Mycroft revenue, CEO Michael Lewis, team size, customer count, churn, and more in 2022.

hello everyone my guest today is michael lewis he's the founder of stella stellar semiconductor which was sold to broadcom in 2000 then went on to found cryptic studios which was sold to atari in 2008. for the past decade michael has been deeply involved in charitable efforts through the onspar foundation for me the lewis charitable foundation and now is running mycroft.ai michael you ready to take us to the top sure let's do it alright so first off you were not you were not leading mycroft when i lasted my episode with mycroft so something changed they pulled you out of charitable giving and back into the business from an operating perspective how'd they do it that's right um well uh to be honest i was a backer on the mark ii kickstarter project and so i've been following my craft for a while and when josh reached out and was looking for some additional high-level help at the company i took a look at it and i decided that this was a good time in my life and mycroft's mission merges you know perfectly with the work i was doing at my foundation and uh and the company itself the technology the uh working with hardware working with software working with community that's all in my work experience as well and i'm really passionate about all those things so um it was really just a perfect combination of things that uh that got me interested so for those people that missed the first episode just give us the quick keynote here what does mycroft do what do people pay you for ah right so mycroft makes a privacy first open source voice assistant so what's uh what's really important about this is that we allow the users to control their own experience so we don't consider the users our users we're building a community of people and this community includes people who are developers people who are assist us with con contributing their data and uh and people who just want to have a privacy experience uh in their own home you know putting something that's always listening in home can be a very invasive feeling uh experience and we want people to feel safe and comfortable in their homes and uh privacy is you know is something that you should be able to have in your home so michael you're saying this your song is directly to consumers moms and dads at home or is it a b2b model it's a bit of both to be honest we're a small company and so we're starting off by direct to consumer we're going to fulfill our latest kickstarter and then we'll continue to sell units direct to consumer but i'm calling them developer kits at this point because to be honest the price point isn't really at the level where we could uh realistically ship them to consumers but the functionality is totally there so we want to be able to get to early adopters and and down the road we expect to partner with oems to provide our assistant technology their own devices including smart speakers um and uh you know really refrigerators i still understand what you're selling right so so what are you actually selling to the consumer i have my own house here what are you selling to me okay so a smart speaker is basically something just like the um the amazon you know home uh assistant or uh oh sorry google home uh or the uh the amazon echo so this isn't just like an sdk you're selling to me it's a physical piece of hardware yes yeah so initially the mark ii is a physical piece of hardware it embodies our uh our software and connects to our platform it's basically it's an off-the-shelf device that just works okay and it's i consider it a reference device for other oems who want to produce devices that are like it uh or that just incorporate voice technology in their own products so while we will sell it direct to consumers we're using this to prove out our technology to demonstrate that it works and to um and to serve as a reference design for oem who want to come in and integrate it in with their own technology so what does it cost you to produce one of these pieces of hardware one speaker uh about a hundred bucks right now okay and what do you retail it for that's just the hard costs um it's not set just yet um but um you know we're not due to really ship it i think until the second or third quarter next year that's i think our realistic timeline guys are you guys so we have a great revenue today um we have um we're effectively pre-revenue right now we have not tried to monetize any of our customers we have about 50 000 people who are signed up to our system and are using our system but uh we are not actively trying to monetize them yet because quite frankly the experience isn't where we want it to be we're not marketing to the audience right now we're we're more working with developers and uh people who want to um you know add to the system and improve the system and who are interested in integrating it in the future with their own products got it okay so 50 000 people it's kind of an open source ish like platform you have your own piece of hardware have you guys bootstrapped this or raised and if you've raised how much uh minecraft over the last five years has raised over five million dollars in crowdfunding uh and uh very favorable loans but we've never raised an institutional round so that's a favorable loan uh basically it's a long-term loan with very low rates uh and that's basically a balloon payment at the end so what would you consider low are you talking like five or six percent yeah exactly and and why did how i mean how does a bank get comfortable loaning to you in your pre-revenue what are they loaning against what's the collateral it's uh these actually weren't from banks um one of them was actually from a previous investment deal that kind of went sour before i got involved and as a compromise they agreed to convert the part of the investment that had you know that had been made into a loan rather than keeping it as equity another big part of loan is actually from my own foundation because mycroft's mission so closely matches what my foundation is interested in i was able to convince the board of directors to make a sizeable investment in mycroft uh purely because of of the mission so how much of the five million has been debt that has to be paid back um offhand it's um a little under two million okay got it so nice nice mix here now what i mean you guys have also a lot of investors right according to crunchbase when you have 47 investors that have put in the five million dollars your cap table must be a wreck uh oh it's more exciting than that uh we have over 1500 investors because we went through a crowdfunding campaign a couple years back so how do you manage that i mean is your cap table literally 1600 people on it yep the basically we are very forthcoming with our investors we put out a monthly newsletter try to keep them informed as to what's going on we've never had any problems uh to date um and um yeah i mean it's it's really about being transparent with what's going on in the company and setting the proper expectations i mean but so for example if you're going how much are you trying to raise right now institutional uh our target's five million dollars okay um so i mean one of the things that obviously any institution is going to come in and look at is the current cap table and is there any risk and one of the risks they'll look at is well if one just one of these 1600 investors holds out on some decision it could take the whole company essentially how do you convince the vc that you potentially work with those on this new round that's not a risk well there's a couple ways um first of all we have two classes of shares we have voting shares and non-voting shares so all this um the cohort of the crowdfunding investors are all non-voting chairs so that's one issue secondly as i said you know we keep our investors happy but um you know there are ways around us we may have to you know do some uh creative um uh corporate uh restructuring um you know in the same way that maybe an angel fund uh creates uh a sort of um company that uh serves all of its investors we may you know end up creating a a sub entity that um you know uh encapsulates the crowdfunding investors and to simplify the you know the cap table at the top level um that's just just one idea how do you i mean um this is sort of a direct question but like why are your investors happy i mean your first seed round was back in february of 2016 with tech stars and star power partners about four hundred thousand dollars raised here we are four years i need product crowdfunding even earlier than that in 2015. here we are four or five years later and you still i mean there's there's nothing's been shipped your pre-revenue i mean these guys can't be happy the well it it depends on you know why you get into this right a lot of people have in fact most of the investors that we have today have gotten involved with minecraft because they believe in the mission they believe in what we're trying to do and experienced investors like tech stars know that startups have uh they can encounter dumbling blocks right i've uh i've been fortunate to avoid some of these in my previous companies and i've full-on run right into them and others and the you know hitting just one stumbling block can kill a startup right hitting two at the same time you know could be you know an instant death blow but um mycroft has persisted because the investors there's there are just so many people who are um who want what we want right who want a privacy respecting voice assistant because...