Using the iPhone to Mine for Gold & Sense

Our growing ability to use the Internet as a giant database, apply that information in a creative way to build interesting mash-up applications, and then apply them to markets — stock, real estate or fantasy — is an area that holds a lot of fascination for me. But while a few efforts have produced rudimentary, data-based mashups that are good, so far none have been truly game-changing.

We’ve already showcased two startups — Skygrid and Placebase — that have impressed us with their ability to offer pointers that can be translated into actions on the real-world stock and real estate markets. Trulia and Zillow fall in that category as well, though I think they’re both eons away from where they should be. And today we’re adding New York-based Sense Networks to the interesting and growing list of intelligent mashup companies.

By combining historical and real-time location data acquired through either GPS and Wi-Fi, along with other real-world information, the company has come up with a “social navigation and nightlife discovery application” called Citysense. The mobile app, which runs on Blackberry and the iPhone and is currently limited to San Francisco, shows nightlife hot spots on a map in real time. You can then drill down to find information on, say, local bars and restaurants. But Citysense itself is actually a small part of a bigger story.

It runs on Sense Networks’ platform, called Macrosense, which has the ability to take geo-location data sent out by phones and vehicles, such as taxis, and map it to historical data, such as old traffic patterns, local restaurants and other geographical information. I would describe Macrosense as a machine-to-machine platform that can mash up many inputs to create real-time “heat maps.”

This is where it gets interesting: The company doesn’t want to take any advertising or charge people for the application. Instead, it wants to take the trend information it’s gathering and sell it to investors who want to trade based on that information — which is understandable, given that the company has been seed-funded by money from a hedge fund. And I like this idea, even though I have some concerns about privacy. The company says their system is based on “anonymous, aggregate location data.”

“Citysense demonstrates the power of combining anonymous, aggregate location data for social navigation,” said Sandy Pentland, chief privacy officer, co-founder of Sense Networks, and director of human dynamics research at MIT. “The idea is similar to automobile GPS systems sharing and pooling current road speed conditions so that everyone can avoid congestion.”

I’m still not entirely convinced. But if we put privacy concerns aside for a minute, the possibilities of this are mind-boggling. Imagine mapping foot traffic to, say, Gap or Apple stores. While it would never tell you if people were shopping or not, it would be a great indication of how hot (or not) the store was, enabling you to trade on the information. Take it one step further and mash it with web-based data or Twitter feeds: You could build a highly complex and near real-time view into what’s happening on the innerwebs.

Which reminds me: It’s time to call my buddies Paul Kedrosky and Tim O’Reilly so I can pick their brains about these trading mashups.