Will Foursquare 2.0 Fend Off Facebook?

The last time we chatted up Foursquare CEO Dennis Crowley, he was running a buzzy company with some 50,000 users and had just raised a $1.3 million funding round that every VC wanted a piece of.

A year later, Crowley’s company claims 2.5 million users, and he’s fresh off a $20 million round that, well, you know.

So it’s a good time to get Crowley’s thoughts on what comes next, beyond a shiny new office space (just one flight up from Foursquare’s current, cramped Manhattan headquarters). Short version: Crowley and team are thinking through what “Foursquare 2.0” will look like. Same goes for the actual business part of the business.

Foursquare knows it needs to update its “game mechanics”–the check-in/rewards system that it helped pioneer, now aped by every social service under the sun, Crowley says. But that will come as the company adds to its 27-person staff.

Meanwhile, Foursquare has put together a few high-profile hookups–with the New York Times (NYT), Starbucks (SBUX) and Gap (GPS)–that have brought in a trickle of revenue. But the service is supposed to be a local play, connecting users with nearby coffee shops, bars, restaurants, etc.

Right now, Crowley says, there’s no problem on the demand side–he says there are more than 30,000 local merchants waiting to connect with Foursquare. So the next step is figuring out how to get those folks into the service, fast.

Other challenges are approaching quickly. Facebook, which could have been a Foursquare acquirer, is going to be a Foursquare competitor in the near future, when it launches its own “check-in” system. And it’s reasonable to assume that Google (GOOG) will try its own version as it tries to build its own “social” service.

Daunting stuff. But first, there’s some empty office space to fill.