Waze and the Fourth Screen

“On the day of the acquisition (by Google), Waze’s revenues were about $1 million on an annual basis.? In 2020, that had jumped to more than $400 million.” – Uri Levine, “Fall in Love with the Problem, Not the Solution”

Waze, the dominant smartphone navigation app used in most parts of the world, had a humble origin in Israel but eventually upended the location business globally.? For those who may have forgotten, Google acquired Waze for $1.15 billion in 2013.

A co-founder of Waze, Uri Levine, in his book, describes how Waze created its maps, routing, and traffic services out of thin air and with the help of some strategic regional partnerships.? Waze established and proved the model and the value proposition of crowdsourcing data and user-generated content.

In the process, Waze set the stage for a broader revolution to which the automotive industry is just coming to grips.? Waze has become, in essence, a media company.? It may be fledgling and nascent, but it is in the forefront of a movement to redefine the fourth screen – the automobile.

The significance of Waze’s achievement derives from the fact that every major car company in the world could have been (or could yet be) its own Waze.? From the moment car companies started connecting cars – circa 1996 with General Motors’ OnStar – the technology was available for map, and traffic data and routing development.

Map creators TomTom and HERE saw Waze coming on the heels of Google Maps but were unable to impede its progress.? Waze wiped out the portable navigation device (PND) business dominated by Garmin and TomTom and has absorbed a substantial portion of the fleet and government markets.

In his book, Levine captures the moment of inflection:

“How does TomTom feel about Waze today?? I had the opportunity to meet TomTom’s CEO a few years ago.? He called me a ‘son of a bitch.’? But happily.

“’Why aren’t you angrier?’ I asked him.

“’If disruption is going to happen, it’s going to happen, and I’m glad it was you,’ he replied.” - from "Fall in Love with the Problem Not the Solution"

Waze is used by car drivers either on their mobile devices or projected onto their center stack infotainment screens.? That evolution from the smaller to the larger screen inevitably brought Waze into the location advertising business turning Waze into a media company.

In this way, Waze contributed to the disintermediation of the car radio.? Commuters listening to broadcasters to get the latest traffic reports began turning to Waze.? Waze singlehandedly downed dozens of traffic helicopters and transformed traffic reporting to an on-the-ground phenomenon.? Helicopter reporters were relegated to tracking police chases.

The secret to Waze’s success was converting its crowdsourced data into what many perceived as the most accurate source of predictive traffic data.? At the time, this disrupted all players including TomTom, HERE (which had acquired Traffic.com), and INRIX (which was planning for a billion dollar IPO).

The value of accurate traffic predictions – necessary to optimize routing for fleets or individuals – touched off a competitive crisis with TomTom (which partnered with Apple to access its probe data) and HERE (which hired physicists and entered a joint venture with BMW, Audi, and Daimler to bring its traffic data up to speed with probe data).? Google Maps, already based on probe data, appeared to be about on par with Waze for ETA (estimated time of arrival) accuracy.

With the help of Apple’s CarPlay and Android Auto smartphone projection, Waze gained access to those larger screens in cars.? Even before that, though, Waze added location-based advertising.? What could be a more compelling value proposition to an advertiser than to connect with a potential consumer at a time and place in proximity to your place of business – while that potential customer is piloting a moving vehicle?

Waze has also added a variety of alerts and other services – such as gas prices.? Waze has even added roadside assistance to its app and the ability for users to report incidents along the way.

Waze’s progress points to a turning point for auto makers.? Analysts and experts are fond of describing the car as a smartphone on wheels.? The reality is that the car is a smart television on wheels.

The unique element of this TV on wheels, though, is that it is capable of creating its own content and broadcasting valuable data – i.e. enabling interactivity.? Waze set the stage for this phenomenon, but now is the time for car companies to capitalize.

Waze was able to assemble its value proposition from its mobile app, but relied heavily on probe data from fleet vehicles to build its maps in the early days.? Car companies have direct access to this data source from their own cars and are, therefore, in a position to Waze themselves.

It is hardly a shock that both Apple and Amazon began creating their own maps.? Apple had its own probe data and Amazon has hundreds of thousands of vehicles gathering data every day.

Car companies are in the identical position, they simply need to put the proper data scientists in place.? At stake is the transition to becoming location-centric media companies gathering, interpreting, and broadcasting traffic and weather data along with navigation guidance and, yes, advertising.

Waze created the template and continues to grow – even if slowly.? Car makers can’t afford to miss the opportunity.

“Page One,” the documentary film that debuted at the 2011 Sundance Film Festival, recounts the existential crisis and transition experienced by the newspaper industry generally and the New York Times in particular.? With newspapers across the country sliding into bankruptcy, the Times finds a way to reinvent itself as a media company.

The same is happening to both the navigation/mapping and the automotive industries.? Navigation users are turning away from TomTom and HERE toward Google Maps and Waze.? Car buyers are turning to electric vehicles – with particular emphasis on Tesla or EVs from China (at least for now, outside the U.S.).

Tesla is the de facto Waze of the auto industry.? Tesla vehicles hoover up data from their surroundings and share that data, including driving circumstances and behavior, with Tesla.? Tesla uses the data to transform the driving experience with Autopilot and its Full Self Driving function.

Tesla’s focus, thus far, has been on delivering a hyper-relevant, location-aware, contextual experience to its drivers focused on safety, sans advertising.? Tesla is not in the traffic, navigation, or weather business itself.

But Tesla has recognized its command of the fourth screen.? Tesla has enabled streaming content delivery and minimized the variety of available apps.? Tesla has not pursued the contextual advertising path…yet.

Car makers must decide whether they are indeed in the media business and will follow a Waze-like approach – redefining their relationship with the customer; or whether they will simply make the TV on wheels and serve as someone else’s platform.

Car makers have been experimenting for the past 15 years with the concept of acting as the platform for others – Microsoft, Apple, Google, SiriusXM, Mobileye, Qualcomm, Amazon.? Has the time arrived for car makers to enable their own platforms?? Are auto makers too small to scale?

It may be instructive to consider how at least one car company looks at this value proposition.? Earlier this year Nio, the Chinese EV maker, introduced a smartphone designed to be used with its cars.? Could a Tesla phone be far off?

Waze started from nothing, building its maps from scratch.? Auto makers have considerable advantages and resources Waze could only dream of.? Opportunity awaits the bold willing to take on the challenge of defining the fourth screen.