How Foursquare's Dennis Crowley Lost The Narrative To Yelp's Keith Rabois

The hype cycle flipped on Foursquare this year, thanks in part to ongoing criticism from one of its fiercest competitors.

Last year, if you believed the hype, Foursquare was said to be bleeding cash and talent. It was struggling to generate revenue. And, worse yet, it faced growing public skepticism and increasingly hostile media attention.

The ups and downs of this journey are charted in Fast Company's new profile of cofounder and CEO Dennis Crowley. Crowley has struggled with the hype cycle that's familiar to most hot startups. The company thrived off of its positive attention in the beginning--from the magazine covers Crowley was featured on after Foursquare surpassed a million users to the television coverage he received for raising a $50 million round from Andreessen Horowitz and Union Square Ventures. But when the narrative flipped in the past year, Foursquare and its star started to fade from the attention. "It's inevitable with such high expectations that everyone will turn on you," says Foursquare employee No. 4 Nathan Folkman, now the CTO of Path, which is experiencing the end of its own honeymoon period. "People are in love with you, but then all of a sudden, they can't wait to watch you fail."

Foursquare is far from faultless. Its product missteps, along with its early and overly heavy focus on game mechanics and badges, pigeonholed the company. "A lot of people still think of us for these cute check-ins, points, and badges--we're still having a hard time shaking that stigma," Crowley told me. Compounded with the company's business stumbles--such as its lack of a local sales team and its sterile search ads--it was perhaps inevitable that Foursquare would face snowballing criticism.

But there is a larger issue at play here, beyond the company's product mistakes. "If I have one criticism of Foursquare," summarizes ThinkUp cofounder and Twitter pundit Anil Dash, "it's that they don't control their narrative very well."

Any observer of the company could tell Foursquare had let its narrative slip away--much of it was co-opted by a particularly vocal detractor with a big platform: Keith Rabois. Rabois is a board member of Yelp, which is increasingly one of Foursquare's chief competitors. (Incidentally, Foursquare also shared an office with Square, where Rabois once functioned as COO.) He's been rabid in his attacks, calling the company's potential a "myth," implying that Foursquare is fudging its user numbers, and suggesting Crowley's only hope is a "Hail Mary Bebo-style acquisition" to bail the company out.

His public assaults, delivered on Twitter, largely resonated. They received a disproportionate amount of attention from the press, and soon, there was rarely an article or tech conference where Rabois's name wasn't mentioned in the same sentence as Crowley's. It also served as a catalyst in changing the narrative about Foursquare.

"There were a few things that moved the perception," says Ben Horowitz, an investor in Foursquare. "They had a competitor [Yelp] who was putting out a lot of bad things, because they felt threatened. [Yelp] figured they'd use a different kind of competitive tactic, which is to sell a story that Foursquare was going to run out of money. The Yelp guys were able to, with some of their friendly investors, get a little information and say a lot of bad things about our [funding] round, which devolved into all the negative stories. The thing that made that story take, at least in my view, was basically the fact that Foursquare had had such a PR run, and so the best story to tell was [its] rise and fall."

When asked whether this was part of a Yelp strategy to paint Foursquare in a negative light, Vince Sollitto, a Yelp spokesperson, would only say, "[This is] as ridiculous a theory as the continued efforts by some to weave a narrative together around these two disparate companies."

Anil Dash agrees with Horowitz. "The press flipped: Excessive boosterism went to excessive skepticism," he says. "This is the character [the press] wanted." But Dash also has no issue calling Yelp's tactics cheap. "My biggest impression of Yelp is that they have a board member who is a loudmouth," he says. "But I look at Keith talking like that, and I think, you know what? The worst thing is not that he's being a dick on Twitter. [It's that] Keith is just playing a really ineffective form of zero-sum competition. I can't imagine a more damaging thing to do to Yelp than to define Foursquare as a competitor."

Rabois declined multiple requests for comment. Sollitto also refused to provide additional comment, declining the opportunity to clarify whether Yelp had any influence over Rabois's comments, or whether the company even endorsed them.

Crowley says he isn't troubled by the criticism. "I think I've got the thickest skin in the world at this point," he says.

He is also never one to shy away from a fight. As Instagram cofounder Mike Krieger told me, lauding Crowley's resilience, "I've seen Dennis on launch days just go out and answer all the critical tweets." (In fact, Crowley has his TweetDeck set up to monitor phrases such as "Foursquare sucks," "fuck Foursquare," and "deleted Foursquare.")

But when it comes to Rabois, Crowley realizes there isn't much benefit in getting into a public snark fest. (Crowley's usual response to Rabois: "Looking forward to proving every single one of you haters wrong. #HatersGonnaHate.")

"No good comes out of it," Crowley says. "I let myself go on Twitter a couple of times just because it bothers me. I sometimes have a hard time letting it go. It's like if someone's standing there and making fun of your brother, you're gonna step in and be like, 'Yo, cut it out.' You're gonna get in the middle of that. So if someone's making fun of all the work that our guys have busted their asses for, of course I’m gonna step in."

As for the larger wave of public skepticism, Crowley says it's not surprising. "Facebook and Twitter went through the same thing, and now we’re just under the same microscope," he says. "A lot of the Valley and the press has the ability to forget that companies go through this stage, where people are really skeptical about them. In my mind, there’s no difference between people saying, 'Oh, Foursquare, you’re still doing that check-in thing?' And people busting on Twitter in the beginning, like, 'Oh, did you tweet about having a sandwich today?' People made fun of Twitter for years before they hit that inflection point."

Crowley's recommendation for other startups enduring similar turmoil: Keep your head down and focus on improving product.

Rabois, for his part, has slowed down his criticism of Foursquare. But he's not keeping silent.

Following the publication of our profile on Crowley, one member of the press, ReadWriteWeb's Owen Thomas, tweeted that Yelp had added $1 billion to its market cap during the time it took for us to report our story.

Rabois immediately favorited the tweet.

[Image: Getty Images]

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9 Comments

  • Frank Demaria

    I think Foursquare still doesn't know what it wants to be famous for and is letting other define it, so I agree with your premise.  They need some old school PR moves and a lot of product focus or maybe that should be the other way around.

  • Chipper Boulas

    IMHO they both miss the mark.  Yelp has tons of information, but it is not personalized, nor is it built mobile first.  Foursquare became too focused on the gaming which hindered mainstream acceptance and sustainability.  Check out Tellmewhere for a personalized and social local search app.  Great model - albeit from an underfinanced company focused mainly on France. I expect both to move in this direction...

  • Anthony Reardon

    Thanks Austin. I read those profiles you shared. Very informative.

    A couple of points I agree with Yelp on. To do a local geographically niched service, starting with one location is a superior strategy. I also think emphasizing service with technology instead of upselling the pure automated efficiency of technology alone is key. Review is certainly powerful for discovery and decision-making, and is perfectly suited for mobile browsing. There's a lot of potential in it, but you've got to do much better. Just check out the comments (reviews) in your linked article and consider what kind of rating that would imply using Yelps own algorithm. Also, compare to phonebooks pushing online like Superpages. They are incorporating reviews and ratings too. It's just not that impressive an idea. I would actually tend to agree with Sandberg's assertion that a problem with local businesses is they are just not very tech savvy. Sure, there are plenty of online ad sales, but take a closer look. Pick a letter and go listing by listing in a phonebook, and I bet you will be amazed how many local (small) businesses don't even have a web presence beyond an auto-generated yellow pages or yelp listing- I'd go so far as to say it's a strong majority. Even then, most that do don't engage their patrons to make best use of the available tools. Same goes for all the auto-generated local business pages in Facebook. Yelp's success of late may have more to do with the transition to mobile prominence, and their prominent alignment with device platforms. Still doesn't change the essential shortcomings of the basic idea of what they are doing, and how that can convert local market dollars. The apparent success they are having might prove to be their downfall if they don't do more to innovate.

    Foursquare is interesting, but I think they are making a huge mistake trying to compete on the same terms as Yelp. It's actually not surprising to see them turn this direction with backing from Andreessen-Horowitz. Virtually everything I've seem them touch seems to conform to the same kind of commercial agenda and thinking. Not that there isn't a soundness to it. If you get more focused on the business end, there is money to be made. However, the downfall in that can be a compromise in the end-user experience in favor of advertiser priorities, and they matter more because they are the actual customer of your business customer. Kind of surprised to see the downplay of "check-ins" though. That is the differentiator for Foursquare, what they became known for, and I think what they should focus on building on. Where they spoke of enhancements off that I noted promise. Where they display deviation from it  I wasn't impressed. My sense of it they miss the potential of the original idea because they are tuned in too much to what their target market is asking for, when small businesses and the industry at large might really be asking the wrong questions. You put the end-user experience foremost, and then all those other aspects can fall into place. You're not going to do that by being almost indistinguishable from Yelp. You've got to take that original idea and think much bigger.

    Best, Anthony

  • Aaron

    Foursquare has iterated its platform many times over, to its benefit. Yelp hasn't changed in years.

  • Anthony Reardon

    I don't know. I think much a do about nothing. Both Foursquare and Yelp are boring IMHO. Clearly attempts to compete against traditional phonebooks by incorporating web and social. Both are too high on their hyper local business solutions, and neither offering anything impressive enough to deserve making money. However, facing off on who is better or in same league at least draws media attention and helps with public perception of relevance.

    Best, Anthony

  • acarr

    Thanks for the comment, Anthony. I think adding social/mobile/local to the game make Yelp/Foursquare both very compelling companies, but I appreciate your opinion.  

  • Anthony Reardon

    Sure Austin, I agree social/mobile/local is compelling, just that the business models need to be more innovative/disruptive/meaningful. You pull up these sites, and aside from some minor variations in aesthetic, they are almost exactly identical in function. Actually, everyone seems to be in the local game if you think about it. Consider the geographic targeting enhancements that have been occuring with Facebook, Twitter, Google, and so on. Just read about AOL's hyperlocal news business crashing. If you think about it, Foursquare and Yelp are not all that different from Groupon who has been struggling too. The market is oversaturated with this same kind of thinking, and without serious differentiation, I can't imagine either doing anything special.