With my family’s background in real estate sales and investing, I’ve always been fascinated by location, cities, the flow of people, and thus, geo-location based products. While the ubiquitous ascent of mobile phones and internet reduces the need to leave your couch (Amazon.com, Prime Now, Netflix, Google, Hangouts, Facebook…etc/etc), location and in-person visits are some of the most prevailing and important determinants of life quality and opportunity.
People need to be places to work, play, and live. Marisa Mayor famously disbanded her Yahoo’s work from home policy to encourage Yahoo’s growth. The Harvard Economist Henry Glaesar, who strongly supports dense people amalgamation in one location, stated that “[Cities] enable us to work and play together… Cit[ies] create productive advantages… speed innovation by connecting their smart inhabitants together… [and] are gateways between markets and cultures (Glaeser 6, 7). Glaser goes on to describe the importance of location in leisure. “As people have become richer, they have increasingly chosen cities based on lifestyle” (Glaeser 10). And finally, people will (probably always) need a place to live.
For example, 97.5% of employees still work in the office. As I alluded to in a previous blog post, the residential housing market is huge, and I would be surprised to see telecommunications displace housing anytime soon. (I do, however, expect to see housing preferences shift.)
From my view, it’s not a question about the importance of location, but its WHAT location is the most optimal, effective, and valuable? And of course, “most optimal” and “best” locations will widely differ for different consumers, workers, and businesses. As some of the above quotes alluded to, preferences and processes for economies and lifestyles will alter over generates. America seems to be moving away from car-frenzy sprawl and re-consolidating in cities. People and businesses should constantly ask, “what location is ‘best’?”
This is why I find the growth of mobile technology and Foursquare, specifically, Foursquare’s Pinpoint product (https://pinpoint.foursquare.com/), to be an absolutely fascinating product.
How does Pinpoint fit into Foursquare?
Quoting Foursquare themselves,
“Pinpoint helps advertisers identify, reach, and measure their audiences based on where they go in the real world. With the power of Foursquare’s first-party consumer data and the world’s largest place database, advertisers can more effectively deliver their message via standard and premium media solutions and generate actionable market intelligence.”
While Foursquare is famous for their consumer-facing apps that gameifies visits between friends, encourages location discovery, and allows you to (again) become the mayor of your fabulous local bar, Foursquare is set up to be a treasure-trove of information. Similar to how Google consolidates the world’s information into the most effective search engine, and then layers a thin layer of advertising at the entrance, Foursquare has the opportunity to understand and control geolocation information best and service ads and sell information accordingly. However, on top of simple advertising, Foursquare may be able to productize this foot-traffic data.
“Power by millions of real people, cookie based targeting for the physical world, unique 1st-party data”
The popular Foursquare and Swarm consumer apps are the essential base to an widely successful geolocation business. And despite Foursquare’s infamous app split, Foursquare is amazingly well set-up to harness their first-party users into a killer product. In addition, Foursquare partners with other companies to collect more geolocation data. The risk that I see is that Foursquare must create a long-term network effect to compete against other products like Banjo. While licensing data accelerates information reach, I believe a strong competitive advantage requires a strong 1st-party customer user base.
Likely Pinpoint Customers
Assuming that Foursquare can hold a strategic advantage in this space (which I think it can), we start addressing some fascinating questions. How can Foursquare generate the most relevant recommendations for their users (which would create a great feedback loop)? How can Foursquare sell geo-location ads (already, Foursquare does a far superior job in personalization compared to the other location discovery titan)? How can consumer data and usage be transformed into what I find to be Foursquare’s most fascinating product, Pinpoint?
First, businesses in set locations have a strong incentive to bring people into their stores. Second, expanding and new businesses will have a huge desire to understand demographic trends to best position expansion. “Businesses” can be very broadly defined as any type of income generating entity. This thus includes any type of commercial property resident; such as a company looking to put its new office, a new Levi’s store looking to rent out their new flagship demo store, or Amazon trying to optimize their new fulfillment centers. Third, I see businesses such consultants, hedge-funds, and investors that layer on top of the core business.
In short, the customers that would be interested in a geolocation based product with a strong 1st party consumer base pose a massive Foursquare opportunity. The questions that remain are – how effective will Pinpoint/Foursquare be at productizing this and will Foursquare they create a strong-enough virtuous cycle to create a network effect to grow into the dominant/leading business in this space?