June 28th, 2011
05:50 PM GMT
(CNN) - Foursquare, the internet business which started out as a social game, allowed users to 'check-in' to locations, pick up 'badges' and become 'mayors.'
That was then, but things change fast in the faddish world of online. Its focus is now moving to the more serious, real world business of payments, coupons, offers and retail.
To fuel this reinvention, co-founder Dennis Crowley and Naveen Selvadurai announced that the business recently raised $50 million from their current Silicon Valley venture capital backers who have a good track record of picking winners (think Facebook, Skype, Groupon and Twitter).
The cash will be used to hire more staff, launch new products and play around with new ideas, without having to worry about where next month’s rent will come from.
In a statement the co-founders noted “having our current investors double down on us is a tremendous gesture of support for foursquare and for the direction we're headed.”
When I spoke to Crowley he noted the company is focused on the bigger picture potential. “We just crossed 10 million users, we’ll be 20 [million], 50 [million], a hundred million in a couple of years,” he said.
Getting involved in real world transactions (and presumably hoping to take a small slice of that very large pie) appears a smart move by the founders.
Today's online consumer sees advertisement funded - and therefore free at point of sale - products almost as a right. Ultimately, however, there are only so many ad dollars to go around an ever expanding online universe.
For Crowley, there couldn’t be a better time to get in on a different, and potentially much bigger revenue stream with smart-phone penetration and the use of complex ‘apps’ becomes the rule rather than exception. “It seems like now is the right time… for foursquare, it’s a little bit like the perfect storm of great opportunity,” he says.
To kick things off, last weekend they announced a high-profile deal with American Express.
By linking their American Express card to their foursquare account, users can access discounts from select stores by simply walking in and, crucially, checking in. The aim is to both encourage first timers to try a brand or product, and existing customers to return to one. For foursquare a tie-up with such a blue-chip brand puts it firmly on the radar of retailers, marketers and payment vendors the world over.
For American Express, a tie-up with foursquare gets it into the online discounting space and in-front of a young and tech savvy demographic.
For Crowley it’s the first move of many. “There are all sorts of triggers that we can start using that are going to help brands and merchants reach customers in new ways,” he says.
Clearly this works well on paper, but online success take a lot more than a sound business plan and deep-pocketed investors.
The future of foursquare will not be dictated by big funding rounds or high-profile joint ventures but rather by how ad agency creatives, small business owners and ultimately customers decide to use the service – something notoriously difficult to manage and manipulate.
Right now for foursquare it's very field of dreams; 'If you build it, they will come' – but will they?
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