Several years ago, three location check-in based startups stormed the tech world. Since then, Foursquare has taken off to somewhere near 15 million users, Gowalla has essentially died and the third and always the little sister, SCVNGR, has quietly maintained. Now two million with two million users and some strong brand partnerships, SCVNGR is not going to fade away. Will it thrive though? That remains to be seen.
The head of SCVNGR, 22-year-old Seth Priebatsch, understands that SCVNGR plays in the sub-domain of a realm, inside a niche. By that he means that SCVNGR is a social game (not everyone's type of fun) with a location-based bent, the niche inside the realm. Inherently, that limits the area of growth for SCVNGR. Yet, teamed with the company's new LevelUp mobile payments strategy, the roadmap for SCVNGR becomes clear.
Complexity, Foursquare & Growth
SCVNGR has raised nearly $20 million in funding over four rounds of funding. It started as an enterprise-based SMS service that did not pan out and went consumer side in May of last year with its location check-in based scavenger hunt. Its primary mode of revenue is brand partnerships with companies like Chevy and with universities to create brand awareness and achieve specific goals.
SCVNGR is fundamentally a complicated game. Go somewhere, check-in, perform and action and go to the next place. Priebatsch understands that complexity is a hindrance to SCVNGR, especially in its early battles with Foursquare.
"I think in many ways, SCVNGR was never meant to be the simplest app because of the challenges it is meant to be a deeper, richer engagement field. I think one of the biggest advantages that Foursquare had on us in the early days was simplicity," Priebatsch said. "Foursquare has more recently become immensely complex. I use it and I understand the rules but I find myself having to think. It is different. So, with SCVNGR, you kind of enter the thing with the expectation that it is going to change. New content is created all the time and what we do with SCVNGR is very much different with where you are playing, who you are playing and why you are playing."
The Limits Of Location Games & Opportunity With LevelUp
We will have more on LevelUp in our What's In Your Mobile Wallet series later, but talking about SCVNGR these days without mentioning LevelUp does not do the startup justice. LevelUp is a local mobile payments system where users have a QR code in their smartphone (or any screen than can do black and white) that is attached to a debit card and they can pay merchants who have Android phones to scan the code. The code becomes the wallet, so to speak.
One might think that SCVNGR has not achieved the level of growth that many were hoping for when the app launched its consumer-facing app at Google I/O (it is backed by Google Ventures) in May 2010. Priebatsch, a bit of an optimist by nature and still young enough to be growing along with his company, likes the growth trajectory that the company is taking.
"I am really happy with the way that SCVNGR is growing, I think that it will grow more quickly in the future. I think there is a lot more cool stuff to be done. I think that the location-based space is just inherently going to be smaller than either the social networking space or the social gaming space," Priebatsch said.
At the same time, SCVNGR inherently plays in a smaller realm. Priebatsch looks at the growth of Twitter, a utility without a lot of strings attached, and understands that the location area is never going to be that big. Fundamentally it is a different realm.
"Foursquare, I think they expect to be the size of Twitter. I don't think that is going to happen, it is just a more narrow realm," Priebatsch said. "That is OK because the value and especially where SCVNGR differentiates itself, the value that we can provide is the engagement at the location."
Not For Sale: "They Do Not Have Enough Money"
Priebatsch says that SCVNGR has a "massive release for SCVNGR coming out early next year and that is what everybody is cranking on." That release will likely tell the future of the SCVNGR as a successful product (outside of LevelUp) and determine the near-term fortunes of the company. The knock locally against SCVNGR is that LevelUp was something that the venture backers pushed on the company.
SCVNGR, for better or worse, is one of the pillars of the Boston startup community. Locally, there has been a lot of chatter recently (and a bit of controversy, caused by antics between Priebatsch and a local tech news startup) if the company is going to end up selling or being acquired. It is a legitimate question, given the venture funding the company has received and the combination of SCVNGR and LevelUp and the way the pair of products could influence brands and the mobile payments space. Priebatsch, in his slightly manic but still thoughtful way, absolutely denies that any companies like LivingSocial, Groupon, financial institutions or other mobile payments leadings are sniffing around or that SCVNGR has any intention of ever selling.
"They do not have enough money," Priebatsch said. "Making a bunch of money is fundamentally uninteresting. Making money move, the second derivative of money, is fascinating. That is really cool. Viewing the economy as a game, a system of interchanging parts, is interesting. What would it mean if interchange were zero? And how can you make that happen? Would that actually accelerate the economy to the degree that frictionless information flow accelerated the Internet. Is that a valid analogy, I don't know."