There’s a great, deep story by Austin Carr in Fast Company today giving a broad overview of where Foursquare is headed, as a product and as a company. I was quoted a few times in the piece, and spent a good bit of time talking to Austin, and I thought it might make sense to explain the non-obvious parts of my perspective on Foursquare.

It makes sense to start at the end:

Crowley is a rare breed of founder obsessed with the problem he’s trying to solve. “The thing I fear, which would be devastating for the industry, let alone Dennis, is that he gets rushed and Foursquare can’t monetize, they can’t raise [another round], and they have to sell to Facebook or Google or whoever,” Dash says. “And then at 40, Dennis has to start over. Because he’ll do it again—there’s no question. But then the world will have to wait another goddamn 10 years for this thing.”

This articulates what may be the two most important points underpinning my opinion of Foursquare:

• There’s undoubtedly going to be a location layer to the Internet. It’s too powerful of an idea, and too valuable of a technology, for it not to come into existence in the next few years.
• Dennis Crowley has incontrovertibly been obsessed with this idea for over a decade.

Now, simply being a person obsessed with a particular class of problem doesn’t always mean that someone will be the one who brings it to large-scale adoption — just ask Nikola Tesla. But my bet is that Foursquare cracks the code on this before anyone else. To understand why, let’s take a look at what Foursquare really does today.

Everywhere You Want To Be

Foursquare’s initial story was about the trappings through which it encouraged engagement — its badges and leaderboard, and the broader concept of recording one’s location in the quantified self sense. Though I am happy to count both Dennis and Naveen as friends, I’ve never spoken to the company’s cofounders about Naveen’s departure from the company. My take on it, separate from any discussion they may have had within the company, is that Foursquare switched from primarily being concerned with the game-based rewards around engagement and the recording of people’s whereabouts to a broader mission that builds on that base to be about location as a core capability of the Internet.

With Naveen building new projects around the smartest parts of what’s considered “quantified self”, that leaves Dennis leading Foursquare to focus on that location layer. [Update: Naveen and others clarify that both cofounders worked on all the aspects of what Foursquare does.] And in that regard, they’ve accomplished something no one else has done before: Almost every important app that uses location connects to Foursquare.

When you post an image to Instagram, you tag its location using Foursquare’s venues data. Put up a video on Vine? Foursquare locations. Share a story on Path? It’ll prompt for a Foursquare venue. Even Flickr, Yahoo’s venerable photo service which popularized geo-encoding on the web in the first place, now lets you tag uploaded photos with Foursquare’s venue data.

Keep in mind, Instagram is owned by Facebook and Vine is owned by Twitter — Foursquare is acting as the neutral third-party here that’s trusted by both of these otherwise-constantly-battling social giants. Only Google, Apple and Microsoft, which each have invested hundreds of millions in location, don’t rely on Foursquare on an ongoing basis for location. And countless independent third-party apps build on Foursquare as well. (Incidentally, this is why I think Yelp board member Keith Rabois’ public petulance about Foursquare is so foolish — there may be some great value Yelp could get by connecting to Foursquare, but the product team there probably can’t consider it for fear of earning the scorn or antagonism from their own board.)

The trick, then, is whether Foursquare can capture some value from this network of apps connected to its data. My gut sense is that the “Powered by Foursquare” branding within these apps is a little bit like looking at search results on Yahoo did around the turn of the century: There was a little logo link, all the way at the bottom of the search results, which said “Powered by Google”, and it became pretty obvious very quickly that something important was going on.

Finding Its Way

To turn its network of client apps into a web-scale business, Foursquare will have to create a two-way exchange of value with the apps that are currently getting a one-way deal of data for free. What could be worth the exchange? The obvious idea is that Foursquare could expand its current advertising offerings in a way that they might be embedded within other apps, perhaps along with some sort of revenue sharing. More broadly, there might be ways of connecting commerce offerings such as Foursquare’s deals in a way that was exposed through third-party apps. To extend the Google analogy, this is going from simply powering search on other sites to delivering text ads along with those search results.

Of course, partners like Facebook and Twitter already have their own self-service ad platforms, so what would it take for Foursquare to convince them to enable a more reciprocal relationship? Probably two things: value and credibility. The issue of value is straightforward, if not simple: Foursquare must provide a form of monetization that improves the experience for end users of mobile apps, whether its own or from a third party. That’s clearly what the Foursquare team must be hard at work to do.

But the second requirement, credibility, is where I think people underestimate Foursquare. They’ve simply done more work, at a deeper level, to really understand the problems around location and location-enabled apps. Astoundingly, for all the public paranoia about online tracking, Foursquare’s never made any mistakes that have caused a panic about the way they collect and share data. And its team is respected by other startups and media companies as being authoritative on nearly every important aspect of location-based technology on the Internet. Perhaps most importantly, its position as a neutral third party offers all of these partners an option which doesn’t empower the competitors they actually fear.

The truth is, aside from simple mapping apps, nobody has truly built a large-scale consumer technology business around the potential of location. As I noted when discussing the importance of public traffic data, there is enormous value to be created by understanding how people move around: Both Bill Gates and Jack Dorsey’s first companies were based on data about how people move around through cities. If Foursquare’s given enough time to keep iterating on the incredible success it’s had as a platform, and its first few steps toward driving revenue through ads make it stable enough financially, there’s no reason it can’t be the company that taps into the value of being the location layer of the Internet.

Going Further

Back in March, I interviewed Dennis as a keynote interview at SXSW. Though the conference seems to have never posted the video, there’s a pretty good fan-shot video of the session:

(See part two of the interview.)
Based on that interview, Wired offered a brief overview of where Foursquare’s headed:

Shoot a video in Vine, scribble a reminder in Evernote, make a post on Path, or snap a photo in Instagram, and you can place-tag it. When you do, you’ll see a little banner pop up that says “Powered by Foursquare.”

Any app developer can pull from this vast collection of place names. The company has become a powerhouse data provider to the internet at large, a sort of utility service for geographical information.

“That place-data that’s baked into those other apps — that’s Foursquare’s ‘Like’ button,” says Dash.

Similarly, TechCrunch wrote its take on the interview which focused on the potential to upgrade mapping for everyone:

At the end of the day, the data that Foursquare has is the ability to provide more personalized maps than what is available today. Crowley said that maps haven’t really changed that much since people started making them, but now that we have certain amounts of trending data or interest data, Foursquare could help make the places that people see more meaningful to them.

This column I wrote for Wired last year actually addresses the point of founders being obsessed with a particular kind of problem by quoting Dennis:

“The love for the space should manifest itself through the product,” Crowley says. “Artists do this all the time: pick a theme, explore it, reinvent it, explore it again. When you look at art in hindsight, you can usually see a linear progression through the work.”

And almost a year and a half ago, I named the company the best-executing startup. I still maintain that the quality of the software and design shipped by the company are a model for others to follow — we never hear about users in an uproar about changes, and even the introduction of advertising has been handled without the frustration or contentiousness that nearly every other platform faces with these types of launches. It’ll be interesting to see if that remains true as Foursquare begins to extend its reach to the network of apps that connect to its services.