Loopt: Why did Sam Altman and Nick Sivo's 1st company close?

Loopt is an American company based in Mountain View California, founded in 2005 by Sam Altman, CEO and co-founder of the famous AI company OpenAI, along with his friend Nick Sivo. It is a social network site that connects people with their community. It gained popularity in late 2008 and gained millions of users during its run but it shut down in 2012. What are the major reasons for the failure of this platform? and detailed information about this company is given in this article.

What service did Loopt provide?

Loopt is a private firm founded in 2005 by Sam Altman and Nick Sivo, later joined by Alok Deshpande and the co-founders’ friends Rick and Tom Pernikoff. It allows people to share their location with other users and it serves the B2B sector in the media and entertainment markets. It had mobile applications and websites for users. It was very popular in late 2008 and had over 5 million registered users. But it was shut down on March 9, 2012, when it was acquired by banking and payment services firm Green Dot. After the purchase its domain eventually expired and the site disappeared from the web. This raises the question, how did a well-established company with millions of users disappear so quickly?

What are the reasons behind Loopy’s failure?

We have listed the major causes of the failure-

Intense Competition: Competition in the location-based services market was intense as many other companies like GoWalla and Foursquare and other tech giants like Facebook and Google came up with their own updated location features. Due to this it faced a struggling situation and was not able to retain its users.

Privacy Concerns: As people became increasingly aware of maintaining personal privacy of their location, demand for location-based services began to decline, Which cost them by losing their users.

Monetization Challenges: Loopt as a business has partnered with several advertising and marketing firms but does not have a fixed revenue model to generate money. This is the reason why this company is not able to generate enough revenue.

Changing market dynamics: When it was launched, there was increased interest in this new tech, but the interest and needs of the users are dynamic and constantly changing, for this platform the users also look for discounts, rewards, or promotions, a change in experience, which they were unable to provide to its users fast enough.

Technical Issues: Due to some changes the platform has bugs and many different technical issues which is one of the reasons for its failure.

Management Decision: After being traded with Green Dot for $43.4 in 2012 million the company was more interested in patents and technology than continuing the service, and this is the major reason why this platform has been closed.

Who are the founders and directors of Loopt?

Sam Altman and Nick Sivo, two Stanford University students and best friends, came together to start a social network platform, which resulted in the founding in 2005 and they were the founders of the platform. He was joined by Alok Deshpande and his former university friends Rick and Tom Pernikoff. Sam Altman was the CEO and Loopt co-founder and Nick Sivo was the CTO along with a Co-Founder. Many big names were ready to invest in it because of their passion and hard work for Software Development.

Who are the investors in Loopt?

Loopt’s first funding was on August 16, 2005, and it received seed funding from Y Combinator. Sequoia Capital and New Enterprise Associates led the investment in the initial funding round. It has raised a total of $39.1M in funding across 5 rounds in its career. It has five institutional investors including New Enterprise Associates, Sequoia Capital, and Y Combinator. The latest funding round was held on May 03, 2010, in which they raised $15 million, and was their last round as the company shut down in 2012.

Top Features Provided by this platform

It is a geosocial networking location-based service, using it people can show users where friends are located and what they are doing through maps on their mobile phones. It was available for iPhone, Android, and BlackBerry users. To use it the user has to register a mobile phone number, full name, and date of birth through which the user will be able to experience the seamless features.

These are the top features provided by Loopt-

Location sharing

You can share location information only with your selected friends, networks, and services
2008 it delivered an opt-in feature in its iPhone application, called Loopt Mix Which utilizes area-based administrations to empower iPhone users to find and meet new individuals nearby
It turns the location on or off feature at any time on a friend-by-friend basis or for all friends at once

Search People

Use search filters like tags to associate with individuals with comparative interests
Peruse profiles of intriguing individuals close to you or elsewhere.
See individuals joining Loopt Mix in real-time on the top bar.

Chats

Make new friends with free, real-time, in-app chat features with push notifications.
Limitless free messaging with individuals all over the earth on Loopt Mix.

Personal Profile

introduce yourself by regularly posting photos and statuses
user can integrate with Facebook and Twitter through their Loop account.
Make sure to include likes/tags to connect with others.
Access your settings to control profile visibility and notifications.

Conclusion

Loopt was running well but they did not update their platform as per the needs of the users and changing interests of the users, this is their biggest mistake and as a result, the company had to shut down. This gives a lesson to various companies to change their patterns and features regularly as per the requirements of the users. It gained so much popularity during its time that as a result, its investors earned huge profits. Its co-founders and owners have founded other large startups and tech giant businesses.

Frequently Asked Questions (FAQs)

Why did Loopt fail?

There are many reasons for the failure-

Intense Competition
Privacy Concerns
Monetization Challenges
Changing Market Dynamics
Management Decisions

What is the valuation of Loopt?

Loopt is valued at $43.4 million and was acquired by Green Dot for the same price.

Where is the headquarters of Loopt?

It is located in Mountain View, California, United States.

Who invented Loopt?

Loopt was invented by Sam Altman and Nick Sivo in 2005.

Is Loopt a public company?

No! it is not a public company. Its current company stage has been acquired.

What happened after the acquisition of Loopt?

Green Dot, who owned this company in 2012, was more interested in patents and technology than in continuing the service, resulting in its instant closure.

Why did Loopt’s users decrease?

There are many reasons like other great alternatives available, privacy concerns, changing needs of users, and some technical issues due to which people lost interest in this platform.