Foursquare: Ready to Cross the Chasm

The arrival of iPhone and the app store led to an explosion of location based apps. Most of these apps (Gowalla, loopt, Google Latitude) were acquired, shut down, or lost in oblivion. Foursquare on the other hand not only survived but it thrived. It did this by adopting a two pronged strategy — new customer acquisition via viral marketing, and engagement of the base via gamification. Now, Foursquare is unleashing some new features that will help it cross the chasm.

Foursquare leveraged Twitter, Facebook, and mobile notifications to create a viral loop, which led to a huge base of early adopters. This approach also guaranteed each new user started with at least one Foursquare friend, which in turn helped with Foursquare’s engagement strategy of gamification. They started with badges so while your Foursquare network was small you could boost your ego with badges for interesting checkins. They were careful about not creating too many badges so there was an illusion of accomplishment. Later on, they launched Mayorships so you could compete with random people to be the mayor of your office, favorite restaurant, or the mayor of Gate C20 at Seattle Tacoma Airport (lame!). Again, this was a good tactic to create a sense of accomplishment and keep people engaged. As time progressed most users had enough friends on Foursquare that a competitive scoring system was introduced. Now, not only were you competing with your friends for mayorships you were competing for the most number of check-ins. This race made early adopters check in to every place they went. All this helped Foursquare build a comprehensive database of everything — restaurants, shopping malls, entertainment venus, transportation hubs, etc.

Then there was the surprise and delight factor — Discovering a friend dining at the same restaurant just because you both checked in to Foursquare, getting a free entree because you were the mayor of a restaurant, 20% off your Gap merchandise, SXSW American Express partnership… Naturally, the early adopters who were crucial to building Foursquare’s database were hooked initially because of the gamification, and later because of the surprise and delight factor.

But, over the last 3 weeks Foursquare has been making some moves that signal it’s ready to cross the chasm.

The homepage redesign that allows first time visitors to experience the benefit of Foursquare’s recommendation engine without actually creating an account. Simply type what you are searching for: a cuisine, an event, shopping for something specific say a hat, etc. and you get a list of recommendations based on other’s people experiences. This is exactly what Google has been trying to do unsuccessfully with Google Latitude, and Google+. Today, they launched a 10 point rating system that allows you to see how your friends, and other strangers have rated the places delivered through the recommendation engine. When you use Yelp you (mostly) rely on strangers opinions. But with Foursquare you could be getting recommendations from your friends, and colleagues.

While these are small steps they will dramatically increase Foursquare’s appeal to the masses, and help Foursquare in crossing the chasm. And as Foursquare fine tunes, and expands it’s search footprint, the possibilities are endless. Foursquare could disrupt any of the following spaces:

Events — Searching for something fun to do on a Friday evening? Look up concerts, theatre, movies, sports, etc.

Payment Platform — While you are looking for something to do/buy/eat, you could pay through Foursquare

Marketing/Advertising — The sponsored feeds on Facebook annoy people because they really don’t care about liking the Samsung Mobile page when they are trying to catch up with their friends life. But, Foursquare is a great platform to serve you a recommendation for a wine bar when you are looking for one. If your friends have visited the wine bar, that’s even better.

In the end, Foursquare may be the dark horse of social networking that beats Google, Facebook, Yelp, and others in the location based services, and monetization game.