I agree 100% with this article. Keeping track of your location will be a commodity very soon.

In one or two years, there will be open standards for sending your location to the person your talking to, sending it to a contact, and broadcasting it. Handset vendors will implement those standards. If they are nice they will provide API hooks to let application act on the sending/reception of location information. The same thing will happen with status messages (Twitter and Facebook) and other activity streaming stuff.

It could happen a lot faster if carriers built these protocols on top of text messaging (probably using a special kind of service message) to drive further adoption of unlimited messaging packages.

The business model is clear. The mobile phone operators will implement it so you have an incentive to buy the next generation of phones. The carriers will implement it because adding the feature to your phone bill is basically free money for them. Users will pay for it because they are used to paying for phones and phone services, and because it is more convenient than dealing with all these social networking plays.

Independent social networks won't make any money because tiny classified ads don't work in social networking, and besides location-based advertising will be bundled into the user's mapping/searching software (Google Maps Mobile, Nokia Maps, and similar). Users won't pay directly for social networking because traditionally it has always been free.

Location-based services are a business, but the consumer holding the mobile isn't who you should expect to pay. Instead, get off your lazy programmer ass and start pounding the pavement, getting local businesses to sign up and pay for access to your awesome location-aware ad network, and then give the consumers the amazing value of being able to ask not just "Where can I go to grab coffee?", but "What restaurant has open seats right now?", "Who's offering discounts to get rid of their pastries instead of tossing them at the end of the day?", "I need to buy a box of Cheerios, any local grocery stores want to bid on my business?", etc.

Location-based is the future of business. I wonder if this guy sees it and is trying to drive away the competition, or if he took his one flawed pass at a business model and gave up. Either way, he's full of shit.

>> Location-based is the future of business. I wonder if this guy sees it and is trying to drive away the competition, or if he took his one flawed pass at a business model and gave up. Either way, he's full of shit.

Are you doing this successfully? If not, I'll take the word of someone who's been there over the word of someone predicting the future.

He's been there with a model that failed. He talks in great length about why that model sucks, and then draws the conclusion that the whole space is doomed. Why is that more convincing?

I'm not saying I'm convinced either way. I have an idea of what it takes to pull together a location based service with a business model similar to the yellow pages (in my case, I'm referring to a local service in my city which is not as big as the Yellow Pages, but is still a 30+ people operation).

If he has valid arguments about why his model doesn't work, I can combine that info with what I already know about the amount of effort, time and money needed to reach the critical mass needed for the yellow-pages-like model.

Then I can come to my own conclusions.

I have no problems with what he said about his model. I have a problem with the larger conclusion that he draws, that the whole space is poison as a result.

I thought the conclusion was this:

>> As a LBS start-up, you need to think about adding distinctive value for users

which, afaik, is true of any type of business (especially start-ups). In that aspect, I definitely agree with the author.

You're exactly right, but that's my point. I mean, isn't it always obvious that you need to be adding value? If you're not, how are you in business at all?

And yet, he's saying this as if it's a great admission of defeat, that location is dead as a business because you actually need to do something with location information, not just provide it, and the only things he's thought to do that could possibly make money are sex and security.

But he's wrong. "Who's nearby?" is still very valuable, just not to the guy holding the handset. It's valuable to the businesses who want those people to walk in their door and buy something.

The thing that he talks about being commoditized is your friends locations, the social graphs that we define. But I'm not going to add grocery stores and such to my personal network, so the how are businesses going to know I'm nearby and want to spend money?

Well, what if I implicitly gave the companies around me permission to know I'm nearby by pulling them up in search, mediated by my location? The company that sets this up using realtime local search is going to be able to make a lot of money, because businesses are going to pay to know who's around and what they're looking for, and to be able to pitch to them directly (think, as a consumer, how great it would be to have access to a reverse auction from the six stores within walking distance anytime you wanted to go grocery shopping. Then think, as a business, how great it would be to be able to broadcast any price advantages you had over your competition in real time to the people who wanted to buy what you were selling).

That sounds like a great idea, but again, convincing businesses to join in and participate enough to reach that critical mass needed for a service to allow the reverse-auction-from-the-6-places-closest-to-me kind of deal can be difficult.

I don't know how your experience talking to local business owners has been, but mine is that a surprisingly high number of local businesses are small shops who are not techie enough to even care to have a semi-decent brochure website.

I suppose that idea would be a lot more feasible in a place like Tokyo, though. These days, they have those 2D barcode scanners on cellphones and all.

You bootstrap by ripping off yelp to get users.

While you're building this traffic, you're investing in systems that let businesses advertise on your channel (handwavy here. Twitter clone? Something to hook inventory records into? I don't think the reverse auction comes until later).

Then you find locations that get a lot of search traffic, figure out the businesses at that spot that would benefit most from it, and show them the numbers. Get just one to sign up (FooCorp), and then add a demo to your roadshow that shows the competitors exactly how many folks are being told that FooCorp is selling that widget, and ask them why they think they aren't selling as many of their own as they'd like. Wash, rinse, repeat.

You don't have to get every mom-and-pop to sign up, just target who and where you think will pay.

>> handwavy here

hehehe, I wish start-ups worked like that :)

I did have a client in the past with a similar business model (much more low tech though), but when I really think about it, it basically boiled down to how good the sales reps were.

While that model may work if you are an extrovert who loves chasing people around town all day, it doesn't quite fit with my particular resource allocation roadmap :/

From what you say it's obvious you didn't read the article or you didn't care to understand it.

Others, why are you upvoting him?

What are you talking about? He keeps complaining that "Where are my friends?" won't make money, and ignores the questions "Where are my customers?" and "What can I spend money on near me?" What, exactly, am I misunderstanding?

Generally, instead of complaining about how people are voting, it's more productive to say why you disagree. It's not like I just spit out a pointless troll, I addressed the substance of the article and said why I disagreed. If that rubs you the wrong way, or you think I missed something, say why or actually take the time to enunciate what I got wrong. Otherwise, please stfu.

We obviously have different ideas on what constitutes manners. Asserting that someone you disagree with didn't read the article and should be downvoted hardly counts as polite.

Most people would interpret what you said that way, though you could claim it was grammatically a question.

Now would you two please stop?

A big assumption underlying the article is that Google's Latitude will take off - that's definitely not a given. Just because it's made by Google and free isn't necessarily enough to overcome switching costs, a lot of people have their location-based network built up in Brightkite, Loopt, etc.

Google's sheer mass and "better" integration with their own products puts it in a good position though.

Part of this guy's argument is bogus. It is basically "Someone big is going to do this so why bother." That could be said of 99.99% of all businesses. "IBM is so big, why bother with Microsoft?"

Part of the problem with any business with a localization aspect is that it takes more people to get buyin. Yelp in the bay area? Fabulous. Yelp in Louisiana? Not so great. Same goes for meetup.com, where I can find people in my area, as compared to plazes, where there was maybe 1 other person near me.

Yes, people probably won't pay for services who tell them where their current friends are, but there's still value. I personally would be interested in knowing where my "facebook friends" are - for me that's people who I am acquainted with but necessarily socialize with unless it's convenient, like if I'm shopping and want to go see a movie in 10 minutes. Random people who might be interesting are also a way to pass the time if I'm bored waiting for a train.

My impression of the article is that the author was saying it's difficult to get into business selling only what or who is nearby, since both of those are close to becoming (if they're not already) commodities. The trick with location-based services is to provide novel interaction or functionality or customization on top of these commodities. Quoting the OP: "As a LBS start-up, you need to think about adding distinctive value for users; differentiating on location is an oxymoron."

There are plenty of companies who will be hugely successful in the LBS space. Maybe Google, maybe Loopt, maybe Brightkite or Yahoo or CloudMade... If you think you can be the next company to track where everyone and everything is (massive infrastructure requirements!) -- this article is suggesting you are probably on the wrong track.

(side note: Yahoo's FireEagle is also something to watch in this space, as are the recently launched developer products from CloudMade.)

I thought it was really even handed, and good advice. Lots of people have tried and failed: few step back, figure out why, and offer advice to everyone coming after them.