Foursquare Closes $50M at a $600M Valuation(techcrunch.com)
techcrunch.com
Foursquare Closes $50M at a $600M Valuation
http://techcrunch.com/2011/06/24/foursquare-closes-50m-at-a-600m-valuation/
41 comments
I love in all of these posts they claim Foursquare has 10 million users. There is no way the amount of active users is anywhere close to that. So many people I know sign up, check in once or twice, and never use it again.
Good point. I like to talk trash about Facebook's PR but one thing they consistently do correctly is report total user numbers only when they are confirmed active users.
Facebook only reports "active" users because it is possible for them to do it in a positive light. If they had the same sort of usage that Foursquare undoubtedly has, they would be counting all users that signed up as well.
That said, I still give Facebook credit for doing it.
That said, I still give Facebook credit for doing it.
Fundamentally, because Facebook counts it, that's what they seek. That's probably part of the recipe.
I wonder if number of registered accounts on facebook already exceeds Earth's population and is kinda absurd to use in any kind of statistics.
I dont think when Facebook said they had 500 million users that they meant they had 500 million active users. I thought I saw a post today (or this week) that they hit 750 million users (without the word active in it...or so I think).
The definition of active is so obtuse and varies wildly from company to company that it doesnt even matter :).
The definition of active is so obtuse and varies wildly from company to company that it doesnt even matter :).
I dont think when Facebook said they had 500 million users that they meant they had 500 million active users.
From Facebook's Statistics Site
More than 500 million active users
50% of our active users log on to Facebook in any given day
http://www.facebook.com/press/info.php?statistics
From Facebook's Statistics Site
More than 500 million active users
50% of our active users log on to Facebook in any given day
http://www.facebook.com/press/info.php?statistics
Okay. My point is what is active? Someone who logs in once a year? Once a month? Sure 50% of "active" users log in once a day, but what about the other 50%?
For Facebook "active" has always meant "signed on within the last 30 days."
We report 10 million _registered_ users. We've never reported (or made any claims about) active users.
Most tech companies report registered users; Facebook being the notable exception. When Twitter says they have 200M users or Skype says they have 650M users, they're reporting registered, not active, users. That Foursquare only reports registered users is in line with what most of the rest of the industry does.
Most tech companies report registered users; Facebook being the notable exception. When Twitter says they have 200M users or Skype says they have 650M users, they're reporting registered, not active, users. That Foursquare only reports registered users is in line with what most of the rest of the industry does.
Why do you think all those companies report registered users instead of active? Because it's always likely to be much larger and to fool those who don't know any better. Many times the image you project, is in stark contrast with reality. Eg: Skype has 650M registered but when I log in at any given time, there are around 20M users.
because the definition of registered is precise, the definition of active is fuzzy.
sure it makes the company look better, but its also nice to avoid the arguments over "what is an active user"
sure it makes the company look better, but its also nice to avoid the arguments over "what is an active user"
The definition of active is absolutely not fuzzy. Standard metrics include 1, 7 and 30 day actives, i.e. the number of people who have logged in at least once in the last N days. Tracking those three over time gives you some good statistics.
But don't you think that's kind of shitty?
"in line with what most of the rest of the industry does" doesn't make it any better of a metric.
"in line with what most of the rest of the industry does" doesn't make it any better of a metric.
FWIW I actually agree with you on this point. It's a bit of a prisoners dilema problem though. Basically everyone at this point has "defected" (reported signups). To be the only company to "cooperate (report active users) would be bad PR in a world in which most people don't pay attention to (or in many cases even understand) the difference.
It sucks a little, but I'm not sure what to do about it.
-harryh, engineering lead @ foursquare
It sucks a little, but I'm not sure what to do about it.
-harryh, engineering lead @ foursquare
presumably your new investors understand the difference and are happy with the real numbers. so it's a great chance to invent the future (as you said above): do it the right way, and have other folks copy you.
All you want to do is showcase your company's growth in the best possible way without being misleading. They're not being misleading or shitty. If you're a free service that doesn't require a signup and makes money off advertising, then reporting registered users doesn't make sense. Advertisers just want to know eyeballs, so Google Analytics Visitor numbers will do. For Foursquare reporting registered users doesn't really make much sense either. They could have easily reported mobile installs too, but that would be similar. Internally, I'd be checking other growth metrics such as "How many people are using Explore", or "How many people are referring friends", or "How many businesses are getting new leads as a result of Foursquare". These are much more important questions, but alas, getting the media to care about that is hopeless.
I honestly don't get why 4sq is worth 600M. As far as I know, their biggest asset is their user's location data; which is all in the past!!
At least Facebook has 'friendships' that can be leveraged as value creating entities for which users go visit the site. 4sq is not even that. I use the app to check in to places, rarely every visiting the site.
Someone please explain to me how is 4sq worth $600M?
At least Facebook has 'friendships' that can be leveraged as value creating entities for which users go visit the site. 4sq is not even that. I use the app to check in to places, rarely every visiting the site.
Someone please explain to me how is 4sq worth $600M?
A big fraction of local merchants offer some kind of loyalty program. Everything from a branded credit card at the high end to a punch card at the low end.
Right now, that stuff is done on an ad hoc basis. If Foursquare ends up owning that market, they're going to make a mint. And a) nobody else comes close to owning it, and b) Foursquare is a better implementation than most existing loyalty programs, especially for a new user.
Right now, that stuff is done on an ad hoc basis. If Foursquare ends up owning that market, they're going to make a mint. And a) nobody else comes close to owning it, and b) Foursquare is a better implementation than most existing loyalty programs, especially for a new user.
Local advertising is a market worth many many many billions of dollars. In the future foursquare will provide more and better ways for local merchants to acquire new customers and treat their already loyal customers better. We'll charge for some of this. We think it will be a profitable endeavor.
Have you dealt with the issue that checkins are almost impossible to verify in their current form?
This is interesting. Just my opinion but you might be ahead of your time. NFC needs to be more mature before a user's location can be exploited. But by then, the concept of a 'check in' will be redundant to this process. Your window of opportunity seems to be now. What remains to be seen is what is the best way to leverage the 'check in' and that if you (4sq) have figured it out.
Well, good luck to you and the rest of 4sq. I like you guys, just don't get how you will survive.
Well, good luck to you and the rest of 4sq. I like you guys, just don't get how you will survive.
I like my phone, but I don't pull it out to be advertised to while I'm outside, I almost always make up my mind about where I'm going before I arrive there, and a physical sign at a store is still more efficient and user friendly than a smart phone coupon.
There was a smart phone only offer for free popcorn at the movie theater the other day. It was advertised with physical posters all over the theater, directing you to Yahoo for free popcorn. I figured "why not," got out my phone while riding the escalator, got the evil eye from my wife for pulling out my phone in the middle of a conversation, got weirded out by the Facebook requirement, and gave up.
I remain unconvinced that local advertising / coupons is something that is worth using a cell phone for.
There was a smart phone only offer for free popcorn at the movie theater the other day. It was advertised with physical posters all over the theater, directing you to Yahoo for free popcorn. I figured "why not," got out my phone while riding the escalator, got the evil eye from my wife for pulling out my phone in the middle of a conversation, got weirded out by the Facebook requirement, and gave up.
I remain unconvinced that local advertising / coupons is something that is worth using a cell phone for.
their biggest asset is their user's location data; which is all in the past
Data, by definition, is in the past.
Users' past location data is hugely valuable, just like customer purchase history is valuable for Amazon.
Data, by definition, is in the past.
Users' past location data is hugely valuable, just like customer purchase history is valuable for Amazon.
Not the same thing since history is not Amazon's value proposition.
Of course it is! As a customer, they can recommend me products based on what I've bought before. And if they sell more, that's valuable to their shareholders too. They can predict what might sell more in the future, what might go down, etc. which gives them a lot of leverage over competitors when it comes to managing the supply chain, negotiating partnerships, hiring new staff.
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"So a $50 million deal at any price wouldn’t lose money unless Foursquare winds up being worth less than $70 million."
I'm just in awe this was written.
I'm just in awe this was written.
You just discovered one of the great secrets of VC preference and crazy valuations. If the startup guarantees to pay me back my investement plus some, then I don't care to announce that I invest at a valuation of $10B. In agreeing to such a high (and flashy) valuation, I give up on extra upside, but if my goal is 2X, then I don't actually care.
I don't think any VC's goal is 2X, especially not for one of the most promising startups.
The two best things about working at foursquare:
1) It's our job to invent the future. We copy no one; other folks copy us. Every single day we're try to build new tools that change the way folks relate and interact with the cities they live in. It's super hard, and we don't get it right all the time but we keep pushing forward and we feel like we're on to something good.
2) We have the best engineering team of our size at any startup in the country. Everyone on the team is just incredibly sharp, hard working, and passionate about what we're doing.
Want to find out more? Check out http://foursquare.jobs for open positions in both NY & SF or send me an e-mail (contact info is in my HN profile). I'm more than happy to answer questions here as well.
-harryh, engineering lead @ foursquare
1) It's our job to invent the future. We copy no one; other folks copy us. Every single day we're try to build new tools that change the way folks relate and interact with the cities they live in. It's super hard, and we don't get it right all the time but we keep pushing forward and we feel like we're on to something good.
2) We have the best engineering team of our size at any startup in the country. Everyone on the team is just incredibly sharp, hard working, and passionate about what we're doing.
Want to find out more? Check out http://foursquare.jobs for open positions in both NY & SF or send me an e-mail (contact info is in my HN profile). I'm more than happy to answer questions here as well.
-harryh, engineering lead @ foursquare
We copy no one
That is good as long as not copying folks is also the best business decision. You get no extra credit in your bank balance for not copying. On the other hand, lots of companies have done very well copying some basic idea from someone else and adding their own magic to it.
That is good as long as not copying folks is also the best business decision. You get no extra credit in your bank balance for not copying. On the other hand, lots of companies have done very well copying some basic idea from someone else and adding their own magic to it.
I have nothing against Foursquare, but this 'We copy no one' is a blatant lie.
explore = copying yelp
specials 2.0 = copying groupon
Foursquare's vision appears to be looking backward. Dennis Crowley's been thinking about this space for 10 years?
explore = copying yelp
specials 2.0 = copying groupon
Foursquare's vision appears to be looking backward. Dennis Crowley's been thinking about this space for 10 years?
> "explore = copying yelp"
Oh come on, that's just disingenuous. That's like saying Netflix's recommendation system is ripping off IMDb - they're completely dissimilar features.
One seeks to use reviews to generate a one-size-fits-all rating. All users get the same "recommendations" based on this data.
The other seeks to match you with other user behavior in order to create personalized recommendations. I can't speak to how well Explore works (haven't used it much), but just conceptually it's completely different.
Oh come on, that's just disingenuous. That's like saying Netflix's recommendation system is ripping off IMDb - they're completely dissimilar features.
One seeks to use reviews to generate a one-size-fits-all rating. All users get the same "recommendations" based on this data.
The other seeks to match you with other user behavior in order to create personalized recommendations. I can't speak to how well Explore works (haven't used it much), but just conceptually it's completely different.
explore = Personalized recommendations just for you based on where you + your friends have been in the past. Lots more powerful than a generic suggestion. Think "You've been to Aquagrill a lot, maybe you'd also like Lure Fishbar down the street cause it's pretty similar." LOTS of work to be done on explore for those with a background in search quality, machine learning, statistics, or infrastructure.
specials 2.0 = much more flexible than a one sized fits all groupon. Venue owners can create specials around frequency of visits, checking in with a bunch of other folks (friends or non friends), being the mayor, and many other criterion. We're also, as you may have seen with our recent AmEx announcement trying to integrate our merchant tools with 3rd parties to provide value to both users and merchants on the foursquare platform.
We've got lots more coming down the pipe as well.
"We copy no one" might be a bit overstated[1] but it really is how we try to think about things. Not everything we do is revolutionary, a lot is evolutionary as well. That's just the nature of building a real product. It can't all be mind blowing (but we try!).
Even if we don't succeed 100% of the time at making things totally new and awesome, I think having that as a conscious goal is a good trait to have in a company.
-harryh
1. I'll admit to being overly dramatic at times. Sorry about that.
specials 2.0 = much more flexible than a one sized fits all groupon. Venue owners can create specials around frequency of visits, checking in with a bunch of other folks (friends or non friends), being the mayor, and many other criterion. We're also, as you may have seen with our recent AmEx announcement trying to integrate our merchant tools with 3rd parties to provide value to both users and merchants on the foursquare platform.
We've got lots more coming down the pipe as well.
"We copy no one" might be a bit overstated[1] but it really is how we try to think about things. Not everything we do is revolutionary, a lot is evolutionary as well. That's just the nature of building a real product. It can't all be mind blowing (but we try!).
Even if we don't succeed 100% of the time at making things totally new and awesome, I think having that as a conscious goal is a good trait to have in a company.
-harryh
1. I'll admit to being overly dramatic at times. Sorry about that.
I'm more interested in http://www.fivestarscard.com/, which I think is a YC alum. Their customer retention model is much more intriguing to me.
Good news, guys, you can sell your foursquare accounts for $60 each.
We're definitely in a bubble with these valuations!