Yahoo! and Foursquare: If two losers sign a data sharing pact, does anyone care? Maybe.

Maybe I’m being a bit harsh, yes, but the news of Yahoo’s data-sharing partnership with Foursquare strikes me as unlikely to be significant for Yahoo and too little too late for Foursquare. Unless…

First, here’s why I’m a skeptic:

Despite its early buzz and significant user numbers, Foursquare has been struggling to stay relevant for a while now. When I log in (which is pretty rare by now…) the only friends of mine that seem active there are the early-adopter tech-savvy crowd. In my experience, Foursquare hasn’t really crossed the chasm to mainstream adoption in any meaningful way. At the same time, the company’s (truly brilliant) CEO has seen the writing on the wall, pointing out “check-in fatigue" as early as 2010 and attempting to re-position the company as about "more than just check-ins and badges.” Facebook brought the check-in to the masses by adding location features to status updates back in 2010. It didn’t kill Foursquare, but it did sort of kill the check in by turning it into a feature. With the uniqueness of the check-in gone and the value of the check-in in doubt, Foursquare has tried to pivot into a discovery tool to help users find great places…  A good move, perhaps, but that’s a crowded field. Call me old school, but I feel very well served by Google/Zagats, Timeout, Tripadvisor, and new upstarts like London-based YPlan and Planvine. Foursquare never figured out how to turn the check-in into a real business, and I think they missed the exit.

Yahoo has, it’s true, been experiencing a resurgence of “cool” lately due in no small part to Marissa Meyer’s infusion of real management talent and desperately reckless acquisition program. This week, Yahoo even topped Google in total web traffic for the first time in forever. With all that, I still find Om Malik’s analysis more compelling than those of the newly minted Yahoo fans. In a particularly cutting piece this week, Om wrote that the focus on user numbers is besides the point. What matter, he argues, is the company’s failure to launch truly compelling new products and its declining share of searches and online advertising dollars. 

So no - I don’t suspect that Yahoo is going to find some brilliant use for Foursquare’s check-in dataset that is going to suddenly turn Foursquare into a big winner or make enough of an impact on Yahoo’s revenues to prove Om Malik wrong in the long term…

…unless.

Unless what is really going on here is Yahoo sniffing around Foursquare for a possible buy. This New Yorker piece on Foursquare from April gathers some data on Foursquare’s recent financings, valuations, and user stats. The company just raised another $41M in convertible debt from Silver Lake, following an equity infusion of $50M two years ago at a $600M valuation. Last year, Foursquare had only $2M in revenues, so I suspect much of that new money is going towards keeping the lights on and - in the absence of a brilliant plan to bring the company to a multi-billion dollar exit - I suspect the private equity guys who are now calling the shots are learning pretty hard on Crowley to find a strategic alternative. Over at Yahoo, Mayer has around $2.5B in cash and equivalents, a sky-high share price that can be used as currency, a stated strategy of focusing on mobile, supportive investors, and a desperate need to make Yahoo relevant by pursuing aggressive product strategies. Foursquare would bring Yahoo 30 million mobile users, a proprietary database of place recommendations (think Zagats over at Google), and a team of around 150 solid mobile developers and product managers in New York with a rather urgent need to pivot. With luck, the acquisition price won’t even be that high…


24th August 7:05 AM
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