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Meet Swarm: Foursquare's ambitious plan to split its app in two

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By Ben Popper and Ellis Hamburger.

Foursquare CEO Dennis Crowley has spent the last year trying to convince the world that Foursquare isn't what it used to be. The company emerged back in 2009 with a novel app that let people “check in” to a location. That vision, and the local information that followed, propelled it to amass tens of millions of users, hundreds of millions in funding, and billions upon billions of data points from people who used Foursquare to check in around the globe. The problem was, in 2014, that story no longer worked for Foursquare. In fact, it was holding the company back.

“Listen, the point of the company, this whole thing, was never to build an awesome check-in button,” says Crowley. “That’s not the thing we got out of bed and said, that we wanted to build the most awesome check-in button in the world!” Back in 2009 declaring your location was a necessity, because phones didn’t have the power to reliably pinpoint a user, and Foursquare didn’t have much data on what venues were nearby. By 2014, however, both the technology and the data have finally come of age.

With the check-in front and center, however, Foursquare was still struggling to enter the mainstream and saw its user growth overtaken by younger startups. The company had created a new paradigm around location sharing, but that activity was never going to be as popular as snapping a selfie, sharing a link, or firing off a tweet.

So Crowley decided it was time to do something radical. “What if we don't need people to check in anymore?,” he asked. “What does a version of Foursquare look like that doesn't beg you to check in as soon as you open it up?” Over the last six months, the team has been hard at work on a complete reinvention of the company. In the end they decided that, in order to save Foursquare, they would have to break it half, splitting the iconic service into two separate apps.

Today, the company is announcing the first fruit of this labor, a brand new app called Swarm that will exist alongside the current Foursquare app. Swarm will be a social heat map, helping users find friends nearby and check in to share their location. A completely rewritten Foursquare app will launch in a month or so. The new Foursquare will ditch the check-in and focus solely on exploration and discovery, finally positioning itself as a true Yelp-killer in the battle to provide great local search.

Starting from scratch

The next era of Foursquare began in a room aptly nicknamed "Don’t Stop Believing." Crowley gathered his top brass. They had spent the last couple years shaping and reshaping the mobile app, moving buttons around, and changing language, but it was time for a bigger transformation. Starting in November of 2013, Crowley instructed them to break the app down into its basic parts, little Lego blocks that represented everything it could do. Then they would rebuild Foursquare from scratch.

"Listen, the point of the company, this whole thing, was never to build an awesome check-in button."

One block was Pilgrim, the company’s cutting-edge tech for guessing a user’s location. Another was the 60 million venues and points of interest the company gathered across the world in one of the largest databases of its kind. The team came up with dozens of different ideas for what the service should look like in 2014, but every answer had one thing in common: they all said Foursquare needed to grow out of its one-app approach.

Foursquare's new direction wasn't based on gut instinct. It relied on some pretty scary data the company gathered about how people had been using its app — or how they hadn't been using it. "We looked at the session analysis and saw that only 1 in 20 sessions had both social and discovery," says Noah Weiss, Foursquare’s vice president of product management. In other words, just 5 percent of Foursquare’s users were opening it to find friends and find a restaurant. "Why not actually just split those apart, because 19 out of 20 times, tapping on one icon or the other, you have satisfied your need completely," says Weiss.

"The more we played with that idea the more we realized that there was a ton we wanted to do on both sides that we can’t do if they are married together," says Jon Steinback, Foursquare’s VP of product experience. "It’s like we were in a three legged race and each side was slowing the other side down." Weiss is a bit more cynical. "We had been taking on a little bit of a mission impossible," he says, "trying to make a single-purpose mobile app that actually had two purposes."

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The great unbundling

Foursquare’s decision can be seen as part of a larger trend in the mobile space to unbundle complex web properties into a suite of connected apps, rather than trying to jam numerous features into a single package. Foursquare’s new divide might actually make even more sense than the unbundling strategies Facebook, Google, and Twitter have employed, since Foursquare’s two sides seemed to be holding each other back.

"It’s like we were in a three legged race and each side was slowing the other side down."

"I think mobile forced this fundamental switch. We were born in mobile but we were born in this idea that each mobile app was kind of like a web property bundled up for mobile," says Steinback. "And as mobile usage has broadened and evolved you get individual experiences instead. You open an app to do a specific task and not as a gateway to a large complicated experience."

Having the check-in button as the main interface every time users opened the app created a noticeable hurdle for engagement. "Imagine if you opened up YouTube and the first thing it asked you to do was create a video. That would scare off a lot of people," says Bijan Sabet, one of Foursquare’s early investors and a current board member. "Just like you don’t need to tweet to enjoy Twitter, splitting the app in two will help make it clear to a big audience that you don’t need to check in to find value in Foursquare."

During months of testing, the company found that unbundling the two halves of Foursquare made each experience more focused and efficient. Sessions were shorter, but more frequent. And using some simple hooks in iOS and Android, Foursquare can shuttle users back and forth between the two apps with ease, much as Facebook does with its main app and its Messenger app. "By simplifying a lot of the story, and having an app that's dedicated to search and discovery I think it's going to be very clear to people that the search and discovery tools that we built are some of the best in class," says Crowley.

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Making serendipity less creepy

Swarm should work very well for seeing who’s around to get one more drink at 1 AM, but Foursquare may have been beaten to the punch by an old rival: Facebook. Two weeks before Foursquare announced its big split, Facebook debuted "Nearby Friends," a feature two years in the making which, for better or worse, looks and acts a whole lot like Foursquare’s Swarm. Crowley posted on Tumblr the following day that he’s not concerned, for the same reason he wasn’t concerned when Facebook first tried check-ins back in 2010. Your Facebook friend list is far too big for people to be comfortable sharing intimate data like their location, Crowley says.

Passive location-sharing in a way that people actually wantA number of similar apps like Highlight, Sonar, and Banjo, which helped you track down friends and interesting strangers, were so broad that they bombed with the mainstream. Both Nearby and Swarm try to ease user’s concerns by providing a sense of which friends are close by without giving away too much detail. "[We’re] using passive location-sharing in a way that people actually want," says Weiss. "They don’t want to be precision-pointed [latitude and longitude] on a map so somebody can go find them in the middle of a park. What they want is for friends to be ambiently aware of where they are, so when they got out of the train in Williamsburg, they can say, ‘Who are my 10 friends in Williamsburg?’"

Most importantly, while you can check in with Swarm, it also passively notes your general location even if you don’t open the app. So if you come out of a subway station and look at your phone, Foursquare will understand that you’re in a new neighborhood and update your status accordingly. This might still seem creepy for some people, but in that sense Foursquare may have one big advantage over Facebook when it comes to ambient location sharing. People who download Swarm are making an explicit decision to provide this kind of data to a specific set of friends.

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Dollars and cents

Swarm is the big story today, but it’s really the changes that will occur within the classic Foursquare app that could grow the company in a massive way. It's a distinction signified by the apps’ internal nicknames: Batman for Foursquare, Robin for Swarm. It’s a tacit acknowledgement by Foursquare that checking in may never appeal to more than a niche audience. Local search, however, is a mainstream activity that anyone with a smartphone is going to want. "The thinking is, if we start to remove a lot of the friction, we make the tools much more accessible to people, that’s the path by which you get from where we are now to 75, 100 million, more than 100 million users," says Crowley.

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Back in 2012, Foursquare struggled to raise new funding at an attractive valuation. First it took on debt, then raised fresh capital, but at a lower valuation than its earlier rounds. The company’s net worth, in other words, was shrinking, and one of its two co-founders, Naveen Selvadurai, departed. The core issue was that its user growth had slowed considerably and fallen behind its peers in the world of mobile social networks.

But if these changes help Foursquare finally hit those bigger user numbers, its investors believe it will be extremely valuable. The company has been inserting ads into its app for a little over two years now, and that taught it some critical details. "We’ve learned a lot," says Ben Horowitz, one of the company’s investors and board members. "And the results have been quite good in that Foursquare already monetizes better than almost any social experience." When it comes to advertising, Foursquare can make far more per user than public companies like Facebook or Twitter. "That is a powerful fact going forward and helps them keep a focus ... they know they can build an extremely valuable company without having anything like a billion users."

The company’s head of revenue, Steven Rosenblatt, knows better than most about earnings potential. His previous job was at Apple, one of the most profitable companies on the planet, where he helped launch its mobile ad product. He was inspired to leave for Foursquare, he says, because he thought it was simply the best way to do mobile advertising. "Everybody else is using geo-fencing, which is nice, but gets things wrong about two thirds of the time," he says. "We have location accuracy that is better than anything I’ve seen during my 16 years in this business, and that’s why advertisers are willing to pay." Sources familiar with the situation say Foursquare has grown its revenue from around $2 million in 2012 to $12 million in 2013, and is on pace to make between $40 to $50 million this year.

"They can build an extremely valuable company without anything like a billion users."

The best model for where the company hopes to be a few years from now is probably Yelp, and in fact people around the Foursquare office refer to its new discovery app as a "Yelp-killer". Built on its user-generated reviews of local shops and restaurants, Yelp is now a public company valued at $4.6 billion. Foursquare thinks it has the data and technology to beat Yelp, but people just haven’t realized it because they were scared off by the check-ins, badges, and social features that Foursquare originally pitched.

"If we all went to Google right now, or went to Yelp right now, we'd all get the same results, and that seems really really broken to me," says Crowley. "Foursquare should understand the neighborhoods I've spent a lot of time in, and the restaurants that I went to once but never went back to." In that sense Foursquare hopes to provide not just the best local search, but the kind of predictive intelligence that comes with a digital assistant like Microsoft’s Cortana, Apple’s Siri, or Google Now. In Crowley’s future, your phone doesn’t just tell you what’s nearby — it tells you what you’ll enjoy based on everywhere you (and your friends) have ever been.

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Check please

But how can Foursquare personalize its users' results if they are no longer collecting check-ins, the foundation of Foursquare’s recommendation engine? Crowley smiles and says something a bit shocking. He no longer needs check-ins, the meat and potatoes of Foursquare’s entire business and data collection engine for the last five years.

Not only has Foursquare collected 6 billion check-ins, he says, but it has collected 6 billion signals to help it map out over 60 million places around the world. Each place is a shape that looks like a hot zone of check-ins — of times when people have said "I’m here." Foursquare’s "Pilgrim" location-guessing engine factors in everything from your GPS signal, to cell tower triangulation, to the number of bars you have, to the Wi-Fi networks nearby, in order to create these virtual shapes.

Now that it has this data, Foursquare can make a very accurate guess at where you are when you stop moving, even without a check-in, a technology it hopes will allow it to keep its database of places fresh and accurate. Foursquare calls these implicit check-ins "p-check-ins," or Neighborhood Sharing. Take your phone into four or five different Japanese restaurants over the course of six months and without a single check-in Foursquare will learn that you like Japanese food and start making recommendations for you based on that data.

"We think of Foursquare as a technology that’s enabling these superpowers."

"This ability to be contextually aware, to have a general sense of the things that I like based upon where the device has been, and the things that I might like based upon where I’ve been in the past or where my friends have been, that’s a really magical ability." argues Crowley.

Tiny micro-facts are part of what could make Foursquare bigger than a recommendations service. "We don’t want you to read longform reviews. We don’t even have longform reviews. What we do have is many millions of people telling us tens of millions of times what is this place known for? What is the vibe of this place?" says Weiss. "How can we surface that back to you in a really authoritative way so you can scan that at a glance?"

In this way Crowley and his team don’t really think of Foursquare as a Yelp competitor. They think of it as something much bigger — a means to finding interesting things around you anywhere in the world. Crowley has for years promised a service that buzzed you when something cool is nearby, and he might finally be in a position to offer it.

"We think of Foursquare as a technology that’s enabling these superpowers… to see around corners and through walls, it’s like I want to find the best stuff that exists within you know, 100 yards, 5 miles, 10 miles of me," says Crowley. "I walked into a restaurant and it told me what to order. I walked into a neighborhood and it told me three places to go to. My plane landed in a city I’ve never been to and it’s telling me that two friends are nearby. That’s stuff that we’re doing now, and I think what people will get is that it’s very clearly the future."

Additional reporting by Chaim Gartenberg and Tyler Gold.

The Verge
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