Foursquare's Valuation Is Getting Chopped in Half | Hacker News Reader

Foursquare's Valuation Is Getting Chopped in Half

inc.com

53 pointsdannylandau33 comments

It will be a huge loss (not monetary) for a lot of people if foursquare closed the shop.

Their database is pretty much unbeatable when you want to search for meaningful places - a.k.a places people actually go to.

In addition, that database can be used for accurate analysis of different vectors, like product sales predictions[1].

It really seems like they waited too long to monetize, and unfortunately decided to go all-in on the social & gamified route. The problem is that even some Xcorp buys them, it's only a matter of (short) time until all that data will be practically stale, and getting people into the check-in frenzy will be difficult.

EDIT: With that being said, I'm glad they're at least taking a down-round since it means them, and investors, actually believe they can turn things around.

[1] https://medium.com/foursquare-direct/right-on-target-foursqu...

> Their database is pretty much unbeatable when you want to search for meaningful places - a.k.a places people actually go to.

For points of interest, Foursquare varies heavily by city.

It's fantastic in NYC, but in Ohio, Yelp, Foursquare, and Google Maps' place databases are all nearly equivalent.

As a keyboard analyst and former Foursquare user, I believe it was a mistake to remove the "chekin" from the Foursquare app.

The new app (cannot recollect the name) would have been ideal for pushing their new focus of review while Foursquare remained and did what it was meant known for - checking in and providing data.

By creating a new feature/ direction for an old brand and moving the old feature to a new brand, it caused a lot of confusion.

People simply decided to move on

what's a keyboard analyst btw? :)

Often called an "armchair" analyst/psychologist/whatever the relevant term would be... - someone who has no qualification, but enjoys speculating and analysing anyway, typically from their armchair in front of the TV, or their keyboard in front of the computer.

See also: Monday Morning Quarterback. It's easy to know what to do after something has happened (like, on Monday morning), but much harder in the moment (like, Sunday afternoon).

What if you're analyzing a Monday night game?

My problem is that they didn't explain with sufficient clarity and succinctness why the split was performed. It was eventually clear that the intent was to delineate between community recommendations and social sharing. (No doubt this made overwhelming logical sense in their strategy meetings, but reality always ends up being messier.)

All the arguable benefits of breaking out Swarm could could have been achieved with some considered use of interface design within a single Foursquare app.

Instead they confused new users and triggered irrational yet predictable anger within a portion of their user base.

I remember being dumbfounded when they announced they were removing check-in functionality. It was the main thing I associated with the Foursquare "brand" and I was a heavy check-in user at the time (the game mechanics were great).

They must have known everyone was there for the check-ins, and it seemed arrogant of them to believe they could force all their users to migrate to some other app. (talk about shooting yourself in the foot)

I never downloaded Swarm on principle (i can check in with the Facebook app if i really want to). Foursquare did this to themselves.

> I never downloaded Swarm on principle

On what principle?

Presumably the same principle of not letting ones self be jerked around by companies who don't give a rat's ass about the consumer experience, like the bizarre Netflix/Quickster fiasco from a few years back.

The Netflix/Quickster fiasco changed the value equation for customers.

All that happened with Foursquare/Swarm was that the user had to press a button to download another free app. I agree it was a silly decision, but was ultimately just a 40 second inconvenience.

As far as a researched opinion can tell. I recall not knowing what differences would be and if it would be more inconvenient or demand other changes in my interaction in the future. I ultimately decided it wasn't worth it, and an app experience I used occasionally became never.

> ultimately just a 40 second inconvenience

Unless you're offering a large value proposition that the consumer finds it difficult to say no to, you just elaborated one of the biggest challenges companies face.

Whether one regards it as absurd or not, that 40 seconds makes a big difference (not to mention people don't like change very much once they're comfortable with a thing they use). It's in that 40 seconds that the consumer shrugs and says to their self: meh, I don't feel like it, I don't want to deal with this new app that I don't understand, my phone is already cluttered with apps I don't use.

Shopping cart abandonment due to second thoughts on purchases. Drawn out check-out processes. Long sign-up forms. Slightly slow web page load times. Waiting in lines. Every study comes back with the same conclusion on consumer behavior: those seconds matter a lot.

I agree completely, I just wouldn't consider disinterest and dissatisfaction as being synonyms for 'principle'.

When Swarm first came out it didn't have the most important features that Foursquare had, mayorship and badges. Those features were what made people check in and without them, what's the point, to collect useless coins? *I know coins have a use now.

Whereas I couldn't care less about the gamification aspects of it.

I use it to read tips about places I visit, which are often useful especially when deciding what to order upon first visit.

I use the social features among a small group of friends. Facebook has similar features but is useless for me as I rarely use facebook, and I am very sensitive about who can see my check-ins. Being a separate social network allows me to curate that list very carefully.

Plus the lifelogging aspect has proven itself useful many times. When you want to remember that awesome meatball restaurant in Amsterdam, nothing beats looking at a list of places you've actually visited. (https://foursquare.com/meatballsnl)

I got a low-ish offer from them four years ago, and the HR person tried to talk up the value of the equity, saying "Right now, this equity grant is worth $XXX, assuming our valuation doubles in the next year, your equity will be worth $YYY!

For what it's worth, also included in the list of perks was an Rdio membership.

In spite of this, I actually wish I hadn't turned them down, since everyone I'd met interviewing was awesome.

Don't know why, but I got a particularly special giggle from the Rdio mention. Thanks :)

...and they won't be the last, as more and more later-stage "startups" begin to show they won't ever make the returns their valuations would suggest, and start begging for cash as they burn through their existing investments and meagre revenue.

Could this lead to an domino effect?

Tech investment crashed in the 90s because billions were poured into companies that didn't make money, there's no reason to believe it couldn't happen again.

I still have absolutely no idea how Foursquare makes money.

I'm impressed that it is only half. Most of the time once the illusion is broken you are in a 90 degree down decline.

Agreed. Maybe the existing investors are refinancing it. In that case they could be in the weird situation of having the perverse incentive (compared to a new investor) of trying to salvage the valuation by throwing more bad money at it. Sunken costs fallacy in action.

Except that Foursquare/Swarm isn't entirely valueless. Depending where you are on the planet, there can be a lot of great data in there — some of it particularly invaluable for not being intensely gamed like TripAdvisor/Expedia are.

When I was traveling around Europe this year, in many places Foursquare recommendations were consistently accurate and of good quality. (My one wish: integrate Google Translate for tips! The locals' tips would surely be the most worthwhile to read.)

Yeah, I was under the impression that nobody liked the Swarm app and they basically did a Digg. It's surprising that it still valued at half of what it used to be (when it was everywhere).

It's valued there because they have a somewhat unique data set, considering the scope and magnitude. The only companies that can compare their data sets are much larger ones.

> Down rounds are typically punishing for founders, reducing both the value and the size of their stakes in concert. Frequently, doing one triggers "anti-dilution" mechanisms designed to protect early investors by carving up founders' equity still more.

In practice, how do these anti-dilution clauses play out?

Do those protected previous investors get issued more shares to hold their same percentage post-money?

Are full-ratchet anti-dilution provisions common?

I just wonder when the same will happen to Groupon, a former VC darling that has seriously floundered the past few years.

It's already happened. Groupon is a public company and we got to watch it go from ~$26/share to ~$3/share in real time! https://www.google.com/finance?cid=10792264

According to wikipedia it was valued at $13B when floated. Then lost ~90% of its value. That means $11.7B. Wow. ELI5: did anyone profit from this other than the founders?

Yep, people who knew a lot about their business model and shorted it. Just like the ones who shorted zynga and demand media.

Groupon is still a two billion dollar company. It's still by any measure a huge success. I personally know many non-techies (normal people) that use Groupon and actually do go back as repeat customers for the places they buy Groupons for.

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