Foursquare, the location-based social network accomplished two milestones in June 2011.
- On June 20, 2011, Foursquare announced that it hit a big milestone: It surpassed the 10 million user mark, becoming the first location-based social network to do so.
- One June 24, 2011, Foursquare announced that it had raised an additional $50 million in venture capital.
Foursquare, which launched in March 2009, posted the following infographic on its blog to celebrate the announcement Monday:
The infographic highlights, among other things:
- Accelerated growth over time: It took the startup five months to get its first 100,000 users and roughly seven weeks to get its last million.
- Its growing global reach: 358 million checkins have been made outside of the U.S.
- The most popular checkin locations in the U.S.: Old Navy, Bank of America, 7-Eleven, Home Depot and Target all top the list.
- A few fun facts: New York City Mayor Mike Bloomberg is also the Foursquare mayor of City Hall in NYC, and nearly 80,000 Foursquare mayors are ousted each day.
One June 24, 2011, CEO Dennis Crowley and co-founder Naveen Selvadurai in a foursquare Blog update titled "Planning for the future of foursquare," announced that Foursquare had raised $50 million in venture capital from Andreessen-Horowitz, and its current VCs (O’Reilly AlphaTech Ventures and Union Square Ventures), as well as Spark Capital. Here's the blog announcement:
"Foursquare is not just about the check-in, or recommendations, or points, or badges. It’s about making the world easier to use. It’s about discovering new places, connecting with friends, and forging new relationships with the places you visit. It’s finding new ways to layer technology on the real world. All of our employees believe strongly in this vision, and we’re incredibly lucky to have investors and a board that feel the same way.
Today, we’re really excited to announce that we’ve raised $50 million in funding so that we can keep working towards our goals. The new round, led byAndreessen-Horowitz, includes our current VCs (O’Reilly AlphaTech Venturesand Union Square Ventures), as well as Spark Capital. Having our current investors double down on us is a tremendous gesture of support for foursquare and for the direction we’re headed.
The additional capital will allow us to move more quickly; we can hire more engineers (we’re hiring in New York and San Francisco!), evolve our merchant offerings, expand internationally, and try a ton of new things. In the last year, we’ve grown from 15 employees to over 70, and our community has grown from under 1 million to over 10 million. The opportunity to build something meaningful in the location space is HUGE, and we feel well-positioned to capitalize on it. We’re encouraged by how far we’ve come, and we’re so excited to have such great support, from both our community and our investors, as we work to build what’s next.
Thanks (and looking forward to more great things)!
– Dennis Crowley and Naveen Selvadurai - co-founders"
foursquare celebrated by displaying a big Times Square billboard.
Now, SHOW ME THE MONEY!! Where are the revenues?
According to Foursquare board member and Union Square Ventures Partner Albert Wenger, revenue is right on track, though he declined to provide any specific numbers. He did confirm the $600 million valuation.
“From the very beginning when we invested, Dennis had a clear vision of where he wanted to go and he’s still very much following that vision. That contains things that are related to revenue and this round of funding is going to support that.”
So, what’s the grand plan? Wenger declined to say, but said the opportunity is great. There’s no clear winner in the post-yellow pages local advertising market that’s cluttered with check-in services, review sites and daily deal peddlers.
“I think it’s still very early in that particular market and I think making that transition from yellow pages to creating deals online is not fully developed. I expect we will see a lot of movement in this market for years to come.”
Much like Twitter, Foursquare has focused on building its member base and enhancing the technical aspect of the service before moving too quickly into monetization. The company has talked about possible ways to bring in revenue, such as location-based ad placement. Tristan Walker, head of business development for Foursquare, said last year.
“We could imagine something akin to a Google AdWords-like model, where merchants can have featured placement based on latitude and longitude, time of the day, or day of the week.”
It’s brought in some money already by cutting deals with major brands like Conde Nast, HBO and Marc Jacobs, but so far pulls in very little revenue overall.
One June 22, 2011, foursquare announced that on Thursday, June 23, 2011, Foursquare plans to introduce its largest partnership to date: a national deal with American Express to offer discounts to cardholders when they check in on their cellphone at certain shops and restaurants.
Foursquare users are accustomed to receiving awards in the form of coupons and digital merit badges. But more substantial deals like those being offered to American Express cardholders may bring Foursquare and other location-based services further into the mainstream.
Foursquare’s mobile application has continued to get faster and more feature-packed as its user numbers have swelled. A recent update of the app added an “Explore” button that helps users find what they’re looking for around their location – be it a Thai restaurant or music venue. The service is evolving from a social game to a social utility.
Google Inc. got rich leveraging the Web to help people find things. Perhaps, Foursquare will too.
In a video interview in February (see below), Foursquare founder and CEO Dennis Crowley said:
“It’s been an interesting start, the idea of turning life into a game, making it so check-ins generate points and badges and mayorships, something playful, a reason to check-in. But ultimately, we’re not trying to build these games, we’re trying to build these things that really change and effect the way that people experience the real world.”
COMMENTARY: It's no secret that location-based social networks are having a few problems:
- A SmartPulse poll reveals that location-based social networks are having a huge adoption issues.
- PEW Research reports that only 4% of internet users use LBSN's.
- LBSN's suffer from a huge gender gap (males outnumber females 2-to-1).
- comScore reports that only 7% of mobile phone users using LBSN's.
- LBSN's have also created continuing privacy and stalking concerns (especially among females).
- USA Today reported that LBSN's are not generating much in revenues. When asked about this, there is nothing but complete silence.
Don't get me wrong, its quite impressive to hear that foursquare has reached the long awaited 10 million user milestone. Several social media experts had predicted that 10 million number since foursquare hit 6 million at the end of 2010.
Even more impressive was how Dennis Crowley was able to convince Adreesen Horowitz and previous VC investors that foursquare is worth $600 million. I would give anything to have sat in on that pitch. In a blog post dated January 29, 2011, Andreesen Horowitz said foursquare was worth $250 million. That's increase in valuation of $350 million. Now that's impressive. Some great things must've happened, right?
I sure wished that foursquare CEO Dennis Crowley would make things a big more transparent and level with us once and for all and tell us how much revenue they have generated. As long as location-based social networks continue their silent about their revenues, it forces bloggers like my self to predict that location-based social networks are headed for a train wreck.
Courtesy of an article dated June 24, 2011 appearing in The Wall Street Journal's Venture Capital Dispatch