Well, Now We Know How Much Revenue Foursquare Is Generating, And It's Easy To See Why Investors Are Not Impressed

Foursquare has been trying to turn itself into a real business over the past few months with a number of product launches and key new hires. For the first time ever, it's building out an ad-sales team under a new VP of sales from Yahoo, Rob Wilk. It has also hired a chief revenue officer, Steven Rosenblatt. But the hunt for new funding isn't going quite as easily as it did in 2011, when Foursquare raised $50 million at a $600 million valuation. Both TechCrunch and The Wall Street Journal say Foursquare is hunting for a fresh new round in the $700-800 million valuation range. But investors aren't biting. Shortly before Facebook's IPO spooked late-stage investors, Spark Capital purchased $30 million worth of Foursquare stock. (From what we understand, a good chunk of that stock most likely came from Naveen Selvadurai, Foursquare's departed cofounder.) The Wall Street Journal's Spencer Ante says the private purchase valued Foursquare at $760 million. But now the company is struggling to raise an additional $50 million, in part because its growth has slowed, but also because its business model isn't yet proven.Out of 25 million registered users, only 8 million use the app monthly. Usage of Foursquare's Explore feature, which recommends local places to Foursquare users, has also slowed. Jon Steinback, a Foursquare vice president, conceded to the WSJ that the company's growth rate has stalled, but he also said Foursquare will sign up more users in 2012 than in any year prior. What may have investors the most spooked is the lack of revenue Foursquare is generating. Unfortunately for Dennis Crowley, his company is still viewed by many as a social media platform, not a data company. So Foursquare is (maybe unfairly) being compared to Twitter and Facebook's businesses. Ante notes that while Facebook was generating $153 million in its fourth year and Twitter $43 million, Foursquare is only pulling in about $2 million at the same age. It's important to note that Foursquare hasn't tried until recently to really generate revenue. The $2 million sounds like it has largely been generated by a feature Foursquare launched over the summer called Promoted Updates. But if Crowley wants to continue independently operating Foursquare, he's going to need to step on the gas. Because while investors may make exceptions for companies that either have a lot of revenue or a lot of growth, it's hard to justify spending money on a company that has neither. Please follow SAI on Twitter and Facebook.Join the conversation about this story »

Here's How To Cook Like Dennis Crowley, Randi Zuckerberg, And Other Techies

"The Startup Chef" cookbook, which just launched today, shows a more personal side of the people who power the tech community. It features recipes from Dennis Crowley of Foursquare, Daniel Ek of Spotify, and 75 other prominent founders, investors, and writers in the tech industry. Contributors even wrote a personal backstory to accompany their respective recipes.  "[The cookbook] shows a side of the tech community that you don't really get to see that much, especially if you're not in the Valley," the book's co-creator Maya Baratz tells Business Insider. Baratz, a product executive at ABC News, and Hunter Walk, a product executive at YouTube, started this project about two months ago to help raise money for charities aiming to end hunger (No Kid Hungry) and to help those affected by Hurricane Sandy (Rockaway Plate Lunch Project). "We thought maybe we could get a handful and we were really quite floored with the fact that we got 75 recipes," Baratz said. Some of the recipes include "Eggnog Cinnamon Chip Scones" from Randi and Donna Zuckerberg, "Mom Crowley's Sausage Soup", a family recipe for Italian pasta sauce from GroupMe founder Steve Martocci, and chocolate chip cookies from Union Square Venture partner Fred Wilson and his wife, Joanne.  Since it's an e-book, Baratz says they will continue to update the book with more recipes. Anyone who is interested in submitting a recipe can fill out the online form. Please follow SAI on Twitter and Facebook.Join the conversation about this story »

After 199 Checkins, 41 Photos, And 18 Badges I Quit Foursquare – Here's Why

Nat Salvione, who works in business development for a startup called Tango Card, wrote us an email explaining why he quit using an app called Foursquare after "loving it" for almost a year. Nat's thoughts are interesting in part because Foursquare is going through a bit of a rough patch at the moment. Last week, Research firm PrivCo made a stunning prediction – that the startup will "fail" by the end of 2013. Alyson Shontell reported:  According to PrivCo's sources, Foursquare is missing venture capitalist's projections, and even its own projections, quarter after quarter. PrivCo thinks investors will get tired of this and sell their shares by year-end for less money than they initially invested. Specifically, PrivCo thinks Foursquare will be acquired for less than $50 million by the end of 2013, significantly less than the $71.3 million investors have pumped into it. Its reasoning is this: Aside from missing quarterly projections, PrivCo says Foursquare has struggled to raise a new round of financing for "nearly a year." More so, it says Foursquare's existing investors have "made it clear to Foursquare management including CEODennis Crowley that they will not be investing additional capital into Foursquare either." PrivCo says it's their way of warning Crowley that he must find a sustainable business model quickly. Ouch. So, here's what Nat says: I installed Foursquare just under a year ago and loved it.  I checked in at conferences, restaurants, and other cool places I visited.  As more of my friends joined I was able to see where they were.  Then I discovered the leaderboard and started competing with a few co-workers and friends.  The social competition juiced my engagement with the app.  I started checking foursquare at least once a day.  And then it hit me - this was pointless.  When I saw the light my usage dwindled and eventually last week I uninstalled the app altogether.  My frustration with foursquare centered around 5 things: 1) Ultimately there was no real reward for checking in - once in a while I received an offer but overall nothing compelling enough to win my loyalty.  One memorable offer was a free popsicle at PCC - worth $.87.    Using it was fun and my son loved it - but all in all the reward was not worth the effort. 2) Not checking in for a couple days (ie over the holidays) reduced my points to 1.  This was hugely demotivating.  Even in video games if you lose a life you don't start over.  Seeing the 1 in December was a major disappointment. 3) My friends were checking in at ridiculous places - one co-worker regularly checked in at his picnic table, one friend was mayor of where his dog pooped every day - this became a distraction, frankly to the extent the leaderboard mattered, a real bummer. 4) I honestly thought leaving a tip or shooting a photo would be valuable to foursquare when checking in.  Each time I contributed this premium content I expected some sort of recognition, thank you, or reward from foursquare.  Taking a photo, uploading, tagging, and associating it to a location took some effort - and I got nothing in return. It's kind of a shame since I don't interact with too many apps as often as I did foursquare over this past year.  However, after a little consideration I believe I'll be net-happier without the app on my phone. You can find Nat all over the Web:  @nsalvione Skype: natsalvioneLinkedInRebelMouse Please follow SAI on Twitter and Facebook.Join the conversation about this story »

How Foursquare Crushed My Startup In The 'Check-In Wars' (FB)

As an entrepreneur, it can be hard to admit defeat.  When Facebook Product Manager Josh Williams started working on Gowalla, a location-based social network, his ultimate vision was for "people to see the world through the eyes of their friends," Williams recently wrote on Medium. Convinced that the idea was crazy, Williams set out to launch it in time for SXSW in 2009. But it turned out that Dennis Crowley and Naveen Selvadurai were working on a very similar project called Foursquare, which launched on the exact same day as Gowalla.  At the time, Williams writes, Foursquare and Gowalla were "quite different in execution," but still shared similarities, with terms like "Check-ins," "Pins," and "Badges." "We thought Foursquare was crap, and believed the design nerds flocking to Gowalla validated our attitude," Williams writes. "Gowalla also worked anywhere — We were the first to crowd-source a local database from scratch. Foursquare only worked in a dozen cities." But Foursquare had a few things that Gowalla lacked: an entrepreneur with vast experience in location-based projects, a strong New York following from Crowley's previous social network product called Dodgeball, and a "more accessible and less fussy" product, Williams writes.  Shortly after launching, Foursquare raised $1.35 million from a bunch of investors, including Twitter co-founder Jack Dorsey, Union Square Ventures, Digg founder Kevin Rose, and SV Angel.  At that point, Foursquare started publicizing the number of people checking in every day, which helped them set the bar for measuring success in the check-ins space, Williams writes.  But that didn't stop Gowalla from moving forward with the launch of new social features, and support for Facebook Connect. The company started to see more growth, and started to catch up to Foursquare in regard to daily check-ins, Williams writes.  That's when investors and a handful of companies wanting to acquire Gowalla started calling, Williams writes. "With SXSW right around the corner again, all the discussion centered around the perceived brawl that would go down in Austin," Williams writes. "The “winner” would be measured by check-ins." Even though Gowalla did well during SXSW, Foursquare still came out victorious. And a couple of months later, Foursquare raised an additional $20 million, which valued the company at more than $100 million.  Gowalla tried to get its numbers up through marketing deals, and expanding to additional mobile platforms like Android and BlackBerry. But it didn't help, as Foursquare tended to be one step ahead of them in all of those efforts.  "We were the younger, prettier, but less popular sister of Foursquare," Williams writes. "And even that had changed. In time, Foursquare had dramatically improved the design & experience of it's (sic) service. This was no longer a defensible platform for us as a company." Facebook eventually acquired Gowalla in December 2011, brought on board members of the Gowalla team, and shut down the platform.SEE ALSO: ANALYST: 'Foursquare Will Fail By The End Of 2013' Please follow SAI on Twitter and Facebook.Join the conversation about this story »

Foursquare Just Poached Another Product Manager From Google (GOOG)

Foursquare just hired another product manager away from Google: Noah Weiss, whom we hear was one of Google's "fastest rising" product managers. (There, he was working on structured data and web search, we're told.) We asked Foursquare CEO Dennis Crowley what Weiss will be working on, and he said "TOP SECRET." But a Foursquare rep wrote back and said the company is still figuring out how it'll be splitting responsibilities between Weiss and Siobhan Quinn, another Foursquare product manager stolen from Google. Weiss also got some press in 2009 for being a star intern at Fog Creek Software, the NYC-based company started by well-known software blogger Joel Spolsky. According to Spolsky's column for Inc., Weiss the intern had come up "with an idea that added a million dollars to our bottom line" -- a job board for Spolsky's well-read blog. No doubt Foursquare would appreciate a few similarly brilliant ideas. Foursquare, we imagine, gets a special kick out of hiring people away from Google. Foursquare's Crowley sold his previous company, Dodgeball -- a pre-iPhone version of Foursquare -- to Google years ago. But he and cofounder Alex Rainert left Google, and then Google later shut Dodgeball down. Now many ex-Googlers work for Foursquare -- including one more this week, Noah Weiss. Read: Meet The Twenty-Something Ex-Bear Stearns VP Turning Foursquare Into A Yelp-KillerJoin the conversation about this story »See Also:Naveen Selvadurai: Here's Why Foursquare Grew From 200K To 5 Million Users In A YearFoursquare Already Getting Almost One Photo Upload Per SecondFoursquare And Friends Throw A Rager For The Holidays

Foursquare Borrows A Massive Amount Of Money To Survive

Foursquare is borrowing $41 million from private equity firm Silver Lake and venture capital firms Andreessen Horowitz, Union Square Ventures, O’Reilly AlphaTech Ventures, and Spark Capital. Silver Lake is leading the debt round. The money from the VC firms is convertible debt. Bloomberg BusinessWeek's Sarah Frier broke the news this morning. It reports that Foursquare generated just $2 million in revenues last year. "This allows us to get closer to being able to prove that there’s a real business here,” CEO Dennis Crowley told Bloomberg BusinessWeek. Foursquare makes a mobile app for users that want to tell their friends where they are at the moment. Sources close to Foursquare investors tell us that the company has begun to realize that use case isn't going to scale much more.  So lately, Foursquare has pivoted to also become an app that people can use to find where they would like to go. That's smart. Yelp has become a nice business doing the same thing. (There is lots of animus between those two companies, by the way. Yelp board member Keith Rabois, got into a Twitter fight with Crowley a few weeks back.) Crowley has also taken to calling Foursquare's data the future "location layer" of the Internet. We're not sure what that means! Please follow SAI on Twitter and Facebook.Join the conversation about this story »    

Remember, Dennis Crowley Could Have Sold Foursquare For $120 Million

PrivCo, a research company, claims Foursquare will "fail by the end of 2013" and sell for "less than $50 million." While that prediction seems like a stretch, Foursquare is clearly in a heap of trouble. What's worse, CEO Dennis Crowley had multiple opportunities to cash-in on the app back when things looked brighter. Yahoo reportedly offered Foursquare $100-120 million during the spring of 2010. Then, the company had only raised $1.35 million but it was in final discussions on a larger round of financing. Crowley owned at least one-third of the company, which means he could have had $30 million in his pocket. Then, Facebook came into the mix. It reportedly offered Foursquare $120 million. Foursquare pushed for $150 million and Facebook walked away. It acquired its much cheaper competitor, Hot Potato, for $10 million instead. When Facebook filed to go public, the shares it offered HotPotato were worth about $17 million; CEO Justin Shaffer went on to run Places and Groups for Facebook. Crowley went on to raise $20 million from Andreessen Horowitz. He kept about $5 million in cash for himself and that was prior to raising $50 million at a $550 valuation. So even if Foursquare fails, Crowley won't be poor, but a few million won't be much comfort. Why didn't Crowley accept Yahoo's or Facebook's offer? We asked him that last year. While Crowley never commented on the buyout offer rumors, he did tell us this: "We talked to a couple different companies about acquisitions -- it comes up anytime you do a fundraising. Of course it's a tough decision because you're trying to figure out what's the best thing to do for your company.  Your company is your baby at that point…You have to make a call and weigh the pros and cons.  If we bring in someone else, are they going to help us build our vision? Or does that mean some of the roadmap gets chopped off because it has to fit into someone else's roadmap?" In addition, Crowley's first startup, Dodgeball, left a bad taste in his mouth. Google acquired it for a small chunk of change but soon shut the company down; Crowley considers the whole thing a failure. "Going through that makes us want to hold onto this company a little longer and make sure we're actually able to build and execute all the things we want to do while maintaining control over all of it," Crowley said. Please follow SAI on Twitter and Facebook.Join the conversation about this story »

Foursquare Raises $50 Million At $600 Million Valuation

Foursquare just raised $50 Million at a post money valuation of $600 Million. Andreessen Horowitz led the round. Spark Capital joined the round. No insiders sold stock, unlike last time. The money will go toward hiring and building out the merchant platform. TechCrunch broke the story. O'Reilly AlphaTech Ventures and Union Square Ventures also participated. It's a mild upset that Union Square Ventures didn't lead the round with its new later stage fund. Here's CEO Dennis Crowley's blog post on the news: Foursquare is not just about the check-in, or recommendations, or points, or badges. It’s about making the world easier to use. It’s about discovering new places, connecting with friends, and forging new relationships with the places you visit. It’s finding new ways to layer technology on the real world. All of our employees believe strongly in this vision, and we’re incredibly lucky to have investors and a board that feel the same way. Today, we’re really excited to announce that we’ve raised $50 million in funding so that we can keep working towards our goals. The new round, led by Andreessen-Horowitz, includes our current VCs (O’Reilly AlphaTech Ventures and Union Square Ventures), as well as Spark Capital. Having our current investors double down on us is a tremendous gesture of support for foursquare and for the direction we’re headed. The additional capital will allow us to move more quickly; we can hire more engineers (we’re hiring in New York and San Francisco!), evolve our merchant offerings, expand internationally, and try a ton of new things. In the last year, we’ve grown from 15 employees to over 70, and our community has grown from under 1 million to over 10 million. The opportunity to build something meaningful in the location space is HUGE, and we feel well-positioned to capitalize on it. We’re encouraged by how far we’ve come, and we’re so excited to have such great support, from both our community and our investors, as we work to build what’s next. Thanks (and looking forward to more great things)! Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:$41 Million Startup Color Is Forced Into An Early, Buzzword-Laden Pivot Foursquare Hits 10 Million User AccountsSAICAST: Why Color’s Pivot Is Not A Big Deal

Early Tumblr Investors USV And Spark Capital Got ~ $192 Million Each From Yahoo Sale

Yesterday, it was reported that one of Tumblr's earliest investors, Union Square Ventures, received a 5,000% return on investment when Yahoo purchased the social content company for $1.1 billion. While Union Square Ventures did receive a significant amount from the deal, the firm says it was nowhere near that high – something investors don't normally admit to. "Total garbage. There is not one fact in this PrivCo thing that is close to right," USV partner Fred Wilson clarified on Hacker News yesterday. "The numbers are good but nowhere close to that good,"  So what was USV's actual return on investment? According to Fortune's Dan Primack, it received "$192 million in proceeds." Spark Capital invested the same amount as Union Square Ventures, so according to Primack, the Boston-based firm also took home $192 million. Their stake was 35% combined and they invested $13 million each.  The initial report also stated that Spark Capital's Bijan Sabet took home $77 million himself from the deal. Primack says that isn't true. "The returns all are at fund-level rather than for individual partners," he writes. "In other words, Spark's Sabet likely makes millions off of this deal based on his share of Spark's "carried interest" – but nothing close to $77 million." We reached out to Spark Capital's Bijan Sabet about his firm's return. While Sabet wouldn't comment on the exact amount, he did say this: "Yes that Crains and PrivCo report was just garbage. Everything was wrong. I can't reveal specifics. But I can tell you we are thrilled with our investment. And USV and spark happily invested the same amount in every round." Please follow SAI on Twitter and Facebook.Join the conversation about this story »    

Former Square COO Keith Rabois Has Started A Foursquare-Bashing War On Twitter*

Keith Rabois, former Square COO, prolific angel investor and new partner at venture firm Khosla Ventures, has been bashing another hot tech company, Foursquare, on Twitter this weekend. This prompted Foursquare cofounder Dennis Crowley to take to Twitter, defend his company, and bash Rabois back. And now many of the Valley's biggest names have jumped in to defend Crowley and Foursquare and blast Rabois. It all started when Googler Hunter Walker, product manager for YouTube, innocently tweeted about a TechCrunch story: "Wow, who knew 40,000 developers used the Foursquare API" Rabois tweeted this reply "@hunterwalk same number of real users." Walker replied: @p2chairman eh, VC has softened @rabois. Prev he would have predicted an actual date of failure ;-) — Hunter Walk (@hunterwalk) March 16, 2013   Developer Sriram Krishnan jumped in defending Foursquare and its API: @rabois @hunterwalk Their API is one of the best sources of location data around. Used it all my apps. — Sriram Krishnan (@sriramk) March 16, 2013   Crowley hit back: "Keep hating... and while you're doing so Foursquare will keep becoming the location layer for the Internet." And Rabois responded to that with another slam, indicating that Foursquare needs to be acquired to save itself and referencing Bebo, acquired by AOL in 2008 for $850 million, and sold off in 2010 for a fraction. In the Valley, invoking the name "Bebo" often refers to when the founders sell a company they know is troubled. @dens @sriramk @hunterwalk great use of jargon.Maybe Hail Mary Bebo-style acquisition will bail you out. — Keith Rabois (@rabois) March 16, 2013 And then it devolved into a bigger twitter brawl, with all sorts of people weighing in and quite a bit of four-letter words and name calling. Entertaining reading. Here's the link. Buddy Media's Michael Lazerow also took up the fight, publishing a column today on LinkedIn, asking "When Is It OK To Bash A Founder?" and coming up with a strange answer: only when you are trolling the 'net making outrageous comments trying to stay relevant. He compared Rabois to Donald Trump, and not in a good way. Correction: An earlier version of this story confused Square, a payments company where Keith Rabois used to be COO, with Foursquare, an app you use to check-in. Also, it described Sriram Krishnan as a former Google/YouTube developer, which he is not. We've updated the post, and apologize for the errors.SEE ALSO: The 25 Most Creative People In Tech Please follow SAI on Twitter and Facebook.Join the conversation about this story »