Foursquare Turns Down $100M 189
theodp writes "Valleywag is stupefied that 'an annoying, unprofitable social network like Foursquare would turn down $100 million,' a move inspired in part by Twitter's 2008 rejection of a $500 million offer from Facebook, which in turn once rejected a $900 million bid from Yahoo. Time will tell whether the move by Foursquare was a prescient one, but it's certainly gutsy. After all, today's $850 million company can prove to be tomorrow's worthless one, right AOL?"
WTF? (Score:5, Insightful)
Christ, I don't think I've ever even heard of these guys. They should have took the money & ran.
Re:WTF? (Score:5, Funny)
Christ, I don't think I've ever even heard of these guys. They should have took the money & ran.
Agreed. With that kind of money you could almost afford your own US Senator ... or US Representative at the least. With one of those they could start pushing their pro-Square agenda. For far too long the Mods and the Rockers have enjoyed an unquestioned two party system ...
Flatland (Score:2, Funny)
I, for one, welcome our new square overlords. It'll give the "religious circles" a run for their money. I can see how the religious circles would be irked by the homo-erotic behavior of four squares vs a normal single square married to a traditional acute triangle. Then again, it's also much less dangerous as the known dangers of being stabbed to death on a daily basis don't exist. /flatland-humor
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For far too long the Mods and the Rockers
I'm a Mocker you insensitive clod!
Re:WTF? (Score:5, Insightful)
Re:WTF? (Score:5, Funny)
I don't think Yahoo has any friends.
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Microsoft and Apple.
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Sieg heil!
Carry on.
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So what you're saying is that Yahoo! is Kip Drordy?
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Re:WTF? (Score:4, Insightful)
because we can only have so many "innovative" companies. A dozen facebooks wouldn't work, a dozen twitters won't work. No one wants to log into a dozen different twitter clones and update their status. You have big sharks, and you have the guppies nipping at their heels. The tiny bit of innovation that Foursquare adds could be added to Facebook tomorrow and Foursquare would vanish into oblivion.
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Yeah, nothing new can come along. Only the established survive in the business world. That's why DEC, US Steel, Cunard, Circuit City, Frigidaire, etc... are all still the giants they used to be and no one has supplanted them.
Re:WTF? (Score:5, Informative)
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Zynga? The spyware makers?
Re:WTF? (Score:4, Informative)
I wouldn't compare Foursquare to Zynga . . . there's a game aspect, but it isn't ad-scam laden like Zynga's properties. Foursquare is broadly very similar to services like Loopt and Google Latitude, but with a few enhancements. Each time you "check in" to a location, you earn points. Whoever has the highest score is declared "Mayor" of that particular venue. Venues are also tagged to classify what sort of place they are, and you earn badges based on your check-in habits. For instance, three times in one week at venues tagged as being gyms will earn you the "Gym Rat" badge; go to a certain number of places tagged as having karaoke nights in a certain amount of time and you get the "Don't stop believin" badge, etc.
There are more aspects too--you can set up "to dos" to suggest certain activities at certain venues, and people can add them to their to-do list, etc. It's basically just another "I am here / what are my friends doing / what's a popular place to go tonight" app with some game aspects.
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The gym staff uniform is a red shirt, white pants, and an oversized button-like belt buckle...
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Seriously,
I went to the site to see what it is. They have no explanation of why i would want it on the front page, except for a link about us.
A 2 minute long video, that's a howto.
30 seconds in I got bored.
even with this publicity, I think it is unlikely to take off. There does appear to be links for developers trying to leveragge the site into money though.
Re:WTF? (Score:5, Interesting)
A 2 minute long video, that's a howto.
30 seconds in I got bored.
even with this publicity, I think it is unlikely to take off.
Besides, losers who use foursquare are just begging to be stalked. It makes Facebook's abysmal privacy look positively friendly by comparison.
In fact, stalking foursquare losers ("fourstalking") has become quite the pastime, so much so that this attention junkie [lalawag.com] quit the service, despite craving the attention. A part of me feels sympathy...while another part can't help but feel these narcissists are getting exactly what they deserve.
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And the people who legitimately use it to connect with or compare notes with friends are also losers?
Not to mention Foursquare has options to not share your updates publicly (like mine) so that only your pre-added friends see where you've been or are.
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Is this just me?
Every time I see a 4sq tweet that says "I'm at the store/mall/etc", I want to reply "I'm at your house, robbing you". If nothing else, to show them how stupid it is.
not really a security risk (Score:5, Informative)
Instead, they knock on the door of a house that appears unoccupied. If someone answers, they say, "Oh, I'm looking for my friend, Sally. Does she still live here?" If no one answers, then they proceed with the burglary. Finding empty houses does not require internet technology.
Seth
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So most burglers prefer to show their faces and announce their arrivals at prospective locations of their crimes rather than looking for victims that will conveniently let the burgler know remotely when a good time would be to swing by. They really do deserve to get busted.
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Of course there's the small minority who really do their research, learn to pick locks rather than smash a window, learn to bypass an alarm system, etc. They're so few and far between that it's easier to get hit by lightning.
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Yup, you never heard of them. Now, though, you did. They were the loonies that turned down 100m for a name nobody knew about.
I think the price just hit the 200m range.
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Christ, anyone who hasn't heard of Foursquare isn't really keen on the social networking scene. It's the latest buzz. HA, get it? Google Buzz? Alright I'll stop with stupid puns.
The general Idea is either
A) They make enough money already (I believe another project of theirs was bought out by Google some time ago)
B) They don't want their project to die, they want it to become worldchanging
C) They are holding out for more, because its worth more.
Or any combination of those.Yes, well, you can say A and C don't
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D) They are idiots, and are far overvaluing their business.
$100 mil? Seriously? That's a fucking huge amount of money! There aren't a ton of web-based businesses, not selling a physical product, which are worth this much. Dreaming that you're going to be the next Facebook or Ebay is not often a financially viable dream to have.
Secondly, I would argue that Foursquare is not well known. It's only got around a million users, which, as a percentage of those "really keen on the social networking
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How many people Know about Facebook but don't use it? How many people know about MySpace and don't use it? How many people know about Twitter but don't use it?
I think its more popular than you realize. Simply because I don't own a phone capable of running it, or because I choose not to use it for the very reasons listed above, doesn't mean that it isn't a well known trade name.
They don't have to "Dream" to be the next facebook. Facebook was offered like 8 or 9 hundred million right? Twitter, which was just
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Their investors already think it's worth that much currently, though: Foursquare just raised a round of venture capital at a valuation of around $90 million. Why would an investor who just bought in at a price that implies a $90 million valuation be keen to sell out at $100 million? Venture capitalists usually aren't too excited about 10% returns.
Now of course, you could argue that they were stupid for buying in at a $90m valuation to begin with. But a few weeks ago they thought that was a good deal, and I
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I think you got the important part. Most of us have never heard of them. They aren't a big outfit. Bragging up that you turned down big money is sometimes just a bragging point.
I worked at a place once, that was totally full of themselves. And no, I'd be pretty sure none of you ever heard of it. The CEO told us in a company meeting (attendance required) that he had turned down a 10 million dollar from Microsoft to buy us out. I thought about it while he continued, why wou
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Most of us have never heard of them.
Except the fuckwads over at ReadWriteWeb, Mashable and TechCrunch is all they blog about: Foursquare this, Foursquare that, Foursquare farted, Foursquare puked. Fuck. Makes you wonder if they have a financial interest in them...
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I've heard of them, but very little. I asked some net savvy teens and early 20-somethings and they said "Foursquare?
I can only imagine the owners of Foursquare are too young or stupid to remember the late 90s
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Well, one day while playing an errant ball struck my gonads and caused me some serious injuries. For lack of a better description, it basically broke my penis. I now will never have children, and suffer from hormonal problems.
It's not like you would have had any kids anyway, so it's no big loss.
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Yeah... it made me think of the Windows logo.
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No it's not, it's just bad grammar.
They should have taken the money & ran.
Well.. (Score:5, Informative)
For two, why is money such a big deal? If you love what you do and can provide for yourself with it, why whore yourselves out? It's not about being filthy rich, but doing what you love, right?
Re:Well.. (Score:5, Insightful)
It is easier to do what you love when you are filthy rich.
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It is easier to do who you love when you are filthy rich.
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It is easier to do what you love when you are filthy rich.
But if what you want to do is to develop this kind of web app, then perhaps Foursquare's owners figure that they're ahead of the game by holding onto the asset rather then taking their money and starting over. If $100 million is a fair price* for the asset, then they would have just broken even.
*Breaking even is a difficult number to come up with accurately. A smaller, more focused team may have a better chance of growing a business, thus producing greater future value. On the other hand, the MBAs who make
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I think the founders of Foursquare already are filthy rich from selling previous companies, though. So they don't have to sell this one unless for some reason they needed to be even more filthy rich.
Re:Well.. (Score:4, Insightful)
For two, why is money such a big deal? If you love what you do and can provide for yourself with it, why whore yourselves out? It's not about being filthy rich, but doing what you love, right?
Some people collect stamps, some people collect coins, some people collect butterflies, and some people collect obscenely huge amounts of money.
Some people worship God, some people worship life, some people worship nature, some people worship money.
Some people love their god above all else, some people love their spouse above all else, some people love their children above all else, and some people love money above all else.
It's all about what you love and what your personal value system is. Personally, I pity anyone who thinks a thing that lacks a price is worthless.
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Personally, I pity anyone who thinks a thing that lacks a price is worthless.
There's a girl I want but she's engaged... she won't leave her guy for me, although she keeps deflecting every offer I make to back off and let her be.
Most people tell me this is stupid and I should leave. They've also said it makes no sense that I'd rather let her go if the guy she has is actually going to make her happy. You're quite right, I think... even if I could have her, if it came at the expense of her happiness there would be no worth in it. You can't put a price on that. People around me d
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You made her various offers. The fact that you did that means that her price is high while your price is low. Girls don't want to go near low-valued individuals, especially if the disparity between your prices is high. If you had high price, she would have made the offer first (i.e., by flirting).
Imagine that you're Brad Pitt. Would you bother making offers to girls just to get laid? The solution to your problem is to increase your value. Go ou
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She started it. She did flirt for a while.
The problem seems to be she has someone she doesn't want to leave. I mean imagine if you had a Mazda RX-8. You LIKE the RX-8. Now, you could trade the RX-8 for a Porsche 911 Carrera. Nice car... but you really like the RX-8. You'll take a look at the 911 ... you're not taking it for a test drive though, for whatever reason; besides, the dealer already told you, no test drives. You could buy it, it's a couple years old, only $25k, trade the RX-8 in and throw $
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Good job completely missing his point.
Re:Well.. (Score:5, Insightful)
I realize Four Square's case isn't the same as going public, but it's similar. If you love what you do and already make good money, why ruin it? And for the record, you can pay everyone's salary and still make zero profit, so "unprofitable" doesn't mean that the people working there aren't making good money.
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Turning down the money is irresponsible (unless it's truly vastly undervalued, which is possible.)
The only reason not to sell it for a price like that is if he already has enough money and is running it as a hobby. If that's the case, it can make or lose some amount of money without it really affecting him. But just because Top Honcho has $XM in the bank already doesn't mean his employees have equal resources. If it starts losing money and he gets bored, who is going to keep all those employees in payche
Re:Well.. (Score:4, Insightful)
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Re:Well.. (Score:4, Insightful)
I'm pretty sure that stock options come with the expectation that the company will be managed in such a way that their value will be greatest possible. It's certainly implied in the option system, howeve I'm unfamiliar with the laws surrounding this issue. Could someone confirm this either way?
I have noticed a disturbing tendency of corporations demanding loyalty from their workers yet giving none in return. This, in turn, breeds cynicism in said workers and makes things like stealing company assets seem more acceptable to them, perhaps even desirable.
There's a reason why humans developed empathy: it makes groups far more efficient, since their members don't have to waste their energy worrying about getting a dagger in their back. But I guess the psychopaths who lead most corporations aren't capable of understanding that.
Actually, I'm pretty sure that it is; if not legally, then simply because options are going to be completely useless as motivators from now on (and also because he runs a serious risk of bodily harm - there are limits to what you can do to someone you see daily and not suffer consequences).
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I've heard this comment before and its moronic.
You're not just turning down money, you're also maintaining control.
Many many more businesses have done better or worse for their employees and customers based on management and control at the top than by getting huge influxes of cash.
Think Netscape, AOL, or all the little companies Microsoft and Intel have bought up and quashed over the years.
Taking the money typically means losing control of the business. That's one of the things Google's founders refused to
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If it starts losing money and he gets bored, who is going to keep all those employees in paychecks?
And this differs from every other business in what way? The only thing keeping me employed today is that my company's owner still likes running his business. Should that ever change, he owes me no responsibility to keep running it to meet my needs. Yes, it'd suck if he decided to close the doors one day, but that's why I'm careful about whom I choose to work for.
Re:Well.. (Score:4, Informative)
Generally even early employees won't become millionaires in these sorts of deals.
Typically, VCs get paid back all their initial investment right off the top (usually part of a "liquidation preference"). In Foursquare's case, that's about $12 million, leaving an $88 million pot. Of the rest, typically VCs plus founders own almost all of it. A very early employee, if lucky, might own up to 0.5% or so of the company. That would give them $440,000 in this scenario. But that's something of a best case, too, because employees often own common stock, while investors and founders own preferred shares, and there are sometimes liquidation preferences for those payouts too.
It's on the outside realm of possibility that there exists an early Foursquare employees with the requisite ~1.2% or so of equity to actually make one million dollars from an exit like this. But there wouldn't be many, and it's quite possible there are none.
Oh, and unlike the VCs and founders, employees typically have a 2-to-4-year vesting period, so they don't get any of their money unless they stay with the post-acquisition company for multiple years, even if they hate their new boss.
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Perhaps someone has already mentioned this, but this is pretty much what 37signals says in their new book "ReWork". A brilliant read.
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Because 4square's not making any money *now*.
I've seen it posted here somewhere, but it's been said that money can't buy happiness but the lack of money can buy a whole lot of misery.
Re: 100 Mio! (Score:2)
Hey he's fixed the typo in the article!
"I sold my location-based service I started in my basement for 100 GPS units!"
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At this point maybe he likes working on the software on his own terms. If he sold, he would have to come up with a whole new extension of his original idea if he wanted something to dabble with--maybe this feels like a
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For two, why is money such a big deal? If you love what you do and can provide for yourself with it, why whore yourselves out? It's not about being filthy rich, but doing what you love, right?
We live in a culture where profit is the ultimate good, transcending all other considerations, including individual and even species survival. For someone to refuse profit -- or, as is more likely in this case, to defer profit now in hopes of greater profits later -- is literally beyond comprehension for most people. And then they get angry because they're envious of all that money. To be fair, people spend their entire lives bombarded daily with the message that wealth and possessions are the only things t
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Why would one offer them 100 mio for it if it's so worthless, for one.
Lets suppose it has 5 million users worldwide. Thats $20 per person. Thats not fucking bad, considering (A) you just purchased their eyeballs (the actual product of all social network businesses), and (B) you have their location.
What is a local television station worth? This service has all the advantages of local advertising markets, but with a global advertising infrastructure.
Did you think the offer was for their IP?
The IP isnt their product. Their product is users, and they rent them to advertise
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Why would one offer them 100 mio for it if it's so worthless, for one.
To those thinking it's worthless (not you, I assume), they forget that FourSquare has location and behavior data on all of its users. It's a goldmine for targeted advertising.
Here on Slashdot, many people may not realize that other people go to places called 'bars' to drink alcohol. FourSquare knows when you are visiting bars (known to the social butterfly as 'bar-hopping'), and where you are currently, and start serving ads for other local bars or pizza places with a high expectation that you are likely
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My bar is sacred to me. Telling me to go to another bar is akin to proselytizing.
In short, heresy.
Thank god FourSquare didn't sell out.
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Thank god FourSquare didn't sell out.
You expect this isn't their intention for monetization, one way or the other? Either they will serve targeted ads, sell to someone else who will, charge the users to play, or go out of business.
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whoosh.
I don't care what foursquare does. Just dont' get between me and my mild form of alcohol dependence.
Speaking as an entrepreneur (Score:2)
Funny thing is, t
idiots (Score:4, Funny)
These guys turning down the money are idiots, all idiots. Twitter cannot create the revenue to generate the profit to pay back $500m. Or $900m in the case of Facebook. They [owners] all should have sold it, they're never going to get that kind of money anywhere else. Have you seek Zuckerberg give presentations? The goofball can't even give a proper PR announcement, let alone get people excited about anything Facebook is doing.
This goes doubly so when the buyer will let the owner retain control.
Rejections (Score:2)
I wonder if these rejections will hasten or delay the bust of social media.
Already rich and still driven (Score:5, Insightful)
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1. A big company like Google can destroy a little company.
It didn't destroy it, it just wasn't doing things on Dens' schedule. Dodgeball became Google's thing, not Dens' personal side project and thus their desire to add developers to his team was low and their desire to tie him and his staff up in endless meetings was more important.
But as far as the money is concerned, yeah, that's probably true.
Fuck Everything (Score:5, Funny)
We're going Fivesquare
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Too bad: Foursome is already taken.
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That doesn't make any sense.
The speech goes "Four square and seven years ago." Not five.
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Four score, not square.
Or, if that was meant as funny, I guess I don't get it.
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Or, if that was meant as funny, I guess I don't get it.
Insufficient sleep is sometimes the line between submit and cancel.
Couldn't help it though. 'Four square and seven years ago' just got stuck in my head once I saw the headline and posting something using that line was the only way to get rid of it.
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I'm going to 4chan. They're much more friendly.
Upstarts. (Score:5, Insightful)
These start-ups love to pass themselves off as scrappy little guys nipping at the heels of giants. In my experience these companies, the vast majority of the time, are backed by investors with very deep pockets. These guys are undoubtedly banking on the hope that this investment will pay off in a big way. There's this infatuation investors have with these social sites and it's easy to see why. Minimal investment, little substance, but the pay offs can be huge if people get hooked. Why spend a fortune building a company that actually makes product, with the expense and work that comes with it, when you can just do this? And given that development can easily be outsourced to India these ventures even more attractive.
Right now they're at the hype generating phase. By turning down this offer they have garnered media attention. And amongst the ignorant masses people will believe that these guys are principled. I think they're waiting to hit critical mass with users. Their hope is that they become the next Twitter. Then they'll sell especially if they haven't figured out a way to make money on something that seems completely pointless.
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The truth (or misleading-ness) of your statement may depend on how you define the terms "backed by" and "investor with deep pockets".
I worked for a tiny software startup in the reporting field, back before enterprise reporting was a mature market. You could claim the company was "backed by investors with deep pockets". It's called venture capital, and it is in no way inconsistent with the view that the company is a dwarf trying to take on giants.
See, those deep pockets aren't fully committed to making tha
Re:Upstarts. (Score:4, Interesting)
Yeah, I'd be willing to bet the investors had a big part in turning this down, too. (Actually, they probably had to; VC firms usually demand a say in these sorts of decisions.)
A bunch of major VCs bought in to Foursquare about a week or two ago at prices that value the company at $80 million on paper [techcrunch.com]. Given those valuations at the buy-in, an $100m exit is simply not enough for the VCs to get the sort of return on their investment they have in mind.
Terms of The Deal (Score:2)
Only the deal makers know what the details of the $100 million deal. Chances are excellent it's a bad deal. Some ways the deal can be bad follow....
Often times, there is a top line PR number, that if *every* option played to the start up's benefit, then they'd have earned the number. But most of the deals are completed leave the start-up members meaningfully smaller pay outs.
Let's say the deal flies and the people selling meet the conditions of the purchase, there's the matter of actually getting paid.
hey, here's a radical notion (Score:3)
Maybe they turned down the bid because they wanted to stay independent and liked what they did?
Jesus, it drives me crazy listening to people go "what morons, they should have taken the money and ran." Why? What if they really like what they do?
Disclaimer: I'm not familiar with Foursquare's product or management, and I have this crazy notion that there are things that are worth more than money.
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Maybe they turned down the bid because they wanted to stay independent and liked what they did?
Jesus, it drives me crazy listening to people go "what morons, they should have taken the money and ran." Why? What if they really like what they do?
Disclaimer: I'm not familiar with Foursquare's product or management, and I have this crazy notion that there are things that are worth more than money.
Social networking sites rise and fall relatively rapidly. The insinuation is that they should have taken the money because even if they love what they do, they probably won't be doing it for much longer. Having the money would enable them to easily go do something else they love.
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I think I get it. (Score:2)
Foursquare looks at first glance to be a site where the entire point is to do things that earn 'rewards'. Looks like they call them 'badges'. Hmm... Life as a massive DnD game, minus monsters and death. Ok...
Like 'unlocking' my city (or cities, where I am). Oh yeah, sounds like endless billboards on my phone. Essentially advertising I participate in. Not a new concept, I participate in advertising now by losing pieces of my life to it.
Kinda like Farmville without the Facebook stuff. And more ads, I b
It's a gamble (Score:2)
Social networking sites can either become incredibly successful or fail horribly, and it's generally down to luck as to which happens. He could make more money at a later date, or go bust.
Inflation / USD weakness (Score:2)
Has the US dollar really become so weak?
Inaccurate title and summary (Score:5, Informative)
Who's Charlie O'Donnell? What's his role in Foursquare? Is he really making statements on their behalf? I doubt it. Quoting from the photo caption later on,
So, wtf? There's no story here, it's just some random dude repeating what some other random dude said would be a wise move.
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location-based (Score:2)
What the hell is that? I thought Twitter was supposed to be the Next Big Thing?
Well, Foursquare seems to currently be the Next Big Thing in the location-based genre of social networking.
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Man, I want this bubble to burst so bad. Is there a market to bet against the bubble? :-)
I looked into it, and there apparently isn't... All the big players (Zynga, Facebook, Playdom, Playfish, Twitter, bebo, studivz, orkut, whatever) are either still private or a really small part of a big conglomerate like EA or Google. So no way to go short equities or long CDS protection in them...
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The article states that Twitter rejected a $500 million and that Twitter "had no revenue at the time".
Is Twitter making money now? If so, how the fuck are they doing it? Their service is FREE, they don't have ads, they don't SELL anything. Yet they have tremendous costs.
Same goes for Facebook. How the fuck are these guys actually MAKING money? Venture capital doesn't count because that will dry up some day. Does any of these social networking sites actually have a real, qualified accountant or two working for them?
These sites give EVERYTHING away for free, yet don't actually SELL anything (except for probably your "private" data). That business model just sucks and anyone investing in them is utterly clueless.
What I would like to know is a list of every single company/person who has invested in them so I know not to ever do business with those guys, or so I have a list of suckers I can get money from for money loosing ventures.
They make money from venture capital. Facebook doesn't talk much about its finances, but the Forbes articles I've read speculating on the topic seem to think it would be a miracle if it has yet to make a net profit in a year. And Facebook is the most successful social network with a well established way of selling targeted ads.
You don't invest in these companies because they'll make money, just like you don't invest in gold because it will make you dinner. You invest because you count on other investors
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