Waze

Topics covered include: Community Showcase: the Nexcast http://www.nexcast.co podcasting platform from listener Brian Sanders, along with their podcast chronicling the team’s journey building the company http://buildingnexcast.com Waze’s origin in cofounder & CTO Ehud Shabtai’s desire to hack his portable GPS navigation unit http://www.globes.co.il/en/article-1000851150Waze CEO Noam Bardin’s retrospective blog post https://www.linkedin.com/pulse/20140403204459-174756-a-unicorn-in-israel on the Waze journey Waze’s Palo Alto office http://2.bp.blogspot.com/-kdC7fO4yUp0/UKGffG3qdiI/AAAAAAAAA5g/BcVMRomXOp8/s1600/waze.jpeg and the bizarre Silicon Valley phenomenon of tech companies being located in retail storefronts Apple’s ill-fated launch of Apple Maps http://www.theverge.com/2012/9/20/3363914/wrong-turn-apple-ios-6-maps-phone-5-buggy-complaints as part of iOS 6 at WWDC 2012, Apple’s subsequent apology letter http://www.apple.com/ca/letter-from-tim-cook-on-maps/, and Scott Forstall’s ultimate ouster http://www.theverge.com/2012/10/29/3574022/apple-scott-forstall-ios-6-maps-apology-letter from the company The climax of the mobile platform wars… which it turns out Apple and Google both won http://ben-evans.com/benedictevans/2016/7/25/platform-wars-final-scoreApple, Facebook, and Google all vying to acquire Waze https://techcrunch.com/2013/06/11/its-official-google-buys-waze-giving-a-social-data-boost-to-its-location-and-mapping-business/ throughout 2013Google’s renewed design ethos under Larry Page http://www.theverge.com/2013/1/24/3904134/google-redesign-how-larry-page-engineered-beautiful-revolutionBen and David spontaneously agree (surprise) to create on a new category of acquisition for the show The increasing strategic value of data and data assets as technology enters the age of machine learning The coming mega trend of autonomous vehicles, and the role Israeli startups are playing in it https://techcrunch.com/2016/07/26/israeli-technology-and-the-future-of-transportation/?ncid=txtlnkusaolp00000629 (including the globalization of startups & innovation)The disruptive power of network and data-based business modelsEmergence of native as *the* definitive advertising medium on mobile, including ability to close the advertising loop via location-based products and services Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC The Carve Out: Ben: Weezer’s “Summer Elaine and Drunk Dori” on Song Exploder http://songexploder.net/weezer David: Simon Sinek’s “Start with Why” TED Talk https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en Followups: None this week… coverage of Instagram Stories http://blog.instagram.com/post/148348940287/160802-stories to come next time!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  We have a model where we take money from venture investors and we give it to engineers. That's how the business model works. But except for that, now that we're part of Google, now that we're part of Google, everything's changed.

• 0:28Speaker 01

  Welcome to episode 17 of Acquired, the podcast where we talk about technology acquisitions. I'm Ben Gilbert.

• 0:34David Rosenthal?

  I'm David Rosenthal.

• 0:35Speaker 01

  And we are your hosts. Today, we're going to be talking about Google's acquisition of Waze. 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 Nexcast. Nexcast is a next-generation podcasting client that has a lot of interactivity baked into 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 two-way street. So you can have a relationship with the podcaster and click links and watch videos and things like that.

• 1:18Speaker 01

  The app's not totally built yet, but their customer development process and kind of their pitching for funding and things like that is being covered in a podcast called Building Nexcast. So check them out at buildingnexcast.com if you're interested.

• 1:32David Rosenthal?

  It's really cool that we launched Community Spotlight and we did an episode about podcasts. And it's like they were listening to the episode. This is perfect.

• 1:44Speaker 01

  Yeah, it's awesome.

• 1:45David Rosenthal?

  So if anybody out there is building a social navigation app, please ping us.

• 1:53Ben Gilbert?

  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 [email protected] or tweet at us at @acquiredfm.

• 2:04David Rosenthal?

  Or hit us up in the Slack group as always.

• 2:08Ben Gilbert?

  All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 2:27David Rosenthal?

  Yep, your risk surface changes every week now. A vendor turns on an AI feature or someone writes in a new model without telling IT and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 2:48Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 3:10David Rosenthal?

  In half, which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 3:28Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A.com/acquired for $1,000 off, and just tell them that Ben and David sent you.

• 3:56David Rosenthal?

  All right, Ben, should we get into it?

• 3:58Speaker 01

  Let's do it.

• 3:58David Rosenthal?

  Let's do it. Waze.

• 4:02David Rosenthal?

  I would presume most of our listener base is familiar with Waze, but for those who aren't, it is a social navigation app, much like Google Maps or MapQuest going way back, or Apple Maps. We'll get into that in a minute. But you drive with friends.

• 4:20Speaker 01

  Yeah, and so Waze's magical insight is that 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 a traffic, there's high traffic there because people are going really slow. Now, Google's been doing that for a long time. They introduced that in 2009 based on data being fed back from Android. But what Waze does is it both plugs you in with a social network based on Facebook or importing your contacts, and you can, while you're driving, report things like red light cameras, like police officers, like traffic accidents, and you kind of get a real-time map when you're driving of the incidents on the road.

• 5:02David Rosenthal?

  And this is really cool because before Waze, there was kind of like all of navigation and mapping was this like top-down thing where like, you know, TomTom or Garmin, like they had their dataset that was like canonical. And then, you know, even Google was collecting it from Android phones, but before that, you know, they were just buying it from these other companies. But the key insight in Waze was like, hey, 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 this started. So, Waze is actually an Israeli

• 5:42David Rosenthal?

  company, and this is our first acquisition that we're covering out of Israel. It was started in 2006 by five co-founders. Ehud, I don't know if I'm saying this right, Ehud Shabtai was the main founder and CTO, and he was joined by Amir and Gili Shinar, Uri Levine, and Ari Gilan.

• 6:09David Rosenthal?

  And Houd had been given an old GPS system, well, new at the time, but now old to our view, GPS system by a friend. You know, those things that like, my dad still has one of these that you like the portable things, like a Garmin type thing.

• 6:24Speaker 01

  Yeah, like in once a year or something, you can download all the new map tiles.

• 6:27David Rosenthal?

  Yeah. And you like, you know, plug it into your cigarette lighter in your car and like, you know, suction cup it to your, to your windshield. So he'd been given one of these in 2006 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 in, on the streets in Israel. And it started to take off, but the company that made the GPS device that he had didn't like it. And so they sent him a cease and desist letter.

• 7:00David Rosenthal?

  And I believe, I believe we read that they said, you know, they'd be willing to, you know, like integrate the software, but like he had to stop doing it. And so rather than just giving them the software, he said, well, screw you. I'm going to take your mapping data out of this and I'm just going to create my own mapping data and I'm going to crowdsource it and have, build this through the user base 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 set that this company had put in their GPS unit with a crowdsourced, you know, living and social data set. And it started to take off.

• 7:37Speaker 01

  Huh.

• 7:37David Rosenthal?

  A couple of years later, in 2008, things are going well and they changed the name of the project and the company to Waze. And they changed the terms of the map from, of the, the map data from being open and being usable by anyone to being owned by Waze. So Waze now owns and can commercialize all of the mapping data that its users are generating. And so that was in 2008. And then in March of 2008, they raised their Series A, the first capital they raised. They raised $12 million, led by Blue Run Ventures, which is a US venture firm, and Magma Venture Partners, and Vertex Venture Capital,

• 8:20David Rosenthal?

  I believe, who are Israeli venture firms. And it's interesting, later, you know, this comes to play after the acquisition. Noam Bardin, who became, joined later in 2009 as the CEO of the company, he writes a blog post, and he said, "One of Waze's mistakes was the valuation of its Series A, which significantly diluted the founders. 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." This was after the acquisition, he wrote in a blog post on LinkedIn.

• 8:53Speaker 01

  Oh, wow.

• 8:54David Rosenthal?

  Yeah. So, the company continues to grow after they raised the Series A, mostly in Israel, and then they start to add other countries as well. And in December of 2010, by that point, they've reached 2 million users, and things are growing pretty well. They have over 250 million kilometers logged in the app, which is, which is huge. Again, think compared to data that other mapping companies are using, which is not live, real data. This is, you know, a huge amount of mileage that's, that's, you know, on real city streets and routes that are getting uploaded to Waze.

• 9:32Speaker 01

  Yeah.

• 9:32David Rosenthal?

  So, at that point, they raise a $25 million Series B from the same investors, plus Qualcomm. And that was at a $95 million valuation. This was 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 Alto, which is really cool. I remember when I, when I started at business school at Stanford and seeing the Waze office, just like on the street in Palo Alto, like, "Oh, man, there's Waze. Like, that's super cool." There's a little storefront.

• 10:04Speaker 01

  I had that same... That same feeling. I remember when I moved out to California for a summer for an internship, walking up and down Castro Street and Mountain View and just seeing like all the different startups. The one that actually sticks out in my mind was Meibo. I remember it was like that web-based chat software that I had 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 a, like a physical representation on a building and you're like, whoa, it's, it's right there.

• 10:33David Rosenthal?

  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 or you visit, is totally mind jarring. Like you see these storefronts and they're actually like storefronts in Palo Alto and Mountain View and sometimes even in San Francisco that'll be next to retail shops and they're like, you know, ways.

• 10:57Speaker 01

  Yeah.

• 10:58David Rosenthal?

  So they raised the Series B. They had about 2 million users. That's December of 2010. Fast forward not quite a year to October of 2011 and here the intrigue starts to begin. October 2011, they raised their Series C. So less than a year later, they raised $30 million at about a $200 million valuation from Kleiner Perkins and Horizons Ventures. And they announced that they have 7 million users at that point. So October 2011. At the end of 2011, beginning of 2012, they announced they have 10 million users. So in just a couple of months, they had 3 million users. Halfway through 2012, in July, they announced that they have 20 million users. So they've now doubled from 10 to 20 in

• 11:43David Rosenthal?

  six months. And, and then later on, by the end of 2012, they get to 34 million users. But a really important thing happens in the life of this company. And like I said, where the intrigue begins, in the summer of 2012, at WWDC. It's amazing like how much...

• 12:03David Rosenthal?

  You know, Apple and WWDC ends up playing a role in, you know, our podcast here.

• 12:09Speaker 01

  Is this, is this the Forrestal?

• 12:11David Rosenthal?

  Oh, yeah.

• 12:11Speaker 01

  Oh, yeah.

• 12:12David Rosenthal?

  Scott Forrestal's last hurrah, last stand. It's like Custer's last stand. I was actually at.

• 12:19Speaker 01

  See what it is?

• 12:20David Rosenthal?

  Well, so, yeah, I'm burying the lead here. Apple announces iOS 6 at WWC 2012 and in it, one of the marquee features is they're 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 map software was Google Maps.

• 12:45Speaker 01

  That, that was built by Apple, but with Google's data.

• 12:49David Rosenthal?

  Data.

• 12:49Speaker 01

  Google's, you know, map tiles.

• 12:52David Rosenthal?

  Yeah.

• 12:52Speaker 01

  And I think it was something like the, uh, 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 get into a little bit of a war between the two companies. And Apple had to ship Maps early because the, they, they couldn't use Google's data anymore and they didn't want to re-up and they knew that re-upping would like become a really nasty price tag for them and, you know, a lock-in to send Google a bunch of data that they didn't want to. And I think Google was 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

• 13:36Speaker 01

  of like, you know, obviously rushed Maps to market because it was.

• 13:39David Rosenthal?

  Well, and this is, you know, I think there's even more context setting that needs to happen here, which is that like, it's, as we were doing the research for this episode, like, 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, you know, quote unquote, were like in full swing. Like, Apple and Google are going at each other's throats and like, everybody in the tech industry is like, who's gonna win mobile? Is it gonna be iOS? Is it gonna be Android? And, you know, the tide's swinging one way or the other. And people think that this is gonna be a winner-take-all market at this point in time.

• 14:24Speaker 01

  Yeah.

• 14:25David Rosenthal?

  And the other thing that had happened is Tim Cook had recently taken over as CEO of Apple. Steve Jobs had passed away. And the Apple was, was really, you know, in a, Tim and Apple, they were figuring out like, what was going to be the path, path forward. It was, it was becoming clear that there was no way that they were ever gonna overtake or catch up to or overtake Android on actual user numbers. 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 war. Like iOS and Android exist, coexist peacefully.

• 15:08Speaker 01

  Yeah, there's this, you know, everybody builds for both mostly. And Apple kinda has the, the more valuable customers and Android has most of the customers. And that's just the, the way the world works now.

• 15:22David Rosenthal?

  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, you know, Waze had been operating for four years at this point, and had been growing the user base nicely and riding the wave of mobile. But all of a sudden, they are like at the center of this huge conflict between these, these two behemoths.

• 15:43Speaker 01

  Yeah.

• 15:44David Rosenthal?

  So, in WWDC, Apple announces Apple Maps, and this has been years in the making, but as, as Ben, as you're saying, they had to rush the product to market when they actually shipped iOS 6 in the fall. And it becomes super clear, like, there was a ton of hype for this product. This was like the tent pole feature of iOS 6. It becomes clear within a week that like, it is hugely broken. And there are all these reports of like, people getting sent to the wrong addresses, causing all sorts of problems and accidents, and like, it is a disaster for Apple when this happens.

• 16:19Speaker 01

  Yeah, and the story, you know, that Apple's trying to tell is like, it's, it's two-sided. One is that, you know, we really messed this up and we apologize, and that's kinda, Tim Cook comes out with that public letter.

• 16:34David Rosenthal?

  Writes a, writes a letter. Letter posted on apple.com apologizing. This has never happened before in the history of Apple. Like, people are saying, this would never happen under Steve.

• 16:43Speaker 01

  Right, right. But on the other side, you know, Apple's hedging and they're saying, well, you know, it takes a lot of time for the data to come in, for it to get better. Apple Maps is only going to improve, which is true.

• 16:53David Rosenthal?

  Which is true.

• 16:54Speaker 01

  It's gotten dramatically better. And that's the exact same story they had with Siri.

• 16:57David Rosenthal?

  Yep.

• 16:57Speaker 01

  And going back to the Steve Jobs comment, it's funny, Steve, this feels like actually a tremendously Steve Jobs move, because like, Steve is famous for, you know, saying he's going to go thermonuclear on Android. And like, when, when he gets into a Tiff, like, they get into a Tiff. And like, even if it is, it has some fallout, like we saw here, I think that that's a very Steve move. And that's actually, Scott Forrestal was largely responsible for this. And he was a Steve Jobs protege.

• 17:27David Rosenthal?

  Yeah. And so, closing the loop on the Apple intrigue here, this ultimately ends up in Scott Forrestal getting fired.

• 17:37Speaker 01

  Scott refused to write the letter. Tim said, I'm going to do it personally.

• 17:40David Rosenthal?

  Refused to write it, refused to sign it. Only Tim Cook signed it, even though Scott had publicly announced, publicly introduced the Maps product, like, it was clear it was his product. And before Tim, before Steve died and Tim became CEO, like, the public talked about, like, hey, is Scott Forrestal the next CEO of Apple?

• 17:57Speaker 01

  Right.

• 17:58David Rosenthal?

  Like, this guy is not, he's not just like some Apple exec. This, he was like Steve Jobs's protege.

• 18:04Speaker 01

  Yeah. And it's amazing that in, in this letter that, that Tim Cook writes, he lists some alternatives for people that are dissatisfied with Apple Maps and says it's going to get better. But actually,

• 18:16David Rosenthal?

  Alternative products.

• 18:17Speaker 01

  Lists ways as one of the products that, that people should go and try out instead of Apple Maps.

• 18:23David Rosenthal?

  In the, in the letter, which is,

• 18:27David Rosenthal?

  Again, this is like uncharted territory for Apple at this point. Again, because with the backdrop of they are locked in this feature war with Android. And another one of the reasons why the people speculate about why Apple and Google couldn't come to terms to keep Google Maps within the native iPhone software 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. You gotta remember, again, this is like more context, like Tom Tom and Garmin and all

• 19:11David Rosenthal?

  these guys had navigation apps in the App Store at the time and they cost like a hundred bucks.

• 19:15Speaker 01

  And I think they were patented, 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 owned the patent to that.

• 19:30David Rosenthal?

  Could have been, maybe Apple was concerned about that. But it was bizarre, like the official Maps app on iOS, 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 600 feet or whatever, like you had to like scroll through the list as you were driving or walking or whatever. It was terrible now, like, you know, looking back on it. But if you wanted turn by turn directions, A, you got crappy products with crappy data from companies like Tom Tom and whatnot. But you had to pay 50, a hundred bucks for that, just for the app. Like, could you imagine paying a hundred bucks for an app now?

• 20:08Speaker 01

  Right, right, right. So the stage is set.

• 20:10David Rosenthal?

  The stage is set. So in the middle of all this, Waze is free and Waze provides pretty good mapping data and application. So this was, it was kind of October 2012 by the time the dust settles. Apple's fired Scott Forrestal. And then rumors start swirling that Apple is looking at acquiring Waze.

• 20:35Speaker 01

  Which was actually never true that I believe it was, who denied it? Apple.

• 20:45David Rosenthal?

  Well, Apple denies everything, so.

• 20:47Speaker 01

  Yeah. Anyway, Apple denied publicly.

• 20:49David Rosenthal?

  Apple denied publicly, but you got to imagine that, you know, in the wake of this, that they're looking around and saying, oh, my gosh, what are we gonna do? Like, we just have this egg on our face. And here's this free app that like is pretty good in the store. And has a really interesting data model, like, maybe we should buy it. And the rumors were that they were talking about about a $500 million acquisition with Waze. How far that went? We don't know, but it, it, it doesn't come together.

• 21:20David Rosenthal?

  At the same time, in December of 2012, so a couple of months later, Google launches a standalone Maps app, the Google Maps app on iOS, which many of us, myself included, now use and love. Does include turn-by-turn directions, but is just a regular app in the App Store.

• 21:38Speaker 01

  And it was great. It was like this incredible. Actually, I know there was a five-person team that did the, the native code, and they're actually in the Kirkland office here in, here in Seattle.

• 21:49David Rosenthal?

  Oh, cool.

• 21:49Speaker 01

  Yeah.

• 21:50David Rosenthal?

  I didn't know that.

• 21:50Speaker 01

  Yeah, I think the backend was all, all down in the valley, but the, the actual iOS app, the Objective-C, was written up here.

• 21:57David Rosenthal?

  Wow, that's all. And, and when it comes out, like, it gets huge praise and it was, it was like better than the Android app.

• 22:03Speaker 01

  And, and there's all these, uh, yeah, that, that was a big blow up. There's all these articles written about Google's new design paradigm, because it was uniquely iOS, but still familiar for people that, that love the Google interface. And they found this amazing way to combine the two design languages. And there were pieces written, there was a Fast Company piece that was written about how Google's new, Google had this like design studio in New York, and they would go and work with all these individual business units. And it was like, I mean. I thought that it was really well made and I think the rest of the world did too. It was so well received.

• 22:36David Rosenthal?

  And I think actually that moment, looking back on it now, is the beginning, the heralding of the end of the mobile platform wars. 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 both decided like, hey, we can peacefully coexist here.

• 22:55Speaker 01

  Yeah. Yeah. And, and Google knew that they, 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.

• 23:10David Rosenthal?

  And then Google realized they were getting all this data and all this monetization opportunity on iOS and it actually was super valuable for them. So that was at the end of 2013, 2012, going into beginning of 2013. Another piece of context here is that Facebook is now emerging as the big, giant counterbalancing Google in the, you know, again, in the posts, you know, as the world is determining that, you know, Apple and Google can peacefully coexist. Like Google's main enemy shifts from being Apple to being Facebook.

• 23:47Speaker 01

  Yeah. And it's funny that it was Apple. This is weird detour. Google's core competency is being the best search engine and that turns out to be a tremendous ad platform. So, you know, 90 some percent of their 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 it made them focus on Apple as the enemy since Apple, you know, was also producing this like rival OS that came with great hardware. But really, Apple wasn't after Google's core business of search queries that led to a tremendous ad marketplace.

• 24:31David Rosenthal?

  And nor was Google ever after Apple's core business of hardware sales. Like Google doesn't make money on hardware sales for Android.

• 24:37Speaker 01

  No, but they really went to bat on, on.

• 24:42Speaker 01

  Trying to displace the iPhone.

• 24:44David Rosenthal?

  Yeah, and it's weird like, you know, historically, Google and Apple had always had this great symbiotic relationship.

• 24:52Speaker 01

  Google does the services, Apple does the hardware, native software.

• 24:55David Rosenthal?

  And, you know, Eric Schmidt was on Apple's board until Steve Jobs kicked him off after they launched Android. And really, and you, but you know, then at the end of 2012, when Google launches Google Maps on iOS, it's like the détente is reached. And since then, it's like, I wouldn't say it's back to the good old days, but like, Google and Apple both realize like, hey, we're not each other's enemy here.

• 25:20Speaker 01

  Yeah, yeah. Apple makes hardware and software that are excellent, sells the hardware. They have services that differentiate them, but ultimately you can plug in Google's superior services on any of those devices.

• 25:32David Rosenthal?

  And have a great experience and it's symbiotic.

• 25:34Speaker 01

  Yeah, but you can, 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're distributing Chromebooks. Anybody who's the front door to the user has the power to redirect that. Like Apple shipping all these services associated with Bing in Siri and I, maybe even the default search engine on iOS?

• 25:56David Rosenthal?

  Uh, it's still Google, but I know that's always back and forth, but.

• 25:59Speaker 01

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

• 26:06David Rosenthal?

  The front door to the internet, which is where we make our advertising money, which is foreshadowing.

• 26:11Speaker 01

  Yeah, yeah.

• 26:11David Rosenthal?

  So Facebook goes public, you know, the, right around the same time as WWDC in 2012, the beginning of this Maps drama, the real threat emerges to Google and that's Facebook's IPO.

• 26:24Speaker 01

  Yeah, Google's, Google's, you know, castle is where are people going to spend their ad dollars digitally?

• 26:29David Rosenthal?

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

• 26:38Speaker 01

  Yeah, Apple's not going to eat Google's lunch. They have no incentive to, to try and get that advertising pie. But like, Facebook sure is, that's, that's their core business. That's the real threat.

• 26:49David Rosenthal?

  Yep.

• 26:50Ben Gilbert?

  All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part.

• 27:04David Rosenthal?

  Yeah, the hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 27:18Ben Gilbert?

  Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower.

• 27:28David Rosenthal?

  Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent visible and secure in one place.

• 27:45Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 28:01David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 28:18Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 28:27David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. So, we've just gone through this wild ride. Apple was rumored to be circling around ways, thinking about a half a billion dollar-ish acquisition to fix their mapping issue. Falls through. But then, a couple months later, in the spring of 2013, rumors start circulating that Facebook... Is not only interested in Waze, but is going to buy Waze and going to buy Waze for about

• 29:08David Rosenthal?

  a billion dollars. This was in the press for weeks. It reminded me of the Twitch deal, you know, about about a year later in that like, everybody just thought this was like a done deal that Facebook had bought Waze.

• 29:22Speaker 01

  Yeah. And in my research, trying to look and see, you know, how Google justified this acquisition and, you know, how Waze was doing as an independent business beforehand. So many of these articles of that are all loosely titled, "Why is Waze Worth A Billion Dollars", were written before the acquisition.

• 29:41David Rosenthal?

  Yeah. Nobody even knew Google was in the mix at this point. This was about Facebook.

• 29:45Speaker 01

  Yeah. Yeah. So the Facebook deal falls through.

• 29:48David Rosenthal?

  And we don't know, you know, unfortunately, Waze was not a public company. So we can't go through all the SEC filings and do our usual magic. And to date, there haven't been any lawsuits for us to go through discovery. So we may never know exactly what happened with Facebook. But in some of the comments that the Waze team has made after the acquisition, one of the key sticking points apparently was that Facebook wanted to move the whole company to Menlo Park, to California, and the team really wanted to stay in Israel.

• 30:23David Rosenthal?

  So a couple of weeks keep going by, and the world assumes Facebook has bought Waze, but it hasn't, hasn't been announced yet. And then, kind of out of the blue, June 2013, it's announced that Google is buying Waze for right around a billion dollars, somewhere between a billion one and a billion three. Most of it was cash, but there were other stock and other considerations, and that the team is staying in Israel. The, some of the Wazers who were in Palo Alto are joining Google in California, but the core team is staying in Israel.

• 30:59Speaker 01

  Yeah, and this, you know, they had a pretty immature location-based advertising product right around this time. Do you know when they, when they actually started having a business model other than?

• 31:12David Rosenthal?

  Waze did?

• 31:12Speaker 01

  Yeah.

• 31:13David Rosenthal?

  I thought you were referring to, Google had a pretty immature location-based advertising product at this point in time, which also might be an accurate statement.

• 31:20Speaker 01

  Yeah.

• 31:22David Rosenthal?

  This was, I believe, when did Marissa Mayer leave Google to take over Yahoo? Topical, as Verizon just bought Yahoo this week. But Marissa had been in charge of Google, of

• 31:36David Rosenthal?

  local and location-based advertising products at Google before leaving for Yahoo, so I don't remember. I think she had left for Yahoo at this point, but.

• 31:47Speaker 01

  Yeah.

• 31:48David Rosenthal?

  Anyway.

• 31:48Speaker 01

  What I was sort of getting at there is this, this billion-dollar valuation has

• 31:52David Rosenthal?

  Yeah.

• 31:53Speaker 01

  very, very little to do with.

• 31:54David Rosenthal?

  Wherever Waze was in their monetization path, and they were doing things like they had sponsored gas stations and they had some, you know, like Safeway and other location-based advertising on the map, but I mean, this was a, well, we'll get into acquisition category. Let's just get into acquisition category right now. I mean, this was not a business line acquisition. I will come down hard on that.

• 32:17Speaker 01

  No.

• 32:17David Rosenthal?

  What's your, what's your categorization, Ben?

• 32:21Speaker 01

  Uh, I want you to go first because I'm going to do some unorthodox.

• 32:25David Rosenthal?

  Oh, I'm going to do something unorthodox. That's why I turned the ball over. Okay, I'll go first.

• 32:29Speaker 01

  All right. Well, I'm doing it. So traditionally on this show, we categorize either by people, technology, product, business line, or other. And I don't believe this falls into any of them because this is

• 32:44David Rosenthal?

  I agree.

• 32:44Speaker 01

  a data acquisition.

• 32:46David Rosenthal?

  I agree.

• 32:47Speaker 01

  And David, you were, it's funny, you were just bringing this up right before we talked about the show.

• 32:52Speaker 01

  I want to introduce for acquired going forward, another category of asset.

• 32:57David Rosenthal?

  Yep. This is clearly an asset buy.

• 33:01Speaker 01

  Is that, what was that?

• 33:01David Rosenthal?

  That's exactly what I was going to say.

• 33:05Speaker 01

  It's like right in here. All right. So apparently we are.

• 33:10David Rosenthal?

  Are we sharing notes or something?

• 33:12Speaker 01

  No.

• 33:12David Rosenthal?

  Are you cheating on the test ban?

• 33:13Speaker 01

  We actually started like, what, five or six episodes ago. David and I realized that it wasn't very fun when we like talked beforehand and then were of one mind when we got into the show. And then we would refer to things like we were talking before the show, which is less fun for you guys. So we were like, okay, we're going to stop 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.

• 33:40David Rosenthal?

  Yeah. And it's like, this is so clearly what it is because if you run through all the, all of our previous categories for acquisition, like this was not a people acquisition. Like the Waze talent, the Waze founders were clearly very talented, but that's not, you know, Google had plenty of people who were great at.

• 33:58Speaker 01

  A billion dollars is not a talent acquisition.

• 34:00David Rosenthal?

  Yeah. Well, I mean, yeah, no, it's not. This was not a technology acquisition. The technology, as we were just saying, that was actually in the Google Maps asset was arguably as good or better than Waze at the time.

• 34:15Speaker 01

  Yeah. They didn't have active reporting, but they had the passive reporting of traffic and had been doing it forever. And I actually had in my notes from real early research, why doesn't Google just do this themselves? Because this is exactly the kind of thing they're good at.

• 34:25David Rosenthal?

  Yep. It wasn't a product acquisition, like Waze still exists and lots of people use it and love it. But like, they didn't replace Google Maps with this.

• 34:33Speaker 01

  No. And it's in fact, not even part of like the Google suite. They, Google finally now is bundling it as one of the OEM options when, 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.

• 34:46David Rosenthal?

  No, Maps, Google Maps is still clearly the flagship.

• 34:48Speaker 01

  Yeah.

• 34:49David Rosenthal?

  Location-based product. Definitely wasn't a business line.

• 34:52Speaker 01

  Now it's just to make money.

• 34:53David Rosenthal?

  Definitely was an other, other slash asset buy. And the asset was, you know, I think a couple of things in this case, which is really interesting. Like, I think this, we talked about this a little bit with LinkedIn, but like, A, this was a data asset. Like Waze generates so much very, very valuable data for, that would be valuable to lots of people, but especially to Google in terms of improving their Maps product, their core Maps product, in terms of their driverless car initiatives and everything they're doing with transportation, you know, 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,

• 35:37David Rosenthal?

  you know, controversially, but has always been part of ways, you know, reporting where police officers are, officers are in speed traps and red light cameras and things like that. 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 Google. Like they did not want Facebook to have this.

• 36:01Speaker 01

  Yeah. And, and even more than the actual asset of the data is they bought this data gathering machine. And I think that's why we haven't seen them mess with it at all is because it had a great growth trajectory, particularly after, after the Apple Maps debacle, it was growing at like 100,000 new users a day.

• 36:19David Rosenthal?

  Yeah.

• 36:19Speaker 01

  It was insane. And, you know, that, that obviously is short-lived, but they recognized that this thing is going to continue to feed us really great data and data about the real world and mapping data is something that is in need of being constantly updated. And people, they like, Waze has invented these great mechanics that people often complain about because they say they're distracting while they're driving, but they've really created mechanics that people reliably feed really up to date information in high fidelity.

• 36:49David Rosenthal?

  Yeah, both passively and actively.

• 36:51Speaker 01

  Yeah. And, you know, the, 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.

• 37:05David Rosenthal?

  Yep. Well, I'm, I don't know if I want to say I'm glad we're in agreement, but I think we should add this to our categories 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, haven't come across before.

• 37:22Speaker 01

  Yeah, I agree.

• 37:24David Rosenthal?

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

• 37:43Speaker 01

  Yeah.

• 37:43David Rosenthal?

  It's also interesting to think, though, I mean, you know, this was 2013, again, not that long ago, reminding me again how fast the technology world moves. I feel like Ferris Bueller here, you know? If you don't stop and look around once in a while, you might miss it. Nobody was thinking about driverless cars then. And today, like, people think driverless cars are gonna be the second coming and the, you know, every tech company and their mother is going after it. And what's interesting is that Israel is actually really, companies in Israel and talent in Israel are really well positioned in this. There's a company called Mobileye, which is a large public company now that makes a lot of the sensors that go into cars that are used for autonomous and semi-autonomous applications.

• 38:27Speaker 01

  Is that the military influence that?

• 38:29David Rosenthal?

  Well, everything in Israel is military influenced, but, so, this is a yes. But, you know, it's interesting to think, like, would a, is independent Israeli-based transportation and driving-focused company, software company, combined with the hardware talent there, be a real player in the race for autonomous cars today?

• 38:55Speaker 01

  Hmm.

• 38:55David Rosenthal?

  I don't know. I mean, clearly, you know, big asset to Google right now.

• 38:58Speaker 01

  Yeah, the hard part would be production. I 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.

• 39:11David Rosenthal?

  Well, and it's interesting, too. I mean, it's just like, that market is so, still has so far to go to play out. Like, do you actually have to make the whole car yourself? Could you make kits to put into cars that lots of people are trying to do? You know, can you just be a pure software platform?

• 39:28Speaker 01

  Yeah, my, I, I think, if I'm the car companies right now, and realizing that there's gonna be this driverless future, I think you have to make the bet that people aren't gonna wanna buy your cars en masse, but people might wanna subscribe to your fleet.

• 39:43David Rosenthal?

  Yeah.

• 39:43Speaker 01

  And it would be like a Mercedes-based Uber, like a self-driving Mercedes-based Uber. And the question is, like, you know, would people rather subscribe to a individual auto manufacturer's fleet, or the things you can do for lock-in there? Or would people rather subscribe to a more generic fleet, Google or Uber?

• 39:58David Rosenthal?

  You know, in terms of, you know, thinking about themes we've talked about on this show a lot, you know, in terms of-

• 40:05David Rosenthal?

  Ben Thompson's aggregation theory and owning the customer and the user experience, you know, his ways, his Google Maps, is that the user experience for driving now? And like then the cars at the back end? I don't know. Maybe we should also spend a minute. I think it would be, because this is just pure speculation, as will this next topic. But what if Facebook had bought these guys? Like, what does the world look like now? Facebook has basically no play in transportation.

• 40:32Speaker 01

  Yeah. Did you see, uh, this isn't quite transportation, but Facebook's doing some like crazy cool drone

• 40:39David Rosenthal?

  Oh, yeah. Super cool.

• 40:40Speaker 01

  So Facebook's, you know, Facebook's core competency is delivering ads to people and they they've basically run out of people with internet. So to expand past 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.

• 40:57David Rosenthal?

  Yeah, it was a company, uh, I believe it was a company they acquired.

• 41:00Speaker 01

  Yeah. But they created this like gigantic drone that can is super lightweight and has like can beam internet down and can fly for like a month at a time. And so it's like, it's interesting, like while they're not in the transportation space, they are in sort of the large-scale manufacturing space for completely different reasons.

• 41:19David Rosenthal?

  Yeah, super cool. This thing is awesome. Like, it is a giant drone that can stay in the air for, um, for, uh, you know, months at a time and beam internet down and probably do satellite imagery applications as well. Super cool.

• 41:37Speaker 01

  Yeah, it's, it 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 billboard space. And that's what Instagram is, that, I don't know if that's what WhatsApp is, that eventually is what Oculus is, right? They create these experiences and Facebook extends their core competency of, of, you know, being an advertising, advertising company into that. I think it's wildly speculative, but basically like, you know, Waze fits into that category of, of digital social billboard space where stuff comes up that is relevant to you or

• 42:19Speaker 01

  people want to show to you or your friends recommend. I think it makes sense in that context and it just doesn't get used for the autonomous car stuff at all.

• 42:29David Rosenthal?

  Yep.

• 42:31Speaker 01

  It is interesting, like to this point until about two minutes ago, we started, we've been talking about Waze in the context of the world when it was acquired. And it is interesting now to start thinking about it in the context of the world several years from now, that's much more focused on requiring a super high fidelity data asset for autonomous vehicles.

• 42:52David Rosenthal?

  Yep, yep. Which is like, you know, clearly, Google, they'd already announced that they were working on self-driving cars as part of Google X at that point, when they acquired Waze. But very few other people were thinking about this at that point in time. You know, how much did that play into this acquisition or not at the time? You know, hard to say, but 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 might have bought it, but what if Tesla had bought, you know?

• 43:26Speaker 01

  Right, right, right.

• 43:27David Rosenthal?

  Or what if Apple had bought Waze as they were trying to? And Apple is now, as you know, widely reported, working on self-driving cars.

• 43:34Speaker 01

  Yeah, did you just see they, they put Bob Mansfield in front of that?

• 43:37David Rosenthal?

  I saw that.

• 43:37Speaker 01

  In charge of it? Bob Mansfield is like their, I think he's a senior VP of hardware and then like didn't agree with management or something when Scott Forstall was still there and then moved to like head of special projects and seemed like he was like half retiring, but now he's like really back in full, full force with Project Titan or the Apple, I think that's a code name for the Apple self-driving car thing.

• 43:59David Rosenthal?

  Yep.

• 44:00Speaker 01

  All right, listeners, now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 44:13David Rosenthal?

  Yep, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 44:30Speaker 01

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 44:45David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 45:09Ben Gilbert?

  And they recently launched Legora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 45:27David Rosenthal?

  And Legora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Legora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 45:58Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at legora.com/acquired and just tell them that Ben and David sent you.

• 46:23David Rosenthal?

  All right. Should we move on to tech themes?

• 46:24Ben Gilbert?

  Yeah, not that, not that we haven't been in there for the last couple of minutes.

• 46:28David Rosenthal?

  Well, I've got, so I've got two here, actually, and 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 the, the value of a, of a data asset and, and, but specifically the, the bent I wanted to talk about it is like, It's when you have the potential for a very valuable data asset, you can use that as like a way to upend the business model in,

• 47:00David Rosenthal?

  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 know, cost 50 to a hundred dollars.

• 47:08Speaker 01

  Yeah.

• 47:08David Rosenthal?

  You know, but ways can just give it away for free because they're going to get their value out of getting the data.

• 47:12Speaker 01

  Right. And they don't have to pay to acquire it.

• 47:15David Rosenthal?

  And then, yeah, right. And they don't have to, they don't have to pay. And I think we've seen this in, in various ways in, in other acquisitions, both that we've covered on the show and ones that we haven't yet. Like I'm thinking about Instagram, right? Like Instagram was a social network, right? But there was also this app called Hipstomatic that was out before Instagram. That was basically just the same thing, but it costs three bucks. And it gave you a cool photo filter for your photos. And Instagram came out and made it free and like lots of people, I'm sure, tried Instagram because they're like, oh, cool. I wanted to use Hipstomatic, but I didn't want to pay three bucks, you know? And, you know, same with LinkedIn, like if you wanted access to people's resumes, you had to, you know, pay recruiters and like go through databases.

• 47:58David Rosenthal?

  And what on LinkedIn was like, resumes are free, you know? Skype did the same thing with phone calls. WhatsApp did the same thing with text messages. So I think it's a.

• 48:07Speaker 01

  That's a really interesting way of looking at that, that I hadn't really thought of before. It's like all of these companies found a way to make something free that was previously expensive and then could upend that business model.

• 48:20David Rosenthal?

  And I think a lot of the initial users that came onto these platforms were probably just like cheapos who were like, oh yeah, I want, I was thinking about using Hipstomatic, but I really don't want to pay three bucks, you know?

• 48:32Speaker 01

  Yeah. Which is like everyone, right?

• 48:35David Rosenthal?

  Right.

• 48:35Speaker 01

  Like as much, I do that, you do that.

• 48:38David Rosenthal?

  Like we. Exactly. Like we're all cheapos in various ways. And, um, but that's the thing about like how you can get these winner take all markets and what you need to tip the market in your favor is you need to, like, I love the, the Jeff Bezos quote at the code conference, which was, um, this year, which was one of our carve outs a while, a while back. You know, he said, he has, has this thing, he says, um, I think it was either Cara or Walt was asking him about, uh, prime and he's like. I want it, I want it Amazon Prime to get to the point where it would be irresponsible not to be a Prime member because you're getting so much value out of it. And like, that's what, that's what this is here is like, it would be irresponsible to pay for Hipstomatic because you get more value out of Instagram and it's free.

• 49:24Speaker 01

  Right. Which especially with networks, network effects, of course you get more value out of it. Everyone's using it because it's free.

• 49:30David Rosenthal?

  Exactly. Network effects, they're a beautiful thing.

• 49:33Speaker 01

  Yeah. All right. I'll, I'm gonna do my two now. That was just one of yours, right? You have another one coming?

• 49:40David Rosenthal?

  Uh, yeah, but it's, it's fast. So.

• 49:42Speaker 01

  All right, cool. I'm gonna do both my now because they're related. One is bringing measurable online advertising into the real world. Google and Facebook both have ad units around this now of 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 really get some good measurement around the holistic view of, of you in the real world and you, you online. And, you know, Waze totally does this. You see a digital ad, you tap on it, you navigate to go there. And like, there's, people don't even think twice about the privacy because like, the main purpose of Waze is knowing

• 50:26Speaker 01

  where you are. So you hand that data right over, you say, I want to go to this place, you navigate there, they might've paid for that ad and then, or it might be a place that you're kind of organically trying to go to. And then Waze knows that you for sure went there, which makes it a pretty valuable ad unit and kind of ahead of their time. I think people were 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.

• 50:50David Rosenthal?

  Yep. Did I actually go there?

• 50:52Speaker 01

  Yep. Yeah. And then this kind of falls out of, uh, my, my second piece, which is, or my, my second tech theme, which is banner ads totally failed on mobile. Like, display ads were a thing on, on websites and people tried to put banner ads on mobile, but there's such a little screen real estate that even the display ad people on mobile have mostly fallen back to just putting a big freaking desktop square in the middle of articles.

• 51:15David Rosenthal?

  Remember when, uh, this would be a fun episode to do at some point, but when, Google bought AdMob and Apple bought Quattro Wireless. So like, everybody thought like, mobile display was gonna be such a thing.

• 51:29Speaker 01

  Yeah, I mean, there's like, there's that slide every single year in Mary Meeker's deck that says that the, uh, the mobile ad opportunity is still huge because the amount of minutes spent on mobile versus on desktop way outpaces the actual ad spend on mobile versus desktop. And that's because, like, uh, this is, this is my, my tech theme. We're just now seeing the emergence of effective native advertising on mobile. And as it turns out, it's not a banner ad, it's not a square, it's not an interstitial, it's none of those things.

• 51:59David Rosenthal?

  Instagram, Snapchat.

• 52:01Speaker 01

  Yeah, and it's Pokemon, right? Like, it's, it's figuring out what the very specific tailored experience someone is in when they're, they're immersed in this, you know, single full-screen application. And like, in the Pokemon case, it's, my God, they're so obsessed with finding, that we're so obsessed with finding the Pokestop or 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 my opinion, the way that mobile advertising succeeds, is that it's native, it's very specific to the platform, and it took us frickin' 10 years of mobile to figure out what the right way to advertise to people on that platform is.

• 52:41David Rosenthal?

  It's such a classic case of like, uh, you know, the mobile display ads being like the head fake that, you know, it was a faster horse, right? Like, it just wasn't, you know, it was the totally wrong way to think about it. And we see this over and over again in technology that like, um, and we especially see it like being in, in, you know, the startup world, like, so many times people recognize an opportunity coming in a wave, but their mode of thinking is stuck in the old world, right? And like, You know, it's the faster horse thing like, you know, it's like, you know, you need to build the car, you know, and like Right. Pokemon Go is the car, Snapchat is the car, Instagram is the car, AdMob was the horse, you know?

• 53:26David Rosenthal?

  Yeah, it's a $750 million horse, but Hey, you know, good for, good for them and Omar, I believe the CEO is at Sequoia now. So Hey! Yeah, he's doing great. Everybody, it worked out for everybody. I'm gonna 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 we'll put in the show notes from Noam Bar Dan, who was the CEO of Waze and still is from 2009 onward. And the theme is that entrepreneurship is a global thing now and like Silicon Valley is this incredibly special place and has its own network effect and

• 54:11David Rosenthal?

  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 Noam puts this great in his blog post, he writes about how Waze was an Israeli company and the importance of that. He says, "Growing up in Israel in the 80s and 90s, I lived in a radically different world than my American cousins. We had one channel of black and white TV. Music and movies arrived 10 years later. There was no fast food or American brands and we lived very differently." And then he talks about how cable television started flattening the consumer experience when that came out in the 90s and early 2000s. But then he says, "Then the internet accelerated this change as people globally used Windows

• 54:56David Rosenthal?

  PCs and explorers to surf websites. Social and platforms have pounded at it again. And today, most of the users have the same Facebook account or Gmail interface and use it very similarly. The final flattening of innovation in the world came from mobile. Anywhere you go in Israel today, you will see iPhones and Android phones, the same as in San Francisco, running the same consumer apps and delivering equal joy. On a family vacation with Waze management, it was amazing watching our kids, both Israeli and American, naturally communicate and share apps without the need to speak the same language." Like, this is like a sea change that's happening in innovation. And we're seeing it with stuff like apps like Musically now that are getting big, like it's based in Shenzhen, but like, it's a big social network in America.

• 55:41Speaker 01

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

• 55:51David Rosenthal?

  Absolutely, but I think the nuance here, though, is like something like Musically, something like Waze, like it's in both places, like Musically is in Shenzen and it's in Silicon Valley, Waze was in Palo Alto and in Israel.

• 56:04Speaker 01

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

• 56:13David Rosenthal?

  Yep, absolutely. Well, we talked about this with Scott, right? Like the importance with in the Exact Target episode, it was so important to Scott and to Indianapolis that they get the direct flight to San Francisco.

• 56:24Speaker 01

  Yeah, that's a great point.

• 56:28David Rosenthal?

  Okay.

• 56:28Speaker 01

  Grading it?

• 56:29David Rosenthal?

  Let's grade it.

• 56:32Speaker 01

  So it's interesting, there's probably, there's like two criteria to think through here. There's, we're three years out from this acquisition, so we have a little bit of perspective. We can see what they've done with it so far. But then you also have to take into account the speculative view looking forward, which is a lot around autonomous 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 Waze is. I predict it is nowhere near close to paying back the the purchase. Like this as a product.

• 57:06David Rosenthal?

  I would be shocked.

• 57:07Speaker 01

  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 Waze all the time. Many, like Uber drivers are, you know, using it and preferring it to Google Maps. It's in in developing countries, it's used way more often because the crowdsourced data is way more accurate. So as those countries really start to come online, I mean, their default experience is Waze. It would be not great for Google if that was out of their hands. And I think that that combined with with Google's autonomous vehicle future and the the great data that it develops, that it creates for itself, for its use in its own app, and that feeds into Google Maps,

• 57:51Speaker 01

  you know, I'm going to go A minus, only because these, the As that we've given out are just like wildly successful on a ridiculously fast scale.

• 57:58David Rosenthal?

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

• 58:11Speaker 01

  Yep, yep, yep, yep.

• 58:14David Rosenthal?

  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 ways story, I feel like, was really the closing chapter of the mobile platform wars, quote unquote. 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, you know, Google's being very open in saying this, you know, about themselves, but we went from a world, call it 10 years ago, where companies were, you know, internet first companies, we weren't software companies, we were internet companies, to, you know, from 10 to five years ago,

• 58:57David Rosenthal?

  the world shifted to mobile first companies, companies aren't, you know, aren't just internet, like, they're mobile and they're not just building desktop websites. But now, like, we're shifting to a machine learning based, you know, companies are ML first, like, Google is very explicit. We are an ML first company now, and you see that across all of our products with Google Brain, with Maps, with TensorFlow. And the first, I think, like, huge native ML application that industry that's going to happen is going to be probably autonomous vehicles. So.

• 59:31Speaker 01

  Yeah, it already is.

• 59:33David Rosenthal?

  Well, yeah, it already is. I mean, Tesla's doing it. Like, it was like, you know, this was the Trojan horse. So how important ways 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, for the defensive reasons we talked about and for the value that they've realized even so far along that. Yeah, I mean, I think it's an A minus because, like you said, the bars, our bar is, is very high for the As.

• 1:00:06Speaker 01

  Yeah, it's like, it's, it's an A minus with low confidence that it's going to stay there, right? Like, it either is going to be an A or it's going to not be an A minus.

• 1:00:15David Rosenthal?

  Yeah, right.

• 1:00:17David Rosenthal?

  Yeah, it's interesting. Compare that to Cruise, which GM bought for a billion dollars, like right around the same amount of money. You know, arguably, there's a lot more value in ways thus far that Google has realized than, you know, Cruise is still very much pre-product. So we'll see. That's a part of why I say, though, is that like, it's just, it's too early to tell.

• 1:00:42Speaker 01

  Yeah.

• 1:00:44David Rosenthal?

  Okay, let's bring this one on home. So, follow-ups, we got nothing for you this week, but maybe next time. Maybe we'll talk about autonomous vehicles. Carvout, what you got, Ben?

• 1:00:59Speaker 01

  All right, so I've got a podcast for us this week. I've been, I listened to one episode of this because I got, I got totally roped in, actually a while ago, to a podcast called Song Exploder by their first episode, which, which featured the postal service. And what, what the host does, Rishi K. Sherway, he sits down with an artist, a musical artist, does an interview, and also gets them to provide the actual track, 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

• 1:01:44Speaker 01

  did you collaborate with? And a lot of the times, they even come with early recordings and demos and songs that inspired that song. And he does a really great job of kind of isolating these individual pieces. So you go, oh, whoa, I can totally see that. And one of my favorite bands is Odeza. I saw them this weekend in Seattle at Capitol Hill Block Party. Their episode is, is super, super cool. They talk about, you know, when they went over to Bainbridge Island to compose this song, and that's super cool. But the best episode, in my opinion, and it's sort of dangerous to start with this one because it sets the bar high, is an interview with Weezer, where the systematic approach to songwriting by this dude-

• 1:02:27Speaker 01

  Dude is absolutely amazing and he has like spreadsheets full of lyrics that come out of his journaling that he highlights that he then puts in there and tags by the number of syllables and the onbeat and the offbeat and then combining all these different ones after he writes a riff. It is like, I'm not doing it justice. You gotta listen to this. It's the Weezer episode of Song Exploder. It's so good.

• 1:02:52David Rosenthal?

  Dude, that's awesome. I've, I've heard about this podcast but, and been meaning to check it out, but I really need to know. That sounds really cool. It's like they're doing two songs, what we do to M and A deals.

• 1:03:04Speaker 01

  They are. And the production is so, so high quality. It's like a total treat to listen to each one. And it's gotten me into bands I didn't like before and it's gotten me into songs where now when I hear some of these songs, after I hear it get exploded for 20 minutes before, it's like that song that comes on, that's like one of my favorite songs if it was, if it was an episode.

• 1:03:24David Rosenthal?

  That's awesome. So my carve out for the week is an oldie but goodie that was sent to me recently by a really good friend. And I'm so glad he sent it to me because I'd watched, it's a TED Talk and it's Simon Sinek's Start With Why TED Talk. It's one of the, one of the top 10 TED Talks and interestingly, it's a TEDx Talk done at TEDx Puget Sound here in, I believe it was in Seattle in 2009. And it's just such a cool concept and it's, it's called Start With Why and then he ended up writing a book about this. But in the

• 1:04:08David Rosenthal?

  sort of more raw version of the TED Talk, he talks about it as the golden circle and it's, you know, there are three levels of communication about a company or a product or a person or a firm. There's the what you do, there's the how you do it, and there's the why you do it. And 99% of companies or firms or products or people say, Hi, I'm David. I'm a venture capitalist at Madrona Venture Group in Seattle, Washington, and we do seed in Series A deals, invest in seed in Series A-stage technology companies, largely in the Pacific Northwest, and would love to talk to great companies, right?

• 1:04:52David Rosenthal?

  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 that is, has a much higher chance of success, you need to start, you need to reverse the order and start with why. Say, "I'm David Rosenthal. I 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."

• 1:05:25Speaker 01

  Yeah, that was a lot more.

• 1:05:26David Rosenthal?

  "Do you want my money?" Right? Like, you know, then that, like, it just comes across, like, you're, you're just by reversing about, like, talk about why you're doing, you're doing something and what you believe in. It's going to be so much more powerful than starting with the what. And interestingly, Apple is the, is the company that he uses as the canonical example here. We think differently at Apple. We design beautiful, we have beautiful intelligently-designed products, and those products happen to be phones and computers, not, "We make computers."

• 1:06:02Speaker 01

  And cars.

• 1:06:03David Rosenthal?

  And cars, yeah. "Not, 'We make computers and phones. We design them beautifully, and we believe in thinking differently.'"

• 1:06:09Speaker 01

  Yeah. Yeah, that wouldn't fit on the poster.

• 1:06:12David Rosenthal?

  It would not. All right, listeners, now is a great time to talk about one of our favorite companies, Statsig.

• 1:06:20Ben Gilbert?

  Yes. There is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 1:06:31David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly.

• 1:06:42David Rosenthal?

  The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 1:06:51Speaker 01

  This is where StatsSig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 1:07:04David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 1:07:15Speaker 01

  All right. If you aren't subscribed on iTunes and you want to hear more, you can subscribe from your favorite podcast client. And if you feel so inclined, we would love a review on iTunes or tell your friends. Share us on Twitter and we'll see you next time.

• 1:07:28David Rosenthal?

  We'll see you next time.