What did Foursquare do right, and what can we learn from their strategy?

Here are the 3 important lessons I believe you can take away from Foursquare’s success to implement into your startup company.

Start with something people really care about

Haha, ok, so the first lesson is going to be pretty hard to learn from.

I think one of the greatest lessons to learn from Foursquare is that they found something that people REALLY care about. Finding something that people care about is incredibly hard.

Anyone can have an idea for an app or a company, but it is extremely rare to find something that really hits the spot. With the saturation of location, photos and social networking applications, you really need to find a unique opportunity and a valuable reason for people to actually care about your product.

As I talked about in A solution to lack of traction, there are more mobile applications than the market can handle, and there will only every be so many winners. If your application is going to be in the top 3 – 5 applications a user frequents everyday, you need to make something very special.

The competition is also extremely heated as more and more people have entered the industry because of the success of others.

I think the best thing you can do to stumble upon something that really hits the spot is to launch small and keep trying different things within a small group of people. Everyone wants to be featured on TechCrunch, but really, being written about by a media outlet is not going to make or break your success.

You’ll know when you find something that hits the spot when you stumble on a powerful Viral Coefficient. However, until you do, keep things small, spend no money, and continue to test and iterate amongst your group of friends.

Not going after the business model

I think another very important reason to Foursquare’s success was how long they have held off from really turning on the business model.

Now of course, not everyone has the luxury of time. Foursquare has been funded for many years, and have not been under pressure to generate revenue prematurely.

When Foursquare did decide to start start looking at a business model, they already have much of what they needed already in place. Foursquare already had checkin data from millions of users and they had already built out the Merchant tools that were already being used. Foursquare can now start showing the value from the billions of checkins they have collected over the last couple of years.

I think it is a shame when startups start clutching at straws for a business model. As I wrote about in Avoiding the “Brand partnership” trap, a lot of startups try to emulate the success of Foursquare by copying their business model, but changing it slightly to try and fit their product.

Just because a business model works for one product, does not mean it will work for your slightly resegmented product.

Also, let’s be honest, any kind of business model in the early days of a product like a location app, social network or photo application is a huge turn off.

If you are feeling the pressure to find a business model, hit targets and turn into a profitable business, perhaps you shouldn’t of taken that investor money. Instead you could of continued with the product as a project, allowing yourself the time, room and opportunity to find something that really works.

The evolution to a utility

And finally, arguably Foursquare’s biggest success has been their ability to turn their product into a utility. Foursquare is now a huge resource for local information. If you go to Foursquare.com you will see how Foursquare has transformed into a search engine for local data. This is obviously a huge opportunity even if Foursquare only emulates the Google Adwords business model, although Foursquare seems to have an even bigger opportunity than what Google has achieved through the power of local and connecting the gap between online, mobile and physical locations.

A while ago I wrote about the importance of Moving your product from a fad to a utility. I believe the really big, next generation of companies will need to make this transition in order to stay relevant to it’s users for the long term.

Lessons to learn from Foursquare was written by Philip Brown on Culttt - Articles on business, technology and the Internet

Building a mobile application is not for the faint of heart. It is likely to be a big investment in terms of money, time and resources. However, when it is done right, I strongly believe a mobile app can be a huge asset to your company and your future strategy.

So if you are considering investing in a mobile application for your company, here are some things to consider before you make your final decision.

The vanity bandwagon

Firstly, if you are looking to build a mobile app for your company just so you can show it off at conferences or down the golf club, you need to really consider whether this is really an appropriate use of your company’s investment. As I said, having a mobile application is currently the hot thing to do. Yes, it is impressive to be on the cutting edge, but if the vision of your app is just for vanity, it’s going to be a waste of time and money.

You need to solve a problem

It’s very easy to think up potential ideas for mobile applications, if you are reading this I’m sure you’ve already thought of a number of “great” ideas. But when it comes down to it, having a great idea is not enough. You need to be solving a problem.

Imagine if you’ve already decided to invest in an application, you’ve had it made and you’ve successfully launched it into the app market, who is going to use it? Do you really think your idea is going to have people opening this application on a daily basis? What problem are you solving? What is the reason for the average user to continually open your application? What do they get out of it? In what situation do they use it?

Having a great idea is all well and good, and it might very well make for a great mobile app. But if you aren’t answering all of the above questions with good solid answers, you are going to launch an application that never gets used.

The “build it and they will come” fallacy

The number of people who now have smartphones, combined with the rate of people who are buying their first smartphone is staggering, and so it has created a huge opportunity. Smartphone usage has already overtaken traditional computer usage, and it opens up a number of exciting opportunities when you consider micro-payments, geo-location awareness and the fact that people are going to be more engaged with their phone for a bigger part of the day.

However, this has also created a fallacy that, “if we build it, they will come”.

Just because there is now a new established market to enter, does not mean that your company or application will succeed. The “viral” nature of outlier applications like Instagram has created this fallacy that the market itself will drive usage and new user acquisition. However, it is far more likely that you application will not be installed by anyone, but rather join the application graveyard that is inevitable for the majority.

Apple has created a huge opportunity for people who are looking to create revenue from their app. It is now incredibly easy to build an application that utilises Apple’s payment back-end natively within the app. Apple already has millions of user’s credit card details stored in their database, and so monetising an application can be as easy as a single tap. However, this is another fallacy. Just because the potential users and payment facilities are there, does not mean people will make purchases. If you are creating a freemium game that relies on in-app purchases to monetise, don’t think just because the option is there you will be an instant success. It is far more likely that you won’t make any significant money at all, and you will most likely not re-coup your investment.

Not utilising the characteristics of the hardware / software or the typical usage of the device

Another filter you should put your fantastic new idea for an app through is “will this app fully utilise the characteristics of the hardware, software and the typical usage of the device”. This is a key consideration because, if you idea fails this test, you are certain to be wasting your time and money. The typical pointless application I see is essentially a brochure for the company or the organisation. This type of application has no relevance to the opportunity of creating something for a mobile device. Instead, it is attempting to jump on the app bandwagon and hoping to get traction because of the market opportunity.

When filtering your ideas, you should be considering the following points.

“Does my idea make the most of…”

• The restricted and focused real-estate of the screen
• The short bursts of usage that is typical of a mobile application
• The phone’s sensors, geo-location, connectivity, camera, microphone

If your idea is not making use of these characteristics of a mobile device, is there any advantage of it being a mobile application at all?

An application Vs a website

There are a number of similarities, and a number of stark differences between a mobile application and a website.

Firstly, if your idea is not taking advantage of the key benefits of being a piece of mobile software, you could save yourself a lot of time and money by making a responsive website that works natively on a mobile device. Instead of investing in having an application built, you can instead make a website that has many of the features of a mobile application, and when done right, can look beautiful on a mobile phone. That being said, it will be in no way as powerful as a native mobile application.

Secondly, making websites is quick and easy, and you can tweak to your heart is content with really very little effort. Editing the look and feel of your website is very easy because all you have to do is edit the CSS file, hit refresh and you can see your change. Developing a mobile application is not like this at all. A mobile application is a piece of software and therefore it is much harder to do these on-the-fly changes. Also, making changes to a live website is quick because all you have to do is upload a file to the server. This is great if you launch something then you realise something is wrong or needs to be fixed. Launching an application is completely different. Making changes can often be a 2 week process, and so there is far more risk for getting things right the first time.

Thirdly, making a website is easy because you only have to make it once. Taking the issue of browser compatibility to one side for the moment, you know that your website will usually look similar on just about any operating system. Your website is served to the browser through an external server and so you only need one code base and one copy of assets like images or videos. Creating a mobile application is completely different. Making an app for Apple’s iPhone and making one for an Android phone are two very different things. You will need to write the applications in different programming languages, and you will need a whole set of images and user interface assets for each different platform (and usually different assets for different devices on the same platform!). This is adding an order of magnitude of more complexity than simply creating a website.

The key point here is, making a mobile responsive website is far easier than creating a mobile application. Before investing your time and money into a mobile app, you need to be testing the potential of your idea by making a website. With a website, you can quickly build it, and iterate it to really refine your idea. It is going to be far cheaper, and there is much less risk involved with creating a website. If your idea completely fails, you can just start again. In fact, you can go from an idea to a working prototype within just a couple of hours. Once you have proven the concept of your idea with real user engagement data, you will have a much better plan for building an application that can really take advantage of the unique opportunity a smartphone presents.

You need to be prepared to fail

Each application market now has in excess of 100s of thousands of applications. To launch a successful application is very rare, in fact it is the exception to the rule. It is very likely that your first attempt will bomb. It took Rovio 52 failed attempts before they landed a success with Angry Birds. The application markets are so saturated with applications that it is likely that your application will just fall into the cracks. The majority of all applications never achieve breakeven and never re-coup the investment that was needed to create the app in the first place.

Conclusion

The revolution in smartphone technology over the last couple of years has opened up many opportunities for new and existing businesses to find an audience or engage with their existing audience in a whole new way. However this has created a “bubble” in that too many people are trying to capitalise on the opportunity wrongly believing that the entering the market is enough to achieve success. Developing mobile applications is a whole new world of complexity verses developing websites, yet many believe they can turn around a high quality application just as quick. Before making the big investment in developing an application, full opportunity testing, research and customer development should be taken on to prove the concept. If this critical stage is neglected, it is highly likely that your application will fail.

What are you experiences with developing smartphone applications?

Why your company does not need a mobile app was written by Philip Brown on Culttt - Articles on business, technology and the Internet

Mari Sheibley – Foursquare

Mari Sheibley was the first designer recruited to Foursquare. Mari was the first full time designer, and along with Dennis Crowley and Naveen Selvadurai, helped shaped Foursquare into what it is today. To read more about how Mari joined Foursquare, read this Quora thread, and to see the evolution of Foursquare’s design, have a look at this post from Mari’s Tumblr.

Daniel Burka – Oink

Daniel Burka is one of the Co-Founders of startup incubator, Milk and designer of their first product, Oink. Daniel was previously the Creative Director at Digg and also contributed to the Mozilla organisation.

Danny Trinh – Path

Danny Trinh is a designer at Path and previously worked at Digg. Danny is just 21 years old, but is already considered one of the best product designers around. Danny got his start in Silicon Valley after sending Daniel Burka, who was at Digg at the time, an introduction email. Danny was invited to one of Digg’s user groups, and then an internship. Whilst at Path, Danny came up with the idea for a new application “With”. This was an app to share who you are currently with, without the need for a connected social network. Path released the app as a short, but it has now been rolled into the release of Path 2.0.

Mark Jardine – Tweetbot

Mark Jardine is the designer behind the incredibly successful Tweetbot Twitter client for the iPhone and is co-founder of Tapbots. Tapbots have released a number of applications for the iPhone including, Calcbot, Pastebot, Convertbot and Weigthbot, and all feature Mark’s distinctive user interface design style.

Tim Van Damme – Gowalla

Tim Van Damme is one of the designers behind the beautiful Gowalla. Before Facebook acquired Gowalla in late 2011, the application was regarded as one of the best designed applications available for iPhone. Before Gowalla, Tim was a freelance designer in his native Belgium. Tim is now an interface designer at Instagram.

The designers behind the hottest iPhone apps was written by Philip Brown on Culttt - Articles on business, technology and the Internet

Oink, the first product out of the startup incubator Milk, was launched in November last year to a highly anticipated audience. Oink is another geolocation mobile recommendation application. Oink’s differentiator is, you rate things, not places. So if you go to a restaurant, you can rate a particular dish, rather than the establishment itself.

Oink has a lot of good things going for it, including an very talented team lead by Kevin Rose and Daniel Burka, but I believe it’s time for the team to move on to their next project as Oink will never be able to compete with the juggernaut that is Foursquare. Here’s a breakdown of why I think it’s time to move on.

The Geolocation wars

When our children look back at this period of the Internet, it may well be known as the era of the geolocation wars. The geolocation wars began when two opposing rivals launched similar products at the South by South West conference, those two rivals were Foursquare and Gowalla. The battle raged between the two rivals for a while, both furiously adding value and users to their products. Facebook fleetingly entered the battle with it’s Places feature, but it was Foursquare that finally won the war when Facebook announced they were killing their Places feature and decided to acquire Gowalla in late 2011.

Enter Oink

Oink is a late entry to the geolocation wars. While technically, the product is more about rating items, rather than locations, the two services really go hand in hand.

Now here’s the problem

But the problem is, there really isn’t room for two services that rate either an item or a location. If you’re out in a new city, you are only going to pick one of the services to find a place to eat or a nightclub or bar to visit. Using two services is too complicated for the average person to make a decision.

The same goes for adding value to either of the services. When you find a bar you like, are you really going to add tips and photos to two services? At the minute you can rate an item in Oink and have that check you in on Foursquare, but then you lose the value of using Foursquare.

The differences between Foursquare and Oink

Foursquare has recently announced they have over 10 million users and over 1.5 billion check-ins. That means that Oink already has an inferior product because the aggregated data is so valuable to making high quality recommendations. Foursquare uses a much less intuitive way of surfacing good things to do a certain location through their lists and tips features. Oink really has nailed this aspect of their product because they make it incredibly easy to find the best item within that location. You can then compare items within different distances, whereas Foursquare is much more of a Yelp type experience, where tips are just written notes left by other users. But you have to ask yourself the question, how long before Foursquare adds a feature similar to Oinks item ranking?

One of the major differences between the two services are their respective business moats. By a moat I mean, what is protecting the company from rivals? At the minute, Oink’s moat consists of a beautifully designed application, a talented team and a couple of unique features they have brought to the geolocation table. Unfortunately, this isn’t a very big moat. Foursquare on the other hand have a very large moat in their huge user numbers and check-in data.

To conclude…

Oink and Foursquare share a common goal. To become a utility application that can make insightful recommendations to the user based upon their past actions, likes, friends activity and location. Foursquare have already made significant progress in reaching this goal by acquiring a huge data set and building their Explore and Radar features both in the mobile apps and on the web. I predict that before the end of 2012, Team Milk will decide to cut their loses and move onto their next project.

Why Oink has already lost to Foursquare was written by Philip Brown on Culttt - Articles on business, technology and the Internet

I was excited to hear that Flipboard has created an iPhone version of their extremely popular iPad app. As a huge consumer of online content, I was eager to see how Flipboard would fit into my “consumption workflow”. However after using the app for a day, I’m a little disappointed.

Here are the iPhone apps I use the most, all of which Flipboard aims to create in one experience.

• Reeder
• Tweetbot
• Instagram
• Tumblr
• Facebook

Now with Flipboard I don’t really need all of these apps as, in theory, I can view all of that content from one app. But here’s my problem. Flipboard is not a better experience than any of the above apps!.

Firstly, Reeder is by far a better way to consume a large amount of internet content. If you are like me and you subscribe and read from more than a handful of websites, Flipboard is completely incapable of providing the user with a way to consume a large amount of content.

The integration of Twitter, Facebook, Instagram and Tumblr is a nice feature as, admittedly, being able to view in-line images from these sites is a really beautiful experience, but it is still not as good as using the native applications.

For me, Flipboard is a great way of consuming light information from sources that wouldn’t of normally made it into my RSS reader. Sources like news websites, where I don’t want to see every story, but I can dip in and out really suit the Flipboard experience. Flipboard is a beautiful app, and I’ll definitely still keep using it, but it’s a long way from allowing a high content consumer like me to use one app.

Flipboard is great, but… was written by Philip Brown on Culttt - Articles on business, technology and the Internet

A brief history of Path

In early 2010, Dave Morin leaves Facebook to start a new company. Dave was one of the first Facebook employee’s and is seen in the industry as a leading innovator.

Morin begins to allure some of Silicon Valley’s top players and they launch Path, a social network that is restricted to only your closet friends. Path is limited to 50 connections and its very restricted in what you can do as a user. Initially you could only upload photos, but slowly Morin added the ability to add comments and other features as the product slowly grew.

Path had one of the richest talent pools in the industry, and so it wasn’t long before the big boys came knocking in late 2010. However the offer was rejected, instead Morin decided to take on Venture Capital money lead by Kleiner Perkins.

In October, 2011, Morin revealed that Path was approaching a million users. Path also decided to increase the friend limit to 150. Despite Path’s talent rich team and strong investors and management, Path could not boast the vanity metrics of other niche social networks.

And finally, a couple of days ago, Path announced their 2.0 of the product. Moving towards more of a mobile journal, the latest version of Path unveiled a slick new user interface and a many ground breaking ways of display data about location and user interaction.

Facebook’s poor efforts at trying to crack the mobile platform

Facebook’s mobile applications have, for a long time, been a complete joke. The current Facebook mobile application borrows an incredible amount of features and design from other leading mobile applications. Previous to this version, the Facebook mobile applications have been stagnant and bug ridden.

A lot of the success of Facebook can be attributed to the huge opportunity that mobile has presented over the past couple of years. Finally the technology has been made available to allow users to interact with many of the features of Facebook in a acceptable manor. Geo-location, increased photo capture technology and the application revolution have given Facebook an excellent opportunity to increase their growth and engagement through mobile applications.

In the recent past, Facebook has been acquiring a number of small design and mobile development companies, with some of the leading talents in the industry being brought into the Facebook family. It is quite obvious that Facebook is building it’s team to fully attack mobile in the near future, but up until now, it has blown just about every opportunity to fully maximise the mobile opportunity.

Why would Facebook want to acquire Path?

Path have some of the best mobile designs and developers who have so far produced two of the best mobile applications, Path and With.me. With Path’s talent, and under the leadership of Morin, Facebook could finally step out of the shadow of it’s mobile competitors. Facebooks needs to be on the cutting edge of what is possible in mobile interaction, not chasing the coat tails and copying design and development from others. With an acquisition of Path, Facebook would finally have the talent to do just that.

Path’s 2.0 release of their product is the next step for Facebook. Path have nailed frictionless sharing, the ability to post music and photos and geo-location, all of which Facebook is aiming to incorporate into their core product, but have so far failed. An acquisition of Path would finally allow Facebook to be on the cutting edge of mobile development. Path’s product is already a polished version of what Facebook could only hope to achieve, yet Path continues to struggle to find the correct user base.

Why would Path want to be acquired?

Morin has already turned down one acquisition attempt, and I think it would be hard to convince him to sell his company to Facebook at any price. However Morin is a product person with a clear vision of what he wants. Path have so far created an excellent niche product, but at Facebook, Morin could bring those product values to a user base of 700+ million. Morin and his team could continue to shape mobile interaction and their vision on the biggest, most successful network of humans ever. Morin is clearly dedicated to his vision, but the allure of shaping such a huge part of the future could be enough to convince him to take on the momentous challenge that could face him.

How much would Path cost

Morin has already turned down an offer of Path for $100 million from Google and he has since shown steady progress in terms of users and a continued evolution of a ground breaking product. Path is generating money through it’s sales of virtual goods, however it is unknown (and unlikely) that Path is profitable. Keeping in mind that this acquisition is really more about the talent and the technology rather than the user base, I would say an offer of around $175-$225 million would be fair offer for Path’s assets.

Only time will tell for the future of Facebook’s mobile strategy and where Morin’s Path eventually takes him. However, two things are very clear; 1 – Facebook need to seriously attack the mobile space before it’s too late, and 2 – Path needs to cross the chasm into the mainstream, or face being a product that was good but failed.

What do you think?

Why Path will finally succumb to Facebook was written by Philip Brown on Culttt - Articles on business, technology and the Internet

Why do we use location based social media? Where is the value? and what is the future for the industry?

Why do we use location-based social media?

People use Facebook to connect with old friends, new acquaintances or family who live on the other side of the globe. People use Twitter to connect with people, stay up to date with what’s going on or for promotion and business. Location-based social networks are quite similar in that their users have a wide variety of wants and needs based upon their context of use. For some, they want to be the best, the most checked in, the most badges, the most tips. For others they want to share their knowledge with friends or be able to arrange impromptu meet ups whilst in the same area. It’s clear to see, that the users who make services such as Foursquare, Gowalla, Twitter and Facebook all have different objectives and that what makes them so popular, they cater for a wide selection of people.

Developments in the industry

A number of clear developments have taken place that has lead us to where we are today. Here is a brief overview, but if you would like to add, anything you think I’ve missed, please leave a comment.

Leaving reviews and tips

Yelp began in San Francisco and offered a service where users could leave reviews about restaurants and bars. This has become a clear aspect of all geo-location services including Foursquare and Gowalla. The information that we hold about our past experiences is of interest to others when deciding upon a restaurant. It’s word of mouth, but on super-charge. Previously we could tell 4 or 5 friends about a good or bad experience, now we can influence on a much wider scale.

Mapping and tagging your location

With the introduction of Foursquare and Gowalla the industry now had a way of seeing your tips and reviews on a location based map. The introduction of these services into the industry also brought with it the gaming aspect of checking in and earning badges. Now users had a reward for sharing their knowledge and the competition nature of being the best on a social network had been introduced to the location-based industry.

Earning rewards

As the location-based social buzz began taking off the mainstream media and companies who actively engage with social media began taking interest. Reward schemes were introduced for Mayors in Foursquare, where they would be rewarded with a free cup of coffee for example. Although gaming of the services was inevitable, other such reward schemes have sprung up recently and main stream advertisements and integration is happening everyday.

Where is the value?

Location-based services offer a lot of value for the users and equally for the businesses that are talked about. From a user perspective gaining the rewards is an obvious draw, who wouldn’t want a free cup of coffee thanks to your loyalty? Also sharing an opinion or a helpful tip about a restaurant or bar is a rewarding feeling in the same way you would spread that knowledge in casual chats with friends.

From a business perspective, location-based social media offer an unprecedented view of how they are perceived by their customers, without which they might never know that their customer service sucks or they have terrible cleanliness. On the other hand, people from out of town might not try a restaurant without their friends recommendation or tips for what to order.

Location-based social media offers huge value to both organisations and consumers and as the industry develops and learns how to gain even greater value the rewards for both parties will increase.

The future of the location based industry?

Here are my thoughts on the future of the industry, what could be changed or developed in order to enhance location-based services.

Verification and Unification of data

After using Foursquare for sometime now, one of the most annoying aspects for me is seeing a bar or restaurant with incorrect information. Be it a miss-spelled name, wrong location or imprecise information. Location-based services need a verification system where owners can take overall control in order to keep data correct.

Another area that I believe would greatly enhance the end-users overall experience with the industry would be a unification of data across all location-based services. So any user would be able to see a much detailed and more precise landscape of information. This however, is unlikely as the real value in this industry is within the data that is produced and so no service would want to share with their rivals. However I believe a unification would benefit the industry as a whole and bring it more into the mainstream. For new users, deciding on a service is growing increasingly more complicated due to the number of services. If they could choose a service and tap into the pool of information this choice of provider would become irrelevant and uptake would increase, each service provider would therefore need to raise their exclusive rewards and benefits in order to attract users to their portal.

Better reward schemes

New reward schemes are popping up all the time, Foursquare Checkins Now Part of Customer Loyalty App for iPhone for example. If location-based social media is ever going to become mainstream the services must tie in with current loyality memberships. An integrated scheme with Starbucks would be an obvious move, but other industries could take it on too. Retail shops, restaurants and even banks could reward consumers for their loyality.

Simpler checkin ?

From a technical perspective, I think making checking in a simpler process should be a top priority. Currently I usually need to open the app, refresh my near-by places more than once, find the correct profile and then tap in. A one click process would make cheching in a breeze and the service would become more main stream.

More rewarding?

In order for location-based social media to really breakthrough into the main stream the service must become a lot more rewarding to the end user. The user experience of using the apps must be a breeze. The rewards for actually bothering to check in and share you experiences must be worth while. Reward schemes for your favourite places need to actively engage with the big players.

Resources

Here are a number of great articles all about location-based social media.

5 Things You Need to Know About Location-Based Social Media

Foursquare vs. Gowalla: Who’s Winning the Geolocation War?

Geo-based Social Networks, The game changer? was written by Philip Brown on Culttt - Articles on business, technology and the Internet