After months of speculation, the fate of Waze, the social-mapping-location-data startup, is finally decided: Google is buying the company, giving the search giant a social boost to its already-strong mapping and mobile businesses. Speculation has had the sale at $1 billion to $1.3 billion, and so far there is no price on the deal, but a source tells TechCrunch that it was done for $1.1 billion.
Update: Waze has also published a blog post on the acquisition. In it, CEO Noam Bardin writes that CEO Larry Page, Google GEO VP Brian McClendon and the Google Maps teams “We are excited about the prospect of working with the Google Maps team to enhance our search capabilities and to join them in their ongoing efforts to build the best map of the world.” He also notes that “nothing practical will change,” with the company, now pushing 50 million users, “will maintain our community, brand, service and organization.”
He also raises the subject of why Waze decided to sell. Bardin says that it was motivated by the fact that an IPO appeared the route that would take the company more into being focused on returns and less on growing as a product for users. “Choosing the path of an IPO often shifts attention to bankers, lawyers and the happiness of Wall Street, and we decided we’d rather spend our time with you, the Waze community.” Of course, the burden of getting a return on the investment now become’s Google’s, but as you can see below there are a number of reasons why it would buy Waze, anyway. [original post continues below]
Update 2: Israeli tech blog GeekTime also confirms our $1.1 billion figure, “of which $1.03B will be transferred in cash directly to the company and its stockholders. An additional $100M will be awarded to employees based on performance.”
This is a doubly strategic move for Google. The purchase comes in the wake of what appeared to be failed negotiations between the Israel-based startup two big rivals of the search giant: Facebook, which was eyeing up the company but apparently faltered at the due dilligence phase; and Apple (neither company ever publicly confirmed interest in acquiring Waze).
The news comes after a particularly heated few days in which reports of Google’s interest in Waze reached new heights, after first surfacing two weeks ago. In the wildfire that is internet publishing, many even went so far as to report it as a done deal, making things even more confusing.
Waze had raised some $67 million in funding from Blue Run Ventures, Magma, Vertex, Kleiner Perkins Caulfield & Byers, and Horizon Ventures. And it looks like the majority of the payout in the sale will go to these VCs. Globes, the Israeli business newspaper that first reported the latest interest from Google, estimated that payouts to co-founders — Ehud Shabtai, Amir and Gili Shinar, Uri Levine, Arie Gillon — and its CEO Noam Bardin, will be under $200 million in total.
There are at least a couple of places where you can see Google making use of Waze data.
Social. Under CEO Larry Page, Google has been especially bullish on where it positions itself on social, which it has been hinging on Google+ as a kind of web across all of its other properties to show you, the user, what those you know are doing, and also to let your connections see what you are looking at online. Taking a page from Facebook’s book, the thinking goes that this helps with discovery and engagement.
Waze, as a crowdsourced location platform, would give Google an additional, very mobile-based angle on this concept, letting users not just share places (i.e. sites) visited on the web, but actual places visited physically. As Bardim noted at the AllThingsD conference in April, “What search is for the web, maps are for mobile.” By this, he means that most of the searches you do on mobile have to do with location, and Waze is one of the few companies out there that is bringing that kind of search together with actual map data and a social layer. (The NYT ran an interesting piece yesterday with one mapping company describing how maps on mobile specifically become a “canvas” for all other apps.)
Competition. Waze could be a two-pronged fork for Google: On one hand, it gives the search giant nice, healthy wedge into the mass of consumers who are already using the app on iOS devices. But it also, if reports are to be believed, also gives Google a way of roadblocking how companies like Facebook could use Waze’s assets. As the startup likes to point out, it’s not a mapping company, but a big data player. Facebook, making its own big push on mobile, would have been a natural home for a socially-focused company like Waze, which also happens to be one of the few home-grown mapping databases around. This will mean that Facebook will need to have to continue to use third-party data for its own location-based searches and information, or less look to acquire elsewhere.
(Now could be a good time to wonder whether Nokia might consider offloading Navteq, its loss-making but strategic mapping asset, to shore up its financial position…)
It’s interesting, in any case, that Google and Waze have now kissed and made up. It was only in April that Bardin jabbed at Google when talking about who the big players in mapping were and how Waze stacks up against them: Waze used to benchmark itself with Google, he noted at the AllThingsD conference, but after the search giant cut off access to its API, Waze started to benchmark to Navteq.
When the Facebook acquisition reports surfaced, we’d heard that one of the sticking points was that Waze wanted to keep its R&D in Israel, while Facebook was leaning to a Menlo Park relocation. Since then, others have told us that this was just smoke a mirrors and that there were other reasons the deal fell through (Mountain View’s most famous resident being one possible factor). Google, unlike Facebook, has a decent presence in the country, including a new hub for startups started in December 2012, Campus Tel Aviv.
Google today made it clear that it would keep Waze’s operations going in Israel — for now, at least. “The Waze product development team will remain in Israel and operate separately for now,” Brian McClendon, Google’s VP of Geo, noted in the blog post announcing the deal. “We’re excited about the prospect of enhancing Google Maps with some of the traffic update features provided by Waze and enhancing Waze with Google’s search capabilities.”
In any case, it makes sense that Waze might want to keep its Israel-based operations intact. Just about all of the company’s 110-or-so employees are there, with only around 10 in a very modest office in Palo Alto, just down the street from another big-data startup, Palantir. That small proportion, however, is mighty: regular workers there include CEO Noam Bardin and Di-Ann Eisnor, Waze’s VP of platform and partnerships.
The U.S. is currently Waze’s largest single market — in April, Bardin noted that 12 million of its (at the time) 44 million users are based there — and this is where the company is putting its growth efforts for now, too. In February of this year, Waze expanded its U.S. operations, and its monetization ambitions, by opening an office on Madison Avenue, the heart of the advertising world in New York City, and we’ve seen that members of the team have been visiting New York recently. There is still a lot of development to be done on the advertising front — and given Google’s pole position in online and mobile advertising, that would give Waze another obvious fit with its new owner.
Ironically, the news comes as Google continues to fight other kinds of fires on the mapping front. In the U.S. it is trying to get a ruling overturned that it violated federal wiretap laws with its StreetView services.
In Europe, Google recently offered up a settlement in a search antitrust suit, originally brought by travel and mapping companies, that claimed Google, the biggest search engine in Europe by a longshot, was giving its own mapping and travel results more preference in search results over those of its competitors, making business untenable for smaller players. In that ongoing case, the EU competition regulator Joachin Almunia said at the end of May that Google still needed to make more concessions.
There has been a growing rate of exits happening for Asian e-commerce companies, but valuations remain small on average. Most are under the $50 million mark, according to CB Insights’ latest report.
The report, which provides a broad sweep of the past three years of activity in the region, showed that most activity—unsurprisingly—was happening in the large markets of India and China.
But while India had the most exit deals done so far, China completely dominated in terms of investment volume. India had 154 exits since 2010, and China had 83. Russia had 61, Singapore 35 and Japan 11, in the time.
But those 83 exits in China were worth $4.8 billion collectively. India trails at $978 million in second place. Russia had $731 million, followed by Singapore at $328 million and Japan at just $58 million.
China’s activity saw a particularly big spike in Q2 of 2011, thanks to three mega-deals there: 360buy ($1.5 billion), 55tuan ($200 million) and Lashou ($110 million).
Besides exits, large e-tailers also IPOed in the US in recent years, such as China’s DangDang and VIPshop, and India’s MakeMyTrip. DangDang specializes in selling books (although it’s recently been trying to broaden across products) and raised $272 million in its NYSE IPO in 2010. VIPshop IPOed in 2012 and raised $71.5 million. MakeMyTrip shares surged 89 percent in its 2010 Nasdaq debut, raising $70 million.
But apart from the activity in China, the rest of Asia has a ways to go. On average, 60 percent of exits were valued at less than $50 million, with about half of that being less than $25 million. The result of the poor valuation outcomes may contribute to the sector being exit-challenged for the time being, said CB.
Furthermore, post-IPO performance has been lackluster. DangDang, VIPshop and MakeMyTrip saw their share prices tumble after IPO.
The fashion vertical receives the most interest from investors, with more than a quarter of overall e-commerce deals coming from apparel sites consistently each year.
Rocket Internet’s Singapore-based fashion site, Zalora, has been doing particularly well in the past year. In March, scooped up $26 million from German retail conglomerate Tengelmann Group, following a “significant double digit million” dollar investment from JP Morgan in September last year.
Tiger Global Management is the most active investor in the region’s e-commerce sector, and appears to be focusing mostly on India, with 16 deals so far. It’s joined by Accel Partners, Intel Capital, Sequoia Capital and IDG in the top five.
In the ever-raging Map War, Google seems to be not only a first mover, but the boldest mover.
According to the Globes, an Israel-based publication, Google is reportedly set to acquire the Israeli transit and navigation company Waze for $1.3 billion, making it one of the larger Google acquisitions in recent memory. This latest development comes amid swirling rumors that Waze would be bought up by one of the big guys, by Facebook for $1 billion, Apple for $500 million and now Google.
Waze provides information on traffic congestion, police presence, speed-sensing cameras, and other transportation-related information thanks to the crowdsourced information flowing in from its almost 50 million users.
According to a number of other Hebrew sources, the deal will be in all cash. Noam Bardin will reportedly remain as CEO and Waze will also continue as its own brand. Waze’s R&D facility, as well as their offices in Israel, will remain in place for at least three years.
We had heard originally that Apple was interested in Waze, which made perfect sense at the time considering Apple was building and releasing a buggy, inadequate Maps app. Waze probably could have helped out quite a bit.
However, those rumors died down to make room for new ones, namely that Facebook was considering buying the social satellite-navigation company.
In fact, Globes reports that Facebook executives went into negotiations with Waze right in Israel, but neither company could come to a comfortable resolution. But perhaps more interesting, Google moved in to have chats with Waze while Facebook was still in negotiations to buy, showing just how eager Google is to block out potential competitors in the mapping space.
Neither Google nor Waze is commenting on the acquisition at this moment, but this isn’t the first time that the search giant has been paired with Waze. Just last month, Bloomberg reported that the companies were in talks, and that Waze was seeking more than $1 billion.
The report says the deal has just entered due diligence, and details are subject to change.
Google’s long-term goal with Waze is somewhat unclear. It obviously increases its footprint in Israel, where it currently operates two offices, and there is a thriving startup scene, from which Google has already plucked Labpixies and Quicksee. But looking further, this is also a good way to keep competitors like Apple and Facebook away from such reliable and popular mapping software.
Remember, Google’s Maps application is already a world-class product, with nothing even remotely close following behind in terms of competition. But that’s not to say that folks aren’t trying. Apple booted Google Maps as the default mapping app on its iDevices with the launch of iOS 6 and the iPhone 5. Unfortunately for Apple, Apple Maps is abysmal.
By buying Waze, Google keeps competitors like Apple and others away from the easy out, which would be an acquisition of a company with already-working and reliable technology. With this deal, Google effectively blocks Apple and Facebook from even having a chance.
See, Facebook, Apple, Microsoft and any other big tech player will be focusing on location technology as a way to bolster other services. Maps is the spinal cord of the mobile ecosystem. It affects advertising, other social tools and apps, and e-commerce. Apple, Facebook and friends won’t give up on owning our location data anytime soon, but Google is doing a good job of blocking out the potential to buy technology instead of build it.
Waze was founded back in 2007, and has since raised a total of $67 million from investors like KPCB, Horizon Ventures, Blue Run Ventures, Magma Venture Partners, and Vertex Venture Capital.
Makerbot, the Brooklyn-based 3D printing company, is in talks with Minneapolis/Israel-based Stratasys regarding a possible acquisition by the latter, according to a source close to the matter. While Makerbot founder and CEO Bre Pettis refused to comment on speculation, and in fact told reporters “We’re not going anywhere” at a factory opening on Friday, persistent rumors of a sale or new funding have followed the company this year.
Stratasys makes high-end, professional-grade 3D printers for industrial applications. For example, the Liberator 3D-printed pistol was built on a Stratasys machine. Stratasys does not yet have an entry-level model for average users, a niche in which Makerbot has generated $50 million in revenue this year.
The company also appears to be chatting with investors to raise $25 million on a $300 million valuation, according to a WSJ report. We had also gotten the information that the company had been raising, but at a valuation quite beyond that. With 3D printing technology all the rage, and considerably less-hyped startup Shapeways recently raising a $30 million Andreessen-led round, why wouldn’t Makerbot want to maximize its own momentum?
Note: That image above is not of a Makerbot, but a random 3D Printer in SkyMall magazine. Signal of lack of consumer utility? Or a sign of mainstream acceptance?
Uber is planning an aggressive strike against mounting competition in the on-demand transportation market, as it will lower fares for its low-cost UberX service by as much as 25 percent in San Francisco. According to multiple drivers, UberX could see those fare reductions take hold as early as next week, as the company seeks to steal business from peer-to-peer ride services like Lyft and SideCar.
Update: The reduction in fares is expected to go into effect on June 12. And, as far as we know, the lower prices will only apply to rides in San Francisco.
The move to lower fares comes as Uber is facing more competition from taxi e-hail apps and services that use drivers who aren’t commercially licensed. In its home market of San Francisco, Lyft, SideCar, and new entrant InstantCab all offer an alternative by connecting passengers with community drivers who have a car and the spare time, under the guise of ride sharing.
Lyft, in particular, has been growing fairly quickly, serving more than 30,000 rides per week just one year into offering its ride sharing service to the public. It’s also raised a huge, $60 million round of funding led by Andreessen Horowitz which it plans to use to fund expansion throughout the U.S. and international markets. Uber has raised about $50 million since being founded in 2009, but it has a much longer history of generating revenue and is in many more markets.
With lower-priced competition mounting, Uber has also gotten into the so-called ride-sharing business, first in California, but with plans to extend the lower-cost service into new markets. While the low-cost UberX service was first launched with commercially licensed drivers in hybrid vehicles, earlier this year Uber announced that it would also offer peer-to-peer, or ride sharing services on that platform as well.
While expanding into new markets, Uber has also been aggressively trying to recruit drivers from its competition. It’s gone so far as to hire a mobile billboard to drive around San Francisco, urging Lyft drivers to “Shave the ‘Stache” — that is, to shed the pink mustaches that adorn Lyft cars — and join its platform instead.
Uber may have previously sought to steal drivers away from its competition, but now it’s going after their customers. When the new fares go into effect, it won’t be the first time Uber has done so — the company lowered UberX rates by 10 percent when it first introduced the idea of community drivers. And over Memorial Day weekend, it reduced fares by 25 percent in the Bay Area, in a seeming reversal of its surge pricing during high-demand periods. That could have been seen as a test run for a more permanent price reduction.
While Lyft and SideCar have been entering new cities with their ride-sharing service, Uber has an early lead in most markets. In addition to the San Francisco Bay Area, Uber offers black car services in New York City, Los Angeles, Seattle, Chicago, Boston, Washington, D.C., Toronto, Paris, Berlin, Philadelphia, Dallas, San Diego, Amsterdam, Atlanta, Denver, London, Melbourne, Minneapolis–Saint Paul, Phoenix, Stockholm, Sydney, Baltimore, Detroit, Milan, Sacramento, and Singapore.
Representatives from Uber could not be reached for comment.
