How Lucidworks CEO Michael Sinoway grew Lucidworks to $47M revenue and 400 customers in 2024.

hello everyone my guest today is will hayes he joined lucid works in 2013 as the chief product officer and was appointed ceo in 2014 he has over 15 years of product marketing and business development experience before this company lucidworks he was head of technical business development at splunk where he was responsible for defining the company's market category and key product feature sets all right will you ready to take us to the top sure thing okay so for the rare human that has not heard of lucidworks tell us what the company does and what's the revenue model are you guys pure place ass sure we are actually hybrid we do uh we deploy our technology on-prem and when i talk a little bit about the use cases that would make sense given the sensitivity of data that we work with um we also have sas offerings that we target primarily towards a retail um lucid works at its core is that we've built a search engine that combines the power of search along with machine learning and ai to really create personal experiences around data um you know our our viewpoint is that really in this day and age the only experience that matters the only user experience is the data experience and so customers deploy our technology to help online shopping customers support behind the fire while we're helping with helping support agents and researchers find information quickly and we really personalize that information both for the workplace and for uh digital shop so be specific here for a second i know you work with staples right so how do staples use you guys yeah so on their uh on their business platform uh when you're buying in bulk as a company like lucy works as a customer of staples so if i'm purchasing office supplies equipment be it you know large physical goods like printers or having to go refill cartridges and paper and all the things that we use in and around the office um they're using our technology to power the search and the browsing experience along with product discovery and merchandising and so helping you learn about new services new products in relation to the preferences and behaviors that you've uh you've shown in the past so they're connecting essentially all the metadata related to all their product features the pictures the images all that jazz and then you're i mean is there are you doing anything that enables staples to know oh it's willviewingstaples.com right now let's show him this toilet paper that he really likes he likes the five ply exactly so because if you think about kind of where the search engine sits and that whole kind of interaction we are actually capturing all the user intent we're monitoring their behavior when they look for something when they click on something add it to the cart check out and so we're processing all of those signals that we're capturing and we're using that to build personalization models and so we know it may be that you know these are the preferences for will or maybe that you know will bought printer cartridges six weeks ago and we know there's a propensity to refill every six weeks so let's promote that item to will both on the site in a mobile application or maybe we even send that insight out through an email promotion interesting monitoring and capturing really it's the telemetry data right all the data that's sort of surrounding the interaction some of our customers for instance will go down to the point of like how long did you mouse over a certain item before you clicked on it or before you scrolled past it we can take all those signals and make sense of those signals through machine learning and use them to find better precision and personalization and targeting of content to to users and then help me understand a revenue mix so over the past 12 months if you look at your total revenue what percent would you categorize as pure sas versus something else sure so um there's been a huge shift um and that we launched our sas product last year um so as my cfo and i like to say every quarter we're growing by about a thousand percent i was gonna say it's easy to go from a dollar to a thousand dollars and it really is and then from a thousand to a hundred yeah yeah yeah yeah you leave you ever every board deck starts that way right on away growth uh of course it's wildly successful but uh but you know what's interesting is um really i mean that mix is caught up and so we're at about 25 today we think we're going to be over 50 by the end of the year um when you look at our two solutions right one for the digital workplace helping kind of personalize content for employees and large organizations like morgan stanley and other kind of global organizations um they still do a lot on prem so that's why we still support the on-prem software as much as it's a pain in the ass and we've got to worry about hardware provisioning and networking well is there still kind of the sla though agreement there it actually still is recurring revenue it's just not like your traditional sas absolutely and so you know that as the valley has has done over the last few years we run everything like a sas business even our on-prem business is subscriptions um annual licenses you know health checks customer success models all of those things it just so happens where the deployment is is behind their firewall so what i mean and obviously don't be offended by this but i mean what took you guys so long to launch a sas product uh you know most people that had an a strong on-prem president were getting into sas back in like 2010 2011-ish yeah you know in our space both the volume of data that we deal with and the sensitivity we do a lot of healthcare a lot of financial services these are sort of the late majority when it comes to adopting technologies like cloud most of them are just now starting public cloud initiatives and so the focus of our go to market was both around sort of highly complex organizations with massive amounts of information that they needed to surface and personalize and highly sensitive information so again healthcare financial services telco it is changing and in fact you know a year ago you couldn't even mention the word cloud inside of a bank literally you'd be thrown out now most banks that we're engaged with are starting pilots with various public cloud providers private clouds and so the world is shifting so for us it was really about just timing the market correctly um you know we wanted to go through a bit of a micro services re-architecture before we truly launched a sas platform so we waited a year when other folks in our space were kind of starting to get there um but now we're full steam ahead and we're even seeing the more legacy use cases and the legacy kind of industries if you will are starting that sort of late majority adoption of things like public cloud and sas tools and so you know it's sort of aligning perfectly with our roadmap so moving forward for the rest of this i'd love to just focus on the cohort right the sas cohort that you guys are working on and so with that in mind give me a general sense of what you're targeting here what's your sweet spot in terms of what the average customer is paying per year to use the tech would you say yeah um good question i mean we um you know we typically target kind of the global 2000 so we're not interested in like putting you know like there's these little products like algolia or something like that where you're going to stick something on a web page and surf through 100 pages or you know all you know every tiny site out there or tech techcrunch or whatever you know for us what we're looking for is more multi-dimensional and so you know customers of ours who have worldwide deployments of content in multiple languages multiple geographies multiple gdpr gdpr requirements are definitely kind of right there in our sweet spot so our typical order size is you know between kind of 250 to 500 000 um on the average with you know multiple customers well into the seven figures and these are annual uh licenses using that market i mean so would you say is it fair and accurate to say it's it's really difficult to get started with the lucid works products unless you can unless it's at least a quarter of a million kind of acv um i mean to be honest like if you have a smaller order of problem you know there are other vendors that we might really we might refer you to right it really depends on not exactly where you are today but what is the roadmap of all the problems that you're trying to solve if you're saying look i've got a simple search problem on a simple site i want to check this box and move on to other things then yeah i mean there's there's products like algolia and swift hype that we think do great um when you're looking at like you know large government deployments large global enterprises even if we're biting off that small piece like we'll do transactions that you know typically not below like a 48k but somewhere in that range um it's really looking out to the road map of where do we kind of go from here and how do we partner together um and that's where we're most interested in getting engaged we want to you know build meaningful relationships we're not just in here to transact and leave put this on a timeline i know you took over kind of 2014 but when was the company launched what year company was launched um in 20 2008 on a completely different business hell of a year by the way to launch a company oh it was it was it was they they learned yes now and you guys have capitalized yourself so what's the updated number how much have you raised to date yeah so um let's see uh you know from the time that i've come in um i'm just kind of doing quick back...