Graph of Foursquare's Popularity After Removing Check-Ins
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If your app name has become a verb the last thing you ever want to do is refocus. If you want to go to a ratings app like they apparently did (because... uh... that's not a saturated space or anything?...) then you make another app and leave your wildly successful app alone.
What? If you don't make money, you will go bankrupt. You can be a verb all you want, if it doesn't make money, it doesn't matter.
This change was poorly thought out and probably wasn't going to be successful, same as if Twitter spun their micro-blogging to another app, it wouldn't end well.
Could he have done this in a more elegant way? Maybe. But either way, the data he has compiled to entice advertisers is already quite substantial. If he successfully rebrands 4sq. as a resource and swarm as a tool, he's done exactly what he wanted to do.. as opposed to something close/safer.
What's your evidence for that? I could entirely believe they thought it through very carefully, knew that this was a likely outcome, and did it anyhow because it was the best chance they saw for success.
Remember, this is the third checkin app in this series. It started life as a student project. The first commercial version was Dodgeball [1], which was created, grown, and purchased by Google before the iPhone even existed. Google wasted the opportunity, so Crowley started Foursquare and did it again.
Personally, I suspect they discovered that the whole check-in dynamic was fading. E.g., it's something people did for a while out of novelty and they expected its true long-term audience to be small.
Once you take VC money, it's "go big or go home". A small, modestly profitable company is not something your investors are interested in; they would rather you gamble and lose. And Foursquare took $162 million [2] so they had to go very big indeed. The "success" period of the article's graph looks like VC-failure to me.
Winning back your penny at the penny slots isn't the result you're playing for, but it's a better result than losing the penny.
I don't know the details of the FourSquare pivot, and hindsight is 20/20, but if I had even a small chance at medium-to-long term profitability (good brand, loyal followers, but flat growth), and a minuscule chance at riches by burning down the building, I wouldn't light the match.
The CEO doesn't have that choice. He'll get replaced by the investors.
The VC investors don't have that choice. It's not their money they're working with. They've promised their investors, the limited partners, that they'll go after high risk, high reward scenarios. If they don't make those gambles, they won't get the capital needed to run.
The limited partners also don't generally have that choice with this money. They are people who manage large pools of cash, and part of what they need is long-term, high-reward investments, which are necessarily high risk. [1] They have other money in safe, low-return investments. This money is for go-big-or-go-home bets.
This is the devil's bargain people make when they take VC money. There are other ways to build businesses, but they aren't the kind that will let you spend $100m-2b before you get to break-even, which is apparently what it takes to build a social network.
[1] http://www.theequitykicker.com/2010/12/01/where-do-vcs-get-t...
https://medium.com/@mrdavenport/swarm-branding-and-visual-de...
How much does it actually cost to run the foursquare that millions of users liked?
Hint: not very much.
If you can't make that "not very much" back from ads, you should sell to someone who can.
Why? Because merely covering core operational costs doesn't do anything to pay back the investors who put in $160 million.
Assuming so, the short answer is that the venture capital ecosystem is about investing in businesses before we know what kind of businesses they'll turn out to be. This was especially true for free-to-use social apps like Facebook, Twitter, and Foursquare. Those only make sufficient money if their scale is very large. It's also hard to know what their true monetization opportunities are until they reach scale, which is why Twitter and Facebook didn't really bother with pursuing revenue until they were huge.
This worked out pretty well for the winners. But it has a known failure mode for the losers: things that might have been good small businesses end up getting totally destroyed in the rush for glory and riches.
0: http://aws.amazon.com/solutions/case-studies/foursquare/ 1: http://www.businessinsider.com/what-exactly-do-foursquares-1...
How about firing 120 employees and moving to a smaller office, just until you've figured out how to make money?
Hint: not very much."
OK, why don't you enlighten us?
The AWS case study linked below
http://aws.amazon.com/solutions/case-studies/foursquare/
mentions "stream[ing] hundreds of millions of daily application logs each day." These logs must be at least 0.5K w/ metadata (probably more), so we're talking about...what, 100GB/day of application logs? Alone?? You're not persisting those using cron + MySQL--they likely use Kafka/Kinesis, many threads/instances subscribing to topics, and a large, horizontally-scalable db or Redshift to manage them.
Note that I haven't even addressed querying those logs (I believe 4sq uses Hive, the case study mentions Tableau). That all costs money.
We also haven't mentioned reviews for their millions of locations, user auth, check-ins, app development (web/iOS/Android). Each of those is a problem for a company with a MM-level user base.
Do you have some kind of intimate knowledge of their monthly engineering costs?
EDIT: 4sq website says 2M legit businesses, 65M total places.
Foursquare didn't agree. They didn't pivot just because it's the cool thing to do.
Maybe the millions of users actively making check-ins every day weren't too big of a clue for them?
They needed a monetization strategy, you pivot when your product is not being used.
Makes the timing of this post interesting.
Why not give a coupon when checking into a place that is near others - making people stop by another place/shop to maybe purchase something? (lat/long based)
And how are they doing?
What it really comes down to is this:
1. You're left with an app that has stagnated in market share for a number of years (even dropped a bit)
2. Your brand has been marginalized by Facebook's vertical integration of your primary feature
3. You have some money left (investment, revenue, whatever - I don't know about Foursquares's finances, but they obviously have some money or they'd be gone)
Given the aforementioned, do you A) pretend like nothing happened and continue watching your brand fade into obscurity (e.g., MySpace), or B) try to reinvent (e.g., like MySpace did - their traffic topped 55M uniques/mo in 2014)?
A lot of folks were upset when a small app named Burbn removed a bunch of its features as well, after a year of stagnant growth.
Twitter's incorporation of the POI will give them much more "check-in" data than their own apps ever could.
https://medium.com/@dens/six-years-in-a-few-thoughts-on-four...
I lament the loss of the app too. Checking in and becoming the mayor was the fun of the old app, and Swarm just doesn't do it for me. At this point I use it mostly as a log of new places I've been to so I can visit them again in the future, particularly while traveling.
I might have even installed it. ;)
Lots of searches are driven by news stories, including bad news stories. For example the marker D is a story about how Foursquare resorted to raising debt financing to avoid a down round. It's a mistake to label that "SUCCESS".
Keith Rabois has hinted that they did do a down round: http://jackgavigan.com/2013/03/17/foursquare-does-a-down-rou...
> In attempt to placate frustrated users, Foursquare launched "Swarm," a separate check-in app with minimal features, removing most of what made the original Foursquare app great. "
This sentence is provably incorrect. FourSquare launched Swarm before their pivot, there were no 'frustrated users' at that time because their main app still did checkins. The article makes it sound like FourSquare were reacting to pissed of customers. They weren't - they foresee people who liked checkins and always accommodated them.
Not a frequent 4sq user but for me the app is more relevant now - it pops up useful nearby stuff that I might like as I wander around London, so far its suggestions are pretty good.
Not really, it was part of their pivot. I think that was pretty clear at the time.
1. Swarm released
2. New 4sq released
The article talks about 2 then 1, implying incorrectly that new 4sq was released, people got pissed off, then swarm was released.
I don't think anybody is arguing that it wasn't part of the pivot. I specifically am calling them out for implying 4sq was reacting to users who were pissed off with their new app, when their new app wasn't yet released.
Anyhow...If I were to relate Foursquare and its value to any recent acquisition it would be to Waze. Waze does have some degree of ads, but going out on a limb, I would venture to guess they are pretty negligible. Others may argue that Waze has all this valuable crowd sourced traffic data, well I don't think that data has been or will be monetized either. So what is the value of Waze that justifies a >$1B acquisition? In my estimation, it is the same thing as Foursquare (if not now, at one point should have had), due to their user base and the nature of the app, by default both Waze and Foursquare are cartographers and there is real money/value in that, and I am surprised of >100 comments I didn't see one mentioning that.
Because of the cost involved, there are only a handful of true map makers in the World, and from what I can tell they are all Billion dollar + companies. Waze (and Foursquare) both found novel ways to propel themselves into the space...and on the backs of their users, not with the traditional investment of satellites/GPS technology. If anyone anywhere creates an App that has millions of users who are updating geocentric data in real time from their own users and not paying for this data...I wouldn't be to concerned with ads for its own sake, just losing my user base.
Companies like Yelp and Foursquare are actually in the blackmail business. They needed the users to achieve a massive amount of reviews. Now they just collect "protection money" from business to remove / prevent bad reviews and laugh all the way to the bank.
At least, that is the only way I can see their move making any kind of sense.
I hope you have some kind of evidence for that, because it's a pretty serious accusation to throw around.
"The number of complaints might not come as a surprise to those who have followed the numerous lawsuits and allegations of extorting money from businesses to remove negative reviews."
"For years, businesses have claimed that negative reviews pop-up on their Yelp pages after they’ve declined to purchase advertising with the company."
Besides actual journalists have made this connection and published it, just google "yelp extortion"
I heard a business owner complained that yelp was showing mostly bad reviews after he refused to pay. So that's only anecdotal evidence but there seems to be more of it out there.
I've never seen a place with an undeserved good/bad reputation. And I've seen a lot of reviews from those sites (and went to those places)
As the number of reviews increase the "I'll never go back to this place" begins to show, but they're compensated by good reviews.
Now, systematic bad reviews usually mean there is an issue with the place.
"Sponsoring your listing" helps if you have a small amount of reviews (something like 5 to 10 reviews)
Two years ago I sat in on a call with a Yelp rep with a former employer of mine (small business connected to the real estate industry). The Yelp rep said "Advertising through Yelp will almost instantly increase you rating." My employer asked "Does that mean you'll manually fix my score?" To which the rep responded, "Your rating will get better if you advertise with us."
That was 2 years ago. I know Yelp has gotten flack since then, and maybe they cleaned up. But that stink of being a thug doesn't wash off quickly, especially in the small business community.
Moreover, assuming that s/he did say what you're quoting, you have to put it in context: Yelp employs hundreds (if not thousands now) of telephone sales reps. They get paid crap, work in a call center, and have zero ability to influence anyone, anywhere. Sales people, when incentivized to say things for money, tend to walk as close to the ethical line as they can without going over. I haven't looked, but there probably is data showing that advertising increases your rating. It wouldn't surprise me.
Every time I've bothered to dig into these claims, it's a story like yours, where a business leapt to a conclusion because they thought they heard something that validated a rumor they read on the interwebz.
"That's a nice kid you have. It would be really pity if something happened to him, right?"
"Children who buy our product end up smarter and healthier than those who don't."
...and now it's just marketing. The rep didn't say that the rating would get worse if you don't buy an ad, just that it gets better if you do.
"What? No, not because the teachers favor them and inflate their grades, but because they end up with more school pride and do better in class!" Wink wink, nudge nudge.
What the Yelp rep said was not clear. The Yelp rep didn't answer the question my former employer had. She avoided it. Does that mean Yelp was/is up to something nefarious? No. But it has that appearance.
And that's the point. Yelp can, in fact, be doing absolutely nothing wrong as far as their data is concerned. But small business owners don't see that. All they see is aggressive Yelp sales agents, and a better rating if they advertise through Yelp.
It's an image problem, not a data problem.
I've seen dozens. It happens in smaller towns, and smaller markets in large cities.
Now, Yelp is a marketing tool, it brings people in, if there's already an established customer base, it's irrelevant, same thing if it's a "Maltese Falcon specialist", the market between specialists and service buyers is so small that people don't even bother with a review.
And even that is skewed by the ones that reject everything, and the fake positive reviews (and people with no idea on what they're reviewing)
It has 33 5-star reviews that are "unapproved", and eight 1-star promoted reviews that amount to a 2 star overall rating. I'd say that's an undeserved bad reputation. And no matter how many good reviews there are, the 1-star ratings are still the only ones weighing in.
In comparison, Google review page has a near perfect 5-star non-curated rating - https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e...
The real kicker here is that to get to these 5 star Yelp reviews, you have to navigate a barely legible grey link at the bottom of the page. Purposefully hiding good reviews until the business pays for membership borders extortion to me.
I see 1 5-star, 4 2-stars, 3 1-star, the rest is closed
Now, if you see the hidden reviews, there are a lot of "5-star" ones (which are really 3 or 4 star) but a lot of 1-star ones as well
A lot of them are from people with a few friends (however, a lot of them seem to come from "high-quality" posters)
Well, Yelp better watch out if Google can give a better result
I'm glad that Yelp reviewers biases coincide with somebodies, but they don't coincide with mine. I basically ignore the star rating at this point.
Why? Customer service. Some restaurants have absolutely delicious food yet take pride in having poor poor customer service, and frequently lose points for that.
Guess what, Yelp?
I don't care about poor customer service. I have two questions about a restaurant: how good is the food, and how much does it cost?
For the 5-star rating system to be useful, I should be able to compare two restaurants and simply pick the one with the higher rating. Sadly that often leads to worse food.
So if I'm trying to use Yelp as anything more advanced than a restaurant directory, I end up reading each review, and then the reviewer's reviews of other places to get to know each reviewer's rating system, how they feel about restaurants I already know, and this inevitably takes far more time and effort than I care to.
However, this graph does not mention the popularity of Swarm. It's likely that some Foursquare users switched to Swarm and uninstalled Foursquare entirely.
Because they pivoted with poor knowledge of their users wants/needs/requirements.
"Open 4sq, tries to check-in, remembers it's on Swarm now, eventually gives up"
They killed the reflex (also we may discuss on some more global trends, twitter usage by early adopters dwindling, etc)
The lesson here is that you can build something amazing and still fail if you can't turn it in to a business.
No excuse. If you have a timestamped record of people's interactions with physical businesses and can't find a way to monetize that, sell to one of the thousands of people who can connect those dots pretty easily. And how do you possibly convince yourself that moving into an already-saturated market like ratings is going to help?
If it's as easy as you believe they wouldn't have pivoted. Perhaps they know something you don't. Or perhaps there's still a massive opportunity there. I don't know.
And how do you possibly convince yourself that moving into an already-saturated market like ratings is going to help?
I suspect it's by being wildly successful for a while and believing that you can translate that success in to a market that you can monetize. Plenty of companies make the mistake of thinking success follows you around rather than a pivot being a step backwards as far as your brand goes. Foursquare mistakenly thought that people were fans of Foursquare the brand rather than being fans of the value that Foursquare gave them (eg social validation from having the most checkins). They thought they were a brand like Nike that people do follow from one product to another. They were wrong.
I don't think that follows. People and organisations make mistakes all the time; it's equally possible that Foursquare made a bad decision here.
This kind of major decision would have been made with the full agreement of the board. They have some very impressive investors, including DFJ, Union Square, and A16Z. The theory that all of these people, people who collectively happened to have $160m on the line, just happened to miss easy monetization opportunities is implausible.
Not only that but in Foursquare leadership's case it was a matter of being wildly successful two times. Dennis had already sold the first version of Foursquare to Google.
- Crowley built this product before and sold it to Google.
- Foursquare was an overnight phenomenon and had great user engagement. People were addicted to this app!
- They raised a ton of VC money and were able to hire some of the best engineers in NY.
- They're still struggling to build a sustainable business model.
I know my comments are repeating themselves, but if your business plan does not includes actual transactions that generate actual revenue, then you are not a business, you are a gamble.
The days of "Get traffic and it will all work out in the end" are over. Way over.
Struggling to build a sustainable business model is not the same thing as not having a business model. Again, it's difficult.
I am as disappointed in the pivot of the app as everyone else, but it's hardly the sign of impending death the post (and many of these comments) make it out to be. 4sq built up an incredible points-of-interest database, and that is their real product.
By providing that POI data to other providers -- most notably Twitter -- they get much of the same data that checkins in their own app gave them. And Twitter is massively more popular than the Foursquare/Swarm apps ever was or ever will be.
They took over $162 million in funding, and I'd bet that a lot of people had a lot of ideas on how to turn things around monetization-wise. They had to try something, but this pivot seemed pretty detached from understanding their users.
Maybe they could also make a play in the Meerkat/Periscope space while they're at it.
When I was about to check in on my visit to a nearby mall, it said in my feed,my friend was there too. I texted him if he wanted to catch up for a beer after shopping. When we met up and ended up realizing that he never checked in but still showed up on my list, I decided to stop using Foursquare atm. I never knew if it was a bug or intended feature.
https://www.google.com/trends/explore#q=swarm%20app%2C%20fou...
Note that you should sum the two together to be fair, meaning they haven't declined much since a year ago.
http://www.google.com/trends/explore#q=Foursquare&geo=TR&cmp...
I personally loved the check-in feature. With hundreds of millions in VC $, foursquare had to find another way to make money. They're on the way to building a really nice business with their reviews and ad-tech business.
I hope they didn't raise too much money before figuring it out.
Almost everyone had tried the product at some point, but very few were still actively using the product.
There's still a checkin button in Foursquare that launches Swarm. Saying Foursquare got rid of checkins is like saying Facebook got rid of Messenger. They didn't, they just moved it to a new app.
It's true, they did (mostly) remove the gamification aspect of checkins. It was fun competing with my friends for getting the most points. Now, you just can compete for stuff like most restaurants, most night life spots, etc.
Suppose wycats checks in at some interesting-sounding dive bar in the Mission. I want to click and see pics of the place and the menu and a map showing what's nearby.
(not implying wycats was a foursquare user just that he's a celebrity developer / trendsetter...)
On the comments , there are a comparison between the two:
https://www.google.com/trends/explore#q=foursquare%2C%20swar...
Its present day rank is better than at the beginning of 2014.
If you read the FS CEO's comments about the Twitter thing, you'll notice he mentions they have basically focused on what their main value prop is: solving the difficult problem of accurate and quality locations.
The consumer apps are just something they "still do" but I certainly don't think they consider it their primary business model anymore.
> used but what they once loved about the app was removed.
Well that's just a silly point of view. If you post something to a commercial entity, in general that thing is no longer yours. You gave it to them. No backsies.
Seriously, this is how it has worked for years. Don't feel "betrayed". You chose to use their service, and post reviews on it. On the web, if you don't pay for the hosting, it ain't yours.
Once they removed checkins and moved it to another app, most of the people were outraged and decided they didn't want another app. The few who did give the other app eventually stopped using it because none of their friends were using it any more.
It is like Google deciding they to discontinue search and concentrate on ads.
Is there a version with scale?
It seems to be a screenshot from google trends though, so it starts at 0 - http://www.google.com/trends/explore#q=foursquare
It's a "relative" scale. It's the difference between the highest point and the lowest point. The highest point being when Obama checked in on Foursquare. The lowest being ,well, when Foursquare started.
I like the recommendations it can give me once I tell it what I like, also its "places I want to go to" type lists.
Booking a haircut, paying for your meal all taken care of by foursquare.
Loyalty program? Upselling? Competitor advertising or intelligence?
Get your axes and scales right people. WTF.
"Numbers represent search interest relative to the highest point on the chart. If at most 10% of searches for the given region and time frame were for "pizza," we'd consider this 100. This doesn't convey absolute search volume."
http://techcrunch.com/2015/04/15/sources-yahoo-in-talks-to-b...