How Foursquare's new CEO is trying to avoid Twitter's big mistake
As stocks of big social media names like LinkedIn (LNKD) and Twitter (TWTR) get pummeled, Foursquare’s new CEO is trying to distance his company from the troubles facing the sector.
Yelp (YELP) reported better-than-expected earnings and revenue on Monday, though the stock sank more than 10% in the thick of a market sell-off and news that CFO Rob Krolik would be departing in the coming months.
Beleaguered Twitter is set to report results on Wednesday afternoon. Shares of the once hailed social media darling fell below $15 for the first time on Monday.
When Foursquare, a local search and discovery app, launched in 2009, people speculated that it could be the next Twitter or the next Facebook. Newly minted CEO Jeff Glueck told Yahoo Finance that it was an unfair comparison. “That became a standard against which the company was judged,” Glueck said. “We’re now in this 1% of startups that’s worth hundreds of millions of dollars and our business is thriving. We had our best year ever last year.”
In January, privately held Foursquare received $45 million in funding and its valuation was reportedly halved from previous rounds. The same day co-founder and former CEO Dennis Crowley became executive chairman of the company. Former COO Jeff Glueck was promoted to CEO. Crowley approached Glueck asking for help in scaling the business – to run the day-to-day and grow the company. Meanwhile, Crowley will take a bigger-picture focus: to evangelize how location and consumer experiences will intersect in the future.
According to Glueck, Foursquare check-ins are at an all-time global high and 50 million people use one of the two apps or the website in 100 countries every month.
In May 2014, Foursquare split its company into two separate apps, a move that was met with confusion. The Foursquare app is primarily used for exploration of places and Swarm is for the social aspect -- helping users find friends nearby and checking in to share their locations.
Glueck acknowledged it wasn’t an easy feat to explain to users why they separated the features. “There were a lot of people who wanted the recommendations and the city guide that Foursquare represents but they didn’t necessarily want to be part of a social experience where they were competing with people or sharing locations,” he said.
Intense competition
And now Foursquare faces competition from the likes of Facebook (FB) for its mobile check-ins and Yelp for its reviews.
Glueck said Foursquare’s location-based technology is more reliable than Yelp’s check-ins and reviews, which can often depend on how a customer felt on a particular day or whether “they’re related to the owner of the restaurant.” Foursquare relies on its location intelligence technology, called Place Insights, which analyzes where phones stop for more than five minutes. “We think people vote with their feet,” said Glueck.
“You’re not dependent on the one guy who is writing a Dostoyevsky-length review of the place but much more on data. We think that’s a better way to do it,” he said.
Beyond the consumer experience, Glueck said he’ll be investing the $45 million in hiring developers to create programs that help businesses learn about customer trends and habits. One-third of Fortune 500 companies, including Apple (AAPL), Twitter (TWTR), Microsoft (MSFT) and Pinterest, are using its advertising solutions, according to Glueck.
Specifically, Foursquare helps businesses measure whether their ads actually drive people into stores; Foursquare for Business allows companies to manage their listings and attract more customers. It also gathers data on whether people respond to things like McDonald’s (MCD) all-day breakfast. “We’re like the Nielsen ratings of the real world and there’s a lot of value in the data we collect,” he said.
As for IPO goals, Glueck said it was an unlikely scenario in the short-term. The immediate goal is to build a profitable business, which he sees as a target over the next couple of years.
But the primary takeaway from Twitter’s recent struggles and increased competition? Distinguishing itself from other social media behemoths.
“Twitter perhaps over compared themselves to Facebook. They’ve had a lot of success as a professional kind of interest group publishing network -- if they were judged by that and the huge revenue growth, then maybe they’d be in a better position than comparing themselves to Facebook.”
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