Position Statement
Mobile app and social networking game Foursquare is changing the way we travel, one check-in at a time.
HERE’S A TYPICAL travel situation: You’re exploring an unfamiliar city, and you want something that you can’t find. You’ve just left Seattle’s Interlaken Park, say, and you’re wandering west through a leafy residential neighborhood when your stomach begins to rumble. Problem is, you left your Fodor’s Seattle, 304-page tome that it is, at the hotel (and even if you’d lugged it along, the guide draws a blank on this side of Capitol Hill). You’ll likely stumble blindly into whatever presents itself first, be it a fast-food joint or a pizza parlor, and eat an unsatisfying meal that fills you up with something you weren’t even in the mood for.
But what if venturing beyond the usual didn’t have to be such a crapshoot? What if there was a tool that acted as an insiders’ guide to the unknown places that sur- round you, and rewarded you for exploring beyond your comfort zone? That’s the question programmers Naveen Selvadurai and Dennis Crowley asked each other when they met in 2007 in a shared office space. Their answer, after weeks of furious code writing, was Foursquare, a social networking application that utilizes a straightforward interface, GPS technology and game-based incentives. With more than 2.2 million users signed up at press time and $20 million in new venture capital funds to invest, Foursquare is in the process of changing how people experience new places.
Here’s how it works: Foursquare is set up like a game, where “checking in” via smartphone to places you visit in real life—restaurants, bars, flower shops, parks, galleries or other landmarks—earns you points and virtual merit badges. The badges (examples include the “I’m On A Boat” badge, for checking in from a boat, and the “Don’t Stop Believin’” badge, for three karaoke check-ins in one month) elevate your status in the Foursquare community. Check in at a single location more than anyone else within 60 days, and you become its “mayor,” entitling you to bragging rights as well as special Foursquare offers.
“We had to think, ‘What’s it going to take to get people out discovering new places?’” says Selvadu- rai, 28. A little bit of social pressure, they decided. That’s how they came up with the points system and badges—the true genius of Foursquare, and what sets it apart from apps like Yelp, Where and MenuPages. Sure, Foursquare tells you what venues are within walking distance, and those listings have reviews and tips left by users who have been there. But then it goes a step further, using the promise of more points and new badges as carrots to lure you into stores and restaurants you’ve never visited. “To earn the ‘Pizzaiolo’ badge, for instance, [people are] visiting 20 pizza places, some of which they’ve never been to,” Selvadurai says.
Winning in Foursquare can translate to savings in the real world. Many businesses offer users exclusive freebies and other deals that reward loyalty and attract new customers: At Transfer Pizzeria and Cafe in Milwaukee, for instance, check-ins earn you $5 off an order of $20 or more. And at ADios Café in Atlanta, you get a free coffee with every 10th check-in.
The upshot of all this for travelers is they can access a rapidly expanding network— around 15,000 join Foursquare daily—of insiders who leave valuable tips, encouraging them to explore areas that are off the beaten tourist track.
FOURSQUARE’S GLEAMING, NEW 7,600-square-foot office complete with individual desks is a far cry from the three tightly packed rows of tables that occupied its former headquarters, a sparsely decorated, fifth-floor office in New York City. The smaller (and quieter) two belonged to real-estate blog Curbed and web-design agency Hard Candy Shell, and the raucous, rapidly growing, all-elbows one was Foursquare’s—which Hard Candy Shell rented to Selvadurai and Crowley in 2009, when it was just the two of them.
That was the year Foursquare launched at the SXSW Interactive Festi- val, the debutante ball for social media startups. Like Twitter two years before, it was named the conference’s “breakout app” by journalists—an honor that raised eyebrows among venture capitalists. Soon after, Foursquare raised $1.35 million in an initial round of financing from Union Square Ventures and O’Reilly AlphaTech Ventures—enough capital to hire software engineers to build out the application. (Selvadurai and Crowley were still personally answering every single email that came Foursquare’s way.)
At the beginning of 2010, the com- pany had six employees and a part-time BlackBerry developer. Now, there are 26 full-time employees (including Selvadurai and Crowley). These additional people, most of them engineers, are necessary to keep Foursquare running smoothly while it grows as well as handle the mountain of requests that pour in on a daily basis—in addition to new users, 300 venues want to be added to the system and hundreds of new specials are submitted. Altogether, there are more than 2.2 million users, up from 1 million in April. (It took Twitter two years to reach that benchmark.)
While Foursquare isn’t generating much revenue yet (“Right now our main focus is improving the application and signing up more users,” Selvadurai says), profitability may be just around the corner. Unlike social media applications like Twitter, Facebook and MySpace, Four- square’s moneymaking potential has been obvious from the start. The information Foursquare tracks—the favorite restau- rants, boutiques and hangouts of young professionals—is a marketer’s fantasy. That data will allow the company to deliver highly targeted ads to users.
It’s only a matter of time before advertisements show up, according to Erin Gleason, Foursquare’s public relations manager. “Our goal is to use the data— about people’s location, check-ins and types of places they like—to eventually serve them ads that are targeted to them. But we want to do it in a way that won’t alienate users,” she says.
For now, though, Foursquare shares customer analytics—age, gender, and time and frequency of customer visits—with local businesses free of charge. (Users can opt out of having their information shared on the “settings” page.) These places can use the data to improve their own business models or simply tailor Foursquare specials to their most active customers.
Where Foursquare is making money right now is from marketing partner- ships with national and local brands. In early February, it announced a deal with entertainment television network Bravo!, for which it created six branded badges based on shows—including Top Chef, Shear Genius and The Real Housewives—that players can earn by visiting some of the 500-plus Bravo!-recommended locations. Additionally, Bravo! reality celebrities like Galina Sobolev (Launch My Line) and Patti Stanger (Millionaire Matchmaker) contributed tips. The deal provided Foursquare with quality content and exposure to mainstream America in televi- sion advertising bits, and Bravo! was able to engage their audiences after they turned off the television.
Since then, big-name brands have been tripping over themselves to get friendly with Foursquare. Deals with Starbucks, Harvard University, The Wall Street Journal, CNN and many more have followed. Even tourism boards have jumped on board, counting on the app to help travelers explore their locales. In February, Explore Chicago (Chicago’s official tourism website) became the first to partner with Foursquare. (VisitPA, Pennsylvania’s tour- ism board, was second.) Like the deal with Bravo!, a variety of badges were created, including On Location (earned by checking in at locations and venues linked to movies filmed in Chicago), Celery Salt (for when you chow down on a Chicago-style hot dog) and Chicago Blues (if you visit a spot related to music history).
According to Sarah Best, a web specialist at Explore Chicago, the partnership with Foursquare was a natural fit. “Foursquare needed more users in the Chicago market,” says Best, a dedicated user of the app, “and we’re focused on getting people out into the city’s neighborhoods and educating them about our cultural history.” Explore Chicago added venues to Foursquare and seeded them with roughly 200 tips. While some of those locations are downtown, like Alexander Calder’s Flamingo sculpture (check in here if you want to earn the “On Location: Ferris Bueller’s Day Off” badge), others are farther out, like the Blues Brothers mural on the city’s South Side.
The success of these partnerships hasn’t escaped the notice of investors, and Foursquare announced in June that it had raised another $20 million in venture capital—raising the company’s valuation to $95 million and setting the stage for future success. Not bad for a company that was built and pushed out of the nest in about four months—which, according to Selvadurai, was part of the company’s plan. “The best thing you can do is launch quickly and constantly keep turning out new updates and features,” he says. Even more important, he contends, is picking the right pieces to launch first, then refining the application over time with feedback from users.
In fact, members are integral to how efficiently the program works. Foursquare has come up with a way to give authority to its most passionate users while, at the same time, improving customer support: “Super users” have the ability to police listings in their neighborhood, correct typographical errors and delete duplicate venues, thereby cleaning up the system and making it more functional. “Users should be able to take over the system,” says Selvadurai, who still responds personally to some customer support requests. “They make the site what it is.”
BACK IN SEATTLE’S Capitol Hill neighborhood, you dig your smartphone from your pocket and launch Foursquare. It locates you, and tells you that a restau- rant—Volunteer Park Cafe—is just a few blocks away. What’s more, it appears to be a culinary oasis in a part of town with very few restaurants. Ryan C. commented that, “Every- thing is good, but the almond croissant will change your life.” Sarah H. noted that the “pulled pork is amazing!”
You walk to the café, grab a seat at the communal table and, tucking into a delectable slow-braised barbecue pork sandwich (made with local, sustain- able ingredients, no less), you take in the intimate space and think to yourself, “I could be mayor of this place one day. Just six more check-ins.”
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