In Facebook’s Crosshairs

artfinal In Facebooks CrosshairsIt was not an invitation that Dennis Crowley could have been thrilled about.

Mark Zuckerberg wanted him to do what, exactly? Fly to California and stand onstage while Facebook unveiled the launch of a new location-sharing check-in feature that tech pundits had been saying for months would decisively put Mr. Crowley’s young Manhattan start-up out of business?

Apparently the idea was that Facebook Places would be introduced, and then the little guys who were already working in the same sector of the social networking business, including Mr. Crowley’s Foursquare, would come forward and offer some brief remarks about how excited they were to integrate their services with Facebook’s. Such a gesture of cooperation would send a mutually beneficial signal to reporters, bloggers and the rest of the tech scene, telling everyone that Facebook, with its half-billion users, wasn’t trying to hurt anyone with its new feature, and that none of the start-ups they’d be competing against were feeling all that threatened or salty about it. Facebook Places was just a new friend arriving at the party!

‘When we were a scrappy start-up, we were compared to people a little bit smaller than us,’ said Dennis Crowley. ‘For a long time, it’s been Foursquare and Gowalla’—another geo-social start-up invited to appear at the Places event—‘and now it seems to be Foursquare and Facebook.’

Of course, Mr. Crowley, who co-founded Foursquare in March 2009 with Naveen Selvadurai, had known for some time that Mr. Zuckerberg and his team were preparing to march into his territory sooner or later and adopt his company’s most basic feature, which allows users to tell their friends where they are by “checking in” on their mobile phones. 

But he didn’t think it was going to happen this early. And now he was supposed to play along with this Silicon Valley hand-holding ceremony? It was as if Bill Keller had been invited to say a few words at the launch of The Wall Street Journal’s Greater New York section! And yet …

“It seemed like the right thing to do,” Mr. Crowley said recently, when asked why he decided to participate in the Aug. 18 event, even though doing so could be seen as an act of submission to a mightier foe.

He didn’t make the trip himself, sending in his stead Foursquare’s new VP for mobile and partnerships, a fellow named Holger Luedorf, who spoke at the event for only a few minutes and made clear that Foursquare was not yet sure about the nature of its “partnership” with Facebook. Later, in a post titled “Facebook Will Crush Foursquare,” PCMag.com described Mr. Luedorf as looking “down-right depressed and [speaking] wistfully of how the company pioneered the category.”

At the same time, Mr. Crowley was reportedly checked in at a Chipotle in New York, while a significant contingent of Foursquare staffers were hanging out at their office and tweeting about how much fun they were having. When Mediaite editor-at-large Rachel Sklar declared on Twitter that she was still a “diehard @foursquare fan” because, unlike Facebook’s check-in feature, Foursquare has a “personality,” she promptly received a nudge of appreciation from Foursquare VP for business development Tristan Walker. The next day, Mr. Crowley wrote on Twitter that his 86-year-old grandma had called him and remarked that this Facebook thing “sounds like Four-Squared, but without the fun.”

Foursquare could very well have a bright future as a relatively modest check-in service that is fully integrated with the Facebook Places platform. It really wouldn’t be so bad. The company could still operate as a perfectly handsome tool, and lots of people on Facebook would probably use it and have a ball keeping track of where their pals are, getting tips on places to go, and competing with each other for special deals. Assuming there were enough people using the service to attract the interest of businesses, Foursquare would still be able to sell ads and set up promotional partnerships the way it does now. It really could be O.K.

Luckily for the New York City tech scene, which badly needs a major local success story, Foursquare is not settling for O.K., at least not yet. And though many in the tech industry are predicting the death of Foursquare at the hands of Facebook, Mr. Crowley and the rest of his team seem committed to outgunning the behemoth and turning their fledgling service–currently at some three million registered users and growing by about 18,000 new users per day–into the city’s first true social media juggernaut.

 

AT THE HEART of Mr. Crowley’s vision for Foursquare’s future is the idea that the check-in will become one of the primary ways people express themselves and their preferences online, just like status updates, tweets and likes already are. In this scenario, people will be able to check in not only to indicate their presence at physical places but also their participation in group events and real-time consumption of TV shows, books, movies, etc. By all accounts, Mr. Crowley wants Foursquare to transcend its status as a niche mobile check-in tool, and to become the platform upon which all other check-in tools, whatever they turn out to be, are built.

“As a platform, Foursquare would control the underlying infrastructure of most location-based applications. It’s a very powerful position to be in,” said Hilary Mason, chief scientist at bit.ly and a cofounder of HackNY, a group that steers college graduates to careers at start-ups. “The market motivations are pretty clear–if you control the infrastructure, you control the market. We see the same thing with Twitter and with Apple.”

Mr. Crowley doesn’t want Foursquare to be a train running on someone else’s tracks, in other words. He wants to own the tracks. The question now is whether he has a fighting chance of doing so with Facebook leveraging its user base in pursuit of the same thing.

It is a possibility plenty of people in the tech world would dismiss as ludicrous, but Mr. Crowley made clear the scale of his ambition earlier this summer when he and his co-founders rejected nine-figure acquisition offers from Yahoo and, yes, Facebook in favor of going it alone. At the end of June, Foursquare announced it had raised $20 million in venture capital in a series B investment round led by the venture firm Andreessen Horowitz that valued the company at $95 million.

“My personal view is, it’s going to be huge–Facebook huge,” said Hunch founder Chris Dixon, an investor in Foursquare who is not known for polite optimism. “They’ll have a huge brand and a direct relationship with users. … They absolutely could become the dominant platform upon which all check-in services are built.”

And still, one hears it all the time: What is Foursquare actually for? How is it useful?

Currently, the service delivers location-specific ads and tips while letting users play an entertaining but frivolous social game in which they check in to venues in exchange for points and other virtual rewards, some of which lead to special deals from businesses that have partnered with Foursquare. On the Foursquare company blog, they call the service “your favorite, er, mobile + social + friend finder + social city guide + nightlife game thing”: a tongue-in-cheek joke, to be sure, but one that gets to the heart of why some detractors scoff at the idea that Foursquare will ever become anything more than a faddish amusement.

The week after the launch of Facebook Places, Mr. Crowley sat in a conference room at Foursquare’s spacious new office on the sixth floor of the Village Voice building and spoke with deliberate calm about his company’s future.