FOURSQUARE

Foursquare is an app that I have heard a lot about over the last year or so but had yet to check out until this weekend. Essentially, it allows you to log where you are hanging out at any given time, and then upload this information both to Foursquare itself as well as Facebook/Twitter and other social networking sites. In practice, wherever you go: out to a restaurant, to a club etc, you use foursquares mobile app to let other people in your network know what you are up to. The "model" includes promotional offers at certain locations and prizes when you become the most frequent visitor to certain locations. Obviously it has already caught on, with over 1 million users but will it be sustainable as a business? I'm not sure. I think it has great potential for a buyout from Twitter (for example) but I don't see the company growing exponentially and for a long period of time.

Whats my problem?

Two fold!

1) To date the foursquare business model (not customer usage model but its means of generating revenue) is fluid to say the least. While there are a number of avenues they could go down, including payment from the venues they advertise and drive business too, I would much prefer to see the company come up with a long term data aggregation and analysis service. According to some sources the company does plan, to focus on data sales in the future but their is no reliable information on how they will package and sell it.

2) The company offers an application that makes it very challenging to invite new users. As a fairly savvy user of social networking tools, I expected to have no problem with this application. And its true that my initial foray into foursquare was highly intuitive and easy. Unfortunately this was not the case when I tried to invite my friends to join. I found the process so cumbersome that I eventually stopped trying. I simply could not find an easy way to blanket invite other friends to join. In contrast to WhatsApp, the iphones latest hot messenging tool, which automatically picks out the data from your address book and tell you which of those phone numbers belong to active Whatsapp users, Foursquare seems (dare I say it) dumb in comparison.

Where is the Value?

Ok, to be fair, the company currently has over 1MM subscribers, a strong brand, a valuation in excess of 100M and an intuitive product....not to mention Mark Zuckerburg flying in for weekend talks and Yahoo fighting to get a piece of the action. This however does not a good company make. As we saw with the founders previous incarnation of Foursquare...the mobile app Dodgeball was purchased by Google only to be shut down in January of this year. If Foursquare is to do more than become an internet darling that puts money in the pockets of its founders, we need to see an innovative business model that drives revenue and creates a unique mechanism for harvesting, managing and delivering valuable data to clients around the world.

As I have said before, what is probably the most valuable aspect of Foursquare is the data they are collecting. I would love to see them begin aggregating reviews and creating all sorts of "best of" lists for "best brunch spot" or "strangest place to take a date in Madrid". I think that understanding buyers preferences has become such an integral part of marketing that these guys at foursquare should begin looking for ways to harvest more data from their users and then create interesting means of leveraging it. . . Then we will REALLY have something to talk about!

Don Simon