By Emma Barnett
Dennis Crowley, the new darling of Silicon Valley, has a clear sense of direction
Forget traditional social networking, the new holy grail for business is access to real-time data.
In the digital world, the big question of 2010 is “Where are you?” After months of Twitter and Facebook asking everyone to update everybody on “What’s happening?” or “What’s on your mind?”, the focus now is on our location at any given time.
Location-based services, thanks to global positioning systems (GPS) wired into smartphones, have burst onto the scene in 2010, pushing the boundaries of the information people want to share to a new level. And, of course, the business opportunities associated with such growth.
At the centre of this movement is Dennis Crowley, the 33-year-old co-founder of Foursquare, the fastest growing location-based social network. The service, which has attracted more than two million users and is valued at $95m after just 16 months, allows its users to share their location with friends by “checking-in” at bars, restaurants, clubs and even offices and railway stations. Since February 2010, the site has been registering more than one million “check-ins” a week.
Unlike other social networks, the deployment of simple yet addictive gaming mechanics has been key to its success and usability.
People are encouraged to “check in” their location so that they can unlock badges of honour and eventually ascend to the highly- coveted position of “Mayor” of a certain spot – which they have visited more than other Foursquare users.
Big businesses and media brands, such as Starbucks and The Wall Street Journal, have started getting in on the act, signing deals with Crowley, offering discounts to their most loyal customers or privileges to those who have attained “mayoral” status.
Foursquare’s growth shows no sign of slowing – with the first million users taking 12 months to acquire, the second million only three – so how is it going to make money?
Famously, Twitter only launched its own commercial model a few weeks ago, embeddable tweet-adverts, some four years after its creation. Four-square, with several high profile partnership deals already in place and a $20m cash injection from the likes of Facebook board member and Twitter investor Marc Andreessen, appears quicker off the blocks.
Crowley, an easy-going New York tecchie, has been hailed “The New King of Social Media” on the cover of Wired UK’s July issue.
He says that the social utility, his description of Foursquare, currently has two main revenue streams.
“The first model, which we have already begun, is partnering different media companies to help them take their content beyond its usual constraints and appear next to relevant locations.
“We started with The New York Times and then began working with Bravo and other fashion and sporting brands. It’s about helping these brand’s content come alive in a different context and world,”
These partnerships have generated Foursquare some cash, but Crowley remains tight-lipped over specific numbers. However, it is the second revenue stream that really gets him excited – and which he thinks will create the bulk of the company’s profits over time.
“Advertising deals and discount offers in partnership with global merchants are going to be really big for us. We are talking to coffee shops, clothes shops, restaurants and everyone else about the tools we can build for them using our data.
“Local merchants can create ‘smart coupons’ for people who check in the most at their venues. Businesses will have access to real-time data about who is buying their products, how regularly and where those people are going right at that moment.”
It sounds like a business’s holy grail – to know exactly where your customer is, what they have bought from you and then be able to send out a relevant promotion in real-time using Foursquare’s app. Obviously enough, users will need to remain opted-in to the company’s setting, which allows local businesses to see where and when they are checking-in, for the service to be valuable. And in exchange, Crowley, with his New York office-based team of 27, must ensure that promotions remain appealing but not too invasive. If that balance is struck, Crowley knows he just might strike gold.
Foursquare may be one of the biggest and, at the moment, the hottest, but with just over two million users, it pales a little next to Facebook’s almost 500m and Twitter’s 100m-plus reach. Yes, it’s still in its infancy, but just how active are those users and how will it go beyond its niche early-adopter userbase?
Crowley, who set up the site in May 2009 with Naveen Selvadurai, to help people organise their lives in the city, turns the question on its head: “It depends how you define active. Lots of people are using the app to get tips on where to go near them at that moment, not just for checking in. So there are different types of activity going on at different times,”
As well as checking in, Crowley wants people to start really contributing to the “tips” section of the service, as this speaks to the real reason he has persevered with location-based services for the best part of a decade and why ultimately he believes Foursquare has the capacity to become a social networks’ game-changer.
“We built this service so we could give people tools that act as a bridge between what they do online and making those things happen in real life. I wanted to build something that made cities easier to use and helped people manage their time in those places with greater ease.
“We think of Foursquare as a social utility.”
High-profile partnerships and users, such as Barbie, are also helping spread the word. The service is definitely still waiting for its Twitter-style Oprah moment – but then again, celebrities probably don’t actually want anyone to know their whereabouts any time any place – unless they can commercially benefit in some way.
So, is there any chance of Foursquare joining forces with Gowalla, arguably its closest rival in terms of reach, style and profile, to increase its impact? “We are more social than Gowalla and ultimately have different visions moving forward. They are excited about different things,” Crowley replies diplomatically.
Foursquare, and services like it, also run the risk of established digital players, namely Twitter and Facebook, starting to prioritise location and developing a whole host of tools to encourage their huge userbases and commercial partners to take advantage of geo opportunities.
Crowley maintains his relaxed demeanour when presented with this potential spanner in the works. “Twitter already turned on its location capabilities – but regardless of others starting to play on location more, Foursquare remains unique as people are using it for different reasons. They are using it to play the game, discover offers, tell friends where they are and find new places.
“On Twitter, people are telling each other their thoughts, whereas on Foursquare we are building an incentive and reward program to encourage people to try new places,” he argues.
One final major hurdle, which has affected technology companies the world over, is privacy. A new survey earlier this week revealed that 55pc of those using location-tracking applications on their mobiles, such as Foursquare or Gowalla, are worried about the loss of privacy incurred with the use of geo-location technology.
The research, carried out by Webroot, an internet security software firm, polled more than 1,645 people and found that 39pc of those with mobile phones were using geo-location tracking applications. Among those, more than 25pc were using apps such as Foursquare to share their whereabouts with strangers and 14pc were using it to meet new people.
Crowley points out firmly that users are given “every option” to opt out of check-ins being revealed to local businesses and are asked every time they check in whether they want to share the information beyond Foursquare, for example with friends on Facebook. He says that the company is very careful about respecting people’s privacy but at the end of the day, users will have to learn to trust them.
The Foursquare developers are using the new funds to create a “whole host of new gaming features” to keep the competition thriving among the community. Crowley refuses to be drawn on details of the site’s new innovations on the horizon.
However, he does realise that he needs to keep the site fresh so people continue to explore the world via Foursquare.
Interestingly, he doesn’t view Foursquare as a game, as undoubtedly some of its users do, but more as a social network that uses gaming mechanics to keep its users hooked.
And with 40pc of the site’s users now situated outside of the US, the new features will have to translate universally. Crowley seems genuinely and pleasantly surprised at how the site has taken off in places as far –flung as Indonesia and South Africa.