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foursquare starbucks offerFoursquare is on a roll. It's got heathly user adoption and very desirable demos, a growing roster of major brands who want to team up for promotions, and plenty of love from the media (not to mention endless speculation about potential suitors?

Now, the white-hot location-based social service is facing problems very much in keeping with the ones Twitter faced at this stage in its development: scale.  A word that rhymes with both "fail" and "whale", perhaps the most infamous error page in recent internet memory, and an emblem of how difficult it can be for small start-ups to keep up with rapid growth.

As Foursquare racks up the partners and sponsors, most recently Starbucks in addition to other gold-plated names like The Wall Street Journal, MTV and Pepsi, its members' ability to take advantage of special offers, and indeed even to use the service, are being dangerously hindered by overloaded servers that prevent users from checking in to venues. While it can be important that tweets be timely, timeliness isn't as mandatory with Twitter as it is with Foursquare. The company is aware of this and says its servers are being "hammered" with up to 600,000 check-ins per day. If you can get through to the server and check in, which has been a challenge of late, to say the least.

To play square on Foursquare, you're only supposed to check in when you're at the venue you're checking into (as opposed to claiming mayorships from your couch). The company recently introduced GPS-based measures to ensure people are checking in from where they say they're checking in from. And certainly to claim $1 off a Starbucks Frappuccino, or get 2-for-1 drinks for your first check-in at Poisson Rouge in New York, you have to be able to check in then and there, then show your phone to the appropriate bartender or barista.

Competition and one-upmanship is largely what's spurring Foursquare's success, not to mention its marketing potential. When the Twitter server is down and the failwhale is up, you can usually save that witty or pithy remark or link for later, no problem. But when Foursquare's down you could lose out on a mayorship. Or a badge. Or a discount. Or a brand exposure. That's not good for Foursquare or its user base, and it's certainly not good for its partners.

Foursquare has other problems to work out to be sure, largely from users trying to game the system, which is ridiculously easy right now. I'm not losing sleep over it, but I lost my mayorship of a business that's open until 8 p.m. to a certain Gina L. who checked in three hours after closing time. Should Foursquare consider limiting check-ins to known (or reasonable) business hours? Probably. But those aren't the kinds of problems that are easy to tackle when you're busy just trying to keep the servers up.

But those are exactly the types of problems Foursquare will be forced to take a very serious stab at now that it's attracting major advertiser interest. Lots and lots of it. Major brand advertisers are complaining they can't get through on the phone (or via email) to anyone at the busy (and overtaxed) start-up. They want to reach Foursquare because Foursquare allows them to reach consumers -- so long as the servers are up.

Who knows? Once Foursquare solves its scale problems, either via a cash infusion or by becoming acquired, and the scale issues are resolved, newly-minted Starbucks mayors may be rewarded with a great deal more than a paltry 25% discount on a $4 beverage. And on the user level, it's the surprise and delight of uncovering perks, gems, and unexpected discounts that will really spur Foursquare's growth by encouraging check-in after check-in.

Rebecca Lieb

Published 18 May, 2010 by Rebecca Lieb

Rebecca Lieb oversees Econsultancy's North American operations.

Follow me on Twitter, or connect with me on Facebook.

160 more posts from this author

Comments (1)

Aggelos Taplatzidis

Aggelos Taplatzidis, Consultant, Web solutions at Squiz UK

Foursquare is following Twitter's path in terms of innovation of service and thus consumer appeal. Online debates regarding consumer acceptability but also functionality rose even before the application was launched. It is down to the business and technical teams of Foursquare to take advantage of the opportunity and create a truly customer friendly service, going beyond the another-mobile-application model. Innovative ideas have to be backed up with innovative business strategies and Foursquare seems to be getting there.

almost 6 years ago

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