Foursquare CEO Dennis Crowley: From Pink Slip to In The Pink

Dennis Crowley spoke at NYU Stern School of Business today about how he went from being laid off in 2001 to CEO of Foursquare.

About 400 people were gathered outside the auditorium, because the session before Crowley’s was running late. The crowd was getting very loud. There were business school students and NYU alums, and everyone seemed to be talking to each other.

Then I noticed a young man in jeans and a hoodie off by himself in the corner. He was concentrating on his iPhone and glancing up at the crowd. I realized it was Crowley, so I went up and introduced myself. We started chatting about his upcoming talk, and I asked him what the format would be – whether he’d have a moderator/interviewer. He said “I don’t know, I just show up where they tell me to, and just hope I’m in the right place at the right time!”  Well he did, and with no Powerpoint or agenda, he told his story:

From Pink Slip to Grad School

After he was laid off from an internet startup, Crowley thought about going to business school. A friend brought him to an art show, sponsored by NYU’s Interactive Telecommunications Program (ITP). Students at the show were doing cool things, like making robots “just because.” He made up his mind to go to ITP.

From a Thesis to a Business Sold to Google

For his graduate thesis, he decided to make a product with someone he met the first day of school (Alex Rainert,  now Head of Product at Foursquare). It became Dodgeball, and he sold it to Google in 2005. He worked there for two years, but was stymied from fulfilling his vision for the product and left.

Later he was at another startup, sharing office space with another startup. He started a side project with a buddy at the next desk (Naveen Selvadurai). They wanted to make a cool product. Then they heard that Google abandoned Dodgeball, and they decided to do it better.

Coding on the Tarmac

They decided to make life a game, and make a “leaderboard for Saturday.” The object of the game was to be able to say, “Hey, I had more fun than you last night.” They wanted to convince people to do things they don’t want to do, such as go further than 5 blocks from your apartment, and came up with badges. He said the “ultimate reward is that you’re happy that you did it, but you need the kick in the pants to get you do it.”

He said “Dodgeball was too focused on my friends, it didn’t appeal to most people. If you have 3 friends and 2 stop using it, then you’ll have a crappy experience.” He described Foursquare as a 1-player game that hooks you until you build up multiple players.

For a launch date, they gave themselves the deadline of the South by Southwest (SXSW) conference, which he called “Nerd Spring Break.” They took different planes to the conference – not because they were afraid the plane would crash and they would both die, but so that in case the database went down, someone would be there to fix it. They were “coding in the airport, coding on the tarmac.”

They got 10,000 users from SXSW and press, and decided to make a company out of it. (He had been looking for a job before that, but he said “no one wanted to hire me – the founder of a startup that failed). They went to venture capitalists (VCs), who said “Oh, you’re the dodgeball guy, what happened to that? Ha ha ha” and everyone rejected them. “Actually,” he said, “no one said ‘No,’ they said, ‘We LOVE this idea, but we need someone else to be lead, which means they want to know someone else thinks it’s good.”

Merchants Tap into the Power of Foursquare

Meanwhile, the product was maturing, and one day Techcrunch sent them a picture. It was a coffee shop in San Francisco, who made a flyer with the Foursquare logo that said “tell us that you checked in and we’ll give you a $1 off. Show us you’re the Mayor!” Techcrunch asked him, “what are you experimenting with?” He said, “we didn’t do this. Check ins are like ad impressions that a business didn’t buy to reach people that they normally wouldn’t reach. Businesses caught on to this before we did.”

He said “people were writing that ‘Merchants tap into the power of Foursquare.’ We were flooded with requests to verify their businesses.” They went from free coffee to a free taco, and then “went crazy: free steak dinner, free airline ticket.”  Crowley said they went back to the VCs, and said “you know that Foursquare thing? The community wants us to do this. Merchants are begging to work with us.” Then they started raising money, and settled on $1.35 million, which he thought would last forever.

A Good Problem to Have!?

“Dodgeball had only 30K users total,” he pointed out, “and now we get 25K in a day.“ Foursquare has 3.75 million users with 1.5 million checks in a day. “Unfortunately,” he said, “that means outages, which brings the server down, as it did Monday and Tuesday.” While some may say “that’s a good problem to have,” he said, “it’s not when you have 10!”

Because of their investors and relationships, he said he can write to Twitter: “Dear Twitter, How did you get over this outages problem?” and find out “Oh, we hired some people and wrote some code, it’s open source, you can have it.” And they can write to their investors: “Dear investor, How did some of your other companies get over this server problem?” and hear about some new experimental database technologies that can help them.

Crowley was asked if Foursquare was threatened by Facebook Places. He said “Facebook getting into this space could be one of the best things that happen to us. They are teaching 5 million users about location-based check-ins, so I don’t have to. Now it’s ‘Foursquare and Facebook,’ not ‘Foursqaure and 5 other scrappy startups.’”

New and Different Ad Models

He said, “Everyone wanted to buy banner ads (we don’t do that), they wanted to buy ad space in the app. (we don‘t do that).” But their through their deal with BravoTV, users loved getting rewards by going to restaurants that the brand discussed and unlocking hidden levels of the game.

He was asked how they make money. He said, “When global merchants want to work with us, it’s easy – there are opportunities. Amazon monetized search for digital cameras, by showing ads for digital cameras. If I’m looking for the best Indian food right now, there’s no way for the Indian restaurants on 6^th Street to compete for my eyeballs using mobile.” He said, “It’s not about taking existing ad models and put them in Foursquare, we need new and different models.”

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• Tweet Tweet Boom Boom (NYmag.com)
• Why Selling To Google Can Be A Mistake (GOOG) (businessinsider.com)