Free The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

thousands of cars squeezing onto the major roads and highways, traffic speed will not approach, let alone eclipse, the speed limit. Andy should instead seek out all the sneaky little back roads that longtime commuters know about. Andy’s GPS knows that these roads exist (if it’s up-to-date, it knows about all roads), but doesn’t know that they’re the best option at eight forty-five on a Tuesday morning. Even if he starts out on back roads, his well-meaning GPS will keep rerouting him onto the highway.
    Shabtai recognized that a truly useful GPS system needed to know more than where the car was on the road. It also needed to know where other cars were and how fast they were moving. When the first smartphones appeared he saw an opportunity, founding Waze in 2008 along with Uri Levine and Amir Shinar. The software’s genius is to turn all the smartphones running it into sensors that upload constantly to the company’s servers their location and speed information. As more and more smartphones run the application, therefore, Waze gets a more and more complete sense of how traffic is flowing throughout a given area. Instead of just a static map of roads, it also has always current updates on traffic conditions. Its servers use the map, these updates, and a set of sophisticated algorithms to generate driving directions. If Andy wants to drive to Erik’s at 8:45 a.m. on a Tuesday, Waze is not going to put him on the highway. It’s going to keep him on surface streets where traffic is comparatively light at that hour.
    That Waze gets more useful to all of its members as it gets more members is a classic example of what economists call a network effect —a situation where the value of a resource for each of its users increases with each additional user. And the number of Wazers, as they’re called, is increasing quickly. In July of 2012 the company reported that it had doubled its user base to twenty million people in the previous six months. 3 This community had collectively driven more than 3.2 billion miles and had typed in many thousands of updates about accidents, sudden traffic jams, police speed traps, road closings, new freeway exits and entrances, cheap gas, and other items of interest to their fellow drivers.
    Waze makes GPS what it should be for drivers: a system for getting where you want to go as quickly and easily as possible, regardless of how much you know about local roads and conditions. It instantly turns you into the most knowledgeable driver in town.
    The Economics of Bits
    Waze is possible in no small part because of Moore’s Law and exponential technological progress, the subjects of the previous chapter. The service relies on vast numbers of powerful but cheap devices (the smartphones of its users), each of them equipped with an array of processors, sensors, and transmitters. Such technology simply didn’t exist a decade ago, and so neither did Waze. It only became feasible in the past few years because of accumulated digital power increases and cost declines. As we saw in chapter 3, exponential improvement in computer gear is one of the three fundamental forces enabling the second machine age.
    Waze also depends critically on the second of these three forces: digitization. In their landmark 1998 book Information Rules , economists Carl Shapiro and Hal Varian define this phenomenon as “encod[ing information] as a stream of bits.” 4 Digitization, in other words, is the work of turning all kinds of information and media—text, sounds, photos, video, data from instruments and sensors, and so on—into the ones and zeroes that are the native language of computers and their kin. Waze, for example, uses several streams of information: digitized street maps, location coordinates for cars broadcast by the app, and alerts about traffic jams, among others. It’s Waze’s ability to bring these streams together and make them useful for its users that causes the service to be so popular.
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