Freemium at scale: How Life360 built trust and hit $1.8B

It’s an age-old question: How do you make money with a freemium subscription app? Over the years, there’s been plenty of debate on this topic, but there are a few standout freemium apps that have stood the test of time — proving that freemium is a legitimately great way to build a subscription app business.

Life360 is one of those apps. Launched in 2008, Life360 is a location-tracking app that’s designed to give families peace of mind by monitoring where their loved ones are — and some of its features are and always have been free. 18 years and one IPO later, Life360 has over 80 million monthly active users, 600 employees, and a $1.8B market cap. To find out how Life360 has made freemium work so well for almost two decades, we sat down with co-founder and CEO Chris Hulls.

It’s (not) all about the money

Of course the ultimate goal of building a subscription app is to monetize (you’ve got to make money somehow). But if you’re going the freemium route, you should be cautious about how much of your value proposition you put behind a paywall. “The core has to give real value to our customers, not, kind of, fake value,” Chris said of Life360’s freemium philosophy. “Like real, real value forever for free, period.” Not only does this help you build up a user base of potential paying customers, but it also promotes retention, brand recognition, and virality. According to Chris, Life360 didn’t even monetize until they reached 10 million monthly active users. 

Testing… 1, 2, 3

Everyone knows the importance of A/B testing to verify the impact and value of product decisions, but you might be overthinking your testing strategy. According to Chris, testing a percentage of your user base out of a concern for statistical significance isn’t always necessary. As he points out, “People say, ‘we need 20% to get statistical significance.’ Well, [for Life360] 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 see this happen again and again and again. And I think … it stops people from doing smart tests.” Instead of focusing on statistical significance, Chris recommends being a bit scrappy and getting, say, 70% certainty with painted-door tests. Especially for lower-stakes decisions, this looser approach to testing can yield helpful insights faster and speed up product iteration.

Maintaining user trust

One reason Life360 has been so successful is the company’s unwillingness to compromise on user trust. Now that it’s competing with the likes of Apple’s Find My product, the company’s dedication to building a long-lasting relationship with its users has helped it stand out from the competition. As Chris puts it, “Once you have someone on a subscription, you can actually really, really squeeze them if you want to. We haven’t done that … we’re trying to build a product and brand and platform that people love … we need people to love us. And we need it to feel like a really good deal.” The company has gone so far as to draft a customer “Bill of Rights,” which the team uses to guide product decisions for the free tier. For example, “We will not get in the way of the job to be done with an ad,” Chris said.

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Check out this week’s episode of the Sub Club podcast to hear our full conversation with Chris and learn more about building a successful freemium app.