Transportation
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Waze CEO Noam Bardin.
- Many founders depart from their startups soon after the company is acquired - but not Noam Bardin.
- We sat down with the Waze CEO at CB Insights' Transform conference to talk about selling the company to Google for $1 billion.
- He talked Tesla, Uber, self-driving cars, and more in a fireside chat about how Waze was moving beyond traditional notions of commuting.
One of the first hard decisions Noam Bardin, the CEO of Waze, had to make in the early innings of the company's life was deciding whether to build the now ubiquitous navigation app for the iPhone or the BlackBerry.
Times were different back then: BlackBerry was still a thing, the Waze team was still based entirely in Israel, and the app had only about 14,000 users. Now, it has more than 100 million monthly active users across the world and is branching beyond its roots into things like carpooling.
The anecdote highlights how much the world has changed in just 10 years.
Bardin recently sat down for an interview at a CB Insights' Transform conference in New York to talk about his near decade at the company, which Google bought for $1 billion in 2013.
(This transcript has been lightly edited for length and clarity.)
Graham Rapier: Take us back to 2009. Obviously a lot was different then. What's changed? And do you think Waze could have been started today?
Noam Bardin: It's funny. When I joined Waze in 2009, we had about 14,000 users in Israel, and we were going to go around the world. One of the first decisions I had to make was, Are we building a version of the app for iPhone or BlackBerry? And all the logic said BlackBerry.
I'm only here because I chose iPhone of course, but it was a different world in that sense. The iPhone you still had to jailbreak and navigation wasn't allowed there. It was definitely a different world as mobile was starting. Today, Waze specifically would be extremely difficult to start.
Today, Waze would be extremely difficult to start.
Rapier: Four years later, Google approaches you and you end up selling for a reported $1 billion. What was going through your mind during those talks? What did you tell your staff about becoming part of what was then already a massive company?
Bardin: We were acquired in 2013, but 2012 was sort of a defining moment for the company. It's a day that's still celebrated today at the company every year: It's called Tim Cook day, and it's the day Apple came out with Apple Maps. The day before I was interviewed by a not-to-be-named publication, and it doesn't really matter what I said, but the headline said "Apple partner says Maps will be terrible."
So you can imagine the response when that happened from Apple - they were definitely not very happy - but it's what I said. The next day, Apple Maps came out, and suddenly I went from being about to get fired, app get pulled from the App Store, to "I saw the future" and "I knew what I was talking about."
Tim Cook came out and actually put out a letter apologizing for Apple Maps, and he said until that comes out you can use Microsoft, Google, and Waze. That was our coming-out moment in the US, and from there things start to pick up pace, eventually ending in the acquisition in 2013.
In the beginning of 2013, we realized where things were going and we had to decide how do we want to handle this. So me and the other two founders sat down to answer the very personal question of what do you want to do. A lot of people forget in this acquisition world, you're going to go work for four years at this company, right? And so you really need to know what you want.
We built a model. We were either going to raise money - and were really close to raising $100 million at a $750 million valuation, which in those days was a lot of money. It wasn't like today where it's everybody raises $100 million and that's the minimum. It created a framework for what we're going to raise money to do. We said if we're going to sell the company for below $750 (million), then we're going to raise the money and continue. But a lot of us were tired and stressed and really wanted to move forward with that, so we said if it's going to be above a billion, then we'll sell the company. It's a nice round number, and everybody wants to build a billion-dollar company.
If it was in between, it really depended on who was going to acquire us. The way we looked at it, if it's Microsoft, it's got to be way north of a billion, and if it's Facebook, it could be $750 million.
If it's Microsoft, it's got to be way north of a billion, and if it's Facebook, it could be $750 million.
It really depended on where we wanted to go work. All kinds of things happened, and we ended up being acquired by Google.
One of the biggest risk factors in the acquisition documentation was how would the community take this. Waze is completely community-driven - our community builds our maps, maintains them, and manages the information. It's one thing to be part of a community for a struggling, David-and-Goliath startup but something else to be part of Google. That was a big risk, and when we look at the success of Waze post acquisition, the community not only stayed but grew and flourish.
We started talking to Google at about 10 million actives, and today we're at 112 million actives. We've managed to grow through our time at Google pretty dramatically. In that sense, I think that risk went away.
Rapier: At Google (now Alphabet), you've stayed pretty isolated. You've got your own tech stack, your own maps and marketing team. How have you leveraged Google's capital and other expertise while maintaining the relatively small team?
Bardin: When we were talking about the acquisition, one of the big things that was important to us was to remain independent. I think it was Larry (Page), or one of the board members, said: "We're acquiring you because you do things differently. We're not acquiring you to do things the way we do things."
I think that's a very important point when you talk about acquisitions going forward: having clarity about why you're acquiring a company is critical in what happens next. If you're acquiring a company for the team, that's one thing. If you're acquiring it for the technology, that's something else. But if you're acquiring for the product and for the brand in that sense, keeping the company independent is crucial.
Now before us there was the Instagram acquisition, and we looked at that as a model. Facebook acquired Instagram and kept it very independent, which became a model that's rolling out in Silicon Valley, when you think about things like WhatsApp, Instagram, Nest, LinkedIn, Skype. Keeping the companies independent and maintaining their culture and brand is crucial if that's what you're acquiring the company for. All of these acquisitions have been very successful because of that. Had Facebook acquired Instagram and tried to integrate it on day one, my daughters would not be using Instagram today. Same thing with Waze and Google Maps.
Rapier: That's funny you mention Instagram. The app's founders just left in a high-profile disagreement, and one-third of founders leave within the first six months after an acquisition. Why are you still around five years later?
Bardin: You're just at the beginning of your journey when you get acquired. It doesn't matter if that's 10 years in or three years in. Mark Zuckerberg used to say "We're 1% in" and you're always 1% in to the vision. If you create the right environment, where the founders continue to build out what they dreamt of building but suddenly aren't worried about fundraising the same way and aren't worrying about recruiting and other things, what could be better? You get to continue to build out your dream in a protected environment. I think as long as that environment really is protected, most founders stay.
At the same time, some people do move on. Everyone's looking at the founders kind of exiting from Instagram and WhatsApp, but that's just sort of what happens. Humans move on at a certain point. I don't think it's surprising.
What I think is interesting though, if you look at Instagram, it's phenomenal what they did. They got acquired by Facebook and they built one of the most powerful brands that, in many ways, is surpassing Facebook in terms of what people are doing with it. That success will probably continue. There was an escape velocity achieved with Instagram to the point where if the founders leave, it's not the end of the world.
You do need to factor in that at a certain point the founders are going to leave. It's the responsibility of the founders to build the infrastructure, the management, and the processes so that the company can live beyond them. That's the dream of every founder: Someday you're going to leave, but the company will live beyond you.
Rapier: Where in that journey is Waze? Are you on mile one or halfway through the marathon?
Bardin: Our mission from day one was about battling traffic. Traffic is one of the ills of modern society, and we're all very passionate about fighting it. Waze was known for outsmarting traffic - we could find a better route for you and try to circumvent the traffic - back when a small percent of users were on our product.
As we grow, we run into the problem of less and less options. Basically we're exploiting all the shortcuts and so at a certain point we're running out of them. After we got acquired we launched the connected-citizens program, which is about sharing our data with cities and municipalities to try and focus on planning for traffic. For example, we can share with them a pothole that was collected on our platform and they can go out and fix it. Even then, we're still running out of options.
That brought us to our next stage of evolution: carpooling. If we can get a fraction of our drivers to take a rider or two with them, especially if it's someone that lives next to you and works near you, we can actually have a measurable impact on traffic.
At the end of the day, traffic is a social phenomenon. We are all responsible. When you sit there in traffic and you look out at those idiots that are making you late for work, those idiots are looking at you and saying, "Why are you making me late for work?"
We're all at fault because we've chosen to drive at the same time on the same roads by ourselves. We don't really have anyone to blame, and there's this feeling that someone's going to save the day, like a new technology. This is all wonderful, but if we stay with the same model of one person in a car, it doesn't matter who's driving. The same amount of space is being taken. The capacity is there. That's our focus today at Waze: How can we convince you to leave your car at home a few days per week? Changing behavior is not easy, and so the challenge is very real.
Rapier: How might public
Bardin: Public transit is a very important thing - especially when you think about America, we kind of screwed it up. If you go back to the beginning of the 20th century, there were all kinds of plans for transportation in Los Angeles and around the world, but car companies bought it out and shut it down. It eventually reached the point where we don't really have public transit in America.
Not only do we not have public transit, but we've built our cities in a way that you can't just add in public transit to this urban sprawl.
You can't just add in public transit to this urban sprawl.
To have efficient public transit, you need to concentrate people in centers where they can easily take advantage of the public transit. New York is an anomaly in the US because of public transit, but you still have millions of people driving in to the city every day. If not, the tunnels would be empty.
So we would like to connect with public transit. Maybe you'll take a carpool to a park-and-ride place and from there take the train in. If we are going to wait for the government to save the day, we have a challenge ahead of us.
Rapier: There have been lots of other ideas for how to fix this, too, from scooters to Elon Musk's Hyperloop. What is most exciting to you? What moonshots might actually work out?
Bardin: Obviously carpool, that goes without saying, but I think every one of these modes of transportation is part of the solution. There isn't going to be a silver bullet here. Most of these are dealing with the "last mile" problem - Uber, Lyft, and scooters all make sense within a city, but if you're living 20 or 30 miles outside of the city and driving in as most Americans do, that doesn't help you.
Now, if you can carpool in to the city, and then take a scooter from that point to your job, that makes a lot more sense. Long term, all these modes will be connected. Every player in the space thinks they're the most important one and that they can commoditize everyone down the stream. At the end of the day, whoever owns the customer and the payment method basically owns the whole experience. It doesn't matter if the user takes an Uber or a scooter - it depends on who's responsible for your commute. Obviously we want to be that, but so does Uber, so does Lyft, and many other companies.
Rapier: And for Waze, that customer is essentially traffic and commuting data, right? Google is obviously all about data, from search to maps. Do you think we'll see more crossover soon between Waze and Google Maps?
Bardin: I take offense in that term that the customer is data.
Rapier: Why?
Bardin: Because the customer is not data, the customer is an idea with irrational ideas just like every other human. When we think about communities, communities are built by people doing something which is not rational. You can't explain rationally why people volunteer hours a day to work on our maps. The user is the essence of the service.
Today we can do a lot of interesting things with data that we couldn't do in the past. We like to talk about AI and all these great new technologies, but all of them are like 50- to 100-year-old algorithms. The difference today is that we have the compute power and the storage to do it at scale.
Waze is basically about data, but we're about data and algorithms on one hand and humans on the other.
We're about data and algorithms on one hand and humans on the other.
We combine the two. We can figure out there's a new road somewhere because suddenly we see Wazers driving in the middle of nowhere. We're never going to know the name of the road, no matter how sophisticated the algorithms are - we need a human who lives there. That's where humans and data work together.
When someone creates a road closure on Waze, we share that with Google Maps as well so we can close that intersection there. There's a lot of other sharing going on, but at the essence, we're different products with a different focuses. Google Maps is doing a whole lot of things: walking, public transit, driving, search, discovery, and all these things. We do driving. That's what we do, and we're going deeper and deeper and deeper into driving.
Rapier: Speaking of driving, I know you just bought a Tesla. How do you view Elon Musk as a fellow CEO?
Bardin: It's kind of "in" to bash Tesla in the last few years, especially all you East Coast people who like to look at financials and all that kind of stuff. I don't know where you come up with that. Come out to the West Coast where we're trying to save the world. We don't care about the financials. When you think about changing the world, the balance sheet doesn't matter.
When you think about changing the world, the balance sheet doesn't matter.
Go talk to someone who owns a Tesla - that's what made it click for me.
There was a situation in 2013 where a Tesla caught fire and there was a recall. A friend of mine said: "Over my dead body am I sending my car back! I don't care what they say." That love for a product is very unique. To have 700,000 people prepay a thousand dollars for a car that doesn't exist yet and has no delivery date. Those intangibles are what matter. That's the story of the iPhone too. That kind of love is the hardest thing to create and is the essence of great companies.
I'm a huge fan of Tesla in that sense. They manage to do all of that and also have the most rational model to get to self-driving. If you think about Uber building a self-driving car, it's all or nothing. Either they have a fully level-5 autonomous car that drives everywhere on its own, or they've got nothing. They have no service if they don't have it. Tesla is selling very expensive cars; I paid a tremendous amount of money for the right to train their algorithm. Their business model is growing while they slowly get to full self-driving. They'll probably be at 85% fully self-driving very soon. Uber has nothing at 85%.
To me, the genius of Tesla beyond everything else is the ability to build such a product that people love, and the ability to use that love and product to build the next product and have a gradual way of creating revenue and building a company as they get closer and closer to full autonomy.
Rapier: When will I step into a self-driving car for my commute? Five years, 50 years, or somewhere in between?
Bardin: We are, I believe, 10 to 15 years at least away from the average American being in a self-driving car. Yes, there will be areas where they'll be self-driving very early. These will be extremely expensive services that make no economic sense whatsoever. I think we're very very far away from that being an average American service.
Rapier: Finally, what advice do you have for entrepreneurs who might be eyeing an acquisition themselves?
Bardin: If you're going to sell your company, sell it to Google. I mean that. They are professionals at what they do, and they really know how to preserve sort of that special thing. I don't think I would be there if it was another company. Nobody thought I would last a year or month at Google, but somehow I've lasted because they created the environment for us.
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