The Business Model behind FourSquare

Foursquare check-in social network is a really hot start up, getting more and more users every single day. Since the company began its operation in early 2009, it reached more than 2 million users by March 2010. The information on company's growth rate, as well as the milestones since 2009, can be found in its CrunchBase profile.

Users

The first thing I did is registered with the Foursquare myself to experience why is it so rewarding to be its user. While it is very cool to check-in and let other people know where you are, Foursquare encourages its use by adding a game on top of checking-in behavior. The more times you check-in, the more points you get, eventually becoming a "mayor" of the place. In addition, people can leave tips on their preferences going to certain spaces and doing certain things. Indeed, the application resembles a smart social guide. It eventually moves from descriptive mode to prescriptive. It knows ahead of time which places you like to visit based on data pool of previously visited locations and prescribes new locations accordingly. Isn't that smart? Thus, there is a powerful incentive in using the platform as much as possible, making a link between the company and its users very strong.

Clients

1) The most obvious category is the places/businesses themselves. Restaurants/gyms/museums/etc. can channel their marketing campaigns through Foursquare. By letting their frequenters know on the promotions and incentives, the businesses gain recognition and attract significantly larger clientele.

2) City guides. Like never before, Foursquare manages to link internet and reality. By accumulating real check-in data and tips, Foursquare provides a reliable and valid statistics on best places in the city plus valuable suggestions on how to use these spaces. This almost a real-time guide is constantly updated, solving a problem that city guides had in the past - the dynamic nature of social life. A recent sign-up with restaurant rating guide Zagat, is one example of successful relationship between a city guide and Foursquare.

3) Entertainment brands. The partnership with entertainment media is probably the most appealing for the platform, although it is not very apparent at this point. The trick is in unlocking the "special badges" that a certain type of entertainment (e.g. TV show, movie) has to offer by visiting the places associated with it. The practice causes people think about the brands outside the time they watch it on TV or internet. Same idea - connecting internet and reality. The entertainment market is huge, giving Foursquare a lot of potential to explore fruitful partnerships.

4) Related to the third point but can stand on its own - partnerships with event organizers (e.g. Conde Nasts Lucky Magazine). The guests receive through Foursquare useful tips on places and facilities.

Infrastructure

Foursquare is highly encouraging developers of communication devices/software to build applications that are compatible with the platform. The list is expanding fast, with Android, Palm and Windows Mobile already involved. By building alliances with these companies, Foursquare projects on its users, targeting all segments of the population and all types of users.

Competitors

The idea of checking-in is not new. Before Foursquare Google tried to implement its Dodgeball project, which was not successful. Besides, there are Jambo, Rabble, Contakme, Zorpia, Wayn, Citycita... the list goes on and on. What then makes Foursquare so unique?

First, Foursquare does not try to cover all aspects of communication, its goal is quite narrowly defined. The information exchange is about content, where you are at a particular moment in time and what you like about being there. Foursquare does not touch identity of its user, because there are other platforms that specialize in it, like Facebook, Twitter and My Space. That way Foursquare avoids repetitions and overloads.
Second, the checking-in behaviour is not important per se, but the tips, preference, comments that the users leave are important. The point is not to create a competition to meaninglessly go to certain places over and over, but to go there for a reason. What do you like about the place that may be beneficial to other users? Foursquare is a social gesture and not just a check-in tool.