Foursquare’s Inflection...

When Dennis Crowley, the CEO of Foursquare, visited the Mobile World Congress in Barcelona last year, he told me he spent a lot of time explaining Foursquare to the operators and vendors that are the main visitors at this event. This year, he said the number of business cards he was handed was “like this,” making a big C-shape with his index finger and thumb. Why the change? “I think we are one of a handful of companies that builds products that would actually encourage people to upgrade their devices,” he said. That’s an important fact to remember as smartphone penetration continues to grow and takeup slows down, specifically in the developed markets where Foursquare has most made its mark. That growth in reputation has been matched by a growth in Foursquare’s business: the company has tripled its numbers in the last year, going from “around five million” to more than 15 million, Crowley said. That’s something that is impressing investors, too — with news that Spark Capital is reportedly buying up employee stock. But perhaps more interesting, he says, is that the company is starting to notice a marked change in behavior: “People are using the app, but they’re not checking in,” he told me. “I asked myself: did we break something? But in fact, it’s because people are using Foursquare to look for where their friends are, to find things, and as a recommendation service. It’s almost like it doesn’t occur to them to check in.” Crowley compares this to the moment on Twitter in 2009 when the service suddenly shifted gears, and it was not about the number of people tweeting but about how many are reading those tweets. “When you start, you are so focused on engagement,” he said. “Then you hit this point when you are big enough and say there is something awesome going on anyway. At some point you look and say, oh wow, the consumption model is actually taking off.” That seems to fit well with Crowley’s vision of how Foursquare is going to grow in the near future. Some social media sites like Facebook have made a big effort to net in members using whatever means possible — so, for example, you get pared-down Facebook experiences delivered on some of the most basic phones around. But Foursquare seems to be more interested in behavior than the scale: “We want to change experiences,” he said. The best way to do that, Crowley added, is to use maps, access to GPS and the other sensors you have on smartphones. “We want people to use the stuff we build, and to do that you have to focus on the great things,” he said. “These are not toys; they are big defining features that are changing the tune on location services.” That has so far taken the company to making apps for most major mobile platforms, and while some of those are seeing especially strong usage in particular markets — BlackBerry usage, he says, is highest in southeast Asia and Brazil — by far the most popular platform is iOS. But that growth has only partially manifested in staffing: Foursquare has gone from 18 people eight months ago to 100 now, but some big holes remain. There is, for example, only one business development guy in Europe, Omid Ashtari , who apparently currently works out of Soho House in Shoreditch, London. But there are also some key engineers coming on board from Google and other places. And, that growth is slowly but surely starting to emerge as monetization on the platform, too. Crowley says that so far there are already 750,000 merchants registered on its platform, and most of that growth has been viral, without a sales force driving it. None of those merchants are being charged “yet”, but he said but he said Foursquare will probably start experimenting later this year with new features that will be charged. He said he’s confident that there will be a market for this because there are already companies calling up asking what they should be budgeting for the services — even without them launched. What will those features be? The kinds of tools you are already seeing around retail engagement, but with a Foursquare flavor: “We have enough check-in data to make some amazing stuff,” he said. It sounds like the data will take the form of a kind of dashboard that would segment customers and popular items. Whether the connection to the Foursquare app makes either that data easier to collect, or more unique than what can already be gathered by the businesses themselves through their loyalty programs, is the big question. But if it appears that Foursquare is becoming a more commercial network, one thing that Crowley says it won’t be in the near future is a way to pay for things. “It’s not something we are actively working on,” he said. “It’s the bottom of the funnel for us and if we did something it would probably be in partnership.” That is probably a good thing, given how many other companies are piling in on mobile payments now, not just operators, but credit card companies, startups, and if you believe the WSJ today, big retailers like Target and Walmart. But as a measure of how far he seems to be from this scene, he is pretty dismissive of NFC — a big topic this last week at MWC — and doesn’t see the point of a phone able to make a transaction if a credit card works just as well. “I prefer to find solutions to actual problems that exist.” [I'll be posting a short video from our conversation soon, with material not in the story. Watch this space.]

(Founder Stories) SoftT...

At the top of this Founder Stories episode featuring SoftTech VC’s   Jeff Clavier ,  Chris Dixon mentions much has been written about the “ Series A Crunch .” It’s the occurrence of seed stage companies hitting the end of their initial funding cycle at roughly the same time and having to compete for big checks from a limited supply of VC. There’s just not enough money or VC interest to keep all entrepreneurs afloat for another round. In an effort to prevent future founders from colliding into the Series A Crunch, Dixon advises startups set out to initially raise 18 months of funding, adding, “18 months effectively gives you let’s say 12 months of real operating, which gives you three iterations instead of one.” The more time to perfect the product the better. Clavier agrees that the Crunch “is absolutely happening” and backs Dixon’s longer runway strategy. Clavier also says consumer internet companies need to demonstrate more than ”just pure user traction” to whet a VC’s appetite. He tells Dixon SoftTech VC is moving towards backing “businesses” and trots out Fab as an example. “We’ve made money from Fab the day we launched the service, Why? Because it is transaction based.” Make sure to watch the full interview for additional insights and make sure to watch  episode I  and  episode II of this interview. All Founder Stories  videos including interviews with David Karp, Lauren Leto, Stephen Kaufer, Christopher Poole, Dennis Crowley and many other founders are  here .

(Founder Stories) Jeff ...

Jeff Clavier  just finished raising  $55 million  for his third SoftTech VC  fund and after closing it out, stopped by TechCrunch to tape Founder Stories with host Chris Dixon . In part II of this  Founder Stories conversation, Dixon surveys the seed stage landscape and comes away wondering if too many unproven entrepreneurs are running companies with unrealistically high valuations. He believes it gives pause to investors thinking about backing these budding startups. As a micro-VC, Clavier says he manages this trend by clearly defining what he wants out of any partnership and if there’s not an agreement on the table he wastes no time analyzing the next opportunity. “We want a certain level of ownership and if ever we don’t get the ownership or it is too expensive we’ll just bid farewell.” The two also discuss signaling risk, which is basically when a major VC invests in a startup during a seed round and doesn’t follow up with more funding. Rightly or wrongly, it signals to other investors to stay away. (If Accel or Greylock isn’t doubling down on the A and B rounds, something must be wrong with the company). Clavier shields his investments from signaling risk by telling outsiders that just because “firm x, y, z [is] on the cap table” it doesn’t mean they are the bellwether, especially if they only put in a token amount as an option to invest later. Clavier also believes allowing multiple VC’s to fund a seed round sets the stage for “a disaster” and offers advice to founders who are considering bringing on a “brand name” investor. It can be great if there is true commitment, but too often it just raises questions later when they lose interest and drop out of future financing rounds. Make sure to watch the full video to hear all his insights. Part I of this interview is here. Episode III is coming up. Past Founder Stories episodes featuring Mayor Bloomberg, David Karp, Dennis Crowley, Fred Wilson and Alexis Ohanian are here .

Foursquare Adds Restaur...

Less than a week after unveiling the Explore section of its website, Foursquare announced a nice addition — restaurant menus. The Foursquare mobile app has included an “Explore” tab for while now, but last week’s announcement marked its expansion into a full-blown city guide, personalized based on your check ins and those of your friends. Foursquare called it  a “big leap” toward its vision of “adding an ‘interesting’ layer to your whole world,” while TechCrunch’s Alexia Tsotsis suggested it was a return to CEO Dennis Crowley’s roots as a product manager at mobile city guide Vindigo. Now, Foursquare says it has partnered with startup SinglePlatform to add menus and pricing information for almost 250,000 restaurants in Explore. This seems like a pretty natural addition, and a way to make Explore a viable alternative to a site like Yelp. (It seems only appropriate that Foursquare is becoming more Yelp-like, since  Yelp took a page from Foursquare by adding user check ins .) Menus are now live on the Foursquare’s PC and mobile websites, and the company says it will be adding them to the mobile app soon. I’m also curious if Foursquare can do more with this menu data. What about allowing users to include exactly what they plan to eat as part of their check in? After all, the company is already partnering with ESPN, MovieTickets, and Songkick  to allow users to check-in to specific sports events, movies, and concerts, and startups like Foodspotting are already exploring the appeal of sharing what you’re eating. On the other hand, the food check in model isn’t quite as natural as checking in to a movie. You might check-in somewhere without knowing what you’re going to order, and you’ll probably going to order more than one item from the menu. But it could be a fun feature if done right.

(Founder Stories) TripA...

Earlier today, TripAdvisor added its name to the list of companies publicly trading on the NASDAQ. After doing so, TripAdvisor’s co-founder Stephen Kaufer stopped by TechCrunch for a Founder Stories interview with host, Chris Dixon . TripAdvisor offers user-generated reviews of everything from hotels to restaurants and claims “50 million monthly unique visitors and 20 million members.” Healthy numbers now, but dial back a decade and TripAdvisor was gasping for air. Kaufer says 18-months in “we had no clients, we had no revenue and we were running out of money.” Realizing time was short, the team dumped their initial business model after recognizing a demo they released on the side “to showcase what someone else could do with [our] technology” was gathering steam. Leadership built a plan around the concept, added a “write your own review” button and was off to the races with what we now know as TripAdvisor. Kaufer dives into additional detail on those early early days, discusses Expedia’s acquisition of his company and voices concerns about Google as the interview unfolds. Make sure to see it all by watching the entire exchange. Also be sure to check out Chris Dixon’s thoughts on the interview, the IPO, and issues surrounding it all on his blog,  cdixon.org . Episode II of Kaufer’s interview is coming up. Past Founder Stories interviews featuring Mayor Bloomberg, David Karp, Dennis Crowley and many other leaders are here .