The deal is worth $43.4 million in cash, though that includes $9.8 million set aside in retention payments for key Loopt employees.

Loopt’s products are to be shut down at an unspecified date, while its 30 employees will now comprise Green Dot’s Silicon Valley-based mobile product development team.

In a phone interview this morning, Loopt CEO Sam Altman described the deal as an opportunity to make location more accountable. “We’ve been doing cool stuff with deals, offers and loyalty, but we haven’t had a way to tie that to payments. Now, instead of being about check-ins, it can be about payments.”

Funnily enough, Loopt didn’t actually start out with check-ins. It was actually a passive location-tracking app — once you turned it on, it continued to tell your friends where you are. Those kind of apps are the new darlings of tech, especially this week at SXSW in Austin. Back when the trend was toward asking users to actively note their own location, Loopt changed to a check-in model in 2009.

Founded in 2005, Loopt was very early in the mobile location space — it actually made deals with carriers to get its app on their platforms, back when that was essential.

At this point, though, it’s only the latest location app to be acquired and see its own product shut down, following others like Gowalla and Yobongo.

Altman said his acquisition was different, because of the opportunity to work with a banking company. “Many of the companies in the mobile location space are trying to figure out different ways to tie what they’re doing to commerce,” Altman said today. “We’ve all realized the critical piece is how you tie in commerce and payments.”

Altman said he would continue to be a part-time partner at the Y Combinator start-up accelerator program — where Loopt was a very early participant — but that he was committed to working with Green Dot for a long time.

Loopt had raised on the order of $17 million from investors including New Enterprise Associates and Sequoia Capital.

(Image courtesy of Loopt)

“They haven’t shut us down,” Shah said. Apple last week changed its ranking algorithm to downplay download numbers in an effort to crack down on certain cross-marketing practices, including those core to the way TapJoy makes its money. Apple has also rejected certain apps over the last few weeks that include various TapJoy ads, Shah said.

TapJoy was particularly affected by Apple’s changes as its business model works by allowing mobile app developers to essentially pay to get a certain amount of downloads and installations of their apps. Typically, users of one app are rewarded with virtual currency or other inducements for downloading and using another application. In many cases, the goal of TapJoy customers is to get a new application into the Top 25 of an app store category, said Loopt CEO Sam Altman.

The methods used by TapJoy–and similar approaches–have become increasingly important in a world where developers are struggling to get attention amid a flood of new mobile applications hitting the market.

Their comments came during a discussion at the VentureBeat Mobile Summit in Sausalito, Calif.

Shah said TapJoy doesn’t yet have total clarity on what will appease Apple, but said it is making some changes, such as guaranteeing that no single app will be used to vault another app into the top of the rankings.

“They (Apple) have rejected certain apps for a certain mechanism,” Shah said. “When we have tweaked that mechanism we have seen apps approved.”

Shah said that his company is committed to making the moves it needs to make in order to ensure its business model is sustainable.

“I think we are very early in the market,” Shah said. “We are going to have to tack a few ways.”

On Tuesday Loopt, a social network catered to mobile-device users, unveiled a plan to allow advertisers to send alerts to Loopt users, based on their location, when they want to offer them an limited-time deal.

A restaurant looking to fill empty seats, for example, could alert a nearby Loopt user of a special price for a meal if they arrived first, says Loopt’s chief executive Sam Altman, in an interview. “We’re very excited about this,” he says.

The initiative, called Reward Alerts, will begin later this month and builds on prior efforts by Loopt, other social-networking services such as Facebook and Foursquare and big Internet companies such as business-review site Yelp and search giant Google to tap into the market for local-business advertising.

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BoomTown arrived late to the Facebook mobile event for the press due to traffic related to the parade today for the San Francisco Giants’ World Series victory–and where I would much rather be right now.

Go Giants!

10:53 am PT: In any case, I am here in the cafeteria of Facebook again, where the company continues its attempts to take over the known digital universe before Google does.

Currently, the social networking giant notes “200 million people around the world are now actively using Facebook from a phone, more than triple the number just one year ago.”

Thus, some new tries of a lot of stuff, such as single sign-on.

Meaning you sign on a Facebook and it signs you on all over the Web (or at least at those in partnership with the company).

Such as at Groupon and Zynga.

This single sign-on stuff has been tried by many before, a kind of Holy Grail of the Web, and where everyone has failed.

But it also the proverbial camel’s nose poking in your digital tent.

As in, the whole Facebook body is surely coming in next.

Facebook’s exec in charge of all this, Eric Tseng, talks about a virtuous circle of single sign-on, happy users and happy developers, sounding as if this is the single biggest problem facing humanity.

A password crisis! Silicon Valley to the rescue!

Perhaps the only issue the now damaged administration of President Barack Obama could actually get some legislation passed on now.

“My fellow Americans, we have too long be stuck in a miasma of forgetting which name of our dog we used for our password plus the number one…”

How much do I want to be at Giants parade right now? Much!

11:02 am: Next, we move onto more ability to show your location to friends on Facebook better and make sense of it by opening location APIs.

More heavy pontificating about what a disaster it is that we cannot properly see where our friends are on Facebook in the real world.

Of course, this leaves out the pertinent point that my “friends” on Facebook are exactly those I do not want to run into at the Starbucks on El Camino Real in Palo Alto, Calif.

Loopt Founder Sam Altman comes up to show off the integration with Facebook Places, where this problem is solved anyway.

“We believe data wants to be unified,” says Altman.

Certainly if you are the Borg, you want it to be unified. Me, not so much.

11:11 am: Now comes the attempted Groupon-killer from Facebook, which is creatively called “Deals.”

This is essentially allowing Facebook Places to locate a person and then merchants to offer deals when a user is nearby via a platform offered by Facebook.

You can do individual deals, such as getting a beer at a bar when you check in. Then, there is a loyalty deal on the phone, taking the place of that dog-eared card you always lose.

And there is the “friend deal.” This is not friends with benefits, sadly.

It means if you check in and bring a lot of folks, one eats free–which sounds just a little naughty.

Also, there is one deal type related to charity.

For the Gap, for example, you get a free jeans if you are among the first 10,000 to check in at a Gap store. There are 500 million Facebook users, so you do the math.

Essentially, it is about getting stuff if you check in, including experiences.

So, just like little white mice in Facebook’s lab, we push the button, we get the cheese. Sigh.

But I wonder if I check in right now, I can be transported to the Giants parade via a time machine. Now that might be something worth handing over my privacy to Facebook.

“The big takeaway for today is that there is obviously a lot of change in the social space,” says Facebook CEO and Co-founder Mark Zuckerberg. “You can rethink any product area and make it be social.”

Indeed, you can. And Facebook obviously is going to be plowing on through a lot of them in order to solidify its stranglehold on the consumer.

11:23 am: Q&A!

The first question is on privacy and third-party developers giving up your location.

Yes, that!

Zuckerberg makes assurances that the current privacy steps now in place are working just fine and also users need to consent.

“The place information about people is not public,” he says.

There is question from Ben Parr of Mashable, about whether there is an iPad app for Facebook coming.

“It’s not mobile…it is a computer,” declares Zuckerberg, dismissing the very good question.

“I think Apple would disagree with you,” countered Parr, correctly.

“Well, sorry,” said Zuckerberg with more than a little bit of snark.

For a second, he sounds just like the guy from the Facebook movie.

But Zuckerberg quickly declares his love of Apple products and apologizes, although he should not have as it was a funny exchange.

A question about single sign-on. Zuckerberg notes that it has been tried, but the experience was bad.

“What we think is going to happen now is that it is so easy when it works, it is a whole different experience,” he said, comparing it to the way YouTube made video uploading on the Web easier.

Zuckerberg’s goal is that all apps become social, which is also a virtuous circle for Facebook, of course.

A question about the deals offer. It seems for Zuckerberg that Facebook is not getting a cut from retailers right now, as Groupon does.

Ruh-roh, Andrew Mason!

Zuckerberg then notes that the Places offering is going well, without giving a lot of specifics.

At the end, PR maven Brandee Barker wraps it up by saying what I have been thinking this entire time:

“Go Giants!”

In short, while most technology isolates us behind computer screens and virtual worlds, location-based applications help us discover more, experience more and connect with others in the real world. It’s technology to save us from our technology. But in all the recent conversations about location-based services, there has been very little discussion so far about what we at Loopt think is the most interesting future of these services.

I call the set of all places that you go (and information about when you go, for how long, who with, etc.) the Life Graph. This data set is unique to everyone, and it’s incredibly rich. For example, it’d be easy to learn about me from the neighborhood I live in, the block that I work on, the kinds of restaurants I eat lunch at, and where I usually spend my Saturday afternoons.

The Life Graph creates a powerful model of who you are. As a publisher, when deciding what places and events to present you with, or what nearby users might be interesting for you to meet, we are far better off looking at your Life Graph data than at traditional demographic data. Instead of guessing what you should like based on your age and gender, we can make an incredibly informed guess about what you will like based on what you have liked in the past, and also based on what people you know like.

I hear great new ideas about what to do with this data all the time. For example, a service could learn the time and route you drive to work everyday and alert you if there’s traffic on your normal routes. Or, a service could suggest restaurants rated highly by people who also liked restaurants you like. Or, a service could tell you about “specials” being offered at locations you visit and enjoy frequently. More than just broadcasting your location and helping find nearby friends, these apps can deliver personal and contextually-relevant information that can help us discover and experience more of what’s around us. Certainly we think this kind of service will play into the future of mobile advertising.

Privacy is obviously a huge concern when dealing with an individual’s location history. We know that it’s critical to give users complete control over what data is stored and how it’s used, and to minimize retention of unnecessary data. (See a more in-depth account of Loopt’s privacy policies here.

Our mobile devices are always with us, and they have a lot of sensors. We’re quickly reaching a time where everyone will create massive amounts of data about who they are and what they like just by walking through their worlds. I’m very excited about how this will revolutionize the personalization of mobile services.

Sam Altman is the co-founder and CEO of Loopt. Sam founded Loopt to improve the way friends communicate. His primary responsibility within Loopt is driving the product vision, assembling a passionate team to realize that vision and making sure people have fun while they’re at it.
Sam studied computer science at Stanford University, focusing on security and machine learning. He also helped build an autonomous helicopter navigation system while in school.