Nowadays, even if the company is not making money right now, it seems most important business model is amount of users, rather than revenue itself. I have been searching how Foursquare is creating revenue but couldn’t find any significant profit. And also, it seems Dennis Crowley, the founder of Foursquare, is more focusing on gaining users.
Who is Dennis Crowley? Of course, he is the founder of Foursquare. But also, he is the one who previously founded Dodgeball, the friend-location-tracking application, and sold it to Google. He might know how the taste is like of founding a company and sell it.
The business concept of Foursqure is that users are publicly sharing recommendations of the businesses they frequent while company reward users with points and titles such as “mayor” and “deputy mayor” for checking in repeatedly.
It is pretty obvious that Foursquare is gaining great market power with local shops by its enormous users or potential users. And furthermore, it seems to become new advertizing media itself and forcing local shops to be aware of it. Even though it had been quiet time since internet has introduced to public, the last industry that was not much influenced by internet was the local small shop industry. However, foursquare is aiming to it and trying to change all the crust of that industry.
The business model of it can be variable. They can create revenue from venues, or advertiser with various ways, such as a restaurant who paid for premier service can be listed in place which users can easily find on the screen, or collected users data can be provided to advertiser.. and so on. However, they will never make their users to pay since the numbers of users are the most essential part of their business.
However, I think the best way to make synergy in creating revenue is to be combined with other sites, such as Google or yahoos. Because those companies had been searching for new business model for a longtime and they have knowledge of how to implicate the data of users. And also, it seems creating revenue with Foursqure alone seems little bit limited (at least, compare with synergy) to me.
On April 6th 2010, there was a news that Yahoo is trying to buy Foursquare for 100 million dollars. Even if Dennis would refuge this deal, I’m pretty sure that there will be much more news about merging Foursqure by other companies. Let’s wait and see how it works.
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Jun, selling a company is definitely not a business model. The analysis is whether Foursquare can be a successful business model on its own, and your answer to that seems rather dubious. We cannot value a company according to the number of users, we need some idea on how money is going to come, and that's the main part I'm missing in your analysis...
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