelp users, for example, typically start searching for establishments when they are interested in a particular time and place. Yelp makes it easy for them to filter within specific categories and by personal preference. No matter the quality of its data, Foursquare’s “search and discovery” recommendations will always have trouble competing with user-driven intent.
The two companies also expose a core divergence over value of data that offers personalized recommendations versus data that aggregates the wisdom of the crowd. Compared to Yelp, Foursquare does a far better job telling you that a friend has recommended a particular neighborhood bar, for example. It may be far more important to you, however, to know that a nearby bar has been recommended by more than 100 people, even if they’re mostly strangers. This is the Yelp model. While recommendation algorithms and anticipatory systems may someday prove more valuable, so far Yelp’s aggregate data model has proven far more popular.
4. Better Design Isn’t Enough
The new Foursquare app incorporates crisp, visible fonts; real-time mapping; colorful icons; and user pictures. It makes adequate use of touchscreen swiping to move across the app’s core functions. It’s slick, but a bit confusing.
The app’s home page, for example, includes a bookmark tab, chat function, search bar, small map, information on the user’s last check-in, data on “places nearby” – without details – trending topics and a large floating button that pops up a short list of nearby businesses. It’s hard to see how the new design will drive engagement or draw in new users.
The app’s design seems to mirror Foursquare’s mash-up of old and new business models – an apt metaphor for the company’s struggles.
5. Selling Data Isn’t A Slam Dunk
Integrating offline and online, merging social, mobile and local – in real-time – seems to be the sweet spot for the future of commerce. Foursquare lives in this space. It’s user base, billions of check-ins and location data, including across the thousands of apps it’s linked to, may in fact be the single best collection of social and local personal data currently available.
The value of all that data, however, remains unproven. Plus, Foursquare can’t just only on the existing database, it has to continually inject new information from new users to remain relevant. Even then, while some ad agency executives recently quoted in AdAge called Foursquare’s “unique and proprietary data incredibly valuable,” others suggested that Foursquare’s data didn’t offer anything they could not already get elsewhere.
Positive Signs?
Foursquare is forging ahead regardless. On the plus side, the company’s non-financial metrics are quite impressive:
- 30 million users worldwide
- 3.5 billion check-ins
- 1 million businesses signed-up
- API integration with 40,000 apps – including with Facebook, Instagram, Vine and Twitter
With its latest $41 million infusion, the company plans to increase its sales staff from 10 people to 40. The company claims that ad-related click-throughs on its app run 3% to 5%, far higher than the industry standard of 1% or less. These are all positive signs.
Will it be enough? Despite its popularity, for the past four years, Foursquare has failed to fully capitalize on the social-local-mobile opportunity. The move from check-ins to data mining is a huge gamble. One that Foursquare has to win – it won’t likely get another chance.
Lead image from Foursquare.
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Foursquare Borrows $41M, Checks In As The Mayor Of Debt Town
Apr 11th
Foursquare has checked in as the mayor of Debt Town today after announcing $41 million in loan-based funding. Which really puts the pressure on the company to generate real revenue as it shifts its focus away from simple social check-ins and tries to recoup lost ground in the battle over local search.
No investors plunked down cash for new Foursquare shares. Instead, new investor Silver Lake Waterman led the financing with what other reports are calling a multi-year loan, while existing Foursquare investors — Andreessen Horowitz, O’Reilly AlphaTech Ventures, Spark Capital and Union Square Ventures — offered loans that will convert to equity if Foursquare’s valuation rises.
In other words, Foursquare just put itself into the hole in a high-risk gamble. The Silver Lake loan will most likely force the startup to make regular interest and principal payments lest it risk default — creating a steady cash drain that most startups try hard to avoid. We’ve reached out to Foursquare for more information on that investment, and I’ll update when and if I hear back.
The convertible debt, meanwhile, represents a hedge of sorts for the company’s existing investors. They get to sidestep the question of Foursquare’s actual valuation — which obviously suggests it’s not doing that great — and, should things go south, may stand a better chance of recouping some of their investment than if they held nothing but equity.
A Foursquare In Flatland
This means Foursquare, which has increasingly found itself in trouble with the entry of Google+ and Facebook into local search, is under a lot more pressure to demonstrate that it can make money. Investors like Union Square’s Albert Wenger claim they see opportunities for Foursquare to take off, with the explosion of smartphones and abatement of couponing services like Groupon.
Wenger highlights what Foursquare really wants you to do with its app: Don’t just check in, but identify retailers and businesses more actively so that your data in turn can drive better local searches. It’s a tough nut to crack, particularly since Android users are more easily tied to Google to do the same thing, and many smartphone users of any platform are apt to use Facebook.
This may be the key problem for Foursquare: it’s too specialized. Users may be more likely to share information on Facebook, for example, because they’re already using it to socialize. I don’t use either service regularly, but if I did, I’d rather share a review with my more well-developed network of Facebook friends.
Foursquare is going to have to turn itself around and get more money coming in the door. If it can’t do get positive cash flow through its services, it may have to resort to other methods, such as raise equity privately or publicly to pay off debt holders.
There’s also the option my former colleague Jon Mitchell has put forth: Fourquare could sell itself to Apple. Or any bigger company, for that matter. Given Apple’s need for better local data, Mitchell’s argument makes a whole heck of a lot of sense.
However it does it, Foursquare now has to make money fast to work off this new debt in a very competitive market. If it doesn’t get traction soon, Foursquare won’t be mayor of anything.
Image courtesy of Juan Camilo Bernal/Shutterstock.
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Search Takes On Even Greater Role In Foursquare 6.0
Apr 10th
This morning Foursquare is rolling out version 6.0 of its app. It puts a new search box “front and center” at the top of the screen to emphasize the local search capabilities of the app. It also adds or enhances other features to make it easier to find places and things to do. The…
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Foursquare Improves Android App, Makes Search More Prominent
Feb 12th
Foursquare has introduced a new version of its Android app. As the company says in its blog post there are three primary changes: More prominent “Explore” search box at the top of the screen A map at the top of the screen displays your network’s most recent check-ins (which opens…
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How Local Businesses Can Leverage New Facebook & Foursquare Features
Feb 4th
Recently, Facebook and Foursquare announced new features that will drastically change the ways local businesses leverage the social networks to build customer loyalty and drive new sales. With Facebook, the introduction of Graph Search provides businesses with greater incentive to invest time and…
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Facebook Graph Search Arrives To Challenge Google, Yelp, Foursquare & Others
Jan 15th
After largely ignoring that little white box at the top of its interface for years, Facebook is finally getting serious about search. The company announced today a new experience that it’s calling Facebook Graph Search. It relies heavily on “Likes” and other connections to…
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Foursquare Responds To Facebook Nearby By Tapping Facebook’s Friend Graph
Dec 19th
Foursquare has made a quick response to Monday’s announcement of Facebook Nearby, with its own announcement today that Foursquare Explore is cranking up its personalization. The irony? It’s going to use Foursquare activity from a user’s Facebook friends to improve the…
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Foursquare Is Now Irrelevant, Thanks To Facebook’s ‘Nearby’ Update
Dec 18th
Facebook just home-brewed its own Foursquare – and the giant social network isn’t stopping there. Places, Facebook’s first “Foursquare-killer”, got nixed last year. Now the company is back in the mobile check-in sphere and it’s way better prepared.
With an update to a quaint little tab called “Nearby” on Monday, Facebook’s expanding mobile strategy is finally taking shape. Watch out, though, there’s going to be collateral damage.
Facebook Doubles Back
After Places flopped, Facebook snatched up Gowalla, a Foursquare competitor co-founded in 2007 by Josh Williams and Scott Raymond. It also bought Glancee, an app that emerged out of this year’s brief obsession with ambient location services. ”While Josh Williams is leading the location team that built Nearby, former Gowalla employees are working on other products at Facebook, including Scott Raymond who’s working on our mobile photo products,” a Facebook spokesperson told ReadWrite. ”We spent a lot of 2012 working to improve the foundation of our mobile products and today’s update to Nearby positions us well to offer more location aware features on mobile in the new year.”
A Facebook Newsroom blog post about its latest mobile update might as well be describing Foursquare: “…open the [Nearby] tab to find local spots your friends have recommended, checked into, or liked. If you’re looking for a place to eat, choose a category like Restaurants to see what’s nearby… tap to see info like friends who’ve been there and business hours.”
Uh-oh.
Making Money On Mobile… Finally?
If Nearby gains traction, it could be mean big things for Facebook’s mobile revenue stream. Monday’s update is only the beginning of Nearby’s new direction, one sure to be long and lucrative for Pages. Nearby was formerly a pretty bare bones way to check in to a spot and tag who you’re hanging out with, but it won’t be a quiet feature for long.
The newly robust vision of Nearby sure pulls the company’s acquisition of geosocial Foursquare rival Gowalla into clearer view. Gowalla boarded up its windows this March, officially integrating into Facebook’s team, ostensibly to beef up Timeline.
Earlier this year, Facebook admitted that it “[did] not currently directly generate any meaningful revenue from the use of Facebook mobile products” before Zuckerberg did a 180 this fall, declaring that not only is Facebook ramping up in mobile, but that it’s actually a full-fledged “mobile company” now.
With Nearby evolving into Facebook’s own Foursquare, brands will have a direct line to the 600 million people who log into Facebook on mobile. And this is just the beginning – the feature will grow as users start checking in, rating and reviewing local businesses.
So now that Facebook’s been newly infused with Gowalla’s know-how, where does Glancee come in? ReadWrite founder Richard MacManus placed his bets earlier in 2012, and they’re still looking good:
“My bet is that Facebook will soon make use of the technology in a new mobile location product. Its primary focus is likely to be “social discovery,” a term Andrea Vaccari used when describing Glancee in our SXSW interview.
Where Places failed for Facebook is that people didn’t manually check in enough at locations. One benefit of Glancee is that it removes the need to check in. Another benefit is that it mines Facebook for interest data, which is then used to make social connections. This is something that Facebook is surely very interested in exploring, as it seeks new ways to tie social networking into mobile.”
Badges Are So 2010
Foursquare may still be growing, but it offers little that’s compelling to new users. In September 2012, the geosocial app boasted 25 million users, up from 20 million in April. But most of Foursquare’s members use it to complement a major social network, namely Facebook or Twitter.
Before Facebook came back with its new mobile direction, Foursquare might have been distinct enough to stand its ground. When Foursquare first hit, it had that playful, mobile-only vibe that makes Instagram feel fun. It gamified everyday life, awarding in-app badges for patterns of activity and special check-ins. Foursquare devotees and badge-junkies might still enjoy the thrill of unlocking a rare virtual reward, but the novelty is wearing thin.
Beyond Foursquare, Yelp could be in threatened too. If local businesses take their proverbial business elsewhere, the company’s ad-powered revenue stream could be seriously endangered. But the local-reviews leader hedged its bets against Facebook considerably better than Foursquare did. Yelp is stuffed to the gills with unique, user-submitted data.
Google has its own check-in and local reviews tricks up its sleeve – Google has a bit of everything, after all. Now that Google+ is the epicenter of its social universe, Google’s geosocial long-game is anyone’s guess, but Google is anything but a one-trick pony.
Check-Ins Come Standard
Foursquare has come a long way over the years, but it’s still all about check-ins. Instagram’s location-tagging service is powered by Foursquare, and Foursquare check-ins can be zapped to a Facebook Timeline. The problem is that check-ins are a nice tool for adding depth to more interesting activities, like photo sharing. But they’re an afterthought – not an app-worthy activity in their own right.
With Facebook’s aggressive new mobile direction materializing, Foursquare had better be looking over its shoulder. If check-ins now come standard with other, richer social experiences, why open Foursquare at all?
Why indeed?
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Foursquare: Who’s the Mayor of This Pizzeria?
Oct 29th
Foursquare is a Web and mobile application that allows users to check-in or post their locations, connect with their friends, and become virtual mayors of a certain venue. Basically, it’s a social network that allows you to inform your friends and family where you are. Created in 2009, Foursquare has now 20 million registered users [...]
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