It has been a while now since so-called people discovery apps took their turn in the hype cycle. Highlight was the most prominent of a group that included Glancee, Sonar, and Banjo. It was January 2012 when the tech evangelist Robert Scoble called it "the coolest app I've seen this year," calling it "very viral and very freaky." Since then, Glancee sold to Facebook and Sonar shut down. Meanwhile, chatter around Highlight turned from whether it was the next big thing to whether it was just a flash in the pan.

Today, Highlight is re-emerging with a new version for iPhone and Android that uses the same basic premise — finding notable people around you, based on your shared friends and interests — while overhauling the algorithms that decide what to show you. In addition to an improved recommendation engine and total redesign, the company also announced that it has raised $4 million in funding. Founder Paul Davison is still pitching the same grand vision he always has — a world where you can easily meet strangers and find your friends thanks to the data supplied by your smartphone. But even at version 2.0, there's still a big gap between that vision and the product Highlight is today.

The new Highlight works much like the old one. The app creates an account for you from Facebook, porting over your friends and interests. It then operates in the background, sending you a few pings throughout the day when you come across someone who may be of interest. Click on a profile and you'll see basic information about the person's job, hobbies, and mutual friends. (If they're on Twitter, you'll see their most recent tweets, too.) When you find someone you might want to meet, you can send that person a message or a virtual "high five," or "highlight" them, which creates a kind of bookmark.

Version 2.0 replaces the original, utilitarian design with one that emphasizes people's faces in a more attractive, two-column grid. They have also gotten rid of the original, headache-inducing logo in favor of something more refined. "Version 1.0 was designed by me," Davison says, "and I am not a designer." In a move sure to creep out the privacy conscious, the new Highlight updates your status automatically based on your motion state. The app knows whether you are sitting, running, biking, or driving, and will mention it in your status. The professional oversharer can choose to further augment the profile with information about what song he or she is currently listening to.

The new Highlight also includes a map view, showing what street a person is on and indicating their presence with an icon of their face. You can only see people in your immediate surroundings — for privacy reasons, Davison says. Even so, some of the app's new features seem likely to spook the mainstream. It's one thing to create a feed of nearby strangers — at this point, lots of apps have done it. But it's another to visualize those people on a map and describe their motion state. It's impossible to see the new Highlight and not wonder how it will be misused by stalkers and other creeps. "If you don't push things a little bit, you miss opportunities," says Davison, who worked at Google before starting Highlight. "Fifteen years ago, it would be crazy to post your resume online. This is new territory. We're figuring out."

And the company's backers say that the tide is turning on location-based apps. The popularity of Google Now and the rise of dating apps like Tinder and Grindr have shown that people are more than happy to share their location when the app can solve a problem. "The timing feels right," says Bubba Murarka, a former Facebook executive turned partner at Draper Fisher Jurvetson who led the investment in Highlight.

Highlight's challenge lies partially in how abstract it can feel. What it solves for is essentially serendipity — linking you together with the old friend who came to town but forgot you live there, or a nearby person who would be perfect to work at your company but didn't realize you are hiring. "It's all about reducing friction," Davison says. "Our goal with Highlight is to dramatically reduce the friction involved in learning about people. Right now it's all analog. But when you can (receive) this data in an ambient way ... all of a sudden, it reduces the friction by orders of magnitude." Of course, that's also been Highlight's pitch from the start, and it has yet to catch on. (Davison won't say how many people are using it.)

The company says version 2.0 is much better at understanding who you might like to meet. "With 1.0, the logic was pretty basic: someone nearby has a mutual friend, and it notifies you," Davison says. "Quite frankly, it was a bad experience. It was crude. It was a prototype. Since then, we've invested a lot in what's under the hood. 2.0 just understands more." A key lesson of Highlight 1.0 was that most connections between people just aren't interesting. Having a handful of friends in common is unlikely to spur you into messaging a stranger. And so the app has started to look for more unusual connections: a person from your hometown, say, or someone who attended the same elementary school. If you both like Coldplay, the app is smart enough to know that Coldplay isn't that unusual of an interest — but if you both liked an obscure polka band, it might tell you.

Davison speaks convincingly of a world where you never again struggle to think of the name at the person you see at a party for the first time in years, and where it's easier to connect with your neighbors because you'll have an easy way to see what you have in common. With wearable computers just now coming onto the horizon, Davison envisions a world where something like Highlight becomes a layer that you look through continuously to instantly understand the people around you.

But to survive to build the killer app for that world, Davison and his nine-person team have to create an app that succeeds in this one. Highlight 2.0 is undoubtedly better looking than its predecessor. But the product is still catching up with its founder's vision — and the rest of us may not be ready to take the leap along with him.