- David Shim sold his location-based measurement firm, Placed, to Foursquare in May with the goal of becoming a one-stop shop for advertisers’ location data.
- Shim talked to Business Insider about building the eight-year-old firm and having it acquired twice: Prior to selling the firm to Foursquare, he sold it to Snap for $135 million in 2017.
- Shim credits Placed’s focus on measurement and a “conservative” approach to advertising in helping his company weather a tough market for ad-tech companies as regulation and privacy concerns grow.
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David Shim didn’t want to work in advertising when he founded his measurement startup, but the firm has been acquired by two companies that are betting big on location-based ads.
In May, Foursquare acquired Placed, Shim’s location-based measurement firm, as part of a $150 million round of funding led by The Raine Group.
The Foursquare acquisition is the second time Shim has sold his eight-year-old firm. In 2017, Snap acquired Placed for $135 million to help advertisers with attribution, a metric that tracks ad exposure with real-world purchases and foot traffic.
In January, Foursquare CEO Jeff Glueck approached Snap to see if it would be interested in selling Placed. Snap had acquired Placed when it didn’t have a self-serve advertising platform or its own first-party location data. According to Shim, Snap wasn’t looking to sell Placed but asked if Shim would be interested in meeting with Glueck.
“They were transparent and [said], ‘someone reached out — do you want to have this conversation?'” Shim said.
From there, Shim said it became clear that Foursquare could help Placed grow more and become part of Foursquare’s tech stack for marketers.
“That got me really excited to say, ‘If Placed were a company that was only focused on location data, where would I go?” he said. “The answer was Foursquare.”
Snap facilitated further talks between Foursquare and Placed from January until the acquisition closed in June.
Shim is now Foursquare’s president and is working on pitching advertisers on the combined company and its goal of being a one-stop shop to power all of a marketer’s location data.
Shim stayed focused on solving measurement
According to Shim, Placed’s single focus on solving the complex metric of attribution helped Placed weather the tough market of location tech firms that have struggled to stay profitable or pivoted their business into other areas.
“I want to build what web analytics did for the digital world for the physical world,” Shim said.
39-year-old Shim founded Placed in 2011 after working in product and operation roles at Quantcast. At the time, sales of iPhones were gaining traction and he saw an opportunity to build a data business that used phones’ built-in location features to understand consumer behavior.
One of his biggest challenges early on was convincing investors that people would be willing to give their permission to have their location tracked. Plus, a number of check-in apps like Gowalla, Foursquare, Google, and Facebook Places were already popular with consumers, and he didn’t want to build another similar service.
So he built an app called Checkin King that allowed consumers to check-in to all of the services at the same time to aggregate all of the data together.
“I dove into a space where I thought there was no incumbent, there was no market at all,” Shim said. “My biggest problem back in 2011 when I was raising funding was people were like ‘people will never give you location data on an opt-in basis.'”
Shim then spent 18 months building out Placed’s technology that used the data collected by the app to track the whereabouts of people who agreed to share their location without requiring consumers to check-in to locations.
By 2013, the firm had started working with retailers to find foot-traffic patterns around big shopping days like Black Friday.
But selling location data during slower shopping times of the year was tough. Shim said the sales cycle for location data ended up taking six to nine months and was typically based on specific campaigns that retailers were running as opposed to year-long deals.
“I was a little bit too ahead of the curve at the time because people didn’t have use cases,” Shim said. “I didn’t want to go into advertising — I wanted to stay pure-play analytics.”
In fact, Placed didn’t hire a salesperson for the first two years. After a little nudging from investors and interest from advertisers, Placed started working with publishers and ad networks like Pandora and Millennial Media to measure the impact of advertising campaigns.
“I thought I had this organic demand, but I should have probably put more fuel on the fire — we were more conservative,” he said.
Snap insulated Placed from ad-tech disruption
Shim said he didn’t consider selling the company until he received an offer from Snap in 2017. But as the ad-tech industry got more crowded, it got harder for firms to differentiate themselves, and Snap allowed Placed to be “incubated outside of the ad-tech ecosystem,” Shim said.
Placed raised $13.4 million before being acquired by Snap in 2017.
“If you look at the location space, there’s been a lot of turbulence — you’ve seen a lot of people fall off,” Shim said. “These companies are shrinking because the market doesn’t want to fund some of these companies.”
When Foursquare’s Glueck approached Snap to see if it would be interested in selling Placed in January, Shim knew Glueck from working in the industry as a competitor. The two had met up for lunch in 2016 to talk about a possible merger that didn’t work out.
Shim met with Glueck and Gary Little from The Raine Group (who is also a board member for Foursquare) to talk about the long-term plan for Foursquare and its $150 million round of funding.
Shim also personally invested “seven figures” into Foursquare, though he declined to say the exact amount that he invested.
“It wasn’t just Foursquare wanting to buy Placed for the name or customer list,” he said. “[It was about] being the single platform for location.”