What problem does foursquare solve and how large is their addressable market?

On the surface, Foursquare solves one of the problems faced by early location-based social networks like Loopt and Whrrl: the lack of background processing on the iPhone. This issue basically rendered these products useless because a user had to open the app to update his/her location and there were few engaging reasons to do so. By adding the "check-in" feature and adding clever game mechanics to induce check-in behavior, Foursquare gets users to regularly open the app to update their followers with their location.

Under the surface (and where the real value of Foursquare rests), the whole game is a front. It is all a vehicle for generating and amassing customer data for local businesses. By and large, local brick-and-mortar businesses (unlike their online competitors) have little to no data about their customers; there are few (if any) great ways for a restaurant, bar or small retailer to know who visits, when and how often. Foursquare can, in theory, address this. It could essentially become a CRM for local merchants. Offering deals to mayors is just the beginning. With the data Foursquare is collecting, a local merchant can know if a regular customer starts coming less and try to bring them back. They can build loyalty/rewards programs, offer highly targeted coupons/discounts and so on.

In this sense, Foursquare's addressable market is the local advertising market, which totals hundreds of billions of dollars across all forms of locally targeted media. It becomes much more interesting if Foursquare finds a way to tie its  check-in data to actual transactions. Not sure how they'd do that, but there are pretty significant medium/long-term synergies between Foursquare and Jack Dorsey's Square.

The big problem for Foursquare is making local merchants (generally not a particularly tech-savvy bunch) aware of its existence and selling them on the value it can add. This is probably not insurmountable, but it is usually expensive.

Who invested in Foursquare?


– Union Square Ventures
РO’Reilly AlphaTech Ventures
– Jack Dorsey (Twitter (product) creator)
– Kevin Rose (Digg)
– Joshua Schachter (Delicious)
– Alex Rainert (Dodgeball)
– SV Angels / Ron Conway
– Chad Stoller (friend)
– Sergio Salvatore (friend)

Why does Foursquare only show the initial for last names?

I don't have any special information but a guess would be because of the privacy concerns that come up with making location information public.

One vague reference to this can be found in this article:

You guys set it up so when you become friends with someone on the service you give that person access to their phone number and e-mail address. Have you been getting a lot of feedback from people who would rather keep the messaging limited to just the app?

Crowley: This was by design. The service is designed to make social coordination easier and better, and having the ability to text or call someone is a big part of this. We didn't do a very good job explaining this to users (we were so rushed pre-SXSW) so there was a little pushback from users, but ultimately I think people are cool with it.

With a lot of social-networking services, there's no consequence to having a ton of friends, and I think people get used to that 'I'll be friends with everyone' mentality. We saw this with Dodgeball too. We had an influx of users who were previously on Friendster and friended everyone in sight, and then had a 'wait, these people know where I am!?' moment and then reconsidered who they became 'friends' with. I think we're seeing the same type of 're-valuation' with Foursquare, and I think that's a good thing.

But that's hardly conclusive.

What does Google think of Foursquare?

It's hard to say since they haven't publicly said much and they are a big company so its hard to generalize about individual employee's perspectives, but one thing is: Google launched a fairly similar product called Latitude in the last few months which indicates that they think the location broadcasting space is valuable or at least interesting.