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Opinion – Why Gowalla Shut Shop and How Facebook Profits From its Acquisition

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Opinion – Why Gowalla Shut Shop and How Facebook Profits From its Acquisition

Two years ago two location sharing services targeting the mobile platform, emerged on the scene – Gowalla and Foursquare. Both were touted to become the next big thing. But while one went onto become hugely popular by building a better and much more popular network, with sky rocketing check-ins, the other floundered, so much so that its founders had no option left, but to shut shop and sell it to the biggest social media site around. Yes, I am talking about Gowalla and its acquisition by Facebook.

While Facebook has claimed that it is not buying the technology or services of Gowalla, but only wants the entire team behind Gowalla to join its design and engineering team, it’s no secret that Facebook bought Gowalla to get a pie of the increasingly lucrative location sharing market. A move that is seen in expert financial circles as perfectly timed to ramp up its service before it introduces its public offering.

But, I am getting ahead of myself. Let me begin at the beginning and explore the root cause of Gowalla’s failure to succeed in a market where Foursquare, its competitor, is doing great.

Reasons why Gowalla Failed

To put it simply, Gowalla didn’t miss the bus, but was at the wrong bus stop entirely. It got it all wrong right from the very beginning. According to experts, it was a great social app, whose time had come, but it failed. And, compared to its rival Foursquare’s one billion check-ins, Gowalla’s failure was all the more surprising.

One of the reasons attributed to the Gowalla disaster was that it only looked good, but wasn’t functional enough. It made things difficult for the user and that’s never a good thing, is it? The focus was not on form and function, but form only. First big mistake!

Second reason why Gowalla failed was because of its location. Based out of Austin, Texas, the platform just couldn’t gain the critical urban mass that powers the early growth of a mobile social app. It couldn’t build the kind of network effects that Foursquare could.

The third reason was that Gowalla overcomplicated things right from the very beginning. It didn’t offer a simple process of check-ins and rewards, and offered too many things at one go. This overwhelmed users, who didn’t really like being offered multiple features before they were actually well versed about how they are going to optimize the use of this mobile social media platform.

Lack of early business development deals also did Gowalla in. It was unable to exude clout and not many brands lent their brand equity to this platform which further precipitated its downfall.

I am sure there are plenty of other reasons why this platform failed, but what is surprising is that Facebook, went ahead and bought Gowalla, in spite of its failure. Or is it really that big a surprise? For all its mistakes, there was no doubt that Gowalla was a dynamic and innovative company with a pool of creative and talented developers.

The management at Facebook thought Gowalla fit in fair and square with their business trajectory and that’s why they bought it. Let’s take a look at how Facebook can benefit with the Gowalla acquisition.

Expect a lot of Gowalla in Facebook

Facebook says it didn’t buy the company for its technology or data, but was more interested in getting the Gowalla team onboard. Sounds like a plausible justification as there is always room for more creativity and talent in any company, but this doesn’t seem the only reason. Facebook will, at some point or the other implement ‘check-ins’. In the near future, you can expect a lot of features that look like a replica of those found on Gowalla.

C’mon it Wants Your Information

I simply can’t believe that a company buys another company with around 600,000 active users who share locations and says it doesn’t want their information. Remember, the failed experiment that was Facebook Places? So, there might be a case for taking a second look at location based sharing, by getting Gowalla on board. A new look, a new feel, customize the geo-location technology and Voila…. You have an optimized location sharing networking environment looking at you through the Facebook prism.

Improve Talent pool

I have kept the most obvious benefit for the last, but this is what is claimed by Facebook to be THE reason why they bought Gowalla. Facebook is making constant and newer inroads in the world of social sharing and there is no doubt that the fantastic team of innovators behind Gowalla, who are now joining Facebook, will enhance the already superlative team of developers and designers at Facebook.

There is no doubt that Facebook has converted Gowalla’s failure into an opportunity. But the folks who were in charge of Gowalla and behind its excellent concept have yet another opportunity, to create and innovate – Something that are very good at.

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Pratik Dholakiya

Pratik Dholakiya

Co-Founder at E2M

Pratik Dholakiya is the Co-Founder of E2M, a digital marketing agency and Preceptist.com, an executive branding & content marketing agency. ... [Read full bio]

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