I was at the buffet at the Las Vegas Hilton a couple of weeks ago, and they have the little internal advertising cards on the table. You know, visit our nightclub, see our show, that kind of thing. But one of the items was a "Check in with Foursquare, get rewards" card. That changed my perception of where Foursquare is with things. And what they really are.
The casino sees them as another customer loyalty program. If they're providing customer loyalty programs to every business in the world...well. That's a market. And that's where they seem to be making the most inroads, moreso than with users so far. But if the businesses start helping them advertise, ala the casino...
Foursquare is on the verge of being MUCH bigger in very short order. That's why the feeding frenzy is happening right NOW.
if facebook does NOTHING, yes foursquare could go somewhere. but the bottom line is they already releasing privacy settings with location awareness in them, it's only a matter of time before they have their own LBS. and for $125mm trust me, they will develop in house thank you.
Foursquare etc. find themselves in this position: the game mechanics they used led to explosive growth but also left them with a really low glass ceiling (think people don't get Twitter? ha.) They may have had a crazy hockey stick recently, but there is simply no way they will go main stream. It's got too MUCH personality: being mayor and getting badges will either REALLY resonate with someone or not at all.
I think the founders see $80mm+ valuations on a product with a very small, homogeneous demographic of users as far greater than they could ever dream of with their current stats, and they know FB could relatively easily enter the space with a far bigger and international crowd, as well as a household name that already does biz with f500 companies, and just crush them.
I think foursquare dies no matter what, if I were the founders I'd sell to the highest bidder and run.