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Amber Case of Geoloqi (Photo by Kris Krug)

“There’s a graveyard of geo experiments,” says Amber Case.

She’s the CEO and co-founder of Geoloqi, a company that helps mobile developers integrate, track and measure their users’ location data, and she was a panelist at the Location & Discovery discussion at the Privacy Identity Information conference (pii) in Seattle.

And she’s right. As smartphone market penetration graphs begin to look a lot like a hockey stick, some of the best minds in technology are placing bets on where the geo-location puck is going. But it’s slippery terrain – and no single app has found its footing since Foursquare debuted at SXSW in 2009.

Highlight, the most-hyped experiment in ambient location-awareness, was also the most-uninstalled app at this year’s SXSW. Location-based startup Path landed both Britney Spears and an angry letter from Henry Waxman, but it has struggled to acquire users as well as it acquires financing.

On the heels of Grindr’s overwhelming success, a number of location-aware hookup apps for the hetero set cropped up. Developers realized that as soon as you put women in the equation, that business model goes up in flames.

What seems to be the problem?

“Twitter and foursquare are direct descendants of RSS feeds,” says echoecho founder Nick Bicanic. “They’re asymmetric models where 5% of the people create 95% of the content.”

Asymmetric follow systems can’t be applied to mobile and location, he says. It doesn’t scale.

A social discovery app like Highlight might generate a lot of connections somewhere like SXSW — when the entirety of that 5% descends on downtown Austin – but it can’t cross the chasm into mainstream the way Twitter did.

Startups need to think about how their app will be used by the mainstream market — the people who have a Facebook account, and maybe a Twitter, but who will speak each letter individually when presented with “SXSW”.

So what will work?

“You need a Venn diagram approach” to relevant mobile notifications, says Case.

A user doesn’t want to see every time her neighbor checks into the gym. Anyone who had Highlight installed at SXSW can attest that a user doesn’t want to know about anyone around them who has any type of overlapping interest. (“You should meet Jen. You’re both interested in tech. Ta-da! You didn’t need any battery life here in Austin, did you?”)

But if you happen to have a layover at O’Hare at the same time as the college roommate you haven’t seen in five years, you’ll want to know that. And when you miss it among the stream of supermarket check-ins across your social networks, you’re going to be annoyed.

However, if your college ex-boyfriend is at that same airport, you may not be impressed with an app that cuts through all the clutter to alert him to your proximity. You will have plenty of time to uninstall that app while you’re hiding in the bathroom.

But how does an app tell the difference between kismet and catastrophe?*

Solving the location relevance problem is non-trivial, which makes it a compelling business model. The company that gets the proprietary algorithm right will have a running start.

Mainstream users are, so far, more open to sharing their location data with brands than with people. And Banjo** CEO Damien Patton says they’re most comfortable sharing location data at a certain level of granularity.

For instance, an app that offers a 20% discount on shoes when it senses a user is within a mile of a Nordstrom might get traction. But an app that offers a discount on coffee when you broadcast that you’re actually inside Starbucks will get real creepy, real fast.

At the end of the day, it’s about trust.

In fact, most panels at pii lead back to a concept Joni Brennan, executive director of the Kantara Initiative, calls a “trust framework.”

“If I tell you to hand $5 to the person to your left, most of you won’t do it,” she says.

She points out that this is not because we implicitly distrust our fellow conference attendees, but because we don’t understand the value exchange. We haven’t been told what will happen next, what that person will do with our hard-earned cash, or what the benefit might be for us.

“You have to verify trust on common terms that all actors understand,” she says.

It seems simple, but so many companies – large and small – fail here. If you’re taking something from your user, be it their email address, their credit card number, or their self-endowed “right” to get free content without ads, the user has to understand, and agree, that what you’re offering in exchange has equivalent or greater value. All actors have to buy into that value swap, or you have a model that won’t work.

What’s your take on the future of location-aware apps? What’s the business model that works here — one that works for a mainstream market and can be monetized?  Weigh in in the comments!

* Why, yes, there is a social discovery app called Kismet. Perhaps at an upcoming Startup Weekend, someone could pitch Catastrophe, the social discovery app built exclusively to warn you when your exes are nearby.

** Fun fact: Their URL is You’ll be relieved to know that still sells most major brands of banjo.

Sasha Pasulka is the VP of Marketing at Salad Labs and a digital strategist at Red Magnet Media. You can follow her on Twitter @sashrocks. Read more of her GeekWire posts here.

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