2 ms·

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) go

by 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.
  - ynniv 14y ago
    The established market collects data from Android phones, commercial vehicle tracking, some municipal systems, and mobile phone providers. A couple ten million casual end users is two orders of magnitude less than the billions of points Inrix aggregates. They're also almost certainly already covered by either aggregate Android OS or cellular tower data. How valuable is a patchy 2% of the industry standard?

by panabee 14y ago

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.
- ynniv 14y ago
  The established market collects data from Android phones, commercial vehicle tracking, some municipal systems, and mobile phone providers. A couple ten million casual end users is two orders of magnitude less than the billions of points Inrix aggregates. They're also almost certainly already covered by either aggregate Android OS or cellular tower data. How valuable is a patchy 2% of the industry standard?