Amplify LA Co-Founder: Monetizing Local Is Challenging

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The startup scene in Los Angeles has been slowly building for years now, with more and more companies emerging to build  bridges between entertainment, media, and tech. New models are emerging hastily and agents of influence are on the hunt for rising stars doing interesting things with location, location, location!

Although startup accelerator Amplify LA doesn’t deal exclusively with media and entertainment properties, the group’s executive director Jeff Solomon (who previously co-foundeed Leads360, a VC backed SaaS company) has plenty of opinions about how the hyperlocal space is evolving. Solomon caught up with Street Fight recently with some thoughts about location=based companies, monetization, and LA’s up-and-coming “Silicon Beach.”

Amplify boasts being tightly connected to both media and entertainment in Los Angeles. Can you benchmark some traits that keep you above the line?
Well, we have connections because a few of our partners come out of that world and many of our investors do t0o (Jim Wiatt, Mark Burnett, etc.). I’d say there is a genuine desire from the media and entertainment sector to connect with the startup scene, but it’s not that simple. Both sides don’t fully understand the other just yet… it’s early.

As more startups test business models that play into the strengths and opportunities of Hollywood, we’ll start to see some really good companies emerge, but that probably means they’ll be a fair amount of casualties along the way. From the media/entertainment side, it’s not as simple as it sounds to get into the scene. I think we’ll see some false starts on that end too. But it’s an asset for LA and everyone sees there is opportunity to innovate, disrupt and transform business models. That’s a good thing, it’s just a bit nascent so we need both sides to continue to invest time, money and resources. Amplify is designed to do that — we are essentially on the hunt for new models in this space, although we’re not exclusive to media and entertainment either.

What do you think of investments in the hyperlocal space? (What’s most interesting right now? What’s about to pop? What’s bloodless?)
Well, truth is I’m mixed. There are going to be some good business models eventually, but I’m not sure anyone has cracked it yet. There have been so many businesses, websites, services, etc. that have tried to break into SMB and local; many have tried and failed, few have succeeded.

One good example I like to look at is Foursquare. The company has really only done one thing well so far — prove that human beings, as silly as it is, like to “check-in.” But where they haven’t succeeded yet is around servicing the SMBs and locals that are being “checked into.” I actually really like some of the tools they’ve built for businesses to monetize check-ins. A coffee shop can create offers that are triggered when you check-in (you’ve probably seen this) and Facebook has it too. If either of these two companies, that have mad user adoption, can’t make it work, then how can some new startup break into it?

If you go to a VC and you even whisper “daily deal,” you’re [screwed]. That doesn’t mean deal models will all fail. — Jeff Solomon

I’ve seen a lot of companies in the past year in this arena trying to make the connection between consumers in the area interacting and spending money with businesses nearby (points, discounts, offers, etc.) but nothing really works well.

Do you think location-based companies will really be able to develop business models that justify their valuations? Why or why not?
Location tech isn’t going away and it’s getting better every day. No doubt it will play a huge role in a variety of business sectors. Anything early has problems; I think as the tech improves so will the innovations from startups.

Once your mobile device definitively knows where you are within an inch of a location, a product, an event, another person, whatever — which it will — that will unlock a lot of very interesting business models. A company we’ve been nurturing a bit at the campus called Howler is doing some interesting things with location services. The idea is that Twitter fails to to provide context around location. For example, when you tweet you can add a location, but that doesn’t necessarily mean you’re actually in that location; moreover, people following you won’t necessarily see that tweet if they are in that location. Howler is trying to create a platform to “message” a certain area range (i.e. howl @ Venice) and anyone in that range will be able to hear… they are on to something I think.

What’s the word on daily deal companies?
Well, one of the really interesting things about running an accelerator is that we are a bit like an early warning system. In other words, we see the trends super-early because we see so many early pitches. This gives us insight into where the market is going.

In the case of daily deal, we saw some remnant pitches back in 4th quarter 2011, but really haven’t seen much around this category since then. Nobody is starting these companies. That said, I think the reason is more stigma than business quality. If you go to a VC and you even whisper “daily deal,” you’re [screwed]. That doesn’t mean deal models will all fail. I think we’ll probably see a 2.0 of this sector, particularly when local tech improves. The value proposition is still there for consumers and businesses, there has to be some good models.

Catherine Mangan is a UCLA alum living in Los Angeles. She is currently Events Marketing Manager with Dun and Bradstreet Credibility headquartered in Malibu, Calif.

This interview has been edited for length and clarity.

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