Why critical mass for Foursquare isn’t universal adoption

I’ve been chatting with a couple of people recently and they’ve questioned whether Foursquare will ever get sufficient penetration to break through to the mainstream and influence people in the same way as Facebook or Twitter. Sure Foursquare has 10m users, but that’s hardly the 200m that Twitter has or 750m that Facebook claims. Growth at Foursquare may be strong they argue, but checking in to venues and the like will only ever appeal to a minority of people, and the service is unlikely ever to have significant social or commercial impact.

Now the people I happened to discuss this with were both ex tech VCs, each currently working on their own online start ups, and therefore reasonably sensible commentators on the space, but I think they are missing the point. Here is why I think Foursquare is already at critical mass in many places, and whilst utility will obviously grow with adoption, Foursquare only ever needs a minority of people regularly checking in to generate significant value for users and businesses.

Essentially I think a lot Foursquare’s critics fail to recognise the end point for the service. It’s not about being able to broadcast your location to your friends in the hope that they will drop by, or bragging about cool places you’ve been to (though there is some marginal utility here). It’s about creating a Last.fm for physical locations, a service that helps you discover places you like, and rewards you for staying loyal to them.

Critical mass for this is not universal adoption, which the critics are right in thinking will never happen for Foursquare. Instead critical mass for Foursquare is sufficient penetration for it to have enough engaged users to gather rich data on venues. With this “location graph” Foursquare can generate significant value for the majority of passive observers, as well as the small minority of engaged users who are checking in.

Twitter is great because it allows you to discover content and keep up to date with your interests even if you never write a single tweet, and even if your friends aren’t tweeting themselves. I find few of my friends outside of the media and tech world are on Twitter, but this doesn’t matter – I use Facebook to keep up with them. I’m on Twitter because I’m interested in tech start ups and there are only a few people I need to follow to get a constant feed of (often, if not always!) high quality links to content I would not have discovered otherwise. (Incidentally I tweet for quite separate reasons – to raise my profile on the web, connect with people that I don’t know that well, and engage experts that I have never met.)

Foursquare is analogous to this. It doesn’t really matter if your friends are using the service or not. All that you need is enough people who like similar places to you to be using it. Already if you check into one location then Foursquare will recommend you other venues based on where people who checked into the same location also go to. This is an order of magnitude better than the results that you get by Googling or Yelping locations. Sure there are plenty of comments and tips on Yelp, but it’s time consuming and difficult to determine whether the people leaving the tips and you have anything in common. What if their idea of hip is your idea of grungy? A bar that a banker likes is not going to be perfect for a student.

And if you’re not the checking in type? No problem. As long as some of your friends are using the service, then you can use their check ins as a proxy for yours. After all, you are more likely to share your friends’ tastes that those of the average man in the street. The more you check in the better the results should be, but as long as Foursquare can connect you to the rest of the community in some way, it doesn’t matter whether either your friends or check ins are particularly dense or not.

For me, the key component of the value Foursquare delivers is this context that it gives you about locations. You can fit its recommendations into your mental image of the world because of the link it creates between them and the venues you already know, through telling you about users that have been to both. I realised how important such context is when I set up a business called The Crackberry Times back in 2007 – back when Blackberries were the height of smart phone technology. The Crackberry Times was a weekly email recommending (not reviewing) bars, restaurants and events in London, in much the same way that Daily Candy covers women’s products.

Other business interests that were priorities for us were a constant distraction, and the idea never really took off, but we received a fair amount of praise for our content and editorial. One of the most consistent, and surprising, pieces of feedback we received was that people loved the fact that they had been to a fair proportion of the places we recommended. Because of this, and unlike edgier competitors that talked up venues that no one had ever been to, our readers felt they could trust our recommendations much more. They knew exactly how to slot our recommendations into their world view using what we said about places they had visited as a benchmark to judge what we said about venues they hadn’t been to.

I was pondering the whole issue of Foursquare critical mass a couple of days ago when I had dinner at Freemans in New York’s SoHo. A buzzy American restaurant, I guessed it must go through a couple of hundred covers in a night. How many of these people would need to be Foursquare users to it to have a rich presence on the service, with tips, photos and sufficient check ins to get a sense of the sort of people that liked it? Maybe one or two a night for a month or so? That would only equate to 1% of its patrons being Foursquare users. Not a tall order in Foursquare’s back garden, and in actual fact the place has 5,743 check ins from 4,329 people.

Assume the math holds true for other locations though, and I think it’s likely that with 10m users Foursquare already has sufficient penetration in most major cities in the US and Europe to make meaningful recommendations. Additional users will improve the quality of recommendation that you get, and the depth of content that it can offer about each location, but my guess is Foursquare has already hit critical mass over a huge area. Foursquare will succeed because, as with many other social networks, it can create value for the majority of passive observers with only a small minority of truly engaged users.

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