Waze is a navigation app that allows users to update their fellow drivers about any interruptions or road changes they face.
Waze makes money via advertising, service fees from its carpooling product, Bluetooth beacon installations, referral fees, as well as by selling access to aggregated data.
Founded in 2007, Waze has grown to become one of the world’s most prominent navigation systems. The app was acquired by Google in 2013 for $1.15 billion.
What Is Waze?
Waze is a community-driven navigation application that provides users with the best possible and fastest route information.
Where Waze differentiates itself from the pack, which includes Google Maps or MapQuest, is through the information that users share on an ongoing basis.
The 140+ million users (called Wazers) can alert their fellow drivers by adding any ongoing disruptions, such as constructions, traffic jams, accidents, or police controls. Waze will then automatically update surrounding drivers and may, in some instances, adjust the route.
Users can, furthermore, customize the app according to their own preferences. For instance, they can choose between 2D and 3D maps and pick from a variety of different voices in almost all available languages.
The app also has implemented integrations with different third-party applications, such as Audible, Spotify, or YouTube Music. Even delivery drivers for platforms like DoorDash or Uber can seamlessly switch between the different apps due to Waze’s Transport SDK.
Waze, apart from its users, also works together with over 3,000 cities and municipalities that add additional data points, such as planned infrastructure changes, to the app. Lastly, the app also notifies users in case any major crisis, such as hurricanes or floods, breaks out.
On top of the navigation aspect, Waze also promotes shared rides via its Carpool product. Carpool is aimed at other businesses, allowing their employees to drive to work together while connecting with each other.
Waze is available on all Android and iOS devices. Additionally, the app also introduced support for Android Auto as well as Apple’s CarPlay.
How Waze Started: Company History
Waze, headquartered in San Francisco, California, was founded in 2007 by Israeli entrepreneurs Amir Shinar, Ehud Shabtai, and Uri Levine.
The idea for Waze occurred to Shabtai, a computer science graduate of Tel Aviv University, in 2006 when he faced problems using a navigation system a friend of his gifted him.
The maps would often lead him to roads that were simply out of date, ultimately leading to severe delays. Being a tinkerer at heart, he set out to build a better mapping system for the people of Israel.
Months later, he launched an app called FreeMap Israel, which encouraged users to upload information about speed cameras and other interruptions.
Unfortunately, there was one problem: the actual maps he used to build the first version of the app were owned by Mapa Ltd., which soon filed a copyright claim against the first-time founder.
In a surprising turn of events, Mapa soon after also offered Shabtai to purchase the app. However, he was already off to bigger and better things.
As a result of the copyright suit, Shabtai simply removed all traces from Mapa’s IP. Instead, he teamed up with Shinar and Levine to form another company.
Having the validation of his previous endeavor allowed the team to quickly raise an initial round of funding in March 2008, netting them a whopping $12 million. Within a matter of months, the team completely redesigned the previous app. In late 2008, they finally unveiled Waze to Israeli Android users.
Despite Android’s smaller market share, Waze soon began to take off in Israel. By May 2009, the app already counted over 80,000 users. To professionalize the company and help it to expand internationally, the founding team decided to hire a more experienced CEO.
That same month, Noam Bardin, who had previously taken Deltathree public as CEO and just failed his second startup (called Intercast Networks), was chosen as Waze’s new chief executive.
Over the coming months, Bardin attended a variety of web conferences to stir up hype for the app’s upcoming launch in the United States. Around August and September 2009, Waze was finally launched in the States while introducing alternate versions for iOS as well as BlackBerry.
Given that the app heavily relies on crowdsourced information in order to be useful, it became almost necessary to get it out to as many operating systems as possible. At the time, the iPhone had just been introduced while other providers like BlackBerry, Nokia, and even Windows were all fighting for market share.
By January 2010, Waze had amassed more than 500,000 users. One interesting growth hack the company used was to develop a Pacman-like game within the app, which rewarded the highest-scoring users with a $500 Amazon gift card – and further aided the expansion of its maps.
Over the course of the year, the company continued to double down on its social features, for instance by launching a Twitter integration (to notify drivers about any roadblocks, for instance) or the ability to form and join groups (which the company would double down on years down the road).
By the end of 2010, Waze had already 2.2 million users, a more than fourfold increase from the beginning of the year. As a result, it was able to raise a second round of funding, netting them $25 million.
In 2011, the company first and foremost focused on international expansion. In June, for example, it expanded into the United Kingdom by partnering up with Denver-based Intermap (which provided the base map).
The growth and the company’s tremendous hype were awarded by another round of funding. In October, Kleiner Perkins and others poured an additional $30 million into Waze. The company had previously just passed the 7-million-user milestone.
Another growth channel for the app became its various partnerships. In December 2011, Waze announced that it would work together with 12 American broadcast stations (such as KABC Los Angeles), which would use the firm’s data to inform their listeners about any ongoing interruptions.
As these things go, growth exponentially increased from that point onwards. In 2012 alone, Waze was able to triple its user count from 10 million in January to over 30 million by December. However, one growth accelerant came even as a major surprise to the founding team itself.
At the beginning of 2012, rumors began emerging that Apple was planning on launching its own map product within iOS. Unfortunately, the launch probably went down as one of the worst in the company’s illustrious history.
The app, which launched in September, had troubled users with tons of bugs while often being highly inaccurate. This even prompted the newly appointed CEO Tim Cook to issue a public apology in which he nudged customers to use competing services such as Waze. The public shoutout netted the company millions of additional users.
Towards the end of that year, Waze also began to finally make its foray into monetizing its platform. In December, it introduced location-guided ads, which would promote nearby products and services from local business owners or big brands.
At the turn of the new year, with Waze now having a path to profitability as well as counting over 40 million users, rumors began emerging about the company potentially being acquired. One of the strongest suitors became Apple, which needed to up its mapping game after the previous rollout fiasco. Soon after, the likes of Facebook and Samsung also entered the bidding war.
However, all of them were eventually outbid by Google, which purchased Waze for an alleged $1.3 billion (the founders later said the purchasing price was around $1.15 billion) in June 2013. After a probe by both the Federal Trade Commission and the UK’s Office of Fair Trading, the deal finally went through in October of the same year. The regulators’ main concern was that Google’s own dominant Map product would render any competition in the market worthless.
In the meantime, Google was already busy integrating the two products with each other. In August, for instance, Google became the default search engine within Waze. Later on, Waze also became a default install on any new Android phone.
Towards the end of 2013, the app also launched another temporary feature that would prove to be extremely popular over the years to come. Waze partnered up with comedian Kevin Hart who’d borrow his voice for the app’s navigation. Over the years, (fictional) characters like Arnold Schwarzenegger, Top Gear hosts Jeremy Clarkson, Morgan Freeman, and even Batman became voice options on the app.
Throughout 2014, Waze continued to add more features and products to its platform. The most prominent one became a data exchange program in which it would partner with local governments and municipalities across the world to grant them anonymized traffic data. In return, Waze would receive information on public projects, construction plans, and other pre-planned initiatives.
Unfortunately, not every government body was happy with the app’s ascend. In January 2015, the Los Angeles police issued a statement that it wanted the app to be taken down. According to the statement, the app was being used to pinpoint the location of police officers and thus circumvent law enforcement.
A month prior, 28-year-old Ismaaiyl Brinsley killed two police officers in New York whose whereabouts he allegedly sourced from Waze. Hundreds of cops in Miami then retaliated by downloading the app and falsely reporting their own locations.
While Waze did not back down and turn off the police reporting feature, the two parties did eventually find a middle ground. In April, Waze announced a partnership with the NYPD which would share kidnapping and hit-and-run data with Waze users. The police, in turn, would receive a variety of other data points.
Unfortunately, the bad news did not end there. In September, mapping competitor PhantomAlert filed a lawsuit against Google and Waze, claiming that it stole proprietary mapping information from the company.
2016 continued to be somewhat of a rollercoaster for the company. In January, it unveiled its now widely-adopted Transport SDK, which allows ride-hailing businesses to utilize Waze data as well as enable their drivers to switch seamlessly between both apps. Waze initially partnered with Lyft but now counts delivery juggernauts like Grab, Didi, Instacart, or Uber as customers.
Then, in March, the app made headlines after its navigation system sent Israeli soldiers into the Kalandia Palestinian refugee camp, which resulted in a fire exchange breaking out. One Palestinian soldier ended up dying while 10 were seriously injured.
A month later, security researchers from UC Santa Barbara discovered a backdoor that would allow users to spy on each other. The exploit essentially allowed strangers to track any user’s movement through the app. Luckily, Waze ended up fixing the vulnerability within 24 hours.
To make matters even worse, more and more homeowners began to publicly speak out against Waze. In essence, its navigation system was redirecting drivers into lesser frequented neighborhoods, which led to an increase in noise while negatively affecting safety.
At the same time, Waze also continued to expand the use cases of its platform. In May, it began to test a new carpooling service in California’s Bay Area. The service, which has now expanded across the United States, allows people from certain firms to organize rides to work together.
It also launched another product named Bluetooth Beacons in September of the same year. Waze would partner together with governments and tunnel operators to install Bluetooth beacons, which would then automatically connect to the user’s phone during the tunnel ride. This ensured that users could maintain a connection while driving through (particularly lengthy) tunnels.
Throughout the coming few years, Waze simply continued to expand its features as well as adding on new products. For instance, the company launched integrations with other music streaming providers like Spotify while expanding its app to Android Auto as well as Apple’s CarPlay.
However, towards the end of 2017, both Shabtai and Shinar left the company after serving as Waze’s CTO and Head of R&D post-acquisition, respectively. Levine had already departed from Waze soon after it was acquired in 2013 and went on to invest in a variety of startups.
After three years without much news, Waze vis-a-vis Google entered the news cycle with more negative news again. In February 2020, the FTC began to re-investigate acquisitions made by the BigTech firms over the past 10 years – Waze being one of them.
A month later, though, the company would likely face its biggest headwind to date. The coronavirus pandemic, which led to a global transportation shutdown, decreases the miles driven on the platform by over 70 percent.
As a result, the company had to lay off 5 percent of its workforce, equal to about 30 employees. It also closed its sales offices in Asia-Pacific, namely Indonesia, Malaysia, Singapore, and the Philippines.
To cap the poor year off, long-time CEO Noam Bardin announced in December that he would be leaving Waze after close to 12 years of leading it. He was replaced by Neha Parikh, a former President of Hotwire (which is part of the Expedia Group) as well as a board member at Carvana and Tailwind Acquisition.
Today, Waze counts over 140 million users, is available in 185 countries and employs more than 500 people across multiple offices.
How Does Waze Make Money?
Waze makes money via advertising, service fees from its carpooling product, Bluetooth beacon installations, referral fees, as well as by selling access to aggregated data.
Let’s take a closer look at each of these revenue streams in the section below.
The bulk of the revenue that Waze generates comes from allowing brands to advertise on its platform.
Ads on Waze are displayed in four different formats:
- Pin Ad: a pin informs a customer that a brand’s store is on their route
- Search Ad: whenever a user searches for something (e.g., fuel station), the ad will appear on top of the search result
- Takeover Ad: a digital billboard, which is displayed when the car is at a complete stop to prompt awareness and action
- Arrow Ads: indicates that a business is nearby and prompts customers to visit that store (based on past search behavior, amongst others)
Waze gets compensated on a cost-per-impression (CPI) basis. That means whenever a user sees an advertisement, a fixed fee is being deducted from the brand’s budget.
If a business spends $3,000 per month on Waze ads, it can expect a reach of around 1.5 million impressions. Therefore, one impression costs around $0.002.
Waze works together with a variety of brands, including large corporations like Shell as well as small mom-and-pop stores.
Waze, via a separate app called Carpool, provides users with the option to schedule communal rides for work or other occasions.
Users set their preferred dates as well as locations. Waze then matches the user with every possible driver who is taking the same route.
Users also can create driver profiles that can be linked to their social handles (such as Facebook) and receive ratings. This, in turn, increases trust amongst the user base.
The majority of the revenue that is being generated goes to the driver itself. Waze generates revenue by charging a service fee.
The amount that is being charged to the rider will be disclosed prior to booking a ride. The amount charged is dependent on the overall fare.
The Waze Carpool app is currently available for use in Israel, Brazil, Mexico as well as the United States.
As previously stated, Waze introduced its so-called Bluetooth Beacon program back in 2016. It allows municipalities and private tunnel operators to install Bluetooth sensors within their tunnels to ensure that the user’s connection remains.
While it’s likely a very small revenue stream, Waze nonetheless also generates income via its Beacon program.
A Beacon itself costs $28.50. Around 42 Beacons per mile or 26 per kilometer of the tunnel are required. The company, however, does not charge for maintenance costs as a malfunctioning beacon is simply replaced with a new one.
Another income stream for Waze comes from the referral fees it collects when it recommends other products.
For instance, in August 2021, Audible and Waze announced a partnership that would grant Waze users two months of free access to its subscription-based Audible Plus service.
In all likeliness, Waze will receive a referral fee for every user that it helps to convert into a paid subscriber. The percentage share is not being disclosed to the public.
Selling Aggregated Data
One common misconception many people have about Waze is the extent to which one’s data is being shared with third parties.
There are only a few exceptions when this might occur, for instance whenever a user knowingly agrees, in case of any legal proceedings or police investigations, or to prevent fraud.
While the company does not sell personally identifiable information, it can still be assumed that it sells access to its data in an aggregated and anonymized fashion.
There are a variety of companies, including car manufacturers or large insurance providers, which may use that data for a multitude of reasons.
It has to be noted though that governments and other municipalities do not in fact have to pay for access to that data. Oftentimes, these governmental bodies actually also share various data points with Waze in an effort to improve their local traffic.
Waze Funding, Revenue & Valuation
According to Crunchbase, Waze has raised a total of $67.1 million across three rounds of venture capital funding.
Notable investors include Qualcomm Ventures, Kleiner Perkins, Horizons Ventures, BlueRun Ventures, and many others.
Google does currently not disclose any valuation or revenue figures for Waze. It may opt in to do so in future financial reports.