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Building the Netflix for the Physical World: A Conversation With Foursquare

By: 28 January 2011

Yesterday I had the chance to talk to Foursquare GM Evan Cohen. A former Jupiter analyst and Bebo exec, Cohen was brought aboard last year to help steer the ship amid rapid growth.

The wide reaching discussion hit upon the company’s perpetual innovations “beyond the check-in” and the challenge in appealing to the large but elusive small-business segment.

On the former point, the company gets points for being first to market but also for not resting on its early mover advantage. Part of this is making Foursquare a better discovery engine — in line with a big mobile trend we’re seeing.

“The core utility is simply getting friends to find each other out in the world,” says Cohen. “Building on that, it’s the notion of discovering what you should be doing next, or tonight, or tomorrow, based on your tastes, proclivities and what your friends have done.”

Going Down (Market)

As for the SMB challenge, it’s something the company is well aware of, and is working on ways to boost its appeal to merchants. The parallel I’ve made in the past (sometimes to glazed eyes) is to Groupon.

In other words, Groupon has uncovered massive demand for the concept of paying for a new customer instead of traditional “faith based” advertising. It’s the new local marketing.

Foursquare’s check-in deals are often thought (unfairly) to only reward existing customers. But with its continued moves toward local discovery (i.e., nearby specials), it could likewise build this Groupon-like appeal in acquiring new ones.

You could even argue that specials offered in the mobile context are more appealing than desktop-based group buying, due to their immediacy. This is especially true for businesses with dynamic levels of inventory.

Think restaurants and happy hours: The idea is to create flash mobs. It’s group buying meets mobile. Some businesses have already done this by getting clever with Foursquare’s swarm badge (see: Milwaukee’s AJ Bombers).

Cohen adds that Groupon also has parallels on the user end. Daily deals have an interesting discovery element in buying things you wouldn’t otherwise seek out (pottery lessons, hot air balloon rides, etc.). Not only the price, but also the impulse, is right.

We could see an announcement soon along these lines, though Cohen understandably couldn’t confirm or go into detail. My speculation would be some version of the above, possibly involving volume discounts with a shorter leash than Groupon’s 24-hour clock.

In the meantime, the company continues to evolve other ways it pushes specials. This includes partnerships with brands and retailers, such as Pepsi and Vons, to target specials based on a broader set of data points than just one check-in.

Taking It to the Streets

Beyond the appeal it could have as a self-serve tool for SMBs, Cohen sees the need to scale with local reseller partners that have feet on the street and existing SMB advertiser relationships.

Until it gets that far, it’s doing pretty well on the product’s momentum and viral growth. It’s even marshaled avid users to evangelize Foursquare to merchants through a recently launched local ambassador program.

Judging by its innovation across the board, I’m confident it will find other creative ways to tackle that elusive SMB market. We’ll also see Foursquare continue to build the user and advertiser sides of the equation, which dovetail nicely in local specials.

This all goes back to discovery, which will be a key design principle going forward. Cohen also takes a page from other industries.

“We do some of that now in showing what’s around you, what’s trending and friend check-ins,” he says. “We can do so much more. We see ourselves in some ways as the Netflix or the Amazon for the real world.”



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