Google Maps

Um I ha I don't want to spoil I have like some stuff that I could tell you, but I don't want to spoil it. Well, Google Maps.

Welcome to Season 5, Episode 3 of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert, and I'm the co-founder of Pioneer Square Labs, a startup studio and early stage venture fund in Seattle. And I'm David Rosenthal, and I am a general partner at Wave Capital, an early stage venture firm focused on marketplaces based in San Francisco.

And we are your hosts. Today we are talking about Google Maps and the acquisition of three companies, starting with WHERETU Technologies in 2004, that set the whole thing in motion. And David, I would not have guessed it when starting the research, but there's a chance this is as big of a success, but far less discussed than our shining example of an A plus. Instagram. And listeners, over the next hour or so, we, or at least I, am gonna try and build that case.

Oh, I can't wait to hear it. Well, that's actually a good question. Which probably Instagram is used more like in terms of more individual like use sessions per day than Google Maps. But I don't know. If you count all the APIs of Google Maps, like it might be close. Yeah, the the dual revenue model as one being a different front door to Google than search, and two, actually uh now selling that API access. But we will get into all of that and more.

Alright, listeners, this is a great time to thank one of our favorite companies here at Acquired, Sentry. That's S-E-N-T-R-Y like someone standing guard. Yes, Sentry helps developers debug errors and latency issues pretty much any software problem and fix them before users get mad. As their homepage puts it, they are considered not bad by over 4 million software developers.

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to some of the biggest companies in the world, you can check out century.io slash acquired. That's S E N T R Y dotio slash acquired. And just tell them that Ben and David sent you. Yes, and they are offering two months free to all acquired listeners. Yes. Thank you, Sentry.

If you like the show, you should come join the other twenty five hundred plus acquired fans that are hanging out in there. And if you want more of the show, you should become an acquired limited partner. David and I release one LP show for every main show and we use these episodes to go deeper on company building topics. The last of which was on a not very well known topic with Andrew Abramson from Riviera Partners on how the best companies in tech search and recruit for product executives.

You can get started with a seven day free trial and listen right now here in the podcast player of your choice by clicking the link in the show notes or going to glow.fm slash acquired. All right, David, I'm pretty excited to do a classic acquired episode.

This is gonna be classic. I noticed in our LP show read you uh you no longer say how buttery smooth it is to subscribe, because it is very buttery smooth, but we got a bunch of feedback in the survey that people uh people didn't like that description. Yeah.

We got a lot of funny feedback in the survey. I think actually we should do an LP show on stuff we learned from the survey'cause there's a lot of good of course there's like interesting demographic stuff. For example, the top two uh types of people that listen to the show are product managers and and engineers. But there's a lot of other really interesting data that I think we should we should tease out on L P.

Yeah, we totally should do that. We had what almost eight hundred responses. Uh which is great. Thank you for all the feedback and some great helpful stuff, some really funny stuff. But mostly we just appreciate, you know, all of you for listening. It's it's super cool. So thank you.

All right, David, you wanna dive into the acquisition history and facts? Let's do it. So We go back to two thousand three, relatively recent by acquired standards. Yeah, we're not starting with like the c the original cartographers. And It's been a busy week here at Wave, you know. No, we go back sixteen years to two thousand three to Google in Mountain View. It is pre IPO Google as we're gonna see

just pre IPO Google. They are starting to gear up. They have found their business model of paid search inspired by Overture, uh, which we covered at the The borrowed best business model of all time. Yes. We covered uh with uh the Internet History Podcast, right? Um Beth Yep. Yeah, I'm Brian McCullough. Yeah, thank you, Brian. So it's two thousand three and a young product manager at Google, fresh out of Stanford, whose name is Brett Taylor.

is working on a uh little and truly little feature of Google at the time called search by location. The idea is that you could enter searches into Google by location. But there's no maps. There's no it's it's like completely useless and and uh in Brett's own words it had Zero. Users per day.

And I think if I remember right, you had to like use a keyword, like you were typing in the search bar and it was like location colon or something like that to scope where you wanted to I mean it was like a command line function. I mean I don't remember because I didn't use it. But uh for listeners, uh the name Brett Taylor might sound familiar. Uh Ben, do you know what uh Brett Taylor went on to do? Is he CTO of Facebook now? Well he went on to become CTO of Facebook. Through Fen French.

He founded Friend Feed. He was CO of FriendFeed. Uh that was acquired by Facebook. Uh he became CTO of Facebook. Then he left, founded Quip. which was sparked by Salesforce and he's now the chief product officer of Salesforce. We're gonna have many illustrious Google Maps alumni as we continue throughout the episode here.

Friendfeed was so awesome. That was that like time in social where all of the platforms were similar enough that you could build an aggregator and that actually made sense. Like now Facebook posts have so much crazy metadata and different types associated with them, Twitter, everything has uh is so sort of unique. But FriendFeed basically said, sure, connect with all your services and we'll create one feed of all your friends across all your services.

That wildly defies the business models of all these companies now. So that would get shut down immediately. But that was a really cool. It was like um but you worked on with Red Ride of aggregating uh Uber and Lyft and uh Yeah. Great idea. Not uh anti business model of big companies. Anyway, we digress. So it's two thousand three. Brett sits down with Larry Page, co founder of Google, and recently hired VP of business development, Megan Smith.

to talk about search by location, the state of the product, the state of the competitive market out there. And they realize, look, this is not this feature is not cutting it. We need to do better. And and what was going on out there, AOL a couple of years earlier had bought MapQuest. MapQuest was the leading map a internet mapping product out there. AOS. Pretty public. They they they bought it after it was a public company.

Yeah, that's right. They bought it for a billion dollars. I think that acquisition was pre bubble bursting. It was the most used product out there. Yahoo also had Yahoo maps out there, which were quite popular, and Google found out that Yahoo was doing a bunch of work uh to adding a bunch of features to Yahoo Maps and really making a push on it. And so the three of them decide We need to really compete in this space.

Fortuitously, right around that same time, they get a tip from their investors, Sequoia Capital, one of their investors, that there is an interesting uh little company down under in Australia that they might want to look at. In researching this, uh last night I discovered that MapQuest is still around. You can go to mapquest dot com. The logo is something that I've never seen in my life.'Cause of course it's owned by Verizon,'cause the whole AOL to Yahoo Verizon That's right.

So it's like a still a thing you can use. It uses uh map box and um it licenses sort of maps and data. I couldn't believe it was still around'cause like my the last time I used MapQuest I was Like printing out the directions so that when I was driving somewhere I could look at the piece of paper and you know

Yep. That's what you did. Well w well we'll get to uh state of the art in a minute. Well that was state of the art was you went on MapQuast or Yahoo Maps, you got some directions, you printed them out, and as you drove along or walked along, you were like looking at the sheet of paper and there was no Look at it.

Yeah, they were just static pages. You entered your starting point, your destination, and you got a static webpage that you then printed out. So, down in Australia though, there is a motley crew of four people. two Danish brothers, Lars and Jens Rasmussen, uh, who had recently moved there. They're Danish by birth. They had been in Silicon Valley in California. They had been working at a startup. That startup was called Digital Fountain.

Well, it was a dot com bust. I think it ended up surviving and maybe ended up getting acquired like in the mid two thousand. But they laid off like most of the people. They laid off most of the people. And so the two brothers had gotten laid off. Um and they said, Okay, well, you know, it's kind of nuclear winter here, post dot com bust, but

Let's start something. Like, you know, we've seen we've been through this startup. We were interested in starting a company. Lars was dating a woman who he would ultimately marry uh who was Cuban and she couldn't immigrate to the US. And so she and he decided to move to Australia. So they moved to Australia, but he and his brother Jens are are thinking about

you know, a product that they could build. And Jens had the idea that that, you know, just like we were talking about, this state of the art in mapping on MapQuest and Yahoo Maps. It kinda sucked. Like it really kinda sucked. And maybe like they could build something that was better. And his idea was that so

Uh if you go way back and try and remember using these sites, you would see a map, but the map wasn't like actually the key part of the experience. It was the list of turn by turn directions. on the side of the map. And the map itself was like you'd get a tiny little like you know, gift it. For fun they generate you this tile that's like, Look, this is sort of il illustrative of where you're going.

And so he had the idea that the map should be front and center, just like a map, and that the directions should be on the map. And the map should not be static, but it should be dynamic. And you could interact with it, you could zoom in, you could pan, you could do

all of the things that we now think of as normal modern mapping applications. The way he thought that you could do this was to make the map based on this concept of tiles. And each a tile, it would be dynamic tiles in the map, and they represented a small part of it, and that they could stitch it together so that whatever view you were looking at was an aggregated view of all the little mini tiles that made up the map and you could move it around and see different tiles and whatnot.

That's a brilliant technological innovation that enables this. It's amazing to me that it both requires this sort of like breakthrough technology innovation, which is still how maps work today. I mean, there's a lot more vector stuff than just this sort of static tiles world. But That that's what enabled this mapping revolution. But the vision innovation w th that that he really nailed was if you made the map big and pretty and zoomable.

and searchable, it itself could be a platform for other services. Like the map itself could be a platform. Could be the the mode of of interaction. So Lars is like, well, yeah, okay, this is cool. Well let's start a company around this and let's do this. So he's moved to to Australia, he convinces Jens to move to Australia and he recruits two other engineers who are friends of theirs, Noel Gordon and Stephen Ma, and the four of them start working on this.

out of Noel's spare bedroom in Sydney, in Australia. They decide the name of the company, Ben, as you said, Where Two Technologies, Where and then the number two technologies. And they, you know, start talking about how they're gonna do this and like

The web isn't even on their mind. Clearly the only way that you could build an application this performant and dynamic would be with desktop software, right? Like you would this would be like uh, you know, the Encarta encyclopedia. You know, you're gonna install this. On your desktop computer, and it would be super cool. And you know, you can find what you want, panorama. Maybe you could still print out the directions eventually. How else could you do that?

So they start working on it. They realize that, hey, this is this is kinda cool. They might be onto something. They should search for funding, VC funding for this. Uh so Lars and Jens fly back to California. They meet with a former Cisco executive uh that they had known who is a prolific angel investor. His name is Frank Marshall. Frank says, Okay, like this is cool. I'll introduce you to my network to a bunch of ECs, including Sequoia Capital. So they get introduced to Sequoia.

And Sequoia gets pretty excited about this. Sequoia been was investors in Google, they were investors in Yahoo, investors in in lots of, you know, great companies over the years, as we've seen many times on this show. They start talking terms and they give a unclear if this is a verbal offer or they actually gave a term sheet to the company to invest.

two million dollars for forty percent of the company. It was a different time back then, uh, post bubble bursting, so that would be a five million dollar post money valuation selling forty percent of the company for two million dollars. Times have have definitely changed in uh in the seed market since then.

However, before they ink a deal, and and the brothers are excited about this. They're like, man, great, Sequoia Capital, one of the premier marquee venture firms out there. They're willing to fund us here in here here in Sydney, Australia. Uh, this is great. They're excited to do it. Before they actually sign the deal, though, Yahoo releases what the Google folks know that they are about to do is a big update to Yahoo Maps.

and they add local yellow pages listing and it's it's clear that like oh okay this is gonna be the business model here of like we're gonna have local businesses on these maps. We're gonna sell advertising around that. People are gonna be able to find them.

And this is kind of game changes in the industry. Sequoia sees this and they pull out of the deal. They say, Yeah, Yahoo's gonna be the winner here We're not as excited about funding this start up company to try and compete with these giants anymore. Sequoia gets a lot of things right, but uh Uh well they still get something right though, you know, and this is one thing um

They are in many of the best, you know, big platform companies out there, and of course they're investors in Yahoo and Google. Sequoia does say, as a kind of a parting gift to while passing with the brothers here and where to says, you know

With Yahoo launching this, Google is gonna need to respond. And uh, you know, we're investors, we're on the board at Google, like w we can introduce you to them, we'll broker an introduction. So they, as we alluded to earlier, make this introduction to Larry Page. Back in Mountain View, I I don't know for sure, but I assume Larson and Jens fly over again back to California. They meet with Larry and Megan.

they pitch them. This company that they're building, I I think I didn't mention earlier. The the name of the software, the desktop software is Expedition. They show them Expedition, how cool it is, they pitch them. And and Larry and Megan are interested, but there's there's kind of two problems. One As we alluded to earlier, Google's in the middle of Desktop.

Well well the the smaller problem is Google's in the middle of preparing for their IPO, so all deals are on hold, like period indefinitely. They're not doing any MA during the quiet period while they're getting ready to go public. Uh this is two thousand four at this point. But two, yeah, it's a desktop. So like we're talking about Google here. Google doesn't make desktop software. Google makes web software. Did you see that that Larry Page quote, We like the web? Yeah.

Yes. Exactly. We like the way that's all Lar at the end of the meeting this g that's what Larry says. He's like, you know, Yeah, this is great but

We like the web. Of course, Lars and Jens in in typical great entrepreneurial fashion, they say, Well, we can do that. So they go back to Australia and the four of them and where to only the four, they're still just four engineers. They work feverishly for three weeks and at the end of three weeks

They come back to Larry and Megan and they say, Hey, remember how we had Expedition running on the desktop last time? Well, here it is running on the web. And what they do, they have it running on a on a web browser. They use this idea that was uh as best as we can tell and and they've talked about it and Google's talked about it, kinda independently invented both by the Gmail team and Paul Buke within Google.

and also where to while they're trying to get acquired by Google at the same time. And that's leveraging this kind of relatively unknown feature of JavaScript that Microsoft had added to Internet Explorer that allowed it to sync with allowed a web page that was already loaded to sync with XML data stored on a server. So like

Ordinarily and at this time, like web pages are static. You load a webpage, everything is done, there's no processing happening on the webpage, it's static. But there is this feature that you can dynamically fetch XML data in the background without refreshing. Asynchronous JavaScript and XML. Indeed. Yeah.

The wave of the future. And uh for all of our uh engineering audience and and probably some others, you're gonna know exactly what we're talking about here. But for everyone else, you may have heard of the term Ajax. Asynchronous JavaScript syncing with XML data stored on a server. Uh short for yeah. A We're we're we're coming to the the the plumbing the depths of our our engineering uh uh abilities here.

All I remember is this is like a couple of years before I rewrote the the Hudson High School website and I remember writing a lot of XML HTTP requests and being like, This is gonna be cool like Google Maps what? So indeed, you know, I feel like we've been lately been on a um web two dot oh history kick here, but this is su becomes a killer key building block of the whole web two dot oh era is the ability to have

non-static web pages via this technique. Well, as part of the Slack episode, we talked about Flickr. That had just launched a couple months before. This is really like one of the key underlying technologies of the Web 2.0 Renaissance.

So the where to team, they come back, they present to Larry and Megan, and they're like, Oh, well, all right, this is this is pretty good and they were doubly impressed and Google was doubly impressed, because again, Paul Bukite at uh on the Gmail team that was I think I don't think Gmail had come out publicly yet. I think it was still being worked on internally.

They were like at the bleeding edge of building web applications. They were doing the same thing internally. So Google's like, wow, man, these engineers must be pretty good if they come up with this independently.

So later that summer, in August, Google does complete the public offering on August nineteenth, two thousand four. And then very shortly thereafter, probably as soon as they can, once the dust settles from the IPO, in October two thousand four, Google acquires where to. Brett Taylor moves over and becomes the first PM for this new team, uh, which is rechristened from Where Two to Google Maps.

Very inventive name. So, you know, it was just over the summer while Where Two is building the web version of the product to try and impress Larry and Megan Google Maps launches publicly in February 2005. So the acquisition is October 2004. The web product is only a couple months old, and within months.

Google Maps is launched to the public. It's it's pretty incredible. I I I feel like we hear this story a bunch on Acquired of some of these totally world changing products are built in just a matter of months by really, really talented engineers. Well one of the things that makes this story so common on this show is there was this time when web applications were so new that it was intuitive what was going to have product market fit.

because there were so few web applications. I mean, I think like, oh, the first really good interactive mapping software, the first really good interactive you name it, like there was probably a big space for it. Photo software, Flickr, video software, YouTube, you know, the all of these companies, yeah, it was the floodgates were opened to building these applications on the web and whoever could build them fastest and

And the web was s so slow at the time too that it's that's exactly it, fastest and best. Like there was like this was an era where technology innovations

created a a hundred X better user experience for people that made them actually use those applications. So there was lots of people that would sort of like decide that they wanted to get into this, but it it took real technical genius to you know, work with the the internet speeds we had at the time, the browser technologies to be able to sort of like make that possible for people.

Yeah. And what's interesting is like this is pre Google Chrome days, so actually all of the browser technologies making this possible are coming out of Microsoft and Internet. And Firefox. And well and Firefox too, yeah. Uh yeah. Uh pretty incredible.

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Rewind just slightly back to the end of two thousand four. Google also acquires two other companies in quick succession at the same time. One is a company called Keyhole. Keyhole was unlike Where Two, uh was a well funded startup, I believe located in in Silicon Valley in California.

It also though made desktop software uh and it was called Earth Viewer. And of course, as listeners can probably guess, that becomes Google Earth, which interestingly would remain desktop software for quite a number of years. And contain a flight simulator. That's right. Later. Very, very important here. Um Ben, do you know who the CEO of Keyhole was? I do not. Uh well it was I'll give you his name, see if see if this rings any bells. John Hankey.

Oh man. So John would ultimately after a couple of years become the VP of the Geo Group, quote unquote, within Google. So he would be taking over all Google Earth and Google Maps responsibility as an executive for that. But then, as, you know, oftentimes happens in big companies and at Google, uh, he kinda got bored with this role and wanted to do s go back to doing something new and innovative. And he had come from the video game industry before he started Keyhole.

And so he started a little project within Google that was referred to as Niantic Labs. Away. Yes, yes. The geospatial stuff makes a lot of sense though. Indeed. John is is now the CEO and co founder of Niantic, which of course makes Pokemon Go and the new Harry Potter game and all of the uh Ingress. And Ingr well started with Ingress. Yeah. And um all of well actually it started with, I think it was Field Trip, which was a application built on

Google Maps to that could show like interesting um points of interest around you with y if you held up your phone and like panned it around. But yeah, uh certainly by far the most successful augmented reality uh game or probably application period out there right now. Yeah. Yeah, for sure. I mean w uh it is funny. I think when people talk about the emerging AR market, I th I think that's the widest used AR market.

That is the market. Yeah. Yeah. Pokemon Go. That's the market. Um that was Keyhole. Uh Google also acquires a company called Zipdash, uh a very, very small company. I believe they paid two million dollars for for Zipdash. Zipdash was also based in in Silicon Valley in California, and they were providing creating real-time traffic data on streets, and they were

getting that data both from and sending it to uh mobile phones, of course, like that is when you would want traffic data, is when you're you have your mobile phone with you while you're driving. There's a giant market Only for Nextel phones at the time of the acquisition. Uh It does have that sweet like walkie-talkie feature. The push to connect. Oh man. I never had one of those, but I always wanted it. Yeah, but the commercials were great.

I thought the commercials were awesome. So the uh the Zip Dash team by far, you know, the most insignificant of the three of these acqu acquisitions, uh To this day, the where to acquisition price is still undisclosed. It it was a mix of cash and stock. That's the most we know. But I think it was less than fifty million. Like I think it was a relatively small acquisition. I mean great for four people, but

And I believe Keyhole was around thirty five million, I think. I'm being sort of facetious about the total insignificance of the zip dash uh acquisition because Google would of course, you know, stick them in. this backwater thing that they would work on that nobody would care about, which would be the mobile version of Google Maps. Which of course is now like

by far the, you know, ninety plus percent of the business and one of the most important applications uh in history. Back to the launch in February 2005 of Google Maps. The night before launch it got slash dotted. Remember slash dot? Oh man, yeah. That was like uh that was like getting dug before dig. I know, I know. So great. Or tech memed now or you know. I mean it's still up. Like you can I think you can still I don't know if there's traffic, but like There's writers.

Yeah, I know. I remember going to Slashdot like literally every day. It looks the same. I mean this is crazy. Oh man. It's not even the way back machine. Like somebody published something this morning. This is this is like it's still a news site. Wow. So Slashdot, of course, for listeners who uh don't remember or weren't alive, was you know sort of the tech meme equivalent. It was it was the user um generated and posted news site for technology.

back during this era, getting slash dotted, quote unquote, was if your application or service or product or what have you made it to the top of the slashdot boards, uh, you would get just a ton of traffic. I'm reading the about. Slash. was created in nineteen ninety-seven by Rob Commander Taco Malda. I remember Commander Taco. He would he was like the the username on all the posts. Yes. Oh, so great. People find out about this impending or kind of re well, not even relaunch of

of where to because Expedition was, I don't believe, ever launched publicly and it was desktop software. But the launch of Google Maps coming uh the night before, it gets slash dotted with the URL of Google.com slash maps. And so when they launch the next day and announce the product, it they just get a ton of traffic. Ton of traffic. But that doesn't equate to immediate success for the product.

And and actually according to uh according to Brett Taylor and many of the histories out there, for about a year it was like okay. It got some usage, but certain MapQuest and and Yahoo maps were, despite being obviously inferior in many ways, were we're still the the the leading products out there on the web. Over the next year though, they do two things that are really important. Uh one that is sort of like fundamental that was

starting to be well known and I feel like Google was way ahead of the curve but now is like obvious, which is that they rewrote the app. It was really slow and they rewrote it for speed. So like Google understood that speed of loading of web pages, search results, you know, everything I mean those one of their primary value propositions for for why Google won. Not only was it the best results, but it was the fastest.

It was instant. And so they rewrote all of the software, they made Google Maps actually performant and and fast. And that Certainly helped a lot and especially as the product scaled helped a lot. Two though, on the distribution and uh uh sort of stunts side, they added satellite imagery to maps.

And I s vividly remember this. And then the satellite imagery they they the aerial imagery they took from the Google Earth team from the Keyhole acquisition and they they were able to bring it into maps and the web application. And so when this launched

People it was such a novelty. And I remember doing this. I remember my parents doing this. Everybody would go find their home. Go to find my house. Go find my house and view it from a satellite. And that was like the key thing that like made um sort of like the zestimate for Zillow that like it got made Yeah. It was like you were like, I saw this in a movie, only the government can do this and now I can do it too.

Yeah, yeah. And um uh there's a super, super fun story from Brett Taylor that uh he posted on Twitter that we'll we'll link to. about naming this product feature, which of course is, as we all know now, called satellite view. When they were working on it, the maps team called it Satellite view. But apparently the Earth team got really upset about this because some of the images were from satellites. Right. Most of the images. Helicopters. were actually aerial from planes and helicopters.

And so there was this kind of like holy war between the engineering teams about you can't call it satellite view. It's like most of it's from planes. And and so they ended up having a um a a product review in one of the product reviews uh before the feature shipped.

with Sergey Brennan is in the in the product review where they like the on the agenda was to finalize the name of this feature. And apparently in typical Larry and Sergei fashion and especially Sergei, they were always doing, you know, nutty stuff. And Sergei was on this kick that

every meeting had to end on time. Every meeting he went to he brought like a timer, like a countdown clock. And he would hit the countdown clock at the beginning of the meeting for, you know, forty five minutes or an hour or however long it was. And then when the clock reached zero He got up and walked out, meeting was over. And whatever like decisions needed to be made, the current state of where things stood, that was the decision.

So they're in this meeting and uh debating what to call it and everybody's throwing out different names and Sergei's mostly in listen mode and then the clock hits like ten seconds and Sergei says Let's call it bird mode. And then the buzzer like goes off and he walks out. And everybody's looking around and they're like, Are we really gonna call this bird mode? Yeah.

Uh, so according to Brett, the the maps team goes back to work on it and they're really debating, like, we can't call this bird mode, that's ridiculous. And so they decide just not to do it. And they just leave the satellite mode, you know, name in there. And then they shipped the feature and nobody asked them ever again. And so they literally defied Sergei and they just did it. And now satellite mode that we all know and love is satellite mode.

This reminds me. Meanwhile, Microsoft uh shipped the org chart. I remember I don't know what it looks like today, but I remember in Bing Maps for the longest time there was both satellite, which was truly from satellites, but then there was also like I don't know if they're not going to be able to do

called it bird's eye or they called it helicopters, but or aerial perspective or something like that. And this was actually the helicopter shots, which For Nerds was pretty cool'cause then what you could do is they crisscrossed in the sky, like north to south, south to north, east to west, west to east, and you could actually rotate

The perspective that you were viewing. And it it wasn't like at a 45 degree angle. It was maybe like a 20 degree angle or something. But you could actually like Sort of see what it looked like viewing not directly down, but sort of like slightly at an angle down. I remember when they did this. Yeah. Yeah. And I remember like I'm like, this is cool, but like, is this useful at all? Like Why would you have two different views for this?

Yeah. Yeah. But sure enough, I looked at my house and I looked at it from all four angles and I was like, This is pretty cool. Well, uh uh to be back in the mid two thousands. So by two thousand six, uh once all these features had shipped, Google takes over MapQuest and Yahoo and becomes the largest.

internet mapping destination and provider in the world. In mid two thousand six they released the maps API. And this was another like watershed moment in web two dot oh development is developers go nuts with access to the maps Google Maps API and they start creating mash-ups. Do you remember mashups, Ben? Now Oh, Google Maps mashups were such a thing. It was like the tech world meme of, you know, 2006 to 2009.

All sorts of applications get built showing, you know, overlaying uh crime data or, you know, any of the points of interest data or whatever. People are just like taking the underlying maps And the the dynamic nature of it, embedding it in their web pages, layering data over it, super cool stuff gets built. Uh my favorite was: do you remember Pad Mapper? Did you ever use Oh yeah, for sure. Sure. Yeah, so Pat Mapper is a Google Maps mashup.

That yeah, that makes sense. I mean that's how I f I found uh an apartment that way. Like until at least Craigslist got all huffy in and shut him down for screen. Yeah. And this was severe I mean, this is uh fun stories here, but like this this release of the API. the developer interest in mashups and people starting to do this, this leads to things like Trulia, things like Zillow, things like Uber. You know, none of this would be possible without the Google Maps API.

Which for a while we should say was free. It was a maybe a Google growth strategy, but maybe just Google saying like We love making things that make the web better and so if you wanna use Google Maps for your own thing, it's it's free. And then if you're really using it a lot, it's pretty cheap until recently.

I remember I worked for a year at the Wall Street Journal after investment banking and before uh moving to Madrona and getting into venture capital. And during that year we started doing a bunch of mashups and work with Google on the uh uh with maps and we spent a ton of time with the maps biz dev team.

trying to figure out how we you know, could we use this for free? Did we have to pay for it? How much did we have to pay for it? Also it's it took Google a little while to figure this out. I think they've uh got a pretty good business model now.

Also listeners, uh quick update on my last comment. Uh I'm on Bing Maps right now. They no longer have the uh they have an aerial feature, but it is effectively satellite view and there is not a way to rotate around your favorite buildings in four slightly different angles.

Oh, sad. There's just one problem with all of this though. This might actually be I bet this is why it took so long for Google to fully iron out the API business model, which is that Google and Google Maps were completely dependent on mapping data from other data providers and satellite companies, the two largest of which were Tele Atlas and Navtech. And in two thousand seven, both of those companies got acquired. I may mix this up, but I think Navtech got acquired by Nokia.

and Tele Atlas got acquired by TomTom. It may be the other way around. But they were both fairly large acquisitions. And they had a duopoly on satellite map and uh navigation data providing. And so they would sell their data and images to all the car companies that were putting GPS uh and maps into screens in their vehicles. They would sell to Garmin. They would sell uh TomTom obviously was making their own standalone GPS devices. Uh and they would sell to MapQuest and Yahoo Maps.

So Google knows that this is a dependency that they're not too excited about. Also in early two thousand seven, Larry and Sergei are back on the Stanford campus, where of course they were PhD students and Google was started. And they meet up with uh someone who I assume they knew and were friends with, who was computer science professor Sebastian Thrun.

who at the time was a computer science professor at Stanford and he was running two really important projects. One was Sale, the Stanford Artificial Intelligence Laboratory, and two was the Stanford's team in the DARPA challenge. And He and uh Stanford's team had just won the 2005 DARPA challenge. The DARPA challenge, of course, was the uh challenge to create an autonomous vehicle that could navigate a pre-set-out course and terrain in the desert.

And so Sebastian uh and his lab were like at the forefront of all of the things that would go into ultimately autonomous vehicles, but a huge component of that is mapping, navigation data, all of these things. Sebastian told Larry and Sergey that he is actually in the process of with a bunch of his grad students starting a startup to work on one aspect of this. It was gonna be called Vuotool, V-U-T-O-O-L.

Great uh really great product name. And they had a crazy idea that they were going based on their work and the DARPA challenge, they knew all these things that were important. They were gonna drive around the streets of America with Cars Driven by human drivers, but with big cameras on top. And they were gonna use these cameras to take pictures of everything.

And A, that was gonna have pictures of everything, uh, but B, it was gonna be data that was gonna be incredibly useful for this future of navigation and autonomous vehicles and all of that. Which was not a thing that the public was in any way talking about. That w that was five years out.

mean I remember the DARPA Challenge from back when I was in in school uh at Princeton, uh at the same time. We had a DARPA challenge team, uh I mean all the major universities did. So it was something that like academics and engineers were thinking about, but just nowhere near Main Street. But it was like twenty twelve, twenty thirteen before the tech community started getting buzzy about ooh, autonomous vehicles might be a thing sometime soon.

Yeah, it was totally in science project territory. You could argue maybe it is still in science project territory, but but it definitely was then. So Larry and Sergey they hear all this from um from Sebastian, and of course they know on their minds is this dependency problem on teleatlas and navtech. And uh they say, we're gonna buy you immediately. So they do, and of course this turns into Google Street View.

But Street View itself, as we were talking about, was never the only goal of the project. Although Street View was super cool and it it was a whole nother round of just like when there was satellite. Yeah. Everybody goes and looks at their house. Um, but uh so it was great marketing for Google Maps. Using that data, Google starts internally a project called Ground Truth.

And this is led by Megan Quinn, who was a uh product manager uh at Google at the time. She would go on to Square and then Kleiner Perkins, and now she's a GP at Spark Capital uh and an investor and board member at rover.com, one of the many illustrious Google Maps. PM alumni. So she leads this project. And what they're doing with all the engineering talent at Google is basically taking the data and the images from the street view cars.

and using that and interpolating it in ways such that they can get everything they need from that and they don't need to buy teleatlas and navtech data anymore. Talk about another unique and amazing technology problem to solve is we're gonna take

you know, these whatever it is, nine cameras or something that are mounted in this crazy way on top of this car that are all taking these still images. And of course, like there's the difficult thing of stitching them together nicely for street view, but we're gonna be able to extrapolate structured data that serves to create our maps.

Yeah. Taking these lat long coordinates from the moment that these pictures were taken and all these pictures and actually derive map data from that. Frickin' amazing. Incredible engineering project.

It takes a little bit of time as you would imagine, but they have to drive the cars around all of America to get it. Uh but by October two thousand nine, so they acquire Voodool in in two thousand se early two thousand seven. By October two thousand nine Google boots out Navtech and teleatlas, and they are officially only using their own Google data uh for Map.

And that then and I think it was right around then and now that I'm remembering this is when I was at uh the Wall Street Journal. It was right around then that they open up the business side of the Google Maps API and they start uh charging to license out the maps API.

Continuing Ben's quest of playing with mapping software in real time while doing the episode, um, there's a really cool feature you can do, uh, because you know, these cars are still actively driving around all over the place capturing all this data. where you can actually in street view go and change the year that you are looking at. So in the top left corner, if you hover over the little clock,

you can adjust. I'm on Mercer right now in Seattle. You can adjust from twenty fifteen to twenty nineteen. And even in those few years, it's crazy to watch how much the city gets built up and how much that road changes. And I think on average r roads tend to have four or five years of historical data there. But it is like the coolest thing to go in this time machine and look at what they captured today versus what they captured over let's see, I can go back to twenty fourteen over here.

And it it's it's wild to watch the change over time. Wow, I didn't know you could do that. That's really cool. Yeah. I found it in a a deep way too much time on the internet Google images click around session. Love it. Um, okay. So apologies for the multiple jumps around in timeline here, but uh as we're seeing like Google Maps, like this becomes such a foundational product and technology to so many things.

And of course, I'm sure what is on everybody's minds, and people probably remember uh going back to the zip dash uh acquisition uh is mobile. What's going on with mobile for Google Maps? So let's let's Go back again to two thousand seven. Two thousand seven, great year, year I graduated from college. But it was also what else did ha happen in two thousand seven? It was the year of the Jesus Phone. Yeah. Remember it was called the Jesus Phone? I do.

Oh my goodness. I mean if any phone was a Jesus phone, it was the iPhone. Um people uh probably remember when the iPhone shipped, there were no third party applications on it. Everything was built by Apple, but there were two apps that weren't entirely built by Apple and did have third party backends and those were Maps, powered by Google Maps, and YouTube, powered by YouTube. And those beautifully skeworphic images, like YouTube was that old TV instead of YouTube.

Oh well, we're gonna be talking about Mr. Forrestal in a minute here. This must have been in 2006. By this time, uh John Hankey of Niantic Fame had become the VP of the Geo Group and so he both Earth and Maps were reporting up to him. And so one day, according to him, he's at his desk at Google and the phone rings. And uh he picks it up and it's Steve Jobs. Just like the trip episode, uh the EA episode with Trip Hawkins. Steve just like

And so so this is a quote from from John. He says Steve Jobs called me at my desk to ask me to help out on a project. He wouldn't tell me what it was, but of course I knew it. Uh, we worked closely with Apple to get maps ready for the launch of the first iPhone, which opened up so many possibilities. So at iPhone launch, when uh Steve Jobs announces it on stage in January two thousand seven, uh, like we said, maps and YouTube are the only third party apps on the iPhone.

Except they're not really. So what happened was They work closely with Google and YouTube on these, but it's actually Apple engineers and Apple designers that are building the apps based on the backends and the APIs from Google. So Google has not Think about that time like how there w there was no iPhone SDK, everything was

th there was no separation between being a platform engineer and being an application engineer as far as iPhone OS went. So of course it had to be Apple engineers because like There were no like APIs that were optimized for performance. You were writing like directly interfacing at a very direct level and you'd be very careful that you weren't doing anything that would, you know, just cause the app to crash every time or worse, you know, something at the operating system level.

We'll have to see if we can find a link to it in the show notes. There's great uh great retrospectives and histories with people. I think on the tenth anniversary of the iPhone talking about how duct tape it all was together in the first version. Especially that demo, that on stage demo where it was actually like three different phones that were used during the course of it'cause it couldn't all work on

Yeah, and they'd choreograph the entire thing like if uh Steve touched one thing at the wrong time or went off script, like the whole demo would crash. Anyway, so Apple is controlling everything about the UI of maps on the phone. Uh Google's just providing the data. But of course Google is also working on the smartphone of operating system of their own in Android, which they acquired in two thousand five. Two thousand five was a big four or five was a big time of

Acquisitions for Google. We of course covered that on our on our Android episode. So then in 2008, when Android launches, of course it has Maps and Google Maps on it. And then when they update it in two thousand nine, the next year with Android two point zero, Google adds turn by turn navigation to maps. on Android. And this is huge. I mean, people knew at the time. This was like

the death knell of Garmin and TomTom and Navtech and all of these companies. Like they I didn't go back and look it up, but I think their stocks dropped to like like thirty percent on the day of announcement and they're, you know, worthless now. Meanwhile though, like y Google Maps for the iPhone, i you just see your blue dot. You know where you are, you y you can get a list of directions, but like you can't get anything live.

Yeah, r remember tapping through like oh I've made this turn now. Now I'm gonna tap and I'm gonna go look what the next one is. Barbaric. Um who knows what was going on in discussions between the two companies. You could paint a picture where Google wanted to add turn by turn navigations to maps on the iPhone, but they couldn't because they didn't control the UI. But then as

the two companies start fighting over the smartphone wars in this era. Um, the turn by turn navigation is a killer, killer feature for Android. There were turn by turn apps available on the app store for iOS, but they were like fifty or a hundred dollars that you had to pay, remember? Right. Yeah.'Cause I think Tom Tom had one of'em.

Uh yes, Tom Tom did. I th maybe Garmin too. Uh we talked about this on on the Waze episode, which we'll refer to in a minute, as all of this is deteriorating also I have in my notes here. Remember when Microsoft bought Nokia as part of this? Oh my god. An era best forgotten in time. That was just like an arbitrary dig. I know. Well I just you know, we haven't talked about it on Acquired yet and I feel like it had to come up at some point. Um time marches on, we get to two thousand twelve. It

Dub dub, WWDC, and rumors are swirling that Apple is gonna make a major move in the wars with Android. They're gonna release iOS six. Major update and the marquee feature is they are booting out Google. They are launching their own mapping service, Apple Maps. It's gonna be insanely great. and who comes out on stage to introduce it. But Scott Forrest. Scott Forrestall.

And uh we won't be hard to I mean, it's so hard to build a mapping service. I mean I think Well and especially one where you're starting ten years after the the your your competitor. Yeah, I mean not quite Tim, but but everything we've talked about on this episode from where to to keyhole to zip dash.

all the work internally to Street View and Vuotool, all of this over the years that all this engineering that Google has put into maps and Apple I don't know how long they were working on Apple Maps internally. Um I'm sure a couple of years. Like and I'm sure that they realized it was a huge thing and they

I mean they had cars driving around, people sort of were posting pictures on MacRumors dot com of uh the Apple cars driving around. Like it w they were they were definitely putting in a a a huge amount of money and effort. But in the meantime, Google was doing not only all this engineering, but they had billions of people, well, probably hundreds of millions of people at this point in time using their services and getting all that data back from them.

And so when Apple Maps finally ships in September twenty twelve with the release of iOS six Google Maps is gone. So Google's completely booted out. You cannot get Google Maps on the iPhone anymore. Your only option is Apple Maps or a third party application of which Google is not on there. And Apple Maps did have turn by turn. Uh Apple Maps did have turn by turn, but if you followed the turn by turn directions, you might not necessarily end up where you wanted to go.

It reminds me of that uh episode of the office where Michael drives into the lake. Yeah. The machine says. Uh totally. And that I mean there were stories of this happening all over the world. Uh And uh the only thing worse than not having turn by turn navigation on your map app on your phone is having turn by turn navigation that sends you to the wrong place within days of

Of this happening. And we we covered this on the Ways episode. Apple apologizes, letter from Tim Cook. Uh Letter from Tim Cook, not the same. Not from Scott Forrest all yeah. The writing. Yeah. Yeah, the writing was on the wall there. Quickly Scott is um and skewomorphism in total is uh i is uh removed from Apple. And as part of the letter, Tim says, We recognize this as Unacceptable. We are working to make Apple Maps better. Here is a list of third party applications that you can get.

in the App Store that are alternative mapping applications to use in the meantime. One of those that he lists is Waze. And of course we cover this on on our Waze episode, which uh everybody can go listen to for the history there. What everybody wants is Google Maps. Google Maps is the best. Yeah, they hadn't done the rewrite for iOS yet. They had not. So it was remember, Google was kinda caught flat footed here. There was no team internally that had built Google Maps for iOS.

So amazingly quickly, again, this was September 2012 when this happens. On December 12th, 2012, so three months later, Google ships a third-party application to the App Store of Google Maps, and it Incredible. It's amazing. It's it it it's so good. It's so good. It is complete feature parody with Android Google Maps. including turn by turn navigation. In many ways people think it was at the time better designed, better looking, better flow. And within two days it is installed on over ten million

iOS devices. It is like a a tall cool drink of water in a desert. So two two quick personal stories on this. One, uh I remember Like the halls of Office for iPad uh or the Apex team at Microsoft were a buzz when this came out because everyone's downloading it, everyone's analyzing their user interface paradigms. This was the first time that Google had really nailed that trade-off of distinctively Google, but um sensibly iOS.

And it was their their sort of first of many really great iOS apps that felt googly but also felt iPhoney. All of us were sort of like tearing it apart and trying to to understand, you know, d what d should we be taking cues from this in in Office for iPad. The second fun personal story there is the team that built that app was actually Kirkland based.

It was Google Kirkland. It was a small team. I remember there was four core people on the team and I went to a presentation by them on how we built Google Maps for iOS like three months after they launched it.

They basically said like, look that the whole API surface was already written for Android. Like we just needed to be really good iOS engineers and connect to the right services. Like Not that it wasn't that hard, but like it actually was architected really nicely for us to just sort of make an iPhone app that that you know, we just had to be Objective C experts.

It really shows the power of all the work that Google had done to this point that just in a few months there they could make something really nice. w people talk about Google being an engineering driven organization and having incredible engineering uh resources and talent. And like, this is it. I mean, better than anyone else on the planet. Nobody else could do this. Everything that they did with maps over the

now fifteen years uh that it's been around. The incredibly architected back end and API surface such that within three months, a team that is an incredibly talented team can build one of the best iOS applications in the world at that time and use this this API backend and not need to worry about it and then ship it to the App Store and and now Google Maps is one of the most downloaded and installed iOS apps of all time. Uh pretty incredible.

Yeah. I also remember one big thing that made it so good was uh when it was still the Apple version. Apple's app was connecting to an older backend that used the static tiles and had to re-download new tiles for whatever your sort of zoom level was. Whereas When Google regained control over the front end by being able to ship their own app, they could connect to their V2.0 or whatever it was APIs that actually had the vector maps.

So that suddenly the the all the scrolling was much smoother, um and zooming. And actually this is when they introduced that gesture. And for anybody who hasn't used this, if you don't use this and you're learning this from me for the first time, this is gonna blow your mind to make your life better. Instead of pinching

on Google Maps, you can actually double tap and then move your thumb up or down to change your scroll level. So you can use Zoom one handed by just holding your phone instead of holding it with one hand and pinching with the other hand. Oh, that's awesome I did know that but I'd forgotten that. That's huge.

So we're gonna end history and facts here. Definitely go check out our Waze episode, our Android episode to hear more of the history around this. And Waze especially kind of picks things up from here because Google a couple months after this, Waze gets a huge traffic boost and download boost from Tim Cook's letter where Waze is one of the applications he recommends in rumors start swirling that Apple's gonna now buy Waze to fix their maxing mapping problem.

Then the rumor starts swirling that Facebook is gonna buy Waze because they wanna be a, you know, internet portal too and have a mapping solution for some reason. Ends up Google buys Waze for one point three billion dollars in June of twenty thirteen.

And then progress marches on till today. One last little coda uh before we leave the history and move on to acquisition category. I think this was a One of our carve outs on the Zappos episode with Alfred Lynn, Justin O'Byrne did three wonderful, wonderful uh long form blog posts uh in the last couple of years.

comparing the development of Apple and Google Maps over the last uh over the last uh few years. Um, we'll link to them in the show notes. If you're really into all the technical aspects and like detailed minutiae of mapping and business models around this. Go read Justin's post. They're really, really great.

I've got a couple of fun uh catch ups from this story to today. The first is what did the Rasmusens do at Google after moving to I know the answer to this. Google Waves. Google Wave. Oh, I remember when that was launched. I was so hype on that. I watched Lars's live stream of like here is the the platform that's gonna change the freaking world.

It was super cool. I mean, the crazy thing, like one of the main meta themes on Acquire that we keep talking about is like the tech world is a small place, old ideas are new again, everything comes around. They were right. Like they were completely right on the need for this. And the need for it the product that met that need was Slack. It was n not Google Wave. Sort of. It was like Slack plus Notion'cause it was also That's true. It was like a document surface in addition to being chat.

That's true. That's true. And so the c you know, it'd be interesting to think about like, was it just that the timing was wrong? Was it that they got the product wrong of trying to be slack plus notion all in one product? Uh uh w we'll never know necessarily, but yeah, Google Wave. So then do you know what Lars went and did after Google Wave? I know the company that he started that he's running now that I'm not sure if you're Uh but before that. Ooh, I do not know.

He went to Facebook. I don't know if he uh conceived of and launched, but he was a key executive on Facebook for work, which is Facebook's attempt to uh to compete with uh to compete with Slack and uh be in this market. Uh

Uh which we have heard from listeners. I think we uh we may have denigrated Facebook for work in the past and uh we've heard from some listeners that they really like it and that it's rolled out at scale inside their organization. So that's definitely a quietly large and successful product. Yeah, within Facebook. So Yeah, super fun.

Lars's new company is called Weave.io Weave not to be confused with Wave and it is a like musical BPM syncing service that uh their first thing is a running app that I'm excited to try out. Yeah, yeah. Well you've been doing a lot of running lately. It's true.

And then one last update, the f uh fourth co founder of We're Two, Noel Gordon, is the only one of the four who is still uh working at Google. So their fourth co founder Um retired a few years ago, the Rasmussen's obviously are are are gone, but Noel Gordon is still a Googler. Wow. Incredible. Fifteen years later. Yep.

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Well, should we move on to acquisition category? Yep, let's do it. I think it's a technology acquisition with Where Two. Uh walking through this, listeners, this is where we select whether it The the acquisition was primarily done or the main value that was acquired was people, technology, product, a business line, uh an asset, which is what we decided that WAV, uh I'm sorry, that Waze was.

since it was sort of a uh the data that Waze contained and the data that would be generated on an ongoing basis in the future. or other, which gives us the uh ability to come up with new stuff every episode if we want to. Uh but I think this is pretty squarely a technology acquisition that they transitioned into launching their own product. Yeah. That makes sense.

I mean you could make an argument for product, but it wasn't like it was Google Maps. They launched it at status Google Maps. Like it really like a lot of the work and building was was done within Google and it was the technology uh that they uh that they acquired that Wed to this

All right. What would have happened otherwise? Oh man, I think. That's a really good question. Would Google have done this internally without buying where two and would it have been successful if they did without the Rasmusons and the the rest of the Wear Two team? And hanky and uh uh and keyhole and and subdash. Maybe maybe I mean

Maybe maybe they would have gotten there internally eventually, but there was so many other things going on at Google at this point in time. The IPO, obviously, Gmail, everything that was happening then, all the YouTube, uh which of course they acquired, doc.

They certainly wouldn't have moved as fast. And then you think about Voodoo and acquiring that and street maps. And of course what we didn't talk about then is Sebastian Thrun uh goes on, uh just like all of these alumni to do so many amazing things, uh founded Udacity.

uh started Google X with in Google and then of course WiMO and and that whole division and Google's autonomous card division comes out of that. We're we're really throwing rocks on this episode, but I don't think Yahoo would have uh uh come up with all There wasn't a logical other acquirer for them. I mean Facebook was too early and apparently made some decision that they didn't care about owning maps at some point. I think they used Bing Maps as their their solution. Now I remember that.

You know, Apple was ye almost a decade away from doing anything here. Uh if they were gonna sell the company to someone, it was probably gonna be either Google or a legacy player. And uh then I guess the other what would have happened otherwise is what if Yeah. And what if the timing had been different by, you know, just enough so that they actually could close the deal? This is actually a good question.

Did where to need Google in order to be a successful mapping product or could where to have been its own? Because if this were playing out today, where to would have raised hundred Softbank would have invested hundreds of millions of dollars in this company. Um I mean Mapbox uh like literally Softbank invested three hundred million in Mapbox. Yeah. So yeah.

Yeah. So we we have to go back to what was happening at the time. I don't think this could have been an independent company. I actually agree with. Did they need Google for distribution? Uh uh w n maybe, maybe not. Um uh but I I I agree with Sequoia's decision to ultimately pass because

May maybe they could have gotten distribution on their own, you know, certainly Flickr did, certainly YouTube did, although both of those companies, you know, sold and had sold way too early. But they could have been built as standalone companies. I think the problem here was the reliance on on uh Navtech and teleatlas data. Like if you're a independent startup, are you gonna be able to negotiate with them, get

rates, especially since users are not gonna pay for the product. Like it has to be a free product because MapQuest and Yahoo Maps is free. So you're not gonna have a business model. You're gonna have to license all of this super expensive data. And

The business model, the ingenious business model that Google ends up developing of the API here, that you can't really monetize until you free yourself from that data. And you can't free yourself from that data. Well, there's there's multiple businesses. Sorry, yes, the certainly local advertising is

the primary business model. But but you're gonna be hamstrung by that. And I think that would just be r at the time have been really hard to do as an independent company because there was no way, even if you went public, you couldn't raise the amount of money that companies can raise now. And so they just wouldn't have had the access to capital to do this.

The Google has run this in the red for at least ten years, maybe more. There's no way that they would have had the leeway to do that at a b as a private company in that era. I mean and and when I say in the red, like way in the red. Like you think about the operational costs of driving all these vans around or paying someone else for that data, which wouldn't have been as good as the data that d data asset that Google has built up. Um

And back to back to a satellite for a minute. Uh in twenty fourteen Google acquired Skybox Imaging, which is a satellite company. So Google is now owning, operating and launching satellites into space to do all this. Could a mid two thousands startup have done this all independently? Hard to imagine. Thank you right.

All right, should we move into playbook? Yep, let's do it. So it's been a while since we did a classic acquired episode of sort of uh analyzing a big company that bought a small company and then grading if that was a good use of capital or not from A to F. Uh so I went back and and cloned an old script and uh you know, my old one said tech themes, which of course we now call the the playbook now because I think

when we used to do this section we were just sort of obsessed with uh abstractly what tech themes are there here and uh we've we've definitely become more interested in what are the learnings from the actions that that Google took and where to took here that we can sort of extrapolate to use in future investments, companies we start, companies we work at. And so here I have playbook formerly known as Tech Themes.

The biggest thing that I'm taking away here is that Jens saw the future that there could be a geovisualized search results page. And this is an important distinction from turn by turn directions with a map. It's it's if you have a rich canvas map and it's a full experience.

And in the future screens will get better and speeds will get better and everything, you know, all the technology will get better. A map is actually a great platform interface for other things, particularly search. And I think it's important to think about that when considering startup or product ideas, really l sitting in the nuance of

Th this is not a direct competitor to MapQuest. This has the potential to be something very different because we're gonna build it in such a way where it can be so much more than what MapQuest is. Yeah. There's two thoughts on that w one, you know, uh just the power of the interface. It's not just search. It's not just Google Maps. It's Uber. It's DoorDash. It's Zillow. Like none of these businesses would exist without without Google Maps and without this.

user interface paradigm. The other thing that it reminds me of is I'm trying to remember who said this to me. I think it might have been Kurt Delbeni, uh back uh former uh way early days acquired guest, former venture partner uh at Madrona when we were all there.

and now uh head of strategy at Microsoft. We were looking at a company and I remember him saying to me, like It's very rare that you find an idea, a product or a company or an idea, you know, think about it in terms of an idea, that the more you think about it, the bigger it gets. And this is one of those ideas. Like the they're extremely, extremely rare. Uh and they they often come, you know, in camouflage. But when you find them, that's the time to go big and and

At this moment in time, as we were saying, there was no way to go big as an independent company. The only way to really do this was part of part of Google. Maybe Microsoft could have bought them or something, but but really Google was the natural fit here. At this time. Exactly. At this time. Yeah.

Today, if you find yourself with an idea like this, well, the first trick, and and this is actually a big part of our jobs as venture capitalists, is like everybody, you know, might think they have an idea like this, but are you really, really intellectually honest with yourself? And can people around you evaluate uh whether this truly is an idea of this category, of which m ninety-nine point nine percent of ideas are not. But if you do have that,

today you can build it as an independent company and today you can become an enormous, enormous platform in and of yourself. And I think this really is, you know, everything comes back to South Bank. But um

for all the uh uh funny hijinks around Softbank and uh we will cover many of them uh in our coming We Work IPO episode. You know, I think this is the thesis that like With ideas like this, you can now fund them and build large independent companies and not have to be YouTube and sell to Google for a billion dollars.

It's a good point. I think I don't remember if we talked about it on the show or not, but I feel like you and I had a conversation four or five years ago and and I remember having this conversation a lot and saying, you know, n machine learning is becoming

equivalent with software. In the way that in the early two thousands you said we're software. In the late 2000s you said we're an internet company. In the early 2010s you say we're a machine learning company. Like it's table stakes to build a technology product. um, especially a a large scale one, is to use machine learning in some way. And I remember having this fear, and uh definitely we both talked about this that Startup innovation was capped because the big companies had all the data.

And the best products were gonna be built by Google and Facebook, not because they had the most money, but also that, but because they had the most data. Exactly your point. For all the hijinks and criticism uh of of SoftBank, it enables this t this way to flank that and says, Okay, yeah, but what if you had half a billion dollars? Yeah. Or what if, you know, your DoorDash? Like, what if you have like three or four billion dollars? Like, how about that? Can you compete?

It it does actually in a world where data modes have become incredibly important, it does actually allow for startups to continue to have the ability to compete with these big companies. Yeah. Yeah.

Uh, so this is, you know, uh at the risk of being too uh uh waxing poetic here, which you could definitely accuse uh us us on a on a unacquired uh all the time. But to zoom way out here, I think it's really cool. Like we started this show in twenty fifteen.

So we've been doing it for four years now. And I think we've like witnessed uh and this show has has been chronicled uh all the changes that have happened of exactly what we're talking about. And and it's like when we started, we were focused on acquisitions.

and acquisitions that actually went well and then acquisitions and that was, you know, still at that time people thought, you know, people were thinking about, yeah, you can build big independent companies, of course Facebook did and whatnot, but like

As VCs and as founders, you were still like, you know, yeah, I could build something. I could get that half a billion billion dollar acquisition and the whole venture landscape was optimized around that. You know, most funds, most uh quote unquote early stage funds were in the two hundred to you know, maybe at the outsize five hundred million dollar

Fund size, and so a billion-dollar acquisition of a portfolio company, that really was meaningful. But today that's really completely changed. And so you see on the show, And to really dig into that, like let's say you own ten percent at exit. That means you have a hundred million dollar return on that company if your fund size is is two hundred million. Like ideally it's not it shouldn't be your biggest exit. You should have a an exit that's

you know, two to three X that size to really m make the portfolio math start to pencil. But you know it You could string together a number of those and you could have, you know, a good fund. It's been a long time since we've covered an acquisition on this show. Most of what we do are IPOs or just stories of great companies, right? Because now the opportunity is to build a great company and there's so much more capital available, not just from Softbank, but from

Like Sequoia, for instance, which we'll talk about more on this season, just raised the twelve billion dollar global growth fund. So many funds, new entrants, all sorts of things. And the goal is really find these types of ideas. and build them into really large, independent, standalone companies.

Yep, yep. There's a few other topics I want to touch before we sort of go to grading. So one is something we didn't talk about, but I think was actually a really big piece of value creation for Google Maps, which was Google Map Maker. And uh Lars talks about this in a a talk that he gives six, seven years ago. It's an old YouTube video with like 3,000 views. But basically In order to build out maps, especially before they had all the the cars driving around with cameras really operationalized.

They got a lot of their early data from relying on the passion of locals who I think were called Google Guides or Google Local Guides who wanted to improve digital maps for their area because they saw this dream of, oh my God, like my area, no matter where I am in the world, should totally have a really rich, robust digital map for it. And and they figured out this great system of appointing local guides and earning points and

community leaders emerged to really build the maps for their area. And it's the totally the power of of UGC, of user generated content business models where if you can organize people to do something that benefits them, I mean, people were excited to use the maps, but also have a little bit of uh of street cred around being a local guide.

And your vision is big enough and your vision is I wanna make the world better in this way. Everyone should be able to digitally view a map of their area because of all the benefits that come with that. You can get a crazy amount of stuff for your business for free. And and in a sustainable and updatable way. And and and for a long time. And and Google Mapmaker is not a tool anymore, but they still have variants of this um with people in in local communities ke updating information for them.

You can claim your business and update all the info on it. Another point that I wanted to make was uh Lars in that same talk talks about how difficult it was for them to recruit to where to. It was the four of them. They wanted to hire all of their engineering friends, they couldn't because everybody thought that they couldn't make money from maps.

And I think it was even difficult to to recruit once they got into Google because the canonical wisdom was there's not a business there and uh as we'll get into here in grading, there was. It was just fifteen years later.

Yeah. Well, so lucky that Brett Taylor was already working on this and totally was the natural person to to move over and and help make this happen and um You have to imagine adding a truly excellent PM to the team of engineers like that had a lot to do with how fast they shipped and how fast they iterated.

Do we wanna do value creation, value capture before diving into grading? Well, we could probably devote a whole episode to this here, you know, between the wars between the platforms and the moat uh that Google has built because of all this and uh uh how hard it is to compete, you know, we t we talked alluded to Mapbox, which is like great infrastructure potential, but like man, that's a large hill to climb to compete with uh Google Maps here.

And especially the Waze acquisition and like I don't know, in the current antitrust environment, like would that have been allowed to happen? Probably not. Or at least it certainly I think would have been scrutinized a lot more than it was. I mean I guess I'll this is a long winded way of saying I think Google Maps is a perfect example to me of the kind of thing that Ben Thompson has been talking about for a couple of years now of like antitrust needs to evolve in the current environment because

Google Maps has created so much consumer surplus. It's free to use as a consumer. It's incredible benefits to like so many people's lives and so many other businesses. And yet because of that, it has this moat where it's effectively a monopoly and it has been allowed to continue to purchase other startup competitors to it. And like what does that mean for the future of innovation in the space?

But no doubt in my mind, massively, massively value creating for the world that this product exists and that this acquisition happened. Zero doubt. Uh the interesting thing is like it has created so much value for the world. Like had does that enable Google now to capture so much value going forward that it becomes a problem?

Which is a great way to to to segue into grading, you know, of the a lot of times you the way to sort of think about value creation, value capture is a fair trade is to be able to capture ten percent of the value that you create for your customers. you know, at the very start of maps, Google was capturing zero percent and the question is how much are they capturing now from all this value that they're creating in the world? Going into grading. This is where I wanna I wanna make my case.

The criteria that we use for grading, uh, for for anybody who's joined the show in the last, I don't know, season and a half or something for for grading acquisitions is how good of an idea was it for the big company to buy the small company? Like an F is They lit the money on fire. Uh that that it it would have been better off in their bank account doing absolutely nothing, or perhaps even buying a company that did less worse, you know. Are you referring to a uh burning platform?

All time Warner or Nokia or you know a variety of companies. An A plus is uh Instagram is our shining example. Booking dot com is a great one too, uh the the priceline group buying that, you know, where you spend money and it becomes an enormous, enormous part of your business. Instagram actually some great data that that came out today thanks to some reporting by the information. Facebook bought Instagram for a billion dollars and Instagram revenues were expected to surpass ten billion dollars.

in twenty eighteen after hitting one billion dollars just two years before. So I mean you think about like Yeah, the enterprise value of Instagram is, I don't know, uh one to four hundred billion dollars. What is that? That's over three hundred percent annual growth over the last two years, starting from a billion dollar base. Oh my goodness.

Yeah, so that's that's what an A plus looks like. So let's think about this. So let's start in the abstract. Google's mission is to organize the world's information.

And make it easily searchable. What maps does really is it organize the world's information geographically. So it's this sort of like really, really nice extension of their mission. And Another thing to keep in mind for context here is to remember that Google, despite being in cloud computing, productivity, mobile operating systems, making phones, making laptops, making home assistants, and all these other bets.

Eighty four percent of the revenue for Google still comes from advertising revenue. Like four percent is Google Cloud, which they just started breaking out, and twelve percent is this others. So when you think about Google as a business, It is Ads and most of the ads is search ads. Not the search No. Does that include YouTube ads too, I think? Yes. The YouTube ads are included. YouTube ads and maps ads are included in that eighty four percent of revenue. It's considered

I guess a advertising. That what they don't break out is what is search advertising for I don't think th they have over uh in different points in time sort of alluded to it, but It's not in their regular financials to break out sort of like YouTube advertising versus search advertising. So advertising is still the cash cow. Maps one decent allegory is maps is a lot like Facebook acquiring Instagram. Granted, maps didn't come with its own user base, but

Um, you know, in the sense that it lets their existing uh advertisers have access to more inventory and new and creative ways to reach users where they are. You know, YouTube is is similar. YouTube actually uh is is estimated to be worth a hundred and sixty billion dollars according to a Morgan Stanley estimate. So David it is We got that.

It is time for us to go and and revisit YouTube. Um we we analyzed that business and said from as best we can tell, it's still a breakeven business. You know, it it still is extremely expensive to run. We just did the episode too early. Yeah. Well the funny thing is we did the episode sort of like value investors, like, you know, what are what are the gross margins on this business and, you know, will it ever actually generate a profit?

And we should have been doing it like tech investors or like public market investors who are willing to buy these IPOs who are saying, Wow, look how much revenue they're doing. Let's that's a hundred and sixty billion dollar market cap company right there within Google. It's Yeah. being a little facetious, but uh, you know, it really speaks to the difference between trying to value a business based on what you think it's

either Udin economics or gross margins are today, and what you believe that scale will be able to uh let that business accomplish in the future. So Here I'm making this case that maps is kind of like YouTube, which is kind of like Facebook buying Instagram, which is take your existing advertisers, give them a new way to reach existing customers in a new inventory format that's valuable. So, you know, what do the equity researchers sort of think that Google Maps is doing as a business?

Baird equity research has estimated that in twenty sixteen MAPS could do one point five billion in revenue. Um and then in twenty seventeen they estimated that uh uh as soon as twenty twenty maps could do five billion in revenue. And you really start to see, you know, this business emerging where people are using Google Maps as uh a a place to go for search. And it's a different kind of search. It's not what lawnmower should I buy. I mean that's all happening over on Amazon, but

they're really using it for I need to find something around me. And they're very open suggestions. I mean, last year Google launched or I think two years ago they launched promoted pins on Google Maps. They just issued a change. in the last six months that sort of made those larger and more prominent. Um but they're really starting to think about using the Google Maps surface much like the search results surface. And I think that'll

Total aside here, uh uh feature request for any Google Maps folks who are who are listening right now. So I still use Foursquare for restaurant, bar, cafe discovery. Um I think you're weird in that man. Well okay, but but here's why. So for for Google Maps folks who are listening. I hate the five star rating system uh of both Yelp and Google Maps. I think it's completely useless and doesn't give me any actual information. Foursquare has a ten point oh rating system.

And so when I run a search on Foursquare, they have two features. One that you can use your finger to draw a geofense of where you want to search. I just still don't think you can do that on Google Maps. Like for me, like I'm looking for a restaurant in a very specific area that is not a rectangle. That I can get to with map zoom. Two, um, the ability to differentiate between quality at that 10.0 granular level is super important to me because.

Everything's a four star and that just means like I wanna know and what I can tell foursquare is show me ranked on a ten point oh scale within this very specific geofenced area that I've drawn what the best cafes are. And then I can like that is much more useful information to me than the current way you can search for such things on Google Maps.

That's a that's a great feature request. And actually it um I I looked up last night to see what's Yelp do in revenue. Last year they did about a billion dollars. I mean th that could also be Google's revenue. Like I could see a world where Google Maps continues to get better and better. They encourage people to do more and more local searches there. They control the operating system so they could get a little bit more heavy handed.

Uh, for how most people, or at least 50% of America and most of the world, begin to look for things in the real world. It seems very plausible to me that there's five, ten billion dollars of advertising revenue that Google could see come from the mapping product. And if if you're looking at it that way, I mean, it could well be as as big as an advertising platform as Instagram is. Ja, ja. Then you have the API licensing. Uh and I haven't dug into the finances there, but it's

Tough. Uh what you can do, uh the the new pricing is uh seven dollars per thousand requests. So it's a$7 effectively CPM. So any app that wants to so DoorDash is paying$7 per thousand times someone looks at a map. And there are five million customers with API keys for uh for Google Maps. And so tough to tough to quite understand how much of the Google Maps business is attributable to the the API versus uh versus search ads. But The potential is there.

So when I when I look at this versus Waze, you know, let's say that uh this acquisition, just to put a number in the air, is uh uh where to was maybe ten, twenty million dollars. Waze was a billion dollars. you look at the revenue potential from maps and and probably what they're doing now being single digit billions, maybe in the next couple of years getting to five billion, it it's a much better

m better revenue business. They're generally a lot more revenue from Google Maps than they are from Waze and they paid a heck of a lot less for it. Now of course the amount of the billions of dollars they've poured into building the asset over time You know, tha that's actually I think the the right way to to sort of analyze this. But you know, um just for from the acquisition itself, paid way less to buy the company and seeing significantly more upside than Waze.

I in this case, this is it's truly warranted to say the financial aspect is only one part of grading here and probably not even the most important.

because it's everything we've been talking about. This is fundamental infrastructure for so much of the internet and beyond the internet going forward as you think about autonomous vehicles if and when they should ever uh become mainstream, um that this asset is so, so valuable and they bought it for, you know, so we know it was thirty seven million dollars for Zip Dash and um Keyhole. Add say another. It's more silly to It's silly, right? They've priced back. You're right.

How many billions of dollars really creating it? But but it was as we talked about, if they hadn't bought these companies, I don't think it would have bubbled up internally, uh certainly not as fast to be working on these things. And the moat that they have, you know, in fact one of Justin O'Burn's pieces called Google Maps Mode. The moat is so wide at this point. They have years and years of advantages uh over any other competitor and that gap keeps getting wider. All right.

It's funny you mentioned self-driving cars,'cause I think if we had done this episode a couple of years ago, I would have been more inclined to grade on how helpful has it been to self-driving cars, but in spinning Waymo out and that market developing slower. I don't know.

Wanted thought. Yeah. And it feeling like Google's not necessarily a clear winner there. It's I I feel like less of the value that Google Maps is gonna provide is is coming from self driving cars in the next, I don't know, five years or something. That may be true. But what's interesting though is like to me it comes back to the API. Forget self-driving cars. What about Uber? What about Zillow? How many more businesses are gonna be built on the Google Maps API? I don't think we're done yet.

No, I think you're totally right. Um this is an A for me. Yeah. Yeah. Well I think the yeah, for uh for me too. The question is is it a is it an A plus? I mean with Instagram, it's like they've d on every dimension, strategic, asset base, and financial returns, it's a knock it out of the park. The reason why I think this is an A and not an A plus when you just compare it to Instagram is Instagram is a pure tech business. Like they've built uh an incredibly asset light

thing that's pretty I'm gonna say easy to maintain, even though there's tons of people working on it. Uh but basically like super high fixed costs, almost no variable cost. And except for like cost of revenue to go and acquire the advertisers that are that are putting the ads on it. But crazy high gross margin business.

When you look at this, the maintenance costs of keeping the maps up to date, to adding the the expected functionality, to doing all this stuff in the physical world, it's it's meaningfully higher. Alright, I'm with you, A. So there so our only A pluses remain Instagram and Next? Uh I think booking. Oh was booking an A plus or an A? If it wasn't we were wrong. Okay. We're uh either actual grading or revised grading. The A plus Pantheon is next Instagram and booking.

Yeah. Maps doesn't quite make it. But it's very close. quite make it. And we'll see over the next few years too. I think it could uh I think it could emerge. The two big takeaways are one, it's m fundamental structure to the internet as we know it today that they're gonna monetize through charging for that API. And two, um, it's an ever increasingly common Basically new search page and Google makes all their money on the search page.

Very compelling argument. We want to do a bit of follow up? Yeah, so um I messed something up on the Shopify episode that I I wanted to talk about. Um that was our last episode, not including the quick take that we did on DoorDash. And that was uh Shopify actually powered.

forty one billion dollars of sales last year, not fourteen billion, uh as discussed toward the end of the episode. That fourteen billion number that we talked about was the fourth quarter number, so uh I guess we way discredited the incredible amount of um commerce that that Shopify powers. So while this changes the analysis of the value captured that we did at the epis at the end of the episode.

where Shopify actually only captures two and a half percent of the merchant sales uh as their own revenue, not the seven percent, uh, which admittedly is is very different. I don't think it changes the overall sentiment that we had on the company as as discussed in the episode. Any thoughts on that, David?

The only other thing I'd add, especially given this episode and the just you know, w we're talking about the platform that Google Maps has built and the ability for and power of companies to be built on that platform. I I'm starting to think Shopify actually is a similar opportunity uh that you could think about like I think you might be able to build really big companies that use Shopify and Shopify's customers as a platform and in particular Shopify Fulfillment that was just launched.

Which is not them doing their own fulfillment, it is it is a wide open door for new logistics and fulfillment providers to come in and serve all of Shopify's customers with a very easy uh distribution channel and customer acquisition. So um I'm even more bullish on um Shopify's potential as a platform. Yep. Very much agree. And interestingly, that's predicated on there being a huge total addressable market out there. Because if we think about this.

So Shopify, I mean, it's not a marketplace business, so it's not a take rate, but if you think about it this way, they capture two and a half percent of the value that they create as their own revenue. If you think about Uber Uber captures close to thirty percent of the value that they create as revenue for themselves in the form of a take rate.

That's marketplace assign where the platform itself is doing a lot of the work. Um if you look at uh uh you know, Airbnb marketplace assist, do you know what the take rate there is, David? It's like the It's about fourteen percent, or at least historically on average. So so less of the value is sort of being provided by the platform than Uber, because Uber actually assigns you someone. When you bring supply to demand.

You're entitled to take much more of the economics than if you just provide a platform and then say to someone, go find all your own customers. And I think that that was sort of an interesting takeaway for me, um, in analyzing the the percentage of total value they're capturing. Yeah. Well it it comes back to the end of the Shopify episode which we talked about of

It's not a network effect business, uh although there are network effect aspects to it. It's a platform and it's Bill Gates' definition of a platform is you are capturing far, far less of the value than you are creating. And what's cool about platforms like Google Maps is they provide a wide open opportunity for businesses to be built on top of them and especially marketplace businesses.

So if you're if you're building a marketplace business on uh Shopify or anything resembling a marketplace business, please come talk to me.

Carve outs. I'm gonna do a mashup of one of your recent carve outs, uh, which is the Expanse. I started reading uh not yet watching the TV show, I want to read the books. I started reading the books of the Expanse uh series. They are so good. So, so good. I finished the first one. I'm in the second one. I think there are maybe nine in total. Um uh so it's gonna keep me occupied for a while, but uh really, really great stories.

I heard the books are great. I did the lazy thing and watched the T V show. It's good. I'll watch the TV show eventually. Uh books or TV show, take your pick. Great, great sci-fi stories. David, as you alluded to early in the episode, I've been doing a lot of running recently. I ran my first marathon on uh Sunday this past weekend.

Uh and that means that I've listened to a lot of podcasts in in my training. I always thought I'll never listen to podcasts when I run. Like I I need something I need music, I need that to be sort of like fast and motivating and I can't like not focus on the running.

It turns out like when you're doing lots and lots of miles, having a distraction is actually pretty nice and being able to z to to not focus on the steps is quite nice. So um one of the episodes that I listened to during the marathon was an episode of The Moment with Brian Koppelman, uh who you may remember me raving about is the one of the co-creators of Billions on a a previous carve out. So he has this this podcast.

The podcast itself is very cool because uh he talks to people from uh sort of all walks of life, but really dives into creativity, creative process. It's like lightweight psychoanalysis, but it's it's a lot of um making the unique work that someone does often in a very archaic way, understandable and digestible to a broad audience.

And that's very similar to what he did at Billions. It's very similar to what he did in Rounders. And uh he interviews in this episode Mark Andreessen. And it's really fun to uh for listeners to this show, for myself, for David, we uh listen to people talk about tech and venture capital and building big companies within our own circles a lot. And we get to hear it discussed at a

Uh, very micro Exactly, exactly. We all know what the terminology means. Everything there's lots of expectations that it we all sort of have. There's lots of things that you can look over at another person and and know that they have the same fundamental basic assumptions that you do.

Brian's show is not like that. And so it's very cool hearing Mark Andreessen explain venture capital to not you know, people who probably have never come in contact with it. It's just a really cool and and different perspective on it. I think. Super cool. I have to listen to it. Yeah.

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But you can really only understand the impact once your product is live with real users, and then you can measure how their behavior actually changes. It's very different than the way that you would ship features in a pre-AI world where you knew exactly what the Software was gonna do in production. Yeah, exactly.

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rather than, you know, what we're doing on this show, which is reflecting on uh on sort of where they ended up. Um so if you are uh in the process of building company in any way, shape, or form, we'd love to have you join us and listen. You can click the link in the show notes or go to glow.fm slash acquired. And all new listeners get a free seven day trial. So with that, we will see you next time. See you next time.