Freemium Done Right: Lessons From a Multi-Billion-Dollar App — Chris Hulls, Life360

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. SubClub 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 at revenuecat.com.

Let's get into the show. hello i'm your host david bernard and with me today revenue account ceo jacob biding our guest today is chris holz founder and ceo of life 360. On the podcast we talk with Chris about how to do freemium the right way. drafting a customer bill of rights to guide product decision. and why blindly following A-B test results can lead to short-term gains but undermine your business long-term.

Hey, Chris, thanks so much for joining us on the podcast today. Thanks for having me. And Jacob, always nice to have you with me today. I'm super excited to talk to the founder of Life360. I was at a party, Easter party on Sunday, and I literally saw somebody using Life360, and I was like, there's Life360! And here we are. Was it a mom? It was a youth, like somebody maybe 21 years old. I was like, it's still happening. That is happening more and more. We were not complaining.

As we were talking before the podcast, Live360 is kind of one of the slept-on giants of the subscription app industry. You know, it's not mentioned in the same breath as Strava, Duolingo, and some of those, but it is an incredible company, and I just checked this morning.

you're on the nasdaq and australian stock exchange with a 1.8 billion usd market cap huge successful story in the subscription app space so i do want to kick off you've been on a lot of other podcasts and kind of given the full story i listened to multiple of those we can put links in the show notes if people want to hear kind of the whole founding story and all that

But I wanted to get the summary of it, and then we could dive deeper into the nuts and bolts of building a great subscription app business like you have. So what was the founding story? Yeah, I'll get the very quick version and hit on a few things that are more specific to subscription. Very quickly, the early idea was Hurricane Katrina, help families reconnect after big emergencies. I had that idea in college about 20 years ago. I've been doing the company for 18.

We've had our one and only pivot in the early days as to what we're doing now, which was something much bigger. Facebook was getting big for friends. LinkedIn was getting big for professionals. We thought, like, let's go after family.

That part of our pitch is very cliche, but our take was different than everyone else, which was based on our belief that mobile would become ubiquitous, which obviously has, but it was actually controversial way back then. People didn't think teens would be using smartphones. That was the number one reason VCs passed on our seed round.

I think it's like a productivity tool. But our insight was that location was so central to many communications and safety is something people would pay for, but actually tying it to freemium business models. We figured out that daily communication utility, good free engagement platform paired with safety that people pay for. And that really was our secret monetization.

If you go on either end, you can have problems. So we're now up to over 80 million active users, 400 million-ish revenue, growing very quickly. International is taking off in about 600. So that was in 2008 or so. When did the first app come out? 2008. Maybe launch 2009 or something. We were a launch app on...

Okay, which David's point of you being like a sleeper giant, do you think that's part of the reason is that you've kind of been, like iOS has fine friends baked in, and if you're a full iOS family, that might be your tool of choice. We actually do better in iOS every week.

Really? I mean, maybe not that surprising to me, but I think like the tech press tends to have a still like an iOS bias, right? If it's not Apple, they tend to overlook things. And I always wondered if that was, I think that's it. I think we are an example of being in an unanointed category from a VC standpoint. Now that we're public, it's kind of a different ballgame. But I think for whatever reason, VCs just assumed our category was not a real one and it was a feature not.

a platform and I still sometimes wonder why we are... kind of still relatively speaking so under the radar. I don't really mind because we have almost no competition, which is weird. Yeah, I also, not to get too much about stock, but you guys have one of these rare stocks that's kind of not looked totally battered over the last decade or five years or so.

And I always feel like the over-focused on companies, like they tend to just swing around with the whims of the market. Yeah, I mean, we've swung, but we never were overvalued. So it's more frustrating. We were trading at 1x revenue at the peak of the doldrums for no good reason. Maybe two extra, whatever it was. But it was weird. But people overlooked.

companies that are not in hot verticals i think location now is finally becoming a thing that people are not creeped out by but i think people are almost uh only bad parents and bad families use location sharing it's creepy i think that was more

Yeah. Oh, oh, right. Just like the concept of like... spying on your kids but yeah i think i mean i think about it now i have a i have a six-year-old and i'm like i'm gonna chip her i'm gonna know where she's at until she's 17 and 360 days like years old you know what i mean

But it's not actually that invasive, honestly. It's better if you use it properly, you can give your kids more freedom and not worry. The real helicopter parents are the ones that are following them around and interfering with their activities. We're sort of just...

saying, go have fun, and we're actually a way to give kids more freedom, if use appropriately. We have a big enough user base. Some parents do go over the top, and I feel... bad about that but you also exist in like an interesting place that like revenue cat does too which is like because apple's fine friends is so verticalized and like just has no interoperability it creates an opportunity for a business

or 60 to become a platform because it's not locked into these phones. There's a lot of conversations now about antitrust and these platforms being locked down. Sometimes the lockdown actually creates opportunities for companies to overcome that lockdown, which is your case.

I feel good about that for our long term, specifically in Europe. But surprisingly, we do way better in these iOS-heavy regions. Actually, to tie it back to your earlier point, I think most of the world has not woken up to location sharing. It's many years behind, and I think it was Find My, even the Find My launch five years after we were out, it really helped us because it reduced the stigma.

So as of now, we actually see it the inverse, where someone's using Find My, they've got over the hump, that this is a real need, and then we're just so much better for our vertical. that it doesn't hurt us. That could change. We want to be sensitive to not drink our own Kool-Aid. Apple could get better. They are getting better. They're waking up to location. But historically, I think it's just actually interesting for smaller startups.

Apple in your space with a mediocre product can actually be a good thing. It's so much easier to be like, it's find my book better, right? I can't imagine how you guys pitched before that. Be like, oh, it's a penopticon for your family. You know what I mean? It was kind of hard, honestly, because most people did not understand. It was just a... for anyone under i'm 41 so i'm kind of on that tipping point but anyone Under.

30 probably doesn't realize just what the attitudes to the location were when it came out. I mean, I'm 37, and I remember when, like, you couldn't even have a phone to know where people were. You know what I mean? If you weren't at your home at the landline, like, you were unfindable. And that changed in a decade. And people said cell phones were invasive because you could never just, you're always going to be findable.

And relatively, they were, right? Like, you went from, like, unfindable to now I could call you at any time. And, you know, it's more the relatives that freak people out. But I don't think anybody who uses these, like, location technologies within their family can say they're not, like, valuable and life-enhancing and stuff.

Yeah, I mean, life is a double-edged sword with most technologies, but you can't put the toothpaste back in the tube. Right, people aren't going to use it. Yeah, you're not going to get people off the internet, and we have Luddites and Mennonites and Amish who have all made...

decisions not to embrace technology and that's genuinely okay but you do you but we can't stop ai as an example it's wishful thinking so maybe i can get a whole other tangent there but it's like we're creating our ai race because we know If we stop, the other guy will do it, and so it's just going to keep going. So I think that's just a general... theme of life.

Well, you've hit on like five different topics I want to go deeper on. But the first one I wanted to go a little deeper on was you mentioned the freemium product. This is something that a lot of folks get wrong and struggle with. If you want to become a big app, you almost have to be, you pretty much have to be free. You have to have some experience that's going to

retain users who don't pay. And then to build a great recurring subscription business, you've got to have features that people are willing to pay for. but getting the balance just right where you don't ostracize the free users but they still have a really fantastic experience but then you have paid features that actually attract people to spend so how have you thought about this and how have you structured the freemium over time and then have that evolved it's one of the things that

we locked in on early on and just haven't really deviated at all and now we're 18 years into this thing but ignore our early couple years we're just trying to figure things out we didn't know what we were doing and the industry was nascent but what we realized was To your point, we will only succeed as a business if we're free. I'm not a purist at all in that regard, but our belief was that location was going to be huge. All the carriers were offering competing products.

Back in the day, also the younger entrepreneurs might be surprised. AT&T and Verizon, if they had a product, there was a threat. And how could we compete with these giants? And so we felt like the only way you can do that was giving away a better product for free. And that is what over the top. I mean, just going direct to the app stores, not to the carriers. I don't know if people still use that terminology. I haven't heard that in a while. We're all dating ourselves.

Yeah, we kind of felt like we had to. And so our view is roughly like, let's not even worry about monetization until we hit 10 million active. We probably pushed it later than most people, and that was somewhat arbitrary, but also in the early days of subscription, it was way harder to get people to sign up, and there was no internet purchase, there weren't even push notifications, so it was a different era.

But the general view was for a product like ours, which we correctly identified, would actually be a commodity. Find My came out later, like locations everywhere. We would be dead on the water if we tried to charge for our product early on. Now we actually probably could. There is some conversation like, when do we go to harvest mode? I would not be the right CEO for that because I'm sort of a product purist.

But we can talk about a little bit later. But I think once you have someone on a subscription, you can actually really, really squeeze them if you want to. We haven't done that. I don't think that's... We're trying to build a product and brand and platform that people love, which means you want to keep a pretty big... It's a viral product, right? Yeah, we need people to love it.

And we need to feel like a really good deal. And we've been fortunate. Our user base is so big now. We have a lot more flexibility. But going back to the original question, our founding story was around safety and Hurricane Katrina, but we very quickly realized out of sight, out of mind. And so you'd talk about these things people would want. Oh, well, like, will you use that? Will you pay for it? People say yes, but they wouldn't.

So the thing we've realized with location, that was like a 10-time-a-day use. And people actually will pay for safety, but they need to be reminded of it and can't forget about it. So we basically locked in the strategy of free location, pay for safety. And it was the combo of the thing that engages you, keeps you top of mind, brings you back again.

And then peace of mind that people pay for. And not BS peace of mind, like stuff people actually use. And we do limit some of the free features like location history and all that. general theme, more and more challenging to get bigger. The core has to give real value to our customers. Not kind of fake value, but real, real value forever.

Period. And we actually recently just wrote a bill of rights for our free user because it's so easy to chip into that, especially because we have the Brandon platform and then you're never going to... No, if you pushed it too far, would they? When you have 600 employees and you've got like a mandate from public markets to increase revenue and like it's easy to be like extractive versus like value creative, right?

The bigger you get, the more specialized people get. And it's just very hard to keep that focus. And it's a bit religious because I have people push on me like, well, we did this thing, look at the retention, it's fine, see, like, you're not being data-driven. Like, smart people might disagree, but for what we're trying to do, there's a gestalt effect, and, like, you just...

At some point, you've taken this away, you've taken that away, you've taken that away, and I don't think we would ever just fall off a cliff. I think we would just see that...

People are using Find My More, and the prior strategy of just being a whole lot better is not quite working, and people aren't raving about us because they're just feeling... chipped away at nobody runs a holdout group long enough to see the cumulative effect of that well i don't think you can hold out the holdout group long enough because i would agree any one feature you run the holdout group and it doesn't do anything

You'd need to hold out for a half a decade. You know what I mean? And with 20 features in a box. And it's coming over time, so it's almost impossible. So we made a free user bill of rights. That's a recent thing. I'm curious if it will work. Is it for internal purposes only, or are you sharing it with customers too? It's not secret, but it's internal, so it's kind of like, hey, this is our constitution.

Period. Do not argue with the Constitution. That sounds too kind of... We can always revisit it. It's not... Sure. Well, you can. Yeah, I'm trying not to be that top. So it's more like... This is just the lifeblood of who we are. This is a thing that unless it's going to formally change...

at the exact level, you've got to believe the religion. I think a lot of product people in the trenches are not all that religious to use the word again about what they think. If you give them some guardrails and say, hey, this is what we want to do.

helps to harmonize like a bigger broader strategy so ask men a year if it worked i don't know can you give an example of what some of the rights are on the bill One is just the start of the most important, we basically had location history, the core map, location history, and place alert. They must be free. Doesn't mean we can't move the payout wall a bit, but real value there. No deceptive tactics around it in dark patterns is another one.

I could probably pull it out, but the real anchor is all just around the free as lifeblood do we are. These are the things that differentiate us from Apple and don't touch them. We don't trick our customers. We're very transparent. When we do changes, we're going to notify people, not spring it on them because of... If you're kind of A-B testing an early app, like whatever, but we're trying to build this kind of bigger thing.

you can't jerk people around in the same way. Yeah, and I mean, you think of, like, how Apple, you know, manages Proctor historically. Like, they have a very, like... It's a very coherent vision about how they interact with their customers and market and bring things. I have a similar version. I've never made it public to the team. I probably should, but I call it, I have a doc of hot dogs.

like the costco hot dog story like you'll never change the price yeah it's a dollar 49 yeah yeah yeah and it's like it doesn't matter for losing margin on it doesn't matter it's always gonna be a dollar 49 And so I have a list of those. I have a list of things that we will never touch. Kind of for me and Miguel, more than anything. But I think it's important to write those down, or otherwise, yeah, you're right. Even you write them down, though, it's just very, very hard.

Because I don't think the parody has a bit of a religion. Yeah, and somebody has to enforce it to some degree, right? Somebody has to be like, wait, did this violate? I assume you don't have a court system within Life360, so somebody has to be monitoring. No, I think the bigger thing though is what do we exude?

It's definitely easier for a small startup to be user-centric. Then you get bigger. The pressures get bigger and bigger. A little off-topic, but one thing I think young entrepreneurs might not realize when they think about product managers or product, they think about people, probably craftsmen who build stuff. As companies get bigger, product managers often aren't builders at all.

They're kind of like aligning on strategy. There might be more process people. So it's been interesting that later stage companies like product managers might not even be able to build a darn thing. Doesn't mean they're bad, but the craft changes. They're certainly going to bring a different set of personal values to the process of building stuff. Something you touched on there is something I've actually been talking a lot more about privately and a few times even on the podcast is that...

These dark patterns, as you said, tricking users. Any one tactic in isolation could maybe be justified. Oh, you know. The call to action button doesn't really say exactly, you know, it doesn't say subscribe. It says continue. And it's like, well, I mean, that's kind of an industry standard thing now. It's like people get it. They still have to go through the Apple flow.

or, you know, the price. I've been seeing more and more apps put the price further and further away from the call to action button. And those are like really subtle. It's like any one of those, it's like, that's not a dark pattern. That's not really tricking users. But when you start stacking up a lot of these growth hacks, one after the other, after the other, I think. People are underestimating what it feels like.

to the people going through the app and to your point earlier you don't see that in the data because you still get the convert you don't see that in the short term you see that over like you're saying you need to do a five-year holdout to really understand how users feel about your brand and product theoretically could do the holdout practically you couldn't because again like you're changing 30 different things and so

You could say we're going to keep the app from 2025 and we're going to do a version. We don't change at all to the version of 2030. But then what about all the improvements there? So you're never going to be able to tease it out. And so it's not about being data driven. I actually think you're being more data driven to acknowledge the limits of data. And so many people think they're being data-driven by looking at first-order data, even with AI.

a flimsy understanding of significance sometimes right it'll be like oh it's a tenth there's a tenth of a point and the significance calculator says it's six sigma or whatever and you're just like well let's think about it we actually haven't had that problem in terms of looking at data for whatever reason. One of my pet peeves

I'm actually going to send this interview to them. I'm glad we're doing this because it's kind of all my thoughts that I can send to our team and just get in my head a little bit. Internal comms for the Life360 team. Yes, exactly. This will actually be a bit of internal comms. I hate when we do tests based on percent of user.

I hate it. Oh, like just on a subset of the user race, I mean? No, instead of N, we do percent. We're testing this with 50% of people, 10% of people, 2% of people. And I say for our size base, you can round us to 100 million. And then people say, well, we need 20% to get statistical significance. Well, that's 20 million people. So are you saying a company that doesn't have 2,000 people, they just literally can't test?

I still see this happen again and again and again and again. And I think what it does do is actually it stops people from doing smart tests because if you want to do like a painted door test, paying the door for dual and i was like it was basically fake you click letting it break so you have made some graceful failure you should be able to do that 100 people or 10 people and say well then we're not gonna get enough predictive power

But I'm kind of okay in a pane of door that you get like 70% sur- Yeah, well, you get enough predictive power if it's a powerful enough change. You know what I mean? 100 people with a big change, you'll see it. Yeah, exactly. Or enough just like, if we're just going to paint a door, then we'll do the real test, but...

this idea that we need to say like people need to really understand what they're testing and when so sure if we're trying to like change Some header, some text, yeah, low risk, roll out to everyone, and you're kind of okay, kind of picking up a 0.1% thing. But if you're trying to try something really new or build a lot, do the painted door to 100 people. But don't tell me if we're going to do it one person.

Then you're showing it to almost a million people. Yeah. The percents get much bigger, right? But I think people just assume 1% small 50s. big and there are times you want to do like if you're doing a rollout we do do like 1 5 10 50 because that's more server traffic and because you're on your way to 100 right yes exactly if we're on our way but i call that is a rollout not a

And again, if it's like email, headline, copy, sure, like do the percents because it really doesn't matter. But what are you testing? Why? What's the right methodology? Like think critically, think first principles. Don't just follow a playbook. But I guarantee I'll show this internally and then we'll go back to say we need to test 1%.

Got to put it in the bill of rights. No percents. No percents, yeah. Do you do a lot of qualitative? Let's say you run a test on 100 people, fake door test. Do you then try to get those folks on the phone? Is that part of your process? Some people, as we've grown, we're going to let more individual teams do their thing. I've probably spoke to users less than most would suggest. I'm not saying it in a good way. I probably should have done more of that.

I think I have naturally been gifted at sort of like putting myself in someone else's shoes. I literally close my eyes and I try to think like if I'm with it, I do a little like, what am I, what, how am I going to react to this thing? What am I going to do? Not me, but the customer. The Rick Rubin method, right? You just close your eyes. The famous producer who just doesn't play any instruments, doesn't really do anything, he just kind of feels it and knows what to do.

Every great consumer founder I've worked with has always had a really... both like emotionally empathetic like ability but then also like they're very analytical about that you know what i mean they can like put themselves mechanically into the mindset of many different And like when I was working consumer, I sometimes found...

There's so many voices that like individual conversations can sometimes be misleading because like there's a lot of variants and behaviors and like it's very unlikely that you personally are all that close and characteristic to the person that you're selling to. And sometimes I think that can. So obviously I start a B2B company, then you're forced to like be in the room with people all the time. It's actually been a benefit because it's a little bit easier, but I was in the same place as you.

consumer like i think it's still good i think like and also like I don't know if you all do surveys and stuff like that. You're talking about, like, extending beyond just, like, pure, like, AB test statistical significance on a binomial experiment.

Just sending a survey to those hundred people that hit the broken door and being like, you know, see if you get any responses. I think they're all good and you just need to know why and you don't do it just because and you're really thoughtful about it and you don't.

overly kind of like saying this is the way other than our villa rights you don't don't argue with that one but jokes aside maybe we have to take these are the things that just who we are and but we're being very self-aware these are the artifacts of religious faith

Because we believe they're according to who we are. And these are the things we test. And this is how we think about it. With those free users, how do you think about monetizing them? And what has been the path of monetizing them? I know most recently you have been working on an in-house ad network. but have you shown ads this whole time or like ads are new?

We have some really ugly banners on the home screen that make me want to... I genuinely have a physical reaction every time I see them. Well, you just got to subscribe, Chris. Then they go away. But ads are part of the user experience. The free user experience. I removed ads from my side project app because the user experience of them were so bad. And I went to a hard paywall because it really is part of the user experience.

Yeah, so going back to the fuzziness of data, the team did the holdout group and showed that the ads didn't hurt anything at all. I think that data was actually valid but do that 20 times you don't know but we decided the upside was worth it and we are trying to start this new business and that over time we can evolve the ad product to something that customers actually love.

or don't even realize it's an ad. So the banners we have, they're horrible. I hate them. I've challenged the team. Can we find in a year, can we not have ugly banners? But really pushing every day. show that you care about the customer show you want these gone we've done some really cool ones like when you land at an airport now to like hey David welcome to SFO do you need an Uber

One tap. Did you do that deal directly, like with Uber? We did, yeah. We have another one we're announcing, which is... very similar where it's not it's actually good for the customer and people probably know it's an ad but it's not interrupting the workflow and if you actually want to interact with the ad it's adding value I think the company that did that the best nothing to the subscription but Credit Karma and Credit Card.

Yeah, you don't even know it's an ad, right? You're just using their website. Well, I think maybe you do, but for people who don't know Credit Karma, it's basically give all your very personal sense of information, including your social. they match with credit card offers. And your credit score is X, you live here, you want points, you want travel, whatever. This is the best card or cashback.

They just match you with cards. That's 100% Legion. Everything they match you with is an actual ad, but to the customer, you are actually getting matched with a product and service that's good for you. And so I think that's very different than spamming someone and all that. I'm going back to Bill of Rights. We've said we will not. That's actually in our Bill of Rights. I've forgotten all our point. It was tied with advertising. We will not get in the way of the job to be done with it.

Sure, no full screen interstitial, 30 seconds to close. Yeah. What are the ads that upset you so much then? It's not the Uber at the airport ones. No, that one's great. I genuinely think I can look someone in the eye with a straight face and I actually think that's giving you value. Because if you just want that one tap, it's not hurting at all. So we just have these banners. It's just more that, like, Banners are only good for brand impressions. They don't really drive performance.

And you don't get to control probably using an ad exchange or something like what brands get pulled in. We are doing that, but we have our own ad unit that does force people to do a little bit to make it look there. That was one of those. some arbitrary lines we did as well. These are all things you only get to do when you have as many users to select 360, right? If you're a random app, you don't have the leverage.

Yeah, exactly. You would not be able to... No, you don't have that choice. So you never just installed Google AdMob and just let Google serve... I think we did, but we put our own ad unit and we did some testing around it. And then it's just, we're using it. And at some point we could actually allow more of that, but the performance actually capped, like put the product hat back on and like try to think about what's actually good for users.

The holy grail for us, the credit card map, is an insurance problem. for driving, because we know how you drive. And people are like, who wants to give your data to an insurance company? First off, most people don't care about sharing data as much as that's like this very kind of like tech bubble press group.

Most consumers think that Amazon and Google are recording everything you say and doing already, and they say they don't like it, but it's a lost cause. It's a lost cause to them, and not that I think they ever... Actually, I think I enjoy complaining about it, from my perception. I think that just, well, things people say they care about, they're not lying, but what do people actually take?

We want to be straight with our users, but if we were like, I think people think this is an inherently bad thing without thinking about it, but imagine if like... Hey, Jacob, you are in the top 5% of drivers. You absolutely should give your insurance data to insurance companies. You will be saving money.

And here, we can help you. And if we're like, David, you're in the bottom 10%. You should never, ever give your... Maybe stop driving. Yeah. Or, hey, you had a DUI. We're going to match you with a DUI specialist. Like, I don't know. That's actually a thing. It's hard to insure people. That's a use like we're actually helping you with your data.

and it's going to be an ad. But think how good that is. It's not us being sneaky or whatever. Truly, if you're a top driver, why should you be paying to subsidize all the bad ones? That will not feel like an ad when that happens, but it will be. It'll be a lead gen experience.

Yeah, very similar to Credit Karma, right? Like, except for instead of the finance data, you're taking in location and transport to them. Believe it or not, Credit Karma is now moving into that same lineup because they can see. So if you use the Credit Karma app, you can do that with the driving. And for some insurance profile stuff too, yeah. They're doing the exact same thing. And it's not bad for customers. It's good for customers.

And so we eventually want to get there and only about one-eighth of our families are paid. So if we get equivalent performance, or sorry, if we get one-eighth performance of monetizing free users, we've essentially doubled our revenue and then we get the... virtuous flywheel of more to spend on marketing, more to spend on R&D, and then just put more daylight between us and our competitors.

And you said this is fairly recent. When did you all start playing with the ads as a revenue generation thing? About a year ago. Okay, wow. So like post after publicly listing and all of that. The only revenue before that was all subscriptions, like an app? Essentially. but more or less. Significant revenue, I guess. that's interesting because like

Would you say 17 years? So 16 years, no ads? Yeah, we did have some stuff. We were trying to move an insurance space with Allstate, but it was sort of... So we did have a sliver of the product, these ugly ads, and we didn't really, we still haven't got it to where we wanted. But in terms of like the kind of traditional ads, it's only been about over a year.

And you have another vector that you have to think about as a family-focused app that kids and teens are going to be in this app. How do you think about keeping that whole experience, including the ads, family-friendly? We don't serve ads to people on a certain age. and we eliminate huge categories. We've still had a few that have crept in, but we have a team that looks at it, and we have a public Slack channel, or a public in the company Slack channel for reporting ads.

It's been okay. I really challenged the team to get rid of the dumb banners. Yeah, and a lot of what we also want to do is we did use to monetize by selling data. We never had a single instance of misuse as far as we can tell, but that kind of got the target on it from... press and regulators. So we stopped selling raw data. But basically all that was doing that was helping people target ads. I personally like targeted ads and it's a good thing.

I kind of joke that the only time I don't like them is if my wife's using the computer, I get a yoga pants ad. That's not from location. I think that's usually just IP address and NAT.

stuff and then it is yeah target ads are good like i'd rather relevant ads and actually kind of like if i search for a certain product and i'm not ready to buy i know for the next week i'm gonna get their 10 competitors and so we wanted to do location-based We wanted to empower location-based advertising, and so we would do these contracts with third parties where they would get our...

They would get de-identified, which is different than anonymized data feeds. So it's like raw, like the GPS points, we'd filter out, like we try to filter out sensitive locations, but people would say, well, in theory, someone could. I guess, hack the data or breach your contract. From the third party, I mean. Yeah. And then find out who you are and do bad things. In theory, that was true.

But it's very normal to let third parties have your data like Google. You guys, as an example, like you have percents. It's a good example of how it's more the feeling of it and the spirit of it than it is the literal, like what's being shared. I knew like Foursquare's SDK used to monetize that way as well. There's a lot of companies that would monetize.

Was the decision just like it wasn't worth the PR and like the explaining and all that stuff for the revenue? Or what was the decision to stop doing it? So we were able to pivot a bit and then think longer term, which actually comes back to the ads piece where...

Our users never cared, but we didn't want to keep getting away with bad press and regulators and FTC and all that. All the ones we worked with were fine, but it was just... kind of constant scrutiny that we didn't need and our view is that we could we can move into doing bigger things in ways that would not spark that iris. We have one partnership with a company that does aggregated data.

And aggregated is very different than even de-identified. I'm getting a little esoteric in the words. No, it's good for this audience. They're good. They're good. Yeah, but to kind of go down those, it's complete raw data with names, which has always been a no-no. de-identified, which is raw data but no names or emails. There's anonymize, which is scrambled in a way.

where in theory you truly can't find anything, period, period, period. And there's aggregated, which is even further, which is we're kind of lumping you together with a whole bunch of stuff. We now have a partnership where... We do sell our aggregated data for Insights through a company called Placer.ai. I think we get like 20-something million a year from them. And it's basically if you are a... I'm going to give one use case. You're a retailer.

I want to know where people came from. They came to my store. What roads did they drive on? Where do they live? We do it aggregated. So you build it by a census block. So 72% of people come from this census block and whatever come from this one. But there's no raw GPS line, all that. And we still had the press take swipes at us. This is actually something that frustrates me about the way Apple operates. Their privacy stuff is very ivory tower.

It's like there can't be any possible way for one bit of data to leak in our like ad tracking, you know, SKA network and things like that are so ivory tower design versus like the practicality of. A needle in the haystack is not... worth a Facebook building a whole infrastructure around finding a needle here and a needle there that might happen to leak.

Yeah, meanwhile, actually incentivizing more privacy-violating systems outside of Apple by being so limiting. If we're truly worried about data, I think we are kind of moving to the singularity and the hive mind and all that.

You should be really scared that... these giants are the ones that have all of it with complete control and like don't you want like kind of the rebel alliance of smaller companies kind of all using it and sharing it so there's a there's a very weird and arbitrary distinctions like somehow if it's all within your bucket it's completely fine but the second you do a hook to somebody else

you're somehow being super dangerous and risky to be fair to their side there i think there is some truth that in like every new industry there's a wild west emerges and so i actually remember the first time I met with a number two guy at Disney in like 2011 or 12. And we were just young at the time. We were very, very small.

We built this really cool tool where we actually went right to Disney. Like, look, here's a person. Look, here's where they live. And we watched the lines. But it was before there was any regulation at all. And we weren't even thinking about the downstream implications. Like, oh, look. Here's the guy coming to the house, and this is where he lived. But it was just new. So I do think that some regulation makes sense.

But oftentimes it happens too early and it just really often favors the Giants. And we're at the point it actually kind of helps us because we can have all the lawyers and deal with it, right? 600 people lots of lawyers you can figure it out right navigate it yeah it's true it's these are like really interesting because i think there's a lot of i don't know i it's funny you mentioned the selling the data or the selling the data story it's very because because i thought about this problem for us

And actually, I didn't know I had written a bill of rights, but this is something I wrote down early. It's like, we're never going to do that. Not because, like...

I'm all that moral about it, but because I knew it would probably be a press issue and like, I just didn't want to make it a temptation. Like we could still, I could probably find double our revenue tomorrow if I like, we started selling all of the revenue cat stuff, but I don't want my customers to have to think about that. And we're just never going to. There's no right or wrong answer. What we have said is we will always be transparent and that any data product we have, I'll use it myself.

than I have. I never opted out. And I actually opted into cross-app tracking. I like being targeted with it. i'm always like allow please i'm not like a big deal or anything but like i have certain more people more people after me than the average person just from like the user base of millions i get all sorts of weird crazy death threats and things and I genuinely do. But I'm not worried about my data being out there because of that.

The crazy dude is not going to be buying data. It takes a lot of agency. It's easy to send a tweet. It's a lot harder to actually hunt somebody down. What individual without millions of dollars could find a way to buy raw data and then... I just don't even know how you'd go about it.

I'd have to set up a fake company first off to buy it, and then I'd have to commit fraud, then I'd have to... become a data engineer which i am not or find some i find myself having these conversations often internally too not related to this exact question but around like i don't know maybe it's a contract we're signing and it's like the lawyers say we can't sign this thing and it's like

Can we just line up the conditional probabilities that would have to all fire for this to go wrong? Anyway, I'm pro data. I think we should be allowed and open to do more. If we didn't have as liberal, and not necessarily personal data, but let's say copyrighted data, for instance, we would not have the world of LLMs that we've invented or been able to put together in the last few years if we didn't have a society.

where like information was pretty and then there's obviously there's questions about the exact legalities but like i think we could all argue it's probably a net good thing that this thing was created being like llm is an ai And right, if we had strangled it, we might not have ever, ever invented. There's this really good, I forget where I heard of this. Somebody got.

llama 3 running on like a windows 3.1 machine which implies like we could have had this since the 90s do you know what i mean in theory but in theory i mean if you can run the model forward pass you could you could train it you just need more computers and probably existed at the time

You could have maybe like just guessed weights until you found the right one. But anyway, yeah, I don't know. It's interesting ethical questions. And I think something our users are thinking about. And like RevenueCut too, we're quite aware of the... We've always been focused on subscriptions. I still think that's, and it sounds like you too, that's probably best if somebody will pay for your product. That's the best way.

to make money it's because it's very aligned i don't know just a not exactly pushing on that i'd be careful about saying best and like what are you trying to do what's best for you because i don't think there's a one size fits all and even some of the more growth I think a very valid subscription strategy too is like not exactly freemium, but it's basically give people a teaser and there's been your implicit premium. So it's not a one size fits all thing.

For us, it made a lot of sense because we had a very, very, very natural engagement platform with the upsell. But what if we didn't? Right. I guess it's conditioned on that there's enough people who will pay. Right. It's better that your app exists and is profitable and is sustainable than it is that you use like one specific monetization method over another. Right. Yeah, exactly. There could be, what are you trying to do? What are the specific unique attributes about your model?

Because I think at some point, if we get this insurance thing working that I'm excited about, maybe we get rid of the subscription model altogether and we give everything away for free. Because if we can be the next Allstate or State Farm, give it all away. Yeah, erode your own margins before somebody else does, right? Yeah, or just cement our reach. And that is actually something we've talked about, but it's sort of different stages of the company. You'll shift your strategy.

We couldn't have monetized the data or done insurance early on because we didn't have the user base first because it only works when you have a big user base and you have to fund yourself. And so this evolved and we're 18 years in and it's still evolving. So I was going to ask just... off of that like yeah i mean these are kind of like problems you only get the uh privilege to think about when you've been in it for this long and i have to think like there's not too many it's hard to find ceos

even in like breakout successes and stuff that goes 17 years and it sounds like you're you still got energy and ideas and stuff like what has it been like committing to this project for as long as it has and like what keeps you like still energized and excited to dream about becoming an insurance company for example

In the early days, I just really just had someone kind of lockjaw, don't quit, and very persistent. Money was a big factor for me, honestly. I didn't grow up with a lot of them. They weren't broke, but like...

stability and locking that in and yeah as my wealth level has increased and the money out of the company it's and it's hard to keep it going very few people like whether you love right elon musk or steve jobs or whatever like they it was never about the money for them or it was just about this deep, deep, deep drive to maybe it's to win, maybe it's to make the world a better place, maybe it's just to build stuff. I actually don't have that.

This is not my forever and only thing, and I kind of fell into it. But I have a lot of loyalty to our team, to our investors, and so I've... I've always said until I really feel like I'm not needed, I'll stay. And I have been trying to get less operational these days and try to focus on the stuff that I'm more passionate about.

do less of the things that kind of wear me out. Yeah, but even if you're not leaving, that's the thing you need to, as a CEO, be doing all the time, right? You always need to be layering or leveraging. because then it gives you the time to like have the crazy stupid ideas and things just need time to spend time on that stuff and it gets harder and harder as you get bigger and look at like

I remember for a long time, Facebook was buying up a lot of like seed and series A startups that didn't quite break out on their own. The idea was they're going to get these very entrepreneurial high agency people to start new product lines of Facebook.

Does any break out in work? Instagram, maybe, would be the one I'd say. Well, they bought Instagram, but that was a 1.1 billion acquisition. Oh, yeah, they paid for more than just the team. Yeah, and just letting them, giving them a budget to build new products.

I don't think any actually made it in their own right. I think they got some really good talent into other parts of Facebook, but it's very, very hard for companies to do new things as they get bigger. It's almost a law of nature. And it's frustrating how much you slow down, but it's also... The only reason we're here is because of these laws of nature. In a weird theoretical sense, shouldn't the big guys just... suck up every piece of opportunity they have.

lots of money and momentum and users, but it's just not how the world works. What do you do to like kind of fight those laws of nature internally? Like bills of rights, like things like that. Do you just, I like to just go and blow things up sometimes. I'm an order of magnitude smaller. I am not a natural kind of graceful leader.

I kind of just smash stuff a lot. And I, and I know there in theory is a better way. Like, I think the best way to lead is clear, like be the inspirational person, be kind of really collected and like. have the master plan execute, make people feel good. Clearly, that's the best. And I think it does exist. And some CEOs, I think, are like that. I look up to people like Reed Hastings. All that good human being, composed, thoughtful, not overly erratic.

I think the second best, though, is just sheer brute force and just like get shit done. Elon's probably an extreme example of that. You're making a value judgment there, though. Why do you think it's not the best? I mean, so many things just can't get built.

with that mentality because i think it wears out the person doing it and it wears out the people around them and so i think i mean i'll go to the third best when we come back the third best is i think where big companies fail which is just bureaucracy where they think they're doing it they're doing the surveys they're like making sure everyone's heard but then you get this thing where like any one person can say no but you need 12 people to say yes and then you just grind to a halt So...

I have been very much a leader in the number two category, and I'm trying to get better at moving up the chain. And this is a sort of an abstract framework. I'm not necessarily like no one's in one bucket or the other, but willingness to pick fights is a lot of the reason I'm still here. You must enjoy it a little bit. Not internally, I don't. I love the results, I guess, at least, right? I think people really misinterpret that about me. I don't like conflict.

The only time I like conflict is when I feel like someone's like, I can truly put you in a bad person bucket. So like when people sue us, like patent troll, they're just like, when you're righteous. Yeah, then it's really fun. Yeah, I can let out my righteous anger, whatever that means. But no, I actually... Deeply, deeply. I dislike conflict, and I have to have all sorts of strategies to get around. Reflexively, I'm tough, so it's like...

I'm not cowering, but it takes my energy versus gives it. And I hate firing people with a passion. And my strategy on that is if someone's not working like an exec, I will. tell the board it's not working and i don't feel like i'm telling you now to put myself in uncomfortable position so when you ask me in a month is it fixed or is it not i'm gonna have a shitty conversation either way i have either either fix the problem or i'm gonna look really

Or I'm going to look really bad to our board that I'm not making tough decisions. So I think you can manage your own psychology by... putting yourself between a rock and a hard place intentionally the point about like sort of process death by process right i think applies i don't

I think like we kind of touched on it with the experimentation conversation as well. It's like, I think sometimes you can, to it to a fault ignore the um the intuitive and the obvious and sort of the common sense in lieu of like oh we have to do it the right way because there's too much at stake or like whatever and it turns out that like

Especially for compounding businesses like Life360 or like Gravity Cat or like ones that have brands and sort of like repeatable motions. It's very unlikely you're going to do one wrong action that's going to like...

You know, maybe you could in a position as a CEO. But even then, if you did something so off the rails, like the board would take care of it and the company would be back on, you know, the next day. I think people fall into a trap of that. It's like, hey, it's like, it's so easy for me to mess up. that, like, I should just avoid that at all costs, right? Yeah, we haven't solved that one fully because we do have a few things, like, we have life safety-related features that really can't break.

We have to be the best at location. And part of what we do is like doing it without killing a battery. Part of one of our challenges, like... I actually think killing someone's batteries, it's a one-way door, not a two-way door.

And so we're not like a social network. And they'll never, even if you fix the bug, they will forever feel like you're killing the battery. And we still have that from a few handfuls of battery bugs. Well, just think about it from a product mission perspective. Like somebody's really unsafe if their phone's dead.

You know what I mean? Like, I can't even call 911. So it has been a hard one for us where we still have some fear, I think, to ship. So we are saying these are the things that can't break. these are things that can't even go back to like tests like paint a door to a ton of people don't worry about craftsmanship like don't be stupid but it's very hard to have nuanced communication at sketch

And so that's why I think you do get these processes. We really do need to be fanatical about location and battery not breaking for us. And that needs to be a big problem. When somebody breaks or regresses that, that has to be the people feel it. And we call it guilty until proven innocent. jump in like we're gonna chase ghosts 80 90 percent of the time but the one time he kept something he's probably going to the er right it's like us in uptime

Right. Anything for us that is sort of reliability related. I don't care if it's a one in a hundred that it's a thing. We have to chase it or I won't be able to sleep. The time I've seen Jacob the grumpiest around outages.

and issues that i mean but those are our can't break situations if i started the game over i don't know if i'd do a critical infrastructure company i might make different choices but i think it's similar going back to the size of scale The average employee is not going to have that same passion around it because there's a bystander effect on the person that...

can't be the bystanders the ceo and the founders but then you get the processes to try to acknowledge the reality that people aren't going to have the same passion as you and then you get the processes that just expand and expand and expand and so we definitely have gone through that with like Because we got bigger.

we needed a scalable way of not breaking location. I think we've flipped way too heavy towards kind of like too much focus on program management things. It's just a very, very hard trade-off. Yeah, and I imagine every probably incremental 100 employees, you have to kind of revisit these things. They just keep cropping up. It's deja vu every day. I think that's part of it. I think that never ends.

I see it when I look at, like, Toby, Shopify, like, it seems like he's still fighting some of the same demons that I feel like I'm fighting now, probably you're fighting too, at three different scales. I mean, I think that's the... We're talking about just doing stuff, like for people making apps, right? Like, just try. Just like do stuff. Don't let your

fears of breaking things or fears of whatever. Throw it to 100 people. Forget about craftsmanship. Just get it out there. And it applies to corporate process. It applies to product management. Entropy can be a very useful thing to insert in a system.

but sometimes that can take in the other way and I see that too which is like one of my things i see i think that's good advice for founders but i just i'll get it out there get learnings but you still need to have a strong intention about what you're trying to do so like for us like big north star vision build things in chunks but we had a feature that failed last year and it was a bummer because like

I mean, the team was just looking at two-week horizons, and there's sort of a North Star where they're trying to go, but I think we just got in our own way around, like, testing too much. And so there's a lot of nuance in this, and I think some people are naturally good at it.

I think founders usually... the ones that get funding and all that, like, if you've made it to even Series A, you're probably... have some level of outlier gift there not like 0.01 presenter outlier but you're pretty good because you're able to have that intuition around what people want and how to build things but the average person who's kind of come up through a different track they just don't have those skills They have other skills. I don't think I would have been promoted up to the chain.

Oh, God, no. For me. I was the highest I was ever going to get. Yeah, so I think I would have probably had to have been on a sort of like the super IC path.

or start my own thing because I think I would have I think people think there's this linear path from IC to CEO or whatever but the skill set chunk very very differently it's kind of their channels right like a lot of them they don't they don't all terminate in the same place you know what i mean yeah and what makes you go to the next one is completely orthogonal so i think it can be a good CEO and a bad manager. I'm legitimately not a very good manager. Don't tell anybody, but yeah, same boat.

Same boat. Yeah, I mean, it goes to the point there would be a lot more than, there's only like, I looked this up today because I was doing some research, but there's only like 3,000 or so companies listed publicly, at least on the NASDAQ. There'd be a lot more than 3,000 if everybody was good at this, right? Or everybody had this skill and it was easy. So it's just the way of it. But I don't know. I think these are just like nuance and just applying.

a combination right of like the data your intuition input from customers like you kind of just have to all take it all in and feel like when you set up orgs and you specialize and stuff it kind of goes in the opposite direction of that you know what i mean or you have to like create like really good information flow or culture probably is the right word or religion, whatever, to induce that. I don't think anyone's fully solved it. You can look at a few companies, but it's very...

Especially for consumer product-focused ones, very, very, very few are able to maintain craftsmanship at scale. Or craftsmanship plus rapid innovation. The trade-offs are tough. or stability and speed like it's it's easy to be stable if you're not doing anything yeah i say i always feel like i'm not sure those are completely or thought you know what i mean there's like no physical reason but there seems to be a strong correlation

Yeah, I do think the ultimate cliche answer to all this is just hire really good people and be ruthless about that. And I'm also very hard to do. And then it's gotten a lot easier because we've had this market downturn and now the AI, everything's a bit easier. run leaner, but if I go back to some of the...

VC advice from when we started in a very different era. It all holds true today, and the vast majority of it is just team, team, team, team, team. Which culture is one of these things that helps?

that you know without you in every single interview closing sure but it is so hard I think it sounds easy but like it's not it's not like the hardest it's probably the hardest part yeah the people yeah always has been and miguel says that my co-founder says all the time he's like computers are easy like it's the people that are hard products easy to some degree too i guess products more people but yeah and then when do you want

homogeneity versus diversity of things and i'm not talking like an identity sense i'm more saying like The people who really want to do A-B tests and iterate are usually not kind of the really craftsman-oriented people who have vision around it, and they're both important skills. You need both, but then that makes it harder to have that. Especially early on, you don't have a central theme around who you are.

creates a lot of tension too right like when people have like somewhat different values but i've hoped is the point of mission right like if we can all agree we're on the same mission and then it can be resolved and the tension is good right i feel like tension and art and most things like can actually improve the outcome to some degree but

In theory, but if you kind of go back to the early PayPal guys, they're like, we want everyone who thinks the same way and acts the same way because we just, especially early on, it was not the time and place to kind of like have differing views. It was like, we're all thinking the same way on a mission.

It was super fun to be a fly on the wall listening to two CEOs gab. And I think a lot of our audience will be interested to know because they're either... working for someone like you or aspire to be an executive at a larger company or grow to your side.

So I think getting those kind of insights and getting into your head a little bit is super interesting. I was fascinated. But I will say, I want you to introduce me to somebody else on your team who can go talk about the 10 other topics we have signed up for today.

I'm sure we have lots, and going back to the different functions, we have some very good people who are very focused on... optimizing subscriptions and they're not necessarily would even claim to be the people that would be the kind of the big product thinkers but when you're at the scale we have hundreds of millions of revenue Small improvements and doing things the right way really, really do matter and even kind of flows.

I don't even have to look at that. How do you cancel save flows? And if someone's about to turn, it's not really about the vision, but these are real levers to help. And how do you make sure... yeah, because someone's credit card goes bad, what do you do? And like, how do you have a nice way of reminding someone what they're losing? And very, very different on the vision side, but very important.

Awesome. Well, as we wrap up, anything you wanted to share? We're going to share a link to the careers page, but maybe listening to this podcast, somebody's not going to jump right into applying to a VP direct report. No, it says that the right people will. That's the whole point, David. That's true. I'm getting less operational these days, so you don't have to deal with me as much as you would have in the past. Our COO, Lauren, has been taking on so much for me, and she's amazing.

If someone does want to join, we're growing very quickly. We are very focused on just having the best team. We've been under the radar for a very long time, but now that we're in this world, we're... It's not kind of the go-go days. We're almost like a defensive growth stock. We grow very predictably.

very profitable, very limited marketing budgets. And we also have been very focused on the free user. So we have a lot of room to grow because we have not been one of those companies that have gone to the aggressive harvest mode prematurely, which is probably some of the stuff we could talk about in another conversation. Yeah, that's one of the things that I wanted to get to. And again, we'll just have to have a different conversation with somebody else on the team. But you have a huge vision.

and you're already expanding into new verticals. So most people, myself included, think about Live360 as like keep tap on my kids. And my son's on Android now, so I've been meaning to install it because I can't. get a track on his location now that he's off the Find My ecosystem. But you have a very big vision and you're expanding into elder care. Like you said, there's just so much opportunity. So even though you're already at a $2 billion valuation-ish,

There's massive headroom. Come for the family location sharing, stay for the world domination. Something like that. We want to be the super app for families and it's the closest network we all have. From the time you have little kids to aging parents, there are a lot of needs that we think we can solve. And the Trojan horse that I think people only realize how to get location in and of itself is a boring commodity. But we have an app that I think parents are going to make 22 times a day.

So we have so many touch points and we have this data that really opens up a lot and we're excited about the next chapter. Yeah, fascinating company. Well, thanks so much for joining us and for opening up so much about how you think about things. So thanks. Thank you for having me. 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