Israeli tech startup Waze was always an interesting business; the idea of combining crowdsourcing and social media to provide traffic reports was fascinating concept that seemed to work well.
When Google bought the company two years ago, it was seen as one of the success stories for Israel’s vibrant tech startup scene, but a LinkedIn post by Waze’s founder Noam Bardin suggests the acquisition was not what the founders wanted.
One of Waze’s mistakes was the valuation of its A round which significantly diluted the founders. Perhaps, had we held control of the company, as the Founders of Facebook, Google, Oracle or Microsoft had, Waze might still be an independent company today.
Not being an independent company is also a weakness for Waze, as Google have shown in the past they are ruthless in shutting down businesses they’ve acquired and there’s no guarantee that Bardin’s creation won’t meet the same fate.
Google though are not alone in this, Yahoo! is notorious for neglecting companies they’ve acquired and today Microsoft announced it’s closing the Farecast travel price prediction service it bought for $115 million six years ago.
Oren Etzioni who founded Farecast in 2004 isn’t happy about this according to Geekwire, however that’s the downside of selling your baby to another business – its destiny is now in the buyer’s hands and their vision may not be the same as the founders’.
A good example of a company controlling its destiny is Atlassian, the Australian founded collaboration tool service, which the Wall Street Journal describes as being “one of the world’s most valuable venture-backed companies.”
In many respects Atlassian is the opposite of the Silicon Valley business model with an emphasis on engineering and product development over sales and marketing. Atlassian’s founders aren’t focused on hyping the business with the aim of selling to a deep pocketed greater fool.
For founders, the tricky balance in raising enough money to achieve their objectives while not giving away a controlling interest. Get it wrong and a founder ends up being forced into a course of action they didn’t want to do, as Noam Bardin found.
Bardin’s post on the Israeli business community and startup scene is an interesting perspective into the strengths and weaknesses of the country’s entrepreneurial culture, much of which would be familiar to many outside of Silicon Valley.
One big lesson though for founders, Israeli or otherwise, is don’t give away too much equity too early, or the investors make take you to places you didn’t want to got to.