The Decline and Sale of Loopt

Key Insight

Foursquare launched in March 2009 at SXSW, quickly becoming the festival's breakout app. Co-founded by Dennis Crowley, it offered a location-based service distinct from competitors like Loopt through 'checking in' mechanics, badges, and the ability to become a 'mayor' of locations. Crucially, Foursquare adopted a 'conservative, manual approach' to broadcasting one's location, directly contrasting Loopt's 'always-on tracking' model, which Crowley stated, 'People don’t want always-on tracking. There’s a big distinction between those two models.' This strategic difference resonated with users and allowed Foursquare to rapidly gain public consciousness.

Loopt employees viewed Foursquare's success as a 'gut punch', sparking internal debate over pivoting or maintaining their always-on service. This existing core product faced significant operational challenges; its 'always-on' functionality was stymied by iPhone's inability to run third-party apps in the background, limiting its use to when the app was actively open. Financially, Loopt charged a few dollars monthly, generating 'a few million dollars' in revenue, but this was largely offset by 'enormous infrastructure costs' in the era before affordable cloud services like Amazon Web Services. Altman attempted to pivot with 'Loopt Star', a Foursquare-like check-in app offering Groupon-style discounts, diverting engineers from the core product. While Loopt's 'platform' business, which helped wireless carriers reduce location lookup costs, generated 'a few million dollars a year', investors and Altman deemed it non-strategic for achieving 'a really big company'.

Growing internal concerns over Loopt's profitability and Altman's perceived lack of care led to significant tension. Ultimately, Loopt was acquired by Green Dot in March 2012 for $43.4 million in cash, which included $9.8 million in retention payments for its thirty employees. This transaction functioned as an 'acquihire', resulting in the shutdown of all Loopt products. During negotiations, Altman prioritized keeping his team intact, ensuring they remained in the Palo Alto office and rebranded it as Green Dot, demonstrating 'deep loyalty and sense of right and wrong—a deep moral conviction'. Altman later attributed Loopt's failure to his 'misreading of how people would use digital technology', noting, 'We had the optimistic view that location would be all-important. The pessimistic view was that people would lie on their couches and just consume content—and that is what happened. I learned you can’t make humans do something they don’t want to do.'