Twitter isn’t the only social media platform struggling these days.
On Thursday, Dennis Crowley checked out as the location-based social media app’s chief executive, handing the reins to Jeff Glueck, Foursquare’s chief
The switch comes after the company raised $45 million in funding, but saw plummeting valuation.
The financing pegs Foursquare’s valuation at roughly half of the approximately $650 million that it was valued at in its last round in 2013, according to
three people with knowledge of the deal’s terms, who spoke on the condition of anonymity,”
The New York Times
The app’s estimated worth has been declining over the past few years. The Wall Street Journal reported that Foursquare’s valuation was $760 million in 2012—a steep difference from the current
valuation of roughly $330 million.
In addition to the lowered valuation, investors secured liquidation terms. The Wall Street Journal further
Investors in the latest Series E round of financing were also able to secure a senior liquidation preference, meaning that if the company were ever sold,
those investors would receive at least the entire value of their investment back before other investors or employees holding shares receive anything.
These investors could make even more money in a liquidation if Foursquare hasn’t generated at least $25 million in gross revenue in a calendar quarter. In
that case, the investors would get 1.5 times the amount of their investment before any other shareholders receive proceeds.
Foursquare couched the leadership change in a positive light, stating on its blog that Crowley’s new role as executive chairman would give him
time to develop strategies and work on new products:
Our co-founder Dennis Crowley, whom many of you know personally if not by name, is stepping into a new role as executive chairman—a full-time position
that’ll give him the professional freedom to do all the visionary thinking, creative brainstorming, new product launching and (of course) nonstop tweeting
with you, his friends and followers and our valued community of Foursquare and Swarm app users.
Dennis has tapped Jeff Glueck, who has served as COO for the past year, as our new CEO, in recognition of how Jeff has grown and scaled several businesses
in the past and is ready to do the same for Foursquare. Dennis also asked four-year Foursquare veteran Steven Rosenblatt to serve as President, overseeing
revenue and the business-to-business offerings that have become such a critical part of our company makeup.
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Crowley wrote a post on Foursquare’s Medium blog,
saying the change would free him from management duties and allow him to work on “things that should exist in the world that only Foursquare can build”:
Meanwhile, I will be stepping up into the role of Executive Chairman. This new role will allow me to focus full-time on vision and innovation, long-term
strategy and creating new consumer products. If this sounds more like my job from 2010 than my job from 2015… well, that’s the point. It frees up my time
from operational and management duties and allows me get back to the “let’s just make something awesome that people love” spirit that got us here. There
are a lot of things I still want to build at Foursquare. And there are a lot of things that should exist in the world that only Foursquare can build — for
both consumers and app developers. My new job is to make sure those things get built as projects, and that the best of them get pushed into the real world
Crowley responded to a Twitter user who tweeted about the company’s decreased valuation and unsavory terms, saying he was “proud” of the recent deal and
“what it means for [Foursquare’s] whole team.” He wouldn’t share further details:
reported that Foursquare was coveted by tech startups after its launch in 2009, but the app has fizzled out as other social media platforms have added
location and check-in features:
Foursquare was once the envy of every startup in the tech industry. It exploded onto the scene in 2009, as attendees of the
South by Southwest conference used its check-in feature -- which lets users post their location at a local business over the Internet -- to let people know
where they were hanging out.
But the world of social networks is brutal. Enthusiasm for the service waned as companies including Facebook and Instagram built location services into their own apps. Some people also questioned
the value of checking into restaurants and other spots. Foursquare aimed to resolve that issue in 2014 by splitting its services into two apps: Foursquare
would be for recommending restaurants and other venues, and a new app, called Swarm, would be for check-ins.
What do you think this news means for Foursquare, PR Daily readers? Do Foursquare’s communication efforts put the news in a more positive light
for investors and users?