Freemium at Scale: Why Life360 Protects its Free Users – Giordano Contestabile

David Barnard:
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Hello, I'm your host, David Barnard. My guest today is Gio Contestabile, VP of Product at Life360. On the podcast, I talk with Gio 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, Gio, thanks so much for joining me on the podcast today.

Giordano Contestabile:
Hey, David. Thank you for having me and a long-time fan of the podcast of RevenueCat, so I'm very happy to be here.

David Barnard:
Oh, thanks. Thanks. 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. I think way too many people sleep on Life360. 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, a more dedicated users. There's so much going on with Life360 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 Life360, 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.

Giordano Contestabile:
For sure, for sure. And I definitely agree we are kind of a sleeping giant in a way. In Italy, the company's been around for a long time, about 15 years. We've been public in the US for a couple of years now. We are a safety and peace of mind app, primarily for families. In Italy, we intend 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 will 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.
In terms of subscription, this is, I think, an interesting point to make. We have around three million active subscribers. Now, if this is low compared to the 100 million MAU, it's because every subscription is actively 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 in benefit of our subscription.

David Barnard:
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 this subscription app industry realize just how big you are. And then 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 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 Life360.

Giordano Contestabile:
I would say the main point, you kind of already made it. I think the most important thing, first of all, a 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.
In 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. We have a Tile and pay GPS, which are devices to track things and pets, but will also be user growth, which is in Italy super important. Being a systematic experimentation program at scale was if you want the first step, what we are doing now, which I think is the real exciting part. And the first part was in Italy very, 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 program. 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.
I think that's where it really becomes powerful because if you align the whole company behind the top line metrics, probably a revenue growth metric and I use a growth metrics. 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.

David Barnard:
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? Is your customer service team, are they running experiments on user satisfaction? Any examples?

Giordano Contestabile:
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 routine work, and then they build tool 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. 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 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 there 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 a 150 million MAU company, we want to be a billion dollar revenue company in the next couple of years. And so how do we align everyone behind those goals and give them the tools to help achieve them?

David Barnard:
What does that look like on a staffing perspective, a team by team perspective? 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 does that actually play out? How would somebody replicate this culture you're building?

Giordano Contestabile:
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 growth, 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 team 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 are looking for them to emerge and self-select and kind of start getting things done.

David Barnard:
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.

Giordano Contestabile:
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 very simply, there are three levers that you can pull in terms of effectiveness of the program. Velocity, how many experiments do you ship? We rate what percentage of those are successful, but there is a caveat there that we go through now. And the average win, right?
Basically what we're trying to do now is increase velocity mostly through AI while maintaining win rate and average win value, roughly stable. That's the kind of first step for us in going through this AI transformation.
When I say that there is a caveat for a win rate is because experiment, 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 wasn't right. Because we took a bunch of time and a bunch of effort and we didn't get static 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, well, then we just learned something. We prove or disprove an 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.
And 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 a, I will 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.
That actually helps in then creating more experiment and kind of having this portfolio approach. In a portfolio, some will win, some will lose. The important thing is that you get enough big wins to drive growth. And when you lose, you get some good learning.

David Barnard:
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 that a metric that is measured across teams inside Life360? Or is that just kind of like more an operating principle?

Giordano Contestabile:
It's very appreciable. 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 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 lose, a loss, we do have the learnings and we do have time to think about it and act on them.

David Barnard:
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?

Giordano Contestabile:
Yes, absolutely. I can talk a bit about this 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 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, I would say tools that most company use, from Databricks to Statsig. We have some ongoing tools, but really infrastructure is pretty standard. It really is more about, I will say, the understanding and knowledge of the user, right?
In Italy, 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. I think that's the reason why." Because you already seen this in other cases, et cetera, et cetera. So that's kind of on the understanding.
Then acting on it, there are two ways. So one is deliver 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 our 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 necessarily these nuclear family couples, for example, a lot of them have pets. And maybe they're not so interested in some of our core features that are driving safety or things that are more family oriented. But if you add value for pet owners, we make the platform better for them, we can make them subscribe, et cetera, et cetera. 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. Learned from the data and allow us to target those experiences in a much more accurate way.
So in this 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.
And so 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.

David Barnard:
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 do a 60-page onboarding, sometimes you only do a three. But once you get into the app, it's done for a lot of apps.
And one of the examples I've been using more and more lately, and podcast listeners will be familiar with this one, but a 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 you have a personal coach on your phone, they're actually talking you through the workouts and planning the workouts ahead. Each workout is customized. They record a script. It's really an incredible product, but then the coaches actually coach you on how to use the app.
They remind you to set your weights and then they tell you 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 say, "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 way they just kind of pull all of that together to get the user to succeed. 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, and not many apps have the luxury, of that kind of 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 feature education, the tips, are you popping little banners? Is it in a feed? What are all the ways you're able to push those learnings into the app? And I think your situation's 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.

Giordano Contestabile:
I think there is kind of more mechanical aspect of it. For example, we know like every 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.
And so we know that if you're able to make understand the value of the app in the first week, we have a long-term users. And so in Italy from a 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 mid-boarding.
So maybe on day two we see that you haven't used a feature, which maybe you have a look at location history, which is a very popular feature. So we say, "Hey, do you know that you can see that?" And we use customized, so if John is in your circle, we can say something like, "What was John up to yesterday?" Things like that. So you can do that for sure and that's kind of personalized and more and more we are also targeting on specific behavior.
And then the other thing is that a lot of those things after a while become noise because users use a lot of apps, they don't read. As you said, nobody does. And so they tap, tap, tap, and 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 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 Life360 users will know and be on the lookout for the dog. We got a really huge success with that. A lot of people created it.
And 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, 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. And so that worked very well.

David Barnard:
Yeah. No, that's super smart and you're exactly right. 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 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?

Giordano Contestabile:
I think contextual prompts, useful prompts, personalized and targeted. If you can make it meaningful. Rather than just tap here to check out this feature, something about their profile, something that is relevant to them, that's really the way to go. You need to cut through the noise and make it very clear why it's interesting, why it's cool, why it's fun.

David Barnard:
That's awesome. And the cool thing too is 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 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.

Giordano Contestabile:
Yep, exciting.

David Barnard:
So the next thing I wanted to talk about is your take on freemium. It's been such a hot topic lately. We've had guests on the podcast talking about it recently. And then 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 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 at Life360 scale. How do you think about freemium?

Giordano Contestabile:
So first in Italy, it depends on the type of app. There are some apps for which hard paywall absolutely makes sense. App store user 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, 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. 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 in Italy 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.
Why? There are a few reasons. One is, well, our company mission, we're really all about keeping families safe. And we have a lot of features that are SOS and crash detection, et cetera, et cetera, that are literally lifesaving feature in some cases. And so making it accessible to everyone is a big part of why we exist really.
But the second is we are an app that benefits from network effect. In Life360 in solo mode is not really useful or interesting, right? You need to invite your family, invite your friends, et cetera, et cetera. The number one way that people discover us is parents telling other parents about the app.
And so our thesis is that having a large, free, engaged 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 we have an advertising business, so in Italy there is also a business incentive for us to grow our free base.
But it's really 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 the safety feature that we have in 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 MAU are subscribers, but on average about four people use a subscription. So it's really more about 12% of our MAU that benefit for subscription, 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 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.

David Barnard:
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?

Giordano Contestabile:
Well, yeah. So adding friction to the free experience, we try not to. In Italy, in some cases you have to. For example, we have a paywall in onboarding like every other app. Sure, it does add one screen of friction, but not having that, we're aware of will cut off a significant amount of other new subscribers.
We have a feature that is a location history where you can look at for the last two days for free users where people in your circle were. Today's is more than enough for a lot of use cases. Usually people want to see what people were in the last day or so.
We did some testing in the past, if you cut it down to six hours or even 12 hours, we doubled 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.
So we decided not to do it. And we paid for it on short-term bottom line, but we think it long-term is going to be the right thing to do for a business.

David Barnard:
It's so hard to balance the short-term wins against a long-term strategy. 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 I think he called it the premium trap. Is that you can easily juice numbers and 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 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? How do you make those kind of decisions because it's so hard?

Giordano Contestabile:
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 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 every time they call it, we pay for the tow, right? And so that's one where yes, it's a paid feature and I think nobody expect to get roadside assistant for free.
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 mium part of freemium, not as an artificial gate. Say I give you two for free and then the rest is paid, although some features that we have worked that way. 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?
And so part of this is getting teams that always think about free to think about both and vice versa. 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 would 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 the creative way to build on top of it.

David Barnard:
How do you think about or measure how that factors into long-term growth? Especially compared to customer acquisition and growth. It's 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?

Giordano Contestabile:
I mean, there are in Italy different ways in which we track value. The network one is LTV. And so like every company, we have an LTV model that is ever evolving. In 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 viral factor into consideration, right?

David Barnard:
Right.

Giordano Contestabile:
And so it's a beast that is ever evolving. But in Italy, that's the big one that works in the background and we use it, then we attribute different campaigns to it, et cetera, 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, or platinum? They're in Italy, different value and different economics. And how long they stay subscribed. 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.

David Barnard:
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 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 that top line growth where 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 Life360 as that kind of almost a social album versus 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?

Giordano Contestabile:
It's interesting I think because we are not a social app, right? We're not a social network. We're not a place where you can actively 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 going to share your location on X for everyone to see where you are. And so it's a social app in the sense that the circle, which is often a family but can be anything really, is the unit. 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 we know 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 our 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 it 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.

David Barnard:
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 four to two, is that a signal that the one subscriber is potentially going to churn? I imagine it adds a lot of kind of complexity into understanding usage patterns and retention and subscriber retention.

Giordano Contestabile:
Without going into a lot of detail, but what I can say is that there is a certain circle size, three to four people, that has a significantly higher conversion and retention than lower and higher circle sizes. And so higher circle sizes is often friend groups or things like extended family. Or they're probably less motivated to pay for safety features.
And the lower circle sizes, yes, they're either couples or maybe groups that maybe the kids... One big churn reason that we have is the kids left, they're in college. And that's basically for some families, at least, the end of the Life360 circle, right? It's really about how their needs and how their life changes.

David Barnard:
Yeah. Well, that's great, the pet feature, right? So the kids leave house and now you're extending that runway by tracking their pet instead of the kids.

Giordano Contestabile:
Yeah, exactly. Yeah.

David Barnard:
Yeah. I did want to dig into that actually because it is fairly unique as a company in that you have physical products that you sell. The Tile brand that Life360 purchased, which really cool now is the Apple Find My compatible and all those things. So that's a 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 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? You kind of layer on a lot of those physical products can fill a lot of roles. How do you think about those?

Giordano Contestabile:
Yeah, absolutely. I would say it's all of that. So in Italy, there is a top of funnel effect, right? You buy a Pet GPS, which is a pet tracker. Or you buy a Tile, which is our Bluetooth line of Bluetooth trackers, and then you sign up to Life360 and become a user. In some cases, like with Pet GPS, you need to be a subscriber to use it and that's in Italy, 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, 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 than people without Tiles. Simply because the base is they have the same use case and they layer Tile on top of it and so it becomes more useful.
And also there is a matter, as you mentioned, of prolonging the usage cycle, I will say, of the app. So people use their trackers on younger kids, for example. Maybe younger kids don't have a phone and you can put a Tile in the backpack and have some peace of mind. You use the Pet GPS even when your kids go to college, your dog is still there so you're going to still using it.
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?

David Barnard:
Yes.

Giordano Contestabile:
Which is 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 the idea is can we provide solutions for all of it?
And in Italy, it's because 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.

David Barnard:
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 layer 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 view it as a loss-leader that drives the subscriptions or as a profit center itself?

Giordano Contestabile:
I would not say as a loss-leader, for sure. I mean, Skylight devices are much more expensive in Italy 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.

David Barnard:
Yeah. It's tough to balance that though. Yeah. It's like 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.

Giordano Contestabile:
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.

David Barnard:
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 stuff. 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 just being a tracking app 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 what are the steps you've taken so far and how do you broadly think about that without delving into future plans or anything?

Giordano Contestabile:
First I will say that it is a stated goal of ours to become the family super app, but we're very early. We have things in flight in Italy and ideas that I cannot go through on future plans, but I can tell you the way 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 pain point. And so in Italy, we have 100 million monthly users, we hear from them a lot, what they need, we know what they tell us. Explicitly they tell us, "Oh, I wish that Life360 was also doing X." Or implicitly because we see the data, we talk to them. There are partners that we see that because I think we have opportunities in other sectors.
So we're really about family safety peace of mind that my first safety peace of mind doesn't just mean location. There are a lot of ways to look at it. Then there are ideation, I will say opportunities that still leverage location. Family coordination is one. 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. Or, "I wish Life360 was helping my aging dad be protected from scams. I just make two random examples, but there are many things that can either fit in the realm of family safety or of location that probably we can take a look at.
And I think the main thing there is to be disciplined and really understanding, are we solving a real problem? Do we have permission to solve this problem? And is there a big overlap with our existing audience? Versus just putting stuff in the app and making it become bloated.

David Barnard:
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? If it would make sense to have to build a whole separate second app, it makes less sense? Or is that something that-

Giordano Contestabile:
For sure. For sure. I think very few companies have success developing a second app, no matter the size of your first, right?

David Barnard:
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 tried. And you'd think if anybody could succeed with two different apps, it would be Duolingo, and nope.

Giordano Contestabile:
Yeah. 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. And so 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 useful as possible to as many families as possible.

David Barnard:
And that's how you drive the value, which then drives the LTV, which then drives the word of mouth and drives 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 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 ad platform to start doing more and more of that internally.
How do you all think about balancing that? And I'll go back to kind of what we were talking about before too. 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?

Giordano Contestabile:
Yeah. I mean, really good question. And I will 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 two years, really we started working in ads.
So the baseline is do no harm, meaning make sure that the ads are not intrusive, not invasive, and they're not unwelcome by the audience. In Italy, you measure that in a qualitative and quantitative standpoint. Look at attention, look at engagement, and your total users, et cetera, et cetera. So 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, all the knowledge that we have to actually provide value to users? So Uber will be an example. Uber started as a partnership on the lending notification product that we built and that's a product we built for users. We built it just because it was actually a Hackathon product project.

David Barnard:
Oh, nice.

Giordano Contestabile:
And so we ship it. And so basically when you land, it inform people in your circle that you landed, right? 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?"

David Barnard:
Nice.

Giordano Contestabile:
When you landed there, it makes a lot of sense. And so that basically what started the partnership. And now they have this Uber Team product and so we are about to launch partnership with them in the sense. So those are just things that make sense, right? As a family, you get value through it and you get discount, special offers, et cetera, et cetera. And they make a lot of sense for what you do.
Think of we know, for example, when someone is going to Costco. 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 for Life360. 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 their platform, right? We become more of a network in a sense.

David Barnard:
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 freemium and I used to have ads. And I got so many complaints about ads because it was like guns and casinos and really flashy, annoying things that really took away from the product experience.
But over the last few years, I've come to really appreciate, I actually enjoy scrolling Instagram in part because of the ads. They're kind of a product recommendation engine. I mean, specifically, if I'm shopping for a new hat, I'll go into Instagram and search hat and look at a few hats. And then all of a sudden I get all the best hat ads.
And so I think it is a mindset shift. And it is something that as a whole industry, all of tech industry really needs to get better at 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 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.

Giordano Contestabile:
Yeah, for sure, for sure. And think how many very successful apps there are that are, as you say, basically ads. All those apps that offer first discounts, coupons, et cetera, et cetera, they're super, super popular. And those are essentially ads, but people use them because they get the value out of it. So I think that's the key.

David Barnard:
All right. Well, as we wrap up, I do ask every guest now three questions. The first one is what is the most impactful experiment or change you implemented in the last year, your biggest win of the last year?

Giordano Contestabile:
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 great for most people. Platinum has 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.
It's sometimes hard to explain it. People rotate to the mid-tier pricing product. In a paywall, you often cannot show all of it. So you just show the one that most people will go for. And so we use machine learning to target platinum to people that we thought based on data, based on previous experiments, based on profile, we have about 900 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 subscribing to platinum. So that was already very, very good. But it did that without losing a single gold subscriber, which was super surprising.

David Barnard:
That's incredible.

Giordano Contestabile:
So it basically found new users in 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, they subscribe to platinum. And so that's an example of how using machine learning was really transformative and gave some surprising upside.

David Barnard:
Yeah. No, that's great. And at Life360's 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?

Giordano Contestabile:
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 then I tell you something else, but I tell you this one because it's funny.
I was like six months into the job and I do this experiment and I saw the numbers. And I was like, the number were very big in terms of revenue upside. And so I ran back to the exec team and like, "We're going to be rich." And instead of telling me, "Oh, this is great, et cetera, et cetera." I basically got yelled at. And so that was my education into how things are done on Life360.

David Barnard:
When I had Chris on the podcast, Chris Hulls, the former CEO, who's now the chairman and still super involved, he talked about the freemium bill of rights. That inside Life360, there is core things that you should never touch. So I'm assuming it was one of those core things and you were going to take it away from free users?

Giordano Contestabile:
Correct, correct, correct. In Italy, I learned. And at the end I understood why, but it was pretty striking as someone they used to just make the number go up. So that was kind of a really funny one.
I will say recently, we've been kind of in success, a lot of losses in trying to drive virality 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 pickup in the school chat or whatever they talk and that's where people find us.
And 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 silver subscription." Different things, right? Nothing, nothing, really failure across the board. And the reason is people my age or families or older people are not viral. Parents are not viral.
And so one that are viral are their kids, but their kids are not usually the core audience of our app. They're on the app, but the decision between the app is made by the parents. And so that has been a series of successes for us.

David Barnard:
All right. Last question as we wrap up as a fill in the blank, growth would be easier if?

Giordano Contestabile:
I will go back to what I said at the start. If every team thought of itself as a growth team, then growth will be easier.

David Barnard:
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 out?

Giordano Contestabile:
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, find your for 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 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. It's very dynamic, it's fun, and we're doing something that I think is worth doing. We hear that from families every day.

David Barnard:
Yeah, you're literally saving lives.

Giordano Contestabile:
Once in a while, yes. But most of the time we're telling people that their kids are late at school, which is still useful.

David Barnard:
Yeah. 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.

Giordano Contestabile:
Thank you very much, David. Thank you for having me and talk to you soon.

David Barnard:
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.