Most interesting bit to me:<p>"The conversations with potential acquirers [...] allowed the founders to develop close working relationships with some of the most important Internet companies who can not only be acquirers but also distribution partners and monetization partners."
This is an odd post by Fred, a lot of <i>The Company</i> and <i>the service, the users, the team, and the shareholders (in that order)</i> quite unlike his usual free-flowing writing style.
tlwr; Four Square is a feature of a cell phone network and that is where it will go. No cell phone company is going to pay whatever the investors now expect if it can rebuild the feature for 10% of that and instantly have more than 1.8M eyeballs.<p>The fact that I don't know anyone who would pay for FourSquare is irrelevant when considering its greatest value is as an advertising mechanism for a cell phone provider. If ATT can say, "We have foursquare" it'll do better for ATT than I suspect FourSquare will ever generate in revenue on its own.<p>It would be big if Sprint can say, "We're hip, we have FourSquare and Verizon doesn't." That will get Sprint business, but will Joe Company advertise on FourSquare even with 1.8 million users? Will Joe FS User pay for Four Square? Probably not. The vast majority won't -- ever -- Even with 10 M users. Four Square doesn't provide <i>that</i> kind of value. It provides the Facebook kind of value, which is to advertisers -- not the consumer.<p>Foursquare is a value in that it helps people connect. But connecting with people is like disposable income. If one option for spending disposable income goes away, the disposable income goes somewhere else. Similarly, foursquare users will go somewhere else to connect if there is another option or foursquare costs too much or anything at all probably. I don't even know if foursquare costs money I don't know anything about foursquare really.<p>What's the point? The point is, FourSquare is a feature. It's a feature of a cell phone that lets people connect. How much does that feature cost for a cell phone company to build? Does it cost $20M? Does it cost the valuation of FourSquare with a $20M investment? Probably not? I easily believe that Sprint or ATT or verizon could build FourSquare with $20M.<p>This is why investing $20M in companies like FourSquare is not a wise investment. It's not a rational investment.<p>The second reason it is not rational is this: FourSquare's competition for a buyout is not FourSquare clones, it is <i>any</i> network with 1.8 Million eyeballs. There are tons of those and many that are much more niche and easier to target and understand.<p>This $20M investment has just raised FourSquare's valuation so unrealistically high that it will be difficult for them to find someone they can convince to waste enough money on it to get a return on their investment. Even with $20M, the best FourSquare can do is get more eyeballs and they're going to have to get enough more eyeballs to make themselves, as an advertising mechanism, more valuable than all the other advertising mechanisms that have just as many eyeballs, but without the unrealistic expectation on behalf of investors that they need to get a certain return.<p>Many companies with many more eyeballs exist as advertising media with way lower valuations and way more potential as a rational advertising expenditure from a company that may consider acquiring FourSquare.
Making major decisions for "service, the user base, the team, and the shareholders (pretty much in that order)" doesn't strike me as particularly wise.<p>In my experience, user loyalty is worth very little. If it suits them, users will happily go and use a competing service that copies everything you do. Caring about the users is noble but a bit misguided since the users don't care about you in the slightest. Of course, people often say "we're doing this for the users!" whether that is the primary motivation or not.<p>I can see not feeling ready to sell out so soon, though. Foursquare has all sorts of potential and they're well situated to go in a number of directions. For instance, the local review (yelp) direction is natural, and look at the massive valuation Google et. al have considered for Yelp.