The Rewards of Inflating a Bubble

A quarter of Foursquare's new $20 million venture capital infusion will go straight into the pockets of founders Dennis Crowley and Naveen Selvadurai, according to an SEC filing. Five million dollars is a nice reward for unprofitability.

Of course Crowley and Selvadurai have effectively promoted their location check-in service to hundreds of thousands of iPhone owners and, far more importantly, to deep-pocketed investors. Even if they never figure out how to turn Foursquare into a profitable enterprise, they have a real shot at offloading it on Google or stock market investors, at least if history as any guide. Think of the pre-profit payment to Foursquare's co-founders, then, as a reward for their ability to talk people out of their money. It's pretty circular logic for such a quadrilateral company, but it'll do, apparently.

[Business Insider]

[Pic: Crowley poses during a portrait session at the 2010 Digital Life Design conference. Getty.]