Foursquare Turns Down $100M

theodp writes "Valleywag is stupefied that 'an annoying, unprofitable social network like Foursquare would turn down $100 million,' a move inspired in part by Twitter's 2008 rejection of a $500 million offer from Facebook, which in turn once rejected a $900 million bid from Yahoo. Time will tell whether the move by Foursquare was a prescient one, but it's certainly gutsy. After all, today's $850 million company can prove to be tomorrow's worthless one, right AOL?"

Comments

Well..

[ZeroExistenZ]

Why would one offer them 100 mio for it if it's so worthless, for one.

For two, why is money such a big deal? If you love what you do and can provide for yourself with it, why whore yourselves out? It's not about being filthy rich, but doing what you love, right?

Re:Well..

[Trepidity]

Generally even early employees won't become millionaires in these sorts of deals.

Typically, VCs get paid back all their initial investment right off the top (usually part of a "liquidation preference"). In Foursquare's case, that's about $12 million, leaving an $88 million pot. Of the rest, typically VCs plus founders own almost all of it. A very early employee, if lucky, might own up to 0.5% or so of the company. That would give them $440,000 in this scenario. But that's something of a best case, too, because employees often own common stock, while investors and founders own preferred shares, and there are sometimes liquidation preferences for those payouts too.

It's on the outside realm of possibility that there exists an early Foursquare employees with the requisite ~1.2% or so of equity to actually make one million dollars from an exit like this. But there wouldn't be many, and it's quite possible there are none.

Oh, and unlike the VCs and founders, employees typically have a 2-to-4-year vesting period, so they don't get any of their money unless they stay with the post-acquisition company for multiple years, even if they hate their new boss.

Re:WTF?

[reverseengineer]

Apparently, this same guy had a similar project called "Dodgeball" which Google bought out in 2005- and then killed in 2009 to replace with Google Latitude. I don't know how much he got for Dodgeball, but it may be that he really can afford to walk away from offers now. Both Dodgeball and "Foursquare" are/were location-based social networking services for mobile devices- Foursquare appears to tweak the concept by turning it into a sort of Zynga-style game where you earn awards for using the service. 100 million bucks for that.

Re:WTF?

[Orange Crush]

I wouldn't compare Foursquare to Zynga . . . there's a game aspect, but it isn't ad-scam laden like Zynga's properties. Foursquare is broadly very similar to services like Loopt and Google Latitude, but with a few enhancements. Each time you "check in" to a location, you earn points. Whoever has the highest score is declared "Mayor" of that particular venue. Venues are also tagged to classify what sort of place they are, and you earn badges based on your check-in habits. For instance, three times in one week at venues tagged as being gyms will earn you the "Gym Rat" badge; go to a certain number of places tagged as having karaoke nights in a certain amount of time and you get the "Don't stop believin" badge, etc.

There are more aspects too--you can set up "to dos" to suggest certain activities at certain venues, and people can add them to their to-do list, etc. It's basically just another "I am here / what are my friends doing / what's a popular place to go tonight" app with some game aspects.

Inaccurate title and summary

[noahm]

Foursquare hasn't turned down anything, as far as anybody knows. In fact, the Yahoo! buyout is still only rumor. The article is basically representing the opinion of some analyst entrepreneur. Quoting from the article:

Sometimes making a fortune is dumb, writes entrepreneur Charlie O'Donnell—which is why, O'Donnell adds, Foursquare will wisely walk away from a rumored $100 million offer from Yahoo.

Who's Charlie O'Donnell? What's his role in Foursquare? Is he really making statements on their behalf? I doubt it. Quoting from the photo caption later on,

[Photo: Laughing Squid's pic of Foursquare CEO Dennis Crowley who, to be fair, may not have turned down anything yet.]

So, wtf? There's no story here, it's just some random dude repeating what some other random dude said would be a wise move.

not really a security risk

[SethJohnson]

A lot of people believe this to be the security risk. That a criminal will monitor a Loopt or Foursquare account to figure out when a house is unoccupied. In the real world, that's a far more sophisticated approach than what house burglars use.

Instead, they knock on the door of a house that appears unoccupied. If someone answers, they say, "Oh, I'm looking for my friend, Sally. Does she still live here?" If no one answers, then they proceed with the burglary. Finding empty houses does not require internet technology.

Seth