Why Foursquare failed to reach escape velocity

foursquare

By the time I finally signed up for a Foursquare account, sometime in early 2013, it was like arriving at a party that was already winding down. Sure, I could find several of my friends on the platform, but their accounts had been inactive for months. Still, there were a few hangers on so I dove into the app with relish. The benefits of such a tool seemed obvious: Living in Washington, DC, a geographically small city, I could see when friends were at nearby bars and restaurants and then stop by if I was free. Upon visiting a new business, I could view tips users had left about what dishes or cocktails to try. I could get ideas for new places to visit by watching my friends’ check-in activity.

But as the months wore on, I found myself using Foursquare less and less. Sure, some of my friends used it, but not enough close friends whom I’d feel comfortable barging in on if they were nearby. And of those I’d found active on the app, they slowly became inactive, until the number of friends who were consistently using it was vanishingly small.

These aren’t just my anecdotal observations; Foursquare’s userbase, after massive early adoption, has stalled out at fewer than 50 million users, which may seem like a lot but is nothing compared to its more-popular peers like LinkedIn, Tumblr, and Instagram, each of which has users numbering in the hundreds of millions.

So why did such a bright star burn out so quickly? Why did Foursquare fail to reach escape velocity?

In 2008, Nicholas Carr published an essay on what he called the “centripetal web.” Carr noticed that Technorati, a once widely-used blog search engine, had become less and less of a website destination for him as he slowly replaced it with late-comer Google Blog Search. This was also around the same time users began abandoning Bloglines, an early RSS reader, in favor of Google Reader. In both cases, an early innovator that had been first to dominate in an emerging market was usurped once a much larger player, i.e. Google, moved in and applied its superior servers and much larger engineering base to create a competitor.

Even though Technorati offered more precise tools for searching the blogosphere, it was often slow to return results, or it would just fail outright. When it came to handling large amounts of traffic, Technorati just couldn’t compete with Google’s resources. But it wasn’t just a matter of responsiveness and reliability. As a web-services conglomerate, Google made it easy to enter one keyword and then do a series of different searches from its site. By clicking on the links to various search engines that Google conveniently arrays across the top of every results page, I could search the web, then search news stories, then search blogs, then (if I was really ambitious) search scholarly papers. Google offered the path of least resistance, and I happily took it.

As Carr later argues, “on the web as off it, things gravitate toward large objects,” and so even when a company has the first-mover advantage with, say, a geosocial social network, there’s still a very large hurdle the company needs to overcome in terms of providing an adequate social graph. The utility of Foursquare isn’t just based on its technology, but is also reliant on having enough users so that new adopters can find friends with whom to interact. Foursquare had been on the path of amassing that core social graph, but much larger social networks, sensing that there was value in geosocial, stepped in and began offering their own check-in tools.

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So just as Google eclipsed Bloglines and Technorati with its resources and massive reach, nearly every major social network from Facebook to Instagram added the ability to check in to a location. Suddenly, you didn’t have to worry over whether your friends would use the tools, because the tools had been integrated into a space on which your friends already were. Because Foursquare didn’t have much else to offer other than geosocial (its tips were useful, but already available on platforms like Yelp), users gravitated to the larger objects. Being first wasn’t good enough.

This is the same fate that Spotify may be facing. The Swedish company was the first to provide a proof of concept that millions of people would be willing to pay $9.99 a month to stream music, just as Netflix proved possible for video streaming. According to a recent feature in the New Yorker, Spotify has amassed 50 million users globally, with 12.5 million paying for subscriptions (the rest use the free service, which is interspersed with ads). It arguably dominates the paid music streaming market, and one would think it has the first-mover advantage that would shield it from competitors. But now that it’s proven that users will pay for music streaming, much larger stalwarts, which already have millions of credit card numbers on file and have primed their users to pay for content online, may launch their own streaming services:

James McQuivey, an analyst with the Boston-based Forrester Research, is less optimistic about the company’s prospects. “Spotify has shown people value streaming,” he said, “and that means somewhere someone could use that value in a bigger chess game. Someone like an Apple or a Google is already realizing how valuable music is as a customer-engagement tool and will offer something quite similar to this, without making you pay for it, the way Amazon has included video in the Prime membership without expressly charging. And then suddenly you’ve disrupted Spotify.” He added, “If I have to say yes or no will Spotify be as big and strong as it is five years from now, the answer will be no.”

Currently, YouTube is the largest music streaming platform in the world. And while Spotify CEO Daniel Ek believes Spotify’s user data has allowed it to develop an unbeatable service, it has nowhere near the user data available to YouTube, especially since YouTube is owned by Google, which tracks hundreds of millions of logged-in users daily. Apple, with its iTunes store, has access to millions of iPhones and Macs across the world and already maintains strong sway with music companies.

So while we’d like to believe that being first to innovate ensures one a fighting chance of maintaining dominance — isn’t that the primary allure of being an inventor? — the web’s history would suggest that any first-mover advantage can be rendered moot. Though with its 50 million users, Spotify may be a formidable force, there are much larger objects moving in on its turf. Put another way, there’s a reason the moon orbits around the Earth and not vice versa.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.