When I talk to business school students, they always assume that you start at the white board, put up your 100 best ideas, analyze them, and come up with the best opportunity for success. That was was never what we did. We were just kind of going about living our lives in New York and encountered no problems with things that we thought that software could solve better. We just made ourselves tools.
Dodgeball was essentially just a tool to make it easier to meet up with friends in a dense urban environment. Foursquare was essentially that same tool rebuilt, but with the foresight that people using the tool will generate lots of data. With that data, you can do interesting things such as recommend new places you know, rank places based on popularity, including all the things that we’re doing now, which is advertising and enterprising products.
We had heard about venture capital, but we didn’t know how it worked. We hadn’t taken any business school classes. There used to be a Barnes and Noble across the street from the NYU building where we were. I’d go over there and skim the business books trying to learn what little I could. However, there wasn’t a lot of VC going on in New York at the time, it was all out west.
The Google stuff came up very serendipitously. We were speaking at academic conferences because we were experts. Our thesis was entitled “Exploring the Intersection Between Location-based Services and Social Software on Mobile Devices.” We talked about what happens when everyone has a phone and all the phones are connected. What happens when other phones know who your friends are? What does the world look like? As an illustration of that, we made a prototype and the prototype was Dodgeball.
So we’re presenting this stuff at these conferences and someone said, “You need to come to Google and show us what you’re working on.” I went there to meet a friend for lunch and she said, “You know that rumor got out that one of the guys from dodgeball is here.” So I pitched to two other people and spent all day talking to people at Google. They said, “We don’t invest in companies but we like to bring in people that are really excited and passionate about a certain line of work. So maybe we should talk about acquiring your project.”
That’s really how it started. We weren’t looking to get bought. We didn’t know how. We were struggling to figure out to turn it into a business. We’re trying to figure out how VC works. It seems like things worked out pretty well.
We were working out of a lab at NYU eating pizza and ramen every single day. Then we had a project that was acquired by Google, which led to us working at Google we had real jobs. We had health insurance, we had I.D. cards that said that we worked at Google. We had business cards and we got free lunch every day. It was great.
We started to build the team at Google, and we started to make friends at Google. It was a very fun job. I learned a lot from working there, but we were really early in this, before Twitter, before iPhones, before apps. There were a lot of things working against us at that point and so there’s a lot of reasons why it didn’t work out. When we built Foursquare, we basically did it with a lot of schoolgirls at a lunch table where we sat together at Google. Once we raised venture capital, we basically hired one of them a month for a year.
It was January, 2009 when we really got serious about building something. We were just tinkering around up to the point Google announced via a blog post that they were going to turn off Dodgeball. This is two years after we left Google. So we had to make another one because all of our friends were still using it, and we were probably the best people to make another one. So, from January to March, we did this open prototype with 100 of our closest friends in New York, then we opened it up for everyone to use on the first week of March.
From there we went to South by Southwest. There, a couple thousand people started playing with it and we got great feedback on it, but the momentum didn’t really last. We peaked at South by Southwest and then it was kind of a gradual decline. The software only worked about 70 percent of the time. We didn’t have an Android version or a Blackberry version, both which were big at the time. My co-founder and I were trying to figure out a way that we could work on this thing full-time. So we started looking for investors and we thought would be easy to get investors after our amazing success at South by Southwest. No one really cared though.
Are they still using it?
We didn’t end up raising any money for the company until September, 2009. We worked on it for nine months around my kitchen table, mostly trying to make this thing work and trying to tell the story about it and trying to get people excited about it. Really, it was just get to work.
I wish I could tell you that we were more thoughtful about the plan of rolling this thing out but it was always just two people sitting at a table, each person doing work. When it’s ready to go, it’s ready to go even if it only works 30 percent of the time. The first version of Dodgeball worked probably 10 percent of the time and it was like that for months. People would use it and put up with the fact that it didn’t work.
Most of the time the version of Foursquare that we launched at South by Southwest conference in Austin in 2009 probably worked 70 percent of the time,but it worked enough to get them to get the point across. When it gets the point across, you can ask people to imagine the same type of vision and story if it did work all the time. If it were bigger, if there were a thousand people using the first version of your product, then you’ve waited too long to release it. You should throw stuff out early and often you know just to make sure that you’re on on the right track.
There’s no sense in holing yourself up for six months to build something you think the world is going to love only to show it to your friends and realize that it doesn’t make any sense to them or that they don’t see the world through the same lens that you do.
The Thing That Made It Happen
The thing that made it happen was our ability to tell a convincing story about how this thing might turn into a business, because they’re over Foursquare, which is very similar to Dodgeball. A lot of people looked at it like we’re building the same thing that we built at Google, and that they didn’t want and turned off. “That isn’t interesting to Google and now you want us to invest in it too?” It didn’t make sense to people.
However, the idea that eventually ended up getting investors interested was that users have to check in to merchants see the check-ins. Because they go through Twitter and Facebook, merchants incentivize check-ins with deals and that will encourage more check-ins and we’ll give data to the merchants. It was that ecosystem that was starting to emerge that was interesting to investors.
The interesting part about the story is that wasn’t our idea. We didn’t invent this idea of merchants running specials. Some merchant in California just hung up a sign and said, “hey if you check in on Foursquare, you get something.” Someone took a picture of it, wrote a blog post, investors saw a blog post and wrote, “This is Charlie O’Donnell at Union Square Ventures. I’ve seen the future. I think the future is called Foursquare.” That was not our articulation of the vision, but it was a better articulation than what we were telling at the time. So we just we ran with it and that was the Foursquare story for multiple years.
The lessons out of this are listen to what your users are doing. Listen to what people in the community are doing. One of my professors at NYU, Clay Shirky, has a classic rule of social software, which is no matter what you build, people will use it in ways that you didn’t intend them to use it. As a designer of these systems, you can either roll with it and then embrace the users and kind of help them do what they want to do, or you can fight it. We rolled with it, but we didn’t cause it.
The company is a lot different than it was many years ago. I think the big difference, even from two years ago, is that the company is finding success in monetizing data advertising and enterprise tools. A big chunk of what you see around Foursquare HQ are sales people, enterprise developers, people doing deals for licensing, a lot of our technology, and our data platform.
I still run that consumer team. We’re a small team that’s over in the corner of the office. So we have customers, people that pay to use our tools, and technology enterprise customers advertising these media buyers hedge funds urban planners real estate agents you know they they they are paying customers.
So we listen to them and we basically build the things that they need on the consumer side. It’s still one of the problems that we, as a company, want to solve. People like the Swarm app; it’s designed to encourage and inspire you to go and explore places and it gives you rewards for doing that. The Foursquare app is supposed to be the easiest way for you to find the most awesome things nearby that you never knew about. We always think about the app. It’s good but it’s not great.
So we think: What are the three things we should build this quarter to make it great? A lot of that comes from talking to users. We do user research. We have a couple of people here that work on a research team and they’ll put together a structured research study and they’ll get feedback from users. Sometimes the feedback is, “You built this thing but I don’t understand how to use it. … I don’t understand why this is any better than Yelp.”
We hear that sometimes, so we go back to the drawing board and say, “How do we make it clear to people that the things that we care the most about are obvious to people that enter a relationship with us by downloading the app and using the app.” It’s a tricky science.
In the early days, of course, I think it was about disrupting the way that local merchants will connect with potential customers. Now, what does lead generation political merchants look like. I mean, the vision of Foursquare early on was built off of that. It’s a very, very hard business to make work because it requires massive scale from businesses, massive scale for users. And we have 50 million active monthly users, but that’s not the 2 billion that Facebook has or the 300 million that Snapchat has. It’s a small number, right?
So these days we have we found a model that works and enterprise data and advertising solutions you know the disruption is like. You know it’s still on the consumer side. Let’s make apps and methods that are better than Yelp, Google Maps, all these other things, but a big part of it is there’s all these existing advertising technology solutions. They don’t work very well and our team is doing a fantastic job disrupting that space.
If you talk to people that run hedge funds, they would tell you that they used to trade off of stocks based off of looking at satellite images of Wal-Mart parking lots and counting the number of cars in them. That’s a great way to get sales data that Wal-Mart doesn’t have, but it’s pretty antiquated.
But what if we could just give you a real-time update of the number of phones that we see going in and out of these places? That’s a big deal. So it just drops out of it. For the longest time, you talked to someone whose job it is to put a bunch of new Gap stores across the U.S. and they would use census data on ZIP codes for targeting. That’s five years old. I can tell you where demographic groups in the U.S. are walking right now via a real-time map of the United States. That has to be more valuable to you.
I went to college at Syracuse and I studied advertising . I wanted to be a copywriter. I wanted to work at an agency and I ended up interning at two agencies. I didn’t think it was the thing for me, but I certainly had some experience and thinking about target audiences and thinking about concise messaging and the alignment of those things.
We also just did a lot of you shameless self-promotion. We ran a snowboard club and we put fliers everywhere. We had to get people to pay attention to get them to buy season passes to the mountain. We threw house parties and it was a really competitive thing to get people to do. This sounds stupid but this is how we learned how to do this stuff. We built the Dodgeball city guide in 1999 and a couple people wrote about us. You went out and talked to the press.
It sounds corny, but it’s more like street-smarts marketing or common sense than really being studied and applied.
I think the thing that works in our favor with Foursquare is that it took off right in the early days of social media, and we were in the business of inventing social media at the time. So we’re really good at this stuff. It’s not like we learned it, we just kind of grew up on it. I’ve used every single service that’s ever been made. So you just kind of know how to use those tools and the voice and audience and the cadence and the playfulness and all that stuff came pretty naturally to us.
When it got time to really promote Foursquare and make noise about it, we were just naturally pretty good at that. It’s going to vary depending on what example you’re looking at. Foursquare hasn’t made it yet. I mean, we have a great office, 200 people work here, 50 million are going to be users, but you know we’re still financially trying to get to the point where it sustains itself and where we know how to do it. It’s a numbers game now. Give us a couple of months to get there.
There are other companies like Twitter that are still trying to figure out how to make this stuff more snapshots. We’ll be figuring how to make it work for a while. You know hugely successful companies but not you know not not minting money financially yet. You know so I think that I think it it depends on what Apple can get.
When we started in 2009, there were 20 people trying to do the same thing we were trying to do. There’s probably 50 apps that we competed with over the course of time and I don’t think any of them are still around. Why did we make it and they didn’t? I don’t know. Are we good at what we do? Are we just really crafty and competitive being in New York, and have advantages having done a startup before this? Or is the advantage we just have better people and a better team? You know there’s a thousand reasons I can think of but sometimes it’s probably just luck, right?
On the air, I like to talk about how startups and entrepreneurs and CEOs are kind of glorified by the press and very rarely do people talk about the journey in between. The journey of some days, some weeks, some months, some quarters, some six months stretches that just suck and it’s really, really hard.
A lot of times at startups you hire all your friends and sometimes your friends quit, sometimes there are fights with friends and sometimes that affects your personal life and your spouse and the relationships you have. There is an infinite amount of stuff that can go wrong and usually all of those things do go wrong. And very rarely do you get people that talk really openly about it.
We’ve been doing this eight years and I there’s huge stretches we’re just sucked. Part of the reason I handed over the CEO role is that I felt burned out by the gig, just carrying the stress of all this all the time. I just needed to take a break and I’ve gone through a couple stretches. For example, when I got married in October 2013, I decided not to work on weekends.
You really can burn yourself out and just need to take a vacation to the beach because you could really be out for a couple of years if you don’t. If you really do burn yourself out, that speaks to the importance of delegating, having a team, having a strong management team and knowing when you have holes in the team and knowing when to replace people. I’ve learned a lot of the stuff from my investors and from the board and from our my coworkers here at Foursquare. We have an incredibly strong management team now. When the team is strong, the company does well and everyone props each other up.
But it wasn’t always that way. There are also plenty of stuff that we struggle with here. Sometimes there are hard periods and we have to get through them, and sometimes we realize that someone is no longer effective in their role, and we have to say goodbye to them. You know, even though we’re friends with them, that gets that’s really hard. The best way to describe it is that being the CEO is really a lonely gig.
There are not a lot of people who can empathize with the problems. A lot of my buddies I hang out with, they don’t carry the same sense of do-or-die responsibility with investors barking all the time. You can’t complain to the employees, so it’s really lonely and you’ve got to figure out how we’re going to do it. I’ll tell you the one thing that we did do that was helpful.
Years ago, in 2012, we got an executive coach. We actually used a number of executive coaches and actually I thought this was like such a bad stigma, like it must be so bad at your job. It’s like seeing a shrink or something like that, but that’s what it is like. It was me and my CEO would go see this executive coach, which is like basically doing couples counseling. Sometimes you actually go and lie on the couch in his office and talk about your feelings and what was going well and what sucked. And that was that. That was night and day, helping us get to being able to talk about stuff in public, of being able to do it outside the office and make a stronger bond with my CEO.
We’re in a little of a lull right now that we’ve had for the last three or four years, but we’ve always had executive coaching and executive training and it makes a huge amount of difference.