Published May 09, 2014
Foursquare, the app known for its location sharing, will have a new identity next week.
Foursquare will be launching Swarm for “check-ins” and the existing Foursquare app will aim to compete with Yelp (YELP), as the game changes for the company.
Founded in 2009, Foursquare encouraged users to share their whereabouts to earn points and badges. Now there will be no more Foursquare mayors, the company said in a blog post.
“Mayors were great when Foursquare was small and you were competing against your friends to rule the neighborhood coffee shop, but as more people signed up, earning a mayor crown became impossible.”
This is a marked change for the New York-based startup, which boasts 50 million users. Although Swarm will encourage location sharing, the competition will be oriented towards friends and not the full universe of app users.
“Everything Foursquare was built on is essentially tossed out the window,” Sam Hamadeh, CEO of private capital research firm Privco, says.
The new course for Foursquare likely stems from pressure to monetize the business. The app has struggled to garner revenue, which would make it difficult for Foursquare’s implied goal of going public.
Founder Dennis Crowley has vocalized his commitment to keeping Foursquare an independent company. Crowley had misfortune with a previous startup -- a few years after he sold Dodgeball to Google, it was shut down.
The startup is venture backed, having raised $162 million from a long list of investors, including Andreessen Horowitz, Union Square Ventures and Microsoft. Foursquare will be expected to provide an exit for investors that exceeds their share purchase price.
“For a company that has raised so much venture capital money at such a high valuation, it's that dreaded brick wall for a startup:years that every founder and VC dreads most: ‘The Pivot,’ according to Hamadeh.
In its new business model, Foursquare hopes that user reviews will create competition for Yelp. The user-generated service has seen its ad revenue soar and its stock shot up 74% in the past year.
The “new Foursquare” is slated to debut this summer.