Stardust Global Ventures

We’ve been keenly interested in the power of Location Based Services (LBS) for quite some time. Early on Jaiku provided some LBS functionality supported on Nokia phones via cell tower triangulation. Then the mighty Google purchased and all but kiled Jaiku. Brightkite provided an LBS a la Twitter interface that gave insight into why we might really want to use LBS, but has proven pretty user intensive, so the return on effort never led to adoption reaching critical mass.

Google introduced Latitude, which opened all sort of new potential. I wrote Giving Google a bit of Latitude on TheNextWeb back in February of 2009.

Today LBS is a hot topic, but it has a very limited adoption rate and user audience. While location baser services like Foursquare and Gowalla dominate conversation at events like SxSWi, the draw is first and foremost for mobile geeks in the tech sector and for tech-oriented events. We might observe that the greatest use of these tools today so that the Digerati/Twitterati web celebs (@Scobleizer and others in that visibility sphere) share their location so fawning hordes of fans can come touch the robes of the elite. That’s not the only use, but perhaps the biggest and most visible use today. There’s nothing monetizable in those egos, and there is no sustainability.

Secondarily, people in both business and technology are intrigued by the technology, using LBS tools to drive serendipity. The ability to share location in real-time can lead to chance meetings, for business and pleasure in a very personal and human way. Connecting with a client, colleague or friend by chance at a coffee shop, restaurant or Home Depot is a personal encounter. People buy from people, and this humanized and personalized connection through emerging tools builds a bond and forges a sort of alliance between people that we’re only beginning to appreciate.

Sheryl and I use these services extensively to check-in because we’re business and technology leaders in our community, and heavily engaged in the global tech sector. That means friends around the world know when we’ve checked in at Walla Walla Java Hut. For people in our community, they’ll also know that we’re friends of the owners, Brad and Cameo. They know we’re likely to be there chatting for a while and they can stop by to say hi, have coffee, ask a question. In short, we’ve made it easy for colleagues, clients and others to be in touch with us. We use LBS to lower the barrier to access.

This is a conscious choice, and for us carries a high value. We are social, and we value interaction and engagement. We’re also focused on our work, and use tools to leverage our strengths and our value. We think this is important.

That said, the tools of today are in their infancy. And the ones mentioned are not the only tools of today, or of next week. Google Latitude is still alive and well. Yelp provides an LBS oriented yellow pages like service that’s popular and widely used. Twitter has provided LBS information in the API for third-party developers for some time now. Recently they activated that feature on the Twitter web interface. Facebook will follow shortly with something bringing location into play.

Location may be the single most talked about piece of user metadata that exists today. The open discussion isn’t about location as metadata, but that’s where the value chain lies. That’s where the future is and where there’s money to be made, customers to be won, and influence to be leveraged.

What’s missing today for general adoption? The WIIFM quotient. What’s in it for me? Today, nothing. There is nothing in it for me, John or Jane Q. Public. As a member of the general population I could care less about being the mayor of McDonalds, finding a frisbee, collecting valueless influence points or any other intangible that the geek squad might think are fun. They have no value. None. As long as WIIFM = ZERO, critical mass adoption by the general population simply won’t occur. Why would it?

Just like I own my other information, I own my location. For me to share it with you, or the world, requires incentive. Incentive and time to build a new set of social behaviors.

Countless studies have shown that we’ll give up private information for an incentive. My favorite is the people who gave away their system passwords in exchange for a chocolate bar. We’ll share our demographic information. We’ll share personal information. We’ll share passwords. And yes, we will share our location. But we want something in return and the industry hasn’t found the balance point yet on what that something is.

Many debate the merits of check-in vs. tracking. While there’s some interest in the constant stream of breadcrumbs for some, privacy concerns dictate the check-in model will win. At least until the masses have been socialized over time to embrace the value of location information. Over time. Now we have to grow general public adoption of e the check-in model. That’s our next goal.

I’ve been thinking about how that incentive to share might appear and what it will take to drive mass adoption of check-in LBS. Today the incentive is entirely intangible, and that’s why the geeks run the show. But I can see other models to deliver incentive and to monetize sharing in ways we simply aren’t today. Let’s look and two very well known brands and something as simple as WiFi service.

Let’s begin with free, because who doesn’t love something for free? McDonald’s has experimented with WiFi in several different models. Most recently, they’ve activated free WiFi and pretty much every golden arches. We love it. Free and easy. What does McDonald’s get out of it? Some people hang out longer. There’s a certain demographic that hangs out, eats, works, plays at Ronald’s place. WiFi encourages that.

What does McDonald’s get in return? They sell another cup of coffee and a hot apple pie? Wahoo. Why not do something more? Why not partner with one or more location based services and tie free WiFi to a check-in? Why not work a deal that delivers some demographic metadata that tells me this set of 30 customers comes in every week on Thursday? And given LBS profiles, let me know more about them so I can upsell them on a quarter pounder while I’m at it? Or something more?

There’s one idea. One I don’t see happening soon. Here’s another, more familiar to the LBS crowd.

We all know people who work at Starbuck’s or as our friend RG would say, St. Arbuck’s. For countless people it’s become home away from home and an alternate workspace of choice. The key difference is that Starbuck’s already understands the power of social media. Brad’s behind their Twitter presence. Starbuck’s understands marketing. They understand PR. They understand engagement.

One of the reasons Starbuck’s wins so big in the coffee shop space isn’t their coffee. Many of us prefer other coffee. But their consistency ensure that no matter what store we enter, the product is all going to be the same. The differentiator between stores is the people working there, not the coffee. Not the muffins. In essence, not the experience, although for those who spend hours each week in their local Starbuck’s the camaraderie with other regulars is a factor not to be discounted. And Starbuck’s understands LBS brings new power to the game.

Foursquare and Starbucks Team Up to Offer Customer Rewards
Foursquare means business. The 1-year-old startup now has a huge brand — Starbucks
— using its platform to test out an experimental customer rewards program.

Starting today, frequent Starbucks visitors who check in at retail locations using Foursquare will earn customer rewards. Although there’s no financial incentive or free coffee to begin with, customers can unlock the “Barista badge” after five checkins.

Of course that’s just the beginning; the coffee behemoth plans to use Foursquare as a testing ground for alternative reward strategies and to unlock “the pulse of the experience” for each store.

If you think this is a straight-up play to offer location-based mobile coupons, think again. The New York Times Bits Blog writes that the company is “hoping to use Foursquare to provide even more meaningful prizes, like invitations to special events, photo-sharing or online reputation scores.”

[Read full story on Mashable]

Starbuck’s is getting the the location based game because they understand the power of location and owning the customer experience at that location. They also understand the power of the metadata.

In the service industry, service itself dictates the customer experience.

Metadata is the new fuel that will drive the customer experience.

Starbuck’s gets this. There are things that could be very different since AT&T provides the WiFi engine for Starbuck’s customers. AT&T charges for WiFi access because that’s the model that works. Some AT&T customers (notably iPhone and Blackberry Bold) get free WiFi at Starbuck’s. (Free being operative given that these customers already pay a small fortune to AT&T each month. For AT&T it’s really a chance to offload their beleaguered 3G network under the guise of a freebie.)

Starbuck’s can and will find ways to deliver coupons, specials and more in the way of customer incentives. AT&T, most likely, will not. But they could offer a WiFi landing page that provides discounted rates, promotes AT&T, and could, done well, make AT&T the personal carrier who pays attention to where people check in and visit. And they could base all this driven on an LSB service that can further deliver usable market data (user metadata). They could. Don’t hold your breath.

Location based services hold tremendous power. There are hundreds of ways to monetize LBS. There are even more ways to promote LBS for goodwill, karma, whuffie or public good as a public relations vehicle. Please note I said public relations, not PR. Relating to the public, to customers, etc. seems to have precious little to do with PR (more on that in another post).

I’m pressing some of the LBS service providers behind the scenes. I bring some different insights to unlocking the real power of social networking and location based services. In the weeks and months ahead, I expect to be sharing much more. Your comments, questions and ideas are always welcome.