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`Exhibit 2 13 4
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`3/4/201 5
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`The Location Labs-AVG Marriage: The View from the CEO's Desk
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`The Location Labs-AVG Marriage: The View from the CEO's
`Desk
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`by Kurt Scherf | Sep. 25, 2014
`In my last blog post, I commented on the AVG Technologies NV acquisition of San Francisco-based Location Labs.
`This week, I was given the opportunity to discuss the merger with Location Labs’ CEO, Tasso Roumeliotis, and Jason
`Finkelstein, the company's vice president of marketing. We discussed the company's history, the fit between the two
`companies, and the business of selling value-added services.
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`Background and Company History
`
`Location Labs began as WaveMarket in 2002. The company's early business model was to license the location information
`collected by mobile operators (via their cell towers) and provide it to developers of location-based applications. An example
`of such a partnership was uShip — an online transport marketplace. Using WaveMarket’s data, truck drivers could allow
`their locations to be tracked by customers automatically and safely. WaveMarket also worked with Sprint for fleet and
`mobile worker tracking. It also powered such apps as city guides, location-based dating, and retail/shopping features.
`
`Family locator services using WaveMarket’s technology were first implemented by Sprint (Family Locator) in 2006, and
`AT&T’s FamilyMap followed in 2009, with T-Mobile's Familywhere launching in 2011.
`
`WaveMarket was relaunched as Location Labs in 2010, and the company's model shifted from supporting developers to
`focusing entirely on family safety and mobile control features. For example, it launched its Sparkle platform in November
`2010, combining features such as location finding, geofencing, mobile controls and monitoring, and driving safety features
`into one security platform.
`
`Selling Value-added Features to Mobile Customers
`
`In 2011, Location Labs partnered with Sprint on a comprehensive online monitoring service called Safely Social Monitor.
`Similar to such tools as uKnow Kids, Safetyweb, and United Parents Online (highlighted in an earlier blog), Social Monitor
`was designed to help parents monitor Facebook activity. Roumeliotis notes that this ventu re was short-lived, as they
`quickly learned that this is a tough sell. This is a sentiment that is repeatedly expressed in conversations I've had with
`executives from F-Secure, McAfee, Net Nanny, Secu ritycoverage, and Symantec, Roumeliotis said that while parents
`express a strong interest in getting a better handle on their kids’ online activities, it's been extremely difficult to get them
`to pay for stand—alone features. Interestingly enough, executives at Symantec indicated that family locator services were
`one of the more interesting value-adds that might be added to an existing security offering. Obviously, AVG felt the same
`way.
`
`Sprint is the first carrier with whom Location Labs is working to bundle its offerings — control, locator, and driving safety
`features — into one package. Sprint Guardian is available for $9.99/month after a free trial period. Sprint also offers
`Lookout Mobile Security that offers free antivirus and safe browsing capabilities. This can be upgraded to a Premium version
`(that includes features such as mobile lock and wipe in the event that a phone gets lost or stolen) for $2.99/month or
`$29.99/year.
`
`Success in Selling VAS
`
`According to Roumeliotis, the “Holy Grail” of mobile value-added services is Asurion’s extended service plans. He
`estimates that 85-90% of people accept its insurance. Another successful model that generated “a ton of revenue,” he
`notes, was, Telenav, which offers subscription tu rn-by-tu rn navigation service through such wireless carriers as AT&T. In
`2012, for example, Telenav generated approximately $176 million in subscription revenues. Roumeliotis believes that
`Location Labs is one of the top three value-added services that mobile operators are offering.
`
`Mobile Security is Hot in 2014
`
`The Location Labs acquisition was just once piece of financial news in 2014 reflecting the significant interest in mobile
`security. For example, aforementioned Lookout announced that it had completed a $150 million in financing on August
`13 to help it expand its enterprise offerings.
`
`In its Security Summit, Blackberry indicated that it was taking a stronger lead in both enterprise and Internet-of-Things
`(IoT) security. First, it announced that it was acquiring Secusmart, a company specializing in voice encryption. Company
`officials also indicated that they were going to be playing a stronger role in providing enterprises with solutions to better
`manage IoT security. Although they lacked specifics, it is speculated that their solutions would revolve around cloud-based
`security for enterprises addressing the explosive trend of employees and bring-your-own-device (BYOD) into the workplace.
`
`Finally, I thought that the news that an industry stalwart such as ADT was working with a competitor of Location Labs —
`Life360 — was interesting. As the traditional home security industry seeks to keep itself relevant in an era of do-it-you rself
`home control, I thought that adding a family locator service to its home alarm offerings strengthens ADT’s position in the
`security market by expanding its capabilities to life safety applications.
`
`The Marriage with AVG
`
`Roumeliotis said that the AVG acquisition was a natural extension of the traditional Internet security market, as vendors
`seek to keep themselves relevant in a world where mobile platforms such as smartphones and tablets continue to erode PC
`
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`3/4/2015
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`The Location Labs-AVG Marriage: The View from the CEO's Desk
`sales. When it came down to it, an acquisition was most likely to come from the ISV or the mobile management market
`(companies such as Mformation, Mobile Iron, etc.). In the end, the fact that the vast majority of mobile management is
`focused on the enterprise meant that Location Labs’ consumer-facing positioning was most attractive to a company such
`as AVG.
`
`Looking at the numbers, it's clear why AVG’s acquisition of Location Labs makes strategic sense. AVG has 182 million
`monthly active users, 82 million of whom are on mobile, but they've struggled to monetize. Location Labs, with 1.3 million
`monthly paying subscribers and a 100% CAGR in paying subs from August 2013 to August 2014, has a proven
`monetization model in its partnership with mobile operators. Carrier network, billing and CRM integration mean their
`mobile safety apps can be controlled by account holders for every phone on their plan, without having to download apps to
`individual phones, and can be seamlessly paid for, month after month, through their carrier bill.
`
`Finally, the two companies’ products in combination provide a complete mobile security offering — the only one of its kind in
`market. AVG’s services protect devices and data, and Location Labs’ protect the people who carry devices. It's a
`combination of features that expands “Internet security” into more holistic safety applications and should lead to strong
`growth.
`
`Future Plans
`
`Given that Location Labs’ key products—name|y Locator and Contro|s—have yet to be deployed with all their key US
`partners (AT&T, Sprint, T-Mobile, Verizon), rolling these out to every partner is a logical next step. And of course growing its
`business by adding US and international partners (to date their only international partner is Telefénica) constitutes another
`substantial opportunity. Growing the Location Labs business, says Roumeliotis, is the biggest priority at this time, and this
`is the order in which the company is focused on growth tactics:
`
`Launch all existing products with existing partners
`Increase channel penetration of existing products with existing partners
`Launch new products (or bundles thereof) with existing partners
`Launch existing products with new (international) partners
`Launch new products with new (international) partners
`
`Tags: mobile, smartphones
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