Foursquare has been a fantastic idea in search of a business plan for as long as it’s been alive. Efforts to monetize the platform via ads in its app (now apps) have not made the grade.
Now, the last of the cool standalone Web 2.0 companies has a new hit revenue stream in its business and enterprise location services and it’s looking to capitalize on that with some restructuring and new funding.
Foursquare has raised $45 million in equity financing. The Series E round is led by Union Square Ventures, with Morgan Stanley and previous investors including DFJ Growth, A16z and Spark Capital participating.
In addition, co-founder and CEO Dennis Crowley is moving to an executive chairman position and Jeff Glueck has been appointed the company’s new CEO. Glueck had been serving as COO and overseeing the enterprise businesses that have become the majority revenue stream for Foursquare.
Chief Revenue Officer Steven Rosenblatt has been appointed Foursquare’s president and, Crowley says, Glueck’s ‘co-pilot’. Rosenblatt had previously been at Quattro and at Apple as a director of iAd.
Other moves include Kinjil Mathur to CMO and Jonathan Crowley to VP of Product. Rory Parness (VP Finance), Meghan Lapides (VP HR), and Brian Chase (General Counsel) also join the executive team.
During a chat today with Crowley, Glueck and Rosenblatt, Crowley said that “[Foursquare] has become much more than just the two mobile apps.”
He pointed to deals that Foursquare has signed with companies like Apple, Twitter and Pinterest to use its location data. These, Crowley says, have contributed to Foursquare’s biggest revenue year.
Freshly minted CEO Glueck says that the “maturing” revenue lines are growing at ‘triple digit rates’. More specifically, its media businesses like Pinpoint — digital targeting with location info for businesses and ads — are 170 percent over 2014 revenue. Combined, the enterprise side of Foursquare, which includes its Places API customers and its newer Place Insights business, has seen 160 percent growth, says Glueck, though no hard revenue numbers are forthcoming.
Glueck stressed the importance and uniqueness of Place Insights: “It’s the world’s largest opt-in foot traffic panel, with no check-ins required.”
Place Insights has grown out of Foursquare’s new location system — called Pilgrim — which is able to place users at locations with confidence even if they don’t check in. This allows Foursquare to provide serendipitous recommendations to users of its consumer apps, but it also provides a wealth of foot traffic information that can be offered to the enterprise.
Place Insights allows enterprise customers to access aggregate anonymous trends — which can tell them where they should locate their next physical business, where to move inventory and invest in growth and more.
For a practical example, see Foursquare’s recent data ‘win’ with its accurate prediction of iPhone retail sales based on historical sales traffic data recorded by Foursquare.
Glueck says that the Pinpoint and enterprise revenue lines now make up the majority — over 50% — of Foursquare’s revenue. That’s up from 40% last year.
Glueck is also careful to note that the financing round was oversubscribed. In advance of this round, TechCrunch reported that Foursquare was raising and that it would be at a lower valuation. We’ve heard that this latest round of financing cut the company’s valuation roughly in half. Foursquare declined to speak to valuation, but its previous round in 2013 put it at a reported $650 million valuation.
In response to a question about what portion of the funding will go to developing the enterprise product, Glueck said “we will continue to launch innovations with our consumer brands. This is our foundation of the map of the world and our living breathing members that discover [it].
In a blog post today, Crowley said:
“I will be stepping up into the role of Executive Chairman. This new role will allow me to focus full-time on vision and innovation, long-term strategy and creating new consumer products. If this sounds more like my job from 2010 than my job from 2015… well, that’s the point. It frees up my time from operational and management duties and lets me get back to the “let’s just make something awesome that people love’ spirit that got us here. There are a lot of things I still want to build at Foursquare. And there are a lot of things that should exist in the world that only Foursquare can build—for both consumers and app developers. My new job is to make sure those things get built as projects, and that the best of them get pushed into the real world as products.”
This is essentially a move back to a purely product role for Crowley, with the majority of the responsibility for revenue falling to Glueck and Rosenblatt.
“This will allow us to meet the demand out there from our customers and potential customers. We want to accelerate growth of business as leading location intelligence company,” says Rosenblatt.
Foursquare says it is hiring 30 new positions, mostly in enterprise media sales and engineering.
“Making sure that everything we ship is something that we’re really proud of — making sure that the whimsy and magic of everything we built in 2010 is still in the product,” is how Crowley characterized his new role to me. “It’s Foursquare’s duty to build these new products — we can build things that no one can because of the technology that we have and it’s my responsibility to make sure that we build those.”
The location confidence business that Foursquare has built up, both in support of other platforms’ location efforts and in the vein of an enterprise intelligence suite, provide it a unique opportunity. Those of us who have followed the company for some time have been waiting for it to utilize these differentiators efficiently — mostly to avoid it going away or for it to end up as a fire sale of data to something like Microsoft or Yahoo.
If Foursquare is able to take this latest lease on life to make a booming business out of its Pilgrim data, then the consumer ‘cloud’ of users that get enough benefit out of it to continue contributing to that pool will finally be able to rest easier.
Of course, there is another path, one which has been a danger for years. Under its new leadership, Foursquare could build a solid enterprise business that is just ripe enough for a company in need of its location intelligence — say Salesforce — to pluck for a choice sum when its runway runs out of asphalt and into the weeds.
Now it has $45 million more to figure it out. The clock is ticking.
Matthew Lynley contributed additional reporting on this story.