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In what world does a company with no monetization strategy turn down a $500M acquisition? Who do they think is going to pay more for them, Yahoo!?

• smackfu 14y ago
  "multiple sources have told us that the company was valued around $200 million in its last funding round, and current investors were aiming for a higher price, somewhere nearing $1 billion."
  • ynniv 14y ago
    I read the article too... that doesn't answer the question of who they think is going to pay that price. Here's a hint: not Google, Microsoft, Yahoo!, Oracle, Apple, IBM, Nokia, or Facebook... Perhaps they're holding out for Samsung, but that's a bit of a stretch.
    • Me1000 14y ago
      Why do they need to sell? Just because a company doesn't have a (public) monetization strategy doesn't mean it won't come with time. There are other options for successful startups than just selling the company.
      • k-mcgrady 14y ago
        It's going to be difficult to monetize when they are competing against Apple and Google offering free alternatives built into every device they sell.
        • bostonpete 14y ago
          I just started using it in order to get the warnings about speed traps, accidents, and road debris. I don't believe the stock android maps/navigation apps gives me any of those things...
          • edouard1234567 14y ago
            Even IF waze is a little better, it's going to be hard to compete with google's alternative when it's pre-installed, most people won't bother trying waze unless it's 10x better...
• sisk 14y ago
  They've monetized. I've seen advertisements on the splash screen in SF (for the local network news team, strangely), and Zipcar, Hess, Taco Bell, and Dunkin Donuts POI indicators on the map in and around the Boston area. Clicking on those POI pins opens up exclusive offers to those merchants for Waze users. I have no idea how successful that strategy is but it's a strategy none the less.
  • ynniv 14y ago
    Yeah, that sounds like a winner. To quote Sorkin, "Gary’s Tuxedos, the Harvard Bartending Course. You’re just one small step away from bagging Snookies Cookies, I can feel it."
• duked 14y ago
  In a world where the next startup expect to exit like instagram ;) seems like 1B is now the new hot number :/
• ry0ohki 14y ago
  One of the reasons to be very wary of taking funding... you may be forced to turn down $500M because your investors aren't going to take a simple 2X multiple.
  • jacquesm 14y ago
    Very few investors are going to turn down a $500M exit, even if it is only at a 2X multiple. Giving your investors the ability to torpedo a deal of that magnitude seems to be a failure in its own right. So if you do get funding make sure you're not handing over control over future exits. What's good enough for the founders should be good enough for the investors. A good set of 'drag along/tag along' clauses will take nicely care of that possible scenario.
    • edouard1234567 14y ago
      I agree, it's unlikely investors would block a deal like this if the founders want it. At $20 per user I think it's a very reasonable valuation for a company at this stage, same type of valuation instagram and foursquare got. However I do buy the fact that the founders believe they can create more value and continue to grow.
• panabee 14y ago
  perhaps you know more than me about the company, but from the outside, it seems like there are several customers segments who might pay for traffic data: (1) government agencies looking to maintain and invest in roads and local infrastructure like traffic lights; (2) billboard owners who want to offer audience figures to advertisers; (3) real estate developers who want more accurate data before deciding to invest in property; (4) real estate agents who want to offer traffic data to prospective retail and restaurant leasers; (5) shipping/delivery companies who need traffic patterns to determine optimal routes. my understanding is google maps generates $1B+ from its APIs. perhaps the waze founders think they can approach similar revenue figures with traffic data. i haven't crunched the numbers to see if this is feasible, but my hunch is they declined the $500M acquisition with good reason and with a (potentially) sustainable revenue model in their hip pocket.
  • ynniv 14y ago
    Waze is not going to beat Inrix at selling traffic data. People think that Waze is big because it is a consumer application that they have heard of, but Waze is not a serious player in the B2B traffic data market.
    • panabee 14y ago
      i don't know enough about how inrix generates and maintains its traffic data, but perhaps waze could compete because its data is user-generated (and should be cheaper) ... enabling it to offer data at lower prices to less demanding customers, and therefore reaching out to new customer segments. at the very least, waze need not beat inrix to remain independent but merely capture a portion of the traffic data market. is it incomprehensible that waze couldn't be worth more than $500M? let's do a quick calc. inrix is a private company. we can't use its multiples as a benchmark. let's use garmin and tomtom instead for argument's sake. garmin has a PE ratio of about 15, tomtom's is about 20. if we assume waze gets a similar multiple, it needs about $25M - $33M in earnings. assuming 25% net margins, it needs about $100M - $132M in annual revenue. if the net margins are more like 33%, waze only needs $75M - $99M in annual sales. waze could need even less if it attracts a higher multiple (assuming it offers a disruptive model). i know too little about the traffic market to say if $100M in revenue for a new entrant is feasible. but i'm sure it's not impossible, merely a calculated risk on the part of waze's founders to continue acquiring users and implement the revenue model.