Going Geo-Loco: Lessons on the Mad Scramble to Exploit Location Data

7/22/10Follow @wroush

When you’re a cartogeek like me and a conference on location-based services is going on six blocks away from your own home, you sort of have to go. So I spent part of my Wednesday at Geo-Loco. This was a gathering of entrepreneurs and developers debating how to build profitable businesses around the petabytes of information piling up about consumers’ real-time locations in the physical world.

Organized by market intelligence firm Bancroft Group, the event filled up the conference center at UCSF’s Mission Bay campus, just a stone’s throw from Xconomy’s new San Francisco headquarters in the Potrero Hill/Dogpatch neighborhood (+37.757 degrees latitude,-122.394 degrees longitude, for anyone who cares). As Xconomy’s former infotech reporter in Boston, I was pleased to see such a strong group of familiar faces from the New England tech scene, including David Chang from Where, Laura Fitton from Oneforty, Jason Jacobs from FitnessKeeper, Ted Morgan from Skyhook Wireless, and Seth Priebatsch from SCVNGR.

I won’t try to capture the whole sense of the meeting, but I thought I’d summarize a few of the themes that stood out to me.

It’s not about finding yourself on a digital map; it’s about the intelligence you’re providing to marketers in the process. In a keynote talk, Fred Wilson of New York’s Union Square Ventures said that the location-related companies that interest him most as investment targets are those whose applications involve the generating and sharing of data among millions of people. Citing Comscore statistics, he said 14 percent of all mobile users, or about 80 million people worldwide, access maps on their mobile devices regularly. On one recent day, July 3, over a million people checked in on Foursquare—roughly 5 check-ins per active user (the company has 2.1 million registered users but only 200,000 are active on any given day).

All those searches and check-ins generate massive amounts of data. And this data can be used to tell map providers and other parties not only where people are, but what they’re doing (e.g. visiting Starbucks) and what they’re searching for. “Knowing where someone is in real time—particularly if you have some context around that—is an incredibly valuable marketing opportunity,” Wilson argued. So much so that he’s more interested in whether a location-based-services company has millions of users than whether it has a demonstrable revenue stream.

To gain users for your location-based service, give them rewards, make it fun, appeal to their narcissism–and be nice to journalists. A panel led by Stewart Alsop of venture firm Alsop Louie Partners asked how Foursquare piled up so many users—far more than competitor Gowalla (in which Alsop Louie is an investor). Blair Swedeen, of 1020′s Placecast targeted advertising service, said it was the game mechanics, which offer points, badges, and mayorships to people who check in on Foursquare repeatedly. Perry Evans, the founder of MapQuest and more recently of Denver-based Close.ly, which helps businesses market to their Facebook and Twitter followers, said the process of checking in and letting all your friends know where you are is “appealing to the ego…It’s like tweeting, people love recognition.” And all of the panelists agreed that Foursquare and its charismatic CEO, Dennis Crowley, had somehow captured the imaginations of journalists. “Their press exceeded what they were doing for a long time,” said Kent Lindstrom from PlacePop, a San Francisco startup that offers virtual loyalty cards for local businesses.

Check-ins themselves are becoming passe, so location-based networking companies have to provide value in other ways. Though pioneered by Foursquare and Gowalla, the location-based check-in is now basically a commodity feature, offered by many other services such as … Next Page »

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

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