What is Foursquare worth?

Foursquare adds a subtle game layer to the life of the smartphone owner. Checking in to places (although granted by Facebook status updates as well) becomes a competitive practice between a scoreboard of close friends and contacts. The ability to check into a place so many times (that one becomes the mayor of that location) not only provides a sense of personal nourishment, but also grants access to localized special offers. The obsessive nature of the check-in system is reported to last up to a year in more obsessive users who eventually see the practice as a negative addiction without enough benefit to the use of the platform to warrant full OCD episodes.

With fluctuating trending this app has passed its first wave of intense popularity but yet never reached a true tipping point to lead to IPO, so what is Foursquare worth and where does the business-value come from?

  • Localization is an obvious selling point, but scaling a service across a global network of SMBs becomes an operational headache
  • Collected data could be useful for town planning and larger businesses with physical premises who are looking for consumer data about geo-based habits
  • Historical record of location is useful to the user to retrace their steps and work out where they have been before (although searching for locations doesn’t automatically reveal that the user has been to that location before)
  • Open API is a good selling point for Foursquare as bolted on auto-checkin apps and historical user trail apps could be (and have been) created

The wealth of data that Foursquare is collecting falls deeply in the Big data bucket but currently the data does not extend its arm into the world of ad server audience targeting (although it may be available as a data source via a DMP or data provider for the DSPs and exchanges to enhance publisher data). I love the idea that the pathway of my life could be shared with my descendants one day but it is clear from the hilt in the growth of the popularity of this particular app (and its slowdown in daily usage) that finding the right buyer will be a longer road ahead.

I am reminded of the struggle to monetize Twitter but hope that sites like GroupOn that have made a great success of localization (still to see if it will survive long term) can offer an answer to the monetizing of Foursquare. It would certainly be a shame to have fed it so much data and the app to descend the app popularity charts to descend into the ether. Perhaps a global marketing campaign will provide the tipping point in usage: when in doubt, throw money at the problem!

 

Additional note: I wonder how much truth there is to rumors of a buyout investigation: http://business.newsfactor.com/news/Is-Foursquare-Talking-to-Two-Titans-/story.xhtml?story_id=010001570I36

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