Digital banking – Waze: Letting community drive the business

Co-founder Ehud Shabtai was living in Israel and received a GPS for his car as a gift, but found that without real-time information, it was useless.

And so began the online and mobile development of open maps that allowed people to create maps based on their driving histories, add in roadblocks, accident information, traffic jams, police alerts and road hazards, and also report on petrol prices to alert drivers to the cheapest vendors.

Six years later, 90% of drivers in Israel use Waze, and it is used in nearly 200 countries. Last year, Google bought the firm for more than $1 billion.

Whether it does reduce every journey by five minutes isn’t known, but users say they feel less frustrated knowing they have information at hand all the time to help them make decisions. Apple CEO Tim Cook even recommended Waze over the iPhone maps application.

Waze essentially relies on community for its data. It is open sourcing at real time and the feel-good factor that comes with submitting information and helping your fellow driver is the key ingredient.

“The structure of a lot of businesses is to build the model and then add in the community later via Facebook or Twitter, but we’ve built the community in at the ground floor,” says Julie Mossler, spokesperson for Waze in New York.

In addition to the social component of drivers adding data en route, Waze has 200,000 map editors – all unpaid volunteers.

Says Mossler: “Waze.com hosts our open maps that anyone can edit. The map-editor community is self-organizing, much like Wikipedia, and has various hierarchies of editors based on quality and volume of information submitted.

“People like to edit the Waze map as a hobby. There are groups of mappers that meet up for social events. The feedback we have is that they find it rewarding to improve maps in their local area or in developing regions where a current map is a luxury – such as Ecuador.”

She adds: “Right now, there are even several contributing senior map editors who have perfected their own countries’ maps and have spearheaded a project to expand Waze’s services to Africa.”

Gathering data

What Waze is also doing, while its community is feeding in information, is gathering data. It is pinging your GPS chip once a second, measuring your speed and the routes you are travelling.

Users can store important addresses, such as their work or home, and that means Waze, is a hit with advertisers, from McDonalds to Mercedes dealerships, which are its only revenue source.

“If we know you’re headed to work, then a Starbucks discount is more relevant to you than information about the nearest offers at the mall,” says Mossler.

That data also provides what is regarded as the juice of the firm. It gives departments of transport (DoT) in metropolitan areas information they could never hope to collect themselves from road sensors alone – and Waze provides it for free.

“We work with Florida’s DoT, for example, which already does a good job of collecting data from sensors and their existing infrastructure, but we can add all of our driver data and analyze it for them and present it in a more digestible way,” says Mossler.

“We don’t want to be motivated by profit margin, so we built an ad platform to free us to pursue these DoT partnerships more in the vein of social good.”

It means cities can see where there are regular congestion zones, where most accidents occur and when, and what times of day traffic is worst. In this way, cities can bring in policies to stagger school hours to ease road traffic, or install traffic lights or a roundabout or build new roads.

“Every city is different,” says Mossler. “In Jakarta, for example, the traffic starts light in the morning and then increases throughout the day, peaking at night. In many Brazilian cities, however, there are peak traffic times such as around 9am and then again at 6pm. With this knowledge, cities can rethink their infrastructure and policy to ease flow.”

There seems to be a shift occurring with innovation and disruption that puts revenue generation as second to providing a useful service.

“When you look around the various industries and look at the firms having a huge impact, they are leading with community first, providing social good, and then working out what they can do to generate fair and transparent returns,” says Mossler.

“Advertising isn’t the only way for mobile companies to generate revenues, but for Waze it was the best option to allow us to build a business model and still invest in wider projects that serve our local communities.”

She concludes: “Letting community be the driver of your business seems to be the emerging force behind disruption across industries right now.” 

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