Acquired Episode 17 Waze

Summary Notes


In episode 17 of Acquired, hosts Ben Gilbert and David Rosenthal discuss Google's acquisition of Waze, a social navigation app that leverages crowdsourced data for real-time traffic updates. They delve into Waze's origins as an Israeli startup, its innovative approach to mapping through community engagement, and the strategic importance of the acquisition for Google, particularly in the context of mobile platform wars and the emerging importance of machine learning in autonomous vehicles. The episode also highlights Waze's role in the competitive landscape, where it was eyed by major players like Apple and Facebook, and how its data-gathering capabilities offer significant value beyond its advertising revenue. Additionally, the episode features a community showcase of Nextcast, a podcasting client, and an endorsement of Pilot, an accounting service for startups.

Summary Notes

Business Model of Acquired Podcast

  • Acquired Podcast involves taking money from venture investors and distributing it to engineers.
  • The business model has undergone changes since becoming part of Google.

"Have a model where we take money from venture investors and we give it to engineers. That's how the business model works." "Yeah, now that we're part of Google, everything's changed."

The quotes explain the fundamental business model of the Acquired Podcast and highlight the changes after being integrated into Google.

Community Showcase Initiative

  • Acquired Podcast introduced a community showcase to highlight projects by listeners.
  • Brian Sanders and his team are developing Nextcast, a next-generation podcasting client.
  • Nextcast aims to make podcasting interactive, allowing listeners to engage with podcasters.
  • The development and funding of Nextcast are covered in a podcast called Building Nextcast.

"Today we're going to be talking about Google's acquisition of ways. But first, we talked about in our last episode, we are going to be doing a community showcase. And this week it's one of our listeners, Brian Sanders."

"Nextcast is a next generation podcasting client that has a lot of interactivity baked into it."

These quotes introduce the community showcase segment and describe the Nextcast project, emphasizing its interactive features.

Listener Engagement and Promotion

  • Listeners working on interesting projects are invited to share their work on the podcast.
  • Acquired Podcast provides an email and social media handles for submissions.
  • The hosts encourage listeners to contact them for a chance to be featured in the showcase.

"Yeah, if you would like to be on our next listener showcase and you're working on something that you want to tell people about, shoot us an email at, or tweet at us at."

The quote is a call to action for listeners to engage with the podcast by submitting their projects for potential promotion.

Sponsorship and Partnership

  • Pilot, an accounting firm for startups and growth companies, is a longtime partner of Acquired Podcast.
  • Pilot offers comprehensive financial services, including accounting, tax, and CFO services.
  • The company is backed by notable investors and serves a diverse range of clients, including high-profile startups.

"Episode is one of our favorite companies and longtime acquired partner pilot for startups and growth companies of all kinds."

"Pilot is the one team for all of your company's accounting, tax and bookkeeping needs, and in fact, now is the largest startup focused accounting firm in the."

These quotes highlight the services provided by Pilot and its significance as a partner of the Acquired Podcast.

Google's Acquisition of Waze

  • The episode focuses on Google's acquisition of Waze, a social navigation app.
  • Waze is known for its user-generated data that improves real-time navigation.
  • Waze integrates social networking and allows drivers to report traffic incidents.
  • The acquisition is significant as it marks the first Israeli company covered on the podcast.

"Today we're going to be talking about Google's acquisition of ways." "Waze's magical insight is that there's a whole bunch of data being collected on the road by other drivers all the time."

These quotes set the stage for the discussion on Google's acquisition of Waze and highlight the unique value proposition of Waze's user-generated data.

Founding and Growth of Waze

  • Waze was founded in 2006 by Ahud Shabtai and four co-founders.
  • The initial project aimed to share speed camera locations but evolved into a crowdsourced mapping initiative.
  • Waze experienced rapid user growth and raised significant venture capital funding.
  • The company shifted from open map data to proprietary ownership to commercialize its user-generated data.

"Waze is actually an israeli company, and this is our first acquisition that we're covering out of Israel." "So he started a project called Free Map Israel. And the aim was just that to replace this sort of like, top down map data set that this company had put in their GPS unit with a crowdsourced living and social data set, and it started to take off."

The quotes provide a background on the founding of Waze and its evolution from a project to a company with proprietary mapping data.

Strategic Decisions and Impact

  • Waze's Series A funding led to significant founder dilution, which may have impacted its independence.
  • The company's valuation and user base grew rapidly, attracting prominent investors.
  • Waze opened its first U.S. office in Palo Alto, marking its expansion outside Israel.

"Perhaps had we held control of the company as the founders of Facebook, Google, Oracle or Microsoft had, Waze might still be an independent company today." "And at that point they opened up their first office in the US, in Palo Alto, which was really cool."

The quotes reflect on strategic decisions made during Waze's funding rounds and their implications for the company's future.

Apple Maps and the Mobile Platform Wars

  • The launch of Apple Maps in iOS 6 was a pivotal moment for Waze.
  • Apple Maps faced significant issues upon release, highlighting the importance of accurate, real-time mapping data.
  • The mobile platform wars between iOS and Android were intense during this period, with Waze caught in the middle.

"Apple announces iOS six at WWC 2012. And in it, one of the marquee features is they're launching Apple Maps." "It becomes super clear within a week that it is hugely broken."

These quotes discuss the context of Apple Maps' troubled launch and the competitive landscape of mobile platforms, emphasizing Waze's relevance in the market.

Apple Maps Controversy and Scott Forstall's Departure

  • Apple Maps received significant criticism upon release for its inaccuracies and issues.
  • Apple's response to the criticism was to promise improvement and suggest alternative map applications.
  • Scott Forstall, a key figure in Apple and a protege of Steve Jobs, was fired due to his refusal to sign an apology letter concerning the Apple Maps fiasco.
  • The incident with Forstall's firing highlighted internal tensions within Apple and the high stakes of the mobile platform wars.

"Scott refused to write the letter. Tim said, 'I'm going to write it.'" "Scott refused to sign it. Only Tim Cook signed it, even though Scott had publicly introduced the Maps product like, it was clear as his product." "And before Steve died and Tim became like, the public talked about, like, hey, is Scott Forrest stole the next CEO of. Not. He's not just like some Apple exec. He was like Steve Jobs' protege."

The quotes explain Scott Forstall's refusal to sign the apology letter for Apple Maps, leading to his firing. It underscores his importance within Apple and his close relationship with Steve Jobs.

Apple's Competition with Android and the Role of Google Maps

  • Apple and Google were in a "feature war," with Google Maps' turn-by-turn navigation being a point of contention.
  • Apple's decision to create its own mapping solution was partly due to the lack of turn-by-turn navigation in Google Maps for iPhone, which was speculated to be withheld by Google.
  • Google's introduction of turn-by-turn navigation for Android but not for iOS was seen as a competitive move against Apple.

"Google had recently shipped turn by turn navigation in Google Maps for Android, but not. It wasn't available on Apple." "I remember the reason being that Google maps for the iPhone didn't have turn by turn is because those companies owned the patent to that."

These quotes discuss the competitive dynamics between Apple and Google, focusing on the availability of turn-by-turn navigation and patent issues that may have influenced decisions.

Google Maps App Launch on iOS and Mobile Platform Wars

  • Google released a standalone Google Maps app for iOS that included turn-by-turn navigation, which was well-received and seen as superior to the native Apple Maps app.
  • The launch of Google Maps on iOS marked a turning point in the relationship between Apple and Google, signaling a shift from direct competition to a more symbiotic coexistence.
  • Google's strategy with Chrome and Chromebooks was to control the "front door" to the internet, ensuring they didn't lose their search engine dominance.

"And when it comes out, it gets huge praise. And it was better than the Android app." "Google knew that they had a good product on their hands. And if they released it, and I believe you still have to, when they released it, you had to sign in with your Google account. So that was a path to getting a whole bunch of data that they wanted."

These quotes highlight the successful launch of Google Maps on iOS and Google's broader strategy of maintaining its position as the primary gateway to the internet through its products.

Facebook's Emergence as a Competitor and the Waze Acquisition Rumors

  • Facebook's IPO coincided with the Apple Maps controversy, positioning Facebook as a new major competitor in the digital advertising space.
  • Rumors circulated that Apple considered acquiring Waze, a mapping and traffic app, for about $500 million, but this was publicly denied by Apple.
  • Facebook was also rumored to be interested in acquiring Waze for around $1 billion, but the deal fell through, partly due to Waze's desire to remain in Israel.

"Rumors start swirling that Apple is looking at acquiring Waze, which was actually never true." "Rumors start circulating that Facebook is not only interested in ways, but is going to buy ways and going to buy ways for about a billion dollars."

These quotes discuss the rumors of potential acquisitions of Waze by major tech companies, reflecting the strategic importance of mapping services and data in the tech industry.

Google's Acquisition of Waze

  • Google ultimately acquired Waze for between $1.1 and $1.3 billion, with most of the payment in cash.
  • The acquisition was not categorized as a traditional acquisition for people, technology, product, or business line, but rather as a data asset acquisition.
  • Waze's value lay in the unique and valuable data it generated, which was an attractive asset for Google's location-based advertising and data strategies.

"This was not a business line acquisition. I will come down hard on that. No. What's your categorization been?" "I want you to go first because I'm going to do something unorthodox. This is a data acquisition."

These quotes discuss the reasoning behind Google's acquisition of Waze, emphasizing the importance of data as an asset and the strategic value of Waze's user-generated traffic and location data.

Google's Acquisition of Waze

  • Google acquired Waze to enhance its Maps product and driverless car initiatives.
  • Waze provides real-time data, including traffic stops, user-reported accidents, and police locations.
  • The acquisition had defensive value, preventing competitors like Facebook from acquiring Waze.

"This had huge defensive value for like, they did not want Facebook to have this."

This quote emphasizes the strategic importance of Google's acquisition of Waze, not only for its data but also to prevent competitors from gaining an advantage.

Waze as a Data Gathering Machine

  • Waze was growing rapidly, with 100,000 new users daily, especially after Apple Maps' issues.
  • Google recognized Waze's potential to continuously provide valuable, up-to-date mapping data.
  • Waze's user experience and mechanics encourage users to actively contribute data.

"They bought this data gathering machine."

The quote highlights that Google's acquisition of Waze was not just for the data itself but for the platform's ability to continuously gather and update data through user contributions.

The Value of Real-Time, High-Fidelity Data

  • Waze's data is constantly updated and of high fidelity due to both passive and active user input.
  • The user experience is designed to compel users to repeatedly contribute accurate information.

"Mapping data is something that is in need of being constantly updated."

This quote underscores the necessity of having a system like Waze that can provide continuous updates to mapping data, which is crucial for applications like autonomous driving.

Statsig's Role in Product Development

  • Statsig is a feature management and experimentation platform.
  • It helps product teams ship faster, automate A/B testing, and measure feature impact on business metrics.
  • Statsig serves a diverse range of customers, including Notion and Microsoft.
  • The platform is particularly useful for managing and testing AI product features.

"Statsig is the modern version of that promise and available to all companies building great products."

The quote illustrates Statsig's value proposition as a tool that democratizes sophisticated product development and testing capabilities for a wide array of companies.

The Future of Transportation and Autonomous Vehicles

  • The discussion reflects on the potential outcomes if Waze had not been acquired by Google.
  • Israel's position in the autonomous vehicle sector, with companies like Mobileye, is noted.
  • Speculation on the future of transportation includes the role of software companies and hardware talent in autonomous driving.

"Would an independent, Israeli-based transportation and driving focused software a real player in the race for autonomous cars today?"

This quote prompts consideration of alternative futures where companies like Waze could have been significant players in the autonomous vehicle industry had they not been acquired.

The Impact of Free Services Disrupting Paid Models

  • Waze's free service disrupted the paid turn-by-turn navigation app market by using data as the value proposition.
  • Similar strategies were used by Instagram, LinkedIn, Skype, and WhatsApp in their respective markets.
  • Offering a service for free can lead to winner-take-all markets through network effects and increased value for users.

"It would be irresponsible to pay for hipstomatic because you get more value out of Instagram and it's free."

The quote reflects on how offering a free service can disrupt existing paid services, leveraging the power of network effects and the perceived irresponsibility of paying for something when a free, more valuable alternative exists.

Online Advertising in the Real World

  • Waze bridges the gap between online advertising and physical retail stores.
  • It provides measurable data on user behavior from seeing ads to visiting physical locations.
  • Waze's ad units are valuable because they can confirm user visits to advertised locations.

"Waze totally does this. You see a digital ad, you tap on it, you navigate to go there."

This quote explains how Waze successfully integrates online advertising with real-world actions, providing advertisers with valuable data on the effectiveness of their ads.

Failure of Banner Ads on Mobile

  • Banner ads were not successful on mobile due to limited screen space and user engagement.
  • Waze's approach to ads is integrated with its core functionality, making it more effective.

"Banner ads totally failed on mobile."

The quote succinctly states the ineffectiveness of traditional banner ads in the mobile context, contrasting with Waze's more integrated advertising approach.

Mobile Advertising Evolution

  • The discussion begins with the observation that mobile display ads are often just desktop ads placed in mobile content.
  • There is a historical reference to the acquisitions of AdMob by Google and Quattro Wireless by Apple, which were initially seen as significant for mobile advertising.
  • The key point is that the real potential of mobile advertising lies in native advertising tailored to the mobile experience.
  • Examples of effective native mobile advertising include the use of location-based services like Pokémon Go, which directs users to real-world locations.

"We're just now seeing the emergence of effective native advertising on mobile."

This quote emphasizes the recent development of mobile advertising strategies that are more integrated and effective compared to traditional display ads.

"It's figuring out what the very specific, tailored experience someone is in when they're immersed in this single full screen application."

The quote underlines the importance of creating advertising experiences that are specific and relevant to the user's current engagement with their mobile device.

"That's going to be, in my opinion, the way that mobile advertising succeeds is that it's native, it's very specific to the platform."

This quote predicts that the success of mobile advertising will depend on how naturally it fits into the user's mobile experience.

The Misconception of Mobile Display Ads

  • The conversation shifts to the analogy of mobile display ads being the "faster horse" instead of building the "car," meaning that the industry was looking to improve old models rather than innovate.
  • The discussion suggests that companies often miss the opportunity to innovate by being stuck in old ways of thinking.
  • The quote mentions Pokémon Go, Snapchat, and Instagram as examples of "the car," representing new and innovative approaches to mobile advertising.

"It's such a classic case of the mobile display ads being like the head fake that it was a faster horse."

This quote illustrates the idea that mobile display ads were a distraction from the true innovation needed in mobile advertising.

Globalization of Entrepreneurship and Innovation

  • The conversation moves to the theme of entrepreneurship and innovation becoming global phenomena.
  • The CEO of Waze, Noam Barden, is quoted discussing the impact of cable television and the internet on global consumer experiences.
  • The speakers discuss how mobile technology has further accelerated the globalization of innovation, with apps like Waze and Musically becoming popular worldwide.
  • The importance of having a presence in innovation hubs like Silicon Valley is acknowledged, but the spread of innovation is no longer limited to physical locations.

"Entrepreneurship is a global thing now, and Silicon Valley is this incredibly special place and has its own network effect."

This quote recognizes the global nature of entrepreneurship while acknowledging the unique ecosystem of Silicon Valley.

"The final flattening of innovation in the world came from mobile."

This quote by Noam Barden highlights the role of mobile technology in equalizing innovation across the globe.

The Importance of Presence in Innovation Hubs

  • The speakers agree on the importance of being connected to major innovation centers, even when innovation is happening globally.
  • They discuss the practical aspects of having dual offices or ensuring direct flights to places like Silicon Valley.
  • The conversation acknowledges that while innovation can happen anywhere, there is still value in being physically close to where information is exchanged rapidly.

"The dual office thing, I would say you still sort of need to have your finger on the pulse in the hub."

This quote suggests that having a presence in key locations is still important for staying connected to the latest developments.

Grading the Acquisition and Future of Waze

  • The speakers reflect on Google's acquisition of Waze and its impact three years later.
  • They discuss the challenges in determining the financial success of Waze's ad business but note the value of the data asset and its use in autonomous vehicle technology.
  • The conversation touches on the evolution of technology companies, from internet-first to mobile-first, and now to machine learning-first.
  • The speakers grade the acquisition as an A-minus, with the caveat that the full value of Waze, particularly in relation to autonomous vehicles, is yet to be realized.

"So it's interesting, there's like two criteria to think through here."

This quote introduces the factors considered when evaluating the success of the Waze acquisition.

"But now we're shifting to a machine learning based companies are ML first."

This quote reflects the current trend in technology companies prioritizing machine learning as a core strategy.

Podcast Recommendations and Insights

  • The speakers share their podcast recommendations, highlighting the value of deep dives into specific topics.
  • Ben Gilbert recommends "Song Exploder," a podcast that deconstructs songs with artists, revealing the creative process behind music.
  • David Rosenthal shares his appreciation for Simon Sinek's TED talk "Start with Why," which emphasizes the importance of communicating the purpose behind actions and products.

"It's like they're doing to songs what we do to m and a deals."

This quote draws a parallel between the analytical approach of "Song Exploder" to music and the speakers' analysis of mergers and acquisitions.

"We believe that all great companies in the Pacific Northwest deserve a chance to have experience with their venture capital firm that's every bit as high quality as the best companies in Silicon Valley get."

David Rosenthal uses this quote to illustrate the concept of "starting with why" in communication, as advocated by Simon Sinek.

Crusoe Energy Systems Promotion

  • The speakers discuss Crusoe Energy Systems, a clean compute cloud provider that partners with Nvidia and uses stranded energy to power AI workloads.
  • They highlight the environmental benefits and cost savings of Crusoe's approach, as well as the performance advantages for AI applications.

"Crusoe's data centers are nothing but racks and racks of A."

This quote describes the infrastructure of Crusoe Energy Systems, emphasizing their focus on AI workloads.

"Crusoe, of course, locates their data centers at stranded energy sites."

This quote explains Crusoe's strategy of using energy that would otherwise be wasted, which has both environmental and economic benefits.

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