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Foursquare Users Top 4 Million as Growth Trumps Sales

Foursquare Labs Inc. Chief Executive Officer Dennis Crowley said the company is focused on increasing user numbers for now, rather than generating sales, as it confronts competition from Facebook Inc.

“We’re currently not in that mode where we’re building salespeople and filling the desks,” Crowley said in an interview at Bloomberg’s San Francisco offices. “We’re in that growth phase where we’re just trying to build as much as possible.”

Foursquare has popularized an area of social media that lets people use the Web to broadcast their whereabouts, and Crowley said its user base has surged to more than 4 million from 170,000 at the end of 2009. The company is adding features to fend off a threat from rivals, including Facebook and Twitter Inc. that are creating their own location-based services.

“We’re finally building the things we should have had a long time ago,” said Crowley, who founded Foursquare last year.

The New York-based company is luring about 20,000 new users a day and plans to increase its staff, now at about 40, to accommodate the growth, Crowley said.

While it’s mainly focused on attracting users, Foursquare is also working on tools that would help it make money from local merchants. Some may be introduced as early as next year, Crowley said, though he declined to say precisely when.

Photographer: Ramin Talaie/Bloomberg

Dennis Crowley, co-founder of FourSquare. Close

Dennis Crowley, co-founder of FourSquare.

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Photographer: Ramin Talaie/Bloomberg

Dennis Crowley, co-founder of FourSquare.

Foursquare lets users “check in” using mobile phones when they visit a place or business. Users can see who else has checked in at locations, review businesses and get suggestions for things to do nearby. The service also makes it easier for businesses to tailor offers to users based on their location.

Places, Deals

Facebook, owner of the world’s largest social-networking site, in August introduced a check-in feature called Facebook Places that’s similar to Foursquare’s. Earlier this month Facebook announced another tool called Deals that lets merchants such as Gap Inc. and McDonald’s Corp. offer discounts to potential customers, based on where they have checked in.

Facebook’s entry into the market has helped boost growth at Foursquare by making more consumers aware of location services, Crowley said. Facebook’s Deals won’t hamper Foursquare’s ability to thrive, he said, citing services that tried to replicate the status updates popularized by microblogging site Twitter Inc.

“Twitter has its DNA and it’s succeeding in a way that -- Facebook couldn’t crush it with the status update,” Crowley said.

Foursquare, aiming to stay ahead of its competition, is hiring engineers as fast as it can, though finding qualified workers can be a challenge, he said.

‘Great Run’

“New York is a pretty competitive environment,” he said. “You compete with hedge funds; you compete with technology companies; there’s like a huge boom for startups going on, too.”

Until now, Foursquare has picked up revenue with some one- time marketing agreements with large customers, including chain stores, to test the service to target users, he said.

Foursquare raised $20 million in June from investors including Andreessen Horowitz. Crowley sold Dodgeball.com, a location-based service, to Google Inc. in 2005.

In response to a question about potential takeover overtures from companies such as Yahoo! Inc., Crowley said Foursquare is planning to stay independent for now.

“We’re on a great run, and it is too early to get off it,” he said.

To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net and Emily Chang in San Francisco at echang68@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net

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