• by Laurie Sullivan  @lauriesullivan, March 22, 2011

AT&T Interactive wants to create a tech community in Los Angeles that solves online advertising problems across industries, says William Hsu. The chief product officer for the Glendale, Calif.-based subsidiary of the telecom giant plans to invite engineers from local Los Angeles offices of Google, Yahoo, eHarmony, Caltech, and others.

Engineers working together across companies would benefit all companies taking part in the "hackathon," an event that provides the opportunity to do collaborative programming. Taking a cue from companies in Northern California, such as Facebook, the efforts will create a start-up community in the Los Angeles area to better the online advertising industry.

The concept of sharing ideas across companies is the next step in the development of the online ad industry. For example, Twitter cofounder Biz Stone recently agreed to work with AOL as a social impact strategic adviser, as part of the company's broader integration with online news site Huffington Post.

"We are approaching other companies in the L.A. area, trying to find the correct people to talk with," Hsu said. The grassroots movement to gather engineers and develop products from seeds of ideas takes a cue from efforts typically seen in Silicon Valley -- or as Hsu refers to it, "The Valley."

Efforts to launch the first co-op hackathon are about three-quarters of the way done. Engineers from different companies would work together in teams to solve problems related to advertising. When asked how each company would use the product, based on sharing intellectual property, Hsu said: "Hackathons are meant to focus on innovation, and ironing out the IP issues comes later."

Hackathons aren't necessarily designed to develop groundbreaking patentable work, but rather to create new ways to approach an existing problem. Hsu says those are the types of innovations that companies should share.

Collectively, the companies will pick a "problem" in advance, so all agree on the theme.

AT&T holds one hackathon per quarter. The new mapping search interface on YP.com originated as a prototype from one of the four the company has held. "We're in the middle of releasing an improvement to our search technology that came from a hackathon, as well," Hsu said. "It's a polygon-based search rather than radius-based type search function."

That polygon-type search allows people to look for all the plumbers in a closer representation of the geographic mapping of Studio City, Calif., for example. Since the town isn't a perfect circle, the engine must pull in information by searching on a visual representation of a polygon.

Hsu calls local search the easiest category to monetize because searches are based on intent. "I've seen about 10 to 20 start-ups trying to make local work on the Internet, and none have figured it out," he said. "Even Google, based on revenue estimates generated from local search, is between $400 million and $500 million, whereas we are at $1 billion."

Part of what Hsu believes makes AT&T Interactive successful is access to information about small- and medium-size businesses, and having the sales team to support them. "Mom and Pop are too busy selling shoes to man the advertising app, so we can do it for them," he said. AT&T Interactive employs more than 500 engineers.