Foursquare Is No Fad, Argues Founder Dennis Crowley; Xconomy’s Podcast and Q&A

4/7/10Follow @wroush

I may not be the CEO of Xconomy (that title belongs to our founder Bob Buderi), but at least I’m the Mayor.

I won that distinction last week by checking into Foursquare from our office on Rogers Street in Cambridge, MA more times than anyone else. If you haven’t heard of Foursquare, you’re in a vanishing minority: the location-based social game is this year’s Twitter, in the estimation of Pete Cashmore, founder and CEO of the social media blog Mashable.

Foursquare players win points, badges, and mayorships by going to destinations such as coffee shops, bars, or museums, and opening the Foursquare app on their mobile phones to let Foursquare know where they are. So far the startup has versions for iPhones, Android phones, and BlackBerry devices. On the social side, players get to see where their Foursquare friends have checked in lately, who else has checked in at their current location, and what those visitors recommend seeing or doing. On the game side, many users make a point of visiting new places or visiting old haunts more often in order to unlock badges, win points, and beat their friends.

Xconomy Podcast: Foursquare and the
Rise of Location-based Social Networking

The Ad Club, April 5, 2010
Microsoft New England R&D Center



CLICK TO PLAY



Launched 13 months ago, Foursquare now has almost 1 million users, according to CEO and co-founder Dennis Crowley. Twitter didn’t reach that point until it was close to two years old. But as Crowley was the first to admit during a recent appearance in Cambridge, the New York-based startup’s fast growth is in large part thanks to Twitter itself: the microblogging service has trained many people to share quick status updates with their friends and followers whatever the time, and wherever they may be.

Dennis Crowley

Foursquare is also a product of the spread of the iPhone and other smartphones with location-finding abilities, which spare users from having to specify their locations manually. That’s how Dodgeball, Crowley’s first company and Foursquare’s direct predecessor, used to work. Users manually reported their locations to a central server via text message, then received replies that said which friends were nearby. Mainly used in big cities like New York and San Francisco as a tool for meeting up with drinking buddies, Dodgeball was acquired in 2005 by Google. The search giant never really invested in growing the service, and shut it down in early 2009.

Foursquare is not just Dodgeball reincarnated. The badges and points and mayorships are all new, and to hear Crowley tell it, they’re a fundamental part of the service’s appeal, both to players and to potential business partners. And while Foursquare is far from the only social network built around the promise of rewards for local check-ins—competitors include Brightkite, Booyah, Gowalla, Loopt, and Whrrl—it’s fair to say it’s the current darling of the social media elite, not to mention Silicon Valley venture firms, who are competing to invest more cash for equity stakes in the the startup. (There are even crazy rumors that Yahoo is interested in buying Foursquare for a reported $100 million.)

Crowley was on his way home from a series of Bay Area meetings last weekend when he stopped in Boston to take in the Red Sox season opener against the Yankees. On Monday, he checked in at the Microsoft New England Research & Development Center in Cambridge for a talk sponsored by the Ad Club, the trade association for Boston’s advertising and marketing industry. I was the moderator at that event, and I got to ask Crowley about Foursquare’s origins, its business model, and the allure of location-based social networking. You can hear the whole conversation, which I recorded on my iPad, by clicking on the audio player above. (You can also download the original 55-megabyte MP3 file to your computer by right-clicking here.)

In preparation for the Ad Club event, Crowley and I also spoke by phone on Sunday, and I thought I’d pull my notes from that conversation together into the following writeup. It’s a short alternative to the recorded interview, which is an hour long.

Xconomy: How is Foursquare different now than what you envisioned it might be 13 months ago?

Dennis Crowley: The big difference from last year to this year is that it’s evolved into a game. When we started it, it was just a reaction to Google shutting off Dodgeball, which was the way me and my friends hooked up and coordinated meetings. The thing we learned after Dodgeball was that we shouldn’t just bring the service back, but by using game mechanics we could get a whole new group of people interested. We realized we could use game mechanics to describe what people are doing in the real world, like going to the gym 10 times or going to a bunch of different art galleries. By giving people an incentive to go out and achieve something, we realized that we could maybe change their behavior.

X: Dodgeball wasn’t a game at all—it was a pure social networking tool. Where did you get the idea for making check-ins into a competition?

DC: We were hugely inspired by things like Nike Plus. By using game mechanics on top of personal training, it encourages you to run farther or more often than you normally would. There are contests like “Whoever runs the most miles in seven days wins.” Alex Rainert, my co-founder and Dodgeball, and I, when we were at Google together, we used to use this to keep us motivated to exercise. Nike Plus can drag you out of bed on a rainy Tuesday morning better than anything. We wanted to do the same thing for Foursquare, but do it for everything, to encourage you to do things you haven’t done before.

X: Foursquare started out as an iPhone app, but you’ve since expanded onto other platforms. Is it important that people be able to participate in Foursquare from all sorts of devices?

DC: The average person on Foursquare has like four or six friends—a pretty tight social network. You want all your friends to participate. But a lot of times when you get six people together they’ll have six different cell phones. You have to work on all of them—iPhone, Android, BlackBerry, and the Web and text and Nokia. Luckily, everyone is kind of enamored with apps right now and it’s pretty easy to build and distribute them. If you go to api.foursquare.com there is a list of 20 to 30 apps for different platforms. We can’t build things fast enough in-house—the team is small and we get distracted by scaling issues and customer service and all sorts of things. But developers will come along and take the API [application programming interface] and do whatever they want for it. We are getting to the point now where people are using our platform to build new products that are better than the ones we’re creating, which is a big turning point for the company.

X: How do you turn all of this into a business? People like to check in from specific venues such as coffee shops, so does Foursquare become a vehicle for local merchants to offer rewards to their best customers?

DC: We are monetizing right now on several different levels. A lot of people have seen the deals we’ve done with media partners and big brands like Lucky Magazine and the New York Times and MTV and Bravo. Those are great deals that get us distribution with bigger brands. Many of those brands like to create content and scatter it through the world for users to discover [when they check in at a location]. I think the brands like it, because normally you turn the TV off and you don’t think about the brand anymore.

Something that we’ve been wanting to do for, like, 10 years—and this is the story that we sold Dodgeball to Google on—is building a channel that allows local merchants to connect with the customers. You have people who are passionate about being the mayor of their coffee shop, and over time, when they check in, it’s like a mini-advertisement. We are able to give local merchants some statistics on who their best customers are. They can then go and create coupons that reward people for checking in five or 10 times or for bringing in three new friends. Users are participating because they like checking in, but then the venues are recognizing them for checking in and giving them some benefit in return. They want more people broadcasting that they like a certain place.

X: Check-ins are hot right now, but how long can that continue? You’re probably familiar with the Gartner Hype Cycle for new technologies, where the “peak of inflated expectations” is followed by the “trough of disillusionment.” Assuming that you agree that there’s some truth to that pattern, where would you place location-based social networking along that curve? Has it reached the peak, or is it safely past it?

DC: I actually don’t think location-based social networking is a fad or hype. There is genuine utility, just like with city guides. In a sense, what we are trying to do is make better versions of CitySearch and Yelp and some of these other products that guide you to something that should be experienced. In terms of Foursquare’s growth in particular, if you had asked me in October, I would have said I didn’t think we were going to get any bigger than we were then, but we are continually getting bigger. We’ve been on Bravo and MTV. I don’t know when the cycle dies down. It’s not like 20 percent growth per month, it’s more like 50 or 60 percent per month, and it’s not showing any signs of slowing down.

X: If Foursquare is doing so well now, why do you think Dodgeball failed to take off inside Google?

DC: It was a perfect storm of bad timing. When we joined, they were growing very quickly as a company, and we were very excited. But sometimes two people can get lost in a huge organization. What we realized afterward is that we still have this agenda for the things we want to accomplish. We want to continue down this Nike Plus road of encouraging people to do interesting things. It’s too early to let it go. We want to see the idea to the end.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.kaitlinmaud.com Kaitlin Maud

    Hi Wade,

    Thank you so much for your involvement with the Ad Club’s FourSquare event. It was an absolute pleasure having you moderate and I think I speak for everyone when I say it was truly an honor to witness! Dennis is full of great insight on social media, location-based networking and how we, in advertising, can secure our place in the mix.

    I look forward to connecting with you at future events!

    Kaitlin Maud (@kaitlinmaud)
    Social Media, The Ad Club

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