Thought Leaders in Mobile and Social: Tasso Roumeliotis, CEO of Safely (Part 2)

SM: Which app on the smart phone that you think is the milestone event that makes location-based services viable.

TR: I would say that if you actually look at the revenue-generating, location-based services, a lot of the revenue that’s being generated, those applications are still near the top or at the top, even before smart phones. For example, turn-by-turn navigation, which is on Sprint and AT&T, powered by a company called TeleNav, is still arguably the number one revenue-generating, location-based service out there. It’s a public company doing hundreds of millions of dollars of revenue on, effectively, an app that does turn-by-turn navigation.

I don’t think — with the exception of maybe Google Local Search, which is obviously a different ball game — there’s another app out there for the service that generates that kind of revenue.

SM: However, aside from navigation apps, GPS navigation apps, what other killer apps have emerged in the mobile and the social domain that are ground breaking apps that have opened up the industry?

TR: Well, in addition to navigation, the other one is family locator, using location for personal security, which is the area we’ve invested in. That is also a very big revenue generator. It thrives and has enhanced smart phones, but it was launched and was able to make serious traction even [before] smart phones. Those two apps, and then – I don’t know how much enterprise you want to get into – there is a whole range of enterprise services pioneered by companies like Nextel that are big revenue generating services. This generation that was high-value pay for services around enterprise ROI; personal security using location, like a family locator; and then — a big pain point — getting directions through navigation that were big revenue generators … and still are. They’re still fighting pain points.

SM: I’d like to double click down on each of those. We can start with navigation. We can do family safety. We can do enterprise. Now, one that you have not mentioned – and I don’t know how the revenue splits out – but clearly, these are very popular applications are applications like Yelp, which are very much location-based services.

TR: Yes. I mentioned Google Local Search. We can put Yelp into that category as well. Yelp is now significantly more mobile than when it first launched. I consider local search an entire category, absolutely. The category that I’ll say – having experimented in it, having done a lot of market analysis in it – that I’m a little bit more down on is how it monetizes with social. There’ve been a gazillion attempts, and we’ve seen them all over the world, to add social and friend locators and check-in services. There are challenges to making those things work, whereas the other categories are revenue proven right now.

SM: Would it be fair if we spent some time on navigation, spent some time on family safety, spent some time on enterprise, then local search and then social?

TR: Sure. Each of those can take a long time, so let’s try to get through them quickly.

SM: Okay. All right, so let’s talk about navigation. What price point are we operating at with navigation? You said it’s the largest revenue generating location-based service. What kind of price points does it generate?

TR: Navigation is sold at anywhere from $10 a month to. … In some cases, it’s offered for free, and they’ll look to upsell you things like best gas prices and traffic and those kinds of things. But that business was built on a $10 a month price point.

SM: I’m sure you’re dying to talk about family safety, so why don’t we go there?

TR: We’re clearly passionate about the space. The reason we aggressively invested in that space, even while we were exploring, looking at social use cases, is that the phone is, at its primal [core], a safety device. The reason that parents buy phones for their kids is not so the kids can send 3,416 text messages, like the average 13-year-old does. It’s not so they can waste time playing Angry Birds for the next four hours. It’s so that if something happens, [their kids] can call them, or if they need to locate [their kids], they can locate them. That primal safety, security element where there’s a very high willingness to pay, similar to how people install ADT systems in their homes, the same kind of primal appeal happens. We decided that was a big category to focus on. These price points are between $5 and $15, and they come as part of a family pack. You can buy a family pack on Sprint for $5 that allows you to locate four phones. That is a no-brainer deal if you’re buying four phones for your family.

The reason that the economics are appealing is that we work closely with Sprint and AT&T and T-Mobile and help them sell these products, or they’re interested in selling these products because 65% of their install bases are family plans. So, family plans produce churn. If you can offer a service that not only produces churn but also adds revenue, that’s a dream service for them. So, if I can convert people to family plans, the churn rate of my subscriber base drops by in some cases, as much as three-quarters.

It’s a strategic product. There’s a high willingness to pay. It reduces churn for the operator. It solves a human primal need. That’s why we invested in it. It’s been a success. I mean, the company’s grown to 150 people on the backbone of that success.

This segment is part 2 in the series : Thought Leaders in Mobile and Social: Tasso Roumeliotis, CEO of Safely
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