Waze fails to reach its destination

July 11, 2023 will be ten years after the traffic navigation app Waze signed the deal that changed the face of Israeli high tech – the sale of Waze to Google. Last week came an announcement from Google management of impending layoffs, spoiling upcoming anniversaries.

The parent company announced last week that it plans to shut down Waze’s standalone ad system and replace it with Google’s own ad system. As a result, dozens of people will be laid off among Waze’s 500 employees including a small number at the app development center in Israel. It is believed that another announcement is expected in a couple of weeks, and Google employees are biting their nails until it is released. Does the latest layoffs herald a new tense era between Google management and Waze?

The $1.15 billion sale of Waze to Google was at the time considered one of the most impressive exits in the Israeli tech industry. It sounded like a dream. Each of the 100 employees who helped found the company earned over a million dollars while entrepreneurs received tens of millions of dollars and investors saw returns in the hundreds of percent. It also seemed like a great deal for Google. The search engine giant sought to tap real-time traffic updates from streets and highways around the world and earn revenue from ads tailored to the locations of millions of vehicles.

The founders insisted on self-government and then left

One of the conditions Waze’s founders insisted on was that the app would remain an independent business unit within Google and would continue to operate from Israel. Noam Bardeen and his co-founders – Ehud Shabtai, Amir Shinar and Uri Levin – sought to keep control for themselves.

In practice, Waze works with a decentralized corporate culture that can seem chaotic. It was important to Israel’s founders to maintain the culture of a small, growing startup, with highly motivated employees and a product supported by communities of volunteers around the world, who were involved in updating and correcting the maps. For its part, Google has required full sharing of all real-time traffic data, as well as users’ data. However, over the years, veteran founders and managers began to leave the company for various reasons, which weakened Google’s commitment to the Israeli company. Former CEO Uri Levin never started working at Google and became a serial investor in tech companies. Chief Technology Officer Ehud Shabtai and Vice President for Research and Development Amir Shinar retired from the company six years ago and are partners at Wellana Health Food Restaurant on Dizengoff Street in Tel Aviv. Former CEO Noam Bardeen left the company in controversial circumstances in 2020, after friction arose. About the company culture at Google. Since then, he has been involved in developing digital journalism products such as the Post’s news site and Paygo Media’s micropayments service for reading articles online.

Waze has avoided layoffs until today

People familiar with Waze’s employment situation claim that if the founders hadn’t left the company, it would have been very difficult for Google to make changes. But Google took advantage of the global technology crisis and the wave of layoffs to reduce Waze’s activities and powers. Last December, about a month before Google’s big wave of layoffs, affecting 12,000 employees, Neha Parikh, who replaced Noam Baridin, left her post after just over a year as CEO. The Israeli company Google Geo was merged with Google’s map products division and practically transferred to its management, along with products such as Google Maps, Google Earth, and Street View that displays satellite imagery.

However, Google’s wave of layoffs doesn’t seem to have affected Waze, which has increased its workforce, according to LinkedIn data, by 4%. But the current cuts do not bode well for the company’s future. According to Google, it has no intention of harming its “favorite app,” which is used by about 150 million people around the world every day. At the same time, Waze was unable to convince Google that its ad system was better than that of its parent company, which led to the latter move.

In fact, the Waze ad network has been criticized for some time for not being effective enough. With the sale to Google, Waze dreamed of generating hundreds of millions of dollars in revenue from showing ads to drivers while waiting at an intersection or in traffic and directing drivers to select businesses. In the past, the Israeli app signed a multi-million dollar advertising agreement with American multinational fast food chain Taco Bell. Although there is no way to compare the effectiveness of Waze and the Google Ads systems.

This isn’t Waze’s only dream that has been shattered. Ambitions for a shared (carpool) travel system were not realized, as was a similar initiative initiated by rival Intel-owned Israeli company Moovit. Both discovered that not many drivers were willing to drive strangers, take risks and delay their trips for a small fee.

cultural friction

On top of all this, there is “ongoing cultural friction between Google and the Waze team,” as Bardeen himself puts it. The founder left Waze after complaining that Google’s extremely permissive work culture encouraged employees to spend long hours on leisure activities, with no motivation to invest in the business. Bardeen also lamented the tech giant’s culture of political correctness, insisting that Google was not promoting Waze enough in stores and that Waze was being hurt by internal competition between organizations.

Does Waze regret choosing to sell to Google? It’s hard to tell, but Barden himself tried to answer that question last week in a post he wrote. Describing how media leaks about the sale were criticized by Facebook, which was a leading takeover candidate, Bardeen wrote: “At the time, the Facebook deal should have closed at $25 per share. If we had closed with them, it would have been The deal price could have been 10 times greater than the amount Google ultimately paid.(Facebook offered $1 billion in equity.) Still, I felt Google was a more appropriate place – we had a better click with the engineering team They gave us the independence to grow from 10 million users per month to 150 million, and later, having learned about the damage that Facebook has done to the democracies of the world, I would not have been able to spend the four years that were required of me there.

Published by Globes, Israel business news – en.globes.co.il – on July 3, 2023.

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