Loopt has a foothold in a nearly $2 billion business – location services – but it is now entering its most challenging period yet. With 4 million users and $17 million in venture capital backing, 25-year-old entrepreneur Sam Altman will have to take on Facebook, with its userbase of over half a billion and huge capital reserves, reports Bloomberg Entrepreneur.
"My second thought? was, wow, this is a little scary, but if we play our cards right, this is going to propel our company to that next level," Altman told the news service.
Altman thinks that as the current generation of people 29 and younger – the ones most likely to have looser security settings on the web and greater comfort with sharing their locations – come of age, location services will take off. Businesses will begin to see the benefits of signing up for programs with firms like Loopt, offering discounts in exchange for consumer loyalty.
In a way, the location services business plan is just like any old-fashioned customer loyalty program – but with a modern twist.
Altman founded Loopt in 2005, when he was a young entrepreneur of just 20 years and a sophomore at Stanford. With his partner Nick Sivo, Loopt used seed funding from Y Combinator, a venture capital firm. It later got money from Sequoia Capital and New Enterprise Associates.
Loopt must integrate with Facebook, Altman says – if it doesn’t, it will be left behind.
"Given that Facebook takes the approach that it’s going to be the platform for the entire Web, we now have access to 100 times more data than we did before … So Loopt will offer unique services on top of what Facebook is offering. It would be suicidal for anyone in this space not to integrate with Facebook, and I expect them all to do it," he told Bloomberg Entrepreneur.
Indeed, Facebook has helped a number of companies – like Xynga, the maker of Farmville – become extremely profitable. Like the iPhone app store and, increasingly, the Android Market, Facebook has become a platform for young entrepreneurs to boost off of with their innovations.