Waze Founder - why you should teach your children to fail | Uri Levine

0:05The pace of innovation is increasing. Just imagine, think of the top 10 companies of the world today, right? And ask yourself, which one of them is going to remain in the top 10 a decade from now? Now, we don't know which one, but only half. The more interesting question is which companies are going to take their place? Some of them. You haven't heard a name yet.

0:28Yuri Levine is a serial entrepreneur behind more than 10 startups, including two unicorns. The best known is probably Waze, the traffic navigation app he co-founded in 2007 and sold to Google for over a billion dollars six years later. Yuri is a well-known speaker, but he added author to his CV earlier this year with the release of his book, Fall in Love with the Problem, Not the Solution, a handbook for entrepreneurs. The book is the distillation of his learnings, and he wrote it to spread entrepreneurial success as much as possible, which is great for us because that's what we're all about on this show.

1:04How can we make you a better business leader? I must confess, I'm in it for the same reason and learnt a lot from Yuri. Now, he was born and raised in Israel, a hotbed for entrepreneurship. And I grew up at the house that both parents were working. My dad was actually an entrepreneur and my mom was a teacher and I ended up to be both. And in that sense, I ended up with, you know, after Waze was acquired, I left and since then I have 10 different startups and all of them, my role is to coach and guide the CEO and increase their likelihood of being successful. And by that way, increase the likelihood of the company of being successful.

1:43You know, you've written this book, right? So for those that can't see, Yuri right now is wearing a t-shirt. This is a very tech entrepreneur, it's worth saying, like very proudly wearing the title of his book on his t-shirt. So fall in love with the problem, not the solution, which I love to think is probably just a prompt to your interviewer to be like, remember to ask me about the book and don't go off track. So I'm staring at the problem in front of me, not the solution. You've written it as a handbook for entrepreneurs, right? And I know that you've been involved in more companies than Waze, and I think we'll definitely get to that.

2:14But I think it'd be really helpful to actually use the story of Waze along with examples from other companies, if you'd like, to actually explain some of the key lessons you're trying to teach in the book. So let me start by saying that I'm wearing those t-shirts for the last decade or so in different, you know, speaking events and so forth. And the name of the book was obvious that this is going to be the name of the book, but T-shirt was there before. And this is really important, right? Because in general, what I'm trying to say here is, look, if you want to make an impact, if you want to change the world, then start with a problem.

2:47Think of a problem, a big problem, something that it's worth solving, something that the world will become a better place if you solve that. And then ask yourself, so who has this problem? Now, if you happen to be the only person on the planet with this problem, then I would say, you know what, go to a shrink. It's going to be way cheaper and faster than building a startup. But if a lot of people actually have this problem, what you really want to do next is go and speak with those people and understand their perception of the problem. And only then go and start to build your solution. Now, if you follow this path and your solution works, it's guaranteed that you're creating value.

3:20If you start with the solution, you might be building something that no one cares. And this is going to be really frustrating. But there are two other things that are going to happen when you follow this path. When you speak with other people and they share with you their perspective of the problem, you feel like they are sending you on a mission to solve that for them. And this is where you fall in love with the problem. And when this happens, the problem is going to serve two purposes in your journey. The first one is it's going to be the North Star. And when you have a North Star, you are way less likely to make deviation.

3:53You will have deviations, right? There are cloudy nights that you don't get to see the North Star, and there might be many nights of cloudy nights, but at the end of the day, you know where you are going. And when this happens, then you actually increase the likelihood of being successful. The other part is that the story that you are about to tell is way more compelling. Just imagine that we will be here in 2007, and I will tell you, I'm going to build an AI crowdsource-based navigation system. And you're going to say, yeah, really interesting. But you don't really care. If I will tell you I'm going to help you to avoid traffic gems, then you do care.

4:26And so when you speak about a problem, it's easier to create emotional engagement. And the result is that you will have easier life on user acquisition, on engaging with investors, with the media, with everyone. But then you go on the journey. then let me define the journey as in three dimensions, right? It's going to be a long roller coaster journey of failures. And now let me split into each one of them. Roller coaster journeys, ups and downs, ups and downs all the time. Now, if you'll tell me, look, all the businesses in the world have ups and downs. I agree. All the businesses in the world have ups and downs.

5:00But the frequency of those when you're building a startups are dramatically higher. It could be a few times a day. Now, if you realize that this is going to be a journey of failures, then there are two immediate conclusions. The first one is that if you're afraid to fail, in reality, you already fail because you're not going to try. If you are going to try new things, you will fail. Albert Einstein used to say that if you haven't failed, that's because you haven't tried anything new before. If you are going to try new things, you will fail. And to a certain extent, I would say, look, I know that this is about leadership in business, but it also could be about leadership in parenthood.

5:34And maybe the most important thing that you would like to take from this conversation today is teach your kids to fail. Because when you do, they get up. And when they get up, they're being empowered to try more and to get out of their comfort zone and keep on exploring. And at the end of the day, this exploration is going to help them to find what is it that they really like and will help them to become happier. As a generation, we don't teach our kids to fail. We actually expect them to bring A+. There is an old Japanese saying, say, Fall 7, Rise 8, one of my favorites. Exactly, right. But there is another immediate conclusion out of that, right?

6:15If you realize that this is going to be a journey of failures, then what you really want is to fail fast. Because the faster that you fail, you actually have enough time to try something else, to make another version of it, another attempt, a different approach, and so forth. And you essentially increase the likelihood of being successful this way. Just imagine that you're playing basketball and you're trying to score from half court. Now, if you have one shot, it's probably you're not going to make it. But if you have 50, you're actually likely to make it. And you only need to score one. The journey is going to start by trying to figure out product market fit.

6:50And product market fit basically means that you are creating value to your customers or to your users. And if you don't, you will die. As simple as that. In fact, you never heard of a company that did not figure out product market fit. They simply died. That's it. But if you think of those that did figure out product market fit, and for a second, I would suggest let's think of all the apps that you're using every day, right? So just imagine your smartphones, you're searching Google, you're using Uber, you're using Waze, WhatsApp, Netflix, Instagram, whatever it is, and ask yourself, what is the difference between any of those today and the first time that you have used that?

7:28And the answer is that there is no difference. We are searching Google today the same way that we searched Google for the first time in our life. We're using Waze today the same way. We're using Uber or WhatsApp or whatever it is the same way. So once you figure out product market feed, which is the value that you bring to your customers, you don't change that anymore. It takes a long time to get there. So we don't realize that, right? We just, let's take a simple example. ChatGPT, right? This is out for the last two months, maybe two and a half months, right? and you think about it, whoa, whoa, whoa, this is just released and it's already so successful.

8:01This is absolutely amazing. We forget the fact that OpenAI is seven years old. Seven years old, they were working on something that will become good enough and available for the market. And maybe it's still not good enough. Maybe there's still a lot of work that needs to be done. And about$10 billion of funding to get there as well. Exactly. But it's a long journey. And the long journey is the one that is really important here. It was five years for Microsoft. It was four years for Waze. It was 10 years for Netflix. Each one of those companies that you're using every day, it was a long journey to get there.

8:35We hear that story so often on Secret Leaders, which is, you know me today and everyone thinks overnight success, but 17 years until right now I'm talking to you. 17 years. You know, that memory comes to me from a company called Photobox. We had 15 years from the founder of Shazam. It's amazing how long the iterations and quite often as well in technology companies, right? Because I think utilising technology, there's a lot that goes into it, including market timing. Market timing of are you too early with your technology for it to actually be relevant and interesting to consumers at that moment in time?

9:06You can just be a bit too early or you can be too late because it takes too long. There's so many different factors at play. When I even think about something like Waze, obviously Google Maps already existed. So you're not necessarily solving the problem of how do I get from A to B generally because Google have mapped out the world at that point. you're saying what if and your what if is so fucking weird at the time of conception like you're saying 2007 that it wouldn't even make sense to most people but you just need enough believers to know that actually community driven analysis and community driven information is the future but it takes a few visionaries to see that kind of thing right it's it's and i'm assuming a lot of patience.

9:47When you start to think about your new venture, your new journey, and often I compare that to, you know, falling in love with a date, right? So there are many ideas that you think of and eventually there is one. Or you go to many dates and eventually there is one that you tell yourself she's the one. Now at the beginning, you only want to spend time with your date. You don't care about the rest of the world. You're spending time with your venture. You think about it from multiple perspectives. This is the problem I'm going to solve and this is how the solution is going to look like and this is what I'm gonna do tomorrow morning and this is a year from now and so forth until until you feel confident enough and then you go and tell your friends this is what I'm gonna build now the first reaction is always the same this will never work and these are the nice guys the lesser nicer guys they're gonna tell you this is the stupidest idea that they ever heard you take your date for the first time to meet your friends and they're telling you a she's not for you this is where you disengage from your friends so the good news is that you are in love and you don't listen to anyone else.

10:46The bad news is that you are in love and you don't listen to anyone else. But realizing the hardship of the journey, you need to be in love. You need to have the passion to go through the challenges period of this journey. Now, for a second, I would say when we started, Google Maps was just a map display. There was no turn-by-turn driving instructions on Google Maps. And there was no one else that was free, right? And so we had this vision. But the real vision was that we are going to help drivers to avoid traffic gems. And the only way that we can do that is that if we know where traffic gems are, and for that we needed a crowdsource.

11:20So the crowdsource was actually part of the solution, part of the vision of the solution that all I need is someone to be ahead of me on the road to tell me what's going on, right? Because this is essentially the magic of Waze. Waze crowdsource everything. Now the part of the magic, or one of the most significant parts of the magic is that we crowdsource everything not just the traffic information and speed traps but also the map itself. So the map that is being used by Waze was actually generated by the drivers and this is maybe the most amazing part of the crowdsourcing right so we could have realized how you know based on where people are driving and how they're driving we have built the algorithm that takes all of this data and generates the map out of that.

12:06Now, obviously, you know, if we will have a time machine and we will go back into 2007, you would tell me this will never work. And this is pretty much the response that I heard throughout the entire journey. 2007 was the year of the iPhone? And the iPhone was just released in 2007. Yeah, I mean, yeah, okay. So it's definitely early. Very early. The first version of Waze was running on a PDA. Remember, long, long, long time ago, there were dinosaurs and then PDA phones and then Nokia phones. Sorry, PDAs and then Nokia phones. And then a meteor came down and wiped out all the PDAs. Exactly. And when you think about it, you say, wait a minute, this is only 15 years, right?

12:43This is how fast the world have changed. And what does it mean about the future? The future is going to be even faster, right? So look, if we will have a time machine, we will go back into 2007. That means that I'm going to take away your iPhone and Waze and Uber and WhatsApp and Netflix and pretty much everything that you're using every day. It's unclear that some of us will survive. Pace of innovation is increasing. Just imagine, think of the top 10 companies of the world today, right? So Apple and Amazon and Google and Microsoft and Facebook and Tesla and whatever. And ask yourself, which one of them is going to remain in the top 10 a decade from now?

13:21Now, we don't know which one, but only half. If we would know which one, then I would say, you know what, sell short on the others and this is it. And then we are done with the podcast. There is nothing else that you need to know except the fact that you need to sell short on those. The more interesting question is which companies are going to take their place in the top 10 companies? Some of them. You haven't heard a name yet. Now, going into this journey, you know, we started by realizing that, okay, wait a minute. We need to actually do some heavy lifting of coding here because we want to switch from a PDA version into a mobile phone and we need to do everything in real time and we need to calculate traffic information and we need to do constantly rerouting all the time because this is based on traffic information.

14:06And so we went fundraising and that was nine months of journey trying to get funded. And usually I would say, look, if you think that building a startup is a roller coaster journey, then fundraising is roller coaster journey in the dark. You don't even know what's coming. And this is how scary it is. And by the way, when you get to the closing part of it, then it's in the dark and upside down. And so things can flip, you know, instantly, and you don't even notice what happened. And so we started our journey, official journey, only at the beginning of 2008, exactly 15 years ago. And, you know, we built the first version running in real time, running on a Nokia phone, and that was actually pretty successful in Israel.

14:52And we realized that, wait a minute, if this is successful in Israel, and it started out of a blank page, out of thin air, then we crowdsource everything. We can go global with that. and this is exactly what we did. It was not good enough. Now here's the gap in the problem, right? The story makes perfect sense for everyone. No one likes traffic jams. So we found the common enemy of all the drivers that they are willing to do a lot in order to fight traffic jams and speed traps. And that was the promise. We are going to outsmart traffic together. And so people downloaded the app in multiple places and it was simply not good enough.

15:28And what we did, and this is, you know, journey of failures, multiple iterations. We spoke with the drivers. We asked them what doesn't work for them, and they told us, and we fixed that. We built the next version addressing everything that they have told us, and then iteration after iteration after iteration, more than a year of iterations until it's starting to become good enough. Now, this is really important. For each one of those iterations, you go with the conviction that this is it, and the day after you figure out that it's not, you start off the next one. And this is really the most important part of the understanding of the journey of failure.

16:03At the end of the day, if you want those iterations to happen quickly enough that you don't fall in love with your new iteration, you fall in love with the problem, you remain focused on making it work for the users. And the only way that you can do that is by listening to them, because otherwise you don't know. So coming back to I have a question that I'd love answered. And I am a daily Waze user. And one thing I've just never understood, like how did they figure out that first one thing? So the thing that I've always wanted to know about Waze and I get to ask you directly, there's no value to the generous people giving all the data in advance in the first X many thousand customers because they're not getting anything back.

16:44Was that the hardest problem to solve? And I guess like I'm wrapping it up into a bigger question, which is what was the hardest problem that you fell in love with to solve? So you are right. You actually need critical mass. Otherwise, there is no value. And how do you get to critical mass is always the challenge for marketplaces. And it's always the challenge for crowdsourcing. You know, you'll basically say, wait a minute, there is not even a map. So what's the value for the first driver? And the question should have been differently. Who was the first user? These are enthusiastic amateurs. These are people that care about GPS and GIS and maps, and they get frustrated with the fact that the map near their home is outdated, and their street, they are living in a new neighborhood that is there for the last three years, and it's still not on the map.

17:32And the ability to actually control your own destiny was really critical for the first group of innovators. That was one part of it. The other part of the equation, And this is really important to understand. Look, there are a rule of thumbs of creating crowdsource information. If you have information that lasts longer, then you can rely on active participation. If you have information that is only for a short period of time, like traffic information, you have to rely on real-time passive collection of this data. And Waze, by and large, is 99.9 % is automatic collection of the GPS data from your device.

18:16And if you're stuck in traffic, then we know exactly that you're stuck in traffic. We don't need you to tell us that you're stuck in traffic. We already know that. The information that is being gathered by the drivers in that sense, or the active participation, is required for street names and house numbers and points of interest and additional information that they usually last long period of time, right? If you're going to tell me this is the name of the street, you probably know that. And it's probably going to stay the name of the street for a very long period of time. And so the accumulations of this data takes a little while, but then it's becoming good enough.

18:50And where is this free? Good enough and free wins the market. No one can compete with that. And the traffic information, of course, we need critical mass. But then you will say, wait a minute. What if I can inject additional data into the system, right? What if I will approach fleet management companies and ask their GPS data so I can generate traffic information? And in return, I'll give them the traffic information because they might want to use that for their own purposes. And so we ended up with actually injecting this type of data into the system that accelerated the growth or accelerated the value that Waze creates, even if the map is incomplete.

19:29But the traffic information was actually pretty good. And so that was one part. Another part, and I mentioned that we had more than one year of iterations trying to figure that out. And that was very challenging, right? Because it doesn't work, right? And you're stuck in the middle of the desert and it still doesn't work. And some of those iterations, you're making a baby step forward. And some of those, you actually go backward. In some of those, it's a leapfrog, but you don't know which one is which, right?

19:59And so are two things that when you think that you're being in the middle of the desert, there are two things that will help you to carry through the challenging part of the journey, right? The mission and the team. If the mission is right and the team is right, then you will end up with keep on going, never give up. And this is, by the way, the most important behavior that you want from an entrepreneur not to give up because it's going to be hard and it's going to be long and it's going to be harder than you think, and it's going to be longer than you think, and it's going to be more challenging, and it's a roller coaster, and you will have multiple failures, right?

20:34And to not run out of money, right? You might be running out of money. Look, most of the startups that I know ran out of money or almost ran out of money, right? And even if you think of a company like Google, they actually have a hard time to raise capital at the beginning. They actually were unable to raise capital at the beginning and they approached yahoo and asked yahoo to acquire them for two million dollars right two million not two billion not two trillion just two million and yahoo said no no a lot of people would tell me big mistake and for a second i would say no no no they are right decisions or no decisions because when you make a decision you don't know what it would be like if you will choose a different path you don't know what would have happened if yahoo would have said yes back then, or you don't know what would have happened if Waze would have said no to Google at$1.1 billion.

21:25And if you'll tell me that Waze today worth way more, yes, definitely. 10 times more users and obviously, you know, making 500 times more revenues and so forth. So definitely a better company today than it was 10 years ago. What we don't know is whether or not Waze would become what it is today without that transactions back then. So when you make a decision, by definition it's the right decision yeah i think that's really well said and you know there's a like famous interview with kevin sistrum from instagram where they asked him if he was upset about selling the company for a billion dollars um because it's worth so much more now and he just like bursts out laughing and just points out how ridiculous the journalist is it's a billion fucking dollars obviously later many years later you know he kind of changed his tune a bit but it's obviously worth saying you know backing your decision and knowing that it's the right thing and not looking at it like well now it's a bigger company therefore it was a mistake it's just a ridiculous way to look at things.

22:17We cannot change the past. Very true. Even he can't change the past. But he can show you what you were doing four years ago. So that's sort of similar. My favorite fun fact about Google, by the way, do you know who their very, very famous early angel investor was? I'm talking first or second round. I forgot his name. He was the founder of Sun Microsystem, I think. Well, yes, but this is even more ridiculous. And it's very, it's just not well known for some reason but jeff bezos was in the google seed round i yeah it's insane that's a footnote casual from him anyway um so so let me go into something that turns out to be very important and uh i spoke with many entrepreneurs that their startup failed and asked them why what happened and uh and about half say the team was not right and i kept on asking okay what do you mean the team was not right and what i heard the most is you know we had this guy not good enough so not good enough was the main reason.

23:09Another reason that I heard quite often is that we had communication issues, right? Something that I actually called ego management issues. And then I asked them the most interesting question. When did you know that the team is not right? All of them knew within the first month. Within the first month. They said, wait a minute. If you knew within the first month that the team is not right and you didn't do anything, the problem was not that the team was not right. The problem was that the CEO did not make hard decisions. Making hard decisions is hard. Making easy decisions is easy. This is why most people don't like to make the hard decision.

23:42And in a small organization like a startup, they will go all the way to the top to make that decision. The result, by the way, is always going to be the same. The top performing people, they would leave. They would leave because they don't like to be in a place that is unable to make hard decisions. And they would leave because they have a choice. Now for an organization that you have people that shouldn't be there and they are still there, and the top performing people are leaving, that's the beginning of the end. You cannot win if this is the case. There is a chapter in my book that's called Firing and Hiring.

24:14And when I sent a book proposal to the publisher, to multiple publishers, many of them came back and said, no, it should be hiring and firing. And I said, no, firing is hard decision. Hiring is easy decisions. Therefore, you need to learn to fire first before you're going to hire. And one of the most important conclusions of this chapter, and this is for all hiring managers wherever they are, is every time that you hire someone new, mark your calendar 30 days down the road and ask yourself one question. Knowing what I know today, would I hire this person? Now, if the answer is no, then fire them immediately.

24:51Because what happens from this point on, you already set the trajectory of this person not to be successful. So this person is not going to be successful. Everyone knows. And if you don't do anything, then you're actually going to lose your leadership. But if you do, then what happens is that you build the trust of the team, those that stays, and you actually enable that particular individuals to become successful someplace else, because they are not going to be successful here. And the sad story is that they already know that. And so if you are going to do that, they are going to be relieved as well.