THE DREAM IN ACTION

Some people don’t understand how young technology companies work. Some people make it sound like you should be able to charge right away and bootstrap every startup. Well sometimes, in the social web world, you need to have adoption of your product before it proves it’s value. It’s difficult to prove value without adoption and it’s difficult to get adoption without value for the user: chicken and egg.

Enter VC and Angel investment. These investors help companies like this survive and grow until their adoption is proven and value displayed. It doesn’t always happen but it can, and that’s the bet these investors are taking. Twitter has near 60 million users and they’ve not yet chosen a revenue model, although there are plenty of choices. The skeptics are begging for a business model to be chosen before they’ll admit that it’s a worthwhile business. I disagree, I can look past the present to see the future value and I hope that you can too.

Then there is foursquare a location based game that allows you to check-in to venues, get points for being there and collect badges as you go. If you go to that location more than anyone else you become the mayor and trust me, you need to be on this game. There is no doubt in my mind that foursquare will be the missing link between offline cash and online energy.

Here is one way that I think foursquare will connect online and off, and make some serious $krill in the process:

Within the foursquare game there are points given to people who check into venues. New venues award more points because the point of the game is to connect people with their city. They describe the goal of they game as…

foursquare aims to encourage people to explore their neighborhoods and then reward people
for doing so. We do this by combining our friend-finder and social city guide elements with
game mechanics – our users earn points, win mayorships and unlock badges for trying new
places and revisiting old favorites.

Recently foursquare decided to reach out to businesses and offer an opportunity to promote their business by offering its patrons deals when they attend often. Show that you’re the mayor on foursquare and get a free beer, french fries or free cover! Brilliant. So how else could the venues get involved? How could foursquare get cash from those venues.

One option foursquare has is to sell points and sell the ability to award badges to venues. Then these venues will become an integral part of the game, the gate keepers. They’ll be able to determine their own criteria for success within the game and directly reach their customers. foursquare will have effectively open sourced the rules of the game, and we all know the power of open-source. If this happens, all the game skeptics will be hushed…it will become real, tangible, and valuable. We’ve seen the cash value of games when they are strictly online (Farmville, SecondLife), now we’ll see it in the “touchable” world.

So, foursquare took an investment round announced on Sept. 9, they’re a social game so this move doesn’t surprise me at all. They need to continue their growth and this injection of capital will allow them to do that. But to appease the “bootstrap or die” crowd, foursquare is already showing that they are revenue focused with clear business model options. Companies are already involved and as Charlie O’Donnell points out, charging businesses is the way to make local work. These guys understand how young technology companies work and are “working it” from both sides.

photo credit mari sheibley