How Seven Lakes Technologies Reached $7M ARR Serving 25 Oilfield Customers (Interview with Chief Customer Officer Sowmya Murthy)

Introduction and What Seven Lakes Does

Nathan Latka

00:00Hello, everyone. My guest today is Sowmya Murthy. She is the chief customer officer at Seven Lakes Technologies that leads the go to market teams and bringing to market Joyn, a SaaS leader in modernizing oilfields. With a fluency in mission critical system and galvanizing change resistant organizations, she served on CEO's top council for twenty plus years. Sowmya, you ready to take the top?

Sowmya Murthy

00:25>> Absolutely, Nathan. Let's do it.

Modernizing the Oilfield: The Industry Problem

Nathan Latka

00:27I'm glad you're here. Alright. If folks wanna follow along, it's J-O-Y-N dot A-I, joyn.ai. What does it mean, Sowmya, to modernize an oilfield?

Sowmya Murthy

00:37>> 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, 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, They grew from zero to 70 to 80,000,000,000 in a matter of few years and it was a phenomenal story. Track it all the way down to

01:12>> up to twenty fifteen, 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 and financing went into it because one, it makes us energy independent, two, it gets really 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.

01:41>> 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 of

Nathan Latka

02:02Is that a physical sheet that's printed off?

Sowmya Murthy

02:04>> Yes, sir, in a mason jar, a mason Literally

Nathan Latka

02:07in a

Sowmya Murthy

02:07>> mason And what's mind boggling because I've spent four years boots on the ground with hard hat and in these 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 has been punctuated by two, not one oil price madness, which by the way, also has inhibited our trajectory in a way. But here's

02:41>> 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

03:08>> resources. You need to now figure out technologies that allow for your production to happen without needing to go to those wells that aren't producing as much, right? This software is what is sort of Exactly.

Nathan Latka

03:26When did you launch? What year did the company launch?

Company History: Services Origins and 2015 Series A

Sowmya Murthy

03:29>> Well, the company was doing services in two thousand and nine all the way till 2015. This is before the first oil price dip and we raised $20,000,000 in series A.

Nathan Latka

03:41What year was that?

Sowmya Murthy

03:42>> 2015. 2015. And I was brought on board to be able to drive specifically marketing back then Nathan, with the intention of revenue growth 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 largest enterprise deals and also to own customer success and customer operations.

Nathan Latka

04:13In 2015, it was still a services business. What were you selling on a consulting basis?

Sowmya Murthy

04:18>> Yeah, great question. Analytics services, because most of what the fundamental issue with the industry was, they're all these siloed stovepiped ERP and legacy systems, none really talking to each other. And at the time, yeah, you had Spotfire angles, but none that understood the complexity of the industry. So 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 passion is

04:51>> around data architecture and, you know, he's, if I may call him a data geek, that's his core passion.

Nathan Latka

04:59That's where we started. Give me a sense of how large this services beachhead was in 2015. Do you remember what sort of services revenue was?

Services Scale and Why Seven Lakes Pivoted to Software

Sowmya Murthy

05:08>> I know up until the point the company had sold around $100,000,000 in services. So he had a course of years, right? So I don't have an annual number but 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 services business and actually create products that then drive as you know, better

05:39>> valuation.

Nathan Latka

05:40So, yeah, most SaaS founders are shutting down a $5,000,000 agency to go full time into SaaS. Shutting down a $100,000,000 revenue line going, that's a whole another story. Like, that couldn't have been an easy decision.

Sowmya Murthy

05:52>> I'm sure it wasn't. So by the way, that was a total, but you're right.

05:57>> 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. 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 industry's problem because here's a big thing that was not happening in the industry, Nathan, the industry stalwarts

06:24>> or incumbent

06:27>> software companies not innovating, taking an 18% plus support dollars, literally showing up with PowerPoint presentations that twelve, eighteen months later wasn't even productized. So he saw that and went, holy shit, I can do data all day long. But fundamentally, the data being captured, is complex readings and the SCADA instrumentation, big data, none of these are being put into mobile applications. I mean, imagine it was twenty freaking fifteen and industry still hadn't Who were

Nathan Latka

06:59some of those companies? Who was the biggest company?

Sowmya Murthy

07:00>> And they still are, P2 Energy Solutions, Peloton is another player, Quorum is another player. And fundamentally when we dug under the covers and started to do research, and I'm hesitant to throw a particular percentage, but let's just say we have 90 employees, 50 of them are engineers because we knew there was so much innovation we needed to do and we're

Nathan Latka

07:26Today, have 90 employees.

Sowmya Murthy

07:28>> Today, today. Whereas when we spoke to folks on the other side, 300,000,000 business P2, I can't quote the exact number, but I know it was in the low 20 percentage points 20 in terms of again, I'm hesitant to quote the number because I don't have any number. Yeah.

Pricing: Contract Sizes and Customer Tiers

Nathan Latka

07:47So so tell me, so your software today, what are companies paying on average to use the technology, the SaaS tool?

Sowmya Murthy

07:54>> There are about two, three buckets because of the size of the company. So

08:01>> a large size deal would be anywhere from 300, 450,000 to our largest customer would be around 1,000,000.

Nathan Latka

08:12A year?

Sowmya Murthy

08:13>> Yes. And

08:14>> that directly connects to reduction in their downtime. Downtime means they're not producing oil and a significant cost reduction in the number of people needed. Once we install our software, our customers claim themselves, not us. Each pumper reduces two hours of their day in their workload, two of the eight hours.

Nathan Latka

08:35And how many of these folks are you working with today? How many customers?

Customer Count and Revenue Remaining Flat

Sowmya Murthy

08:39>> We have about 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 what we consider a loss, another big company will buy another company. So we end up gaining in some other areas. Does that make sense? So our overall revenue has remained flat in 2020.

Nathan Latka

09:04Yep. Interesting. Okay. And and so if I take 30 customers times sort of a $300,000 to $400,000 average HD, I mean, what you guys are doing I mean, you might be close to 1,000,000 a month.

Sowmya Murthy

09:14>> By the way, I've that's 300 point, then there are a couple of, there then there's a 75 k mark and a 150 k mark. Usually, people fall into one of these three buckets. Yeah.

Nathan Latka

09:24So have you guys broken the million dollar a month mark yet on the recurring SaaS business?

ARR Today and Growth Targets

Sowmya Murthy

09:29>> Not yet. Not yet. So we we are at 7,000,000 ARR today.

Nathan Latka

09:34Do you can you break do think you can break ten, twelve this year?

Sowmya Murthy

09:37>> This year is going to be, we budgeted, 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 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

10:02>> SaaS. And what I mean by that is we were still falling in line with the way that customers were buying these long RFP processes, laborious

10:12>> pricing negotiations, all of these other aspects that are really not SaaS based and doesn't allow you to grow in that trajectory, right? And also on the backend, our systems weren't allowing for single deployments, true ability to push out features at least in 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 six to eight months to re again, regut ourselves. Another bold

10:43>> move from 2015 to go, oh man, we've got to go through SaaS. 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 SaaS pricing is going be completely transparent. If you go to joyn.ai today, we peg it on two factors. One, the number of active wells and your actual production because because you have

Nathan Latka

11:10a And measured basic by what?

Sowmya Murthy

11:14>> BOPD, so it's per day. So their production, a barrel of oil, BOEPD is what they call it. So

11:26>> basically what then it does is gives them the control to see and their pay as you go, you will, buy as you go, if you will, which is, I mean, it's a mind shift for them, right? Because they've never had that opportunity.

Nathan Latka

11:38How many active

11:39wells are you serving across 30 customers currently?

Users, Wells Served, and Key Enterprise Accounts

Sowmya Murthy

11:43>> We

11:45>> don't look at the wells as much as we look at the customers because wells isn't so we have about 10,000, 12,000 plus users on our system. And I would approximate

12:00>> wells,

12:02>> somewhere closer to 80,000 wells maybe. And I think I'm underestimating Nathan because we have ExxonMobil, ConocoPhillips, and by the way, ConocoPhillips just made their biggest basin go live, which by the way, the hottest place in oil and gas right now is Permian, Midland. It's where most operations are and then once we make that successful, we'll get on all of ConocoPhillips on there and

Nathan Latka

12:26Why are only 30 folks paying if you have 10,000 users? I feel like conversion rates should be higher than that.

Sowmya Murthy

12:32>> Well, it's not evenly spread because ExxonMobil and ConocoPhillips have a giant amount of that and there are few other customers like Pioneer Resources and others that have a little bit Wait.

Nathan Latka

12:45What is a user? Is it does ExxonMobil count as one of their 10,000 users?

Sowmya Murthy

12:50>> No. No. No. So it's it's they have, I think, 2,500 or 2,000 now. So it's so it's it's the number of users within ExxonMobil. It's not just equal.

Nathan Latka

13:01The number of people that have access to Joyn 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 a cost so 10,000 users across 30 paying customers. Is that right? Yes. Oh, I see. I see. Okay. Do you have a free option or no?

Free Product Tier Launched in January 2021

Sowmya Murthy

13:21>> Do I have a free option? Yes. We do. 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 our charts and then get them successful. And that's been a tremendous

13:35>> adventure. I'll call it an adventure in the last six months. And so we just launched it in January, Nathan, the free option.

Sales Team Structure and Hiring

Nathan Latka

13:42How do you actually, before I ask that, let me flesh out your team. From ninety, fifty engineers, how many folks carry a quota sales reps?

Sowmya Murthy

13:50>> So we've got fundamentally, it's been Shiva and myself who's been driving the sales and 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 advice and brought on salespeople, 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 salespeople, there's a certain expectation for us

14:19>> 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.

Net Revenue Retention at 95 to 97 Percent

Nathan Latka

14:27So what's the retention rate today on the base?

Sowmya Murthy

14:30>> It still is that.

Nathan Latka

14:31Still is in the high nineties.

Sowmya Murthy

14:33>> 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.

Nathan Latka

14:41Net retention or gross?

Sowmya Murthy

14:43>> Net retention. Net retention. Okay.

Nathan Latka

14:44Got it. So that's adding back upsells. It's about 95% net Yes. Yes. Yeah.

Signaling Risk: No New Raise Since 2015

Sowmya Murthy

14:48>> And so, so now what we did last year was brought on sales SaaS 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

Nathan Latka

15:05mean by that is you guys raised a big round of 20,000,000 in 2015. Really, was right when you were pivoting to SaaS, right? You had a 100,000,000 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 eighteen months, people go something's wrong. How do you manage that risk?

Sowmya Murthy

15:24>> At the moment 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 price crashes, so 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 gonna develop something. We

15:50>> were able to develop a component of Joyn, which we call field services management and successfully competed against Salesforce and Microsoft, which is we'd never gone and played against horizontal players before. And we competed and beat them out in there. 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.

16:19>> Let us get our SaaS traction and make the free option work and get oil and gas situated. And here is how we can add the extra market and 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 telling the marketplace.

Nathan Latka

16:39Are you planning to raise more capital this year?

Sowmya Murthy

16:43>> This year, frankly, what we've heard back is get to 10, get to 10, get

Nathan Latka

16:50to And do have enough runway? Are you guys profitable or breakeven?

Cash Flow Positive in 2018 and Runway

Sowmya Murthy

16:53>> Absolutely. We were cash flow positive in 2018. So 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. Spend the 20,000,000

Nathan Latka

17:11from 2015 between 2015 and 2018, or is some of that 20,000,000 still sitting in the bank?

Sowmya Murthy

17:15>> It's still sitting in the bank. It's still sitting in the bank. Yeah.

Nathan Latka

17:18We'd Brilliant. That's so so you were flat at 7,000,000 over the past twelve months. Fair. Two oil crises that are like once in a hundred years sort of deal. What what did guys finish 2019 at? Remember?

Sowmya Murthy

17:30>> At twenty nineteen, seven. So we've been flat in '20 For three years. Yeah. Yeah. Yeah. So we did We went from zero to 3.5, 3.5 to five, five to seven, and flat.

Nathan Latka

17:41Yeah. That's the hard story to tell. Right? It's like flat for three years. How do you get back on, like, the VC, we're growing super fast sort of story so you don't have to go raise at a down round, basically?

Pipeline and Free Option Traction

Sowmya Murthy

17:52>> Part of it is demonstrating our pipeline, which has been tremendous. The hustle has been real the pipeline has So

18:03>> been 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, once you launch it fully and you get a couple of 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

18:33>> trial. When you see a real pipeline like that backed by 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.

Nathan Latka

18:49We're certainly rooting for you. Quite a journey.

Sowmya Murthy

18:51>> Thank you. A lot

Nathan Latka

18:52of time here.

Famous Five: Books, Tools, and Personal Insights

Nathan Latka

18:53Let's wrap up with the famous five. Number one, favorite business book.

Sowmya Murthy

18:57>> 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 pull that into the rest of the team, right?

Nathan Latka

19:09Number two, there a CEO you're following or studying?

Sowmya Murthy

19:13>> I've been following Sara Blakely for a while, fundamentally because of the nature of how she bootstrapped and moved her organization. I'm inspired by her.

Nathan Latka

19:22Number three, what's your favorite online tool for building Seven Lakes and Joyn?

Sowmya Murthy

19:26>> At the moment, because of the level of collaboration, need Slack. It's been a life and game changer for us.

19:32>> Yeah.

Nathan Latka

19:33Number four. How many hours of sleep or anything every night?

Sowmya Murthy

19:35>> I I function super around six. Anything less, I'm dead.

Nathan Latka

19:38I love that. Alright. And what's the situation? Married, single, kids?

Sowmya Murthy

19:42>> Partnered.

Nathan Latka

19:43Partnered, any kiddos?

Sowmya Murthy

19:44>> I said no kiddos, no kiddos yet.

Nathan Latka

19:47No kids, okay. And can I ask how old you are?

Sowmya Murthy

19:49>> Yeah, 44.

Nathan Latka

19:5044, last question. What's something you wish you knew, Sowmya, when you were 20?

Sowmya Murthy

19:55>> Experiment so much more, twenty year old Sowmya. Forget about success. Just experiment.

Nathan Latka

20:01Guys, there you have it. Joyn.ai, modernizing oilfields. They've got 30 customers paying on average for 300,000 or $400,000 per year. They broke a $7,000,000 run rate back in 2018. They've been flat since, and they're hoping to get back on a growth trajectory. Before this, they launched all doing over a $100,000,000 in services revenue into the oilfield industry, so they certainly are in the niche. They certainly know what they're doing. The question is can they break 10,000,000

20:23in ARR this year? So, Sowmya, thanks for taking us to the top. Thank you.

20:28One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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, 1PM

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22:00See you.