Mobile location-based social network and gaming service Foursquare has been generated a bit of buzz lately, especially amongst the early adopter crowd. In just under a year, it has amassed a user base of 300,000, and with deals like the one it recently signed with television network Bravo, some believe Foursquare may be ready to hit the mainstream.

That’s good news for the company and its investors, but as Foursquare starts exploring the commercial opportunities that come with popularity, it may find that maintaining the ‘cool‘ factor and maximizing commercial opportunities at the same time is a difficult thing to do.

As AdAge details, various businesses are starting to experiment with Foursquare. The appeal is obvious: Foursquare knows where you are. That means that Foursquare offers a lot of potential to businesses with physical locations. One such business is frozen dessert chain Tasti D-Lite. It’s using Foursquare to deliver promotions to Foursquare users who check in to a location near one of the chain’s 50 stores. And it’s also testing out a loyalty program that rewards users for checking in and making purchases.

According to Tasti D-Lite, “preliminary data is showing that this is driving foot traffic in stores“. That’s good news for Tasti D-Lite, and for Foursquare. But before anyone jumps to the conclusion that Foursquare may be on the verge of cracking the location-based mobile advertising nut, it may not be quite so easy.

On Sunday, TechCrunch’s MG Siegler discussed how Foursquare’s ‘Douchebag‘ badge was creating controversy amongst some users. The complaint: it’s offensive. The badge is awarded (if that’s the right word) to users who check in to locations that other users have tagged. These tend to be ‘trendy‘ locations, such as Barney’s.

Putting aside the political correctness of a ‘Douchebag‘ badge, it’s obvious that this badge creates a potential conflict between the interests of the businesses Foursquare needs to court and the interests of its users. As one commenter, Jim Kerr, put it:

They are an innately local business, which will live and breathe with the success of dealing with local brands and establishments, and yet they…overtly tag local businesses (their lifeblood) with badges like “douchebag.”

Foursquare, which, according to AdAge, is earning little to no revenue from its initial deals with businesses, apparently has no plans to ditch the badge. Dennis Crowley, the company’s co-founder, posted a response:

The douchebage badge isn’t going anywhere. 🙂 It’s supposed to be a joke, I feel like 97% of users are in on it, and the only way to unlock the badge is to check-into places that *other users have tagged* douchebag. Sure, it’s a little out of control in some places (I unlocked it on the N/R train over the Manhattan bridge!) but that’s part of the fun of it.

While it would be premature to claim that a somewhat offensive badge is going to destroy Foursquare’s business potential, there is a question as to whether things like this will fly once Foursquare decides to start asking businesses for money.

When it comes down to writing a check, a business might be inclined to look at the situation and demand some protection in return. A guarantee that users who check in to their locations aren’t labelled ‘douchebags‘ would probably be a good start. Will Foursquare give in, potentially diminishing its ‘cool‘ factor with the early adopters propelling its current growth, or will it decide to give potential paying customers a reason to second guess deals? Only time will tell.

Foursquare’s dilemma is not unique of course. Many successful consumer internet businesses find that certain elements of their original offerings that contributed to early appeal eventually come to threaten their potential as businesses. Without users, of course, that potential ceases to exist. But users and no revenue isn’t exactly viable either. In short, sometimes you can’t stay cool and become filthy rich at the same time.

Photo credit: cambodia4kidsorg via Flickr.