Foursquare gunning for Yelp

CEO wants to spread the message that Foursquare is personalized local search -- aka Yelp with better data.

Foursquare CEO Dennis Crowley discusses the future of location at SXSW. James Martin/CNET
AUSTIN, Texas--Make no mistake: Foursquare, the New York-based social network centered around places, is chucking the check-in to take over local search, a move that pits the 4-year-old company directly against Yelp.

When asked whether Foursquare was now gunning for Yelp, co-founder and CEO Dennis Crowley said during an interview with CNET at South by Southwest Interactive that "if we keep doing what we're doing, we make the previous generation of local search products irrelevant."

The shorter answer would have been, "yes."

The underlying message is clear: The future of Foursquare depends on the company proving to people, investors, and local merchants that it can help folks locate the right restaurant, spa, bar, you name it, for their individual needs, and do so better than Yelp can.

If successful, which is by no means a given, the startup can shed its reputation as a check-in app, and grow out of an awkward adolescent phase during which many early adopters have abandoned the app and just don't see the point. Foursquare has 30 million registered users, but doesn't share the number of people who are active on the service each month.

Crowley frequently acknowledges the perception problem in interviews, as he did with me yesterday and today on stage during a featured SXSW session on the future of location. In fact, Crowley now downplays Foursquare's gamification features, badges included, when he speaks. Though defining characteristics in the early years, badges, points, and leaderboards are no longer what Crowley wants his app to be known for.

Foursquare's perception problem is not a new one. I wrote about the startup's growing pains back in December 2011. Fifteen months later, the situation is far more dire. The company finds itself at a crossroads and will need to raise money or find a buyer in the near future to keep financing a team of 160 and a fancy New York office. But those are harsh realities discussed behind closed doors. Foursquare and Crowley refuse to acknowledge them in public.

Personalized local search, or Foursquare's version of Yelp, is powered by the Explore part of the company's applications. Explore recommends nearby places to visit, and makes sense of the more than 3 billion check-ins that Foursquare has collected over the years.

The switch to local search isn't new, but people are still lagging behind in getting the message that Foursquare is a different application than they downloaded and stopped using a few years ago.

At a party this week, one venture capitalist, a partner at a major firm with no stake in Foursquare, joked that no uses the app anymore. Robert Leung, a 20-year-old entrepreneur who attended the SXSW talk, said he likes Foursquare but most of his friends do not, which makes the overall experience less enjoyable. And another attendee said that after listening to Crowley's talk, he may want to use the application again.

Perhaps that explains why Crowley and team are being more aggressive about the message that Foursquare is Yelp, just better -- because of billions of social data points, in their point of view.

The we-are-Yelp-but-better message isn't just a play for more consumer attention -- it's also a way to woo would-be investors with a more colorful picture of how Foursquare could be profitable one day.

In previous off-the-record conversations, multiple venture capitalists told me that if Foursquare were to look more like Yelp, then it would be easier to model its business and predict revenue opportunities. Yelp is a proxy for a business model that makes sense, one investor told me.

Maybe, just maybe, Foursquare can play the Yelp card to finally get venture firms to take seriously its quest for new money at an $800 million valuation, as has been widely rumored.

 

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