# Protecting Freemium at 100M Users AND Driving $500M Revenue – Giordano Contestabile, Life360

Channel: Sub Club by RevenueCat
Video: https://www.youtube.com/watch?v=hPwt12zZMCY
Duration: 55 min
Language: English
Words: 10781
Transcript page: https://viewrankai.com/tools/youtube-transcript/hPwt12zZMCY

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[0:00] The reason number one why people tell us they don't subscribe is because they the free tier is good enough. Our philosophy is that literally we want to do something about it, but with that something is not making the free tier worse, is trying to provide more value and really diversify the subscription offer. Hello, I'm your host David Barnard. My guest today is Geo Contestabele, VP of

[0:22] product at Life360. On the podcast I talked with Geo about making growth everyone's job. Protecting the free experience even when it hurts conversion. And why inconclusive experiments are the only kind he hates. Hey Geo, thanks so much for joining me on the podcast today. Hey David, thank you for having me and long time fan of the podcast of RevenueCat, so I'm very happy to be

[0:48] here. Oh, thanks. Thanks. So so many people in the industry lean on Duolingo as kind of the the superstar example of a subscription app that's, you know, broken out success and uh publicly traded and you know, done really well and everything. And I think way too many people sleep on Life360. Uh it's just such an incredible app. I mean, in some ways, you know, I think we'll get into this, but you probably have a stronger moat, a like more dedicated users. Like there's so much going on with Life360 um that I think more people just need to know about. So I'm excited to have you on the podcast and I wanted to kick it

[1:24] off because a lot of people might not be familiar with Life360, giving you a chance to kind of share some numbers, humble brag a little bit. Yeah, it's a publicly traded company, so they can go read your filings and they can look at the stock performance and stuff like that, but uh doesn't always tell the whole story. So uh yeah, tell it tell us

[1:41] about Life360. For sure, for sure. And uh I definitely agree we're a kind of a sleeping giant in a way. And literally the company's been around for a long time, about 15 years. Uh we've been public in the US for for a couple of years now. You know, we're a um the and peace of mind app, primarily for families and we intend family in a very broad way basically helping you keep your people pets and things and things that you care about safe and knowing

[2:08] where they are. In terms of size we we have about close to 100 million monthly active users. I would say close to half of those in the US and a half internationally. We only started really growing internationally in the last couple of years and actually is the the fastest growing market for us as it should be. You know in terms of subscription this is I think an interesting point to make. We have around 3 million active subscribers. Now if that is low compared to the 100 million MAU it is because every subscription is actually used by four people you know on average. So when you subscribe your circle which is often

[2:48] your family but could be anyone gets the benefits. So that means about 12 million people in reality you know benefit of our subscription. Yeah that's amazing. I want to dig more into freemium in a minute but I'll rattle off a couple of more numbers from your I know by the time this is released you'll have announced new public numbers but as of your last quarterly results you're closing in on

[3:09] 500 million dollars a year revenue. Again sleeping giant not many people in the subscription app industry realize just how big you are and then it's the stock is listed in the Australian market so I forget the exact Australian dollars but in US dollars it's almost a 4 billion dollar market cap of the company. So just incredible numbers and you know again just something I think too many people in the industry sleep on. I wanted to dive into your thoughts on subscription growth as a system. So many apps growth as a team and they maybe have some systems but I know you think about it at a much higher

[3:47] level so I wanted you to get an opportunity to really share that broader perspective that you bring to the company inside Life360. I would say the main point you you kind of already made it. You know, I think the most important thing if we're for growth not to be just a team. And to be honest, we started with that. We started with a growth team, but really a system and for everyone in the company to believe that growth is part of their job, right? And naturally, when I talk about growth, I'm talking about revenue growth, which in our case can be subscription, can be ads, can be

[4:21] device sales. You know, we have a Tile and Page GPS, which are devices to track things and pets. But it could also be user growth, right? Which is naturally super important. Being a system a systematic experimentation program at scale was, if you want, the first step. What we're doing now, which is I think is is the real exciting part. And the first part

[4:43] was naturally very very positive for us. We're trying to build the tools and AI, you know, is going to is having a very very big role there. The gigantic tools to allow every team to contribute to the experimentation program, right? And so, ideally, everyone in the company thinks that growth is part of what they do. And ideally, everyone in the company allocates part of the bandwidth to experimentation in that sense. And I think that's where it really becomes powerful because if you align the whole company behind top line metrics, probably, you know, revenue growth

[5:16] metric and a and a user growth metric. And you allow all of them to then align behind sub metrics that they can really influence, and you give them the tools and the mindset and the mandate and the freedom to run their own experimentation, that's where you get basically a giant experimentation machine that goes, you know, well beyond

[5:33] what a what a team can do. Yeah, do you have any specific examples of of teams that maybe wouldn't normally be thought of as part of the growth team or like experiments? Like is your, you you a service team, are they running experiments on kind of user satisfaction? Like any any examples? Yeah, they they are for sure. I can tell you, for example, our finance team, right? Our finance team automated, you know, if you want a lot of the more kind of if you routine work, and then they they build tools that really allow them to mine for information and provide, you know, insight that can drive real, you

[6:09] know, user breakthroughs in terms of pricing, in terms of tearing, in terms of what we put in our subscription tiers, etc., etc., right? So, they're definitely very progressive in that sense. Our HR you know, people team, yeah, right? Our HR team, you know, everything from the way they they hire to the way they evaluate performance, to the way they look at organization has a growth a growth angle, if you want, right? So, I would say it's definitely a work in progress. I would not say we're there all the way there. I would not say we're perfect at all. But the idea is how can we align everyone, you know,

[6:40] beyond our our goals? And then we say publicly that you know, we want to to be a 150 company. We want to be a billion-dollar revenue company, you know, in the next couple of years. And so, how do we allow align everyone behind those goals and give them the tools to to help achieve

[6:56] them? What does that look like on a staffing perspective, a team-by-team perspective? Are there are there kind of growth leads inside engineering, inside finance that kind of help drive the ship, or is it just a culture thing where everybody internally is just growth, growth, growth? How how does that actually play out? Like how how would somebody

[7:16] replicate this culture you're building? I would say that we we have functions, mostly the product development ones, where there are people that have a kind of a more explicit growth mandate. I would say for other teams, we don't have that, but we really relied on we we call them builders, which I think is is becoming pretty common now, you know, in the AI native organizations. It's really people that have the right mindset, and they want to, you know, muck around the stools and they, you know, they really want to figure out how to do things

[7:45] faster, how to help growth, etc., etc. And then they, you know, the idea is to give them the tools and the training. You know, we have programs that specifically train people for this. We have a fellowship program where basically you can raise your hand and say for the next 3 months instead of doing my job, I want to go and figure out how to make my team faster, how to

[8:05] use technology to make my team faster. We have different things that we do to to really help people with that kind of mindset. To do that, but I will say that overall we looking for them to emerge and self-select and and kind of start getting things done. Yeah, that's incredible. I mean, the the term I've heard used a lot lately is agency. It's like the best people on a team are the ones who feel like they can make a difference and then go start making a difference. But it does take the right kind of culture and top-down leadership of of not micromanaging and kind of celebrating the wins and

[8:37] empowering employees to do those kind of things. So it's really cool to hear that that that's how you're running it. And again, such a big organization doing so much revenue like to be able to continue operating like that and have that entrepreneurial mindset all the way up and down the stack is really cool. A few more things on on growth. You one of the things you shared with me in prepping for this is is a kind of equation that you think about the mechanics of velocity plus win rate delivers

[9:06] compounded growth. So we don't think of experimentation as a series of experiments, but we think as a portfolio and a learning portfolio if you want. And you know, very very simply, you know, there are three levers that you can pull in terms of effectiveness of the program. Velocity, you know, how many experiments do you ship? Win rate, you know, what percentage of those you know, are successful? But there is a caveat there that I will go through now. And the win with average win, right? Basically, what we're trying to do now is increase velocity mostly through AI while maintaining win rate and average win win value roughly

[9:45] roughly stable, right? That's a kind of a first step for us in going through this AI transformation. When I say that there is a caveat for win rate is because experiment The only experiments that we are sad about is an experiment that is inconclusive, right? Then we feel we we we wasted our time or we didn't set up the experiment correctly or the hypothesis was not right because we we took a bunch of time and a bunch of effort and we didn't get statistic results in in any form. If we win, it's usually a good thing, you know, we we we call it, we celebrate, we scale it, we

[10:20] most likely also learn something, so we will do more experiments. If we lost, then well, then we just learn something, we prove or disprove an hypothesis, and then, you know, the decision could be, "Okay, this specific line of experimentation doesn't have value today, we should do something else." Or most likely it is, "Well, you know what? It didn't work, but it worked well for users that live in the suburbs and have been into in the platform for

[10:46] at least a month and have a dog, right?" You know, what can we do about that, right? And usually there are ideas that that come out of that, right? And so it's super important then to go very deep in terms of how you look at the wins and losses, right? And generally speaking, we built a I would say not perfect again, but pretty solid way to a predict the impact of experiments and then once we run an experiment to really segment and understand why things are happening, and that naturally helps in you know, then creating more experiments and kind of having this portfolio approach. In a portfolio, you know, some

[11:23] will win, some will lose. The important thing is that you get enough big wins to to drive growth, and when you lose, you you get some good learning. I I I love that you framed learnings per quarter as a core product metric versus wins per quarter or growth per quarter. Uh it sounds like that was a very intentional framing. And And do you actually I mean are teams judged on that? Is that like a KPI? Is that a a metric that is is measured across teams inside Life360 or is that just kind of

[11:54] like more of an operating principle? Is that a very good principle? It's something that we measure it. I would like to tell you that is the the core KPI, but no, the revenue is the core KPI that the teams are judged on. But it definitely we So, what what we do is we measure the amount of inconclusive test and we we think about how can we can reduce that. And we we make sure that when there is a loose a loss, we we do have the learnings and we do have a time to think about it and

[12:21] act on them. I loved your framing earlier, too, that even if an experiment fails, if you learn, it can be really powerful. And the thing you mentioned is like maybe it just works for pet owners in suburban, small town, or whatever. One, like what's the system you created to to be able to dig that deep into segmentation? And then two, do you then take some of those even tiny segments and do some customized personalized things for those

[12:48] segments? Yes. Yes, absolutely. I can talk a bit a bit about these and also about what we're doing with machine learning, which is very very very connected to this. Being able to kind of look and act on the segments, that's essentially data science and data questions. We we did a I think a lot of strides in the last couple of years. We have a very very competent data science and data engineering and data analytics team. The tools that we use are, you know, I I would say tools that most companies use, you know, from Databricks to Statsig. We have some homegrown tools, but but really infrastructure is

[13:22] pretty standard. It really is more about, I would say, the understanding and knowledge of the user, right? So, we naturally, beside having a lot of data, we also spend a lot of time talking to users. I would say a good understanding of the main use cases. And so, often when we read an experiment and we get data, it's not just some automated system, although increasingly that's the case, that tell us, "Oh, this is interesting." It's really someone that knows the user and the platform and the product very well that says, "Oh, this is happening, you know, I think it that's the reason why." Right? Because you already seen this in other cases,

[13:56] etc., etc. So, that's kind of on the understanding. On the then acting on it, there are two ways. So, one is deliver specific value, specific features that are aimed at sub audiences, I would say, or I would say parts of our core audience. So, for example, we're doing a lot of work on pets. Why? Because about 80% of our families with kids that use our platform also have a pet. So, there is a huge overlap, you know, as you can imagine. And also because we have all the we have a lot of audiences on the platform that are not necessary, you know, this nuclear family, couples,

[14:32] for example. A lot of them have pets, right? And maybe they're not so interested in some of our core features that are like driving safety or things that, you know, more family oriented. But if you add value, you know, for pet owners, we make the platform better for them. We can make, you know, they subscribe, etc., etc., right? So, we think about those audiences. The second, which is the most exciting, is that in the last year we started building machine learning targeting and orchestration system that basically does a lot of those things automatically, learns from from the data, and allows us to target those experiences in a much

[15:09] more accurate way. So, in that example before, will we go and we build and build a big feature for a micro audience? No, probably. But we can know that that audience responds better to certain things, and we can target promotions, we can feature education and other things to the audience, right? And so kind of this machine learning layer orchestrates a lot of the things that, you know, the people see in the app in terms of paywalls and push

[15:37] notifications, in-app messaging, etc. etc. Eventually, you know, we see that becoming a much deeper personalization layer, you know, even personalizing features in the app, but you know, we kind of started from the growth revenue layer. I I think people sleep on just how powerful things like that can be. You know, you onboard a user, they probably don't read half the stuff. Sometimes you, you know, do a 60-page onboarding, sometimes you only do a three, but once they get into the app, it's like done for a lot of apps. And one of the one of the examples I've been using more and more lately and and podcast listeners will be familiar with

[16:14] this one, but huge fan of the Ladder fitness app. And one of the coolest things they're able to do and again, I think people sleep on these kind of opportunities is that they actively have their coaches because the whole point of Ladder is like you have a personal coach on your phone, they're actually like talking you through the workouts and like planning the workouts ahead. Each workout is

[16:37] customized, they like record a script. It's really an incredible product, but then the coaches actually coach you on how to use the app. They like remind you to like set your weights and then they tell you like it's important to set your weights because then next time we do this exercise, you'll know which one to use. And then they rolled out a big feature, uh nutrition in the app. And so now the coaches are all saying, "Hey, don't forget to log your nutrition because no matter how hard you work out, you're not going to see the results you want without getting your diet dialed in." And it's really cool to see the the

[17:11] the way they just kind of pull all of that together to get the user to succeed. You know, succeed in their lifting journey, succeed in their health goals, succeed in their diet goals. And it sounds like that's similar to what you're building. You don't have the luxury like and not many apps have the luxury of that kind of like a coach in their ear being able to say things like that. But what are some of the ways that you are surfacing it in the app? The the like feature education, the tips, are

[17:38] you, you know, popping little banners? Is it in a feed? Like what are all the ways you're able to like, you know, push those learnings into the app? And I I think your situation's going to be a lot more relatable to most apps than the latter situations. I'm excited to to have this opportunity to ask you this

[17:53] question. I I think you know, there there is kind of a more mechanical aspect of it. For example, we know like like every app, the first 7 days of a user are the most important. We know, you know, there is a very very high correlation between you joining the app, creating or joining a circle, inviting you know, other people to eat or joining a circle, and then being around on day seven and you being

[18:16] around, you know, a year later, right? And so, we know that if you're able to make you understand the value of the app in the first week, we have a long-term users, right? And so, naturally from a product and life cycle marketing perspective, we have a series of orchestrated steps like most apps, right? Some of them are in onboarding,

[18:34] some of them will be in mid-boarding. So, maybe on day two, we see that you haven't used a feature, which may may you know, maybe you haven't looked at location history, which is a very popular feature. So, we say, "Hey, do you did you know that you can you can see that?" And check we use, you know, customize. So, if someone if John is in your circle, you know, we can say something like, "What was John up to

[18:54] yesterday?" right? As as as things like that. So, you can do that for sure and that's you know, kind of personalized and more and more we're also targeting, you know, on on specific behavior. And then the other thing is that a lot of those things after a while become noise because you know, users use a lot of apps. You know, they don't read. As as you said

[19:16] nobody does, right? And and so you know, they kind of you know, they tap tap tap and and they kind of become noise. So, more and more we we want to and we need to come up with fun unique things. So, for example, we we launched call something called the pet profile. The pet profile is a set up a profile for your dog or cat. Well, there are a bunch of reasons for that. The main one now is that if your dog runs away, you can send a butt signal to your

[19:41] neighborhood basically. And all the Lighter users will know and and they kind of be on the lookout for the dog, right? We got a really huge success with that. A lot of people created it. And the way we make people aware of it is we call it peekaboo. We basically on app open there was a animated dog popping up, you know, like very cute and and asking you to to pet him, right? To pet it. And so, you tap on it and then you open the the feature,

[20:05] right? And so, that worked really well. Yeah, no, that's super smart. And you're exactly right. Like you know, the more kind of the more push notifications you send, the more emails you send, the more in-app banners you drop down, users do just become blind to it. So, it's really cool to hear the success you had with like a really creative approach to that. And that's what it's going to take. I mean, similarly it's like again, Lighter has a unique advantage there, but they're leveraging it, you know, really well. And so, whatever unique advantage or personality or whatever you can bring into it is going to make it

[20:38] more successful. And any other tips on that front? I think in you know, contextual prompts, uh useful prompts, personalized and targeted. If you can make it meaningful, you know, rather than just tap here to check out this feature, something about, you know, the their profile, something that that is relevant to them. That's really the way to go. You really need to cut through the noise and make it very clear why it's interesting, why it's

[21:02] cool, why it's why it's fun. That's awesome. And the cool thing, too, is like with these AI tools, it's hopefully going to get easier and easier for even smaller apps and smaller teams to do this kind of personalization at scale where it's you know probably taking you all years and machine learning team and data science team to get there. I think it's going to get easier and easier for smaller and smaller teams and smaller and smaller apps to do this level of

[21:24] personalization, which is cool. Yep. Exciting. So the next thing I wanted to talk about is your take on freemium. It's been such a hot topic lately. We we've had guests on the podcast talking about it recently. And then you know in the state of subscription apps report, we actually shared a number that blew a lot of people away, myself included, that hard paywall apps convert users at five times the rate of freemium apps. And I think a lot of people in the industry took that as a you know hard paywall or die. Like that's the only way to grow as a subscription app. And maybe that's true

[21:55] of like smaller apps. But that's obviously not true of an app at Life360 scale. So how do you think about freemium? So firstly it depends on on the type of app, right? There are you know some apps for which hard paywall apps would make sense. You know apps where users are very high conviction, they're not social, they don't benefit from network effect, etc. etc. So that that that makes a lot of sense, right? For us it you know we not only we are a freemium app, but our free tier is extremely generous. I will say that for most people it's good. It's great. It's good enough, right? In fact, the the reason

[22:30] number one why people tell us they don't subscribe is because the the free tier is good enough. And uh our philosophy is is that ideally we want to do something about it, but that something is not making the free tier worse. It's trying to provide more value and really diversify the subscription offering, right? Uh why? There are a few reasons. One is a well, our company mission, you know, we're really you know all about keeping family safe. And we have a lot of features that are SOS and you know crash detection, etc. etc. that are literally you know, life saving features in some cases. And so, you know, making

[23:06] it you know, accessible to everyone is a big part of why we exist, really. But, the second is you know, we are and are the benefits from network effect. In Life360 in solo mode is is not really useful or interesting, right? You need to invite your family, invite your friends, etc., etc. The number one way that people discover us is parents telling other parents, you know, about the app. Um and so, you know, our thesis is that having a large free engage free user base around the world is actually one of the big modes and one of the big competitive advantages for us. I will also say that, you know, we have an

[23:45] advertising business, so naturally there is also a business incentive for us to grow our free base. But, but it's really, you know, the more people in Life360, the more people invite more people, the more people know about it, the more features like the Petfinder network or the Tile devices or other official safety features that we have in the app are useful. You know, the more density of users. And so, you know, for us it's all about that. That said, you know, if you as I was saying before, about 3% of our MAU are subscribers, but on average about four people use a subscription. So, it's really more about 12% of our MAU that

[24:22] are benefit for subscription, right? Which is I would say in line with with a lot of a lot of subscription apps. We are able to provide a good free experience, a great free experience. And for sure we could, you know, limit that and and grow subscriber base much faster, but I think that we will pay for that down the line in slower growth and becoming a less interesting product. Yeah, how do you think about that? Like, how do you think about when to add friction to the free experience versus when to, like you said, just just only think think adding value? Well, yeah, so I didn't

[24:57] friction to the to the free experience we try not to. Naturally, in some cases you have to. For example, we have a we have a paywall in in the in onboarding, right? Like every like every other app. Sure, it does add, you know, one screen of friction, but not having that will uh aware of will cut off a significant amount of of adding new subscribers, right? We have a a um a feature uh that is uh location history where you can uh look uh at for the last, you know, 2 days for free users where people in your circle were. 2 days is, you know, more

[25:31] than enough for a lot of use cases. Uh usually people want to see where people were in the last day or so. Uh we did some testing in the past. If you cut it down to 6 hours or even 12 hours, like we doubled the amount of subscribers from the hook. So, you know,

[25:45] it would be a sizable win. Uh a lot of company would take that, but but we haven't uh because it does make the feature significantly less appealing for free users. And it does make it less useful and in some cases it can make people less safe. So, we decided not to do it. And you know, we paid for it on short-term bottom line, but we think in the long term it's going to be, you know, the right thing

[26:11] to do for our business. It's so hard to balance the short-term wins against the long-term strategy. Um yeah, I mean I talked to the chief product officer at Duolingo about this when I chatted with him earlier this year. And they think along those same lines is that, you know, I think he he called it the premium trap is that you can easily juice numbers and, you know, hit your quarterly revenue by just locking more and more features behind the premium tier, but then you're really shooting yourself in the foot long-term, but it's so hard to get that balance right. Any advice you have on like, you know, how

[26:47] you think about how you differentiate even even things like when you create a new feature, what's the debate internally whether it's a premium feature or free feature? Like how do you make those kind of decisions cuz it's so hard. Yeah, so it's a very interesting one and is actually something that we've been wrestling with because historically we had uh teams thinking about the free experience and team which are you know um the ones I work with now a lot thinking more about the paid experience. And uh that's actually not the right way um to look at this because uh in most cases we think that unless there is a a reason

[27:26] and the reason is is usually cost. For example, we offer roadside assistance to our subscribers, right? We could not offer roadside assistance to our free users because you know every time they they call it we pay for the toll, right? And uh and so that's one where yes, is a paid feature and I think that nobody expect to get, you know, roadside assistance for free, right? In some In other cases we think that every feature should be premium. Meaning that every feature that provides value to a user should be great in the free version of the feature itself and then it's up to us find value, find additional value,

[28:02] real value that we can provide as a premium, right? And the challenge in most cases is thinking of the premium part of a premium not as an artificial gate, you know, say I give you two for free and then the rest is paid although some features that we have worked that way. But the the challenge that we we are wrestling most times is how do we make something free and then create a completely new experience, a completely new tier on top of that that is that that is worth paying for, right? And so part of this is getting teams that already always think about free to think

[28:39] about both and vice versa, right? And uh it's an interesting, you you debate that we have. There's no single question, but we'll say generally speaking, if something is very expensive to provide, it will become a premium feature. If something is more of a software-based feature, we start with free, we try to build the best that we can, and then we find a creative way to to build on top

[29:05] of it. How do you think about or measure how that factors into long-term growth, especially compared to like, you know, customer acquisition and growth is like a easy it's easier it's not easy these days out post ATT, but it's easier to measure, it's easier to see the numbers. How are you tracking that like subscriber value that you create? How are you thinking about growing that and its impact on revenue when it's so much easier to track other

[29:32] things? I mean, there are definitely different ways in which, you know, we we we track value. The natural one is LTV, right? And and so, like every company, you know, we have an LTV model, you know, that's all ever evolving, you know, our case is quite complex because you need to take a subscription into consideration, you need to take device sales into consideration, you need to take advertising into consideration. If you want to get fancy, you need to take the the viral factor into consideration,

[30:00] right? And and so, it is a beast that is ever evolving. And but definitely, you know, that that's kind of, you know, the the big one that that works, you know, in the background and and we use it, you know, then we attribute different campaigns to it and so and so forth. The reality is that if you want you know, narrow it down to subscription, it's really a factor of how many users we convert to subscription, what package do they choose, silver, gold, or platinum, they have definitely different value and different economics, and how long they stay subscribed, right? And so, the reality the job is is

[30:36] quite straightforward in a sense is get as many people as possible to subscribe, direct them to the best package for them, and then try to keep them subscribed as long as possible. It is such a shame. I I do feel like there's a lot of apps that get to this kind of place product-wise where it's like they hit product market fit and then they just put all the gas into growth and top of funnel and aren't putting as much effort, attention, focus into continuing to like increase that value over time. And so it's really cool to hear that as a kind of primary focus of the company, not just, you know, that

[31:12] top-line growth where it's it's easier to see, but it doesn't build that momentum that really compounds over time. Earlier you mentioned um how Life360 really is better with a family, with uh as a couple, uh with a friend group or something. How do you think about Life360 as that kind of almost a social app? Um versus like a standard, I know you've worked on a lot of subscription apps in your career. Uh so how how does it

[31:43] differ and how do you think about that? It's interesting, I think, because we're not a social app, right? We're not a social network. We're not a place where you can actually, you know, communicate with people outside of your core circle or, you know, you can communicate explicitly in a match. Like you can you

[32:00] can send emojis and things like that. You can check on people, you know, but there you know, there's no explicit communication. There are no big viral kind of mechanic, right? It is not an app where, I don't know, you you you you're going to share your location on X, you know, for everyone to see where you are, right? And so it's a it's a it's a social app in the sense that the circle, which is often a family, um but can be a anything really, is the unit, right? Is it is equally the core unit. And as I was saying, a paying

[32:33] circle on average is about four people. A circle on average is about people. It changes everything we we do. It doesn't just change monetization. It doesn't change the way we we think about growth. For example, if we launch if we think of a new feature, often we know the conversation will be you know, we have an idea for this feature and say, "Okay, well, that's a good idea, but I don't know, Snapchat has something similar or uh Instagram has something similar. You know, how is our different? You know, and often the the the answer is, "Well, because we provide a value to the circle in this way and that way and that way,

[33:11] right?" And so, it kind of it makes things harder in a way because uh you're a bit more constrained in what you can do to grow, but it also provides clarity in other ways because it makes it easier to understand this is something that we should be doing or not be doing. This is how we build something

[33:28] that is, you know, really unique to us. How do you think about and measure the those halo effects? Cuz you talked about like on average only one person is subscribing for four people using. Are you watching those individual users who aren't the subscriber that when when it goes from four to two, is that like a a signal that the one subscriber is potentially going to churn? Like, I imagine it adds a lot of kind of complexity into kind of understanding usage patterns and retention and

[33:57] subscriber retention. You know, we without going into a lot of detail, but what I what I can say is that there is a certain circle size three to four people that has significantly higher conversion and retention than lower and higher circle sizes, right? And so, uh higher circle sizes is often friend groups or things like extended family or they probably less motivated to pay for safety features. And the lower circle sizes, yes, they're either couples or maybe groups that, you know, maybe the kids, you know, one thing that we that one one big churn reason that we

[34:30] have is, you know, the kids left. They're in college. And you know, and that's basically for some families at least the end of the Life360 circle, right? It's really about you know, how their their needs and how their their life changes. Yeah. Well, that's great that the pet feature, right? So when the kids leave house and now you've you're extending that runway by

[34:53] tracking their pet instead of the kids. Yeah, exactly. Yeah. I I did want to dig into that actually because you know, it it is fairly unique as a company in that you have physical products that you sell, the Tile uh brand that was that Life360 purchased, um which really cool now is um the Apple

[35:15] Find My compatible and all those things. So that's really fantastic product. And then now the pet product that was released not too long ago. How do you think about incorporating those physical products both as a kind of top of funnel, but then also as like a way to increase the LTV of a user. And then layered on another thing to increase the retention by getting them to track their pet and things like that. There's these kind of layer on a lot of the the those physical products can like fill a lot of roles. How do you think

[35:46] about those? Yeah, absolutely. I would say it's all of that. So naturally there is a top of funnel effect, right? You you buy a pet GPS, which is a pet tracker, or you buy a Tile, which is a Bluetooth line of Bluetooth trackers. And then you know, you sign up to like 360, you become a user. Uh some cases like with pet GPS you you

[36:03] need to be a subscriber to to use it. And uh that's naturally you know, user acquisition and uh subscriber acquisition, which is which is always always a good thing. Sometimes we bundle some offers in the apps. When you when you subscribe, you know, we say, "Hey, do you want a free Tile?" or things like that. You know, that with certain users that helps in converting. But then yeah, there is a retention um consideration. We know from data that people with Tiles retain better overall than people without Tiles simply because the basis they have the same use case and they lay a Tile on top of it and so

[36:37] it becomes more useful, right? And also there is a there is a matter as you as you mentioned of prolonging the usage cycle I will say of the app. So, people use our trackers on younger kids for example, right? And maybe younger kids don't have a phone and you know, you can put a Tile in the backpack

[36:57] and you know, have some peace of mind. You use the pet GPS even when your kids go to college, you know, your dog is still there, so you're going to still using it, right? We are more and more doing work on the aging parent segment. I don't know if you're familiar with the this concept of the sandwich generation, you know, which is you know, people in their 40s or so that they have kids, they have parents that are aging, so you worry about your kids, you worry about your parents and so you know, the idea is can we you know, provide solutions for all of it, right? And naturally, you

[37:29] know, it's because you know, we want to provide safety, it's also because if we're able to provide you with a a good series of services from when your kids are young to when they grow up, for your parents, your pets, then I think we have a very good product. I had the the Skylight calendar folks on earlier this year. One of the things they talked about was that they actually do make a pretty good profit on the devices themselves and then later on the subscription revenue on top of that. Is that how things are done at Life360 or like how do you view the profit margins of the

[38:03] hardware compared to the subscriptions? Do you view that as a loss leader that drives the subscriptions or as a profit center itself? I wouldn't say it's a loss leader for sure. I mean, Skylight devices are you know, much more expensive than the what we sell. So, for us I would say it's really a way to bring people into the ecosystem and subscription is the main you know revenue driver over time but it's it's not a loss leader I mean we don't necessarily lose money on on the device business but I would say that it's a way to strengthen the ecosystem

[38:33] for us. Yeah. Yeah, it's tough to to balance that though. Yeah, it's like yeah, how much profit cuz it the lower you can get the price the more you can bring that top of funnel in through the devices but then yeah, you have to like fight both sides so it makes sense it's a it's a

[38:46] tough balance. I would say that we will always index toward trying to reach more users with the devices and bring more users in the ecosystem versus trying to maximize the the margins of the devices. We've been talking a bit about you know how important the app is to family. How are you thinking about the growth of that like as you think about use cases and so not not asking you to like you know share future road map plans or anything like that but I know you've kind of been slowly evolving it away from like just being a tracking app to be to having other uses and actually I'd

[39:19] love for you to explain this cuz I didn't dig super deep into it but you recently partnered with Uber on a feature and I know you're starting to think about the Life 360 app more and more as this kind of family super app not just a tracking app. So like what are the steps you've taken so far and how do you broadly think about that without delving

[39:37] into future plans or anything? First of all I would say that you know it is a stated goal of ours to become the family super app but we're very early. We have things in flight and Italy and ideas that I cannot go through on future plans but I can tell you the way we we approach it and then maybe I can tell you a bit about Uber. It's really about what problems can we solve for families that are adjacent to what we do today and that solve a real a real pain point, right? And so in Italy we you know we have you know 100 million monthly active

[40:08] users. We hear from them a lot. We know what they need. We know we know what they tell us. Explicitly they tell us oh I wish Life 360 was also doing X or implicitly because you know, we see the data, we we we know we talked to them. There are you know, patterns that we see that because I think we we we have opportunities, you know, in in other sectors. So, you know, we're really about family safety and peace of mind. That my first safety and peace of mind doesn't just mean location. There are a lot of, you know, ways to look at it. And then

[40:38] there are, you know, additional, I would say, opportunities that that still leverage location. Family coordination is one, right? Our users tell us, "Oh, I wish Life360 was helping me make sense of my kids' schedule, for example." Maybe there are things that we can do there, right? Or I wish Life360 was was helping, you know, my aging uh dad uh be protected from scams. I just make, you know, two random examples, right? But there are many things that kind of either fit in the realm of family safety or of location uh that, you know, probably we can take a look at, right? And I think the the

[41:12] the main thing there is to be disciplined and really understanding, are we solving a real problem? We have permission to solve this problem. And is there a big overlap with our existing audience, right? Versus just, you know, putting stuff in the app and and making it become bloated. Yeah, well, that that was actually my exact follow-up question was it is it implicitly a kind of filter that if it's not an obvious feature that should go into the app, then we're we

[41:38] probably shouldn't go in that direction. Like if it would make sense to have to build a whole separate second app, it makes less sense or is that something that that Yeah, okay. I I think very few companies have suc- success, you know, developing a second app, you know, no mat- no matter the size of your first, right? Yeah, even Duolingo, when I had him on the podcast, he was talking about how they originally thought they were going to build out like 20 different apps and they launched, I think it was either chess or math as a separate app and then they had to bring it back into the main app. So,

[42:07] yeah, even even Duolingo tried and you think if anybody could succeed with two different apps, it would be Duolingo and nope. Yeah, absolutely. This is all yes. And and in Italy, you know, at that point that orchestration commented before because it's super important because the the more things you put in the app, the more important is to show the right things to the right people at the right

[42:25] time, right? And so, you know, that's that's where we we have a lot of thinking to do and it's definitely going to be interesting. But the goal is definitely we want to become as useful as possible to as many families as possible. And that's how you drive the value which then drives the LTV which then drives the word of mouth and drives all the all the things. So, yeah, it makes a ton of sense. I I wanted to get back to the monetization side of things and you kind of mentioned briefly that ads, you know,

[42:51] do bring revenue from the free users. So, it's not that your freemium product is just about the social sharing and things like that, but you're actually making revenue. And then recently, you actually acquired an app ad platform to start doing more and more of that internally. How How do y'all think about balancing that? And and and I'll I'll go back to kind of what we were talking about before, too. Like it would be easy to put more and more and more ads into the free experience and then make it worse and worse and worse, but that's obviously not the approach that you're taking. So, how do How do you balance

[43:21] the ad monetization and and making it still a good experience and and all those things? Yeah, I mean, really good question, right? And I would say it took a long time for Life360 to get into the ad business if you think the company has been around I think 15 years or so and only in the last 2 years really we started we started working in ads. So, the kind of baseline is do no harm, meaning make sure that the ads are not intrusive, not invasive, and they're not unwelcome by the audience. You know, in Italy, you know, you measure that qualitatively and quantitatively. You stand point, you know, you look at

[43:57] attention, you can engagement, and you talk to users, etc. etc. So, that's that's kind of the the baseline. But then the one that I think is more interesting thing building towards is uh how do we use all the data that we have or you know the knowledge that we have to actually provide value to users, right? So, Uber will be an example. Uber started as a partnership on landing notification product that we built. And that that's a product we built for users, right? We built it just uh because it was actually a

[44:29] hackathon product project. Oh, nice. Uh and so we we we we ship it. And so, basically, when you land uh in for people in your circle that you landed, right? So, it's a peace of mind feature that people love. And Uber approached us and said, "Oh, we saw this. What if then we could also ask if

[44:47] you want to call a Uber?" When you land at the airport, makes a lot of sense, right? And so, that that basically was started the partnership, right? And now they have this Uber team product. And so, we we're you know about to launch partnership with them in the sense. So, those are just things that

[45:03] make sense, right? You know, you as a family you get value through it, you know, uh and you get discounts, special offers, etc. And they make a lot of sense for what you do, right? Think of uh you know we know, for example, when someone is going to Costco, right? And you know, there are a lot of opportunities that you know to be useful there. Uh not just by popping an ad, but I by you know giving you an offer that is tailored to you, for example, right? And so, that's the kind of things that I think are interesting. And uh that we can focus

[45:35] on. The other thing that we did in Nativo acquisition, the company that we bought earlier this year, we're expanding our targeting outside of LTM 360. And so, that means that you know, both in terms of the data that we receive and where we can target those ads, they also go beyond our platform, right? We become

[45:52] more of a network in the sense. I love the way you're thinking about that. And I think a lot of people there is just this like negative perception around ads. Like, "Oh, yeah, they get in the way, like they take up real estate, they're ugly." Yeah, I've talked about it on the podcast. I have a weather app and it used to be freemium and I used to have ads and I got so many complaints about ads cuz it was like guns and casinos and like, you know, really flashy annoying things that really took away from the product experience. But, like over the last few years, I've come

[46:19] to really appreciate like I actually enjoy scrolling Instagram in part because of the ads. Like they're kind of a product recommendation engine. And I mean, specifically, you know, if I'm shopping for a new hat, I'll go into Instagram and like search hat and look at a few hats and then all of a sudden I like all the best, you know, hat ads. And so I think, you know, I I think it is a mindset shift and and it is something that as a whole industry we need to get better at the all of tech industry really needs to get better at like finding ways for the ads to actually add

[46:50] value and be enjoyable and contextual and relevant and helpful versus just being this annoyance. And so it sounds like that's that's what you're building. It's like you're you're building toward ads not just being this annoyance that people are going to subscribe to get rid of, but something actually enhances the experience over time. Yeah, for sure, for sure. And and think how many very successful apps that are that are, as you say, this basically ads, you know, all those apps that offer first discounts, coupons, etc., etc. They're super super popular, right? And those are essentially ads, right? But people use them because, you know, that you know, they get the value

[47:26] out of it, right? So So I think that's the key. All right. Well, as we wrap up, I I do ask every guest now three questions. So the first one is, what is the most impactful experiment or change you implemented in the last year? Your biggest biggest win of the last year. I'll talk about maybe one of the machine learning targeted experiments that we we did because it was actually surprising how well it worked for a specific reason. So, as I as I mentioned, we have

[47:52] three tiers, silver, gold, and platinum. The majority of users choose gold, which I I will say is you know, is great for for most people. Platinum has you know, additional features that is a much wider range for roadside assistance, for example. So, if you drive a lot, it's a good deal. There is identity protection. There are a bunch of other other services that we offer, right? So, it's sometimes hard to explain it. People rotate to kind of the mid-tier pricing product. You know, in a paywall, you often cannot show all of it. So, you know, you just show the one the most people will will will go for,

[48:26] right? And so, we use machine learning to target platinum to people that we thought, based on data, based on previous experiments, based on our profile, we have about 900 kind of data points that we use for that. People that we thought had a higher propensity to to subscribe to to platinum. It doubled the percentage of new users that subscribing to platinum. So, that was already very very good. But, he did that without losing a single gold subscriber, which

[48:53] was super surprising. It's incredible. He basically found new users, right? And that would that maybe we were presenting with gold, and they would not like gold enough. And now we're presenting them with platinum, and they like platinum and they subscribe to platinum, right? And so, that that's an example of how using machine learning, you know, was really transformative and and and give some

[49:15] surprising upside. Yeah. Oh, that's great. And at at Life360's scale, I imagine that was a a pretty big financial win as well. Um all right, the next one actually one of my favorite questions to ever ask is what's the worst experiment, the biggest fail that you've had in the last year? Yeah, so this is not from this year, but from from last year, but you know, still

[49:37] still you know, pretty pretty recent. Well, one I I mentioned to you really, which is when we experimented with taking away value from uh that that's actually earlier than that. And it's actually funny, so I'll I I tell you and then tell you something else, but I'll tell you this one because it's funny. I I was like 6 months into the job, right? And I do this experiment and I saw the numbers and I was like you know, like the number were very big, right? In

[50:03] in terms of revenue upside, you know? And so, I you know, I I ran back to the exact team you know, like with yeah, you know, we we're going to we're going to be rich. And and instead of like telling me, "Yeah, this is great, etc. etc." I I basically, you know, go go yell that.

[50:24] And so, that that was my kind of my my education into how things are done at Life360. When I had Chris on the podcast, Chris Halls, the the former CEO who's now the chairman and still super involved, he talked about the the the freemium bill of rights that they're inside Life360, there is like core things that they you

[50:43] should never touch. So, you So, I'm assuming it was like one of those core things and you you were going to like take it away from free users. Correct. Correct. Correct. Then it totally, you know, you know, I I learned, you know, at the end I I understood why, but it was pretty striking, you know, as someone that used to, you know, just

[51:01] make the number go up. You know. So, that was that was kind of a really funny one. Recently, well, you know, we we've been kind of in success a lot of losses in trying to drive virality, you know, beyond the circle creation and joining in the app. So, basically getting people we know people do it outside of the app. Parents go, you know, pick up school pick up on the the school chat or or whatever, they

[51:31] talk and and that's why people find us. But we know and so, we wanted to replicate that in the app, right? Which makes sense. It's like 40% of users tell us they found us because someone else told them about the app and then then great, let's put a button in the app where people can do that in the app and it's going to be my much easier, I know, and maybe we we say, "Hey, you can you can gift a silver subscription. You can get yourself a silver subscription." You know, different things, right? You know, nothing. Nothing. Really really you know, failure across the board. And and

[51:59] the reason is people my age or or families or older people are not viral, you know? Parents are not viral. And and so, you know, the the ones that are viral are their kids, right? But their kids are not usually the core audience of our app. They're on the app, but the decision being on the app is made by the parents, right? And and so, that has

[52:21] been a a series of successes for us. All right, last question as we wrap up. As a fill-in-the-blank, growth would be easier if I I will go back to what I I said at the start. If every team thought of itself as a growth team, then growth would be easier. That's awesome. That's such a such a great way to wrap up the podcast as

[52:40] well. I did want to give you an opportunity though to to shout out any specific job roles. I mean, having this conversation with you and having talked to Chris last year, I mean, it just sounds like such a great company who really cares about its people and the people it's serving. So, yeah, if you're in the industry and want to work for a great company, definitely check out the careers page. But anything

[52:59] specific you want to shout out? I I would say we have a lot of roles open now. You will see a lot of roles in our career page as AI native, which is very exciting. What does it mean? It means that basically you're expected to come in, you know, find your your full things, understand what's going on, understand the company, and then you're given an outcome, and you're told to go and do it. And build your own tools, and find ways to do it, and kind

[53:26] of really lead this AI transformation. So, those are very exciting roles. I will say that you know, we're growing fast. It's a bunch of really passionate, collaborative people. It's very dynamic. It's fun. And we're doing something that I think is worth doing. You know, we we hear that from families every day. Yeah, you're you're literally saving

[53:48] lives. Once in a while, yes. But most of the time we we most of the time we're telling people that their kids are late at school. Which which is still Yes, but still useful. Yeah, yeah, that's awesome. Well, this has been a blast. I don't think I've laughed as much on a podcast maybe ever.

[54:07] Um these last few stories were great. But thank you so much for joining me. This is a blast. Thank you very much, David. Thank you for having me, and talk to you soon. Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com

[54:27] to join our private community.

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