Foursquare Tries Broadening Its Appeal

Boasting one million users and armed with new marketing deals, the startup aims to break beyond its niche audience

The point of Foursquare is to encourage people to get out and do more. Yet the guy who's leading the company's software development doesn't much leave the office. In fact, Naveen Selvadurai spends most of his waking hours in a six-block radius.

The 28-year-old co-founder of Foursquare, a closely watched startup that lets 1 million enthusiastic users "check in" at locations via smartphone during their daily perambulations, spends the majority of his time elbow-to-elbow with co-founder Dennis Crowley in a cramped one-room office in Manhattan's East Village.

When Selvadurai's not there, he's either home at his apartment blocks away or catching a meal nearby. Pretty much everything that matters to him these days is within a five-minute walk. "Right now I'm working about 16, maybe 18 hours a day," Selvadurai says. "I work all day, grab dinner, go home, and work some more. I hardly ever take a subway anymore." He adds: "Lately I've been thinking about getting a scooter."

Getting Around

The more peripatetic devotees of the Foursquare game that runs on Apple's (AAPL) iPhone and other devices have made Selvadurai's and Crowley's company a sought-after commodity in tech circles. On Apr. 21, Foursquare expected to sign up the millionth user of its location-based software, which lets fans check in at bars, restaurants, coffee shops, and train stations, competing for the free meals and other perks merchants dole out to virtual "mayors" in the game who frequent their establishments the most.

Foursquare takes advantage of the GPS chips inside smartphones to let users broadcast where they are and find out where other users are congregating. "I live in the East Village, which has so much rich history and so much to do, and I realized that I'd seen maybe 5% of it," Selvadurai says. "I was looking for a way to get my and friends to go out and do more things."

The startup is advancing in several directions. A partnership with the History Channel announced Apr. 13 uses Foursquare to promote an upcoming special on America's past. In January, the company struck a promotional deal with Bravo (GE).

Raising More Funds

Foursquare is raising a series B round of venture capital funding, according to Selvadurai, aiming to add to the $1.35 million it raised last September from Union Square Ventures, O'Reilly Alphatech Ventures, and such angel investors as Digg founder Kevin Rose and Twitter co-founder Jack Dorsey.

On Apr. 16, fans in cities from New York to Shanghai threw Foursquare Day parties (4/16 connotes four squared—get it?) where users gathered and businesses handed out freebies. "Things are moving so fast we really don't know what's going to happen," says Selvadurai.

Foursquare and its competitor, Gowalla, which makes a similar location game, aren't for everyone. Detractors say they appeal to a limited audience of technology enthusiasts and that the encouragement to announce one's every move is a foolish breach of privacy, and narcissistic. Dave McClure, a startup adviser and angel investor who runs a seed-stage investment program for the Founders Fund, wrote in an Apr. 10 blog post that little about Foursquare or Gowalla is apt to appeal to mainstream consumers. "Without financial incentives or discounts, there is no reason on God's green Earth to check in," he said.

Sharing Office Space

The incentives are starting to materialize. Businesses are offering more than 2,100 discounts or giveaways to Foursquare users, says Selvadurai, who graduated from Worcester Polytechnic Institute in Massachusetts in 2003 and worked at such companies as Sony (SNE) and New York startup Socialight, a location-based software company.

Selvadurai and Crowley met in 2007 when they shared office space. Crowley had just left Google (GOOG), which in 2005 acquired Dodgeball, an earlier location-based social site he had launched in 2000 but that Google shut down last year. He was working for Area/Code, a gaming startup that shared Manhattan office space with Socialight. The pair spent the first three months of 2009 working on Foursquare at kitchen tables, with the help of friends. The service was launched at the South By Southwest conference in Austin, Tex., that March.

For the first seven months of Foursquare's existence, it was just Crowley and Selvadurai. Since then, the team has grown to 18 people. The biggest problem is deciding which engineering projects and partnerships to prioritize, says Selvadurai. "In the past year I think I've had four weekends off."

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