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]