Do you know the way to San Jose…and How’s the Traffic?

Palo Alto offices of Waze.com

A few years ago while on my way on foot from the Palo Alto City Hall to a local breakfast hangout, I noticed a small, unassuming storefront office. People were working inside but there was no name on the door. When I stopped in and asked about the business (I’m always looking for customers!), I got an earful about traffic apps and was offered a “gizmo” with a suction cup to hold my “new” i-Phone upright in my car. Just think,  I could get rid of my GPS and just use my phone! The new service, Waze.com, was free, and it derived traffic reports from users, like me.

Now fast forward to 2012. That same humble start-up now has over 30-million users, in 35 counties. Waze.com remains in the same location, but it seems to have come of age as a reliable, useful, and ubiquitous service. Major news outlets use Waze.com-produced “virtual reports” as substitutes for traffic reporters in helicopters.  Indeed, Waze.com was recently mentioned in the Apple CEO’s apology as a substitute for Apple’s own less-than-successful mapping application.

What explains the amazing growth of this upstart venture, initially funded (Series A & B Rounds) at less than $50-million? Crowdsourcing. Yes, crowdsourcing to passively collect traffic data from millions of users who also share road reports on accidents, police traps, or other hazards, helping to give all users in the area a ‘heads-up’ about what’s to come.

Is Waze.com a service? Most definitely!  Some cite it is a great example of how to deliver a massively scalable service that is high value and low cost. “Our users spend an average on 440 minutes a month on the app,” said Waze Communications Director Michal Habdank-Kolczoski. “That reflects  their high level of commitment to using the service.“ 

  

How do users pay for the service? They use their own cell phones run the Waze.com app while driving, which passively allows Waze.com servers to track their speed on various roads. Collectively, this provides a high level of confidence about road conditions.

Crowdsourcing is a hot new idea that is well represented on Google. A search on the term yielded 3.3 million results. Enterprising companies today use crowdsourcing  to manage projects, sell illustrations and stock photos, and even design footwear.  But is it the service delivery platform of the future or just a fad? 

Waze.com has just launched a program to sell ad space to businesses that you and I pass on the way to work and that targets ads only to the users who typically pass by often.  Sounds like a neat way to monetize the service and stay in the game as concept of crowdsourced traffic reporting continues to take hold.