
  Don’t Sell Out, Foursquare. Not Now. Not To Yahoo.  - sinzone
http://techcrunch.com/2010/04/18/dont-sell-out-foursquare-not-now-not-to-yahoo/
======
metamemetics
I see FourSquare akin to FarmVille: a distracting non-skill based game
designed to get users addicted. It's not going to be that fulfilling project
where you improve the world, so take the money while location-based is still a
buzzword and move on to something else.

~~~
shmichael
Foursquare opens a whole spectrum of indirect interaction between business
owners and their clientèle. The game mechanics are little more than a
usability technique.

~~~
mmelin
Exactly. The problem with location-based advertising etc. has always been that
you need users to willingly give up their location. The genius behind
Foursquare (and the other services like it) is that giving up your location is
the whole point of the "game" - it's not a step required before you can get
value from the service, it's the core action that the service rewards you for.

And really, this is the not-so-secret behind most privacy-threatening trends
and technologies: most people will gladly give up their privacy for a [ sense
of safety, comment from a friend, virtual badge ].

And if that is the value that most of the world places on their privacy, maybe
there's nothing wrong with losing it.

~~~
daemin
Is your physical location really part of your privacy if you're in a public
place?

I can understand that if you're at home on the toilet or something you'd want
to keep that private. But when you're walking around the city, or going to a
shop, those are public spaces. Therefore it's not private information that you
would be divulging, as anyone in that location would have that same
information.

Then if you didn't want people to know where you are online you would change
the settings, or just not use the application. This is just another example of
Clay Shirky's idea of Filter Failure.

------
shmichael
It's easy to call the shots from the audience. TechCrunch is judging this by
Disney over-romanticized standards - self fulfillment et al.

TechCrunch does not have access to the founders' cockpit view. What if the
founders decide the company is about to become stagnated, overrun or just
boring? If they can get a good price it's not worth the stay.

~~~
mahipal
The funny thing is that the final paragraph could just as easily be
interpreted as solid arguments _for_ selling:

    
    
      Facebook and Twitter hitting the geo space... real momentum and that intangible buzz...
    

So two juggernauts are entering the space, and they have a rare opportunity to
actually monetize "intangible buzz" while people still don't know what FB and
Twitter will do.

We're definitely in the realm of wild speculation, since it's impossible to
judge accurately from out here. But I do agree that the whole notion of
"destiny" isn't a good metric, regardless of the actual situation.

~~~
meterplech
I think that that is proof that Foursquare should sell... to Facebook. Their
valuation is still stomach-able enough if Facebook wants to use their current
operating profit and cash reserves. It would immediately make Facebook the
mobile leader, and take Foursquare to millions of users.

~~~
enjo
What's in it for Facebook? Foursquare functionality is easily copied. The
brand isn't terribly strong. $100M+ is hard to stomach when I don't see any
clear benefit to Facebook.

Yahoo! is another story, as they've taken a portfolio approach. I imagine
Foursquare looks pretty good as a member of that portfolio.

------
iamelgringo
Michael is certainly entitled to his opinion, but it would be rather nice if
people stopped criticizing founders for "selling out" instead of "going for
it".

~~~
michael_dorfman
I don't think that's what Arrington is doing here at all.

He's criticizing them for selling out _to Yahoo._

The point is not that "selling out" is bad, it's that you need to sell to
someone who is committed to continuing the project in a meaningful way, and
who has something to bring to the table besides money.

Speaking as a founder who has cashed out, I can tell you that the choice of
buyer matters immensely, and that there are more important things in life than
the amount of money in your pocket.

~~~
prodigal_erik
You would/did regret sacrificing a year or two of good work, in return for
working on anything you care to for the rest of your life? Was that one
project really more important than anything else you could ever do?

~~~
michael_dorfman
In my case, it was 8 years of my good work. And, 30 of my employees, who are
now in a very different situation. (I'm contractually prohibited from
discussing the matter, so you'll understand my being a bit oblique.)

In answer to your last question: no, it's not that that one project was really
more important than anything else I could ever do; but it took a few years to
get past the bitterness to be able to focus, and find the right "next step"--
which could have been avoided, if I had sold to the right people at the right
time (instead of the wrong people at the wrong time).

So: "selling out" can be a great thing, if done well. Or, a really soul-
searing thing, if done poorly. Choose wisely. Here endeth the lesson.

------
davidedicillo
I would take the money and run. 120M now is a big exit for them. If they wait
they might not that lucky next time, and even if they are, there are going to
be 10M or more in funding while now it's just 1.35M.

But honestly I don't care, I had a terrible experience with them as developer
(we built SquarePik, an iPhone client for Foursquare). Twitter became the
Twitter we know cause they built their product on top of their API and
supporting third party developers. Foursquare is mainly focus on their own
clients from day one.

------
maxklein
Michael Arrington is so anti-yahoo that I find it difficult to read his
articles about yahoo without wondering how much of that is just personal
animosity.

Foursquare SHOULD sell. 4sq is going to become the friendster of the space.
All these early starter companies get out-innovated, and it will happen very
soon.

~~~
wdewind
Couldn't agree more. Why would facebook buy them? For their < 1million users
that are already on facebook? The engineering could also be done internally
for far cheaper.

Foursquare etc. find themselves in this position: the game mechanics they used
led to explosive growth but also left them with a really low glass ceiling
(think people don't get Twitter? ha.) They may have had a crazy hockey stick
recently, but there is simply no way they will go main stream. It's got too
MUCH personality: being mayor and getting badges will either REALLY resonate
with someone or not at all.

I think the founders see $80mm+ valuations on a product with a very small,
homogeneous demographic of users as far greater than they could ever dream of
with their current stats, and they know FB could relatively easily enter the
space with a far bigger and international crowd, as well as a household name
that already does biz with f500 companies, and just crush them.

I think foursquare dies no matter what, if I were the founders I'd sell to the
highest bidder and run.

~~~
waterlesscloud
I think Foursquare's value is more likely in their relationships with
businesses than the user base. As many have said, the userbase isn't that
large yet, maybe a million people. But they're right on the verge of kicking
in to the awareness of businesses, which is after all where their revenue is.

I was at the buffet at the Las Vegas Hilton a couple of weeks ago, and they
have the little internal advertising cards on the table. You know, visit our
nightclub, see our show, that kind of thing. But one of the items was a "Check
in with Foursquare, get rewards" card. That changed my perception of where
Foursquare is with things. And what they really are.

The casino sees them as another customer loyalty program. If they're providing
customer loyalty programs to every business in the world...well. That's a
market. And that's where they seem to be making the most inroads, moreso than
with users so far. But if the businesses start helping them advertise, ala the
casino...

Foursquare is on the verge of being MUCH bigger in very short order. That's
why the feeding frenzy is happening right NOW.

~~~
wdewind
You completely ignored the part of my comment where I mentioned that fb
already has much better brand relationships and is already a household name.

if facebook does NOTHING, yes foursquare could go somewhere. but the bottom
line is they already releasing privacy settings with location awareness in
them, it's only a matter of time before they have their own LBS. and for
$125mm trust me, they will develop in house thank you.

------
dagw
I guess it all depends on how emotionally connected you are to your company.
Some people see their companies as their almost literal babies and get very
emotionally attached to them. Others just see it as a thing they built to make
money. Depending where you fall in this spectrum will greatly affect how
you'll react to such a deal, and trying to judge people on other end of the
spectrum by your standards is basically pointless.

------
jrockway
Yahoo's not that bad. Flickr was good before and good after, for example.

~~~
apphacker
Did Yahoo ever integrate anything with Flickr in a way that justified the
acquisition? I realize they have a little Flickr widget on their homepage, but
man they have the world's catalogue of amazing images and they really haven't
done anything with it other than just keep it the same as it was, for the most
part.

I think I understand how M&A teams at places like Yahoo! work. It's all about
what's "hot" with maybe some fanciful vision of integration into Yahoo! in a
way that will never happen. The M&A team is drinking the same koolaid they're
selling to top level execs, founders and VC's of companies they're looking at,
bringing a gigantic checkbook with them.

Zimbra was actually a good kind of acquisition, because they did a good job
integrating it with Yahoo! Mail right away, and what you see today is
derivative of that purchase. It made a lot of sense for Yahoo! to buy a fancy
webmail interface since most people using Yahoo! use it for their email. Some
other good examples of acquisitions are Google buying Android and Apple buying
the chip manufacturer that led to the A4 for the iPad. Bad acquisitions are
when it seems like it's about the buzz and it's hard to visualize how the
purchase can help the bigger company. Those acquisitions go the way of
Dodgeball and Jaiku.

Foursquare is a mobile company and Yahoo!'s (lousy) presence on mobile phones
is restricted to un-installable bundled software deals like with AT&T on the
Backflip. Yahoo! is not a mobile company, it's not the first, second, or even
in the top ten or possibly not even in the top fifty companies you'll think of
when someone asks you to name companies that are movers in the mobile space.

Foursquare isn't going to do well at Yahoo! because it doesn't make sense.

I usually don't like Arrington's rants, but this one was inspired.

~~~
stumm
They moved all of yahoo photos over to Flickr, as well as some integration
between upcoming and Flickr. I'm not sure what else they did.

------
revorad
_You can ask your VCs to redo their term sheets and double the amount raised.
Take half off the table and you, your children and their children will never
want for anything material in their lives, even if Foursquare goes south right
afterwards._

He says the Wordpress guys did it but how common is it? I wonder how cashing
out before making a successful company affects the chances of getting there.

------
rajat
This is why VCs should put some money into the pockets of the founders when
they fund a company.

There may be good reasons, as far as the future of the company goes, why they
shouldn't sell out to Yahoo or someone else. But, we are talking about a lot
of money here. And if the founders aren't already independent, money-wise, can
you really fault them for looking out for themselves, for their families?

I know money isn't supposed to be everything, but come on.

~~~
gokhan
I guess VC's in Foursquare might also be very happy with the possible sale and
less interested in seeing the baby grow.

------
jacquesm
Selling out to Yahoo has one huge advantage. They'll run your brainchild in to
the ground so quickly that your non-compete clause probably amounts to
nothing.

Kidding aside, Yahoo is a 'mixed bag', they've done some good acquisitions and
made some headway, but they also literally killed a bunch of companies they
took over through a combination of neglect and budgetary constraints.

If you sell out to Yahoo you know that that's the risk.

------
bbuffone
I would say that Techcrunch and the like have more to lose from Foursquare
selling to Yahoo!. They were probably counting on three more years of
extensive "Twitter" like coverage to fill their pages.

Once Yahoo! or another big company buys them they will be forced to move on
and find something new :(

~~~
gokhan
Than that's good for people here in HN, trying to bootstrap and need coverage
:)

------
metachris
Hmmm... Arrington having a very strong opinion about Foursquare selling to
Yahoo. Too bad he didn't back it up with more facts and references instead of
those few shallow examples of people selling to Yahoo and being unhappy with
it afterwards.

------
cianestro
If you are conflicted about selling a dream to Yahoo for 80+ million you have
too much careerism. Startups aren't children, it's either they die or you do.

------
aneil
"Yahoo is where startups go to die." Two ex-yahooers echoed this sentiment. A
moribund company, falling apart at the seams.

------
gojomo
Acquisitions are often the triumph of hope over experience. But maybe Yahoo
has learned from its prior misfires, and the Foursquare folks have learned
from the Dodgeball experience, and the threat of Facebook/Twitter will be
ominous enough, such that Foursquare could thrive inside Yahoo.

What's up with FireEagle?

------
Aetius

      You can ask your VCs to redo their term sheets and double
      the amount raised. Take half off the table and you, your
      children and their children will never want for anything
      material in their lives, even if Foursquare goes south right   
      afterwards.
    

He should have led off with this, point no. 5. Who cares that "Yahoo kills
startups" (even tho PG's still isn't dead), as a founder my goal is to
maximize my profit and my well being. I don't give a fuck about Yahoo if I'm
getting $20 million out of the deal.

~~~
michael_dorfman
You'd be surprised. The $20M has a very bitter aftertaste when you watch your
baby getting neglected, or destroyed.

"Maximized profit" and "well being" don't always go hand-in-hand. Sometimes,
it's better not to sell (or to sell to the right buyer.)

~~~
ohashi
Perhaps you should keep in perspective that people didn't give you all that
money for YOUR well being. They gave it to you because they believed you would
be able to generate large returns for them. As such, it's your duty to
maximize their investments as well as your own. Of course, if you believe what
you're creating is changing the world and cannot detach, you shouldn't be
selling.

~~~
michael_dorfman
_Of course, if you believe what you're creating is changing the world and
cannot detach, you shouldn't be selling._

It's rarely so black and white. I'm suggesting that if you are selling, you
should make sure that either a) the buyer's vision coincides reasonably well
with your own, or b) you're sure you'll be satisfied walking away (or getting
pushed out).

I speak from experience.

------
dnsworks
Because Arrington has successfully built and sold many companies, therefore
enterpeneurs should really take his advice.. I mean he was really successful
with .. Uhm .. oh and there was also .. uhm ....

This the "journalists" who tried extorting monies out of Twitter in exchange
for not publishing illegally obtained material .. This is the guy who comments
on others selling out? Really?

~~~
zackattack
For the sake of argument:

Perhaps there is something to be said for his intuition, for he spends nearly
all of his time evaluating startups. He successfully predicted the success of
Mint. Also, Arrington co-founded Achex, sold for 32mm USD, as well as
TechCrunch, which is one of the world's premiere news sites for technology.

~~~
dnsworks
I don't mean to discount it, but I find it really hard to give weight to the
bad companies that got bought out for inflated prices during the dot-com boom.
I worked for enough of them to know how much luck and a gold-rush mentality
was involed.

As for Mint .. I predicted it when I first got a beta invite, because it was
awesome.

I predict that tomorrow the sky will be blue! Bow down before me when I am
right!

