Snap Interactive (STVI), operator of the AreYouInterested.com dating site, has developed a location-based service for Facebook users to meet and interact, based on how close they are to one another.
The New York-based company is using proceeds from an $8.5 million private placement last month to start WhoIsNear.com, which will compete with the growing number of services that let users alert friends to their precise whereabouts. "Location-based service is going to be huge," Cliff Lerner, Snap's chief executive officer, says in an interview. "With ours, you are immediately connected to all of your Facebook friends. We believe this makes it a lot easier and gives us a significant advantage over the competition."
People with smartphones and other mobile devices increasingly load software that tracks their location. Users can register—or "check in"—at a specific place so friends in the vicinity are prompted to chat, exchange recommendations, or meet up. Location is likely to become a more valuable aspect of marketing for retailers, restaurants, and events, says Greg Sterling, an analyst at Opus Research in San Francisco.
A clothing store could flag people nearby to a 20 percent discount for purchases within the hour, for instance, while a seafood restaurant could offer half-off appetizers to groups of six or more. "When you're on a mobile device, whatever is around you becomes very important from a consumer standpoint," Sterling says. "There are some privacy concerns and the question of which ones will succeed, but I think location is a pervasive layer that we're going to see almost everywhere on mobile devices."
Crowded Race Toward "Full Potential"
Snap Interactive is starting its new service well behind other companies. Foursquare Labs, also based in New York, started its service in 2009 and has more than 6 million users, according to Meghan Cross, a company spokeswoman. The company raised $20 million last year from investors led by Andreessen Horowitz, valuing the company at $120 million. Gowalla, based in Austin, Tex., also began in 2009 and has 750,000 users, says spokesman Frank Filiatrault. "The business models that circle the intersection of people and their favorite places are endless," Josh Williams, Gowalla's chief executive, said in an e-mailed statement. "None of the companies in this space have reached their full potential."
Snap Interactive plans to use the strengths of Facebook to compete. WhoIsNear users will link directly to the network of friends that they have already been building on Facebook, which has a total of 500 million members. Other location-based services typically require users to build a network of friends within the specific service. Foursquare users, for example, build their community by adding friends directly on Foursquare, which then lets them sync their accounts with their Facebook and Twitter accounts and share their locations with those followers. "People have spent the better part of the last several years building up their connections on Facebook and there's no reason to ask them to do that again on a new site," Darrell Lerner, Snap's co-founder, says in an interview. "This is us continuing to bet on Facebook as the tool that people will use to manage their social lives and social identity on the internet."
Snap has already used Facebook memberships to build AreYouInterested.com. The dating application is adding more than 50,000 users a day and totals 30 million users, most coming directly from the leading social network, according to Cliff Lerner. By comparison, Match.com, an established online dating service, is adding 20,000 users a day, according to the company, which is part of New York-based IAC/InterActiveCorp. (IACI).
WhoIsNear has been in development since last spring and is currently being beta-tested by 200,000 users, Lerner says. In addition to a website, a WhoIsNear application, or app, is available on Facebook, Apple's (AAPL) iPhone, and other mobile devices. Snap will also use the money it raised to expand its dating business and look for new opportunities in social networking, Cliff Lerner says. Currently, the company has 10 engineers out of 19 total employees. "We're going to aggressively build our engineering team, spend on marketing, and hire more talent," Lerner says.