This week I downloaded a new Yelp app onto my iPhone. In it Yelp included a copy of Foursquare’s badges, which reward people for checking in frequently. Sometimes you might get a swarm badge for checking into someplace that has a lot of other users checked in too. Sometimes you might win a mayor badge for checking in more often than anyone else at your favorite restaurant or park.

Well, Yelp (CrunchBase info on Yelp) has now copied the checkin gesture that Foursquare (Crunchbase info on Foursquare) introduced to us all and also they added badges of their own. I already am the baron of my favorite Mexican restaurant in Half Moon Bay.

This copying behavior demonstrates to me that Yelp is definitely jealous of the attention Foursquare is getting and isn’t able to innovate on its own.

This seems to be a problem for Foursquare. But is it really?

Yes.

Here’s why.

Back when I first met Steve Wozniak I asked him how an entrepreneur can build a new company that gets radically big like Apple. He told me that that only happens if two preconditions are met:

1. That a market is about to explode. That certainly seems true of geolocation-based services.
2. That the existing businesses ignore the new upstarts long enough for them to get traction. He told me how Apple was ignored by bigger companies like HP and IBM from 1977 to the early 1980s when IBM released the PC. Foursquare is only a year old and already it’s seeing its best features copied by Yelp. That’s a real problem.

Now, that doesn’t mean that Foursquare isn’t building something defensible.

Foursquare’s value is in two places:

1. Serendipity around people. Foursquare’s social graph is much more nuanced and much more focused on things that help me meet interesting new people. For instance, in Foursquare, if you’ve added your phone number like most people have, I can see you’re near me and I can also text you. It also shows me your Twitter and Facebook address. Yelp doesn’t focus on this so much.
2. Serendipity around place. Yelp is awesome if you: a. know where you are and b. know what you want. “I’m in financial district in San Francisco and I want great sushi.” Yelp is the best system for that. But what’s Foursquare awesome for? a. when you don’t know where you are and b. you don’t know what you want. When I arrived in Paris I had no clue what neighborhood I was in and I had an afternoon free. I checked in on Foursquare and it showed me, thanks to a tip left by someone, that there was the best Paris bakery right around the corner. I never would have known to search for that.

So, Yelp is jealous of Foursquare’s serendipity and gaming. But they haven’t nailed that yet. I think that’s why Foursquare’s CEO, Dennis Crowley, says that Yelp hasn’t copied the right features yet. But he’s gotta be nervous that they’ll figure it out in a couple of more months and totally take away Foursquare’s air supply. Now, this morning, Techcrunch is reporting that Foursquare is getting an investment, so that gives Crowley some time to figure it all out.

Where would I go if I were Foursquare?

1. Make the badge system web wide. Not just usable inside Foursquare. Lots of other companies are looking for a game to include in their apps. Open that up and make the badge system a platform. That’s probably why Facebook was so interested in it. Facebook needs more things to go web wide than just its like buttons (speaking of which, click like on my blog, please, see the bar below).
2. Add more utility around the tips. Finding the utility there is a bit difficult, and there isn’t enough of a game around adding them in, so lots of locations don’t have any tips, even ones that have Foursquare users checking in. And on places that have tons of tips it’s hard to find the ones that really are going to make your experience magical.
3. I’d buy some other companies, like Foodspotting, or Fiddme, and start hooking them together with Foursquare to make the utility better and more defendable against Yelp and, eventually, Google and Facebook, when they start getting a clue about location. I tried to set that up when I interviewed both Foursquare’s CEO and Foodspotting’s CEO together.
4. Buy a loyalty-card system, like CardStar. They claim not to be interested in selling, but there’s a HUGE amount of value in there. I’m using CardStar now to check in at Safeway with my Safeway card. Imagine if those two systems were joined?
5. Get Plancast and Tungle.me to share their data via APIs and build in new location features into them. Why can’t my calendar, on Tungle.me, check me into Foursquare automatically when it knows I’ve arrived someplace?
6. Add a “check out” feature. Why? Because that way I’ll know my friends are no longer at that coffee shop down the street so I shouldn’t try to meet them. How long you linger in one place says a lot about you, too. For instance, I hate shopping so I’ll only spend four minutes inside the Gap, if I go at all. But there are many people who will linger there for hours. If you are another clothing store, which customer is more valuable to you to get to come to visit your store? Me or that other customer?
7. Let us add a lot more data about the location we’re in. For instance, can eBay add inventory into that location? Can I post pictures or videos? Can you link to a wikipedia entry? Etc etc.
8. Extend the malleable social graph (that’s one thing Yelp hasn’t copied yet and won’t be able to easily). What is that? Foursquare is the only system that shows you users who are near you. That’s a malleable social graph. It shows you only a part of the social graph depending on a non-related variable (in this case location). Now, why can’t I have Foursquare only display people who’ve been to four Austin city BBQs? Or only show me the people who’ve been to five Sonoma wineries? Or, even better, show me only the people who’ve been to Sonoma wineries AND Austin. Yelp won’t be able to do that, and won’t see the value in doing that, but there’s DEEP value in that for getting rid of noise. After all, why am I taking sushi recommendations from people who don’t know anything about sushi and haven’t had enough experience with enough places to rate a sushi place?

Anyway, Foursquare does have a Yelp problem and it’ll be interesting to see how they deal with it over the next year.

What do you think? What would your advice be to Foursquare, or, really, any company that faces a larger, bigger, competitor, who keeps copying you?

Making lists is something lots of us bloggers do. Here, for instance, is a list of the best apps for Android.

How did that list happen? I started a list on a new service, twtpick.in, and then I tweeted it. Within minutes I had dozens of apps that people all over the world had entered. Now 10s of thousands of people have visited that list, and have voted up their favorite app. The list changes, indeed, gets better, over time. This is a new kind of list, one that’s interactive.

Here the CEO, Shyam Subramanyan, explains his philosphy behind these lists and where he wants to take them in the future.

Lithium‘s CEO, Lyle Fong, came to my house for a chat the other day. His service is being used by tons of companies to run their communities.

Now, companies have had communities for a long time. They might even be seen as boring, to take off a theme of my last post on eBay.

But why is Lithium winning?

Because they are using game mechanics to find the key influencers on a community and reward them with power. Why is this important? Well, when I was at Microsoft I learned that only a small number of people who are participating can make a HUGE difference to your community.

Listening to Lyle you’ll learn how this works to entice more people to put more content into these communities.