Tag Archives: Foursquare

Foursquare, Quora, Path: What Becomes Of The Underachievers?

Foursquare, Quora, Path. Each is (or was) a Valley darling; each has millions of loyal users; each has raised more than $50 million, albeit nontraditionally, and been valued at $400 million or more — and each has recently done something remarkable. Foursquare and Path pivoted, hard. Quora, bizarrely, joined Y Combinator.

Are they just flailing, or is there method to this madness?

Foursquare, which started life as “the check-in app,” is ripping check-ins out of its eponymous app and moving them to its new ambient-social app called Swarm. What’s more, it’s planning to start charging for heavy use of its API, which is much beloved by third-party developers (including me.)

Which leaves it seeming more than a little unfocused. The main Foursquare app has essentially become a Yelp competitor. Swarm is now a side business, presumably because check-ins are no longer a growth industry, and haven’t been for some years now. Foursquare is allegedly on course to bring in $30-$40 million in revenue this year, which sounds good — but is not a lot for a company which has raised more than $160 million at valuations north of $600 million … if its growth has slowed.

Path, the mobile social network whose superb design wowed the Valley some years ago, before it began to look like a beautiful solution in search of a problem, has pivoted almost as dramatically. First they ripped a page out of Snapchat’s book and suddenly retroactively made all Path messages ephemeral. A week later they launched a new messaging app and acquired consumer-to-business messaging service TalkTo.

Again, an odd sudden change of direction for a four-year-old company which has raised $65 million. Everyone loves messaging apps today, in principle, thanks to WhatsApp — but the world already has Line, Viber, Kik, Snapchat, WeChat, Tango, etc, to say nothing of Facebook, Twitter, and Skype. It’s hard to see how (maybe) the sixth-place social network, which has struggled with layoffs and executive exits, benefits from branching out to become (maybe) the thirteenth-place messaging app. But Path has to do something … if its growth has slowed.

Quora is the strangest case of all. Why join Y Combinator? I mean, it didn’t cost them much, and it’s nice that it’ll be “fun personally to participate” for Adam D’Angelo, but how is it anything other than a distraction? “We’ll have Sam and all the other partners to help us,” D’Angelo says, without specifying what kind of help they want.

I think we can all make a pretty good guess, though. Quora was recently valued at some $900 million, but as Josh Constine puts it:

Quora has been cagey about its stats since forever, only talking in relative growth and vanity metrics rather than absolute user counts … This makes it tough to know exactly how popular it is, but the general consensus hovers around “known amongst Silicon Valley intellectuals” and “just not big enough”.

Joining YC might seem weird or even desperate, but weird or even desperate is actually the right move for Quora … if its growth has slowed.

You might be noticing a theme here.

As Paul Graham once put it: “A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup.” But, similarly, just because you’re “late-stage” — big, massively well-funded and relatively mature — doesn’t mean you’re not a startup. A corollary of Graham’s definition is: if you need to grow fast, then no matter how big you are, you’re still a startup … meaning you’re still extremely vulnerable.

Foursquare, Path, and Quora don’t yet have mature business models lucrative enough to justify their funding and valuation. Meaning all three are still startups, and have no choice but to keep growing, fast. That’s a huge challenge. It’s relatively easy to double a userbase when it numbers in the thousands; much harder when it’s already in the millions, unless you benefit from network effects. Doubly so when you’ve lost your cool and become yesterday’s news, no longer the talk of the Valley’s chattering classes:

Does it sound like I’m being hard on them? That is not my intent. All three companies have done genuinely extraordinary things. They have scaled from scrappy outsiders into significant players. They have millions of faithful users. While it’s true they have succeeded well within their founders’ wildest dreams, they are still among the best of the best, or they wouldn’t have gotten to where they are today.

But the lesson here is that even that’s not good enough. Not if you stop growing before you start making money. Today’s tech industry will eagerly accept hypergrowth in lieu of revenue, but it will not accept neither. If you’re not yet raking in money, then you must grow, and keep growing, fast … or suffer and eventually die. And the bigger you are, the harder it is to keep riding the hockey stick — and the harder you fall if you fail.

Groupon, Foursquare partner on real-time deals

Groupon has teamed up with location-based service Foursquare to offer its daily deals through the Foursquare mobile application, giving the Chicago-based company another way to sell its discounts.

Foursquare members “check in” to local businesses such as restaurants and bars with their mobile phones and can share their whereabouts with friends. New York-based Foursquare has amassed 10 million members worldwide and recently made a bigger push into loyalty programs and rewards.

“Foursquare’s goal is to help people connect in the real world, discover new places, and save money through Specials and Deals,” the company said in a statement. “We’re excited that Groupon’s daily deals and real-time deals will now be included in our Deals platform.”

Earlier this month, Foursquare announced it had partnered with five deal providers to integrate their offers into its Specials platform. Groupon was conspicuously absent from the list, which included several of the company’s major rivals, including LivingSocial and BuyWithMe. The other three partners were Gilt City, Zozi and AT&T, which offers deals through its yellowpages.com subsidiary in select cities.

With the Groupon partnership in place, the Chicago company’s deals will appear on Foursquare’s mobile app for purchase. Groupon is the only deal provider on Foursquare to offer real-time deals through the app. These are offers that are pushed to consumers based on their location and have a shorter purchase window to encourage spontaneity.

The Groupon link-up with Foursquare represents an expansion of Groupon Now, a real-time deal service that the company launched locally in May and has expanded to 25 markets. The service delivers deals to consumers based on their location. Unlike Groupon’s traditional deals, which typically have a 24-hour purchase window and require a minimum amount of buyers to activate, Groupon Now deals last just a few hours and do not have a tipping point.

“When we think of mobile addiction beyond (Groupon Now), we think Foursquare, and many of you guys do, too,” Groupon said in a Thursday post on its official blog announcing the partnership.