← Sub Club by RevenueCat
Sub Club by RevenueCat
Freemium at Scale: Why Life360 Protects its Free Users – Giordano Contestabile
00:54:59
Loading summary
Transcript69 lines
- [00:01]
A
Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in app purchases, manage customers and grow revenue across iOS, Android and the web. You can learn more@revenuecat.com let's get into the show. Hello, I'm your host, David Barnard. My guest today is Gio, contestable VP of Product at Life360. On the podcast I talk with Gio about making growth every everyone's job, protecting the free experience even when it hurts conversion, and why inconclusive experiments are the only kind he hates. Hey Gio, thanks so much for joining me on the podcast today.
- [01:07]
B
Hey David, thank you for having me and longtime fan of the podcast of revenuecat. So I'm very happy to be here.
- [01:14]
A
Oh, thanks. Thanks. So, so many people in the industry lean on Duolingo as kind of the superstar example of a subscription app that's broken out success and publicly traded and done really well and everything. And I think way too many people sleep on live 360. It's just such an incredible app. I mean, in some ways I think we'll get into this, but you probably have a stronger moat more dedicated users. There's so much going on with Live360 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 off because a lot of people might not be familiar with Live360, giving you a chance to kind of share some numbers, humble brag a little bit. 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 doesn't always tell the whole story. So yeah, tell us about Life360 for sure, for sure.
- [02:09]
B
And I definitely agree. We are kind of a sleeping giant in a way. N the company has been around for a long time, about 15 years. We've been public in the US for a couple of years now. We are safety and peace of mind app primarily for families and Italy winter family in a very broad way, basically helping you keep your people, pets and teens and things that you care about safe and knowing where they are in terms of size. We have about close to 100 million monthly active users. I would say close to half of those in the US and half internationally. We Only started really growing international in the last couple of years, and Italy is 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's because every subscription is actually used by four people on average. So when you subscribe, your circle, which is often your family, but could be anyone, gets the benefits. So that means about 12 million people in reality, you know, benefit of a subscription.
- [03:22]
A
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 $500 million a year in 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 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 level. So I wanted you to get an opportunity to really share that broader perspective that you bring to the company. Inside Life. 360.
- [04:20]
B
I will say the main point, you kind of already made it. You know, I think the most important thing is 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 Italy, when I talk about growth and talking about revenue growth, which in our case can be subscription, can be ads, can be device sales, you know, we have have a tile and pet gps, which are devices to track things and pets back, will also be user growth. Right. Which is natively super important. Building a systematic experimentation program at scale was, if you want the first step. What we are doing now, which is, I think is the real exciting part, and the first part was naturally very positive for us. We are trying to build the tools and AI is having a very, very big role there, the agentic tools to allow every team to contribute to the experimentation problem. 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 the sense. And I think that's where really becomes powerful because if you align the whole company behind the top line metrics, probably, you know, revenue growth metric, and I use a 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 well beyond what a team can do.
- [06:00]
A
Yeah. Do you have any specific examples of teams that maybe wouldn't normally be thought of as part of the growth team or like experiments? Like is your customer service team? Are they running experiments on kind of user satisfaction? Any examples?
- [06:16]
B
Yeah, they are for sure. I can tell you, for example, our finance team, right, Our finance team automated, if you want a lot of the more kind of routine work. And then they build tools that really allow them to mine for information and provide insight that can drive real user breakthroughs in terms of pricing, in terms of tiering, in terms of what we put in our subscription tiers, et cetera, et cetera. Right. So they're definitely very progressive in the sense our people team, our HR team, everything from the way they hire to the way they evaluate performance, to the way they look at the organization has a growth angle if you want. So I would say it's definitely a work in progress. I will not say we are all the way there. I will not say we're perfect at all. But the idea is how can we align everyone beyond our goals? And we say publicly that we want to be 150 million MAU company, we want to be a billion dollar in reven 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 them?
- [07:22]
A
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 replicate the. This culture you're building?
- [07:44]
B
I will say that we have functions, mostly the product development ones, where there are people that have a more explicit growth mandate. I would say for other teams we don't have that, but we really relied on, we call them builders, which I think is becoming pretty common now in the AI Native organizations. It's really people that have the right mindset and they want to muck around those tools and they really want to figure out how to do things faster, how to help grow it, et cetera, et cetera. And then the idea is to give them the tools and the training. 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 three months, instead of doing my job, I want to go and figure out how to make my team faster, how to use technology to make my thing faster. We have different things that we do to really help people with that kind of mindset to do that. But I will say that overall we're looking for them to emerge and self select and start getting things done.
- [08:44]
A
Yeah, that's incredible. I mean, the term I've heard used a lot lately is agency as 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 not micromanaging and kind of celebrating the wins and empowering employees to do those kind of things. So it's really cool to hear that that's how you're running it. And again, such a big organization doing so much revenue. 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 growth. One of the things you shared with me in prepping for this is a kind of equation that you think about. The mechanics of velocity plus win rate delivers compounded growth.
- [09:33]
B
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? We 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 average win. Right. Basically what we're trying to do now is increase velocity mostly to AI while maintaining win rate and average win value roughly stable. Right. That's kind of a first step for us in going through these AI transformation. When I say that there is a caveat for win rate is because the only experiments that we are sad about is an experiment that is inconclusive. Right Then we feel we wasted our time or we didn't set up the experiment correctly or the hypothesis Was not right because we took a bunch of time and a bunch of effort and we didn't get staring results in any form. If we win, it's usually a good thing. We call it, we celebrate, we scale it, we 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 a hypothesis and then 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 in the platform for at least a month and have a dog. Right? What can we do about that? And usually there are ideas that come out of that. So it's super important then to go very deep in terms of how you look at wins and losses. And generally speaking, we built, I would say non 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 helps in you know then creating more experiment and kind of having this portfolio approach. In a portfolio, you know, some will win, some will lose. The important thing is to get. You get enough big wins to drive growth and when you lose, you get some good learning.
- [11:57]
A
I love that you framed learnings per quarter as a core product metric versus wins per quarter or growth per quarter. It sounds like that was a very intentional framing. And do you actually, I mean, are teams judged on that? Is that like a KPI is a metric that is measured across teams inside Live360 or is that just kind of like more an operating principle is operating principle.
- [12:22]
B
It's something that we measure it. I would like to tell you that is the core KPI, but no revenue is the core KPI that the teams are judged on. But it definitely we. So what do we do is we measure the amount of inconclusive tests and we think about how we can reduce that and we make sure that when there is a loss, we do have the learnings and we do have time to think about it and act on them.
- [12:47]
A
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 maybe it just works for pet owners in suburban small town or whatever. One, what's the system you created 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 segments?
- [13:14]
B
Yes, yes, absolutely. I can talk a bit about these and also about what we're doing with machine learning, which is very connected to this, being able to look and act on those segments. That's essentially data science and data questions. We did, 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 would say tools that most company use. You know, from databricks to statsig. We have some homegrown tools, but really infrastructure is pretty standard. It really is more about, I will say, the understanding and knowledge of the user. Right. So we natively, 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 that's the reason why, right, because you already seen this in other cases, et cetera, et cetera. So that's kind of on the understanding, on the then acting on it. There are two ways. So one is delivery specific values, specific features that are aimed at sub audiences, I will say, or I will 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 a platform also have a pet. So there is a huge overlap, as you can imagine. And also because we have a lot of audiences on the platform that are not necessary, you know, this nuclear family couples, for example, a lot of them are pets, right. And maybe they're not so interested in some of our core features that are like driving safety or things that are, 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, them subscribe, et cetera, et cetera. 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 an orchestration system that basically does a lot of those things, automatically learns from the data and allow us to target those experiences in a much more accurate way. So in the 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, the feature education and other things to the audience. Right. And so kind of this machine learning layer orchestrates a lot of the things that the people see in the app in terms of paywalls and push notifications in app messaging, et cetera, et cetera. Eventually we see that becoming a much deeper personalization layer, even personalizing features in the app. But we kind of started from the growth revenue layer.
- [16:17]
A
I think people sleep on just how powerful things like that can be. 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 podcast solicitors will be familiar with 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 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 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, 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, 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. But what are some of the ways that you are surfacing it in the app? The like feature education, the tips, are you 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 think your situation is Going to be a lot more relatable to most apps than the latter situation. So I'm excited to have this opportunity to ask you this question.
- [18:19]
B
I think you know, there is kind of more mechanical aspect of it. For example, we know like I like every app app, the first seven days of a user are the most important. We know there is a very, very high correlation between you joining the app, creating or joining a circle, inviting other people to it, or joining a circle and then being around on day seven and you being around a year later. We know that if you're able to make understand the value of the app in the first week. We have long term users native from product and lifecycle marketing perspective. We have a series of orchestrated steps like most apps, right. Some of them are in onboarding, some of them will be in midboarding. So maybe on day two we see that you haven't used a feature which maybe you haven't looked at location history, which is a very popular feature. So you say, hey, do you know that you can see that we use customize. So if John is in your circle, you know, we can say something like what was John up yesterday? Right. Things like that. So you can do that for sure. And that's, you know, kind of personalized. And more and more we also targeting, you know, 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 you said, nobody knows, right. And so, you know, they kind of, you know, they tap, tap, tap and kind of they become noise. So more and more we want to and we need to come up with fun, unique things. So for example, we launched something called the Pet profile. The Pet profile is a set up a profile for your dog or cat. There are a bunch of reasons for that. The main one now is that if your dog runs away, you can send a bat signal to your neighbor basically. And all the Lite360 users will know and, and kind of be on the lookout for the dog. Right. We got a really huge success with that. A lot of people created it in the way we made people aware of it is we call it Peekaboo. We basically on app open there was an animated dog popping up, you know, like very cute and asking you to pet him, right? To pet it. And so you tap on it and then you open the feature. Right? So that worked really well.
- [20:32]
A
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, the 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. And I mean, similarly, it's like, again, ladder has a unique advantage there, but they're leveraging it really well. And so whatever unique advantage or personality or whatever you can bring into it is going to make it more successful. Any other tips on that front?
- [21:07]
B
I think, you know, contextual prompts, 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, their profile, something 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 is interesting, why it's cool, why is why it's fun.
- [21:29]
A
That's awesome. And the cool thing too is like, with these, 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 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 personalization, which is cool.
- [21:51]
B
Yep. Exciting.
- [21:52]
A
So the next thing I wanted to talk about is your take on freemium, and it's been such a hot topic lately. 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 of like smaller apps, but that's obviously not true of an app@live 360 scale. So how do you think about freemium?
- [22:29]
B
So first, naturally, it depends on the type of app, right? There are some apps for which Harpy Wall absolutely makes sense. Apps where users have very high conviction, they're not social, they don't benefit from network effect, et cetera, et cetera. So that makes a lot of sense, right? For us, 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 reason number one why people tell us they don't subscribe is because the free tier is good enough. And our philosophy is that we want to do something about it, but that something is not making the free tier worse, is trying to provide more value and really diversify the subscription offering. Right. Why? There are few reasons. One is, well, our company mission, you know, we're really all about keeping families safe and we have a lot of features that are SOS and you know, crash detection, et cetera, et cetera that are literally, you know, life saving feature in some cases. And so, you know, making it, you know, accessible to everyone is a big part of why we exist really. But the second is, you know, we are an app that benefits from network effect in live360 in solo mode 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. And so, you know, our thesis is that having a large free engage a 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 advertising business so naturally there is also a business incentive for us to grow our freebase. But it's really the more people in Lite360, the more people invite more people, the more people know about it, the more features like the Pathfinder network or the tile devices or other safety features behind the app are useful, the more density of users. And so for us it's all about that. That said, as I was saying before, about 3% of our machine are subscribers but on average about 4 people use a subscription. So it's really more about 12% of RMAU that are benefit for subscription. Right. Which is I would say in line with a lot of subscription apps we are able to provide a good free experience, a great free experience. And for sure we could limit that and grow a 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.
- [25:10]
A
Yeah, how do you think about that? How do you think about when to add friction to the free experience versus when to, like you said, just only think about adding value?
- [25:22]
B
Well, yeah, so adding friction to the free experience, we try not to naturally. In some cases you have to. For example, we have a paywall in onboarding. Right. Like every other App. Sure it does add one screen of friction, but not having that aware of will cut off a significant amount of the new subscribers. Right. We have a feature that is location history where you can look at for the last two days for free users where people in your SQL were. Two days is more than enough for a lot of use cases. Usually people want to see where people were in the last day or so. We did some testing in the past. If you cut it down to 6 hours or even 12 hours, we double the amount of subscribers from the hook. So it will be a sizable win. A lot of company will take that, but we haven't 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. 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 is going to be, you know, the right thing to do for a business.
- [26:38]
A
It's so hard to balance the short term wins against a long term strategy. Yeah, I mean I talked to the Chief Product officer 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 you think about how you differentiate even things like when you create a new feature, what's the debate internally whether it's a premium feature or a free feature? Like how do you make those kind of decisions because it's so hard.
- [27:25]
B
Yeah, it's a very interesting one and it's actually something that we've been wrestling with because historically we had teams thinking about the free experience and team which are, you know, the ones I work with now a lot thinking more about the paid experience. And that's actually not the right way to look at this because in most cases we think that unless there is a reason and the reason is usually cost. For example, we offer roadside assistance to our subscribers. Right. We could not offer roadside assistance to free users because you know, every time they, they call it, we pay for the tow. Right. And, and so that's one where yes is a paid feature. And I think nobody expect to get, you know, side assistant for free. Right. In some, in other cases we Think that every feature should be freemium, 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, real value that we can provide as a premium. Right. The challenge in most cases is thinking of the mum part of a freemium, 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 away. But the challenge that 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 worth paying for. Right? And so part of this is getting teams that always think about free to think about both and vice versa. Right. And it's an interesting debate that we have. There's no single question. But I will 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 three. We try to build the best that we can and then we find a creative way to build on top of it.
- [29:31]
A
How do you think about or measure how that factors into long term growth, especially compared to customer acquisition? And growth is like, it's easier. It's not easy these days, post att, but it's easier to measure, it's easier to see the numbers. How are you tracking that subscriber value that you create and how are you thinking about growing that and its impact on revenue when it's so much easier to track other things?
- [29:58]
B
There are different ways in which we track value. The natural one is ltv. And so like every company, we have an LTV model that is ever evolving. In our case, it's quite complex because you need to take 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 viral factor into consideration, right? And so it's a beast that is ever evolving. But in Italy, that's kind of the big one that works in the background and we use it, then we attribute different campaigns to it, et cetera. The reality is that if you want to 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 and platinum. They have naturally different value and different economics and how long they stay subscribed. Right. And so the job is priced forward 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.
- [31:10]
A
It is such a shame. 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 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 how life360 really is better with a family, as a couple, with a friend group or something. How do you think about Life 360 as that kind of almost a social app versus like a standard. I know you've worked on a lot of subscription apps in your career, so how does it differ and how do you think about that?
- [32:10]
B
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 communicate with people outside of your core circle or you can communicate explicitly in a match. You can send emojis and things like that. You can check on people, but there's no explicit communication. There's no big viral kind of mechanic. It's not an app where, I don't know, you're gonna share your location on X for everyone to see where you are. Right? And so it's, it's a social app in the sense that the circle, which is often a family but can be anything really is the unit. Right? The circle is the core unit. And as I was saying, a paying circle on average is about four people. A circle on average of about three people. It changes everything we do. It doesn't just change monetization, it doesn't change the way we think about growth. For example, if we launch, if we're thinking of a new feature, often the conversation will be 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 Instagram or something similar. How is that different? And often the answer is, well, because we're providing value to the circle in this way, in that way, in that way. And so it makes things harder in a way because you're a bit more constrained in what you can do to grow. But it also provides clarity in other ways because it makes easier to understand this is something that we should be doing or not be doing. This is how we build something that is really unique to us.
- [33:56]
A
How do you think about and measure those halo effects? Because you talked about on average only one person is subscribing for four people using. Are you watching those individual users who aren't the subscriber that when it goes from 4 to 2, is that like a signal that the one subscriber is potentially going to churn? I imagine it adds a lot of complexity into understanding usage patterns and retention and subscriber retention without going into a
- [34:26]
B
lot of detail, but 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 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 one big churn reason that we 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 life cycle. Right. It's really about, you know, how their, their needs and how their life changes.
- [35:11]
A
Yeah, well that's great. The pet feature, right. So the kids leave house and now you've. You're extending that Runway by tracking their pet instead of the kids.
- [35:20]
B
Yeah, exactly. Yeah.
- [35:23]
A
I did want to dig into that actually because you know, it is fairly unique as a company in that you have physical products that you sell. The tile brand that was that Life 360 purchased, which really cool now is the Apple 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 later 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 those physical products can like fill a lot of roles. How do you think about this?
- [36:12]
B
Yeah, absolutely. I would say it's all of that. So NATO, 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 sign up to light 360, you become a user in some cases, like with pageps, you need to be a subscriber to use it. And that's natively user acquisition and subscriber acquisition, which is always a good thing. Sometimes we bundle some offers in the apps. When you subscribe, we say, hey, do you want a free tile or things like that? With certain users that helps converting. But then there is a retention consideration. We know from data that people with tiles retain better overall, the people without tiles, simply because the basis they have the same use case and they layer tile on top of it and so it becomes more useful. Right. And also there is a matter, 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. Maybe younger kids don't have a phone and you know, you can put a tile in the backpack 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. Do we work on the aging parent segment? I don't know if you're familiar with this concept of the sandwich generation. You know, people in their 40s or so that. But 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 Natalie, you know, it's because, you know, we want to provide safety. It's also because if we're able to provide you with 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.
- [38:07]
A
I had 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 how do you view the profit margins of the hardware compared to the subscriptions? You views it as a loss leader that drives the subscriptions or as a profit center itself?
- [38:36]
B
I will not say as a loss leader for sure. I mean, Skylight devices are much more expensive than what we sell. So for us, I will say it's really a way to bring people into the ecosystem and subscription is the main revenue driver over time. But it's not a loss leader. I mean, we don't necessarily lose money on the device business, but I will say that it's a way to strengthen the ecosystem for us.
- [38:59]
A
Yeah, yeah, it's tough to balance that though. Yeah, it's like, yeah, how much profit? Because 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 fight both sides so it makes sense. It's a tough balance.
- [39:12]
B
I will 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 margins of the devices.
- [39:23]
A
We've been talking a bit about how important the app is to a family. How are you thinking about the growth of that as you think about use cases? And so not asking you to share future roadmap 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 love for you to explain this because 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 Life360 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 into future plans or anything First, I will
- [40:05]
B
say that, you know is a stated goal of ours to become the family super app. But we're very early. We have things in flight, Natalie, and ideas that I cannot go through on future plans. But I can tell you the way we approach it and maybe I can tell you a bit about Uber. It's really about what problems can we solve for families that are adhesion to what we do today and that solve a real pain point. Right. And so in Italy we have 100 million monetary users. We hear from them a lot. We know what they need, we know what they tell us explicitly. They tell us, oh I wish letter 60 was also doing X or implicitly because we see the data, we talk to them. There are patterns that we see that because I think we have opportunities in opportunities, other sectors. So we're really about family safety peace of mind that my first safety piece of mind doesn't just mean location. There are a lot of ways to look at it. Then there are adhesion, I will say opportunities that still leverage location. Family coordination is one our users tell us, oh I wish lighter six years are helping me make sense of my kids schedule, for example, maybe there are things that we can do that right. Or I wish that the 60 was helping my aging dad be protected from scams. I just make two random examples. But there are many things that kind of either fit in the realm of family safety or of location that probably we can take a look at. Right. And I think 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 putting stuff in the app and making become bloated?
- [41:51]
A
Yeah, well, that was actually my exact follow up question was is it implicitly a kind of filter that if it's not an obvious feature that should go into the app, then we probably shouldn't go in that direction? Like, if it would make sense to have to build a whole separate second Apple, it makes less sense or is that something that for sure.
- [42:12]
B
I think very few companies have success developing a second app, no matter the size of your first. Right.
- [42:20]
A
Yeah, even Duolingo, when I had him on the podcast, he was talking about how they originally thought they were going to build out 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, yeah, even Duolingo, Duolingo tried. And you think if anybody could succeed with two different apps, it would be Duolingo and. Nope.
- [42:40]
B
Yeah, absolutely. So, yes, in Italy at that point, that Orchestration commented before because it was super important because the more things you put in the app, the more important is to show the right things to the right people at the right time. Right. And so, you know, that's where 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 you say, as possible to as many families as possible.
- [43:02]
A
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 wanted to go back to the monetization side of things. And you kind of mentioned briefly that ads, you know, 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. And recently you actually acquired an app ad platform to start doing more and more of that internally. How do y' all think about balancing that? And 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 you balance the ad monetization and making it still a good experience and all those things?
- [43:51]
B
Yeah, I mean, really good question. And I will say it took a long time for Light 360 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 two years really 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 they're not qualitative and quantitative standpoint. You know, look at retention, you can engagement, you're told to use and et cetera. So that's, that's kind of the baseline. But then the one that I think is more interesting that we're building towards is 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 the landing notification product that we built. And that's a product we built for users, right. We built it just because it was actually a hackathon product.
- [44:56]
A
Oh, nice.
- [44:56]
B
And so we ship it. And so basically when you land for people in your circle that you landed, right. So it's a peace of mind feature that people love. And Uber approach us and say, oh, we saw this. What if? Then we could also ask you if you want to call Uber when you landed there for it makes a lot of sense, right. And, and so that, that basically was started the partnership, right. And now they have this Uber team product. And so we, we are, you know, about to launch partnership with them in the sense. So those are just things that make sense, right. You know, you as a family, you get value through it, you know, and you get discounts, which offers existence, et cetera. And they make a lot of sense for what you do. Right. Think of, we know, for example, when someone is going to Costco, right. And there are a lot of opportunities to be useful there, not just by popping an ad, but by giving you an offer that is tailored to you, for example. And so that's the kind of things that I think are interesting and that we can focus on the other thing that we did, Nativo acquisition, the company that we bought earlier this year, we are expanding our targeting outside of light 360. And so that means that both in terms of the data that we receive and where we can target those ads, they also go beyond that platform. Right. We become more of a network in a sense.
- [46:19]
A
I love the way you're thinking about that. And I think a lot of people, there is just this negative perception around ads. Like, oh, ads, they get in the way, they take up real estate, they're ugly. I've talked about on the podcast, I have a weather app and it used to be be freemium and I used to have ads and I got so many complaints about ads because 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 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 get like all, all the best, you know, hat ads. And so I think, you know, I think it is a mindset shift and it is something that as a whole industry, we need to get better. All of tech industry really needs to get better at like finding ways for the ads to actually add 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 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.
- [47:32]
B
Yeah, for sure, for sure. And think how many very successful apps there are that are, as you say, basically ads. You know, all those apps that offer first discounts, coupons, et cetera, et cetera, they're super, super popular. Right. And those are essentially ads. Right. But people use them because, you know, they get the value out of it. Right. So I think that's the key.
- [47:54]
A
All right, well, as we wrap up, I think I do ask every guest now three questions. So 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?
- [48:06]
B
I'll talk about maybe one of the machine learning targeted experiments that we did because it was actually surprising how well it worked for a specific reason. So as I mentioned, we have three tiers, Silver, gold and platinum. The majority of users choose gold Which I will say is, you know, is great for most people. Platinum has, you know, additional feature. There 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 services that we offer. Right. It's sometimes hard to explain it. People rotate to kind of the mid tier pricing product. You know, in a paywall you have often cannot show all of it. So you know, you just show the one that most people will go for. Right. And so we use machine learning to target Platinum to people that we thought based on data, based on previous experiments, based on a profile, we have about 900 kind of data points that we use for that. People that we thought had a higher propensity to subscribe to Platinum. It doubled the percentage of new users that subscribe into Platinum. So that was already very, very, very good. But he did that without losing a single gold subscriber, which was super surprising. So he basically found new users and that world 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's an example of how using machine learning was really transformative and give some surprising upside.
- [49:41]
A
Yeah, that's great. And at life 360 scale, I imagine that was a pretty big financial win as well. 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?
- [49:58]
B
Yeah. So this is not from this year, but from last year, but still pretty recent. Well, one I mentioned to you really, which is when we experimented with taking away value from. That's actually earlier than that. And that's actually funny. So I'll tell you, then I tell you something else, but I tell you this one because it's funny. I was like six 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 terms of revenue upside, you know. And so I, you know, I, I run back to the exec team and you know, like with we're gonna, we're gonna be rich and, and instead of like telling me yeah, this is great, etc, etc, I basically, you know, go, go yelled at. And so that, that was my kind of my, my education into how things are done on Light360 when I had
- [50:55]
A
Chris on the podcast, Chris holes the, the former CEO who's now the chairman still super involved. He talked about the, The. The freemium bill of rights, that they're. That inside Life360, there is like core things that you should never touch. So. So I'm assuming it was like one of those core things that you. You were going to like, take it away from free users.
- [51:15]
B
Correct, Correct. Correct. Then Italy, you know, that, you know, I learned, you know, at the end, I understand, I understood why, but it was pretty striking, you know, as someone that you to, you know, just make the number go up, you know. So that was. That was kind of a really funny one, I will say. 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 pick up school, pick up on the school, chat or whatever. They talk, and that's where people find us. So we wanted to replicate that in the app, which makes Sense. It's like 40% of users tell us they found us because someone else told them about the app. And then, great, let's put a button in the app where people can do that in the app. And it's going to be much easier. And maybe we say, hey, you can gift a silver subscription, you can get yourself a subscription. You know, different things. Right. You know, nothing, Nothing really, really. You know, failure across the board. And the reason is people my age or families or older people are not viral. You know, parents are not viral. And so, you know, the one 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 behind the app is made by the parents. Right. And so that has been a series of successes for us.
- [52:50]
A
All right, last question. As we wrap up, as a fill in the blank, growth would be easier.
- [52:54]
B
If I go back to what I said at the start. If every team thought of itself as a growth team, then growth will be easier.
- [53:02]
A
That's awesome. That's such a great way to wrap up the podcast as well. I did want to give you an opportunity, though, 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 specific you want to shout
- [53:26]
B
out, I will 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, find your footings, 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 of really lead this AI transformation. So those are very exciting roles. I will say that we're growing fast. It's a bunch of really passionate, collaborative people, is very dynamic. It's fun, and we're doing something that I think is worth doing. You know, we hear that from families every day.
- [54:12]
A
Yeah. You're literally saving lives once in a while.
- [54:16]
B
Yes. But most of the time we. Most of the time we're telling people that their kids are late at school, which is still. Yes. But still useful. Yeah.
- [54:27]
A
That's awesome. Well, this has been a blast. I don't think I've laughed this much on a podcast, maybe ever. Those last few stories are great, but thank you so much for joining me. This is a blast.
- [54:36]
B
Thank you very much, David. Thank you for having me and talk to you soon.
- [54:42]
A
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 to join our private community.