June 2013

Waze: The Billion-Dollar GPS Social Network

If you haven’t heard of it already, Waze is a recent up-and-coming social GPS application that has been the talk of the town in recent months. Essentially, Waze combines the traditional interface of a GPS navigation system with social networking features that allow users to share information with one another. For instance, Waze users can alert each other about speed traps, traffic jams, and other landmarks; it also helps users find the nearest, cheapest gas and can be used to locate fellow friends who also use Waze.

The reason that Waze has recently hit the spotlight is thanks to Facebook, who announced that they were planning to purchase Waze for up to $1 billion; many sources were confirming last month that the deal was essentially done and had been in the works for nearly six months as the two companies negotiated. The main issue was whether to keep Waze in Israel, where the company is primarily located, or to relocate them to the United States.

Eventually, however, the location issue became more than Facebook could handle. Reportedly, Facebook has pulled out of negotiations after Waze’s management repeatedly refused to move from Israel to the United States. Facebook has purchased two previous companies from Israel that were then moved to the United States – Snaptu and Face.com – but both of those were deals of only $50-70 million, nowhere near the billion-dollar value of Waze.

All is not necessary lost for Waze though, even after Facebook has decided to end their negotiations. Before Facebook’s billion-dollar offer, Apple had initially offered the company $400 million, though Waze declined it, believing their company to be worth more than that. It has also been said that upon the announcement that Facebook was going after Waze, Google began trying to outbid them. In any case, it likely won’t be long before this Israeli startup is snatched up and integrated into a larger corporation.