I cannot be the only person for whom the term "pivot" is starting to sound less a startup reinventing itself and more like an admission of failure. And yes, Foursquare, I'm talking about you.
The popular social networking app, which gained a considerable following for its inventive gamification of encouraging users to share location data, recently announced a radical departure that would see it split into two. A newly-launched app, Swarm, will be a "social heat map" that tells you which of your friends are nearby and allows you to exchange location information. The original Foursquare, meanwhile, will remove the "check-in" requirement entirely and focus more on offering local search and discovery similar to Yelp and other services.
This is not a pivot so much as a complete 360, given Foursquare's original raison e'tre. It points to a central problem of providing value over and above the mere sharing of data. Like many early Foursquare users, I quickly tired of earning meaningless badges and being crowned "mayor" of my local gym.
This, however, is not a problem which is unique to Foursquare but to many social services. Look at LinkedIn, which is focusing more on fostering content creation to push users to log on more often than when they're looking for a job, or Facebook, which keeps reinventing its Timeline in order to boost the volume of status updates. Like even the smallest indie developers, these firms are struggling with sustainable engagement. Foursquare's response, however, may be more instructive than the others.
Swarm hones in on one of the main reasons many people still use Foursquare, which is to see who else is hanging around. I've seen this personally at tech industry conferences, concerts and other places. Even if the revamped Foursquare can't compete with other local search offerings, Swarm provides an onramp for loyal users that removes any clutter from the user experience and amplifies the information that's most important to them.
When apps like Foursquare get bigger, they come to realize what many smaller developers might overlook: The real growth and monetization potential will probably not come through paid downloads, online ads or even in-app purchases. The gold is in the data that the apps collect (ideally via transparent, permission-based opt-in) and in those who will buy temporary rights to that data. LinkedIn makes money that way from selling user information to recruiters, while Twitter represents a treasure trove of insights about all manner of individual opinions. Foursquare may need to collect even more data to make Swarm or its eponymous app viable, but someone has to be interested in data about the places people most often get together in person.
As developers grow their app businesses, they need to pay close attention to session data to figure out when it makes sense to unbundle their feature set into separate apps, what those apps should do and perhaps most importantly, what they might no longer need to do. It may sound like an unlikely possibility for most indie apps, but that's how Foursquare started. Even a pioneer in location-based mobility can't always predict where it's going to end up.--Shane