Dennis, Fred, Scott: Tweet Boom Tweet Boom
4/16: I Found Myself A Party: Tonight's Gonna Be A Good Night
If The Tweet Is The Atom, What Is Location?
Location! Location! Location!
Craig Newmark, Dennis Crowley, Jennifer 8 Lee: Koreatown
First there was talk that Vinod Khosla wants to pump 10 million dollars and above into FourSquare at a 80 million dollar valuation. Vinod Khosla, mind you, raised half of all money all VCs raised last year. He is a top dog in the game. (I Just Became Friends With Anu Shukla, Anu Shukla Has Found The New Frontier In Advertising)
Then there was talk Yahoo wants to buy FourSquare for over 100 million dollars, some figures put it at 125 million. More recently there have been reports other big fishes are also looking, namely Microsoft and Facebook. These stories are relevant whether they are true or not. It is entirely possible the different players are exploring their options. Feelers might have been sent out. Formal talks might or might not have happened.
I think selling FourSquare would be a mistake. Selling Hotmail was not a mistake. Sabeer Bhatia sold it to Microsoft for 400 million. But Hotmail was pretty much a finished product. FourSquare is nowhere close to being a finished product. I could argue it has not even started to start. And if it is about money, waiting a few years makes money sense too. Sell for more in a few years if you really, really want to sell it. But I am going to argue against that as well.
For me it is not about price. I am not saying don't sell to Yahoo for 125 million, but if they give you 200 million, then maybe. I am saying don't sell it, period. Google buying Facebook would have made no sense. Facebook could not have digested Twitter and instead would have ended up with constipation.
I can't think of one company that could buy and digest FourSquare and do the location space justice. Facebook could not do it, Twitter could not do it, and I am not even thinking about any other name.
The mobile web is bigger than the old web and also is growing faster. With the mobile web, location is key. Where you are when you are playing with your smartphone is so very important. And for FourSquare location is not an afterthought, location is the beginning point, and that makes all the difference.
FourSquare should be flattered by all the attention. Things have not always looked this rosy for FourSquare or its two founders. So they should take all this attention as ways to boost their self-esteem.
But flat out saying no might also be a bad move to make. The attitude should be, selling to you would be injustice to the location space, but let's work together, let's see if we can add the location feature to your many web properties wherever they make sense, and pay us for that instead. I think that would be the smart thing to do.
FourSquare has only a million users. That is nothing. The FourSquare team knows better than to wallow in all of the buzz. It is always safer to stay focused on the fundamentals of the business. Buzz comes and goes, ask Twitter. Twitter is in a better shape as a business today than ever before, but it does not have the buzz it had a year back.
FourSquare should use all this offer talk to expand its user base. Google expanded its user base dramatically by becoming the search engine for web properties like Yahoo and AOL. FourSquare should make similar moves. Create location space where it does not exist, and inhabit that space. It makes a ton of sense to talk to the big dogs in town. Cut deals.
2010 is location's year and FourSquare has the clear lead in that space. I see FourSquare never getting sold. Just like I never saw Facebook or Twitter getting sold. FourSquare has IPO potential, not now, I don't know when precisely, but it has IPO potential. If I had my way, Twitter would go for an IPO this year, before Facebook. (Twitter Should Go For A Netscape-Like IPO) I can see FourSquare going IPO somewhere in the mid 10s.
FourSquare is a business. For a business it is about money. The big money is in going IPO. FourSquare has reached that rare threshold for a tech company that it will never have any problems raising money ever again. That gives the FourSquare team the luxury of superb execution.
FourSquare will not get bought. FourSquare will buy. It could makes its first major acquisition later this year or early next. Stay tuned.
Fractals: Apple, Windows 95, Netscape, Google, Facebook, Twitter
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