Acquired Episode 17: Waze
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Have a model we think money from venture investors, we give the engineers. That's how the business, my words, but set for that. Not very part of google, part of google. Easy, you wait, you wait, you who got to know? Easy, me down.

Welcome to episode seventeen of acquired the podcast where we talk about technology acquisitions.

I'm been gilbert.

i'm David rose, and we are your hosts 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, he and his team are building something called next cast. Next cast is the next generation podcasting client that has a lot of interactivity. Big didn't do IT. So they look at the existing kind of flat one way medium of podcasting, as IT is today.

And brian and his team are looking at ways to make IT kind of more of A A two way street so you can have a relationship with with a podcast and click links and watch videos and things like that. The apps is not totally built yet, but there are customer development process in cut. There are pitching for funding. And things like that is being covered in a podcast called building next cast. So check them out at building next cast 点 com， if you're interested .

it's it's really cool that um we launched community spotlight and we didn't episode about pig cast and it's like they were listening to the episode.

This is part yeah awesome.

So if anybody out there is building a social navigation APP please paying us yeah if if you would .

like to be on our next listener showcase and you're work on something that you wanted tell people about, shoot us an email at acquired F, M, at gm mail dot com, or tweeted .

us at acquired F M. Or hit us up in the slack group, as always.

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bench we get, do IT, let's do IT, let's do IT ways. I would presume most of our listener basis familiar with ways, but for those who aren't, IT is a social navigation APP much like google maps or map quest going way back or apple maps will get into that in a minute um but you drive with friends yeah .

and so ways is no magical insight is that um there's a whole bunch of data being collected on the road by other drivers all the time that can indicate things passively like， oh, there's there's a traffic there's high traffic there because people are going really slow. Google has been doing that for a long time. They ended that in in two thousand and nine based on data being fed back from android. But what wait does is IT both plugs you in with the social network based on facebook or importing your contacts. And you can, well, your driving report, things like red light cameras, like police officers, like traffic accidents, and you can get up A A real time map when you're driving of, uh, the incidents on the road.

And this is really cool because before ways there was kind of like all of navigation and mapping was this like top down thing where like tom, tom or garden, like they had their data set that was like canonical and then you know even google was collecting IT from android phones, but before that they were just buying IT from from these other companies.

Um but the key inside in ways was like people are driving around with this stuff like they should be sending data back about what's really going on in real time. So yeah cool history about how they started. So ways um is uh actually an israeli company.

Uh and this is our first acquisition that we're covering out of israel. Um IT was started in two thousand six by five co founders. aod.

A I don't know, i'm saying this right. A hood. P shop tie.

H was the main founder in C. T. O. And he was joined by a mere and guilty 哪儿， uri levine and uri gon. And a hood had been given an old GPS sist that well new at the time, but now old r view GPS system by a friend. You know, those things that, like my dad still has one of these that you like .

portable things like a government type thing.

is that, yes, you like cigarette later in your car, like you know, section carpet to to your windshield. So he'd been given one of these in two thousand and six, and he thought IT was super cool. And he decided to write some software for IT that would allow people to share information about where speed cameras were located at, in, on the streets in israel.

And I started to take off. But the company that made the GPS device that he had didn't like IT. And so they sent a season to this letter, and I believe I, I believe read that.

They said, you know, they be willing to you integrate the software but like he had to stop doing IT. And so rather than just giving them the software, he said, will grow you. I'm going to take your mapping data out of this.

Members could create my own mapping data. And i'm going to crowd sce IT and have built this to the user socially. 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 said that this company had put in their GPS unit with a crowd source student living in social dataset. And I started to take off here a couple years later in two thousand eight. Things are going well, and they change the name of the project and the company to weigh, and they changed the terms of the map from of the the map da from being open and being usable by anyone to um being owned by ways so ways now owns and can commercialize all of the mapping data that is generating. And so that was in in two thousand eight.

And then in march of two thousand and eight, they raise their series of the first capital they raise there is twelve million dollars LED by blue run ventures which is U S venture firm um and magma venture partners and vertex venture capital I believe who are are israeli venture firms um and it's interesting later you know this comes to play after the acquisition uh no bardon who became joined later in two thousand nine as the CEO at the company, he wrote a boy person. He said one of ways his mistakes was the valuation of its serious a, which significantly deleted the founders perhaps had we held control of the company as the founders of facebook, google, oracle or microsoft, had ways might still be an independent company today. This was after the acquisition, he won a boy person on like.

So the company continues to grow up after they raise the series A A, mostly israel, and they start to add other countries as well. And in december of twenty ten, by that point, they've reached two million users and things are growing pretty well. They have over two hundred and fifty million kilometers log in the APP, which is which is huge.

Again, think compared to um data that other mapping companies are using, which is not live real data, this is a huge amount of knowledge that that we do on real city streets and rats that are getting uploaded to ways a so at that point there is a twenty five million dollars series be from the same investors plus qualcomm and that was at a ninety five million dollar valuation. Um this is all reported in a wall street journal article after the acquisition. And at that point they opened up their first office in the us. In palo to which is really cool. I remember when I when I started at a business school at stanford and seeing the waves office just like on the street and pile out like on in there's ways like that super call this little store front.

I have that same um that same feeling emr, or when I moved out to california sur for internship, walking up and down castro street in a mountain view and just seeing like all the different startups, the one that actually sticks out my mind was we meo I member like that web chat sofa that I used a lot and it's like, really strange when you see a logo in real life that you're used to seeing digitally, like like a physical representation on a building.

You know what there? Yeah, this is one of those like, really strange things that when you live in silicon valley, you like get used to really quickly and don't think about but when you first like move there are you visit um is totally mind daring like you see these storefronts and they're actually like storefronts in palo alto and mountain view and sometimes even in difference is go it'll be next to retail shops and they're like you know ways yeah so there is the series b there are about two million users.

That's december of twenty ten. Fast four were not quite year to october of twenty eleven. And here the entry starts to begin october twenty eleven. They raise their series c so less than a year later, there is thirty million dollars that about a two hundred million dollar valuation um from kiner perkins and horizon ventures and they announced that they have seven million users at that point. So october twenty eleven a at the end of twenty eleven, beginning of twenty twelve, they announced they have ten million users.

So in just couple months they had three million users halfway throw a twenty twelve in july, they announced that they have twenty million users save now doubled from ten to twenty and six months um and and then later on, by the end of twenty twelve, they get to thirty four million users. But a really important thing happens in the life of this company. And like I said, where the inside begins in the summer of twenty twelve at wwdc.

It's amazing like how much. You know, uh, apple and W V D C and are playing a role. And you know our podcast here .

is the forest all.

oh yeah h yeah. Scott, forestall, last her stand. Customers, last thing I was actually at what IT is.

Well, so yeah, i'm burning the lead here. Apple announced I O S six ww c twenty twelve. And in IT, one of the markey features is their launching apple maps. So they're ripping google maps out of the iphone. So until then, all previous versions of IOS had had the native built in maps often are with google maps that .

that was built by apple, but with google's data 对 google's know map tiles。 Yeah and I think IT was something like the um the contract expired and IT was such that apple didn't want to renew the contract with google because they were starting to kind of part ways and and get into a lot of a war between the two companies.

And apple had the ship maps early because that they they couldn't use google data anymore and they didn't want to read and they knew that reapin would like, come on at a really nasty Price tag for them. And I look in to send google bunch of data that they didn't want to. And I think google is also requiring that people sign in with their google accounts, which apple didn't want to do for privacy concerns, even all the way back then. So apple kind of like, you know, obviously rushed maps to market because .

that was you I think there's even more context setting the uh needs to happen here, which is that like as we were doing the research for this episode, lake IT struck me like just how fast the technology world moves. Like this was only four years ago, but IT feels like a lifetime ago and I didn't. I had completely forgotten all this stuff. So um this is in this like at this time the mobile platform wars corner quote were like in full swing, like apple and google are going at each other throats.

And like everybody in the tech industry is like who's gonna in mobile is not going to be IOS is is going to be android and you know the type sewing one way or the other and people think that this is gonna a winner take all market at this point time yeah and a the other thing that happened is tim cook had recently taken over a CEO of apple. Steve jobs passed away and um the apple was was really you know in tim and and apple they were figuring out like what was going to be the path ford IT IT was becoming clear there was no way that they were ever gonna uh overtake or catch up to or overtake android on actual a user numbers um but like the world hadn't come to the conclusion yet. Which now we just accept as a given is that like nobody won the platform I O S and android exit code .

peacefully yeah is everybody builds for both mostly and apple kind of has the um the more valuable customers and android has most of the customers. And that's just the way the world works now. And there are all sorts .

of tools now to make IT easier to build for both. And but that was not the world back then. And so this is the stage in a ways had been Operating for four years at this point and had been growing.

The user base is nicely in writing, the wave of mobile. But all of a sudden they are like at the center of this huge conflicts between these, these two beheads. yeah.

So in a wwdc, apple announced apple apps. And this has been years in the making. But as as bad as you are saying, they had to rush the product to market when they actually shipped IOS six in the fall.

And IT becomes super clear, like there was a tone of height for this product. This was like the ten poll feature of U. S. six. IT becomes clear within a week that like IT is hugely broke in and they're all these reports of like people getting sent to the wrong addresses causing all sorts of problems in accidents said like IT is a disaster .

for apple and this happens yeah and the story you know that apple trying to tell is like it's it's um two sided one is that you know we really mess this up and we apologize and that kind of comes out with that .

public letter r posted on apple that come apologizing. This has never happened before in the history of apple like people are saying this what never happened .

to Steve right right. But on the other side um apple's heading in their sake well know IT takes a lot of time for the data to come in for a to get Better. Apple maps is only going to improve which is treated dramatically Better and that the exact same story they had a theory and um going back to Steve jobs comment, it's funny Steve this feels like actually a tremendously Steve jobs s move because like Steve is famous for know saying is going to go through thermo nuclear on android and like when when he gets into a tef like that they get into a tef and like even if if IT IT is IT hasn't fall out like we saw here. I think that that's a very Steve move and that's actually um scotland rest all was largely responsible for this and and he was Steve jobs proa.

And so closing the loop on the apple entry here, this ultimately ends up in scot forest still getting fired.

Scot refused to write the .

letter tim said to the writer, refused to sign IT, only tim cook signed IT. Even those publicly announce IT, publicly introduced the maps product like IT was clear as his product and before tim, before Steve died and tim became CEO like the public talked about like he scores, told the next CEO of apple right like this guy is he's not just like some apple exact he was like Steve jobs protege .

yeah and it's amazing that in in this letter tim cook rates he list some alternatives for people that um are dissatisfied with apple maps and says it's onna get but actually alternative products this ways as one of the products that that people should go and try out instead .

of apple maps in the in the letter um which is um again this is like uncharted territory for apple at this point um again because with the backdrop of their locked in this feature war with android and another one of the reasons why that people speculate about why apple and google couldn't come to terms to keep google maps within the native the the native iphone software um is that google had recently shipped turn by turn navigation in google maps for android but not IT wasn't available on apple and people were speculating that google was withholding that ability which is hugely compelling um you got ta remember again, this is like more context like the this like tom tom and government and all these guys had navigation apps in the APP store at the time and they cost like a hundred .

bus and I think they were presented like apple for whatever reason. I remember maybe I was wrong about this, but I remember the reason being that google maps for the iphone didn't have turn by turn is because those companies, the pattern to that.

Maybe I always concerned about that, but if I was bizarre, like the official maps up on I O S, like you only just got a list of directions, like you couldn't IT wouldn't talk to you and say, like turn right in six hundred feet whatever. Like you add the like scroll to the list as you were driving or walking or whatever um IT was terrible now like, you know, looking back on IT. Um but if you wanted turn by turn directions, a you got crappy products with crappy data from companies like tom, tom what not um but you had to pay fifty one hundred box for that can imagine in a hundred box for an APP now right.

right, right. So the stage said I made.

stage is set so in the middle all this way is free and wait provides pretty good mapping um uh data and application. Um so this was I was kind of october twenty twelve. By the time the dust settles, apples fired, got far as um and h then rumors start swelling that apple is looking at acquiring .

ways which was actually never true that um I think I believe IT was who denied IT apple um well.

apple denies everything.

So yeah anyway, apple denied publicly.

Apple deny policy. You got to imagine you know in the wake of this that they're looking around and say, no, my gosh, what we've gonna do like we just have this egg on our face. yes. And here's there's pretty APP that like is pretty good in the store um and he has a really interesting data model like maybe we should bite. And the rumors were that they were talking about about a five hundred million dollar or acquisition with ways how far that when we don't know, but IT IT IT doesn't come together um at the same time in december of twenty twelve. So a couple months later, google launches a standalone maps APP, the google maps APP on IOS switch, many of us, myself included, now use in love yep, doesn de turn by turn directions, but is just a regular .

APP in the f store. And IT was great. IT was like this incredible. Actually I know um there's a five personal team that did the the um native code actually in the current lin office here here in seattle.

Oh cool yeah I didn't know that.

Yeah I think the back end was all all done in the valley but the the actual IOS apt objected see writing up here that's all.

And when IT comes out like IT gets huge prae IT was like Better than the android and there's .

all these yeah that was a big block. There's all these articles written about google new design paradise because I was unity IOS. But they are still familiar for people that that love the google interface.

They found this amazing way to combine the due design languages. And there were pieces written. There was a fast company piece that was writing about how google new um google had this like design studio in new york.

And they would go and work with all these individual business units. IT was like, I mean, I thought that I was really well made, and I think the rest of the world did too. I was so well to acy.

And I think actually that moment, looking back on IT now is the beginning, the the heralding of the end of the mobile platform is like, now I like, I think we can look back on that and say, that was the moment when the world, at least apple and google, but decided like, hey, we can peacefully coexist .

here yeah yeah and and 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 sign in with your google account. So that was a path to getting a whole .

bunch of data. The google realize they getting all the data, the opportunity. I O S, uh, IT actually was super valuable for them. Um so that was at the end of twenty, thirty, twenty twelve, going in the beginning of twenty and thirty. Another piece of context here is that facebook is now emerging as the big giant counterbalancing google in the know again in the post, you know, as the world is, is determining that into apple and google. Can peaceful ly co exist like google mean enemy shifts from being apple, being facebook?

yeah. And it's funny that IT was apple. This is where d. dee. To our google. Core competency is being the best search engine, and that turns out to be a tremendous ad platform.

So you know, ninety six percent of the revenue to this day still comes from search ads or search and display ads. And they shifted direction IT almost seems like android was a little bit of a distraction to go to war like they needed. They needed android for a variety of reasons.

But I made them focus on apple as the enemies, since apple, you know, was also producing this, like rival O. S. Was great hardware. But really, apple wasn't after google's core business of search quarries that LED to Normal .

google ever after apples. Core business of hardware sales like google doesn't make money on hardware sales for answer and no.

But they really went to bed on on trying to display the iphone yeah .

and and it's weird like, you know, history ally, google and apple had always had this great symbian relationship. Does .

the services .

apple, until Steve jobs kick him off after they are launched, the android and really and but you then at the end of twenty twelve, when google launches google maps on IOS, it's like the daytime is reached and since then, it's like, I wouldn't say it's back to the good old day, but like google and apple both realized like, hey, we're not each other other's .

enemy here yeah yeah apple makes hardware and software that are excEllent, sells the hardware. They have services that differently tie them. But ultimately, you can plug in google superior services .

on on any of those devices and have a .

great experience, yes, but you can see why google felt so strongly that they needed to control the input pipeline. It's the same reason that they make chrome. It's the same reason they are distributing chrome books. Anybody who's the front door to the the user has the power to redirect that, like apple shipping all these services associated with being .

in syria and maybe even the defauts surge in IOS.

Google, you can totally see why. Google, okay, we need to make sure that we don't like lose billions of people .

front door to the internet, which is where we make our advertising money, which is shadow. So facebook goes public right around the same time is wwdc. In twenty twelve, the beginning of this maps drama, the real threat emerges to google. And that's facebook IPO. Yeah, google.

Google castle is where people going to spend their ad dollars.

And that's a linked to where people spend their time and where people's front door to the internet is. And like, oh, man, that's facebook.

Increasingly, yeah, apples not at google launch, they have no in of to to try and get that pie. But like facebook, sure is that that's the core business. That's the real threat.

So we've just gone through this wild ride. Apple was rumor to be circling around ways thinking about a half a billion dollar ish acquisition um to fix their mapping issue a falls through but then a couple months later in the spring of twenty thirteen, rumours start circulating that facebook is not only interested in ways but is going to byways and going to byways for about a billion dollars. This was in the press for weeks um there was all the reminded me of of the twitch deal you know about um about a year later um in that like everybody just thought this was like a done deal that facebook had about ways .

yeah in my research trying to look and see you know how how google justify this this acquisition and um you know how ways was doing as an independent business beforehand so many of these articles of that are all loosely titled why is ways worth a billion dollars we're written before the acquisition yeah nobody even knew google .

was in the mix at this point. This was about .

facebook yeah yeah. So the facebook deal falls through .

and we don't know you know unfortunately, ways was not a public company. So we can go through all the sec filings and deer usual magic. And to date, there haven't been any lawsuits for us to go through a discovery. So we may never know exactly what happened with facebook. But um in some of the comments that the ways team is made after the acquisition, one of the key taking points currently was that facebook wanted to move the whole company to manalo park to california and the team really wanted .

to stay in israel.

So cut me the weeks keep going by and the world assume as facebook has bought with but IT asn't hasn't been announced yet. And then kindly out of the blue, june twenty thirteen is announced that google is buying ways for right around a billion dollars, somewhere between a billion one in a billion three. Most of IT was cash, but there were other stock in other considerations. And h that the team is staying in israel. The h some of the washer who were in palo tower joining google in california， but the court team is staying in israel.

Yeah and this you know they had a pretty image location based advertising products, uh, red around this time. Do you know when they when they actually started having A A business model other than we did?

Yes, google had a pretty mature location based advertising products at this point time, which also might be an accurate statement. This was, I believe, I when did marisa mayer leave google to take over ahoo topical, as verizon just thought, yahoo this week. But marisa had been in charge of good of a local and location based advertising products at google before leaving for yahoo. So don't I think he had left a you at this point? But yeah, anyway.

I was sorted getting others. This billion dollar evaluation has yeah very, very little .

wherever ways was in their monodist ation path. And they were doing things like they had sponsorship as stations and they had some, like safeway, another location based advertising on the map. But I mean, this was a well will get into acquisition category.

This just get into acquisition category right now. I mean, um this was not a business line acquisition. I will come down hard on that now. What's your what's your category? Ation bin.

um I want you to go first because I want to do some on earth dox.

I want to do something I know that's why turn turn .

OK go first, right? right? So uh, traditionally on the show, we categorized IT by people, technology, product, business line or other.

And I don't believe this falls in to any of them because a data acquisition. I agree. And David, you are funny. You are just bringing this up right before we talked about the show. Um I won't interduce for acquired going forward, uh, another category of of asset.

but this is clearly an asset by that's .

exactly .

what I was going to say.

It's like here, right? So apparently we are .

are we sharing notes or something? We actually .

started five or six episodes ago, David. I realized that I wasn't very fun when we like, talked before hand and then were of one mind when we gotten to the show and then we would refer to things like we were talking before the show, which is less fun for you guys. So um we were like OK. We going to stopped talking before the show except for like a few things here and there to make sure we have all of our bases covered. And sure enough.

here we both are again. Yeah and it's like this is so clearly what IT is because if you run through all the are all of our previous categories for acquisition, this was not a people acquisition like the ways to the ways founders were clearly very talented, but that's not google had plenty of people who were .

created a million dollars.

Yeah well, I mean, yeah, no, it's not a this was not a technology acquisition. The technology is we are just saying that was actually in the google maps I said was arguably as go to Better than ways at the time. Yeah.

they didn't have active reporting, but they had the passive reporting of traffic and had been doing IT forever and actually had in my notes from real early research. Why isn't google just do this themselves? Because this is the exactly the kind of thing they are good at.

IT wasn't a product acquisition, like ways still exists in lots. People use IT and love IT. But like didn't replace google maps with this.

no. And is in fact not even part of like the google sweet. The google finally now is bundled ling IT as one of the OEM options when you get to choose all the google services when you're making an android phone. But it's still not a google branded product.

No maps. Google maps is still clearly the flagship ah location best product. Um definitely wasn't a business line but he definitely was an other other slash asset by and the asset was you know I think a couple things in this case, which is really interesting like um I think this we talked about this a little bit with linked in. But like a this was a data asset like ways generates so much very, very valuable data um for that would be valuable a lots of people, but especially to google in terms of improving their maps product, core map product in terms of their driverless car initiatives and everything they're doing with transportation.

You having real time data and not just passive data being streamed back from the phone like they're doing with google maps, but things like, you know where traffic stops are like user reported accidents controversially but has always been part of ways in a reporting where police officers are officers are in speed traps and red like cameras and things like that. Um but also like super, clearly, as we've just been talking about, with this whole drama leading into the acquisition, this had huge defensive value for a google lake. I did not want facebook to have this .

yeah and and even more than the actual asset of the data as they bought this data gathering machine. And I think that's why we haven't seen them mess with that at all because IT had A A great growth trajectory, particularly after after the apple max debacle. IT was growing IT like a hundred thousand new users a day was in saying, and you know that that obviously short lived, but they recognize that this thing is gona continue to feed us really great data and data about the real world mapping data is something that is in need of being constantly updated. And people that like ways is invented, these great mechanics that people often complain about things, they say they're distracting while their driving, but they really created a mechanics that people reliably feed really up to date information in high fidelity.

but passively and actively yeah and .

you know that the super high value asset is nAiling the creation of that machine and the user experience that compels people to continue to do that .

over and over again. Yeah well, i'm I don't know. I want to say i'm glad we're in agreement, but I think we should add this to our categories is going forward because this is so usually in other it's like oh, it's a one off, but like this is very clearly a category that we just haven't come across before.

Yeah, I agree.

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huntress cool. So what would have happened otherwise? I feel like you know in a lot of ways it's it's um through what we were discussing in the history with the drama, all the different big tech companies circling around ways, you know this company was gonna get acquired by somebody.

So I think that's what would have happened otherwise. Yeah it's also interesting to think there. I mean, you know this was twenty thirteen again, not that long ago, reminding me again how fast the technology world moves.

I feel fair, builder here, you know, if you don't stop and look around once a while, you might miss IT. Nobody is thinking about driverless cars then and today, like people think driverless cars are gonna the second coming in. Uh, you know, every tech company and their mother is is going after. And what's interesting is that israel is actually really uh companies in israel and talent in israel are really well position in this. There is company called mobile eye um which is a large public company now that makes lot of sensors that go into cars that are used for autonomous and seven autonomous applications.

Is that the military .

influences that well everything in military influences but um so um this was yes but um no interesting to think like would a is independent is really based transportation and um driving focus company, software company combined with hardware talent there be a real player in the risk for autonomous cars today? I don't know you know big asset to google right now.

Yeah the hard part of production mean that's that's something that traditionally american manufacturing has been very good at making. But you know japanese are probably forthcoming chinese cars when .

it's interesting too. I mean, it's just sink um that market is so still has so far to go to play outlaw. Do you actually have to make the whole car yourself? Could you make kids to put in the cars? Lots people are trying to do um you can you just be a pear software platform?

Yeah I I think if i'm the car companies right now and realizing that there's going to be this driver is future, I think you have to make the bet that people aren't going to want to buy your cars in mass, but people might want to subscribed to your fleet. Yeah, and I would be like a Mercedes based uber, like a self driving Mercedes based uber. And the question is, like what people rather subscribe to a individual auto manufacturers fleet are the things you can do for luck. And there would people rather subscribe to a more generally ber, you know.

in terms you are thinking about things we talked about on the show a lot in terms benthic, on's aggregation theory and owning the customer and the user experience. You know, his ways as google maps is that the user experience for driving now and like then the cars at the back. And I don't know, maybe we should also spend a minute.

I think that would be because this is poor speculation um as well this next topic but what if facebook had bought these guys? Like what is the world look like now facebook has basically no play in transportation. Yeah.

did you see this isn't quite transport oration, but facebooks doing something like crazy, cool, a drone.

Oh, so facebooks.

you know facebook core confidences is delivering ads to people and they've basically run out of people internet. So to expand pass their existing massively saturated user base, they're trying to get internet to more people. So there's a team I think it's a london based engineering team .

that um yeah the company I believe was the company .

they acquired yeah that they created this like gigg antic drone that can is super light weight and as like can be internet down and can fly for like a month at a time. And so it's it's interestingly, while they're not in the transportation space, they are in sort of large scale manufacturing space for completely different reasons.

Yeah super cool. This thing is awesome. Like IT is a giant drone that can stay in the air for a for a months at a time and be internet down and probably do uh satellite imaging applications as well.

Um super cool. Yeah that is interesting. Like why why you could see facebook buying this just to more effectively deliver local ads.

I mean, this feels like facebook at this point is looking for basically facebook is buying digital social billboards space and that's what instagram is that I don't know if that's what what's up is that eventually is what oculus is right to create these experiences. And facebook extends their core capit and see if of being an add advertising company into that. I think it's widely speculative, but basically like.

You know ways fits into that category of of digital social billboards space where stuff comes up that is relevant to you or people want to show to you or your friends recommend. I I think IT makes sense in that context. That just doesn't get used um for the autonomous car stuff at all.

Yes, IT is interesting. Like to this point, until about two minutes ago, we started we've been talking about ways in the context of the world when I was acquired. And IT is interesting now to start thinking about IT in the context of the world several years from now that much more focused on requiring a super hyped data asset for autonomous vehicles.

Yeah um which is you know clearly google they darted announced that they were working on self driving cars as part of google acts at that point um when they acquired ways um but very few other people were thinking about this at that point time.

You know how much did that play into this acquisition? Or is not at the time you know how to say bit bit it's clearly like for them as a defensive move versus everybody else that's trying to get into IT. Now I mean, like facebook meant to bought about what if tesla had bought, right.

right?

Or what if apple had bought with is as they were trying to and apple is now, as you widely reported, working on self driving cars?

Yeah, did you just see that they put bob mansfield in front of that in charge of IT? Bob manfield is like their senior V P of hardware and then like didn't agree with management or something when Scott first I was still there and then move to like head of special projects and seemed like he was like half retiring but now is like really back in full but full forest with project tighten or that at the apple any good the code me for the apple self driving.

Can we move on to tech tims?

Yeah that we haven't been in there.

Well, i've got so i've got uh two here actually in one i'll just do quickly, which is you know we've mostly covered in in this past section, but you know is sort of of the um the value of of a data asset and and um but specifically the the bent I wanted to talk about IT is like it's when you have the potential for um a very valuable data asset, you can use that as like a way to upend the business model in in the industry that you're playing in and just give something away for free. So in this case, like turn by turn navigation apps, you cost fifty to one hundred dollars. But wait can just give me a way for free because they going to get their value out of getting data .

right and they don't have to pay to acquire .

IT and they don't to yeah right. They know they don't have to pay. And I think we've seen this in in various ways in in other um acquisitions, both that we've covered on the show and ones that we haven't yet.

I'm thinking about instagram, right? Like instagram was a social network, but there was also this APP called hyp thematic that was out before for instagram. That was basically just the same thing.

But IT costs three bucks. And IT gave you a cool photo filter for your photos. An instagram came out, made IT free and like lots of people, i'm sure, tried instagram because they like, oh, cool.

I wanted use hepsa tic, but I don't want to pay three backs you and you know, same with linked in, like if you wanted access to people's resume, ze you had, you know pay recruiters and like about your database and what I linked them was like resumes are free you know um skype to the same thing with phone calls. Whats up to the same thing with text messages. So I think it's it's .

really interesting way of looking at that, that I really thought of before. Like all of these companies found a way to make something free that was previously expensive and then could open business model.

And I think a lot of the initial users that came onto these platforms, we're probably just like cheap. S who well, like I yeah I I want to thinking about using hydromancy. I really want to pay three .

backs yeah which is like everyone, right? Like as much I do that, you do that exactly.

Like we're all cheapest in various ways and but that's the thing about like how you can get these winner take all markets and what you need to tip the marketing your favor is you need like I love the the jeff fpa as quoted at the code conference, which was this year, which was one of our how about a while a while back, you know he said he has the thing he says um he was going to care or what was asking him about prime and is like I said, I wanted amazon prime to get to the point where I would be irresponsible not to be a prime member because you're getting so much value out of IT. And like that's that's what this is here is like you would be irresponsible to pay for hipsters tic, because you get more value out of instagram.

And it's pretty right, which especially with network network effects, of course, you get more value out of that. Everyone is using IT .

is free exactly network affects they're .

beautiful thing yeah right all i'm going to do my two now there was just one years.

right even one can um yeah but it's it's fast.

So l i'm going to do both. My noxon related one is bringing measurable online advertising into the real world. The google and facebook both have ad units around this.

Now i've trying to trying to attribute when you see ads online and when you go to physical retail stores and understanding where those places are tracking you either via GPS or sensors when you're in the store, trying to bridge transactions in the store and and and really get some good measurement around that, the holistic view of a view in the real world than you, you online and you know with totally does this. You see a digital ad, you tap on IT, you navigate to go there. And like there's people even think twice about the privacy because like the main purpose of ways is knowing where you are.

So you hand that data right over, say, I want to go to this place, you navigate there. They might have paid for that add. And then or or IT might be a place you are kind organically trying to go to and then waz knows that you're for sure went there, which makes IT a prevalent able edd unit and kind of ahead of their time. I think people we're talking about doing this for a long time, but the idea of putting IT into an APP where you very explicitly have said, please track me yes, pretty interesting. Go there yes yeah and then this kind of falls out of uh um my my second piece, which is my second tech theme, which is banner ads totally failed on mobile like display ads worthing on on websites and people try to put banner ads on mobile but there is such a little screen real state that even the display add people on mobile have mostly fAllen back to just in a big freak and deaths .

p square in the middle articles remember when be a fun episode? Do at some point but when google bot ad mob and apple bot equator like like mobile display was gonna such a thing yeah I mean.

there's like there's that slide every single year and mary maker's deck that says that the ah the mobile ad opportunity is still huge because the amount of minutes spent on mobile versus on desktop way outpaces the actual ad spend more over versus desktop. And that's because like a this is this is my my text. Um we're just now seeing the emergence of effective native advertising on mobile.

And as IT turns out, it's not a banner at it's not a square, it's not an inertial. It's none of those things. It's not yeah yeah and it's poker, right? Like it's it's figuring out what the very specific tailor experience someone is.

And when they are, they're immersed in this new single full screen application. And like in the pokemon case, it's my god, they're so obsessed with finding that we are so obsessed with finding pokey stop for the gym. And like businesses can pay for the right to direct like people to go places in the real world.

And and that's gonna be in in my opinion, the way that mobile advertising succeeds is that it's native. It's very specific to the platform. And IT took us frequent ten years of mobile to figure out what the right way to advertise .

people on that platform is a classic case of like a you know the mobile display ads being like the head fake that you know I was a faster horse, right? Like IT just wasn't the totally wrong way to think about IT. And we see this over and over again in technology that like, and we especially see IT like being in, know, the start up world.

Like so many times, people recognize an opportunity coming in a wave, but their mode of thinking is stuck in the old world. pray. And like, it's the faster horse thing, like, you know, it's like you you need to build the car, you know and like pokemon go is the car, snapshot is the car, instagram was the car, ad mob was the horse, you know, yeah.

seven hundred fifty .

million doll horse but you know you good for good for them and oh no is it's great now so yeah he's doing great. Ah everybody worked out for everybody. I'm going to do my second one real quick.

We've also talked about this before, but I think this is a really I put this in here because there was a great quote in that same blog post I referenced earlier that will put in the shower notes from no one berdan who was the C. E. O.

Of ways, and still is from two thousand. Nine onward. And the theme is that, like entrepreneurship is a global thing now.

And like silicon valley is this incredibly special place and has its own network effect and is where the vast majority of startups are going to come. But like innovation is not a physical is not a physical location based thing anymore. And and no one puts this great in this boy post.

Here is about how ways was an israeli company and the importance of that. He says, growing up in israel in the eighties and nineties, I lived an erratically different world in my american cousins. We had one channel, black, and my TV music and movies arrived ten years later.

There was no fast food or american brands, and we look very differently. And then he talks about how a cable television started flattening the consumer experience when that came on the nineties, in early two thousands. But he says, then the internet like accelerated this change as people globally used windows pcs and explores to serve websites.

Social and platforms are pounded, added again. And today, most of the users have the same facebook account or gmail interface and use a very similar early. The final flattening of innovation in the world. I came from mobile.

Anywhere you go in israel today, you will see iphones and android phones the same as in safran, as go running the same consumer apps and delivering equal joy on a family vacation with waste management. IT was amazing, wanting our kids, both israeli and american, naturally communicate and share apps without the need to speak the same language. Like this is like A C change that happening and innovation. And we're seeing IT was stuff like the outlook musically now that are getting big like based in but it's a big social network in america.

Yeah I mean, there's still something to be said for density of networks um like like just the people you encounter and the people you work around and the speedy which information gets gets exchanged there.

Absolutely bad. And I think the new ones here there is like a something like musically, something like ways like it's in both places like musically is in Cheney and its in silicon valley ways was in palo alto and in israel.

Yeah yeah I definitely the dull office thing I would say, like you still sort of need to have your finger on the pulse in the hub.

absolutely. What we talked about this was cott right. Like the importance with in the exact target epo, de IT was so important to Scott and to indian apple is that they get .

the direct flight to sentences. Yeah, it's a great point.

Um okay, great net. Let's .

great IT. So it's interesting there's there's like two criteria to think through here. There's were three years out from this acquisition.

So we have a little bit perspective. We can see what they have done with that so far. But then you also have to taking into account the speculative view looking forward, which is a lot around autonomists vehicles. And you know, I think they've done a pretty like it's really hard to figure out what the size of the ad business within wages. I predict IT is nowhere miracles to paying back.

Um the the the purchase like this as a product yeah this as a product is not not going to pay for itself, but the data asset has stayed really strong like people still use ways all the time. Many like uber drivers are are using them, preferring to to google maps. It's uh in in developing countries it's used way more often because the crowd source data is way more accurate.

So as those countries really start to come online in their their default enses ways, IT would be not great for google if that was out of their hands. And I think that that combined with with google's autonation vehicle future and the the great data that IT IT develops, that IT that creates for itself for is using its own APP and that feeds into google maps. You know, i'm going to go a minus only because the the is that we've given out are just like widely successful in a ridiculously fast scale.

Yeah I mean, to me, it's almost like in some ways this is a lot like I am going to give to grade but how I really feel is and I know this is a cop out in some ways but .

with coin quote um it's .

too early to tell like even though this happened three years ago and it's too early to tell because just like like three years ago and this whole way story I feel like was really the closing chapter of the mobile platform or is quoted quote, you know what's happened since then? We're now at the emerging of the era of like machine learning is the really important thing in technology like we went from me.

Google is being very open and saying this, you know a about themselves. But we went from a world a call IT ten years ago where companies were, you know, internet first companies. We went off our companies who we are internet companies to you.

From ten to five years ago, the world shifted to mobile first companies. Companies aren't, no, aren't just internet, like their mobile are not spling desktop websites. But now, like we're shifting to a machine learning based auto companies are M.

L. Firstly, google very explicit. We are in ml first company now. And you see that across all of our products with google brain, with maps, with TensorFlow. And um the first I think like huge native M L application that industry is gonna en is gonna be probably autonomous vehicles.

So um art is well yeah the R D is I am testing was doing IT like IT was like, no this was the trojan horse so how important ways um and the ways data becomes in that to google like like I said, I think the value is still in the future. But that said, like um for the defensive reasons, we talked about him for the value that they ve realized even so far along that um yes, I think it's N A minus because um like he's at the bars. Our bar is is very high for the age. Um yeah .

like it's it's an a minus with low confidence that it's gna stay there right like gna B N A or it's going .

to not N A yeah right yeah IT is interesting to compare that to cruise which gm boat for a billion dollars like right around the same amount of money um you know arguably uh there's a lot more value in um ways a thus far, the google is realized that the crews is still very much preproduction. We'll see. That's part why I say though is that like it's just it's too early to tell.

Yeah okay, let's bring this one on home. So follow up, uh we got nothing for you this week um but uh maybe next time um maybe we will talk about autonomous hicks car. Well uh what to get up in all right.

So i've got A A podcast for us. Uh, this week I am i've been listened to one episode of this because I I get totally roped in actually a while ago to a podcast called song exploder by their first episode which uh which featured the pulse of service and what what the host does ric ky. Share away.

Uh he sits down with an artist of musical artist, doesn't interview and also gets them to provide the actual track all all the different tracks that make up that that song and he'll listen to each layer and play each layer individually and have a conversation with that artist about where did this individual sound come from and where did this instrument come from, and who provided this and who did you collaborate with. And a lot of times they even come with early recordings and demos and songs that inspire that song. And he does a really great job of kind of isolating these individual pieces.

You go w oh, I can totally see that. And one of my favor bans as o deza. I saw them this weekend in seattle capital block party. Their episode is is super, super cool. They talk about when they went over to bambridge island to compose the song and um that rule but the best episode in my opinion and it's sort of dangerous to start with this one to set the bar high is uh an interview um um with VISA where the systematic approach to song writing by this study is absolutely amazing and he has like spread sheets full of lyrics that come out of is journal that highlights that he then puts in there and tags by the number of syllabuses and the on beat and off beat and then combining all these different ones after he rates a riff IT is like i'm not doing adjust as you gotto listen to this. It's the VISA episode .

of some explode. It's so good that I ve heard about this part, cast me, check out, but I really need to know that sounds really cool. It's like they're doing to a songs what we do to m and they are .

and the production is so, so high quality. It's A A total treat to listen each one. And it's got me in the baLance I didn't like before and it's got to me into songs were now when I hear some of these songs after I hear IT get exploded for twenty minutes before, it's like IT that song that comes on. It's like one of my favorite songs, if IT was.

if IT was an episode is awesome. So my car out for the week is an older but goody that was sent to me recently by a really good friend and i'm so glad he sent IT to me because i'd watch its a ted talk um and it's uh Simon h cineas uh start with why h ted talk um it's one of the one of the top ten um ted talks and is interesting it's a ted x talk done at ted x pudge sound a here 呢 i believe IT was in seattle in two thousand nine and um it's just such a cool concept and it's called to start with why and then he ended up writing a book about this。 But in the sort of more rovers, the ted talk he talks about as the golden circle, and it's you.

There are three levels of communication about a company, a product or a person or a firm. There's the what you do, there's how you do IT, and there's the why you do IT. And ninety nine percent of companies their firms are products are people say, hi David, i'm eventual capital instead major adventure group in seattle, washington and a we um due seed and series a deals invest in seed and series a stage technology companies largely in pacific northwest uh and would love to talk to great companies.

So it's like people start with what, then they do how and then maybe they do a little bit of why. But if you actually want to inspire people and reach people and do something um that um is has a much higher chance of success. You didn't to start you reverse the order and start with why say i'm David isn't all I believe that all great companies in the pacific northwest deserve a chance to have a experience with their venture capital firm that every bit as high quality as the best companies in silicon valley get.

Yeah.

that was a lot. Do you want my money right? You know then that like I just comes across like you just spite reversing about I talk about why you doing you're doing something in what you believe in.

Uh it's going to be so much more powerful than starting with the what um and um uh interestingly, apple is the is the company that that he uses as the canonical example here we think differently at apple. Uh we uh design uh beautiful uh we are beautiful, intelligent tly design products. And those products happen to be phones and computers, not we make computers and r yeah, not we make computers and phones. We design them beautifully. And we believe in thinking differently.

Like, yeah, and that wouldn't IT on the poster.

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