MARTIN OMANDER: Hello, my name is Martin Omander,
and I welcome you to Google Root Access, the show featuring
actionable, startup advice.
My guest today is Alex Haro, cofounder of Life360.
Tell us about your startup, Alex.
ALEX HARO: Sure, so first of all,
thank you very much, Martin, for having me on.
I'm super excited.
Life360 is a mobile app for families
that lets them stay close and connected to the people that
matter most in their lives.
Things like seeing where everyone is on the map,
being able to communicate throughout the day,
coordinate how they're going to get together tonight
for dinner, and getting automated alerts when they
arrive to home, or leave school, or get to work.
Those are the things we're focused on, and funny enough,
we're actually one of the first venture-backed Android
apps ever.
Our first source of funding was a grant from Google,
when we won the Google Android competition back in 2008.
And since then, by really focusing
in on the daily utility of family life,
and how do we make it a little bit easier,
we've been able to acquire a critical mass of 44
million families who are using us every single day,
and loving the things that we do.
MARTIN OMANDER: Great.
So how-- sounds excellent.
How are the numbers?
How is your traction?
ALEX HARO: Sure, I mean we've already
passed 44 million families, and we're adding 1 to 2 million
every single month.
And it's growing very well, and people really
are finding us organically.
We're not paying for any of those users,
and they're loving us.
MARTIN OMANDER: Wow, that's amazing.
ALEX HARO: Thank you.
MARTIN OMANDER: So I downloaded the app myself,
from the Play Store.
ALEX HARO: Awesome.
Count another user, right?
MARTIN OMANDER: One more, yes.
So I didn't have to pay anything.
How do you guys make money?
ALEX HARO: Sure.
So first of all, the thing that we're focused in on is scale.
We want to capture the family network, much like Facebook
has friends and LinkedIn has work.
No one has really captured that family network.
And we think it's the real big, next network to go online.
And so because we're focused in on that,
we have to build a compelling product
that users want to use every single day.
And we do have to provide something that really provides
utility without forcing them to pay for it upfront.
That being said, we eventually do
have to become a legitimate business that makes money,
and so we've chosen the freemium model to monetize.
And what we've done is we have specific features that
are behind a pay wall that users have to pay,
and those are only features that they'd
want to use after they're deeply engaged in Life360
and really finding the value of it.
So one of our most popular services
is called LiveAdvisor, who's a live representative-- you
can think of it like an OnStar rep in your car--
but for your phone instead.
A live representative that knows who
you are, where you are, and can help you out
with things like a minor emergency,
like a broken down car, or get you
dinner tickets tonight for you and your wife.
MARTIN OMANDER: Great.
So I've had other guests on this show who have told me--
they've all told me how hard it is
to get consumers to pay for something.
And this seems like that's what you're trying to do.
How's that going?
ALEX HARO: Yeah, I mean, I'm not going to lie to you.
It definitely is hard.
And there's a whole bunch of things
that when you're first thinking about business,
you don't realize how hard it is actually to get users to pay.
And we launched back in 2008, and so we
didn't have a lot of these pay APIs that exist now,
things like in-app purchase and Paypal,
and all that kind of stuff.
Really weren't mobile focused at all, back in 2008.
And so when we first launched our premium offering,
we actually collected credit cards
straight from the mobile app itself.
The user had to go in and provide the full credit card
info, if they were interested in it.
And surprisingly, that actually worked for us.
And we actually had a large number
of users opting into premium, and loving our premium
services, as well.
But there's a whole host of issues
that you don't think about that suddenly pop up
day one, after the first month of billing.
When all of a sudden, some percentage of your credit cards
just can't bill.
And we thought we did something wrong.
It's like, holy crap, what's wrong?
And it's all things like lost credit cards,
and people don't, unfortunately, always have funds,
and cards get stolen, and cards get fraud,
and they expire over time.
And all these kind of issues-- a lot of companies
have had to solve, that have billed
hundreds of millions of dollars through their systems.
It's very hard for a small startup
to realize what these are, and try to solve them
without dedicating a lot of their time
to billing and billing support.
MARTIN OMANDER: Right, OK.
Yeah that makes sense, my primary card
has been replaced twice in the last year.
And I feel sorry for everybody who
was trying to get money for my subscriptions.
ALEX HARO: It happens a lot more frequently than you'd expect,
for sure.
MARTIN OMANDER: So you go to people--
some people were actually then entering the full credit card
number, some of them were even succeeding, and in some cases
you were even able to charge the card.
But there were problems, you said.
How did you overcome these problems?
ALEX HARO: Sure, so first of all,
I think the reason that people were able to give us
credit cards, and felt secure, is
because we are around family and closed networks,
and our users actually really do trust us,
and we take that seriously.
And we do a lot of things, we're PCI compliant,
and we follow all the appropriate security protocols
and guidelines.
But the way that we were able to solve it,
and what we've had great success with,
is actually with Google In-app purchases.
So about six months ago, we switched
from doing our own credit card based solution to Google In-app
purchase, and had great success.
We tripled the number of conversions
we had every single day, overnight.
So we released this, and we went from 1x number of sign-ups
to premium, to 3x overnight.
And it's been awesome.
And the other great thing about it
is it's a very simple API that you can build on top of.
Google takes care of all the really hard details
around how do you re-bill?
How do you send them emails to make sure
that they enter their credit card info?
How do you bug them to do it?
How do you remind them?
And how do you deal with fraud and all that kind of stuff?
Google takes care of all those kind of details for you,
so you have this very simple API that you can just say,
hey Google, is this user still premium or not?
And Google will return yes or no, and you can deal with that,
and not worry about all the lower level
details and billing.
MARTIN OMANDER: So the increased conversion rate,
where does that come from, do you think?
Is it because people don't enter the full card?
Or why?
ALEX HARO: So I think a lot of it is that.
The credit card that you have on Google Play services,
that is used for Google In-app, is for all of your apps.
So say you love "Angry Birds," and you want to upgrade,
for whatever the upgrade for "Angry Birds"
is, and you enter your credit card.
Or say you really love Life360, and you're
willing to put your credit card in for that.
Once you enter your credit card, then it's in the system,
and it's available to all the other apps.
So after you've gone through that experience,
say you've done it for "Angry Birds," now you love Life360,
you're using every single day, you say,
hey, I want to upgrade for some of these premium features.
It's a one-click check out.
So you just click and say, yes, I want to buy this.
And all of a sudden, that's it.
So there's no more of this having to enter your credit
card details every time, and a lot of people
haven't even memorized their credit card,
so they have to pull it out and they may be driving,
or something crazy like that.
Instead, it's just one-click touch,
and you automatically upgrade.
MARTIN OMANDER: Great.
So Google takes a cut, of course.
That's on one side of the equation.
On the other side of the question is greater conversion
rate you mentioned that you've seen.
How were you thinking about that trade off?
Is it worth it?
Is it barely worth it to you?
ALEX HARO: Sure, absolutely.
I mean, obviously this is very specific on everyone's
business, but what we've seen is for our premium offering,
some of it it's digital, some of it's real, hard costs--
but the relative fixed cost per premium user is relatively low.
And so when we look at the cost of developer time
to figure out all these billing issues, when
we think about the cost of how do we acquire these new premium
offerings, when we think about just like going from 1x to 3x,
that's almost worth it itself.
All of those costs add up.
They may not be 30%, but you end up
making more money-- we definitely
have-- through Google In-app, then when you
try to do it yourself.
MARTIN OMANDER: Great.
So finally what is your advice to other startups
who are trying to bill consumers on a subscription model?
ALEX HARO: Sure.
So I think one of the things that everyone needs to focus in
on is build something that users really want.
I think that's where we've been hugely successful,
we've actually built something that users really want.
And then you'll figure out how to build them
and how to pay them, but unless you're really
building that product that users really want to pay for,
anything else will be trickery.
Like the users have to want to pay
before you'll get them to pay.
So first and foremost, focus on making a product
that users really do want to pay for.
Then when it comes to actually billing them,
don't try to solve the problems yourself.
You'll spend far too much time figuring out,
how does American Express trade against Visa and MasterCard?
And how do I re-bill users?
And all sorts of things that many other people have spent
many other people's times figuring it out.
And you should be focused on building your product,
not figuring out how to bill users.
Whether it's In-app, or some other service,
you really should consider using another service that really
knows how to bill users and how to deal
with all these credit card issues.
And you just worry on building your awesome product
the users do want to pay for.
MARTIN OMANDER: Great-- great advice, Alex.
Thank you for sharing your experiences with us.
ALEX HARO: Absolutely, and thank you for having me here.
MARTIN OMANDER: We hope you found something
you can use in your startup.
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Please leave your comments below.
We read everything you write.
To learn how Google can help your startup,
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That's it for now.
See you next time.