Loco About Location? Or Just Plain Crazy?
After the much anticipated news yesterday that Foursquare would finally grab a big piece of change from the powerful Silicon Valley venture firm Andreessen Horowitz–$20 million simoleons, in fact–BoomTown was much entertained by two very different blog post that went up about the deal.
The first was by one of the hot social location start-up’s early VCs, well-known New York investor Fred Wilson of Union Square Partners.
In a post on his blog A VC, titled “Some Thoughts on Foursquare,” Wilson disagreed with my assessment that the deal to fund the company–which included acquisition interest from Yahoo (YHOO) and Facebook–was “a very long and decidedly strange funding journey” and that it came “after a series of missteps and switchbacks over what’s next for Foursquare.”
His essential argument about what he thinks of as criticism on my part: Wrong!
“The conversations with potential acquirers were very beneficial to the founders and the company in many ways. It helped them to understand what the risks of going it alone were versus the risks of selling….And it allowed the founders to develop close working relationships with some of the most important Internet companies who can not only be acquirers but also distribution partners and monetization partners.”
Okay, I’ll bite. It’s all been a terrific learning experience for Foursquare’s young management team, especially its CEO, Dennis Crowley. Like college but without the tests and, instead of forking it out, you get handed a big pile of money at the end!
Plus you meet all these nice people along the way, who–even if they don’t scoop you up in a big acquisition hug today–are now super good pals who might also hand you a pile of money tomorrow.
Maybe so, but that does not mean they didn’t wince at the process they got drawn into.
Actually, from numerous interviews with all the players involved, even those who like Crowley and think there is something innovative at Foursquare, pretty much everyone thought the whole process a tad sloppy, a bit arrogant, a lot noisy and, perhaps most of all, gave everyone a little too much time to consider the many competitive challenges the company faced.
Does that matter? Probably not, as everyone in the Internet business is very much used to VCs and others treating entrepreneurs as delicate hothouse flowers who must be revered, coddled and indulged in their noble quest to bring us all kinds of cool stuff, such as the ability to check in from my garage.
And, of course, some of them deserve that attention and petting up and down, transforming into digital geese laying golden eggs for all.
But some definitely do not. Because for every Facebook, there is a plethora of not so successful companies that get quickly and copiously feted and then hit the inevitable wall.
Slide, run by an extraordinarily gifted entrepreneur, Max Levchin, is a good case in point. After its $50 million funding in early 2008, the company was valued at $550 million and seemed ready to take over the widget universe.
It was, if you recall, very hot.
But things cooled and Slide has since regrouped. It is now plugging away at the tough part of building its social entertainment business into a real business.
Perhaps not as hot, where the real heat is.
And, that’s the underlying point Microsoft (MSFT) Director of Social Engagements Mark Drapeau seemed to be making in his post, “It’s About Trust: Thoughts on Location-Based Services, Especially FourSquare.”
His premise: Who knows yet who is going to succeed in the geo-location space.
“I don’t necessarily see why FourSquare or Gowalla or even Facebook will necessarily be the market leader. People generally speak of these three as if they’re predetermined….Deploying the app and making it cool isn’t the real challenge. Building trust among the user base is.”
While you can easily dismiss any complaint from a Microsoft dude–who even admitted to a frustrating experience of trying to reach Crowley to do a small deal–you still cannot ignore the simple idea that these fundings are all crapshoots a lot of the time.
Which is why I do agree with Wilson in a way about his bromide about taking time to deliberate big decisions:
“So the moral of this story, if you will, is don’t let conventional wisdom force you into making decisions you don’t need to make and you aren’t ready to make, particularly about very big decisions that you will be living with the rest of your life.”
Indeed, but let’s perhaps take it one step further:
Don’t let Silicon Valley conventional wisdom force you into making mountains out of molehills too early, particularly very big mountains that you will be waiting to form for the rest of your life.