If your app name has become a verb the last thing you ever want to do is refocus. If you want to go to a ratings app like they apparently did (because... uh... that's not a saturated space or anything?...) then you make another app and leave your wildly successful app alone.
What it really comes down to is this:
1. You're left with an app that has stagnated in market share for a number of years (even dropped a bit)
2. Your brand has been marginalized by Facebook's vertical integration of your primary feature
3. You have some money left (investment, revenue, whatever - I don't know about Foursquares's finances, but they obviously have some money or they'd be gone)
Given the aforementioned, do you A) pretend like nothing happened and continue watching your brand fade into obscurity (e.g., MySpace), or B) try to reinvent (e.g., like MySpace did - their traffic topped 55M uniques/mo in 2014)?
A lot of folks were upset when a small app named Burbn removed a bunch of its features as well, after a year of stagnant growth.
What? If you don't make money, you will go bankrupt. You can be a verb all you want, if it doesn't make money, it doesn't matter.
This change was poorly thought out and probably wasn't going to be successful, same as if Twitter spun their micro-blogging to another app, it wouldn't end well.
What's your evidence for that? I could entirely believe they thought it through very carefully, knew that this was a likely outcome, and did it anyhow because it was the best chance they saw for success.
Remember, this is the third checkin app in this series. It started life as a student project. The first commercial version was Dodgeball [1], which was created, grown, and purchased by Google before the iPhone even existed. Google wasted the opportunity, so Crowley started Foursquare and did it again.
Personally, I suspect they discovered that the whole check-in dynamic was fading. E.g., it's something people did for a while out of novelty and they expected its true long-term audience to be small.
Once you take VC money, it's "go big or go home". A small, modestly profitable company is not something your investors are interested in; they would rather you gamble and lose. And Foursquare took $162 million [2] so they had to go very big indeed. The "success" period of the article's graph looks like VC-failure to me.
Winning back your penny at the penny slots isn't the result you're playing for, but it's a better result than losing the penny.
I don't know the details of the FourSquare pivot, and hindsight is 20/20, but if I had even a small chance at medium-to-long term profitability (good brand, loyal followers, but flat growth), and a minuscule chance at riches by burning down the building, I wouldn't light the match.
The CEO doesn't have that choice. He'll get replaced by the investors.
The VC investors don't have that choice. It's not their money they're working with. They've promised their investors, the limited partners, that they'll go after high risk, high reward scenarios. If they don't make those gambles, they won't get the capital needed to run.
The limited partners also don't generally have that choice with this money. They are people who manage large pools of cash, and part of what they need is long-term, high-reward investments, which are necessarily high risk. [1] They have other money in safe, low-return investments. This money is for go-big-or-go-home bets.
This is the devil's bargain people make when they take VC money. There are other ways to build businesses, but they aren't the kind that will let you spend $100m-2b before you get to break-even, which is apparently what it takes to build a social network.
[1] http://www.theequitykicker.com/2010/12/01/where-do-vcs-get-t...
https://medium.com/@mrdavenport/swarm-branding-and-visual-de...
Could he have done this in a more elegant way? Maybe. But either way, the data he has compiled to entice advertisers is already quite substantial. If he successfully rebrands 4sq. as a resource and swarm as a tool, he's done exactly what he wanted to do.. as opposed to something close/safer.
How much does it actually cost to run the foursquare that millions of users liked?
Hint: not very much.
If you can't make that "not very much" back from ads, you should sell to someone who can.
Why? Because merely covering core operational costs doesn't do anything to pay back the investors who put in $160 million.
Assuming so, the short answer is that the venture capital ecosystem is about investing in businesses before we know what kind of businesses they'll turn out to be. This was especially true for free-to-use social apps like Facebook, Twitter, and Foursquare. Those only make sufficient money if their scale is very large. It's also hard to know what their true monetization opportunities are until they reach scale, which is why Twitter and Facebook didn't really bother with pursuing revenue until they were huge.
This worked out pretty well for the winners. But it has a known failure mode for the losers: things that might have been good small businesses end up getting totally destroyed in the rush for glory and riches.
The AWS case study linked below
http://aws.amazon.com/solutions/case-studies/foursquare/
mentions "stream[ing] hundreds of millions of daily application logs each day." These logs must be at least 0.5K w/ metadata (probably more), so we're talking about...what, 100GB/day of application logs? Alone?? You're not persisting those using cron + MySQL--they likely use Kafka/Kinesis, many threads/instances subscribing to topics, and a large, horizontally-scalable db or Redshift to manage them.
Note that I haven't even addressed querying those logs (I believe 4sq uses Hive, the case study mentions Tableau). That all costs money.
We also haven't mentioned reviews for their millions of locations, user auth, check-ins, app development (web/iOS/Android). Each of those is a problem for a company with a MM-level user base.
Do you have some kind of intimate knowledge of their monthly engineering costs?
EDIT: 4sq website says 2M legit businesses, 65M total places.
0: http://aws.amazon.com/solutions/case-studies/foursquare/ 1: http://www.businessinsider.com/what-exactly-do-foursquares-1...
How about firing 120 employees and moving to a smaller office, just until you've figured out how to make money?
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Even if you ran on bare metal on colocation, I doubt you save more than 50%. That's time wasted that could be more fruitfully spent iterating on profitable ideas. Plus that's exactly why you took investment capital in the first place, so you didn't have to do all that fiddly stuff. It's always better to maximize revenue than to minimize costs. On that note, the cost of paying all those salaries is probably 10-50x the Amazon bill, but you can't really cheap out there either.
Hint: not very much."
OK, why don't you enlighten us?
I might have even installed it. ;)
Foursquare didn't agree. They didn't pivot just because it's the cool thing to do.
Why not give a coupon when checking into a place that is near others - making people stop by another place/shop to maybe purchase something? (lat/long based)
Maybe the millions of users actively making check-ins every day weren't too big of a clue for them?
They needed a monetization strategy, you pivot when your product is not being used.
Makes the timing of this post interesting.
Twitter's incorporation of the POI will give them much more "check-in" data than their own apps ever could.
https://medium.com/@dens/six-years-in-a-few-thoughts-on-four...
I lament the loss of the app too. Checking in and becoming the mayor was the fun of the old app, and Swarm just doesn't do it for me. At this point I use it mostly as a log of new places I've been to so I can visit them again in the future, particularly while traveling.
And how are they doing?