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it seems that we areLife360(nasdaq:lif) to find a truly small and beautiful corporate template.

there is a definite business direction - security. focus on your main business, gain users by constantly enriching functions and improving product experience, and earn revenue through value-added products. stable and effective pricing converts ordinary users into fixed paying users, and will not disturb the life cycle of normal paying users through operational activities. nor will you add various functions that you take for granted (i have seen many times that business owners personally instruct product managers, and adding functions without authorization has caused product data to deteriorate), which confuses users.

focus, this is the secret of life360's success.

after reviewing life360's business and data, i would like to summarize my fragmented thoughts into three conclusions from the simplest to the most complex:

1. "focus" on one business direction;

2. build your own moat around this direction;

3. continuously expand this direction to establish depth and expand horizontal business coverage. depth is more important than the other two.

life360 is an excellent product that we discovered during our daily browsing of the rankings.

as i scanned the charts day after day, a product caught my eye because of its extremely stable ranking on the best-selling list. on the us social charts, this app has been no. 1 on the "social best-selling list" for many years, and has been ranked around 20th on the non-game app best-selling list in the past year. under the shining halo of internet star products, this product seems inconspicuous. because of its misleading name, one of my colleagues even thought it was a qihoo 360 overseas product. this product is life360.

after a brief understanding, i was impressed by the uniqueness of this company and the operating model behind it. such "narrow" demand can actually support a listed company, and the market value of this company today has reached 4 billion us dollars!

what makes me curious is, what experience led the founder to discover this demand, and how he persisted for more than ten years in the face of such a niche demand and took the company public?

01

founding and development history

life360 was founded by two founders, chris hulls and alex haro, in 2008 and is headquartered in san francisco. the core function of its product is to provide location-based member positioning and tracking services.

the company's main product is the life360 app, which is a mini social product for family members or close relationships. members can share locations, send notifications and provide emergency assistance.

as a pure american company, life360 chose to be listed on the australian stock exchange in 2019. however, in june 2024, when conditions were ripe, the company returned to its home base, nasdaq, with a current market value of $4 billion.

the core user demand that life360 solves is safety. a single app cannot fully meet safety needs through location sharing. since its establishment, the company has been cooperating with car companies, continuously enriching functions, and acquiring companies to adapt to all-round safety needs.

1) integrate mobile internet products into real-life scenarios and consolidate user base

in 2013, life360 reached an agreement with bmw to integrate life360's location services into the navigation system of bmw cars. coincidentally, in 2013, google shut down a life360-like product, google latitude, which also made room for the growth of life360, which began to support global positioning.

in 2016, life360 added a feature that enables smartphones to detect car crashes and automatically contact emergency responders.

in january 2018, life360 partnered with adt to launch adt go. adt go leverages adt’s extensive security infrastructure to connect and protect families outside of their homes.

while continuously infiltrating its own application scenarios into real-life scenarios, life360 enriches and completes the full link of app-side security application scenarios through acquisitions - member positioning, security alarms, message communication, and family social networking.

2) make up for the functional deficiencies of its own products through acquisitions

in february 2016, it acquired "couple", a private messaging application product.

in november 2019, it acquired zenscreen, an application that helps users and families track and implement screen time habits.

in 2021, it acquired tile, a top company in the field of lost property tracking, for $205 million. tile was founded in 2012. its core product is a small hardware device that can be attached to valuable items such as wallets, mobile phones, and suitcases. when an item is lost, the tile app on the phone will use bluetooth to find the item and make it make a sound.

the acquisition of zenscreen helped life360 complete the core construction of the final product usage closed loop - family member positioning.

after reviewing life360's function construction and various acquisitions, i clearly felt a kind of corporate operation "rhythm", that is, methodically maintaining old users and attracting new users through increasingly perfect product experience. this kind of corporate temperament that is not disturbed by "trends" and always focuses on its main business seems to be rare in domestic companies.

a good operating rhythm will inevitably bring satisfactory data results. as of the second quarter of 2024, its global mau reached 70.6 million, with 2 million paying users, revenue of us$84.9 million and adjusted ebitda of us$11 million. supporting a quarterly revenue of rmb 600 million, is the market behind life360 big enough?

is it feasible to analyze location sharing to provide security in china? as far as i know, there are almost no companies with similar business in china. the question is, why not? let's go back to the starting point and analyze how life360 specifically does "location sharing and tracking".

02

life360 safety application scenarios

it mainly provides location-based family positioning and location tracking services. typical application scenarios include locating family members when they are out, knowing the location of relatives at all times to provide family security. and additional location-based tracking services such as the location of precious items and personal belongings such as keys, wallets, and mobile phones, and lost tracking.

the life360 app has four main features: location sharing, circles, places, and advanced features.

1) location sharing

the main feature of the app is location sharing, which allows users to view the locations of other members.

2) circle

circles allow users to create separate groups within the app, similar to wechat groups in china. circle members can view each other's real-time location, and the user's location is only visible to members in the same circle.

3) place

users can create a geo-fenced place, which will send out reminders when someone enters or leaves a certain place. this function is very similar to the circle "barrier" drawn by sun wukong with his golden hoop. it is a very practical function in some special scenarios. for example, if a mother temporarily goes out for a short time, she can draw a place for her baby to monitor the child's safety in real time.

4) premium

life360 paid members can pay for additional features such as emergency sos alerts: silent alerts with location to friends, family, emergency contacts and rescuers, 24/7 live advisory services, identity theft protection, roadside assistance, and more.

the above scenarios are the basis of user demand with a market value of up to 4 billion us dollars.

all functions are based on the single function of location sharing, and have been continuously extended and expanded into unique products such as circle and place that are suitable for certain life scenarios. then, value-added services were derived from these functions and revenue was generated.

03

is it feasible in china?

i think not many domestic internet companies have the ability to complete business expansion from the shallow to the deep.

1) users have different habits in using internet products. domestic users are more accustomed to using one app to solve all problems, while the united states prefers professional apps to do professional things.

first of all, no company in china has developed a separate app for the function of obtaining the real-time location of family members through location sharing. the usual practice is to use it as an additional function of a super app, such as wechat location sharing, and hardware such as xiaotiancai phone watches.

or even if there is a separate location sharing app, a bunch of online social features should be added, such as zenly-like lbs social networking. the actual situation in china is that parents attach great importance to their children's safety, but they don't seem to realize that this need should be solved through a separate app. parents usually follow their children wherever they go.

when browsing the reviews of life360 in the app store, i found that a typical application scenario is that when a child starts college or high school, parents use the app to check whether the child is near the university. or whether the child can return safely from a party and whether the location is at the party.

it is easy to see that children will not like this kind of app. in fact, most of the negative reviews in the app store come from the fact that they hate being monitored by their parents. but more positive reviews come from parents who feel that this app solves their biggest psychological need to care about their children and the safety of their family members.

parents care about their children's safety, which is a very strong core demand in any country. however, parents in different countries have different ways to realize this concern. chinese parents tend to "call and ask where you are and what you are doing", while american parents seem to prefer to solve the problem through actual location "open the app to see where you are and whether you are in a dangerous place or where you should not be".

2) a startup company that has not been profitable for many years and cannot go public is unlikely to survive in china.

life360 was listed in australia 11 years after its establishment. it is said that one of the important reasons for choosing to list in australia is that the company's revenue in 2019 did not meet the nasdaq listing threshold. secondly, one of the company's early investors was an australian who had a good relationship with the stock exchange and helped to make connections, so life360 was able to successfully list.

during the 11 years from its founding to its ipo, the company relied on its own cash flow and investors’ money to survive. this long and arduous process not only tempered the founders, but also tested the patience and confidence of investors.

fortunately, the founders and investors held on. this is the american market, and american capital may not have such great patience for domestic companies. domestic capital is not much more patient with domestic companies either.

04

did you really make money?

let’s go back to the story of life360. the story of focus is inspiring, but focus is valuable only if it can make money. let’s look at life360’s operating data from a financial perspective.

life360's revenue comes from three businesses: subscription services, hardware sales, and others. according to the second quarter financial report of 2024, the revenue is $65.7 million, $11.9 million, and $7.3 million, respectively, accounting for 77%, 14%, and 9% of the quarterly revenue. in terms of gross profit, the subscription business is the main contributor. the gross profit of the subscription service is 80%, while the hardware business is only 20%.

hardware sales revenue comes from tile’s bluetooth trackers;

subscription revenue comes from value-added features and membership subscription products.

the revenue cost of hardware products is the direct cause of life360's operational losses. not only can it not contribute profits, but its revenue has been declining for several consecutive quarters. the historical burden brought to life360 by the acquisition of tile will take time to digest.

fortunately, subscription revenue has become life360's core revenue source. according to the second quarter financial report,

1. total revenue in the second quarter of 2024 was us$84.9 million, a year-on-year increase of 20%, of which subscription revenue was us$65.7 million, a year-on-year increase of 25%, and core subscription revenue was us$60.2 million, a year-on-year increase of 25%.

2. net loss of $11 million in the second quarter of 2024 includes $5.8 million in transaction costs related to the initial public offering (ipo) and a $5.2 million higher income tax provision than in the second quarter of 2023. we expect income tax expense in 2024 to be between $2 million and $4 million.

3. adjusted ebitda was positive $11 million, while ebitda1 was a loss of $5.6 million. this was a loss of $2 million compared to positive adjusted ebitda of $5.7 million in the second quarter of 2023. the ebitda loss in the second quarter of 2024 included $5.8 million of transaction costs related to the ipo.

4. operating cash flow was positive $3.3 million, which included the impact of $5.8 million of transaction costs related to the ipo.

judging from business operation indicators, both user activity and major paid subscription conversions have achieved good results, which is due to the accumulation of product reputation on the one hand and the ever-expanding globalization process on the other.

1. in the second quarter of 2024, the global monthly active users (mau) increased by 4.3 million, a year-on-year increase of 31% to approximately 70.6 million. management revealed that 70% of new users came from word-of-mouth.

2. global core subscriptions increased by 132,000 in the second quarter of 2024, setting a record for the second quarter and a year-on-year increase of 25%. total subscriptions reached 2 million, thanks to improved conversion and retention rates.

3. average revenue per subscriber ("arppc") increased nearly 6% year-over-year, primarily due to the price increase for existing life360 android subscribers completed by the end of 2023 and the impact of the three-tier membership launched in the uk and australia and new zealand in october 2023 and april 2024, respectively.

judging from the revenue data of recent quarters, subscription revenue is in a stage of rapid growth. after years of hardening of software and hardware, life360 is about to achieve full profitability, perhaps around winter.