Here is the future: we will use one application to: find a place to go, get a targeted/relevant deal, book our reservation, check in and share our location, get recommendations and tips, see the location’s inventory and place our order, check out and pay, and maintain our loyalty programs.
FIND+DEAL+BOOK+CHECK-IN+TIPS+INVENTORY/ORDER+PAY+LOYALTY
Foursquare is likely best positioned to win this future, though with ‘only’ 15 million registrations (and debatable ‘real’ usage), it’s got a lot of work to do versus Groupon (150 million subscribers), Facebook (850 million registrations and 350 million mobile users), Google (!), et al. Plus foursquare is missing the booking, inventory/order management, and payment systems.
But first, let’s look at what is probably the best vertically integrated app in this space: Starbucks mobile. Yeah, Starbucks. Its apps let users find a Starbucks should there not be a dozen on their block, see what items are available, order (sorta), pay (via a bar code scan), and get rewards. I.e., it hits most of the eight components above. Consumers have responded. Since the beginning of the year, the company processed 26 million mobile payments and users reloaded $110 million to their Starbucks cards via the mobile apps. Not bad, considering the company’s core business is coffee.
But there’s just no way every restaurant and local merchant is going to build their own applications and consumers wouldn’t download/use them all anyway. A more complete and ubiquitous platform is required. Foursquare already lets users check in and (therefore) connect to any location in the world, and 650,000 of those locations/merchants have somehow connected to its merchant platform. Moreover, the company nailed social discovery; maintains a robust deals platform; has relationships with Groupon, LivingSocial, GiltCity, etc.; created a capable loyalty program via mayorships and loyalty deals; has users contributing tons of tips; and is the only mobile and social centric company in the mix. Still missing the booking, inventory/order, and payments pieces, which are not insignificant, but likely on the way via development and/or M&A.
From finding to booking/ordering….
Groupon’s once seemingly odd acquisition of OpenCal makes a lot more sense now. For Groupon and the merchant, Groupon Scheduler (the acquisition’s result) allows each to more effectively convert deal buyers to bookings in an integrated and automated fashion. Ever buy a deal and forget to call and book it and/or realize that the place is sold out for six months? So it is that OpenTable, in possibly the biggest whiff in this whole space, left the door open for competition - not really sure who’s out there, but Savored could be lurking as they’ve got some rudimentary booking capability and GrammercyOne (spun out of SpaFinder and financed in October 2011) claims 2,500 businesses around the world use their system for bookings. Partnerships with the ‘big’ guys (Google, LivingSocial, foursquare…) or M&A targets? Hmmm.
What about the inventory/ordering component? This reminds me the uWink restaurant concept - may it rest in peace. Nolan Bushnell was my hero when I was a kid. Not only was he Steve Jobs’s boss, but the guy created Atari and then a pizza/arcade chain and, evidently, smokes a pipe. One of his many later ventures was this thing uWink Bistro - it was lots of things (including a failure), but at the restaurants patrons had touch screens where they placed their orders (directly to the kitchen) and consumed entertainment content. Holy moly. We’re almost there again by way of smartphones and apps. Lots of restaurants already have their menu systems online via Seamless, Grubhub, Delivery.com, et al. It shouldn’t be terribly complicated to get that data into a mobile app and accessible pre/post check-in. In fact, doesn’t Seamless co-founder Wiley Cerilli’s new company SinglePlatform manage and distribute menus for a gazillion restaurants already? I suspect the spa/etc. booking companies have comparable ‘menu’ data. The pieces are there, including many locations’ ability to accept orders from those systems, so we can’t be too far off. Onward….
Foursquare Check Out
I really started thinking about foursquare as a potential mobile payments platform after getting out of an Uber car. My favorite part of the Uber and GroundLink experience is simply getting out of the car when I get to my destination. Inevitably I have the, “Um, we good?” conversation with the driver, but because the payment/gratuity is already on my connected account I can just walk out without swiping, signing, etc. Why in the world shouldn’t we be able to do that at a restaurant or local merchant? Especially after we’re able to add the mobile booking/ordering capability. Wouldn’t it be great to finish eating, check out on your phone, and then just leave? Foursquare has already been dancing around the space with Amex on the cash back deals. Plus, foursquare already has ‘check-in’ so ‘check-out’ seems like logical vernacular ;-)
Don’t forget, the payments market is measured in the trillions of dollars - with a ‘T.’ So obviously there are tons of others gunning for the mobile payments space. My experience with Square’s Card Case wasn’t terrible, but it was only when I was ready to pay (not when I walked in to Grumpy - one of the only places I’ve been to that takes Square’s Card Case) that I even thought about firing up the app. When I’ve already used another app to find the place and check in (and, jeez, booking would be awfully darn nice) it might be easier to check out using that app as well. Similar to what LevelUp (with 2 million SCVNGR registrations and 5k merchants they say) and Tabbedout (don’t know, but guessing smaller) are trying to accomplish. Those guys and others like Clover and Venmo will/should layer deals on top of payments to integrate horizontally and gain greater/earlier user ownership. But realistically speaking, foursquare is in far better shape to capitalize on this given its size.
What’s everyone else doing?
No surprise, Groupon and foursquare aren’t the only biggies looking at owning this experience….
Google. Even armed to the teeth with developers, Google has been on a very public acquisition binge, following up its Zagat acquisition with a number of others including Clever Sense - developer of the Alfred personal assistant app. The Siri comparison flew around, but I think this had much more to do with social discovery (still playing foursquare catchup). Combine that with Google Offers (for which Google is almost definitely paying merchants, i.e., losing money, for deals) and an enormous investment in Google Wallet, and it looks like Google is trying to squeeze the experience together from either end.
Yelp. Raising money via an IPO now, perhaps to build/buy to complement the check-in functionality Yelp began to offer ~1 year ago to its ~50 million users who contributed ~22 million reviews?
LivingSocial. The #2 daily deals company partnered with Next Jump to work on its loyalty piece. But the company seems more focused on new (deals) products and international expansion than on adding the aforementioned functionality.
Facebook. Oddly quiet, right? Facebook backed away from its deals platform and check-ins earlier this year. Certainly the company has been acquisitive, but mostly for product/design talent that it puts to work on existing and forthcoming products. I, for one, don’t believe the company is exiting the local space entirely. Too big. Too good. And Facebook is too well positioned. Raising $10 billion in an IPO would certainly give it a lot of firepower when it decides to have another look.
In the meantime, I stand by my conclusion that foursquare is best positioned for this version of the future (for now, that is of course). If the company can add booking/ordering/payments to finding/checking-in/getting deals, it’d give users a lot more reasons to use the platform and the company a lot more ways to make a lot more money.
