Waze and the Start-up Nation’s Delusions of Grandeur

waze israel start-up nationBy Josh Cline

Ever since the search-engine giant Google acquired Waze this week for $1 billion reportedly to bolster its planned makeover of Google Maps (and likely to prevent competitors from gaining the app’s crowd-sourced data on live traffic conditions), the mobile-app industry has enclosed itself in a bubble of inflated expectations that is filled to the bursting point with entrepreneurial delusions of grandeur.

The climate in Israel and Silicon Valley is one of energy and innovation. The two global high-tech centers are filled with people who have great ideas or ones that they deem “sexy” (as if the latter is enough to be successful). But over the past four years in Israel, I have met with more than 100 companies, and while some of them have presented great ideas, a clear vision, and an actually-useful mobile application, most have been too focused only on becoming as successful as Waze would become to realize what they actually need to do to get there. The developers have been focused on the ends, not the means.

To be successful (or even to sell for even a tenth of the amount for which Waze was acquired), mobile-app developers need a company, a strategy, a monetization model, and an actual, practical reason for the app’s existence. But too many Israeli start-ups – mobile-app developers or any other type – are not focusing on what it actually takes to become successful.

As my colleague Samuel Scott noted in a prior post:

According to a recent Jerusalem Post report: “Two decades since Israel’s high technology industry took off, many of the country’s start-up entrepreneurs have yet to develop the skills to position their products in the marketplace, devise effective business strategies and develop the management skills to build large and growing companies, investors and industry consultants say.”

All of these reasons that Israeli start-ups fail contain a common theme: a lack of planning and positioning for long-term growth beyond simply, “We’ll sell to Google in a year and get $1 billion!”

We at The Cline Group have always argued that holistic, integrated marketing-methods are crucial to the success of any product, service, or website – and each individual product will need a different combination of various traditional and online methods – but it is important to understand that the same principle applies to companies as well. Firms market themselves in addition to their products.

Waze has been an astounding success because the company had a strong B2C2B model – and an end-game strategy from the beginning. If a mobile application’s goal is to be acquired (and it should be), the app needs to fulfill an important need or desire. Waze is a perfect example of an app with a dedicated goal of making life just a bit easier (along with apps such as 24me, iOnRoad, the Medisafe Project, Any.do, and Bizzabo).

Well-functioning applications that are thrown into the competitive arena at the level of Skype, Salesforce, and Dropbox have an upward battle to fight to gain users and find the right buyer. A comprehensive strategy, however, will help the companies to map routes to acquisitions.

For example: If you are in the app-development industry, ask yourself these questions:

  1. Is this app going to help its users to live a better, easier, or stress-free life?
  2. Does this app help people to do their job or increase their business?
  3. Why am I creating this app?
  4. Who would wish to acquire it within three years?

Yes, the Waze acquisition is amazing news – but I hope it will not blind mobile-app developers to the difficulties with developing a purposeful and useful product. Replicating the success of Waze is not easy, but having and executing the right strategy from the beginning greatly increases the odds that an application will be acquired.

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