How Factor Technology CEO Hugh Winkler grew to $250K revenue and 6 customers in 2023.

guys Factor technology helps folks especially consultants in the well and drilling industry understand uh how to map these Wells at scale right using a different kind of Technology they want to focus on getting more well bore in the pay Zone as Hugh said it uh he's there working with six customer half dozen customers say bootstrapped which we loved uh love launched in 2017 hoping to break a million bucks in Revenue next year we'll see what happens hey folks my guest today is Hugh Winkler he is trained as a geophysicist and experience in web architecture he invented a sneak for well positioning using machine learning technology with two partners he founded Factor technology to commercialize this technique they acquired their first early adopters in 2022 and he previously founded welstrom which is acquired by uh emeris which is drilling info in 2012. Hugh you you ready to take us to the top you bet all right so so I guess tell us about this technology and why do people care about uh what is in a well Well everybody's drilling horizontal Wells since uh you know for the last two decades and uh you know for the last 20 years people have been kind of using an ad hoc sort of heuristic method to position them so you drill it down two miles and then you drill it across two miles and you want to stay in the in the formation that you're targeting and they've got various methods for keeping it in the formation while they go two miles lateral what's the most popular formation before what you've invented the popular formation sorry not formation technique to State and no formation so you're going down two miles and across what's popular geosteering they call it there's there's Directional Drilling and GTO steering is what guides Directional Drilling and so the geosteer is usually trained in in geology you know reads uh measurements that they take down whole and he sort of uses his um intuition and his knowledge and historically uh uses some desktop computer assistance but also his the seat of his pants to keep the well you know in the Target formation and this has worked pretty great for the last 20 years it's it's not that it's uh failing but it turns out that that there's a big it's a big stress on an individual having to do this job and so every 20 minutes you get some new measurements in and you've got a you've got a read some uh Wiggly lines on a screen that are measurements and figure out what that means as far as the geology and then you know if you make a wrong decision you've steered your wellbore out of the productive Zone and possibly into a hazard that could cause you to you know a very expensive side track so it's a high stress uh decision that people have been making and and you've got sorry huge just to dumb this down for folks that don't know the well and drilling drilling business you know you know really well so Exxon Mobil is drilling something new they're fracking whatever in Texas they'll pay someone to go out and do this drilling to understand what the Economic Opportunity is before they spend all the money to actually do the drilling is that is that what's at stake here that's what you help with they're actually this is actually during the doing the drilling part ah okay they're exploiting the field and they're drilling all these horizontal Wells and they've gone out and made a map of what they think the target Zone looks like but nobody you know you can't see what's 20 10 000 feet down under the surface so they're blind and as they're drilling along they try to use these electronic measurements down hold to determine where they are geologically interesting and what what forgive me for my naivete here but if you know if you go down two two miles you're gonna hit you know a slice right that is I'm gonna make this up 300 feet deep of you know frackable oil or whatever why do you need to know what the pattern is the left right why can't you just keep sucking from the same spot why do you have to why do you have to go to the horizontal horizontally uh if the more well bored that you can expose to the formation the more oil you produce out of there because the kind of formations they're producing in Texas mostly now are no longer the rich flowing ones you know with gushers that doesn't happen much anymore what happens now is that they have to they have a little Trickle coming in after and only after they fractured the well so you drill this two mile horizontal hole through that pay Zone and hopefully your whole well boards in the peso interesting so your argument is pay for our software we're going to help you make more money um by spending less money as you exploit you know these you know much smaller pay zone areas there you go you'll have more well bore in the pay interesting oh what's going on there YouTube good to see you guys now imagine this you love 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consultancies so a lot of these big companies Outsource this function because it's it's uh a person has to stay up all night watching screens and they don't like to do it themselves so they Outsource the the job to workers you know who work in shifts watch the screens take the measurements in guide the wells and so that's the way it's been done historically and now we're trying to convince people that instead of Outsourcing it this menial sort of all night work you can automate the process by feeding the data directly into our software sending alerts we compute the answer instead of just you know nobody has to make a lot of judgment calls um what are you billing against like are you billing against number of miles tracked uh size of payload area like how do you build similar it's like it's a day rate okay every day you use the software you you pay a certain amount okay what if I am cheap and I want to take advantage of your software as much as possible so I just do all my work and one day that I'm done well that's possible and I encourage you to do that uh but you can't uh I mean if you're if you're for instance if you have a well that you want to know where what happened to it retrospectively you drilled it last week and you want to know whether it's in zone or out of Zone you could do that but while you're drilling the well you want constant updates so pretty much a user is gonna use it while they're in the lateral and pay us per day as you extend the well so that could be five to ten days so is it just per day rate or what if I'm using you daily across 10 Wells do I also pay a per well rate we have a Enterprise uh Edition as well that doesn't work on a day right so it works on a package and then we sit there with the this is for the majors and large U.S oil companies and they'll uh you know they know what their drilling program is going to be for the next quarter for the next four quarters really measured by what though do they know that they forecast that based off number of Wells or what's the unit measurement we have leases they have to exploit within a certain amount of time because they're they have to drill these leases once they've leased them uh to keep them under lease actually so they know and they have to contract with the drilling contractors ahead of time so they're able to come to us and say you know we're going to drill 40 Wells this next quarter you know what's the what's our package and do you charge everybody no matter the customer the same day rate uh the Enterprise has a different rate I see Enterprise gets a lot more service they have a um the the regular day rate people uh are willing to stick their credit card in and okay so it is a credit card sale it's like 10 bucks a day or something like that well yeah it's like well it's 90 a day but it's not 9-0 yeah okay okay yeah um uh and that's suitable for these consultancies that are you know have they don't have a lot of bureaucracy they don't have they're not public companies but if you're a public company you're asking a lot more of us and one of the things you're asking is compliance so we're socked to type one and type 2 compliant and we're uh uh and additionally as a as a big Enterprise you have a bunch of Automation in the field so that unlike the small consultancies you've got uh continuous data feeds coming in so you're running the software not intermittently but continuously and who's we how many folks are on your team today uh there's six of us six of you okay and how are you the engineer Founders refounding partners and an advisor and a couple of programmers and um an intern do you program oh yeah [Laughter] all right so three Engineers including you you're one of the two the three co-founders were you guys nice at the beginning you just split split the pie equally or what at the beginning yes and now we've been self-funding for the last several years so the the ratios have diverged a little bit I see so can I decode that if you decide to put in your own money you might get more Equity because you put in more of your own Capital to fund sure I see I see um okay so you are bootstrapped today 100 I love that um why'd you make that decision a lot of people choose to raise well at first we were we did go out and pitch everywhere and we got a lot of response and then um covet happened and then oil went to minus forty dollars a barrel and nobody wanted to talk to us about anything for a while and we wanted to keep the company going so we just decided to keep it going and we would maybe change it into a little um instead of being a big Vision company you know because we did this technology is pretty unique in the industry and I just don't think it's been uh you know understood yet I mean by many but we do have people who understand it but um but I think it'll eventually Prevail so that in five years nobody nobody's manually doing GPS during the old way yep it might be might not be using hard software but I think in five years people will all be doing it in this computed automated fashion if we're pioneering I understand leave it we couldn't leave the company and we decided to keep it going and we nursed along a couple of little tiny customers consultancies and um uh how many how many how many how many customers are you working with today is it still like a handful one two three yeah okay um and we never asked we never asked actually one of them is a giant you know 20 billion dollar we do have a giant 20 billion dollar company so I feel good when did you launch the business what year 97 uh nice 2017. I think I was supposed to say holy name all right 2017. startup yeah yeah six customers and I guess how do you you know one one benefit of SAS is you have predictable revenues so you can hire knowing you can pay salaries but if you're charging a day rate I guess I imagine it's really hard to predict if someone's gonna use you you know next week or not how do you try and create predictability in your Revenue stream well we haven't really had to that hasn't been you know we're not uh profitable yet so we're not you know we would like to just have a revenue stream first and I'll worry about predictability after that well don't you potentially happen to potentially have to change your pricing model that's I mean that's sort of my point right um 90 bucks a day if people can turn off or on so easy it's really hard to build a recurring stream well don't you yes of course but don't you love it as a customer the ability to use pay for just what you use well I think if that was the case you'd have more than six customers yeah well I think you have to what we're doing is you have to adopt so we're going to transition you know we're hoping to sell more of these Enterprise systems but um you know that was sort of our strategy as we crossed the little covid uh Chasm yep was to just keep the company going and just try to get users and we don't care how we get them yep how did you get your last customer can you tell me the story uh we went out and recruited a consultancy that we talked to pretty closely you know I go and visit him I didn't get them through the internet now actually I did if you meet my my very last I mean you know every few days we get a new trial and I think that our software requires a sort of a change of of workflow for a lot of these consultancies so they need a high touch experience with us and so far we're really you know one one thing I would say the arms length approach is not giving us that ability to go in and Coach them and bring them along so I think we lose customers through not understanding how to use the software understood I mean what are your goals do you think you can break a million dollars of Revenue this year no what year do you have a plan for like sort of what year are you targeting next year next year okay cool cool and uh well listen we're rooting for yeah we hope it works I love a niche I love a niche product like this so especially bootstrap so on that note here let's wrap up with the famous five number one your favorite book uh God this is one I just read about that I just read uh Julian by gorvidal okay number two is there a CEO you're following or studying oh God uh no but my favorite CEO in the world was Alan Gilmer the the CEO of embarrass interesting embarrass okay number three what's your favorite online tool for coding oh uh well we're you know I hate to say Visual Studio code you know that's all that's sort of the that's fair that's fair Hugh number four how many hours you sleep do you get every night sleep how many hours of sleep six six okay and situation married single kids married no kids no kiddos and how old are you 65. last question something you wish you knew when you were 20. it's all going to work out guys Factor technology helps folks especially consultants in the well and drilling industry understand uh how to map these Wells at scale right using a different kind of Technology they want to focus on getting more well bore in the pay Zone as Hugh said it uh he's there working with six customer half dozen customers say bootstrapped which we loved uh love launched in 2017 hoping to break a million bucks in Revenue next year we'll see what happens here thanks for taking us to the top thank you Nathan one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back-end dashboards their expenses their revenue our 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