Google (GOOG) is buying the Israeli maps startup Waze for $1.3 billion. This should be a massive wakeup call to everyone regarding just how important maps are to the future of everything, from politics, to social, commerce, and communication.
I had breakfast with a friend last week who is a senior sell side tech analyst. We talked a lot about how large tech companies need to be picking off young startups before they are either too expensive and have begun to monetize or they become a serious threat to their incumbents or the whole ecosystem for that matter. But he gets to see how these things really go down in the boardroom, and it's not pretty and straight forward. Spending a billion dollars on a company making next to no revenue because you believe it's a major threat or a major opportunity is not an easy sell to your board as a CEO. After the disaster that was the aftermath of the Facebook (FB) IPO for those shareholders, it's amazing that Zuckerberg was able to push through the Instagram acquisition in the free fall. I guess Waze was the bridge too far.
Where would Facebook be today without having bought Instagram, which is basically all of Facbeook's growth at this point given that my whole Facebook feed is pictures. Facebook's own picture app failed miserably.
Like never before, mature tech companies, and frankly even non mature tech companies with large valuations, need to be buying young startups, because they are serious threats.
Apple (AAPL) took its own shot at maps, and we all know how that turned out. Apple now has a serious inferiority complex when it comes to building software, save for its great OS.
Google is wiping the floor with everyone when it comes to building and integrating new software acquisitions. The company has 'run the table', as Fred Wilson says, on everyone else. I basically live on Google software, all day, every day. I live on Apple hardware. That's not the way Jobs pictured it, is it.
Google has long recognized the importance of maps. Just for a second, sit back and realize how important Google Maps is to the world, and the fact that it is free, completely 100% free. I can't even get around my own city without Google Maps let alone the back roads of Barbados last winter.
There was recently a great podcast about how important Google Maps has become to politics. Maps used to be controlled by the state, and that role played heavily into drawing borders and resolving international disputes. Now the state basically has to go to Google and lobby it for a change. Screw the UN, Google is now the arbiter of who owns what land. Listen to the podcast below.
But the most important part of that podcast is where they talk about the fact that Google has a community layer.
Google has a history of using what we call 'lean' principals to build things. The company builds a lot of things, it takes a lot of chances, and when things fail, it just shuts em down. This happens all the time. A lot of the hugely important features and products that Google owns started as experiments. Google Plus certainly was. Up until now Google's community layer on top of its maps, as well as its social tracking layer, have been experiments.
The acquisition of Waze is a loud proclamation that this is a serious endeavor for Google. It also signals the company's desire to keep this whole realm out of the hands of Facebook, Apple, Amazon (AMZN), or whoever else might want to give it a go.
It signals that Google believes people are willing to volunteer their real time location and other associated meta data to a social network in order to create a smart layer of data accessible by everyone. FourSquare is child's play compared to what Google is about to do. FourSquare is dead.
Privacy as well, is dead. In order to build these collaborative location based systems, people will provide a deep level of access to their personal information. And our government is beginning to think that it is a corporation which can behave like Google, something which is extremely dangerous. Just because I'm willing to give my information over to a system Google runs does not mean that I'm willing to give it over to my government. Unfortunately it seems these two things have become one and the same. The 4th amendment is dead.
Waze represents an extremely important idea, that people are willing to selflessly give their information, or opinions, to an open system, without any direct compensation in return. This is the ethos of Wikipedia, of Quora, of StackOverflow, of Hacker News. There is no quid pro quo in this world, and there are a lot of free riders. There is no zero sum game either.
The very first question anyone asks me about Estimize is, what incentive do analysts have to contribute, isn't their data important? Yes, it is important, but they contribute because it builds a better data set for them and everyone else. The fact that at least 80% of people in any system will free ride does not mitigate the value that you receive. The financial world is still coming to grips with this new philosophy of social data and collaboration. When people find value in a system, a portion of them will give back to that system. Waze is a perfect example of this, and these systems are EXTREMELY powerful. Collective intelligence using the crowd is an innovation not many respect the power of right now.
And remember, you can't do mobile real time commerce without maps. The map underpins it all.
Remember when Google bought a nascent and cash hemorrhaging YouTube for $1.6B? That looks like the deal of the century right now.
This acquisition by Google and what it signals should not be taken lightly. Don't sleep on this.
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