Social network

Foursquare muscles in

According to www.Techcrunch.com, the bible of all things digital, there is a Foursquare 'check-in' every second of every day. Bloomberg gushes that the site, which had 170,000 users late last year, could have three million users by the end of the summer. www.Businessinsider.com recently called its co-founder Dennis Crowley the most-wanted man in Silicon Valley. But what is Foursquare?

Crowley is not much help, suggesting that if you put 10 people around a table, they’d give 10 diff erent answers. The app uses smartphone GPS to help users connect with friends for restaurant and shop recommendations or to let others know where they are. Points and badges are awarded to users for visiting or ‘checking in’ at a location. It has enabled businesses to launch cheap loyalty schemes and coupon services (with discounts delivered over text), collate metrics, and pinpoint potential customers. Oh, and it’s also a lot of fun. Two young Dutch entrepreneurs, Alper Çuğun of Tipit and Robert Gaal of Wakoopa, became so addicted to collecting points in the US that they collaborated on bringing the service to Amsterdam. There are now more than 50 cities worldwide in which people are pinging their way around via Foursquare.

“It’s the philosophy behind Google, to organise all of the world’s information,” says Crowley, who sold social networking software provider Dodgeball to the search engine in 2005 for an estimated $40m. “It’s a really noble goal. We’re trying to do a small subset of that, which is to make it easier to connect with friends, make it easier to remember the things and the places you want to go, and to make it easier to learn about these places.”

Crowley says Foursquare became a hit because users have an innate desire to share what they know. He says it’s not uncommon for users to “gang up” on a business, explaining that a Foursquare user will often mention the service to a small business owner. After several users mention the site, the business usually gives in and starts offering specials. (www.Yelp.com contacts small businesses by phone to get them to sign up, for a fee). It’s the wisdom of the crowd, played out in real-time and based on your locale.

Foursquare’s growth has, not surprisingly, made the service an acquisition target, and rumours have swirled of an imminent buyout by the likes of Yahoo! But while it has piggybacked on the smartphone explosion and the Gen-Y appeal of social networks such as Twitter, Foursquare has still not figured out how to make money. Crowley says one revenue idea involves a business possibly paying to send you an ad when you visit a nearby establishment, especially if you rated the competition poorly.

Even as a social networking success, Foursquare faces an uphill climb as other services, such as Yelp, and MyTown on Facebook, also gain traction. Greg Sterling, an analyst at Opus Research says that a hurdle for these “proximity aware” services is that they depend on local small businesses which often have tiny advertising budgets.

For now, Crowley says he’s enjoying the growth.“It goes back to the idea of experimenting to see what sticks, to see what people like and what venues like. We want to figure out what works and then figure out what the business model is like.” At the same time, he is amused by the geekerati‘s view that the site will change how we live.

Not everything in Foursquare’s world is perfect. www.Mashable.com reported recently that users could get around the system by having a friend visit a location to gain badges, while others have created bogus locations. “When the service was relatively small, we could to trust users to use it the way we thought they should be,” says Crowley. “Now you get people doing it just for the status or to game or cheat it. So we’ve added rules: you can’t check in to a place unless you’re there [since] we know from the GPS on your phone if you are.”

Then there are the limits of the phones, which Crowley says don’t automatically ping you when you enter a business and don’t work when the app is shut down. “What we really want is for a phone to constantly know where it is, who it’s in contact with, and who else is in the room,” he says. “Even when you’re not thinking about the app you want the phone to buzz in your pocket.”