Jun 1, 2010 11:03 AM

Behind Foursquare and Gowalla: The great check-in battle

This article was taken from the July issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online

A Saturday afternoon in March, and Dennis Crowley*,* the 33-year-old cofounder of the location based social- networking game Foursquare, is chilling on a bench in front of the Austin Convention Center in Texas, receiving visitors and trying to save his strength for the coming night.

Crowley, who lives in New York, comes down to Austin for the South By Southwest Interactive (SXSWi) festival every year expecting to party large. Foursquare debuted here last year, and was widely considered 2009's breakout application. So the crowd has high expectations in 2010 for Foursquare -- and for Crowley.

They have been tweeting his movements: "I just saw @dens walking down the street." A blogger calls Crowley "the Pied Piper Of Hipsters". Last night, his friend Danny Newman, a Colorado-based entrepreneur and "idea consultant", was carrying a breathalyser. Crowley tested it while shutting down the bar at the Driskill Hotel. At 3am, he tweeted: "I just blew a 0.127. Burp."

Now, as a camera crew from CNN Money films Crowley's left arm, which bears temporary tattoos derived from Foursquare badges specially designed for the conference, a decidedly non-hipster guy approaches Crowley's perch. He introduces another man, old enough to be Crowley's dad. The other man is from the Office of Innovative Engagement, a new division of the US State Department. The American government, apparently, wants to work with Foursquare.

For some reason, Crowley, with his casual, friendly attitude, his shaggy hair, his all-weekend hangover and brand-new light-blue orange-and-white Adidas trainers, makes the State Department official nervous. A rambling monologue follows, in which the man tries to tie together the philosophies of long-dead newsman Ed Murrow with the goal of bringing interactive mobile technology to Ghana. He and Crowley agree to have "preliminary conversations" about his ideas. It will be "fun", says the official.

Meanwhile, a few blocks away, 32-year-old Josh Williams, the cofounder of the location-based social-networking game Gowalla, is hanging out with some fellow Texans. Mellow Johnny's, a bike shop owned by Lance Armstrong that happens to be across the street from Gowalla's offices, is the final stop of the "Mobile Social", one of Gowalla's signature events at SXSWi, the annual gathering of a leisurely four-hour bike tour of Austin that starts at Brush Square Park, cruises over to the State Capitol, and ends with live music and a barbecue.

Williams stands among it all, looking smooth. On Gowalla he refers to himself as "your urban cowboy fashion consultant™".

Williams drops a message, a feature that the company added just before SXSWi, to his Gowalla followers, saying that the scene at Mellow Johnny's is crazy and they'd all better get over there quick. But just as the party is cresting, Williams needs to leave: he has investors to please.

Silicon Valley VC firm Greylock Partners is hosting a dinner for its favourite clients. Besides Williams, guests include representatives from three portfolio companies, an MIT professor, a couple of writers, and Richard Garriott, a wealthy video-game developer who goes by the name "Lord British" onUltima Online. Upon arriving, Williams posts a photo on Gowalla. The caption reads: "Five glasses?" A few hours later, he posts a photo of six glasses, which have mostly been emptied of wine, and then heads off to a booze soaked party, sponsored by Gowalla, at an enormous outdoor venue on the East Side.

Dennis Crowley's night proves to be less formal, but no less fun: two dinners, seeing The Walkmen play at Stubb's, three other parties, a late-night cruise on a travelling karaoke RV, and a barely pre-dawn bedtime. SXSWi is off to a rousing start.

For a decade or more, the concept of "life as a game" has been bandied about nerd theorist circles, but now it is coming to fruition. All over the web, reward-based achievement games have begun to blossom as a means of encouraging specific behaviour: plusoneme.com gives "gold stars for adults" for displaying "strengths" such as "kindness", "listening" and "generosity"; Chore Wars makes weekly household duties less dull by framing them as a medieval-style grail quest; Nike Plus turns jogging into an elaborate reward-based mini-game adventure.

The innovations have been coming quickly. Justin Hall, now an iPhone game developer, once ran a location-gaming startup called

Game Layers which "annotated" people's web surfing by placing "rewards" or "bombs" on random pages. He says the company folded because it "turned out to be a little too nerdy".

This year Foursquare and Gowalla are "proving the market and experimenting", he says -- but their most important function may be to prepare society for a new way of communicating. "Playing these games," Hall says, "is training us to have access slowly, but soon, to knowledge of where everyone else is in physical space, shared through the network. That's crazy powerful information to have. We need games to help us relax into that and how to deal with that. By playing, we learn about our social obligation. They're social rehearsal for a location-aware future."

But where idealism blooms, profit hunger surely follows. More than 14,000 people registered for SXSW Interactive badges in 2010, 40 percent more than for any previous year. What was once an obscure gathering for introverted web developers has become a tech-based party-cum-networking opportunity for hipsters and tastemakers with the power to shape the culture.

In 2007, SXSWi delegates adopted Twitter as the next big thing. Now, after years of hype, people are using their phones to tell others willingly exactly where they are, and VCs are lined up for a piece of this burgeoning "location based consumer" action. Geolocation and gaming technology are starting to be used to connect people in the physical world. It's a marketers' dream: real-time social networking that can tag people's eating and shopping preferences.

Advertisers can now know exactly who their customers were -- and what they are doing, at any given time.

Already companies such as Denver-based Brightkite, founded in 2007, is charging corporations $10,000 - $20,000 (£6,500 - £13,000) for "local promotions" targeting its estimated two million active users. By comparison, Foursquare and Gowalla's user bases are small -- just under a million for Foursquare and a little more than 200,000 for Gowalla. But in terms of the quality of their gameplay, the user-friendliness of their design, and the amount of press they are receiving, they have been gaining traction fast.

Foursquare, with a stated goal of making people "more aware of all the incredible things" around them, has fashioned itself as a social network around the simple idea of using your mobile device to "check in" to any place once you arrive there.

The gameplay involves two main components: virtual achievements called "badges", some of which, such as the "Player Please" badge, obtained when you check in with three members of the opposite sex, are clearly ironic; and, most prominently, the concept of the "mayorship", which allows participants with the most check-ins to, say, their favourite bar to become its virtual king.

The competitive aspect of the mayor concept has given Foursquare a patina of cool. Fans have performed a Foursquare rap on YouTube and designed a T-shirt that reads "Bow To Your Mayor".

Gowalla's gameplay is less competitive. Upon checking in, users collect sharply designed "stamps", such as one showing a pair of chopsticks for a sushi joint. They can also collect "items", more specialised icons that they can then drop at random locations, allowing other users to find them and, in turn, pass them along, turning something simple like a trip to the grocery store into a geocaching expedition.

It also has a "trips" feature, which lets users string together a series of locations into a kind of virtual tour. These services are very much in demand at SXSWi, where an army of tech-hipsters semi-drunkenly roams the streets, geolocating one another. Their founders are the tech celebrities of the moment. "Last year was like a vacation," Crowley says. "This year, I can't walk down the street. It's definitely a different lens for South By Southwest. You get to pretend you're

[Twitter CEO] Evan Williams for a day. I feel like we're defending our title."

Josh Williams, no relation to Evan, says: "At some point there will be an overload, where folks are only likely to check in once.

We definitely feel like we have to treat it as if there's one check-in to rule them all."

Dennis Crowley graduated from SyracuseUniversity in 1999 with a degree in communications and an eye on getting a job in a New York City ad agency. Instead, he took one at Jupiter Research, a tech-analysis firm, joining a staff of young city dwellers with plenty of disposable income. But Crowley felt that something was missing from his social life. It was too hard to find out where people were; there needed to be a better way to know about the next party.

Citysearch -- a city-specific web guide to restaurants and entertainment -- just "wasn't keeping up", he says. At work, Crowley began tinkering with an application that would provide real-time restaurant reviews.

He proposed it to his bosses. They said it wouldn't fly. So Crowley quit, and landed at a company started by a couple of guys from Dean Shaw, a big turn-of-the-century web-investment firm.

They envisioned a future where a handheld computer could help people navigate around cities and experience them more fully. Out of that vision, they'd designed Vindigo, a city guide application for the Palm Pilot, released in 1999. Crowley, whose job title was "product manager", spent much of his time thinking about how the clunky app could work better. The company later sold Vindigo to a Japanese firm called For-Side, which combined it with a cutesy ringtone app called Zingy.

Long before that, though, Crowley got laid off. Then 9/11 happened, and he was evicted from his West Village apartment. New York was no longer fun. He moved to New Hampshire to work as a snowboarding instructor and plot his next move. In 2004, he entered the interactive-telecommunications master's degree programme at New York University.

It was a fertile environment for laid-off tech geniuses. For his thesis project, Crowley started designing something that he called "Friendster for cellphones". A fellow student, Alex Rainert, had similar interests.

After graduating and failing to find work, they formed a partnership. The result was a free application called Dodgeball, a predecessor to Foursquare that sent text messages to your friends when you checked in at specific places. Dodgeball became the favoured online hangout of an elite few, its membership never topping 75,000.

The blog Valleywag called Crowley "the man responsible for every New Yorker and San Franciscan constantly updating their friends on how drunk they're about to get". Crowley took it to SXSWi in March 2005. "Friendster for cellphones" was just what that crowd was looking for, and Dodgeball became SXSWi's first true breakout app.

Although Dodgeball's profit model was unclear, its potential was enough to attract the attention of Google, which bought Dodgeball in 2006 for an undisclosed sum, its first big purchase since its IPO. Google listed Dodgeball as "a networking service that helps co-ordinate location-based social interactions between mobile users". At the time of the purchase, Crowley posted: "We talked to a lot of different angel investors and venture capitalists, but no one really 'got' what we were doing -- that is, until we met Google. The people at Google think like us. They looked at us in a 'You're two guys doing some pretty cool stuff, why not let us help you out and let's see what you can do with it' type of way." But Crowley says he found himself in what he calls a "shitty" work environment at a company that had a "hopeless social strategy".

So in April 2007, he quit Google and took a job designing interactive games at a company called Area Code. But he wasn't finished creating yet. While tinkering with an early version of Foursquare that he called Jimmy Disco at a shared office space at 12th and Broadway, Crowley met Naveen Selvadurai, a young techie who was the lead architect of a location-based start-up called Socialight.

Before striking out for start-up territory, Selvadurai had spent years in charge of mobile programming for Sony, travelling throughout Asia and thinking about geotagging -- the process of linking content such as texts, images or video to a specific location identified by a GPS system.

One bitterly cold winter afternoon in 2002, Selvadurai found himself wandering for hours around the Akihabara electronics district of Tokyo, looking for a legendary six-storey videogame store called Super Potato. He'd almost given up when he finally discovered the arcade. Finding Super Potato, he realised, would have been a lot easier with a geotag.

They started sharing notes, concluded that they'd be better off bringing their ideas together into a single product, and started working nights and weekends. When Google shut down Dodgeball in January 2009, they decided something had to be done quickly -- Crowley and Selvadurai wanted to have a product ready for SXSWi, just two months away.

They decided to call this sequel product Foursquare, after a popular playground game -- as a deliberate play on Dodgeball, the name of another playground game. But this product would be so much better than the one Google had flushed away.

Six weeks of furious coding followed, and was still going on minutes before Foursquare's launch. Selvadurai got to Austin first.

He called Crowley, who was still at JFK. There was a bug in the system, he said. Crowley recalls standing at the gate, furiously coding on his laptop, as the flight crew urged him onboard so they could close the doors. When Crowley landed, Foursquare was live and functioning well enough. But something else a waited him in Austin: competition, with a side order of playful hacking.

Josh Williams grew up an only child in Dallas. His parents owned a landscaping business. One winter, they closed the shop in favour of skiing and snowboarding in Taos, New Mexico. It was a 40-minute drive to the nearest school, so they decided to teach Josh themselves at home.

Though they were back in Dallas in time for spring, Williams describes that experience as formative, teaching him that the most memorable times in life occur when you veer off the chosen path, a view that he says later became his philosophical foundation for Gowalla.

Williams's parents divorced. His mother inherited the business, and she continued to home-school him. Her curriculum included getting Williams an internship at the friendly neighbourhood mega-church, which put him to work doing graphic design. He learned the tool of his trade:

Photoshop CS2 on the Mac OS7 operating system. By the time Williams turned 16, he was getting paid for 30 hours a week, and consulting on the side.

Two years later, Williams's mother died suddenly of non-Hodgkin's lymphoma, and he found himself running the family landscaping business. He calls this the "here's how- to-run-a-business portion of my life". After three years, he sold it "on a high note", and was ready to head back to the desktop.

Williams had been designing icons for websites on the side for fun, and discovered that there was actually a huge demand for his services. He and two friends started an icon-design company, Firewheel, and a website, IconBuffet. To promote their firm, they created a viral-marketing game urging people to collect all their icons. "It was like Pokémon for web developers," Williams says.

From there, Firewheel developed a similarly themed game called

Pack Rat, and put it on Facebook in January 2008. Pack Rat was a cult hit, and the company turned a profit.

Meanwhile, Williams had been working with former Facebook executive Sean Parker on Causes, a project that promoted altruism through web technology. As a managing partner at Founders Fund, Parker co-led a seed round of investment that brought $2 million for Williams's company to pursue its next step. "At that time we didn't know what the model would be," says Williams.

He went away for a solo weekend to Lake Tahoe to sketch out some next-phase ideas and came up with the concept of putting his beautiful Pack Rat-style icons on an elaborate travel-based mobile game board. "Back in the day, people would travel and collect stuff," he recalls. "But it wasn't about the stuff itself. It was about the stickers on the suitcase. That's what Gowalla is, basically.

Collectible sticker icons laid out on a GPS map." When he returned from the mountain, Williams presented this idea to the Gowalla board, which gave him the go-ahead.

Users definitely liked Gowalla's game mechanics -- the collecting, picking up and dropping of virtual items had plenty of appeal. But the user experience, Williams admits, had some "near-fatal flaws. It was a little bit janky [glitchy]. Parts of it kinda sucked." Most damagingly, the "Check-In" button remained invisible until the user was precisely at the desired location. "People simply didn't know what they had to do to get that button to appear," says Williams.

Gowalla and Foursquare launched on the same day: March 13, 2009.

Neither team had known anything about the other's project until just a few days before. Foursquare was further along its development, but Williams and his partners thought they had sharper ideas -- "several assumptions on how we thought a location-based product that rewards usage should work". They began mischievously testing those assumptions.

Once they realised that Foursquare didn't actually verify locations yet still rewarded people with badges and points for checking in, Williams and his partners started racking up what he calls "a plethora of illegitimate check-ins" trying to become the mayor of Halcyon, a favourite coffee spot. "Three hours later, you're at your hotel room calling it a night, and we're all still remotely checking in," he says. "When it's all said and done, you've each checked in 300 times." They received an email from Crowley with the subject line: "Tsk, Tsk, Tsk". "It was friendly enough, but they obviously weren't a fan of us punking the system," Williams says. "Of course, this wasn't our intent. We just wanted to kick the tyres a bit." Williams and Crowley tried to make plans to meet up in 2009. It never happened, but they were both very much aware of the other because people were constantly comparing their companies. And both companies knew they had lots of work to do.

Foursquare had the jump on "mindshare", as Williams puts it, but its game mechanics needed some tooling and the design needed a lot of work. Gowalla's design was pretty set, but it definitely had some programming flaws and, perhaps most importantly, it needed to increase its public profile if it was going to compete. Over the next few months, Foursquare added a section where users could get "tips" about places where they were or wanted to go, compatibility with Twitter and Facebook, a Facebook-style "friending" feature, and a utility for users to see what places were hot and trending.

The company was growing. After a fundraising round in the summer of 2009 brought in $1.35 million, Crowley and Selvadurai could start recruiting. By October, they were a five-man shop, and by December, Foursquare had 16 employees. One of the new hires was Tristan Walker, an ambitious Stanford business-school grad student who had worked as an oil trader on Wall Street. Walker saw big commercial possibilities in Foursquare: it was "the perfect tool for allowing companies to interact with consumers in cool and unusual ways".

The first key adopter was the Bravo TV network, whose hip urban fan base dovetailed perfectly with Foursquare's core users. As for how much money exchanged hands, Selvadurai says, "we don't disclose terms of deals we do". The business model, or lack thereof, can be explained so: urbane media properties do cool things together.

By January, Bravo had its own page on Foursquare, where contestants from reality shows Top Chef and Shear Genius could post tips, and Foursquare users could tap into Bravo's semi-elite lifestyle brand. Meanwhile, the tortoise was starting to catch up with the hare. In December 2009 came the surprise announcement that Gowalla had raised $8.4 million from VC companies Alsop Louie Partners and Shasta Ventures, as well as Sean Parker's Founders Fund and individual investors.

Williams and his staff, now 11 people, improved Gowalla's GPS and location algorithms and fixed the "janky" design flaw.

They added the ability to post photos and made innumerable tweaks.

In August 2009, Williams moved the company to its new offices in Austin. As the staffs of both companies worked late nights and lived off takeaways, a frenzied run of one-upmanship began about six weeks before the 2010 SXSWi conference.

Foursquare announced the Bravo deal. Gowalla countered with a partnership with The Travel Channel, quickly followed by news that Chevrolet had signed on as a corporate partner. Foursquare topped that with a deal with Starbucks, which would allow users to check in and receive a "barista" badge.

Two weeks before the conference, the CEO of the online image editor Aviary posted an "East Coast vs West Coast" photo, featuring Biggie Smalls's image over the Foursquare logo and Tupac over Gowalla's, with the caption: "Let's just hope nobody gets shot."

Conference head Hugh Forrest saw what was coming and opened a Tuesday lunchtime convention spot for Williams and Crowley to have a "debate".

Crowley seemed fine with the idea, but Williams was less keen. "I don't want to throw logs on a fire that only burns for the press," he said. "I think it would be good entertainment. But I'm not anybody's monkey." The debate didn't take place.

Back at South by Southwest, Foursquare is operating guerrilla-style, its employees roaming the convention centre handing out T-shirts and temporary tattoos. Gowalla has sponsored a taco truck a couple of blocks west of the convention centre, offering the "Gowalla taco", featuring steak, guacamole, bacon and queso fresco in a corn tortilla. Parked a few feet away is a Mini Cooper bearing the company logo and packed with T-shirts.

On Sunday night, the two companies go head-to-head at the 2010 SXSW WebAwards. They have both been nominated for best mobile application; Gowalla wins. Scott Raymond, Williams's partner, gives the acceptance speech. "This is awesome, thanks," Raymond says.

That is his entire speech. After the lights come on in the ballroom, Team Foursquare sits around its table looking exhausted. "We didn't expect to win," Crowley says. "That's a design-heavy award, and we've got other things on our mind." Elsewhere, Williams is celebrating at the Driskill. "They've closed the bar," Williams posts on Gowalla, "but we've opened the champagne."

On the Saturday of SXSWi, a poster appears around Austin.

Designed to look like an old-fashioned boxing promo, it announces: "SXSW 2010: The Geosocial Showdown". On the left is the "heavyweight", Foursquare's "two-headed monster", represented by a cartoon old-time pugilist with Dennis "The Mayor-Maker"

Crowley and Naveen "NYC Supernerd" Selvadurai's head-shots coming out of two hand-drawn chicken-skinny necks.

On the other side, from the "featherweight" division representing Gowalla, is another boxer drawing with a head-shot of the "Ultimate Underdog: Josh 'The Pack-Rat Game-Lovin' Journey-Taker' Williams".

Gowalla booked the Belmont nightclub months ago. Selected guests must unlock a special VIP pin to gain access to the 900-person venue; everyone else waits in line. Foursquare has thrown together its party in a couple of weeks, partnering with a company called Brizzly and with Katalyst, the online arm of Ashton Kutcher's company. It takes up three rooms in the basement of an ordinary beer hall, capacity fewer than 300. Their party is guest-list only. "There's been all this talk about the Gowalla/ Foursquare smackdown, but we're killing them," Crowley reflects. "We held our own, we spent maybe a thousand dollars on marketing. We've done better than expected on all fronts. I feel like they're drafting us. We're pulling them around the track."

At the Gowalla party, Josh Williams surveys the room. This will be remembered as the cooler party, though that's really a minor victory. Gowalla has established itself as a legitimate player. By the end of March the app will have added 65,000 users.

Williams has reason to feel good. Gowalla has done well. But Foursquare comes out of SXSWi on fire. After the conference, Foursquare announces it has cut a deal with MTV Networks, similar to the one with Bravo (and again for an undisclosed sum), and that it has topped one million registered users.

The website Gawker publishes a post titled: "If You Use Foursquare, You Are An Annoying Jackass." Thus it has officially gone mainstream. In late March comes word that four VC firms are battling for lead-investor status in the company.

Foursquare has been talking about raising $10 million at an $80 million valuation, according to The Washington Post. Then Yahoo! reportedly bids over $100 million -- which Foursquare turns down. "We're lucky to be in a position where we have a lot of options," says Crowley of all the interest. "We're trying to figure out what's best for the product. We have a very strong business model -- helping users connect with local businesses and local businesses connect with their best customers. We're not monetising on their opportunities, but it's easy to see how we could do that when or if the time is right."

That time may have come. In April, Pepsi Co announces a partnership with Foursquare that blends loyalty with location, alerting users to their proximity to a Pepsi retailer -- and throwing in a reward, too.

As the money rumours continue to swirl around Foursquare, Crowley can hardly believe his good fortune. After more than a decade of stops and starts, he's finally risen on his own terms. "Ha, how can we not be excited?," he tweets in response to congratulations from a fan. "Kind of the most exciting ride ever to be honest :)"

Neal Pollack is a writer based in Los Angeles. His next book, Stretch: The Unlikely Making Of A Yoga Dude, will be published in August by HarperCollins.

This article was originally published by WIRED UK