Foursquare Raised $20m amid Privacy Issue

Foursquare Raised $20m amid Privacy Issue
Location-based social network Foursquare yesterday announced the closing of a $20 million Series B round with the new venture capital firm Andreessen Horowitz as well as existing shareholders Union Square Ventures and O’Reilly AlphaTech Venture. This fund raising was announced the same day a substantial privacy leak on the Foursquare system was revealed by WIRED.

“With this new round of financing, our main priority will be to expand our organization to supplement the amazing core team we’ve assembled already […]”, wrote CEO Dennis Crowley in a blog post. “We’re hoping to build a world-class engineering organization, based primarily in our headquarters in the New York City to help us develop the next generation of mobile + social + local products that will excite our users and provide unique value for local merchants. The new investment capital will also help fund the infrastructure needed to house our team […] and support our growing audience of nearly 2 million users.”

Foursquare, a start-up company launched less than 18 months ago has grown exponentially in the last six months to reach today around 1.8 million members. In mixing location, social networking and gaming, the company was able to make its product sticks. Furthermore, in encouraging people to check-in at their local shops, restaurants and bars, the company opens the way to various modes of interaction between local businesses and their customers, hence a real business for the start-up.

Unlike friend finder apps with always on location, its “check-in” model let people manage their privacy more easily – but it is clear now that the system is not without risk.

Foursquare Raised $20m amid Privacy Issue
Privacy hole
The privacy leak revealed by WIRED exposed the location history of Foursquare members who checked-in in San Francisco. A total of 875,000 check-ins were collected over a three weeks period by a “white hat” coder who created a small program that continuously scrapes pages open to the public and analyzes changes to determine when and where people check-in. He contacted Foursquare and explained the problem.

Foursquare made changes to its privacy settings but they do not really answer the issue. Now users have to un-check a new box in the privacy settings in order not to have their name appearing publicly on the places where they checked-in.

However, since the company does not seem to have warned its members about the privacy issue and the new settings there is little chance they will take action on it. As a matter of fact, the coder - who continued to run his little spy program - did not see any drop in the number of check-in he monitored since the new feature was introduced.

Thursday, July 1st 2010

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