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

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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.

Pratik Dholakiya

Pratik Dholakiya

Co-Founder & VP of Marketing at E2M
Pratik Dholakiya is the Co-Founder and VP of Marketing of E2M, a digital marketing agency and MoveoApps.com, a mobile apps development company. Pratik has been featured on sites like Forbes, Moz, SEW, SEJ, KISSmetrics, Entrepreneur and FastCompany to name a few. Hit him up on Twitter @DholakiyaPratik for a quick chat.
Pratik Dholakiya
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  • Joseph

    This is a very poorly researched and poorly cited article.

    • Pratik Dholakiya

      Hi Joseph,

      Thanks for your feedback here. I noticed and understand your words and I agree that citation is needed to draft a detailed and information article. I’ll take this into consideration in my future posts. Thanks again!

      Thanks, Pratik

  • Michael

    I second Joesph, this is very poorly researched, gowalla itself was actually pretty simple to use, it had a stable userbase, why it failed is what it did in September, creating a remodeled app without informing it’s users, the new model done away with their innovative “items” and other parts of their app. This was received with much of a negative response and it’s users turned away from an app they used for the past 2 years….

    • Pratik Dholakiya

      Hey Michael,

      I tried keeping as much information in the post as I could while preparing this article. I have shared the points that I got into my mind and shared them as an opinion about why Gowalla failed. The more we’ll go deeper the more various points will come out, and my aim was to share this content as basic opinion that I had about this update and that’s what I tried here to cover up. However, I’ll do my best in sharing more detailed posts in the near future.

      Sincerely, Pratik

  • Peeps

    What they said. I was a long-time GoWalla user who bailed when they fundamentally altered their app design and removed everything that made it FUN because they were under the mistaken impression their users weren’t using those features. Look at GoWalla’s ratings half a year ago and compare them to now.

    Then learn to do some effing research, dude.

  • Pratik Dholakiya

    Hi Peeps, I’ll take your words into consideration while writing another article in the near future. Thanks for sharing your feedback.

    Sincerely, Pratik

  • Bobby Salmon

    Gowalla always had fantastic graphic design, and its geocaching of virtual items was great fun. Those were the two things that made me a Gowalla disciple in its early days. But as Michael points out, Gowalla suddenly and drastically changed its user interface last year without warning, doing away with the geocaching and making it difficult for even existing users to figure out how to complete basic tasks such as checking in or creating new spots. They did this in favor of a more global approach and a “Lonely Planet” guide feel, for what purpose I don’t know, perhaps to distinguish themselves from Foursquare. But in doing so they lost their loyal fan base and the purpose for which it was created.

    I hope Facebook can make use of the Gowalla team and their better ideas. Little has changed with Foursquare over the past year so they are asleep at the wheel. What would change the game is for someone to give real incentive for checking in to locations. Currently with Foursquare you can find the occasional discount deal upon checkin, but some social app needs to find a way to reward mayorships or multiple checkins. Give us a reason for repeated checkins beyond lame “badges”. Or bring in more of a Groupon aspect. It needs to be something more than a diary for those afflicted with social app OCD.

    • Pratik Dholakiya

      Hi Bobby,

      Thanks for stopping by and sharing your experience in detail. Yes definitely, it will be exciting to see how Facebook will make use of Gowalla team and heir better ideas.

      Sincerely, Pratik