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We all did it, at least once: we checked in on Foursquare. So you,
and I, and millions became one more piece of the puzzle. And we still do.
But, how? Foursquare is over, right?
Well, that's what you might think. But chances are you're still using Foursquare,
even if you didn't know it. Correction:
Foursquare is using you. Let's talk about that in this episode of Forensics.
In 2009, Dennis Crowley and Naveen Selvadurai wanted to create a Twitter competitor,
but with a twist: knowing where your friends are. And so, Foursquare was born.
The idea was simple. The app lets you put in your location:
a bar, a café, a restaurant, etc. All those who followed then knew where you were.
You could post statuses, called Shouts, and some locations even had automatic
check-ins. Also, you could collect badges, depending on your activity.
Thanks to Twitter integration, you could also tweet your location and DM your friends. The
magic behind Foursquare was discovering new venues, from bookstores to cafés. Businesses
got a boost from visits, thus creating mini networks for both consumers and businesses.
It could also lead to stalking. But that's not in the brochure.
The idea caught on, and it was so popular, some said it could become a worthy Facebook adversary.
For a moment, this prediction seemed accurate. Foursquare was the new cool kid on the block.
Businesses were quick to place the Foursquare logo on their windows and contact forms.
As for users, Foursquare was also trending upward. Knowing where your friends were and collecting
badges became addictive. It was only a matter of time before celebrities caught the Foursquare bug.
Astronaut Doug Wheelock checked in on Foursquare from the International Space Station,
earning him the NASA Explorer Badge, which is a bit unfair. So, to please those of us who didn't
go to space, Nasa created a special website for others to earn it.
Even Barack Obama checked in on a town hall
meeting.
Businesses created badges to help boost traffic. For example, you could win free ice cream, pizza,
or even books, depending on the place you visited. Back then, Foursquare was huge.
There was even talk of a Unicorn valuation and plenty of interest from competitors.
Yahoo was the first to knock on the door. In 2010, the giant offered somewhere between
$100 to $120 million. But then, none other than Facebook came up with $120 million.
After that, however, it is said that Crowley asked for $150 million, and Zuckerberg walked away.
Crowley insists that he was looking for the best future for the company. But,
as we'll see a couple of years later, the media blasted him
for not taking the money. Because, in no time, the acquisition talks cooled down.
Foursquare's numbers were the main reason: with only $1.35 million in revenue,
investing $120 million seemed crazy. So, in no time, Foursquare lost traction.
But, why? Well, first of all, there's Facebook. Sure, Foursquare had millions of users, but
massive, dominant Facebook was too powerful. Also,
there were other sexier social networks such as Instagram and Snapchat.
Checking in is not as sexy as pictures. Lots and lots of pictures.
Crowley needed cash, and with no deals, he sought
investors. Andreessen Horowitz dished $20 million, which was almost heaven-sent.
Foursquare didn't only face external competition. Crowley needed to go beyond the growth stage,
which had eaten away at the company's finances. But, no money meant no innovation.
Then, he raised another $50 million and a $550 million valuation. But that was about it.
No more cash because he was yet to show a worthy financial model.
Making money was still Foursquare's challenge. In 2012, for example, the company only made
$2 million. So, the media feasted on it and predicted a downfall.
In 2013, Business Insider said that Foursquare would die by year's end. And that it shouldn't
be a surprise. But, backstage, Crowley was working some magic.
The irony was that Foursquare was sitting on a pot of gold. They just didn't know to use it.
All those check-ins, all those venues, locations, foot traffic, what is that? Data. Pure,
unadulterated data, such as having 85 million places registered.
And people love data.
Foursquare had so much data that business owners approached them with questions
about their markets. So, In 2014, Crowley ditched making friends. Now, it would be
about helping businesses, advertisers, brands, and developers. And all thanks to our data.
Now, before you raise your fist in the air: that's what the fine print is for. You agree
to use Foursquare; you agree to share your data. The challenge was to make it all work.
To fulfill this new goal, Foursquare split and released the social network Swarm. This new app
still focused on checking in but included new perks like mayorships and close friend networks.
Foursquare City Guide became a Yelp competitor. Again, users checked in and reviewed
venues. Again, more data. And, for a second, it seemed like the split would work immediately.
Before the decision, Foursquare trended downwards in the download department of the app stores.
However, after the split, downloads increased, and there was much hype around both launches.
Swarm, for example, managed to rank in the top ten during August of 2014. But hype soon
died down. By September, it had dropped below the #1000 app in iOS and Android.
Foursquare was no different. Following the hype, it dropped well below
the #1250 on the iOS store. It seemed like the end was near. But, perhaps, that was the plan.
At the time, Crowley might have seemed delusional to some. But popularity wasn't Foursquare's game
anymore. You see, for years, the company had optimized its data, tools, and technology.
So, the income would come from licensing all that hard work. To do so, the company
needed many changes, so, in 2016, Crowley stepped down as CEO. Then, in came the COO,
Jeff Glueck, to inject new energy into the company.
But, while the waters inside the company were shifting to the outside world,
Foursquare was disappearing. Unless you were
really into reviewing and visiting places, there was no use for it.
Swarm had mediocre results. Even Crowley admitted, in 2017, that he didn't use it
much as a social network. Instead, he insisted that the value was about logging your life. By
registering up to 100 places, you defeated the ephemeral nature of social networks.
But Crowley did have the secret weapon: Pilgrim.
Pilgrim was a Software Development Kit that sensed whether a phone was moving in and out of a
venue. But here's the catch. Users didn't need to press a check-in button. It did so automatically.
And yes, it's intrusive. But, again, read the fine print.
Selling Pilgrim made perfect sense. The automatic tracking could predict trends and
show user behavior with more precision. Plus, Pilgrim belonged to Foursquare.
Foursquare didn't belong to big companies like Facebook and Google,
which made it more attractive.
By 2018, Foursquare's data had three billion hits from a vast array of users. Plus,
25 million people worldwide had chosen to have always-on data tracking. One year later,
150,000 developers had used their technology. That's a good chunk of change.
In 2019, Foursquare merged with data companies Factual and Placed. With these,
it had cemented its reputation as a data colossus. This meant, finally, a solid business model.
By the way, yes, Swarm still exists. So do ribbons for typewriters. It's a niche product
for a niche activity: lifelogging.
Foursquare's data and software now help power apps by Microsoft, Samsung, Twitter, and Uber.
In Q4 2020, the company had its first profitable quarter,
and 2019 showed revenue of more than $150 million.
And, honestly, there's no better ending. So, while we believed that Foursquare had
failed as a social network, and it did, it was reinventing itself.
Yes, all thanks to you and me and the millions. So, I guess, in the end,
it was a social network all along. We just didn't know we were a part of it.
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