Loopt's Development and Business Model Challenges

Key Insight

Founded in Australia in 2000, Boost, a mobile virtual network operator (MVNO), targeted surfing-obsessed youth and urban youth with prepaid services. In early 2006, Boost sought a 'friend finder' with GPS. Altman's company, Radiate, secured the deal by swiftly developing a critical missing feature: a status message alerting users when friends were within 5 miles. This agility, combined with Altman's confident presentation, convinced Boost to partner with the young company. The deal was pivotal, leading Radiate to rename itself Loopt, echoing its indispensable partner, Boost, for a product to be preloaded on all Boost cell phones for four years.

The partnership with Boost, including its existing 'Where you at?' hip-hop-themed marketing campaigns featuring artists like Kanye West and Ludacris, propelled Loopt to an initial 35000 users by its November 2006 launch. Boost initially offered the service free until the end of 2006, then priced it at $2.99 a month. Despite this early traction and reaching over 100000 users within three months, Loopt faced significant challenges expanding beyond its initial carriers like Sprint, struggling with 'good meeting-itis' where executives expressed interest but did not sign deals. A key hurdle was the need to build custom APIs for each wireless company to access location data, a complex and time-consuming process.

The service encountered high user churn, with 70% of users leaving within 90 days after the free signup period ended, primarily due to privacy concerns; users found the 'always on' location tracking 'creepy AF.' This fundamental misunderstanding of user appetite for privacy, coupled with the immense technical complexity of deploying the service across potentially 100 different device types and multiple mobile networks pre-smartphones, revealed a critical lack of product-market fit. The inherent difficulties meant the demand for such a location-sharing service never fully materialized, leading to the conclusion that the problem was 'intractable.'