Despite Recent Financing, Foursquare Confronts Growing Challenges
Business Insider ran a story yesterday about Foursquare that claimed morale was down (“at an all time low”) and that employees were starting to leave. Foursquare has about 50 million users globally and just secured $41 million in new debt-based financing. Thus, the company appears to be in a strong position. Yet numerous sources, including the Wall Street Journal, […]
Business Insider ran a story yesterday about Foursquare that claimed morale was down (“at an all time low”) and that employees were starting to leave. Foursquare has about 50 million users globally and just secured $41 million in new debt-based financing.
Thus, the company appears to be in a strong position. Yet numerous sources, including the Wall Street Journal, have documented the company’s recent fundraising challenges, tied chiefly to its high valuation and perceptions that growth and usage have slowed.
While I don’t know what the “reality” is, that’s certainly the perception “on the ground.” The sense is that despite strong numbers “on paper” people are using the app with declining regularity.
The company says it has between five and six million check-ins daily. However, at industry conferences, I’m often asked “When was the last time you used it?” The sense is that early adopters have largely abandoned the app. That would be fine if Foursquare were gaining mainstream users — and the company says it is.
The key metrics are monthly or daily “active uniques.” However, Foursquare doesn’t expose them. If those numbers are healthy and growing, the company can tell a compelling story. If not, then the company is indeed in trouble (despite its access to funds).
Undoubtedly feeling urgency to show it’s a viable business, Foursquare is starting to more aggressively sell ads or otherwise monetize its traffic and location assets. It recently developed “check-in retargeting” for larger advertisers and is testing “promoted listings” for SMBs. But, the SMB segment is a very tough one for the company to crack without major channel partners or its own sales force.
From a consumer perspective, Foursquare is surrounded by bigger or better known competitors: Google, Yelp, Facebook. But that’s not to say that Foursquare couldn’t surprise the market with some creative new maneuvers.
Months ago, I had thought that Foursquare would be Yahoo CEO Marissa Mayer’s big, splashy acquisition. That turned out to be Tumblr. While Yahoo is perhaps the most logical acquirer, there are undoubtedly a number of others that would scoop up the company at the right price. And, a near-term acquisition is probably the most likely scenario for the company.
The question is who and how much?
Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.
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