Skyhook’s Morgan: Leveraging the ‘Plumbing’ Behind Hyperlocal

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With all of the focus on location-aware devices these days, the companies whose technology powers those locating systems have become even more important.  Skyhook uses WiFi access points, cellular phone towers and GPS satellites to locate mobile devices with 10- to 20-meter accuracy. It then plots your position on a map that services like Foursquare and Facebook Places can translate to a place with a name, like the bar you’re in or near.

Street Fight recently caught up with the company’s CEO, Ted Morgan, to talk about where location-based technology is headed, and find out about his vision for a science-fiction-sounding world that he believes is only months away.

Where does Skyhook fit in the hyperlocal ecosystem?
We are the plumbing, we make the location piece work. Knowing where you are is actually really hard. We invented a whole new class of technology in order for phones to know where they are. Without it, Foursquare could not work, Facebook Places could not work. You could not list the bar you are at. We don’t build the apps or the content or the deals; we supply the latitude and longitude [data] that others use to build those things.

No one knows what latitude and longitude is, but you need it for Foursqaure to show you a list of places. Foursquare is a layer of data above us. They’re taking that latitude and longitude and putting a name on it. We, by having a reliable location system, spawned a set of place databases being fed into these apps. Otherwise you wouldn’t trust that place database.

How does Skyhook define hyperlocal?
The distinction at a high level is people talk about it in a neighborhoody way. They say just show me Boston sports teams, just show me the weather in Boston, show me interesting offers in my town, my city. Hyperlocal is what is happening, or what you might want, or who is around you, right down to the street corner or the room that you are in. It’s all local, but when think about location it’s exactly where are you now.

What street corner you are at at a given hour of the day says a lot about you, your interests and what you want. You don’t want to have to drive across Manhattan to get a deal, so that location changes the dynamic of what you are looking for; it changes the advertising, the services, the networking.

What have been some of the notable failures you’ve seen in the space?
We’re coming at it from the utility side of things. There are tens of thousands of apps out there and not all are successful. One where everyone has struggled is on-the-fly dating: “Let me see who is around who I can meet.” Match, eHarmony, no one has done what they do online and transplanted it to spontaneous, [location-based] hookup. Tons have tried. It is an area where there are social implications that are an obstacle.

The nagging problem with check-in services is in the crowdsourcing that the platforms have used to put place names on top of the latitude and longitude. Is there a way do it better?
Incorrect place names and misplaced addresses are the result of the approach [Foursquare] chose to fill out its database. Crowdsourcing is the cheapest way to do it, but it requires an editor, cleansing, hygiene and curation. The crowd is good at numbers, it’s not good at quality. It’s terrible at quality. There are other people who use different methods. A common one is to pay for the Yellow Pages database — those are companies that registered to be listed. That model costs money. Each model has its advantages and disadvantages.

Your location isn’t just revealing where you are, but what type of person you are. It’s the best targeting we can do. It is closing the loop on the Holy Grail of ad trends of the last 30 years.

What will be the dominant trend of the next 12 months?
What is more interesting is the energy around very local deals and location-based ads — not just a coffee shop down the street with an offer for a free coffee, but Starbucks promoting heavily for you to walk past the Dunkin’ Donuts even though both are on same block. It’s about getting more aware of where you are and what is nearby.

Being on a particular street corner, what does that say about you? If you are there, there’s a good chance the same type of people are in the area. Odds are you are of that demographic profile. And it is different profile based on the different hour. Your location isn’t just revealing where you are, but what type of person you are — you are probably of this income level, this ethnicity, you make these kind of purchases. And the network says that that type of store is nearby and shows you ads for that store. It’s the best targeting we can do. It is closing the loop on the Holy Grail of ad trends of the last 30 years.

So, it’s kind of like Nielsen ratings for streets corners.
Close. Right now, where they put the next Duane Reade [drug store] is the result of an expensive research project; where to put Gap store the same thing. A lot of analysis of who is walking by. And it is antiquated and unreliable data. They try to predict. We can tell the Gap precisely what street corner represents the people pattern of their most popular stores. We do location data for some 100 million phones. That information is extremely valuable.
That’s retail. There are downstream benefits to every other industry. Billboards are old school. There is really no way to measure who sees your ad. Now you can tell an advertiser who saw and a good sense of their profile. If it’s digital signage, your can even change that profile based on the time of day. Location could change that industry. And there are repercussions for public safety, traffic management, emergency response.

This interview has been edited for length and clarity.