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Meet the New Foursquare App Designed to Give Yelp a Run for its Money

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Published: August 27, 2014

Foursquare founder and CEO Dennis Crowley has a new mission in life and it doesn’t include showing rival Yelp any mercy. Locked in a life and death struggle to perfect a sustainable business model, the maverick New York-based Foursquare has literally torn itself in two, splitting its flagship location sharing operation away from its business discovery feature and creating two separate services.

Launched just this past May, Foursquare’s Swarm app will continue to service location sharing customers while its latest app offering (appropriately named Foursquare) rolled out in early August for iOS and Android app users.

According to Foursquare’s chief of product development Noah Weiss, the new Foursquare is focused on proving users with great recommendations based on followers. Foursquare users gain clout by posting ratings and tips, building their expertise, and growing a following all without sharing personal location information outside of their immediate circle.

Why Yelp Might Have Cause to be Worried
Foursquare was designed to learn what users like and to dish up recommendations based on that knowledge. App users can receive customized recommendations based on the places they frequently visit, the people and companies they follow, and their “tastes” – based on the ability to label personal preferences with a descriptive tag.

  • Foursquare CEO Crowley has described Yelp and Google as being incredibly broken. He makes a good point. If search users have different tastes, they shouldn’t be receiving the same search results.
  • In a blog post announcing the new Foursquare, Yelp was clearly singled out as an example of how not to provide local search recommendations: “There’s no reason why we should all get the same recommendations when looking for a place to eat, drink or shop. Getting a one-size-fits-all list of places may have been innovative in 2006, but it feels downright antiquated now.”

The new Foursquare business model has a lot going for it. Yelp’s recommendations are primarily based on independent reviews by an army of “Yelpers” and has come under considerable criticism for its inability or unwillingness to present a balance of positive and negative reviews. Foursquare believes that its model of presenting recommendations more tailored to the individual user, and based on the suggestions of friends and followers offers a more realistic and unbiased point of view.

Has Foursquare Finally Developed a Sustainable Business Model?

  • Despite having a peak base of 35 million users and strong branding partners such as American Express, Foursquare has thus far failed dismally in the monetization department – pulling in a miserly $2 million in 2013.
  • Crowley remains optimistic about the future, and has secured $41 million in convertible financing this past April to enable his company to carry on the good fight.
  • Foursquare has opened up its advertising toolbox to an estimated 14 million merchants already aboard the Foursquare bandwagon. Plans are in the works for Foursquare to begin charging merchant-advertisers for ads based on a cost-per-action basis.
  • Foursquare’s location data is being mined by services such as Uber and Path, a development that can’t help but make rival Yelp wish that Crowley would simply go away or even better, run out of money.