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The Right Way To Value Foursquare

To me, physical maps have always been social, full of ads, and artistic. Of course, they’re utilities, as well. I took a lot of road trips as a kid. My dad liked to order “TripTiks” from AAA, where they’d actually create a free book of your route. Those were the days! Those maps would be full of ads, like the maps you’d get from a rental car service. They were social for us because we’d huddle over the maps and try to plan our routes together. And, in some cases, maps to me are artistic. I had an artist friend once bring me to an cartography exhibit in Berkeley years ago that blew me away.

I’m waxing poetic about maps (again) because, as it seems to happen often, people are confused about Foursquare’s potential fundraise or acquisition. As I wrote months ago, I’m a big fan of Foursquare, love the product, and it’s on my iPhone homescreen. That said, I believe mapping is so critically important to the device makers (Apple & Google, mainly) that I believe Foursquare will be acquired (in 2013), and I believe their acquisition price will surprise many, largely because those people are trying to determine the economic value of a check-in. But, my belief is that is the wrong way to value Foursquare.

The right way to value Foursquare in today’s environment is to string together a few trends:

  1. Over time, profit margins on mobile devices will start to flatten.
  2. As a result, revenues will then be extracted through services.
  3. Outside of applications, the core service offered by iOS and Android will revolve around different types of search interfaces, including voice (Siri, Iris), etc.
  4. A huge search interface in mobile is maps (obviously), and today, native mapping applications don’t contain people, or ads, or data, though Apple Maps pulls in Yelp information, for instance.

Yelp integration is really good, but I see the space going beyond this. My belief is that the big companies will want to own this data for a competitive advantage. My belief is that, in the near future, whether on iOS or Android, when users pull up the native map, they’ll see more ads, more social data, and hopefully more art. And, as a result, Foursquare’s value today is very high, perhaps as high as it will ever be given how important mapping will be to Apple and Google.