Unconventionals Podcast | Season 4 Episode 4

From Faster Commutes To Better Communities, We’re All Working For Waze

It’s frustrating when your daily commute is full of brake lights, isn’t it? Well, the traffic isn’t going, but with a heads up you could avoid it. That’s why 50 million drivers fire up Waze.

Waze is the world’s largest community-based traffic and navigation app, and its 50 million users are dedicated to outsmarting traffic together. The maps are crowdsourced from roads users have driven on — so they’re always up-to-date. And to take it a step further, drivers can share real-time information about construction, congestion, and speed traps, which alerts other drivers and helps them find a faster route.

In this episode, we talk with Julie Mossler, Head of Global Communications and Policy at Waze. She discusses how Waze depends on large, active communities to help drivers avoid traffic headaches — and how the company got started before those communities were existed. We also check in with David Rogers from the Columbia Business School for a deeper look into why Waze has succeeded with crowdsourcing while so many others have failed.

Video Highlights

PODCAST TRANSCRIPT

Voiceover:

Next, on PJA Radio's The Unconventionals ...

Julie Mossler:

Traffic is a universal problem, and people are constantly looking for ways to not only help their neighbors, but also help themselves. The one day you find a shortcut, you're going to use that service over and over and over again, and so we've been able to prove that in cities all over the world.

Mike O'Toole:

Waze is the world's largest community-based traffic and navigation app. It has more than 50 million users dedicated to, as the company puts it, outsmarting traffic together. It's a daily tool for so many of us that you can forget how cool it is. Waze shaves time off our drive by routing us around traffic and warning us off construction, congestion, not to mention cops, and all of this is done by incorporating real-time updates from drivers who are on the road with you. Waze manages to pull all this off around the globe with only 200 employees. It's no wonder that Google shelled out more than a billion dollars for it in 2013. Waze makes for a very cool, and certainly unconventional story, so stay with us.

You can tell the story of Waze as pioneer and disruptor on many levels. It's the little company that out-flanked Apple and Google in the navigation wars, or the company that figured out how to harness the power of its many communities, drivers, map-makers, partner cities, almost better than anyone. In a world of a million apps that we ignore or try, then discard, Waze has become one of the few truly indispensable and influential platforms. I talked with Julie Mossler, Head of Global Communications and Policy at Google's offices in Chelsea Market, New York. We began with what I think is the most interesting question. How did Waze do all this? The Waze business model depends on large and active communities. How did Waze establish itself before these communities were in place?

Julie Mossler:

You know, on paper the product almost doesn't make a lot of sense. To say, "Here's a blank map. We want you to go and drive on it as a user, and then you will help us build it up into a sufficient product that other people can use." But in Israel, where you have a really tight-knit community of people who are early adopters, they work together often. Word spreads very quickly if technology works, and there's a great hive of intelligence and incubation there for new technology.

To take a look at that group of people, who actually understood what the opportunity was to make a map their own, and the next thing you know, they were driving down the street, catching little icons we put on the map to help flesh out that part of the city. Then they were beginning to update us the next time there's a parade or road closures. It became very evident that this was information that other traffic companies did not have, and also something that would scale very quickly all over the world.

Mike O'Toole:

Israel was the first market this was proven in?

Julie Mossler:

Yes.

Mike O'Toole:

Yeah.

Julie Mossler:

But I think one of the smartest decisions we made was opening up the software very early on, so that anyone anywhere in the world can become a map editor and bring Waze to their neighborhood. In countries, most recently we've seen some expansion in Kenya, we've seen expansion, again in Indonesia, is one of our largest and earliest markets. It's not typically a country that a start-up would go and target first, but because we put the power in the people's hands, wherever traffic happens to be the worst is where this application has boomed.

Mike O'Toole:

Waze doesn't have to make a decision, "We're going into Indonesia." You open up the platform and activity starts to happen there.

Julie Mossler:

Absolutely. If we are in the App Store and available in the Play Store for Android, then you can download us in your area.

Mike O'Toole:

You had said in a way this is an idea that doesn't make any sense, and I know what you mean.

Julie Mossler:

It's a tough sell.

Mike O'Toole:

In the beginning it doesn't make sense, because the earliest drivers aren't getting any of the advantage of, "Hey, there's lots of other information that benefits me." How does that start? How did that start? I think every company that's based on the network effect has that same chicken or egg problem. How do you get enough people and enough data to make it useful?

Julie Mossler:

You know, everybody wants to have a viral product, so if your product works, ultimately it will find its own audience. In this case, it was really over-communicating the value prop. I think that by finding people that are passionate about an idea, for an example, when we first began in Israel, to find people who were obsessed with cartography, obsessed with maps, obsessed with new technology. There becomes an opportunity there for you to say that you were first, and also to say that you're helping your community. Those are two values that are really respected there. We've seen that repeated over and over again.

Traffic is a universal problem, and people are constantly looking for ways to not only help their neighbors, but also help themselves. The minute that the data became just good enough, we were then able to share it with TV broadcasters and different traffic reporters in the US, which was a significant way we grew. But there were definitely times, looking at the success of the company where we knew we were on to something, but you're absolutely right. There was nothing stopping Apple Maps or Google from doing the same thing. Probably in about, I would say 2013, we took a look at the company ... Sorry, it's 2012. I don't know if that matters.

Mike O'Toole:

Yeah. That's okay.

Julie Mossler:

We took a look at the company and realized that usage was a little stagnant. We weren't growing the way we had expected to, and it was because we were distracted. As a company, we were so busy focusing on these other companies and what they were doing, and if they had caught on to the genius of our product, that we had diverted our attention away from what a really powerful, simple app looks like. We streamlined some of the features. We went back and actually did a survey and asked users what they liked and what they didn't.

We found out that there were bugs we didn't know about. We found out that due to certain cellphone service in areas of the country, of course we were going to have varying levels of predictability in those areas, and so by simply stopping for a second and pausing, and saying, "We need to realign on what it is we're doing," we were able to really impact our growth, make the product stronger, and then charge ahead the rest of the year.

Mike O'Toole:

So you focused on making it a better app. You focused a little bit on what the users cared about. What else came out of that? Anything else that you can think of?

Julie Mossler:

Well, so one thing was strategy. I think that any time you're looking at your competition, it's only natural that you're also not looking in front of you. You can only look in one place at the same time, right? Coming out of that, we realized that our value inherently lied in our data, which is something we knew but maybe something we hadn't actually done anything with. Our traffic broadcast program launched around the same time and it was something that we really heavily invested in.

Mike O'Toole:

What's that?

Julie Mossler:

It's completely free. Waze does not sell our data. We looked at what we had and we said, "Who needs this?" Well, the traffic reporters need it, obviously. We looked at cities like Los Angeles, who were about to have their main highway shut down for the summer, and we said, "Okay, we can absolutely help here, and at least keep users informed." Every time there's a new construction block or a road is shut down, we will upload it to our app. At the same time, we went to the TV broadcasters and we kept them apprised of how our data was changing.

We offered to come on air and give a traffic report, and we knew if they put it up against the data they were paying for, that ours would be superior because it's in real-time. That's exactly what happened, and so Los Angeles really was a turning point for us in the US, where we had proven we could do it in Israel, but to actually become a household name in Los Angeles, which is a really saturated market, was an incredible vote of confidence for us.

Mike O'Toole:

In LA, traffic reporters would reference that this was Waze data.

Julie Mossler:

Yes, and eventually, if you fast forward to 2015, we actually have a product now for these broadcasters. We have more than 80 all over the world, who use an iPad and Apple TV, and they stream a special version of Waze data on the air every day. They can zoom in on critical parts of the city that often have traffic, and it's incredible to see how this program's grown.

Mike O'Toole:

I guess another traditional way to build a name in LA was to run an ad campaign and tell consumers, drivers, that this is a great app.

Julie Mossler:

Sure, sure. You know, again, the classic traffic providers were only beginning to think about real-time, and they weren't making it possible for users to upload this information themselves. It was still through sensors, and still through existing partnerships that they had, so we knew that we had to move quickly, and the easiest way to do that was to get it on the air every day, and you know, from driving in Los Angeles, the one day you find a shortcut, you are going to use that service over and over and over again. We've been able to prove that in cities all over the world.

Mike O'Toole:

To put a finer point on it, Waze's partnership with local TV stations has built the user base more effectively than any ad campaign could. Julie talked about an example in Argentina, where partnering with a TV station drove user numbers from the few hundred to the 5 figures the next day after launching with the station. They've seen the same kind of results around the world. I like the thought that you guys thrived by stopping a focus on your competitors. That seems counter-intuitive.

But I have heard that from other companies we've talked to, Converse, when they created Rubber Tracks Studio here in Brooklyn. I had asked the Chief Marketing Officer, "Well, who did you look at? Who inspired you?" He said, "To be honest, it was internal. We looked within, and this was an instinct that we knew made sense." I think it's interesting that you echo that. Were there conversations or meetings, or important turning points where you felt like, "Hey, this is proof that we're trusting our own instincts?"

Julie Mossler:

Absolutely. You know, one of the critical conversations we had during that pause point was, "Who are we? Are we a B to B or a B to C company?" Because B to B meant that we would decide to sell our data. It also meant immediately that the priorities change, because we may want to do a public service project and can't because we have to meet a certain amount of revenue, because we've committed to selling this data. Or we have to take care of a client first instead of citizens who have asked to have their neighborhood uploaded to the map. There isn't a right or a wrong answer, but that decision to become B to C absolutely changed our future and our identity, because we committed to it.

When you're a start-up, not only are you trying to continue to generate revenue and also funding, but to have the back end of the house worried about keeping the lights on, and then also the front of the house chasing your identity, your branding, your new users, your active users. A start-up is a chaotic place. For us to sit down a second and say, "Hold on. We've gotten the product off the ground, but let's actually have a roadmap." Then sort of fortuitously, a few months later, Tim Cook mentioned Waze during his keynote, and he actually apologized for Apple Maps.

Mike O'Toole:

How often does Apple apologize? Not very often.

Julie Mossler:

I mean, from a PR perspective, you can't pay for that level of publicity, so to get that level of credit on the local level in Los Angeles, and then moving on to Tim Cook, is pretty special, and we knew we just had to keep going.

Mike O'Toole:

As I mentioned in the beginning, Google paid more than a billion dollars for Waze a few years back, and that price was based on a bet about value. Waze is a free app, so value means advertising, which in a world of too many ad impressions chasing too few people, that's not the sexiest of monetization strategies. But based on the nature of Waze's data, targeted by time, location, and information about where we came from and where we're heading, Waze is not your typical ad platform. There's some big brands out there that are figuring this out: British Petroleum, Home Depot, Taco Bell, all piloted Waze ad programs in 2013, saw a lot of success and increased commitments in 2014.

Julie Mossler:

Waze has a really interesting ad platform that's built on top of the map, so it geo-locates content that could be interesting to you. We know your home and your work if you store it, so we know what your motivation is and where you're going throughout the day. Waze is your companion. As you're going to work in the morning, it makes sense to offer you a discount for coffee but not for movie tickets.

Whereas on a Saturday, you're probably more likely to go see a new feature or to go to the mall. If you're going to the airport, we know you don't want to see anything except potentially gas or food, and those are the only 2 things we'll show you. You can see how understanding the context of the user and what their behavior is like throughout the day really turns advertising into something that's complimentary and additive to the experience, rather than something that's distracting, dangerous, or just an annoyance.

Mike O'Toole:

Right. Well, it's absolutely useful with all that context.

Julie Mossler:

Sure.

Mike O'Toole:

Or creepy, I suppose. Where do you guys ... This is just a big conversation about data and privacy that the whole industry's dealing with. It's not a Waze issue, it's an everyone issue.

Julie Mossler:

Of course.

Mike O'Toole:

Are there lines there or ways that you guys think about that helps you from crossing the line?

Julie Mossler:

Well, our mission is to be an aid and a likable assistant or a friend to our users. If it annoys us we absolutely won't do it. We have to keep the lights on and we need a revenue model as well, but there's definite value. We've all been stuck going home during rush hour, and going, "You know, if I'm going to be sitting here for the next 2 hours in traffic, I should just pull over and have dinner, or grab something for my family." Waze can actually do that. How many times has an advertisement campaign curated all of this interest but can't actually prove that anyone drove to the location and went in the door? In terms of privacy and user comfort, I think that our users ...

Waze sort of has a leg up in that users understand to use Waze is to be part of this crowd-sourced, sharing information effort. We don't get a lot of users who are cagey about their privacy or their history. Of course, we follow all the policy guidelines from Google, but people tend to understand that if you give up a little more information about yourself, you actually have a better experience. I think that just in general, in the app industry, we're starting to see that that's the norm. Consumers' comfort level is becoming a little more welcoming than it might have been 5 years ago.

Mike O'Toole:

Yeah. Any examples of a time that you thought of using the data, or tried to use the data in a certain way and maybe you felt like you heard from your users that you were crossing that line?

Julie Mossler:

No, I'm very proud to say we haven't had user backlash or concern. One thing that we did, we have a government program called Connected Citizens, and we share data with everyone from a Department of Transportation to a Mayor's office to the pothole committee of Boston. We knew in launching that program we had to be very, very clear about what was being shared and how. We will never give a partner carte blanche access to scrape our data. We will go through it ourselves and give only what's relevant. The other thing that is really important that we overly publicized when this launched is that we only share publicly available information that's already in the app. That means that I will never share your personal driving history. I will only share records of accidents in the app or things you can already see.

Mike O'Toole:

Waze's Connected Citizens program is a big deal. With it, Waze is extending the value of its data beyond the driver to the community at large. Connected Citizen is essentially a data exchange. Waze shares data about roads and traffic, and only the aggregated, publicly available kind, with participating cities, and in turn, incorporates municipal data on the Waze platform. The end result is a much more comprehensive and current look at road conditions than you can get from any other source. The program has also enabled some other valuable services. One of my favorites is here in Boston. It was called Pothole Palooza. The winter we had last year left the roads a mess, and Waze collaborated with the city of Boston to fix potholes.

According to Julie, users would tag the potholes and Boston crews would attempt to fix them within 72 hours. This is huge for drivers, but this kind of collaboration signals something bigger and in my mind, a lot more interesting. In part, it's a new app-enabled form of civic engagement. I like how Ben Berkowitz of SeeClickFix puts it. "Reporting potholes is the gateway drug to civic empowerment." Potholes in Boston are one kind of problem. Managing traffic during the World Cup and Olympics in Brazil is a whole different level of challenge for Waze's Connected Citizen program. You guys were working very closely with the government of Brazil during the World Cup, recent World Cup.

Julie Mossler:

Yes.

Mike O'Toole:

Can you talk about that?

Julie Mossler:

Absolutely. You know, the Mayor of Rio de Janeiro reached out to us almost, probably about 2 years ago, and he knew that he had the Olympics coming up and the World Cup, also some of the worst traffic in the world. That's a really tall order to figure out how you're going to take care of your citizens.

Mike O'Toole:

Yeah. All I know is everybody was predicting disaster. Right?

Julie Mossler:

Of course, and you know, the eyes of the world are on you. Everybody's very critical, so it was interesting, because he reached out, and deep down we knew that we could help, but we had never had that sort of a request. He basically just asked what was possible. His cabinet had called us. We worked with his Department of Transportation, and sent them over some data that became very compelling to them. Within 2 weeks we were embedded in their traffic control center, and so they actually have a custom map that uses Waze alerts. It immediately communicates with a team of responders that are in the room, so that the minute there's an accident, it shows up on Waze and then the paramedics can dispatch or whatever they need to do. Really that was almost like a beta test for what became the Connected Citizens program. They were our first unofficial partner.

Mike O'Toole:

At the height of the World Cup, how many people are we talking about on the roads? Do you have data on that?

Julie Mossler:

Gosh, I mean in general, Waze ... The Brazil community is in the top 3 for Waze globally, and we're talking millions of users every single day, just in the city of Sao Paulo or Rio. You can imagine when you add in taxicabs and tourists, the one really interesting thing we noted is that traffic stopped during the games, because people wanted to get into wherever they needed to be and watch it. It was a little counter-intuitive, where I'm sure leading up to the days, with all the travel, complete insanity.

Mike O'Toole:

Right.

Julie Mossler:

But during the actual games, you could have driven anywhere you wanted. It would have been fine.

Mike O'Toole:

It would stop. Yeah. Yeah, yeah, interesting. If you use the Waze app you contribute to the maps. Just by driving, you provide passive data about routes, speed, et cetera, and you can go a step further and pick up some badges along the way by tagging construction, delays, speed traps. But Waze is built on the efforts of as many as 200,000 map editors. These volunteers dedicate many hours every week to update and maintain the maps. To me, this is Waze's biggest surprise. Who are these people and why do they do this? Root around and you'll find some stories. Popular Mechanics featured one of these editors, a geologist named Nick Zahn, who lives in Maryland.

Nick recently enrolled in graduate school and had to scale back his efforts, but still puts in 16 hours a week, much to the chagrin of his wife. I also learned that there are 6 levels in the editor program, and to get to the highest rank, you're required to have made a half million edits to the Waze maps. What's in it for them? Well, you don't get paid anything. You do get a few perks, like your own moods, which is an avatar that you can change based on how your feeling. The T-Rex for example, becomes available for level 5 map makers. This is kind of fun, but clearly there has to be more behind this community than a few badges. What's the motivation?

Julie Mossler:

Well, you could ask the same thing about Wikipedia or a lot of these other crowd-sourced models. But these are incredibly passionate, intelligent people who look at this as a hobby. A lot of our editors have full-time jobs during the day, come home, tuck in their kids and then get on the computer until 3 in the morning, and it's not really different than someone who maintains a blog, or someone who practices basketball. It's something that exercises their brain, and you can actually make a measurable impact. I mean, if you say that you live in a new housing development, and there's tornadoes there frequently, you can be the reason that they evacuated more quickly, because you yourself paved those roads within the Waze map.

Mike O'Toole:

Yeah, and I wonder how much of that is a compact, even if it's not written between your map editors in Waze. If they saw you selling data, if they saw you profiting off that, would they still do what they're doing? I imagine they might not.

Julie Mossler:

It's a good question. I think that we've been incredibly transparent about expectations, about the fact that this is a free, unpaid role, and you're welcome to start or stop at any time. We're very conscious of not demanding too much of their time, either. But that said, you'll see editors who organize meet-ups. They organize training programs and mentorship for new editors coming into the group, because again, anyone can sign up. Really we don't manage them much at all. They have their own set of rules and policies, and it's working really well on both sides, and I think that any time ... You know, because we're a growing company, if we've had suggestions or they've felt any tension, it's really quick to resolve because they do have that direct line to management.

Mike O'Toole:

Yeah, and do you reward them in any way? Do you thank them?

Julie Mossler:

We thank them copiously. We love them so much. You know, there's sort of a little bit of a reward to your ego, because you can work your way up through the chain and become what we call a champ, or a regional editor. There's 7 or 8 levels you can work your way through, so there's a little bit of prestige that comes with that. I think that it feels good to know that you've impacted the community and other people look up to you and look to you for strategy or advice. We do have meet-ups for our senior-most champs, where they'll come to New York or a location in Latin America, and get to meet each other, and Waze certainly helps pay for that as well, so we concentrate more on building the community than on delivering financial return.

Mike O'Toole:

Yeah. Do you have a story or two about people that you've met who are just die-hard map editors? What makes them tick, why they do this?

Julie Mossler:

Yeah, yeah, absolutely. The guy with the most points in the US is actually dating another map editor that he met through the forums.

Mike O'Toole:

That's another business model for you guys, yeah.

Julie Mossler:

Right, right. We're also a matchmaking service. But you know, there's something in their personalities where they were really passionate about the job that they were doing, and they happened to be passing through the same area and caught lunch together and there you go. It's love. We have another guy who is a champion square dancer, and then also does Waze on the weekends. These are just fascinating people. We have people with doctorate degrees, and I would really love to see the female contingent grow, but we definitely have women in there that are working. It's such a fun community.

Mike O'Toole:

Waze wants to grow the female contingent of map editors, which makes all kinds of sense when you look at the role of women at the company as a whole. Waze is notable here, in part, because the tech sector has gotten such a black eye for male dominated leadership teams and cultures.

Julie Mossler:

Waze employees, it's such a wonderful case study for the value where it's pretty much a heavily male culture. The majority of people running a function at Waze are actually women, which is pretty cool. Our head of product is a woman, which is incredibly unusual. Our head of localization manages a community and translates every single version into 45 different languages with her team, and there is no model to look after to position a team like that. I don't know how many companies have a localization team that's run entirely by crowd-sourcing, so it's pretty cool.

Mike O'Toole:

Yeah, and 45 languages you say.

Julie Mossler:

45 languages. Our head of growth is female. I run PR and policy, our head of product marketing. I could keep going, but what a wonderful place to be, where you're empowering people from different countries, empowering women who are running multi-national teams. It's really cool.

Mike O'Toole:

Yeah, well, it does seem like there's not a lot that holds back some of the really innovative ... The tech sector is booming, but one thing that holds it back is this discussion about it being so male dominated at the top, and especially at the technical side, so that is interesting.

Julie Mossler:

It's interesting, and what I like is that we don't have women just in one corner of the company, either. There's a specific personality that can build a product the way our head of product, [Gail 00:26:12] has. Then there's another personality who has to get in there with the community and manage them really well. You can't say one or the other is female and is not, so it's been amazing to see that it's really a very cohesive team, and that stuff is all left at the door.

Mike O'Toole:

This is Mike O'Toole, and you're listening to The Unconventionals. After a quick break, we'll talk to David Rogers from Columbia University. David has been a long time contributor to the show, and he'll talk about how Waze has managed to activate users and editors to such great effect.

Voiceover:

You're listening to PJA Radio's The Unconventionals. To learn more about the show and join in on the conversation, check out our Facebook page, facebook.com/unconventionalsradio. Our academic sponsor is the Center on Global Brand Leadership at Columbia Business School, which turns the research of academia's foremost thinkers on branding into practical tools and insight for real world application. To learn more, visit globalbrands.org.

Mike O'Toole:

Welcome back to The Unconventionals. David Rogers teaches digital business strategy at Columbia University. He's joining us from New York to talk about customer networks at Waze. David, how are things in New York?

David Rogers:

Very well. It's a little sticky in New York today, but good to take a break and chat with you, Mike.

Mike O'Toole:

Well, in Boston as well, but yeah, great to have you. Waze is our Unconventional today, and Waze has very effectively crowd-sourced multiple parts of its business. Can you talk about that? Why has Waze succeeded where other people have maybe failed with crowd-sourcing?

David Rogers:

Well, there's a few tricky things about ... I don't really like, I'm not a fan of the term crowd-sourcing, because it sounds to me like you think your customers are a natural resource to be sort of mined and exploited like tungsten or something. I usually talk about it as customer collaboration, and what makes a successful collaboration with customers, and I do think that shift in mindset is part of actually what makes it work. I think that's how Waze really does see itself, collaborating with customers. One of the things you have to have is you really have to meet your customer where their skill level is. Waze has really figured out what is something that really everybody can contribute?

By creating this incredibly easy entry point, you just install the app and turn it on, and by driving around you're feeding in, you're becoming part of their biggest source of data. Then they have this slightly higher step. If you want, it's optional, but there's this very handy little button, so as you're driving, you can send an alert if there's a hazard on the side of the road, or there's a police speed trap or something like this. Then of course they have the experts, their smaller network of really devoted contributors who are actually going in and spending time editing maps and so forth.

Having these tiered levels of participation, depending on how much time you have, how much skill you have, that's the first thing they've done that's really been effective. The second thing is you have to have a value exchange. You have to, to build a platform like this, where you're bringing people in, to rent their homes on Airbnb or to start their business idea on Kickstarter, or to contribute their data on Waze, there's got to be something that they immediately get out of it. They've built a great app. It's very useful, the utility is right out the gate.

Different maps and systems are slightly better for other things, but Waze definitely has its niche, the things that it does better than any other mapping app. They really show value to the customer. Thirdly, there's the last point is fairness, and that comes I think, up in many of the worst cases of crowd-sourcing, as where the customer winds up walking away feeling somehow that they were taken advantage of, or somebody made a lot of money on their idea and they didn't get anything. Waze is very transparent. You know what you're getting, you know what you're putting in. I think everybody feels very good about the participation at the end of the day.

Mike O'Toole:

That makes sense to me, but I am curious about one thing, which is this exchange of value, makes total sense to me. I'm a Waze user. I turn it on, they help me shave 20 minutes off my commute, and I'm giving a little bit of passive data in exchange. That makes total sense to me, but what do the map makers get out of it? They're volunteering. They're dedicating hours a week, tens of hours a week in some cases, to fixing the maps. What's in it for them?

David Rogers:

That's a good question. I'd love to interview some of them in particular, but in general what you find, these are kind of classic lead users. It is not about the average driver. It's not even probably the 1% of your drivers. It's a fraction of 1%. The Weather Company discovered that there were people out there who were these avid meteorological hobbyists, who loved doing weather recordings in their backyards and in their property and their farm fields, and spent their own money on equipment, so they created an online community called The Weather Underground, where these folks could get together and just share their own data.

They get the fun of connecting with each other, and in the process, The Weather Company gets a lot more additional data to feed into its models for the apps that run on our phones. It's all about finding who's that really ... That niche group who is already really interested in your topic or your area, or your experience on their own. I don't think they're recruiting people who don't have an interest in maps to play this role. It's the people who already do have that interest, and by finding out what's the participation experience that's really going to be rewarding to them and keep them engaged. That's how you make something like Waze work.

Mike O'Toole:

Yeah, it sounds like it's find your crazies, and I mean that in the best possible sense of the word.

David Rogers:

Exactly.

Mike O'Toole:

Cater to them a little bit, and Waze has done that.

David Rogers:

It's like Harley Davidson finding its brand fanatics, folks who tattoo their arms with the brand. It's about figuring out who those people are and really making them feel welcome, and making it a good experience for them.

Mike O'Toole:

Hey, David, thank you for your perspective, and we will talk to you next time.

David Rogers:

Absolutely. Thanks very much, Mike. Talk to you soon.

Mike O'Toole:

We're going to switch gears for the end of today's show. Our last episode was on vinyl and its resurgence. One of our guests was Nick Alt, founder of VNYL, that's V-N-Y-L, a Kickstarter funded service that hand curates records for its members. When we first talked to Nick, it was literally just after his launch. We don't often get to talk to true start-ups on this show, so we thought we'd check in with Nick to see how things are going. Nick, when we first talked, you were just launching, and now you're a few months in. How's it going?

Nick Alt:

It's going really well. The pace of this business is somewhat insane to me, just because this was a nebulous idea I threw on Kickstarter just to test the waters to see if it was worth pursuing. It's been crazy. There's been so much learning, so much ability to kind of see what works, what doesn't work, and try to come up with how do we make the best possible product to really create and engage new music fans?

Mike O'Toole:

What is working? When you had that in your mind's eye back when it was just a Kickstarter idea, I'm sure you imagined what this could be. What is working? Where has that vision come to pass?

Nick Alt:

What really works is the concept that we started with, which was to create a discovery platform for music around human curation, and that at the foremost has always been our mission as we talk about internally. That's going exceptionally well. We've shipped out thousands upon thousands of records so far, and [crosstalk 00:34:48].

Mike O'Toole:

How many folks do you have on-board roughly at this point?

Nick Alt:

We just crossed 1,300 members a few weeks ago.

Mike O'Toole:

When somebody's happy about it, what do you hear? Since there's more vocal fans, what do they say?

Nick Alt:

When they're happy it is like any number of things, and usually it's multiples of these. There's a post on social media, there's usually a private note to one of the curators. Some of the private messages that we've gotten in the last couple months have been exceptionally touching. It's so rewarding to have those moments, and we're using [flack 00:35:27] like any good modern company is, and so we post these things to the curators, to each other, to really kind of reinforce why we're doing what we're doing and why we're so focused on spending all this extra money and time on creating human curation, and not relying on algorithmic conveniences if that's what you'd call them.

Mike O'Toole:

So, some of that vision is coming to pass. Where have you had to course correct?

Nick Alt:

In the course correction department, you know with any business where you're trying to grow in scale at an extremely aggressive pace, you find yourself in a situation where you have a very vocal minority of people that are ... They don't necessarily really like what the product is, and for whatever reason, we're sad about it, because we really want people to love what we're doing, and we want to keep them as customers, but for the most part, it has stemmed around our inability to allow people to ship records back to us for two main reasons, which are a) it's a real for-user experience.

Then the other one, which is more from a real business legality standpoint, is the fact that renting records is some addendum to the copyright law that came about in the mid '80s I want to say, that deals with record stores not being able to rent vinyl LPs to their customers because ... I think at the time it was written into the copyright law because record stores were profiting off the sale of blank cassette tapes, so to prevent that early day of privacy, that was the way it was written into law to prevent that. Obviously that's years and years and years ago, but it's still in practice today. This is something that came up and came out of us researching this and we were looking at that and saying, "Well, at the end of the day it's a great user experience to not have to rent these records."

Mike O'Toole:

I can imagine, too, though, that that could be tough, right? Because the shorthand that some people were using for you guys was the Netflix of records and Netflix is, at least on the physical side, is a rent and return model, so I can imagine that must have been, for a time there, a little bit of course correction.

Nick Alt:

Yeah, absolutely. That was something we course corrected on the business side was basically changing the model entirely, because to us we were basically saying, "Well, we're going to get all this inventory back and so we don't have these inventory costs to have to worry about, because we've devised the model to basically allow people to only be paying for really the curation and the shipping."

It seemed hard for us to kind of wrap our heads around and really figure out how to make that better, and we didn't want to penalize people who had backed us, so we thought the best solution was to just say, "Hey, the cost is going to stay exactly the same as what you pledged, as a backer pledge, starting at $8 and on up, and for that, instead of us assuming we're going to get these records back, you're going to keep them and unlike what we said, we're not going to charge you for what we sent you."

If you would have kept these records, like on some of these orders, we end up losing upwards of $20 a shipment just because we're not getting that inventory back, and so it would have been really poor on our part to basically turn around and say, "Well, you know we're going to force you to keep these records and on top of that, here's the additional charge and thanks for playing." Instead we thought we were really benefiting the user by changing it and letting them keeping them and making it kind of a surprise nicety of the service.

Mike O'Toole:

You made that shift, and it sounds like most people were right there with you, most of your customers. Any other ways the business model has changed just based on early experience?

Nick Alt:

The business model also changed from ... You know, so we started getting into shipping and logistics and trying to figure out, "Okay, since we now are dealing with a business that has infinitely more complexities when it comes to sourcing vinyl and figuring out what vinyl is going to make the cut and not make the cut," we were torn because there's a lot of our customers that really love receiving vintage records, myself would be in the mix. I would be included in that. I love getting stuff that I can't buy anymore and that's out of print, and the stuff that I'm not going to be able to find on Spotify or whatnot.

But for the business to succeed and thrive, we actually shifted the model for a third time, and we're focused now on shipping out 3 brand new LPs to every customer. It still applies the same level of curation, it just changes our ... I'm looking at it from a brand perspective. I think the product is much richer when you get it in terms of these are 3 records that no one's ever listened to and it's 3 new product, and for the price point we're offering at it, it's really hard to beat, I think, because we've got the layer of curation and you're getting 3, so odds are, if you don't like 1 of them, you're probably going to like 2 of them.

Mike O'Toole:

While VNYL counts its members in the thousands, not millions, the company does have something in common with Waze. Namely, the resource of an intensely passionate customer base. We asked Nick if he had any plans to tap his customers for ideas as he grows his company.

Nick Alt:

Yes. That is so interesting. I swear that you've been clearly spying on us, but no ... We're working on some ability to do that. I don't know how quickly we can roll it out with any level of feasibility, but I think it would be really run to make the passionate customers, the people who are most engaged and the most hyperactive inside of the platform, to ultimately become the curator to your fellow customer. I think people would totally dig it.

We're working on that equally in tandem with doing some hopeful guest curation with the labels of artists who are releasing another release and we don't know if it'll take the shape of a custom, limited edition hashtag, a custom vibe for that month. A small, limited edition amount of VNYL members could select that and then could have Tame Impala curate their order or whatnot, which that could be really fun.

Mike O'Toole:

I'm Mike O'Toole, and you're listing to The Unconventionals. Thanks to Julie Mossler for our great conversation. Thanks to Waze. Thank you to Google for hosting us in New York City. By the way, if you haven't signed up with Waze, here's a little extra incentive. Your turn by turn directions can come to you from Rob Gronkowski, Neil Patrick Harris, Colonel Sanders from KFC, or as of September 1st, Stephen Colbert. A special thanks to David Rogers for his time and insights. Join us next time. We'll be staying with the transportation theme. We're talking to Matt George. He's the founder of Bridge, a ride sharing program that matches up elements of Uber with public transportation.

Voiceover:

The Unconventionals is written and produced by Mike O'Toole and Reid Mangan. Post production and technical direction by Reid Mangan. Promotion and distribution by Greg Straface and Graham Spector. Additional media by Anthony Gentles and Ryan [Doe 00:43:45]. Our executive director is Phil Johnson for PJA Advertising and Marketing. I'm [inaudible 00:43:51] Lahey. To listen to more episodes of The Unconventionals, visit agencypja.com/theunconventionals.

Mike O'Toole:

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