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The unexpected impact of Foursquare’s proprietary tech platform

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Zarrion Walker

Entrepreneurs may build something for their own use to later discover that it is valuable to others. Often, the foundations originally laid can end up playing a starring role.

Be prepared for the unexpected.

Life takes many twists, and the life of a business can take many twists as well.

Often, the things you weren’t expecting turn out to be the richest experiences in life, or the most valuable asset in a business.

Take the example of Foursquare.

When Dennis Crowley founded Foursquare in 2009, he wanted to build an intelligent app for your mobile phone that would recommend great places or experiences (around the corner, or around the globe), and that would tell you if your friends were nearby, and help you meet up spontaneously.

He assumed that he could license developer tools and a map of the world that understood location, where every business in the world was located, and how to tell automatically a user’s context: whether they just sat down at a restaurant, or had arrived home, or turned the corner into an unfamiliar neighborhood while traveling.

It turned out there was nothing available like that in 2009. And so with backing from venture capitalists, he hired a team of former friends from Google, and set out to build the technology and data himself.

After 7 billion check-ins, Foursquare is the ultimate map of how mobile phones see the world. Covering 65 million public places, it can recognize whether you are standing at the Starbuck’s on 27th street, or the Gap store at the mall.

Foursquare’s proprietary technology was built for its own app. And is now used to power location, understanding and context for other apps.

Today 89,000 developers and companies use the Foursquare developer tools, including Twitter, Pinterest, Waze, Microsoft Cortana, Yahoo! and others.

And that platform actually provides over a third of Foursquare revenue. A figure growing very quickly.

This was a surprise, because when Dennis set out to build the proprietary technology that would become Foursquare, there were no initial plans to monetize or build a platform. In fact, until 2014 Foursquare had never earned a penny for use of the platform.

It was a quasi open-source project given away for free.

And when I joined Foursquare as COO last summer, my first project was to put together a plan to approach the heaviest commercial users and ask them to pay. And one by one, we signed them up.

My point here is that as an entrepreneur you may have built something for your own use to later discover that it is valuable to others.

There are lots of examples of this.

Amazon set out to build a great e-commerce website, but now one of their most profitable business lines is Amazon web-services.

Amazon also enables e-commerce for small businesses, and has an advertising line that helps other businesses reach interested customers based on their data. This is thanks to a host of services they have perfected, including delivery and inventory logistics they now handle for third parties.

And that provides a big part of their profit stream.

These are high margin services which boost Amazon towards profitability, since Amazon makes low margins on its direct, low-price sale of goods that have to ship out.

I don’t know whether Jeff Bezos had that all planned out. He certainly wanted to go beyond books when it began, but I don’t think anyone envisioned just how big the platform would become.

I had a similar experience at Skyfire Labs, a company where I spent 5 years as CEO.

When I arrived to join the two founders, they had built proprietary technology to detect troubled mobile phone connections, and to adapt videos and flash animations, music streaming and images to whatever would fit your fluctuating available bandwidth. And it all operated in the cloud.

Skyfire’s consumer application using this proprietary technology was initially a browser app for Symbian and Windows Mobile phones, and it had over 20 million downloads by 2010.

But when it became apparent that the world was moving towards Android and iPhone in 2010, I went to the Board and said we were moving all our engineering resources to iOS and Android, and turning off our products on Symbian and Windows Mobile despite millions of users—because the writing was on the wall.

We built the first browsers to make Flash video work on iPhone and iPad, and on Android, and sold millions of dollars in paid apps.

But that business also was time-limited: we were competing with Safari and the native Android browser (what would become Chrome).

So longer term, I knew we needed to get a return on the $40 million in venture capital we had spent on R&D. We had to find bigger growth markets.

As it turned out, those feeling the pain of the explosion of mobile video were mobile operators like Verizon in the US or Telenor in Asia. So we took our consumer app cloud technology, and we built carrier-grade software that could look across the entirety of Verizon’s network.

Everyone connecting on any device to the Verizon network could enjoy this automatic rescue technology in the case of a poor signal or poor bandwidth.

The proprietary technology automatically detects when users are connected to an overcrowded cell tower and instantly adapts video, images and streaming audio so that everyone can still stream content and share the limited resource. We could shrink a video by 70% in milliseconds, in the cloud. We went on to get Verizon to invest and convinced companies to install this customer enhancement in their networks.

These contracts were worth millions of dollars, rather than the $1.99 we charged for each iPhone app. The company had a great growth future and it was acquired by Opera software in 2013.

The lesson to take from this is that if you set out to make a product and the technologies to build it aren’t there… you may have to go out and create the underlying technologies.

And the foundation you build may turn out to be the real star, a platform that others can build around to solve problems you haven’t even imagined.

So keep your eyes on the larger market, keep asking if you have product-market fit, and look for even bigger markets that may value the core inventions, even when your first try at a product proves harder than hoped.

That nimbleness and honesty may prove the key to your fortunes.

A career can work the same way. Be ready for surprises. It’s a lot more interesting to do something you love, and often taking the more interesting path ends up (in ways hard to foresee) being more economically rewarding in the end.

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