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Facebook, Microsoft vying for Foursquare? Hmm

As rumors of acquisition talks surface, check-in service faces accusations of media manipulation.

Technology trends and news by Matt Bowman
April 23, 2010 | Comments (1)
Short URL: http://vator.tv/n/f36

Foursquare knows how to feed the rumor mill. One tenth of MG Siegler's posts at TechCrunch in the last month have been about the company, which only yesterday reached a million users. It almost certainly had a bid from Yahoo and reportedly has Facebook and Microsoft talking with them about acquisition. Rumors from Business Insider, BoomTown and TechCrunch have a slough of top VC firms seeking to lead their latest round, including at one point or another, Accel Partners, Andreessen Horowitz, Khosla Ventures, and Redpoint Ventures. Digital Sky Technologies also reportedly wanted in.

So why are there so many rumors, and so many unnamed sources blabbing about all these talks, which normally stay confidential? We've reached out to Foursquare and will update the post if we hear back.

Andreesen Horowitz, which dropped out of the funding race, had a few ideas. Partner Ben Horowitz told BoomTown earlier this week that Foursquare's CEO Crowley and crew were manipulating the media. “We withdrew our funding offer to Foursquare and we are out." he said. "This is playing out too much in public and clearly someone has an interesting agenda here, so this is not something we want to participate in. [...] If the process was changed, we still like the company, but since it has been long and undefined, it is prone to manipulation.”

The public process certainly does seem to be helping the company

Several VCs have said that the rush to invest in Foursquare has more to do with startup scarcity than the belief  the company is the next Twitter or has a killer revenue model. There is now too much capital following to too few companies. In a bubble, the more hype you attract, the better your valuation.

Facebook could probably turn on a checkin feature and quickly edge out Foursquare, which is still very Silicon Valley-centric.  This morning's rumors could be fueled by a last-ditch push by the company to get an acquisition or funding offer at the highest possible valuation before the Facebook hammer drops.

Update:  Kara Swisher at BoomTown refutes TechCrunch's rumor that Facebook is in acquisition talks.  This is getting interesting.

Update 2: Not too surprisingly, a representative of Andreessen Horowitz says this post is "spot on."


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Comment

Matt Bowman
Matt Bowman, on August 5, 2010

Jeff, you're right about the manipulation ending, but wrong(ish) about Horowitz.

Foursquare has not appeared at any conferences in recent months, and the media coverage is back to normal, focusing on features.

Horowitz backed out for a bit, but Andreessen-Horowitz actually ended up leading the round (!), which means Crowley must have agreed to play by the rules. Indeed, since the round, the company seems to have a moratorium on media appearances, and has been head-down building. If Horowitz's bit of public negotiation made that happen, he can keep the kudos.


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