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Foursquare finally announced that it’s raised $20 million in Series B funding, including money from Andreessen Horowitz, a fund that publicly walked away from the Foursquare investment because of all the attention. (Head fake, anyone?) The funding news has been the subject of speculation befitting the very public-private life of Paris Hilton rather than a tech startup. And I’m glad it’s out of the way, because now the focus should shift to important stuff. Important stuff that involves New York-based Foursquare going from 1.8 million subscribers to tens and then hundreds of millions of subscribers. Important stuff that involves Foursquare going from a product to a company.

As someone who is an unabashed fan of Foursquare and what it represents, I have to admit my usage of the service has been waning. The early thrill of checking in at different locations has vanished, replaced by indifference. And I am not alone in feeling that way. As the number of folks on Foursquare’s network have gone up, it has become virtually impossible to become the mayor of a location. The mayorship and special badges were the “rewards,” and a physical manifestation of the gaming philosophy behind Foursquare, making the service enjoyable in the process.

When I asked Foursquare founder Dennis Crowley about my lack of interest, he emailed me back saying that many of these issues will be addressed as he and his team of 27 are building what is essentially Foursquare 2.0. He didn’t want to go into details — he’s worried about being copied. The whole idea of check-ins (as we have written in the past), badges and mayorships have been copied ad nauseam. Don’t believe me? Take a look at Loopt’s LoopStar. ?(Robert Scoble recently came up with a list of things Foursquare could do in order to ??escape the attack of the copy-cats.)

Crowley wrote that he and his team are working on redoing the core game mechanics, aka “what incentivizes me to check in.” Why is it taking so long to launch? “Because we’re growing so quickly that we have to address our technical scaling issues first,” he said. Crowley also alludes to these scaling issues in a blog post announcing the Series B funding:

We’re hoping to build a world-class engineering organization, based primarily in our headquarters in the New York City to help us develop the next generation of mobile + social + local products that will excite our users and provide unique value for local merchants. The new investment capital will also help fund the infrastructure needed to house our team (we’re finally getting a new office!) and support our growing audience of nearly 2m users.?

Clearly, the new money is going to come in handy for Crowley to build an operational team, which in turn should help the company transition from being merely a product to becoming a company. As he builds a core team to handle the business issues, Crowley will have time to address what is the most important issue facing his young company: the transition from an early adopter service to one used by mainstream customers. Incentivizing early adopters is very different from the incentives for mass market users, as many sites dependent on network effects have learned in the past.

As Stacey Higginbotham put it in a post earlier this year:

Much like it took time for people to see use cases and value in Twitter, which was an entirely new means of communicating, it will take time and a display of beneficial results before folks will see the value in displaying their location rather than focusing on the loss of anonymity. Until that happens, many people, when faced with an unfamiliar friend request, will likely hit delete. And without that large network of strangers, then the idea of machine-mediated serendipity remains just that — an idea.?

The good news is that Crowley and Co. now have the money to figure it all out.

Post and thumbnail photos courtesy of Flickr user schatz.