foursquare_updates

The Foursquare of today couldn’t be further from product that debuted to users in March 2009. Gone is the emphasis on checkins, mayorships, and other gamification tactics aimed at getting users to share their location. What’s emerged is a platform geared toward exploration and discovery of the physical world around us. It’s a problem that Dennis Crowley has been trying to solve since 2005 when he founded Dodgeball – which was later acquired and sunsetted by Google – he just needed technology, small businesses, and consumers to catch up with his vision.

Today the company took the next logical step, thanks to a partnership with Grubhub-Seamless, by adding in commerce. Users can now not only discover restaurants around them that have been frequented by their friends and Foursquare contacts, but order directly within the app from over 20,000 such restaurants across the US.

Four years after Google killed Dodgeball, Foursquare is closer to Crowley’s original vision than at any point in either company’s history. Crowley explained as much during our October 2012 PandoMonthly fireside chat, saying:

I think a lot of people are starting to get it. It’s not like ‘oh, Foursquare is just mayors and points and badges. This is the best local search on the planet… It’s funny, because people compare the numbers, like, you haven’t hit the scale that Facebook or Twitter were when they were at this stage. It’s a utility. It’s meant to make your day a little bit better.

Placing orders from local restaurants through Foursquare does improve user experience, although only marginally so. The alternative is to discover a restaurant through the Foursquare app’s Explore tab and then open a separate Grubhub-Seamless app, search for that same restaurant, and then place an order. Eliminating these few additional steps is a win for users, but it could be a far bigger deal for Foursquare.

One of the primary criticisms levied against Foursquare has been its inability or unwillingness to monetize to any meaningful degree. Another critique is that, with the era of the check-in fading quickly, the app lacked utility. Emphasizing the Foursquare Explore tab and deepening that experience by allowing users to transact seamlessly (pun intended) within the existing flow could give people a reason to open the app daily. In the process, it gives Foursquare a new and potentially lucrative revenue stream.

Erin Griffith sized up to the benefits of Explore living in New York, writing early on, “Foursquare has built something excellent with Explore, but I am not convinced it will be enough to save the company.” She was rightly concerned that new users, who lack the check-in history of Foursquare OGs such as herself, wouldn’t receive the same level of value.

If you’re just joining Foursquare, Explore will serve recommendations based on what’s well-rated nearby. That’s fine. But it’s not nearly as good as the highly personalized (and therefore highly accurate) recommendations a user like me gets based on check-in history and a long list of friends. Without personalization, Explore is no better than Yelp. Check-ins are just as vital to Foursquare’s success as ever.

As Griffith previously pointed out, check-ins are beyond dead. Forgive her for asking, then, what would drive new users not only to open the app, but to find utility once they did.

Maybe adding in commerce features like restaurant ordering will give the product that final nudge it needs to go from interesting to a must-use. It’s not that restaurant ordering isn’t available elsewhere. It’s that Foursquare is arguably one of the best sources of blended interest graph and social graph data available. It knows not only the restaurants, bars, sports arenas (and teams), and music venues (and performers) that its users frequent, but also how those users connect to one another.

It may not have the breadth of Facebook, but there’s unique value in Foursquare’s data. And unlike Facebook, which aims to mine that data for its own benefit while failing to offer users any form of legitimate search option – let’s be honest, Graph Search is garbage – Foursquare serves up this data to its users via Explore to help them navigate the world.

Adding in the tag data that it imports through its API partnerships with Path, Instagram, Uber, Evernote, Garmin, Vine, Waze, and others, Foursquare can help us find the best experiences around us. Now, thanks to today’s integration, it looks like it will help us consume those experiences (starting with meals) as well.

This latest move puts Foursquare in even greater competition with Yelp, the $5 billion public restaurant discovery giant. The company won’t be able to compete on resources, but Foursquare has an advantage based on its location data and social graph. And while Foursquare’s reviews and recommendations are personalized and generally effective, Yelp has devolved into a cesspool of mostly useless 4- to 4.5-star ratings. If Foursquare can become the default restaurant search and ordering platform, and ultimately extend that success into other verticals, then it may have hope yet for living up to all that early promise.

In 2012, Crowley talked about revenue projections that put Foursquare “right in the middle of where Facebook or Twitter land with revenue-per-user.” At the time he was alluding to plans to offer targeted promotions and advertising based on a user’s location, past behavior, and the preferences of their social group. The company piloted this program with 25 paying customers, including Best Buy and Old Navy. It’s not hard to extrapolate how promoted posts dovetail with in-app commerce.

All of this, however, is still barely the tip of the iceberg when it comes to Crowley’s big vision. As he told our PandoMonthly audience, the ultimate version of Foursquare would be an automated tour guide to the world around us. Users would be notified proactively with relevant information as they navigate the world. Things like that cool hidden bar in an alley just around the corner, a great sale on your favorite boutique a few blocks away, or a crowd swarming thanks to an impromptu show by your favorite indie band. Rather than requiring user to check-in, or even open the Foursquare app, one day these alerts will be pushed to us automatically.

The company released an update in the Fall that added more of this passive functionality. The result was 60 percent more frequent interaction and 30 percent more time within the app than the previous version. The company refined the product to blend utility with respecting people’s time, only delivering tips when users are in unfamiliar locations, or visiting locations where their close friends have left advice. Add in commerce, such as buying concert tickets or prepaying for a discounted dinner seating, and this experience gets all the more powerful.

It took Foursquare a while to get to this point, and the road was full of frustration. The company raised a much-needed $35 million Series D in December at a $600 million valuation. The difficulty in completing this round, and the fact that the valuation remained unchanged from its 2011 Series C round, is a testament to the struggles the company has endured. But the future for Foursquare looks clearer than it ever has.

The company still needs to prove that it can grow its user base and drive regular engagement. In doing so, Crowley and his team will also have to balance the need to monetize with the desire to drive real utility first and foremost. It’s a balance that has eluded plenty of other well-funded startups seeking to make good on their nine-figure valuations.

In an era where products and services have consumers spending more time looking into a 4-inch screen than outward at the world around them, Crowley and his team have built a platform to create the very opposite behavior. Foursquare has evolved into a tool for exploring and engaging with the world around us, with only a slight assist from our silicon-powered pocket assistants.

Foursquare reported crossing 40 million registered users in February 2013, and believes that 100 million is within reach. The company is fresh off its latest funding round and appears to be lining up the business development wins. The Foursquare API has already helped the platform move beyond “maps with people in them.

The Grubhub integration in-and-of-itself won’t make or break Foursquare. But what it reveals about the company’s direction drives home the point that this is much more than a check-in platform. The Foursquare of the future aims to be one part tour guide, one part concierge, one part magic.

[Image adapted from Thinkstock]

    1. Chris Dixon
      Past Investor
    2. Jeff Pulver
      Past Investor
    3. MG Siegler
      Past Investor