In Facebook’s Crosshairs

A lot hinges on Foursquare’s response to Zuckerberg’s location play

It was not an invitation that Dennis Crowley could have been thrilled about.

Mark Zuckerberg wanted him to do what, exactly? Fly to California and stand onstage while Facebook unveiled the launch of a new location-sharing check-in feature that tech pundits had been saying for months would decisively put Crowley’s young start-up out of business?

Apparently the idea was that Facebook Places would be introduced, and then the little guys who were already working in the same sector of the social networking business, including Crowley’s Foursquare, would come forward and offer some brief remarks about how excited they were to integrate their services with Facebook’s. Such a gesture of cooperation would send a mutually beneficial signal to reporters, bloggers and the rest of the tech scene, telling everyone that Facebook, with its half-billion users, wasn’t trying to hurt anyone with its new feature, and that none of the start-ups they’d be competing against were feeling all that threatened about it. Facebook Places was just a new friend arriving at the party!

Of course, Crowley, who co-founded Foursquare in March 2009 with Naveen Selvadurai, had known for some time that Zuckerberg and his team were preparing to march into his territory sooner or later and adopt his company’s most basic feature, which allows users to tell their friends where they are by “checking in” on their mobile phones.

But he didn’t think it was going to happen this early. And now he was supposed to play along with this Silicon Valley hand-holding ceremony? It was as if New York Times Executive Editor Bill Keller had been invited to say a few words at the launch of The Wall Street Journal’s Greater New York section! And yet …

“It seemed like the right thing to do,” Crowley said recently, when asked why he decided to participate in the Aug. 18 event, even though doing so could be seen as an act of submission to a mightier foe.

He didn’t make the trip himself, sending in his stead Foursquare’s new VP for mobile and partnerships, a fellow named Holger Luedorf, who spoke at the event for only a few minutes and made clear that Foursquare was not yet sure about the nature of its “partnership” with Facebook. Later, in a post titled “Facebook Will Crush Foursquare,” described Luedorf as looking “downright depressed and [speaking] wistfully of how the company pioneered the category.”

Foursquare could very well have a bright future as a relatively modest check-in service that is fully integrated with the Facebook Places platform. It really wouldn’t be so bad. The company could still operate as a perfectly handsome tool, and lots of people on Facebook would probably use it and have a ball keeping track of where their pals are, getting tips on places to go and competing with each other for special deals. Assuming there were enough people using the service to attract the interest of businesses, Foursquare would still be able to sell ads and set up promotional partnerships the way it does now.

Although many in the tech industry are predicting the death of Foursquare at the hands of Facebook, Crowley seems committed to outgunning the behemoth and turning his fledgling service—currently at some 3 million registered users and growing by about 18,000 new users per day—into a social-media juggernaut.

At the heart of Crowley’s vision for Foursquare’s future is the idea that the check-in will become one of the primary ways people express themselves and their preferences online, just like status updates, Tweets and likes already are. In this scenario, people will be able to check in not only to indicate their presence at physical places but also their participation in group events and real-time consumption of TV shows, books, movies, etc. By all accounts, Crowley wants Foursquare to transcend its status as a niche mobile check-in tool, and to become the platform upon which all other check-in tools are built.

“As a platform, Foursquare would control the underlying infrastructure of most location-based applications. It’s a very powerful position to be in,” said Hilary Mason, chief scientist at and a cofounder of HackNY, a group that steers college graduates to careers at start-ups. “The market motivations are pretty clear—if you control the infrastructure, you control the market. We see the same thing with Twitter and with Apple.”

Crowley doesn’t want Foursquare to be a train running on someone else’s tracks, in other words. He wants to own the tracks. The question now is whether he has a fighting chance of doing so with Facebook leveraging its user base in pursuit of the same thing.

Crowley made clear the scale of his ambition earlier this summer when he and his co-founders rejected nine-figure acquisition offers from Yahoo and, yes, Facebook in favor of going it alone. In June, Foursquare announced it had raised $20 million in venture capital in a series B investment round led by the venture firm Andreessen Horowitz that valued the company at $95 million.

And still, one hears it all the time: What is Foursquare actually for? How is it useful? Currently, the service delivers location-specific ads and tips while letting users play an entertaining but frivolous social game in which they check in to venues in exchange for points and other virtual rewards, some of which lead to special deals from businesses that have partnered with Foursquare. Some detractors scoff at the idea that Foursquare will ever become anything more than a faddish amusement.

Crowley, 34, who pioneered the notion of sharing one’s location with friends via mobile phone as the cofounder of Dodgeball six years ago, insisted that Facebook’s apparent desire to become the dominant platform for check-ins did not worry him.

“Our thinking is a little more evolved than theirs,” he said. “We’ve been in the space a little bit longer. We’re developing this really deep and rich road map for what we’re going to do—putting engineers against it, putting a timeline against it. The fact that Facebook is now in the location space doesn’t change that. We’re still doing the same stuff in the same order.”

Crowley recently indicated on his Twitter page that the launch of Facebook’s feature had coincided with a record number of new Foursquare users. The idea, it seemed, was to illustrate Crowley’s contention that the implementation of Places would be good for Foursquare in the long run because it meant Facebook would be doing the hard work of popularizing the hard-to-grasp concept of check-ins while the Foursquare crew was left to innovate and figure out new ways to make them useful to people and the businesses that want to sell them things.

One thing Foursquare supporters like to point out is that its “social graph”—the map of connections between its users—is more valuable than Facebook’s because its users tend to friend only people who are actually close to them and with whom they would want to share their location. On Facebook, by comparison, where the threshold for accepting a friend request tends to be very low, many people end up connected with hundreds of “friends” whom they barely know. Having a more authentic social graph, in which users are only linked to people they know and trust, means that Foursquare will be better equipped to provide reliable recommendations for things to do and places to go.

Another advantage Foursquare has over Facebook for the time being is its robust and popular application programming interface (API), which allows third-party developers to build applications on top of the platform and integrate Foursquare into other services, thus expanding the range of its possible uses. Where Foursquare has an admired API, Facebook has so far released only a read-only version of theirs, which severely limits what developers can build on top of it.

Furthermore, whereas Facebook naturally has an enormous community of third-party developers building apps on top of it, Foursquare might have a better reputation in the tech community.

There are those who believe that if those engineers do a good enough job creating new features, and the company continues to engage businesses with popular marketing partnerships, then Foursquare will be able to survive and flourish as a service even if Facebook Places, rather than Foursquare, prevails as the Internet’s dominant check-in platform.

“You can own the platform, like, say Microsoft has with Windows. Or you can own the things that sit upon the platform, like Adobe has with Photoshop,” said the media consultant Rex Sorgatz, who counts Crowley as a longtime friend. “Either thing can be huge. As long as the check-in actually does win, they’ll find their spot.”



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