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Foursquare takes on Yelp

Ajit Deshpande - - 0 Comments

Last week, Foursquare introduced a new version of its mobile app that now includes a key new rating feature. Using data from its ~25M mobile app users and ~3 billion check-ins worldwide, Foursquare will provide a 1-10 point rating for places and businesses. This feature puts the company squarely in competition with current reviews and ratings market leader Yelp (as well as Google Places).

Foursquare, which was launched in late 2009, brought to prominence the ‘social check-in’ and can arguably be considered the harbinger of the SoLoMo revolution. Like many social start-ups in the pre-Facebook-IPO era, Foursquare focused on member acquisition and rode its mind-share growth to achieve a valuation of more than half a billion. Now, faced with the realities of monetization in a world with publicly-traded Facebook stock, Foursquare’s valuation estimates seem to have stalled, and hence probably the focus on reviews and ratings.

All things considered, Foursquare is a platform, and potentially the play here is to create an app ecosystem on top of the platform to provide SoLoMo services. So how does Foursquare fare in terms value add to the merchant-consumer network? Facebook (including Instagram), Twitter, Google+ (integrated with Google Places and Zagat) and Yelp all have many more consumer users than FourSquare. On the merchant side, offerings such as Square, PayPal Here and CardSpring are tied to the payment process and are likely to create much more stickiness for the respective networks. Given these competitive dynamics, is there really space for both Yelp and Foursquare to thrive as SoLoMo app platforms? Was going from 10M users in June’11 to 25M users in Oct’12 enough of an uptrend to suggest that Foursquare will remain relevant in the face of Yelp’s ability to tap into the public markets? And do either of these companies have the appropriate business model and enough traction to survive as independent entities in the long run? Let the market decide – maybe in a year we will find out whether it gives Foursquare two thumbs up.

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