For a startup just gaining serious traction, it’s your basic nightmare: Apple, Google, or Facebook decides to enter your space. Those first few million users you earned through blood, sweat, and tears will surely be swept up with the masses on the giant’s platform, and once the big guy throws its dev resources at the problem your app addresses, what chance does your tiny, overworked team stand? Too bad they didn’t buy you instead… Your company is toast.
That’s a standard tech blog narrative and surely keeps some founders up at night, but it’s by no means the way things always pan out these days. Some popular consumer internet services — think Dropbox, Yelp, Foursquare, and Instapaper — have managed to sustain their growth alongside, or even on top of, a giant that tries to replicate their offering.
Now it’s navigation app Waze’s moment to try to pull this off.
At June’s WWDC, Apple announced that it’s ditching Google Maps in favor of its own native maps with turn-by-turn navigation and realtime traffic updates built into the forthcoming iOS 6. The tech press and Waze fans immediately began wringing their hands over the company’s fate — especially here in Israel, where Waze was born and remains everyone’s favorite crowdsourced mapping app.
I sat down with Waze CEO Noam Bardin in Raanana this week to talk about how he’s responding to Apple’s move. Bardin joined the company about three years ago, soon after the founders had raised a $12 million A round to build upon 80,000 early Israeli users. During his tenure, Waze has launched in the US, Europe, South America and in parts of Asia, growing its user base to an impressive 20 million, with the latest 10 million user surge coming in just the last six months. He spends most of his time in the company’s Palo Alto office these days, along with ten of Waze’s 80 employees.
Bardin’s strategy has been to focus almost entirely on the user experience and growing the Waze community, keeping his app free while raising gobs of capital, which buys time. He oversaw two additional financing rounds of $55 million total, including a $30 million Kleiner Perkins-led C round in October of last year. Waze generates a modicum of revenue from location based advertising, but that seems more a proof-of-concept sideshow — they still have no sales team. The company’s focus remains on building a large, passionate community of global users that can’t be displaced by a larger player.
Waze’s hypothesis is that navigation will be so central to our mobile computing experience that no single app will satisfy all needs. “Waze for Android has grown strongly right alongside Google Maps for Android over the last couple years, because the two services address very different use cases,” Bardin explains. “We focus on the daily drive to work — avoiding traffic jams and hazards on a route you know — while Google helps you find places outside of your daily routine. Nobody uses Google Maps to get to work, because it doesn’t bring any particular value there in the way Waze does.”
Bardin doesn’t expect Apple’s new maps to be any different in this regard. In fact, he’s convinced Apple will lag Google’s maps for a long time to come.
“Apple’s really late to the game on maps, and they’re going about it the old way, by licensing data. That leaves Apple at the mercy of their data providers, whereas Google went out and gathered their own data, going as far as shooting photos on every single road for Street View.”
Waze shares that ownership of data characteristic with Google, but acquires it in a very different way. Waze’s users constantly build out its product and supply its realtime data. The app is social at its core, inviting new users to join a community that’s mapping your own local area and to help others around you right now by lessening the agony of their commute that so resembles yours. Waze’s adorable icons, gaming mechanics (you gain points for enhancing maps and providing traffic updates) and social elements all make you feel part of something grassroots, smart, and fun.
That compelling user experience and branding have been key to driving Waze’s growth, which according to Bardin is currently strongest in the US and parts of Europe — anywhere where traffic is hell. “In the US, we started out in just San Francisco and LA, but it just didn’t work to limit it to just those metro areas. People wanted in from other places, so we let them build local maps all over the country.”
With 65 percent of its user base on iOS versus 35 percent on Android, Waze’s experience for the past couple years alongside Google Maps for Android was just a warmup for its upcoming main event against Apple. Is there any way for a company like Waze to collaborate with the big platforms and not get killed? “Probably not,” acknowledges Bardin. “The only thing that can really protect us is our brand and our users’ love of the product.”
That said, Waze seems to have played ball for Apple’s new maps. In the iOS 6 Legal Notice, Waze is listed as contributing “map data.” No matter how hard I twisted his arm, Bardin wouldn’t say a word to me about this apparent collaboration/licensing deal. But he’s not cozying up to Cupertino too much.
“Look at Instagram and Dropbox,” says Bardin. “Apple and Google have had photo sharing and cloud storage services for awhile, but they just didn’t get it right the way these completely user-focused and differentiated services did. That’s what we aim to do. On the app level, Apple’s record has been poor, and while Google builds their own data well, in the long term we think community will always beat enterprise for realtime navigation data. You have to ask: how successful have these big companies been in their non-core products?”
I raised Yelp as another optimistic model for Waze, and Bardin concurred. “As much as they wanted local reviews, Google couldn’t really accomplish what Yelp did because of Yelp’s user loyalty and its focus. Now Apple is going to use Yelp for reviews on top of its maps,” which points to another big advantage of Waze, that it is cross platform: “Every social app built for a single platform is a problem,” Bardin asserts. He expects to see not only a Facebook smartphone, but also an Amazon one and phones from any number of other platforms once the hardware becomes commoditized, and he wants Waze as the go-to everyday traffic navigation app atop all of them.
You can see Foursquare’s success as another model for Waze. Remember when Facebook Places check-ins were going to kill Foursquare? A year later, Facebook killed Places and now Foursquare, like Waze in its optimistic scenario, is in a great position to enable mobile commerce on top of a mobile-native service whose users love it for a very particular feature light social experience.
So for now Bardin’s goals for the company are for continued strong user growth. Waze aims to reach 30 million users this year and 100 million by 2014, while continuing to improve the product for its particular use case. To that end, its latest release provides realtime gas price comparison.
In the meantime, everyone in this field, including Waze, is jockeying for position to work on telematics with the automakers, who finally seem to have given up on building their own systems and resigned themselves to providing better display and UI for smartphone integration. “We’re going to see a ton of innovation with the cars’ own sensors alongside smartphone mobile apps, starting in 2013,” predicts Bardin.
To get there with momentum, though, Waze has to cruise through that upcoming iOS 6 speed bump. Watch for it.