Foursquare is an interesting beat. Like many of the other hot social media companies on the market right now, it seemed to come to life without a business model. Then it woke up one day with a sizeable amount of venture capital backing, an enormous implied valuation and the need for some tangible way to generate revenue. Over the past year, Foursquare has done a great job of improving its product (which was definitely necessary, likely live-or-die for the company). And now, it needs to find a way to turn that into money.
Speaking at Business Insider IGNITION 2011, Ben Lerer of Thrillist put it best. In a conversation about the shortcomings of social media recommendations for restaurants and hotel rooms, he mentioned that Foursquare was getting pretty good at filling the gap. Then, he added that being able to pay through Foursquare at the time of check-in would be a powerful new feature (and that it would make start-up Square nervous).
Now, let’s take Lerer’s thinking a little further: imagine the confluence of check-in, deals, group buying, sharing and payment. Or in other words, imaging Foursquare simultaneously stealing pieces of the market belonging to Facebook, Twitter, Groupon and Square … not to mention big, established players.
Here’s how it would look:
Check-in: this would work as it has on Foursquare. The user visits a place and checks in. Upon check-in, opportunities for sharing, deals and group buys are made available. The check-in is what puts you into the environment.
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Deals: this isn’t new thinking: companies have been offering deals via Foursquare for a while. But, they become more powerful when paired with a group buying opportunity and embedded payment options. Also, deals can spread more quicklyu when they are shared by people in similar geographic areas. Deals can spread more easily.
Group buying: think of a much-improved version of Groupon. The ‘groupon’ would be issued, controlled and managed through the Foursquare application. Through on-platform payment, there would be no need for coupons. Rather, anyone who checks in can participate in the group buy – and share it with their other connections to drive more business. Paying through the platform would limit group buying participation strictly to those who checked in, making life far easier at the point of sale.
Sharing: this can help a promotion get momentum and actually track the ROI associated with social connections. Social marketing moves from ‘it’s possible to accomplish …’ to ‘here’s what it really got us’.
Payment: this is what ties the entire environment together. Foursquare gets to take a piece of the transaction, ostensibly for managing an integrated social media marketing opportunity (not just for processing the payment). And, the analytics that come out of this are powerful for both Foursquare and participating merchants.
Now, this is a business that Foursquare could take to an IPO.