There’s no shortage of buzz around this company. That’s because it’s doing a few things right. Foursquare has made a dead-simple application that lures users to local restaurants, bars and other venues — and despite being a three-person start-up, they are already convincing local advertisers to support the service.
If you haven’t already tried it, you should because while dozens of other companies have attempted to do the same thing, this may just have the winning formula. Here’s how it works: Go to a bar or restaurant and “check-in,” so that your other friends can see you there. If you check-in more than anyone else, you will be named mayor. Other badges of honor are awarded for staying out late, or drinking multiple nights a week. Here’s where the money-making part comes in: To encourage loyalty, bars and restaurants have started offering mayors free drinks or other offers.
The other night I checked into a bar, only to be offered a deal at a neighboring bar where they were extending happy hour for friends of the mayor (This is in Seattle, not New York or San Francisco, where it’s presumed to be most popular). While the ploy didn’t work, this may be a restaurant’s best bet for getting people to change their mind at the last minute. The company explains: “foursquare can tell you how many times a customer has been to your venue or the frequency of their visits. Many venues are now using this data to reward their most loyal customers with freebies or discounts…(and you’d be surprised how effective a little friendly competition – over mayorship, over free fries! – can be at driving people back to your venue).”
Earlier this month, Foursquare raised a seed round of $1.35 million from Union Square Ventures, so it’s not overinflated or bloated with so much cash that it literally has to hit the ball out of the park. It has time to do it right. Currently, it has applications for the iPhone and Android (which was built by a handful of friends), but promises to release a BlackBerry version soon.
Union Square Ventures explains on its blog there’s tremendous value in seeing the patterns created by people checking in. “It is still early days, but as more people check in, Foursquare will generate more information, which in turn can be used to make future check ins more valuable.”
TechCrunch reports that the money raised will go towards a badly needed redesign for the company’s homepage. The applications for iPhone and Android are now more predominantly displayed on the site and there’s a live stream of people checking in across the country. The company also purchased foursquare.com URL (it was previously playfoursquare.com). They still have a ways until they blanket the country with the service, but so far its in 21 markets after launching in 12.
While it may be easy to guess how the application and services will be monetized in the end, the company is slow to say it has figured everything out. Co-founder Dennis Crowley told TechCrunch that while there is a Foursquare For Business section on the site now, there is no big emphasis on making money. “[We’re] really just focusing on getting the product working properly (crashes / UX etc). [It’s] worth noting that we don

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