Interested in learning what's next for the gaming industry? Join gaming executives to discuss emerging parts of the industry this October at GamesBeat Summit Next. Learn more.

On the traffic-clogged streets of Tel Aviv, every cab ride I experienced was either thrillingly close-to-illegal or brain-meltingly tiresome. But car rides were a little easier – and they all had one thing in common – each had an iPhone cradled in a hands-free stand, each toting Waze, the crowdsourced traffic guide that offers turn-by-turn navigation to help you scoot around town avoiding jams, police blockades and accident hotspots.

waze screenshot

“No-one uses Google Maps here, or iPhone maps,” says Eli, one of our hosts for the week. “Everyone uses Waze. Look – here’s how many Waze users are on the road right now…” His screen is covered with pink, smiley speech bubbles, each one contributing to the traffic Hive Mind.

Since its launch in 2009, Waze has enjoyed a remarkable trajectory to the world’s largest crowdsourced traffic information service. Its growth has reached exponential level in the past half-year, with global users doubling to 20 million in the last six months and so far attracting over $65 million in funding from the likes of Kleiner Perkins and Horizon Ventures.

We went to the company’s Israeli headquarters to chat to co-founder and president Uri Levine about the route to Waze’s success.

Putting community in your commute

uri levine waze

“We’re more or less growing at a rate of about two million users per month,” said Levine. “And the beauty is that the more users there are, the better the service becomes. When it reaches critical mass in a new territory, then we have a full map offering.”

And this is the Waze special sauce – the company didn’t spend hundreds of millions on mapping á la Google or invest heavily in custom-built navigation software like the old guard of sat-nav manufacturers. Instead, it provided an infrastructure that allows Waze users to add the information passively as they make their journeys.

Simply by being logged in to the app, you are transmitting data on your environment – and an extra layer on gamification rewards more active members of the Waze community, so logging uncharted areas, reporting traffic issues, etc all come with rewards and kudos from the community.

“As soon as we approach the tipping point of user uptake, all the good things start to happen,” said Levine. “That’s when we see the maps start to be navigable and the growth start to get exponential.”

Why Israel is “the perfect beta site”

This disruptive model of navigation that saw the small startup go up against giants such as Apple, Google, and traditional sat-nav manufacturers meant that Waze had to raise capital – and a lot of it –fast. Its A and B rounds brought in $37 million from US and Israeli sources Blue Run Ventures, Magma, and Vertex VC, while its recent Series C brought in $30 million from Kleiner Perkins and Li Ka Shing’s Horizon Ventures.

“Waze was always a disruptive approach. We wanted to do maps in a way that hadn’t been done before, and to disrupt the market you have to have a lot of funding,” said Levine. “But if you have a good product, there’s always money.”

“Israel was the perfect beta site for us. It’s very small and very dense. It is easy to get to a lot of people to use your product very quickly and to collect feedback. Waze was built on the ability to make mistakes fast and fix them fast – and Israel is a good place for that,” said Levine. “And we found the users and community in Israel to be very, shall we say, engaged. Outspoken.”

jam tel aviv

And because the traffic is pretty awful in Tel Aviv, too? “You know, it’s not so bad! I’m just back from São Paulo – that’s bad traffic. In places such as Mexico City, Bogota, Bankok, Jakarta, Kuala Lumpur, Johannesbuurg – cities of over 10 million, that have had rapid growth, we see really terrible traffic – these are interesting areas for us…”

Cruising into new territories

And it’s these territories that would give Waze world-leading reach if it can gain “tipping points”, as well as in the US and China. The app is already trialing monetisation methods in its “beta ground”of Israel by offering drivers live advertising of stores and services along their route.

“What we learned over the last couple of years is how to bring drivers to the point of sale,” said Levine. “Commuters take the same trip every day, so we’ve seen them actually opt-in to discover what services or discounts are available along the way. They see this as added value. In some cases in the US, Waze drivers can get discounts for fuel as a group. There are six million users in the US, so that’s a big group to attract to your gas station – and everyone wins.

waze screenshotAnd it seems that the company even has its biggest predators snuggling up – the new turn-by-turn navigation in the next iPhone OS is using crowdsourced information from Waze, displaying the true clout of the product.

“OK, so Google Maps is on every Android, so it technically has more that 20 million users, and turn-by-turn is on iOS, but our focus is on creating a social network of drivers and offering more opportunities around that. And that’s how we want to expand the product – by offering more social aspects – the ability to see which of your friends are nearby, who will pick you up, tips on cheaper fuel, etc.”

The new roadmap

Can the company keep up with its spectacular growth? We were surprised by the company’s ultra-modest headquarters in Ra’Anana, a small city to the north of Tel Aviv that houses the 90-strong R&D center (and where, tellingly no photographs were allowed). Levine smiles: “We’re looking for new offices right now, we’ve pretty much outgrown this space.

“It’s a big problem… It’s very complex – you have millions of people that rely on your service, so you need to keep up to date and expand the product at the same time. You have to keep the user satisfied, which requires more engineering, more computing power, more resources. But, then, it’s the most enviable problem to have in business.”

This story originally appeared on VentureVillage, a VentureBeat syndication partner.

This story originally appeared on VentureVillage. Copyright 2012

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Learn more about membership.