The trend that has everyone buzzing ahead of SXSW is "social discovery" tools. They're GPS-enabled apps that let people learn more about others in their vicinity.
NEW YORK (CNNMoney) -- Austin's annual South By Southwest (SXSW) festival is where users started tweeting and checking in on Foursquare long before those services broke through to a mass audience. The gathering has become the Web industry's debutante ball -- the place where star startups announce themselves to the world.
Here's the twist: Most of this year's hot bets are about making offline connections.
The trend that has everyone buzzing in advance is "social discovery" tools. They're GPS-enabled apps that let people learn more about others in their vicinity.
Take Highlight, an app that alerts users when they're near other Highlight participants with common friends and interests. Sign in through Facebook and choose whether you want to see friends, friends of friends, or anyone nearby with similar Facebook interests. The app will push notifications to you when someone in proximity meets your specs. Highlight users can also message one another through the service.
In Highlight CEO Paul Davison's ideal world, people will be able to discover like-minded folks around them without having to enter a bar or attend a meetup.
"It's not about meeting people or matchmaking. It's about surfacing info about people around you and doing it in an ambient way," Davison says. "I'm completely convinced that in 10 years this is really going to exist."
Highlight isn't the only startup exploring that kind of technology. Sonar, a breakout startup at TechCrunch Disrupt last May, pulls people's publicly available social network broadcasts from Foursquare, Facebook and Twitter and finds those nearby with similar traits.
Founder Brett Martin says SXSW, where crowds of early tech adopters spend days packed together, is the perfect testing ground.
"It's an amazing opportunity to get into the future of what things could be like," he says. "What will the world look like if we're all sort of ambiently connected to other people nearby?"
What catches on at SXSW tends to keep spreading after participants head home. That's how Twitter took off.
"If we decide it's useful, we'll take it home to our parents and friends," says tech blogger Robert Scoble. "We all have good iPhones with good GPS. We're now looking for new things to do that go beyond Foursquare-style check-ins."
But creations that play well at a tech gathering can hit real-world obstacles when they get deployed more broadly. How are apps like Sonar and Highlight going to handle the "creepy" factor?
"Earnings people's trust is critical," says Highlight creator Davison. He sees Highlight's integration with Facebook -- it's required to log in -- as a key authentication tool.
"The reason we use the Facebook login is that it's based off real identity and real friends," Davison says. "Having those mutual friends in general keeps everyone on their best behavior."
CNNMoney will have complete coverage of the SXSW 2012 at cnnmoney.com/sxsw and at @cnnmoneytech on Twitter. For all of CNN's SXSW coverage, follow @CNNSXSW. 
