Sowmya Murthy - SaaS Interviews with CEOs, Startups, Founders transcript
4:09PM Jul 23, 2021
Nathan Latka
Nate Joens
Neil Ball
fundamentally
modernizing
A large size deal would be anywhere from 300 450,000 to a largest customer would be around a million.
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Hello, everyone. My guest today is Sowmya Murthy. She is the chief customer officer at seven lakes technologies that leaves the go to market teams and bringing to market join a SAS leader and modernizing oil fields with a fluency in mission critical system and galvanizing changes as an organization. She served on CEOs top counter for 20 plus years. Sowmay are you ready to take it to the top?
Absolutely Nathan. Let's do it.
I'm glad you're here. All right, if folks want to follow along if j o y n.ai joined.ai. What does it mean for me to modernize an oilfield?
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, phenomenal story of entrepreneurial ism that actually out beats 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 and financing went into it because one It makes us energy independent too. It gets 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 GRI sheets. And you've got this dichotomy.
Is that a physical sheet that print off?
Yes, sir, in a mason jar in a mason jar, literally. And what's mind boggling because I've spent four years boots on the ground with hardhat. And in these trucks with pumpers. And noticing this on believable 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, all 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 is what I call it beautiful is there is no other way now for the industry to grow without so what the market is now saying to the industry is hey, look, you can't just do production, you need to show me for 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 that aren't producing as much right.
This is what your software is waiting for you launch what year the company launched
Well the company was doing service. In 2009, all the way till 2015, we this is before the first oil price depth, and we raised $20 million in series A, I came up 2015. Okay 715 and I was brought on board to be able to drive specifically marketing back then Nathan, and 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
In 2015. It was still services business, what were you selling on a consulting basis?
Yeah, great question. analytic services, because most of what the fundamental issue with the industry was there, all these siloed stovepipe, er P and legacy systems, none really talking to each other. And at the time, you had Spotfire, and those but none that understood the complexity of 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. That's where we start.
Give me a sense of how large this services beachhead was in 2015. Do you remember what for pool services revenue one?
I know, up until the point of the company, it's sold around 100 million dollars and services. So he had, of course of yours, right? So I don't have an annual number. But shuba 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,
Sowmya most SAS owners for shutting down a $5 million agency to go full time into SAS shutting down $100 million revenue line going to test a whole nother story. Like, that couldn't have been easy decision.
I'm sure it wasn't. So by the way, that was a total but you're right shivah Shivas 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 pipeline services wasn't going to solve the industry's problem because here's a two big thing that was not happening in the industry, Nathan, the industry stalwarts or incumbent software companies, not innovating, taking an 18% plus support dollars, literally showing up with PowerPoint presentations that 12-18 months later wasn't even productize so he saw that in one Holy shit. I can do data all day long. But fundamentally, if the data being captured it, which is complex readings and the skater instrumentation, big data, none of these are being put into mobile applications. I mean, imagine it was 2000 freakin 15 Yeah, industry still hadn't
Who were some of those companies who weren't the biggest companyy's?
And they still are p2 energy solutions. 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 90 employees 50 of them are engineers, because we knew there was so much innovation we needed to do and work.
Today, whereas when we spoke to folks on the other side $300 million business up to though I can't quote the exact number but I know it was in the low 20 percentage points 20% point in terms of again, I'm hesitant to quote a number because
yeah, so tell me so your software today What are companies paying on average to use the technology to SAS tool?
There are about two three buckets because of the size of the company. So 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 they the that that directly connects to reduction in their downtime downtime means they're not producing oil, and significant cost reduction in the number of people needed. Once we install our software our customers claim themselves not as each pumper reduces two hours of their day in their workload, two of the eight hours.
And how many of these folks we work with today? How many customers?
We have about 30 customers. And today we show 25. But here's what's happening the industry of those five, we 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.
Yep. Interesting. Okay. And so if I take 30 customers time, sort of a 300 $400,000, average AC, I mean, what you guys are doing? I mean, you might be close to a million a month, right?
By the way up to 300. Fine, then there are a couple ofthere, then there's a 75k. Mark. And at 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 stuff business?
Not yet? Not yet. So we are at 7 million arr. Today.
Do you can you break up to break 10-12 this year?
This year is going to be we budgeted it? No. So it won't be this year. And I'll explain a couple of reasons why last year, when we remain flat this year, what we did last year, what we did was of sitting down with the shivah, 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, 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 our customers don't know. So last year, we made a tremendous shift internally, we took 6-8 months to read again, read got ourselves another bold move from 2015 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 p to 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 production, because just because you have a Bo PD, so it's it's per day, it's per day. So their production, a barrel of oil, BOC PD is what they call it. So Bo PD so that, that basically what then it does is gives them the control to see and they're pay as you go if you 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.
How many active wells are you serving across 30 customers currently.
We 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, ah, Wells, somewhere closer to 80 80,000 miles maybe. And I think I'm under estimating Nathan, because we have ExxonMobil conocophillips. And, and by the way, conocophillips just made their biggest basin go live, which by the way, all 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.
Why are only 30 folks paying if you have 10,000 users? Shouldn't your numbers may be higher than that?
Well, it's not. So it's not so evenly spread, because ExxonMobil and conocophillips have a jet giant amount of that. And they're few other customers like finite resources and others that have a little
Wait, what is the user? Is it is Exxon Mobil company, one of their 10,000 users.
No, no. So it's it's a they have I think, 2500 or 2000. Now, so it's so it's, it's, it's the number of users within ExxonMobil. It's not just.
People, the number of people that have access to mine 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 a 10,000 users across 30 paying customers that right?
Oh, I see. I see. Okay, do you have a free option or no?
Do I have a free option to other? We do. And that's actually what we did last year is to say God, we've got to get people into a product and not charge them and get them successful. That's been a tremendous 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 that, but let me flesh out your team from 90, 50 engineers, how many folks area quota sales reps?
So we've got a 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 our price salespeople, 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.
So what's the retention rate today on the base?
It still is that it still is it? Yeah, still isn't that high 90. So it's right now at 95-97? It's if I say that because I'm I haven't gotten the latest numbers from
Is that net retention or growth?
Net retention net retention.
So thats adding back up sells about 95%. net.
Yes, yes. Yeah. And so um, so now what we did last year was brought on SAS sales leadership, we just hired a sales director. He's two weeks in and drinking from a firehose.
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 would use 100 million in services revenue, the prior four years, but you haven't raised anything since then. That's usually a negative signal, the VC market, right? Once you're on the VC track, you're not racing over 18 months, people go, something's wrong. How do you manage that risk?
And at the moment, great question. 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 Oh, my oil price crashes so that that explanations 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 joint 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 it was a soft click and 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's how we can add the extra and market because what we've built today can translate into hora horizontal spaces where Field Services and field mobility is huge. So we've been that's what we've been telling the marketplace.
Are you trying to raise more capital this year?
This year of frankly, the what we've heard back is get to 10 get to 10? Get 10.
Right, you have enough runway? Are you profitable?
Absolutely. We were cashflow 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.
For 10 to 20 million in 2015. between 2015 and 2018 are about 20 million is it still sitting in the bank?
It's still. It's still sitting in the back. Yeah.
You didn't really invest. So So you were flat at 7 million over the past 12 months fair to oil prices that are like once in 100 years what a deal was finished 2019 right? You remember
At 2019? Seven, so we've been flat.
For three years?
Zero to 3.5 3.5 to five, five to seven. And flat. Yeah.
Yeah. 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 stories. You don't have to go raise at a down round, basically?
Part of it is demonstrating our pipeline, which has been tremendous. 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 shot 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 folks saying yes, we're in put us in the process. Now what we have is a backlog of folks wanting to do the trial. And so when you see a real pipeline like that backed by VP levels, controller levels, operations supervisors and it's real, we're able to take up the marketplace and say, hey, we've got real traction.
We are certainly routing for you.
Famous five - number one favorite business book?
Okay, favorite don't have one but I'm in the middle of reading Mastery by Robert Greene. One of my biggest challenges now is how to take all the mastery that shivan I've gathered and pull that into the rest of the team right?
Number two - CEO you're following or studying?
I've been following Sara Blakely for a while and fundamentally because of the nature of how she bootstrapped and moved her organization I'm inspired by her.
Number three - What's your favorite online tool for building seven lakes?
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 oh sleep are you getting every night?
I function super on six anything less? I'm dead.
I love that. Alright, and what the situation married, single, kids?
Partnered? 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? So I mean, when you were 20?
Experiments so much more 20 year old. Sound me up. Forget about success. Just experiment.
Guys, there you have it. join.ai modernizing oilfield did that 30 customers paying on average 300 or $400,000 a year they broke a $7 million run rate back in 2018. They've been flat since and they're hoping to get back on a growth trajectory before this. They want to order $100 million in services revenue into the oilfield industry. So they certainly are in the niche. They certainly know what they're doing. The question is, and they break 10 million in ARR this year. Sowmya, thanks for taking us to the top.