Seven Lakes Technologies Revenue, Valuation & Funding (2021)

hello everyone my guest today is swemia murthy she is the chief customer officer at seven lakes technologies that leads to go to market teams and bringing to market join a sas leader in modernizing oil fields with a fluency and mission critical systems and galvanizing change-resistant organizations she served on ceo's top council for 20 plus years so um you ready to fix the top absolutely nathan let's do it i'm glad you're here all right if folks want to follow along it's j-o-y-n-a-i join.ai what does it mean swimming to modernize an oil field great question so for for fundamentally oil and gas industry has two parts one so super technologized that they're drilling in ways that are uh that has changed the entire oil and gas industry and made us the united states more energy independent a phenomenal story of entrepreneurialism that actually outbeats even technology industry right they grew from zero to 70 to 80 billion in a matter of few years and it was a phenomenal story now track it all the way down to up to 2015 that's the evolution happened at the drill bit but when you move past the drill bit the market there was funded with a lot of private equity and a lot of funding uh and financing went into it because when it makes its energy independent two it gets um uh really the there's a way for upstream oil and gas to move in now what ended up happening is for all the places around production human resources were being used they were using grease sheets and paper to be able to drive millions if not billions of oil production data from the place of where the oil is produced to the office space so your entire inventory and production and everything else is run on grease sheets and you've got this dichotomy is that a physical cheap that's printed off yes sir in a mason jar in a mason jar and and what's mind-boggling because i've spent four years boots on the ground with hard hat and in these uh trucks with pumpers and noticing this unbelievable technology that's happening right next to a mason jar right and so i'm giving you that picture because what now fast forward in the last five years this industry's been punctuated by two not one oil oil price madness which by the way also has inhibited our trajectory in a way but here's the thing what's beautiful about this if i may call it beautiful is there is no other way now for the industry to grow with that so what the market is now saying to the industry is hey look you can't just do production you need to show me free cash flow you need to be able to demonstrate operational efficiency which means what you can't just when the oil price goes down just you know take out the human resources you need to now figure out technologies that allow for your production to happen without needing without needing to go to those wells that are um that aren't producing as much right this is what your software is sort of when did you launch what what year the company launched well the company was doing services in 2009 all the way till 2015 we this is before the first oil price dip and we raised 20 million dollars in series a i came to 2015 okay 2015. and i was brought on board uh to be able to drive specifically marketing back then nathan and with the intention of uh revenue growth uh towards analytics and the market shifted and a whole new world opened up for me as well as seven lakes and my role over the years has shifted from marketing to owning all of sales and bringing in our uh largest enterprise deals and also to own customer success and customer operations in 2015 it was still services business what were you selling on a consulting basis yeah great question um analytics services because uh most of what uh the fundamental issue with the industry was there all these siloed stovepiped erp and legacy systems none really talking to each other and at the time yeah you had spot firing those but none that understood the complexity of uh the industry so we our bread and butter has always been understanding the core structures of all the systems data structures of the systems underneath in fact our ceo on his his passion is around data architecture and you know he's a if i may call him a data geek that's that's his core passion um that's where we started give me a sense of how large this services beach that was in 2015 do you remember what school of services revenue was um i know up until that point uh the company had sold around 100 million dollars in services so he had uh of course of years right so i don't have an annual number but uh shiva had already accomplished what many entrepreneurs would love to see and was doing it in a services business and his intention at the time was come on let's productize so we can get out of the you know services business and actually create products that then drive as you know better evaluation so most sas owners are shutting down a 5 million dollar agency to go full time into sas shutting down 100 million dollar revenue line to bonus that's a whole nother story like that couldn't have been an easy decision i'm sure it was and so by the way that was a total but you're right uh shiva shiva's choice to go and do this and by the way this is one of the reasons i love working with this guy he's just phenomenal um uh he makes some of the most maverick bold moves because at the end of the day what he cared most about and what he saw coming down the pike was services wasn't going to solve the cup industry's problem because here's a two a big thing that was not happening in the industry nathan the industry stalwarts or incumbent uh software companies not innovating taking in 18 plus support dollars literally showing up with powerpoint presentations that 12 18 months later wasn't even productized so he saw that and went holy i can do data all day long but fundamentally if the data being captured which is complex readings and the scada instrumentation big data none of these are being put into mobile applications i mean imagine it was 2 000 freaking 15. yeah and industry still hadn't who were some of those companies who was the biggest company and and they still are p2 uh energy solutions um uh peloton is another player quorum is another player and and fundamentally when we dug under the covers and start to do research and i'm hesitant to throw a particular percentage but let's just say we have about 90 employees 50 of them are engineers because we knew there was so much innovation we needed to do and we're today today yeah whereas uh when we spoke to folks on the other side 300 million dollar business p2 though i i can't quote the exact number but i know it was in the low 20 percentage points a 20 point in terms of again i'm hesitant to quote a number because i don't know yeah so tell me so your software today what are companies paying on average to use the technology um they're about uh two three buckets because of the size of the company so uh a a large size deal would be anywhere from 300 450 000 to a largest customer would be around a million a year yes yes and and uh they the that that directly connects to reduction in their downtime downtime means they're not producing oil and uh significant cost reduction in the number of people needed uh once we install our software our customers claim themselves not us uh each uh pumper reduces two hours of their day in their workload two of the eight hours and how many of these folks are you working today how many customers um we have about uh 30 customers and today we show 25 but here's what's happening in the industry of those five we've really actually lost two because three others have merged and um what we consider lost another big company will buy another company so uh we end up gaining in some other areas does that make sense so our overall revenue has remained um uh flat in 2020 yep interesting uh okay and and so if i take 30 customers i'm sort of a 300 400 thousand dollar average hd i mean what you guys are doing i mean you might be close to a million a month right by the way 304 and then there are a couple of uh uh there then there's a 75k mark and a 150 mark usually people fall into one of these three buckets yeah so have you guys broken the million dollar a month mark yet on the recurring sas business uh not yet not yet so we are at 7 million arr today can you break do you think you can break 10 12 this year uh this year is going to be uh we've budgeted it no so it won't be this year and i'll explain a couple of reasons why last year when we remained flat this year what we did last year what we did was uh sitting down with shiva we said you know what we're going enterprise and this is the part of the story i wanted to share up until last year nathan we were doing we went from services to enterprise not true sas and what i mean by that is we were still falling in line with the way the customers were buying these long rfp processes laborious you know uh uh pricing negotiations all of these other aspects that are really not sas based and doesn't allow you to grow in that trajectory right and also on the back end our systems weren't allowing for single deployments true ability to push out features at least a monthly reason because we were being held back by hey our customers don't move so last year we made a tremendous shift internally we took 68 months to re again re-gut ourselves another bold move from 2017 to go oh man we've got to go through sas so three big things we changed we completely upended our pricing it was traditional p2 what our market does today we said you know what forget that sas pricing is going to be completely transparent if you go to join ai today we peg it on two factors one the number of active wells and your actual uh production because just because you have one product by what uh bopd so it's it's uh per day it's a per day so their production a barrel of oil boepd is what they call it so yeah bopd so that uh that basically what then it does it gives them the control to see and they're pay as you go if you'll buy as you go if you will which is i mean it's a mindshift for them right because they've never had that opportunity how many active wells are you serving across 30 customers currently um we don't look at the wells as much as we look at the customers because wells is an um so we have about 10 000 12 000 plus users on our system and i would approximate um um ah wells uh somewhere closer to 80 80 000 wells maybe and i think i'm underestimating nathan because we have exxon mobil conoco phillips and and by the way conoco phillips just made their biggest basin go live which by the way al the hottest place in oil and gas right now is permian midland it's where most uh operations are and then once we make that successful we'll get on with all of conical phillips on there and uh why are why are only 30 folks paying if you have 10 000 users that the conversion rate should be higher than that well it's uh not so it's not so evenly spread because exxon mobil and conical phillips have a giant amount of that and there are a few other customers like pioneer resources and others that uh have a little wait what is a user is it is exxon mobil count as one of their 10 000 users no no so it's it's uh they have i think 2500 or 2000 now so it's uh so it's it's it's the number of users within exxon mobil it's not it's people the number of people that have access to this coin inside of exxonmobil yes yes i see okay but a bunch of okay got it so so if you so instead of the number of users how many are that's across so ten thousand years across 30 paying customers is that right yes oh i see i see okay do you have a free option or no do i have a free option we do and that's actually what we did last year is to say god we've got to get people into our product and not charge them and get them successful and that's been a tremendous uh adventure i'll call it an adventure in the last six months and so we just launched it in january nathan the free option how do you actually before i ask that let me flush out your team so 90 50 engineers how many folks carry a quota sales reps so we've got uh fundamentally it's been shiva and myself who's been driving uh the sales and we we knew last year we said we can't we've got to bring somebody else on we knew but here's the thing in the past what we've done was taken uh advice and brought on sales people but because we didn't have like the 98 customer retention rate and the referrals and all these other aspects when you bring in enterprise sales people there's a certain expectation for us to be successful for them to even feel so we weren't able to retain them and we didn't want to make that costly mistake again right what's the retention rate today on the base it still is that it still is yeah still is in the high 90s so it's right now at 95 to 97 it's it i say that because i'm i haven't gotten the latest numbers from my team net retention or growth uh net retention networking got it so that's adding back upsells it's about 95 networks yes yes yeah and so um so now what we did last year was brought on sales uh sas sales leadership we just hired a sales director he's two weeks in and drinking from a fire hose that's very cool let me ask you a question you have a bit of signaling risk in the marketplace you have to manage what i mean by that is you guys raised a big round 20 million in 2015. really that was right when you're pivoting to sas right you had 100 million in services revenue the prior four years but you haven't raised anything since then that's usually a negative signal to the vc market right once you're on the vc track if you're not raising over 18 months people go something's wrong how do you manage that risk um at the moment uh great question and i don't know that i have the perfect answer for you at the moment what we're on the hook to demonstrate what we know that we've been given a bit of leeway is punctuated by two all price crashes so that that explanation's there so what we are doing so to your question last year we shifted and said look we're not just going to bring it to oil and gas we're going to develop something we we were able to develop a component of join which we call field services management and successfully competed against salesforce and microsoft we just we've never gone and played against horizontal players before and we competed and beat them out in there and and it was a soft click in salesforce and so that gave us a taste and also the ability to go back to the vc market and say hey we know successfully how to go into the horizontal space let us get our sas traction and make the free option work and get oil and gas situated and here is how we can add the extra and market because what we've built today can translate into horizontal spaces where field services and field mobility is huge so we've been that's what we've been uh telling the marketplace and are you planning to raise more capital this year uh this year uh frankly the what we've heard back is get to ten get to ten get to ten do you have enough runway are you guys profitable right now absolutely we were cash flow positive in 2018 so um i will say we've got an extremely awesome cfo and ceo who've been very diligent in ensuring that we aren't adding more people and cost without the ability to demonstrate 10 to 20 million from 2015 between 2015 and 2018 or some about 20 million so sitting the bank it's still sitting in the bank it's still sitting in the bank yeah so so you were flat at seven million over the past 12 months fair two oil prices that are like once in a hundred years sort of deal what did you guys finish 2019 right do you remember uh 2019 um seven so we've been flat under 20 years yeah yeah yeah it's like we did uh we went from zero to three point five three point five to five five to seven and flat yeah yeah that that's the hard story to tell right it's like flat for three years how do you get back on like the bc we're growing super fast sort of story so you don't have to go raise at a down round basically um part of it is demonstrating our pipeline which has been tremendous um uh the hustle has been real and the pipeline and the pipeline has been real right so when we did the turn in the marketplace on going with the new product we ourselves were astounded when we saw that the free option before we even hit into 2021 or even launched the product we had two dozen real solid companies saying if you once you launch it fully and you get a couple of uh folks saying yes we're in put us in the trial so now what we have is a backlog of folks wanting to do the trial so when you see a real pipeline like that backed by uh vp levels controller levels operation supervisors and it's real we're able to take up the marketplace and say hey we've got real traction this is we're certainly we're certainly rooting for you it's quite a journey here let's not upload the famous five number one favorite business book okay favorite don't have one but i am in the middle of reading mastery by robert greene one of my biggest challenges now is just how to take all the mastery that shiva and i have gathered and pulled that into the rest of the team right now ceo you're following or studying uh i've been following sarah blakely for a while um fundamentally because of the nature of how she bootstrapped and uh moved her organization i'm inspired by her number three what's your favorite online tool for building seven lengths and join um at the moment because of the level of collaboration we need slack it's been a life and game changer for us yeah number four how many hours of sleep we're getting every night i i function super on six anything less i'm dead i love that all right and what's your situation married single kids partnered with videos i said no kiddos no kiddos yet no kids okay and can i ask how old you are yeah 44 44 last question what's something you wish you knew i mean when you were 20 experiments so much more 20 year old samia forget about success just experiment guys there you have it join.ai modernizing oil fields they've got 30 customers paying on average about 300 or 400 000 per year they broke a 7 million run rate back in 2018 they've been flat since then they're hoping to get back on a growth trajectory before this they launched all doing over 100 million dollars in services revenue into the oil field industry so they certainly are in the niche they certainly know what they're doing the question is can they break 10 million in aor this year so um thanks for taking us to the top thank you one more thing before you go we have a brand new show every thursday at 1 pm 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 arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 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