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

Over the past month or so I’ve had a similar feeling as I had back in April 2008. At the begging of April 08 I was evangelizing the use of Twitter. It wasn’t popular, it was “nerdy”, Ashton, Oprah, and Tila Tequila were not yet dominating the service but I saw value in it and I wanted my friends and colleagues to be early to the game. I got a lot of push back at the time but overtime people began to try it out. Now my entire family and my fiance’s entire family is on Twitter and they love it. I have tons of friends on Twitter and everyone finds it valuable and useful. Many of them have become evangelists for the service themselves, they love it, I might even say obsessed.

By no means am I taking credit for the growth of Twitter over the last year and a half but I do feel pretty good about the fact that I recognized it’s value early. I’m attempting to do that again.

I need you to join Foursquare. Even if you think it’s a waste of time or “nerdy”, I’m trying to help you avoid being late to the party…again. There are a few key reasons that lead me to believe Foursquare will be huge, at least huge enough for the non-internet person to benefit from. A few of those reason are the huge potential that is location based applications, it’s fun and non-internet people can see why they’d want to join it, and it helps cities work better.

The way Foursquare works is, you go to a venue (bar, restaurant, park, etc.) and check in. Once you’ve checked in Foursquare awards you points and tallies the amount of times that you’ve checked in there. You’ll receive more points at more popular places and if you’re the person who’s checked in at that venue the most you’ll become the mayor. Also, by checking in to multiple venues and checking in often you receive badges for your check ins. The competitive mood of the game works incredibly well for it’s distribution and is quickly addicting.

Here’s why it has so much potential.

1) Location

Location will be is huge for the same reason Twitter blew up; it’s ability to connect people and provide value to them. Twitter allows you to be connected with people regardless of their location, but imagine the benefit of knowing more accurately and more timely the things that are happening in your area, now. This works between friends on a personal level (where is Ryan, I want to hang out) and with businesses on a public level (where is Ryan, I want to know what he likes).

2) It’s fun

I’ve only been on Foursquare for a few months and I always make sure I can check in to the venues I’m going to. I don’t want to miss out on getting the points and raising the ranks in Chicago and amongst my friends on Fsq. I currently hold 4 mayorships, at my local bar, coffee shop, restaurant, and condo complex. I find myself defaulting to the places I’m the mayor because I want to keep the title. I became the mayor because I like going to these venues but it works backwards too. I really enjoy knowing what bars and restaurant my friends hit up even though I’m not with them and more than once I’ve used Foursquare to meetup with friends and it’ll only get better the more folks are on it.

3) Your life improves

Sorry to reference Fred Wilson again, but he recently wrote a post on Urban architecture and how services like Foursquare make cities easier to use. In short, this type of service makes your life easier. They’ve recently, and much more aggressively than Twitter, found a revenue opportunity.  They’ve launched Foursquare for business that will allow venues to provide deals to the mayors and advertise to the patrons. They may even be able to learn about their customers and what other venues they attend. Can you say partnerships?

Early this month Foursquare announced that they would be taking an initial stage of funding from Union Square Ventures & O’Reily Alpha Tech Ventures. I’m encourage that Foursquare will grow to build some amazing things with their $1.35mm that they’ve raised.

Even if you think the location thing is still ‘creepy’ or the extra effort to connect Foursquare to Twitter isn’t worth it, please signup. Whether you don’t have an iPhone or Blackberry, that’s not an excuse either, I use Foursquare through SMS and it’s great. If you don’t sign-up now you’ll be coming back to this blog post in 3 or 4 months saying dang, I wish I would have gotten on before the hype, now it’s so tough to be the mayor of your favorite joint. Trust me, don’t be late to the party.