Foursquare has always been misunderstood. Will Swarm clear things up?

FORTUNE — While Foursquare has received its fair share of media hype over the years, the company has spent most of its existence defending itself. When the social-mobile-local app first launched in 2009, people scorned at the concept of “checking in” — why would you want to blast your location out to the world? Later they dismissed its game-like aspects, which included badges, a leader board, and arbitrary points. They scoffed when, at the peak of its popularity, the company raised $50 million at a $600 million valuation. (In total, the company has raised $142 million in VC funding and $20 million in debt.)

Dennis Crowley, the company’s charismatic CEO, has been in a constant state of explaining Foursquare’s value and raison d’être. The company has launched endless iterations and redesigns, like “Explore,” which de-emphasizes the social network aspect of the app in lieu of a personalized search engine, and a feature which sends you automatic push notifications about deals and restaurants nearby.

No matter, the high-profile company remains subject of intense debate among techies, and of derision among people who don’t get it. It’s easy to dismiss.

Today, Crowley and crew revealed something much more radical than iterations past: Foursquare has “unbundled” its app, building an entirely separate app called Swarm, which will handle the social network part (checking in without actually using the term “check-in”). The existing Foursquare app will handle search and recommendations. Swarm will appear in Apple’s App Store within the next two weeks.

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Unbundling is becoming popular with consumer web companies. Facebook (FB) has led the charge, launching a separate mobile messaging app called Messenger, which now has 200 million users, and a content recommendation app called Paper.

The idea is that apps should be simple and focused in their utility, rather than try to be everything to everyone. The decision to unbundle was based on the way people use Foursquare. There are two distinct use cases — sharing your whereabouts, and recommendations — and they don’t necessarily overlap. “People hire an app to do a specific thing,” says Jon Steinback, Foursquare’s VP of product experience.

But for Foursquare, a company which has been misunderstood for so long, the addition of another app could further confuse people. The two apps will operate separately, though they will prompt users to move back and forth between the two, says Steinback. “If you tap on a link in your email app, it might take you to Chrome. We think of it in the same way,” he says. Swarm will know historic check-in data from Foursquare, but the apps won’t share real-time location data with each other.

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Foursquare will encourage its existing users to download Swarm. (There are 50 million Foursquare registered accounts.) They will no longer be able to check in on Foursquare, though their check-in history will guide the app’s personalized search results. Existing and new users might need some hand-holding to figure out how it all fits together. Or maybe they won’t care, the same way Facebook users say they distrust the company, but continue to engage with it at record levels.

There are plans to monetize both Swarm and the regular Foursquare app. Swarm will show users special offers when they check in at a location or in a neighborhood. Foursquare will continue to show sponsored search results and recommendations, as it has for the last few years. According to The Verge, Foursquare booked $12 million in revenue last year and is on track to bring in $40 million to $50 million this year.

Foursquare has been fighting public perception that it’s a failure ever since the company raised that difficult debt round in 2012. Regardless of whether that perception is fair, with Swarm, Foursquare has shown it is willing to make radical changes. Steinback says Swarm isn’t just a little experiment — Foursquare is all-in on this. “We set out with this strategy and we feel confident about it,” he says. “This is the future of the company.”

This post has been updated to reflect the company’s correct amounts of equity and debt raised. Foursquare raised $41 million in debt, but $21 million of it has since been converted into equity.

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