Loopt

“Foursquare”, the Location-Based Social-Network Game for 2010

Twitter was undoubtedly been 2009’s media darling and Facebook is continuing on its path to global domination adding tens of thousands of users daily world-wide. With all the buzz about the growth of social networking, you may wonder which social-media service will become 2010’s technology poster boy.

If you speak to any of the Web’s early adopter set, the answer is an almost unanimous: Foursquare.

While the internet and social media landscape is continuously changing, I think it’s fair to say that Foursquare already has aligned itself to become this year’s mainstream social media hit.

Foursquare and Twitter

Foursquare is the brain child of the team that brought us the mobile social network Dodgeball, which was acquired by Google in 2005 and later shut down. Dodgeball was a location-based mobile startup served a simple purpose: It lets an individual share his or her location with a group of friends.

Foursquare ventures beyond simple utility. It’s a virtual game in which participants earn badges for checking in at various locations; those that check in most become a locations “mayor.” Everyone you talk to says that Foursquare, is as addictive as Twitter, Facebook or checking your e-mail on a mobile hand set.

Originally launched as an iPhone application Foursquare was seeded by the young early adopter set in larger metropolitan cities like New York and San Francisco, L.A. and Chicago. Because of this the site’s developers were able to leap from a ready-made springboard. Allowing users to post to Twitter and Facebook.

With users’ “check-ins” being posted to the messaging service, Foursquare has been able to gain a foothold in much the same way YouTube was able to build a gigantic lead from videos embedded in sites like MySpace.

The parallels with Twitter are numerous. As tech writer Robert Scoble wrote in September: “If you go back three years, Twitter was being used by the same crowd that is playing with Foursquare today.”

Similarities to Twitter don’t stop there: Twitter first took hold at Austin’s South By Southwest festival in 2009, and has slowly gained momentum thanks to viral marketing produced by members and the Foursquare team.

Foursquare and Twitter also share investors. Union Square Ventures is a backer, while Twitter inventor Jack Dorsey has made an angel investment in Foursquare. Other notable investors in Foursquare include the founders of Digg and Delicious. According to Fred Wilson of Union Square Ventures’ Foursquare’s first round financing was “among the most competitive early round financings I’ve seen in a long time.”

Foursquare’s big move for both developers and, retailers

This week Foursquare debuted the singular piece that launched Twitter into the super stardom. They released an API. This application programming interface allows third-party developers to build anything they want on top of Foursquare’s location-based social network. This is a huge step.

time and again it has been shown once these ecosystems gain momentum, any potential competitor faces an arduous task of unseating the top dog. From Flickr to Google Maps to Twitter, it’s clear that early critical massĀ  (having enough users and services to make you invaluable) sets you up for total victory. It all goes back to the early laws of the internet. First one with a good product wins. Why?, because getting people to switch from one service to another is almost impossible. With Foursquare’s API launch it is set to capitalize on this advantage before others can make a play.

Foursquare is doing more than wooing users and developers though. Foursquare like Yelp, and Urban Spoon is courting local bars and restaurants. “Foursquare for Businesses” is a platform designed for retailers that are wishing to offer special deals specifically to Foursquare users. A great example is frozen desert maker Tasti D-Lite, Foursquare users are eligible for a discount. This kind of captive marketing scheme not only benefits Foursquare, but businesses like it because it helps them build brand relevance with in an emerging market.

Competition

Multiple players are vying for the location-based services market and the people who are using them. Services like Loopt, Brightkite, Gowalla and Google’s Latitude, are proof that Foursquare will by no means have an easy ride. Even though Gowalla debuted an early version at SXSW 2009 alongside Foursquare, both Loopt and Brightkite have a head start launching products almost a full 18 months ahead of Foursquare.

The one thing that all of these other services lack, is the highly addictive game play that seems to have Foursquare users hooked.

Google is undoubtedly the 800-pound gorilla in this scenario, but the numbers-driven search engine has proven time and again that it really doesn’t grasp social-networking dynamics. Look at things like Orkut and Friend Connect, Google’s Facebook Connect competitor, and you’ll see what I mean. Look at Google’s failure to turn Google Video into a YouTube competitor. What was the Solution? Google bought YouTube. Lets hope that doesn’t happen to Foursquare any time soon.

One company that could actually end Foursquare in its development stage is Twitter itself. The service that helped propel Foursquare to prominence is currently building its location-based features. And Twitter’s location-based API is one that directly challenges Foursquare. The key for Twitter is that it already has the critical mass of users and an established base of developers. If Twitter executes their location-based service correctly, it could leave Foursquare in the dust.

One good thing for Foursquare though, the overlap in investors means the Twitter-Foursquare relationship is unlikely to go bad. Foursquare may network its way to the top in the course of the next year, or it could find itself lost in an increasingly dense competitive landscape. I’m betting on the former.

Foursquare is available for iPhone, Android, and Palm’s Web OS with direct applications, and it functions on Blackberry and Windows mobile via the Foursquare Mobile site.

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