ULocate’s Where Is That Rare Beast: A Location-Based Mobile Platform Earning Real Money

12/16/09Follow @wroush

As the news cycle slows down with the approach of the holidays, I’ve had a bit of time to attend to my towering backlog of unpublished interviews, including the one below, from a visit to Boston-based uLocate. CEO Walt Doyle and vice president of marketing Dan Gilmartin had me over on November 9 for the company’s weekly pizza lunch, and we talked about the latest developments with the company’s “Where” platform—a collection of location-aware widgets for your smartphone that can do things like find you the best local prices on gasoline, direct you to the nearest Starbucks, show you a live map of local traffic, grab movie reviews for the flicks playing locally, and so forth.

These days, of course, there are of plenty of apps for the iPhone and other smartphone platforms that do each of those things separately. But uLocate has been working in the world of location-based services for a long time—six years, with a total company relaunch in 2007 funded by Venrock, Grandbanks Capital, and Kodiak Venture Partners. And in that time, they’ve figured out not only how to combine all of the location-related information a mobile user might need into one convenient package, but how to bundle up that package and distribute it across six different mobile platforms on seven carriers.

Yes, I said six platforms (iPhone, Android, Palm, Blackberry, the Web, and SMS) on seven carriers (Verizon, AT&T, Sprint, T-Mobile, Boost Mobile, Virgin Mobile, and MetroPCS). That’s a feat of remarkable engineering and sales prowess in the maddeningly fragmented world of mobile communications.

Perhaps even more remarkably, Gilmartin says uLocate is now turning a profit, having hit on a combination of revenue sources that are likely the envy of many a competing mobile-app company. Those include subscriptions (most Where users, with the exception of iPhone owners, pay a $3 monthly fee for access to the Where widgets), search-based advertising, banner advertising, and commissions on e-commerce transactions such as movie ticket purchases and restaurant reservations.

Where home screen“A lot of people are trying to figure out how to make money on mobile,” says Doyle. “The one that we’re after is around capitalizing on the personalization—-leveraging our access to network-based location information to present location-specific opportunities to users.”

Still, uLocate faces an uphill battle promoting Where, given the sheer number of competing location-aware applications exploding onto the scene through Apple’s iTunes App Store, the Android Marketplace, Palm’s App Catalog, and other mobile app stores. In our interview, I pressed Doyle and Gilmartin to explain what sets uLocate’s platform apart from other apps, and to talk about the areas where the company wants to keep innovating.

Xconomy: What’s the big idea at uLocate — the distinct, unifying vision?

Walt Doyle: The vision is pretty simple. I was the general manager at Mapquest; I’m a media guy by background, with some experience in VoIP, Gamespot, Dow Jones. At Mapquest we had begun to see location capabilities arriving on mobile handsets. Dan, who was at Sprint Nextel running location-based services, and I had the opportunity to meet. We said, it’s dead-dumb simple: you’ve got emerging devices with location capability that are portable and that are going to create an opportunity for exciting future services that are always-on and always with you, and the monetization capabilities will keep up and will be even more powerful as you gain the context of location. That was the vision. What none of us ever anticipated was how fragmented the marketplace is, from both an operating-system perspective and a distribution perspective.

X: But wasn’t that fragmentation obvious even back then?

Dan Gilmartin: The fragmentation developed over time. If you think back to 2000, everyone was walking around with a StarTac, and Motorola was the number one player. The fragmentation was there, but it wasn’t as large because you didn’t have so many pressures from people saying “Hey, I want GPS, I want Java.”

WD: In the end I think the fragmentation, both at the OS and the distribution level, has been our friend [because it keeps out major competitors]. What it translates to is that your development costs are higher and you need to be faster and more iterative, and your distribution and sales has to be that much tighter. And of course you need a clearly stated value proposition—with Where, we save you time and money and delight you with a wonderful experience on the handset. You’re seeing a lot of people now who have built iPhone apps, and that’s cool, but you really need to be on at least four to five major operators to be credible. An application is not a company. There are people building companies around launching multiple apps, but that’s not what we do. We are a branded consumer service called Where.

X: Tell me what you’ve been working on lately.

WD: Leading to the future, what I’ll tell you first is that we’re seeing a lot of user participation, a lot of content coming into Where from our users, and that content is very much real-time, so it has a lot of value to other users. We’re expanding onto new platforms such as the Droid that are allowing users to create content more proactively. We’re taking that content that’s coming in from the mobile platform and leveraging that to create a horizontal platform on the Web, Where.com. Today, it’s a corporate site, but by mid-January we’ll have a full consumer destination site that leverages the content our users are creating.

X: How do the reviews work?

DG: We’ve built some new functionality on Android. We call it WhereReviews. It allows consumers, as they are going through Where and finding whatever it is they may be looking for, to write reviews. So we’re getting a lot of restaurant and movie and venue and event reviews. It’s only live on that one platform right now, but it’s in queue to launch on the iPhone, and it’s coming in the Palm Pre and Blackberry as well. [Editor's update: since the time of this interview, WhereReviews has launched on the iPhone.]

X: How do you set yourselves apart in a market where there are already so many mobile-accessible consumer reviews? Yelp comes to mind, for example.

Gas Price Map on WhereWD: I think you’re asking, in a world where the barriers to entry are dropping, how do you maintain audience and grow. We stick to four principles: Be helpful, provide a location-aware experience, save time, save money. Over the three years that I was at Mapquest, we didn’t really change the experience that much, but in 2002-2003 we grew from 5 million [unique visitors a month] to 40 million, because broadband penetration went through the roof; that was the turning point, and we had created a leading brand in a growing market. That’s what we seek to do here. We believe we’re at the same transition point in mobile. If we can be helpful and save users time and money, we’ll create a leading brand and we’ll benefit disproportionately from the growth.

We are a top-10 app on every smartphone platform—in most cases, top-5—and we have seen 100 percent growth quarter-over-quarter for the last three quarters. Thirty percent of all North American Android users are active Where users. We have figured out how to make money on our widgets [through monthly subscriptions managed by the wireless operators], so we are growing profitably, and the more users we get, the more money we make.

X: What else are you working on?

WD: The second big thing is personalization. It’s hard to see a lot of that right now, but you will. Some people might come and want to read the news and do a local search, and others might want to come and chat, and what we’re doing is self-learning. Instead of asking you to personalize your own content, over time we just want to watch your patterns and tailor the content to you on an individual basis. On a mass basis, we can leverage the trends we see in searches, and we can say, “People like you are looking for this right now,” which presents more options than just your Yellow Pages results.

X: What do you see as the plusses and minuses of the two leading smartphone operating systems, iPhone and Android?

WD: We don’t really do our innovating on the iPhone anymore, we innovate on Android. Everything you will see on the iPhone follows Android, which is where we do our testing. The beautiful thing about the iPhone is the sheer numbers, the audience you can reach, as well as the frictionless selling environment. But as the other platforms catch up, it will be really interesting. If you think about where all this is headed, the iPhone today is very much about siloed applications. You spawn an app for this, you use it, you close it. The next iteration is a much looser coupling. Android has a thing called OpenIntent—a few lines of code that let you easily integrate somebody else’s content into your app. For instance, we have integrated OpenTable into Where on Android through OpenIntent; you can find a restaurant, book it, and track the reservation. You will see a lot more of that happening. We are pretty impressed with Android, and also impressed with the devices, like the Droid. Motorola is back!

X: As far as I can tell, uLocate doesn’t put any resources toward formal marketing of Where. Is your growth completely through word of mouth?

WD: We really pay attention to the users that we have, because you want them coming back. That’s critically important, because they are your best marketing department. We figure that for every user we get, we get one more by word of mouth, though that is a difficult metric to track. So the consumer experience has got to be great.

DG: Whenever our partners like the carriers are talking about apps, we tend to be featured. They’ll choose five to 10 apps that they’ll put out there in their marketing programs. We’ll reach a lot more people through one Verizon commercial for the Droid than we ever would on any kind of budget that Walt wants to give me.

X: The Where platform is all about getting people information. So do you think of yourselves as a technology company, or a media company?

Movie reviews on the Where platformWD: We are a media company. If you were to ask Google whether they are a technology company or a media company, they will say technology, but their model is all about media, and that’s how they make money. You can’t do what we do if you don’t have a great technology platform that is very robust at operating at scale. But our model is media based, where we aggregate an audience for Where and monetize that through search, advertising, subscriptions, and commerce.

At the same time, we do some heavy-duty technology stuff that very few other people do. We are one of very few companies in North America that has access to network-based location information from the carriers. We can see the location of a phone without having to have [software] on the phone. That’s pretty neat stuff when you start thinking about monetization: push notification of events, deals, things around you that you might be interested in, for example. And when you look at the companies that support seven [mobile] operating systems, there aren’t many of them.

X: I keep wondering how a company like uLocate, which has a good number of software engineers all dedicated to working on this one platform, can thrive in the new world of mobile apps, where there are 100,000 apps just for the iPhone and 20,000 for Android, including thousands of location-aware apps.

DG: If you look at where we were two years ago, we were one of the only companies with access to location. All of a sudden, Google comes along and opens up their own map database, and the iPhone comes out with an open API [application programming interface] to core location, and anyone can create a location-based app. Now there are a couple of thousand location-based apps out there. So you have to evolve. We’ve made some mistakes along the way; there have been a lot of false positives. But we’ve figured out how to build a great app and keep customers engaged and distribute the app and stay in the top five and create a sustainable enterprise.

WD: If you look at the overall numbers, we’re just getting started. 3G wireless data penetration rates are still only 35 to 40 percent. If you look at our market share [across all mobile phones] we may be at 3 or 4 percent. But if we can grow that, you are talking about a huge number. It’s true, every 18 months there is some new thing that you’ve got to catch up with. That’s what makes it fun. If you rest, you’re rust. But it’s not just services—it’s everybody in mobile. Just look at Motorola. Four years ago they were king of the universe, two years later they were dead, then Sanjay Jha [Motorola's CEO] comes in and says, “We’ve got to have a smartphone,” and boom, they’re back with a great story. This is a hardcore, competitive environment. You’ve got to continue to innovate every day.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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