But Waze is also an engine of crowdsourcing. For example, the location of every opted-in user is uploaded anonymously to the servers. Waze then determines how fast each phone -- and by extension, each car -- is moving. That gives you real-time information about the speed of traffic. Waze also lets users report things like gas prices, observations about why traffic is jammed and the location of police cars.
You'll notice that both these billion-dollar startups are social networks acquired by bigger social networks. That's because social networks get all their juice from crowdsourcing.
Social network crowdsourcing is valuable to users because not only can individuals use social networks to do crowdsourcing of their own -- for example, I crowdsourced ideas for this very column -- but social action surfaces the best content on the social networks, either through Google+'s "What's Hot" list, Facebook's EdgeRank or Twitter's Discover page.
The two kinds of crowdsourcing
There are two basic kinds of crowdsourcing -- the kind where people consciously participate, and the kind where they don't.
Waze, for example, uses both kinds. The reporting of observations is conscious, the uploading of speed and location data is not.
Some of the coolest innovations in crowdsourcing tend to be invisible to the user. For example, Google owns a service called reCAPTCHA, which it acquired four years ago. You probably use reCAPTCHA all the time. It's primary purpose is to prove you're human. reCAPTCHA shows you two words with distorted lettering that make it hard for computers to recognize but relatively easy for humans to do so.
Here's the magic part: One of those words presented to you is a word scanned by Google from a library book or from the archives of The New York Times. Questionable scanned words are inserted into the reCAPTCHA rotation, and large numbers of users are shown the same word. When enough users type in the same word, that word is accepted as the correct one for the digital copy that will be stored and indexed for all time.