Foursquare's Yelp problem (they just got time to figure it all out)

Yelp LogoFoursquare Logo

This week I downloaded a new Yelp app onto my iPhone. In it Yelp included a copy of Foursquare’s badges, which reward people for checking in frequently. Sometimes you might get a swarm badge for checking into someplace that has a lot of other users checked in too. Sometimes you might win a mayor badge for checking in more often than anyone else at your favorite restaurant or park.

Well, Yelp (CrunchBase info on Yelp) has now copied the checkin gesture that Foursquare (Crunchbase info on Foursquare) introduced to us all and also they added badges of their own. I already am the baron of my favorite Mexican restaurant in Half Moon Bay.

This copying behavior demonstrates to me that Yelp is definitely jealous of the attention Foursquare is getting and isn’t able to innovate on its own.

This seems to be a problem for Foursquare. But is it really?

Yes.

Here’s why.

Back when I first met Steve Wozniak I asked him how an entrepreneur can build a new company that gets radically big like Apple. He told me that that only happens if two preconditions are met:

1. That a market is about to explode. That certainly seems true of geolocation-based services.
2. That the existing businesses ignore the new upstarts long enough for them to get traction. He told me how Apple was ignored by bigger companies like HP and IBM from 1977 to the early 1980s when IBM released the PC. Foursquare is only a year old and already it’s seeing its best features copied by Yelp. That’s a real problem.

Now, that doesn’t mean that Foursquare isn’t building something defensible.

Foursquare’s value is in two places:

1. Serendipity around people. Foursquare’s social graph is much more nuanced and much more focused on things that help me meet interesting new people. For instance, in Foursquare, if you’ve added your phone number like most people have, I can see you’re near me and I can also text you. It also shows me your Twitter and Facebook address. Yelp doesn’t focus on this so much.
2. Serendipity around place. Yelp is awesome if you: a. know where you are and b. know what you want. “I’m in financial district in San Francisco and I want great sushi.” Yelp is the best system for that. But what’s Foursquare awesome for? a. when you don’t know where you are and b. you don’t know what you want. When I arrived in Paris I had no clue what neighborhood I was in and I had an afternoon free. I checked in on Foursquare and it showed me, thanks to a tip left by someone, that there was the best Paris bakery right around the corner. I never would have known to search for that.

So, Yelp is jealous of Foursquare’s serendipity and gaming. But they haven’t nailed that yet. I think that’s why Foursquare’s CEO, Dennis Crowley, says that Yelp hasn’t copied the right features yet. But he’s gotta be nervous that they’ll figure it out in a couple of more months and totally take away Foursquare’s air supply. Now, this morning, Techcrunch is reporting that Foursquare is getting an investment, so that gives Crowley some time to figure it all out.

Where would I go if I were Foursquare?

1. Make the badge system web wide. Not just usable inside Foursquare. Lots of other companies are looking for a game to include in their apps. Open that up and make the badge system a platform. That’s probably why Facebook was so interested in it. Facebook needs more things to go web wide than just its like buttons (speaking of which, click like on my blog, please, see the bar below).
2. Add more utility around the tips. Finding the utility there is a bit difficult, and there isn’t enough of a game around adding them in, so lots of locations don’t have any tips, even ones that have Foursquare users checking in. And on places that have tons of tips it’s hard to find the ones that really are going to make your experience magical.
3. I’d buy some other companies, like Foodspotting, or Fiddme, and start hooking them together with Foursquare to make the utility better and more defendable against Yelp and, eventually, Google and Facebook, when they start getting a clue about location. I tried to set that up when I interviewed both Foursquare’s CEO and Foodspotting’s CEO together.
4. Buy a loyalty-card system, like CardStar. They claim not to be interested in selling, but there’s a HUGE amount of value in there. I’m using CardStar now to check in at Safeway with my Safeway card. Imagine if those two systems were joined?
5. Get Plancast and Tungle.me to share their data via APIs and build in new location features into them. Why can’t my calendar, on Tungle.me, check me into Foursquare automatically when it knows I’ve arrived someplace?
6. Add a “check out” feature. Why? Because that way I’ll know my friends are no longer at that coffee shop down the street so I shouldn’t try to meet them. How long you linger in one place says a lot about you, too. For instance, I hate shopping so I’ll only spend four minutes inside the Gap, if I go at all. But there are many people who will linger there for hours. If you are another clothing store, which customer is more valuable to you to get to come to visit your store? Me or that other customer?
7. Let us add a lot more data about the location we’re in. For instance, can eBay add inventory into that location? Can I post pictures or videos? Can you link to a wikipedia entry? Etc etc.
8. Extend the malleable social graph (that’s one thing Yelp hasn’t copied yet and won’t be able to easily). What is that? Foursquare is the only system that shows you users who are near you. That’s a malleable social graph. It shows you only a part of the social graph depending on a non-related variable (in this case location). Now, why can’t I have Foursquare only display people who’ve been to four Austin city BBQs? Or only show me the people who’ve been to five Sonoma wineries? Or, even better, show me only the people who’ve been to Sonoma wineries AND Austin. Yelp won’t be able to do that, and won’t see the value in doing that, but there’s DEEP value in that for getting rid of noise. After all, why am I taking sushi recommendations from people who don’t know anything about sushi and haven’t had enough experience with enough places to rate a sushi place?

Anyway, Foursquare does have a Yelp problem and it’ll be interesting to see how they deal with it over the next year.

What do you think? What would your advice be to Foursquare, or, really, any company that faces a larger, bigger, competitor, who keeps copying you?

Published by

Robert Scoble

As Startup Liaison for Rackspace, the Open Cloud Computing Company, Scoble travels the world looking for what's happening on the bleeding edge of technology for Rackspace's startup program. He's interviewed thousands of executives and technology innovators and reports what he learns in books ("The Age of Context," a book coauthored with Forbes author Shel Israel, has been released at http://amzn.to/AgeOfContext ), YouTube, and many social media sites where he's followed by millions of people. Best place to watch me is on Facebook at http://www.facebook.com/RobertScoble

Comments

  1. Robert,

    I would go get Tabbedout and when i check in a resturant or bar have it automatically allow me to enter my drink order use a table numbering system (all resturants and bars have them) to know who ordered and where they are.

    Then when i check out thru tabbedout then i would ask for the recomendation and have games and analytics arround recomendataion. Allow users to comment on peoples recomendations further enhanceing the accuracy.

  2. I think the main reason Foursquare should worry is that Yelp's fairly comprehensive listings (with daily open and close times) and review system add massive value to the check-in game. I know that San Fran and Brooklyn have probably been completely geo-tagged by FourSquarers, but in the Midwest (I'm in Michigan), if I want to check in at a random wafflehouse, there's a decent chance I'll have to fill out the location data. In Yelp, it's all there, and people in my Twitter/Facebook networks get some great data – often pictures of the food and location, user reviews, etc.

  3. Both Yelp and FourSquare are toast, as they are both entirely full of annoying hipsters the mainstream hates.

    Go read about something you like because it is good, and then read about it on yelp and it becomes pretty clear that the people writing the reviews are trying too hard to be ironic and hip and are offering no value in helping you find places that appeal to people who are not annoying San Francisco hipsters.

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  5. Nope. THere are lots of other ways to get phone numbers. My cell phone has been on the Internet for more than five years in thousands of different places. It's +1-425-205-1921 by the way.

  6. Perhaps Foursquare's future is outside of Foursquare's control. Two possible things that could assure Foursquare's success would be to get bought by someone else (and hope that the buyer doesn't break it up or let it rot), or to have an “Oprah-Ashton” moment in which the service suddenly becomes wildly popular with the masses.

    Some people in the small tech ghetto are already tired of the repeated mentions of Foursquare, and I'm not sure whether Foursquare is about to jump the shark, or whether it's just beginning to grow.

  7. It's a tough call. I always appreciated Yelp more than Foursquare, simply because it gives the kind of space for a longer, more meaningful post about a place – not simply, “I was here.” Foursquare, on the other hand, is the ultimate extension of what people always say they hate the most about Twitter: “Who cares what you're having for lunch?” is now replaced with, “Who cares where you're having lunch?”

    But Foursquare is still, somehow, huge. So I can only conclude that people don't really care if Foursquare is limited. Frankly, I've never used it to find a place to eat, and I don't know anyone who does.

    I think Yelp IS in a bad position, though, since they didn't capitalize on the phone app space while Foursquare was. If Yelp can properly steal from the sites that do something better, (I'm looking at you, Facebook, with all those FriendFeed improvements you hoarked before making FF your bitch!) they could still come out of this victorious.

    As for the web-wide idea, I was thinking the same thing recently. If someone could come up with a universal customer review system, but include something like an ad score for reviewers, they could spread their web app everywhere.

    http://ciaoenrico.com/2010/06/09/customer-revie

  8. Yesterday I got to thinking that 4SQ should think about how to build out a meatspace version of Alexa – they're 75% of the way there. Problems exist around precise accuracy of GPS for automated checkins which they'd really need if phones were to run background app checkins (anonymized of course) but comparing and ranking footfall at physical locations, realtime or historical feels interesting.

  9. I am in Seattle and there are fewer annoying San Francisco hipsters here than in San Francisco or Portland, but the one's that are here are the only people using yelp from what I can tell. Foursquare has a Douchebag badge which clearly outs their target annoying hipster demographic.

    In the last few months I have tried several places within a mile of my house that were rated very highly on yelp that I had never visited before. After trying three different places with between 4 and 5 stars and being very disappointed, I went to yelp to look at the ratings for several of my favorite places that are very busy with both better food and service and found they had lower yelp ratings, generally because of things that would annoy hipsters or college students.

    Go read about your favorite place that you didn't find on yelp and then go to the closest place doing the same thing that is ranked higher on yelp and tell me it makes any sense.

    What good is a ranking system that tells me to visit places that are no good and disparages places I know are excellent?

  10. This is why we need malleable social graphs so we can see recommendations from people who are like us. I agree that there's a problem with Yelp. The masses are asses problem, I call it. My favorite sushi place has some one stars on Yelp because some people who hate sushi got dragged there by their friends and they didn't find the food watered down enough for their tastes. I don't find there to be a hipster problem, but rather one of idiocy. :-)

  11. One could argue idiot and hipster are synonyms :-).

    A collection of malleable social graphs seems like complicated data to extract useful information from, I imagine the Netflix prize Napoleon Dynamite problem is magnified and there is probably a lot of hard to filter noise depending on the diversity and sources of a person's friends.

  12. I understand this is a Foursquare vs Yelp issue, but I’m just wondering : what do you think about Gowalla ? Is it worth mentioning ?

  13. The best location app is Google Maps on mobile: aggregate reviews of venues, traffic or transit info to get you there, Latitude to let your friends know you're on your way or when you get there, Buzz to let the world on their desktops, laptops and phones, know how it is.

  14. I actually think Yelp have a Foursquare problem.

    The reason is scaleability; Foursquare have it, Yelp don't. Consider the Yelp business model:

    - Regionalize my site (translations)
    - Buy / license a load of expensive data (from a listings provider)
    - Pay a load of community managers and freelancers to write reviews
    - Hope the above sticks (critical mass), if not throw more money at it

    Now consider Foursquare:

    - No translations (app is in English)
    - Get community to add place details for me
    - Get community to add tips
    - Community encourage their friends to join because of social, gaming, and viral twitter elements (free critical mass)

    This again is reflected in the value proposition:

    Yelp; ok so this app is going to tell me where great places are. I download it. No content – gutted. Uninstall and leave a poor rating. They failed to deliver on their value proposition.

    Foursquare; ok so this app is a game, I can claim places and become major, I can chase my friends around town etc. I download it. No content, hmmm nevermind. Actually there is a benefit to no content; I can now claim everywhere in my town and get a jump start on everyone else. Once I have claimed everywhere I get all my friends on it so I have a head start on them too.

    What does this mean in practice? The game mechanics of Foursquare allow them to penetrate markets where they have no content, and grow organically, the mechanics of Yelp don't. Foursquare never really fail to deliver on their value proposition (most of their negative feedback is complaining about how buggy the app is).

    If you still don't believe me, the numbers don't lie. Just go onto 4sq's leaderboards outside the US and see how much traction they have, it is insane (you can view any leaderboard on their mobile site – http://foursquare.com/mobile).

    Last time I checked there was more activity in Tokyo than San Francisco. There was a decent amount of activity in every major global city; Sydney, Johannesburg, Singapore, Rio de Janeiro, Mumbai. Even smaller provincial cities like Manchester (UK) had decent activity.

    Ultimately I think checkins are early adopter bullshit, but I think these early adopters will give Foursquare significant momentum (and globally), such that when they work out a more mainstream model (e.g. loyalty cards) they could steamroll the LBS market.

    You don't win at the social internets with a non-scaleable, strong in few markets business model IMO; which is why I am bullish on Foursquare (assuming that Facebook doesn't nail them first).

  15. Ok so this is a Foursquare vs Yelp issue, but I was wondering : what about Gowalla ? Is it worth mentioning ?

    And also, what about the restaurants/bar/local stores point of view ? Any analytics on how they integrate/consider these tools and interact with them ?

  16. I think Yelp has a Yelp problem. I think mentioned earlier, Yelp reviews are from strangers, not friends. I will trust them much less, if at all. Many of them may be sponsored or paid reviews anyway. Yelp is known for shady practices and playing games with reviews as a way to monetize their platform. I'll never use Yelp to check into anywhere. They are not to be trusted. And copying the badge feature with Baron. How lame is that? What's next? Earl, duke, prince, princess, czar, assistant to the czar? The beauty of Foursquare is in its simplicity and innovation. There is also a bit of a cool factor that is difficult to capture or understand. Ask all the influencers why they are using Foursquare and not Gowalla, Loopt, Yelp, FB (Check in coming soon?), BrightKite, etc.

  17. I’d like to see foursquare integrate into credit card transactions.

    They give users an opt-in to link their credit card numbers with their foursquare accounts. When customers use linked cards, foursquare presents that customer’s foursquare status to the merchant, who can then apply a rich set of reward/recognition policies automatically. A number of policies could be implemented – 10% automatic discount for Mayors, 5% if you’ve checked-in in the last 5 days, 25% if you’re the Mayor of a competitor, etc.

    Beyond mobile coupons, which require customers to show their badges to barristas, this gives venue owners and customers alike an easy, natural identification mechanism that doesn’t require changes in established behavior – just pay using a linked card. Consumers get better deals for promoting venues. Merchants build loyalty by rewarding customers who self-associate with their venues. Credit card companies see increased usage and preference for their cards. Foursquare sees greater participation and expands its mainstream legitimacy.

  18. Very good points. Another problem that I feel foursquare has is that they are pigeonholing which businesses can and cannot participate. I work for a dental company with over 220 offices on the west coast and foursquare seemed to not be real interested in us providing specials to our foursquare using patients.

    I know they are probably overwhelmed at this point, but if they want real buy-in they need to expand beyond the coffee shop crowd and let other businesses in on the fun.

    Keep up the good work man, I have been liking the blog more and more.

    @chrislorenz

  19. These location based apps are great if you get used to using them frequently. It is very easy to check in via Foursquare wherever I go. It's simple, intuitive and kinda fun.

    Yelp on the other hand is really only about brick and mortar places you spend money. As far as I can tell on Yelp I can't check into a local park, neighborhood, fishing hole or even my workplace Tiny Prints*. So if I can only check in when I'm spending money in a physical establishment I'm not going to be checking in very often. Always posting at the same grocery store and lunch spot over and over gets pretty dry.

    These things count on people becoming semi-addicted and I don't see that happening to Yelp on a mobile devices unless they lift the restrictions.

    *Users on numerous occasions have added my company into Yelp to do both positive and negative reviews, we were even asked to advertise on the site. Periodically the listing would get removed so I inquired about why, I was told Yelp was only for open public retail establishments.

    If I'm a user and have gone through the trouble of adding a new company and writing a well thought out review, I think I'd get a little annoyed if it were all taken down. In our case it has happened several times but only removed after a dozen or so reviews were done. Seems like good valuable web content down the drain.

    Foursquare, I think you're safe from Yelp but keep innovating!