Lessons to learn from Foursquare

Nov 05, 2012

Table of contents:

  1. Start with something people really care about
  2. Not going after the business model
  3. The evolution to a utility

Foursquare has had a meteoric rise over the last couple of years moving from the latest hot mobile app to a genuine contender to grow in to the next Google. Of course, in hindsight, everything is completely obvious, and so the success of Foursquare doesn’t seem to be surprise anymore. But not so long ago, Foursquare was just one of many competing startups in a hotly contested, crowded marketplace.

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 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.

Philip Brown


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