I like Foursquare. I use it. I’m fascinated with maps and mobile technology. That said, almost two years ago, while I think the product and team have been misunderstood by those who track valuations, I blogged here that I thought it would be acquired in 2013. I was wrong, but I’m still stumped. For years now, I’ve been a believer in location-based apps creating multiple winners, and it seems recently that many new apps now have created trust with users to run in the background grabbing location — read more here.
Today, I’m seeing Foursquare made a big PR announcement. From what I understand, they’re turning the original app into a pure explore machine (like Yelp), and moving check-ins into a new app, Swarm. Some thoughts on this strategy:
- Focus on local search and explore: Foursquare has flirted with this approach, moving the check-in button and/or deemphasizing the action. The thought a year ago was that check-ins were a wedge into explore, and now they’re ready to rip that signature feature out of the app. So, they will try to compete against Yelp, which has major mobile penetration and has been rewarded for that growth by public investors. Foursquare tips can turn into recommendations and provide value with new social data layered on top. “Oh, my friend ate here and he liked it.” But…
- The scale requirements for VC-backed efforts in mobile are insane: Mobile is the largest network effect in tech. That makes people salivate. The rub is that distribution requirements for VC-backed apps are through the roof, and Foursquare isn’t in the type of category that can grow at the rate people want it to grow at. Without a robust or defensive business model, that puts the company in a bind — and may be why they raised debt last year.
- Take currency of check-ins in a new direction: Now check-ins are in a new app, Swarm. Risky. Maybe more like a project and a way not to totally upset the loyal user base. There’s a small chance this could take off given those engaged check-in users are likely quite loyal, and if enough people “swarm” it may have a more viral growth path. Definitely a bet, but good on them for trying.
- Likely acquirers at good prices possibly dwindling: In my gut, I’ve always thought Apple or (more likely) Facebook would be interested in Foursquare, even at a high price tag. Now, I think it’s down to Facebook for a more natural fit, but the timing may be off and Facebook may not be as interested in paying such a price.
This all leaves some tough options on the table. Nothing is secured nor sacred in the pursuit of an entrepreneurial vision. I have given up trying to predict what will happen with this company. I do think the product is very well-designed, and I know the team is super super talented. So, sorry, no grand prediction or vision of what will happen, but splitting the features of a mobile app into two apps in today’s constrained mobile growth engine is a very risky, nearly improbable, task. I wouldn’t ever bet against smart entrepreneurs, but venture-backed consumer mobile plays are a brutal game. Maybe it’s all up to that little group of active check-in folks — can they “swarm” one last time and pollenate the physical world and catapult the company into a new trajectory to find that pot of honey? Will be interesting to watch unfold.