SmoothSpan Blog

This is part 3 of my interview with LucidEra CEO Ken Rudin.  If you missed Part 1 or Part 2, be sure to go back and check them out.  As always in these interviews, my remarks are parenthetical, any good ideas are those of Ken Rudin, and any foolishness is my responsibility alone.

How does SaaS affect the sales process?  Walk us through a typical SaaS sales cycle from initial lead generation to closing.

Ken:  Our sales cycle consists of meeting, often via teleconference and showing the demo.  90% want a 10 day free trial.  Our trial actually improves your sales organization and delivers value.  It’s on your own data so it’s real value.  During the trial, every other day we send the customer a killer report, which contains a cool insight about your business.

Bob:  How much do you need to invest to make your trial run on the customer’s real data?

Ken:  Customers using Salesforce.com we can get running very quickly.  Most of our customers are there.  We have a prebuilt connector to SFDC.  We can can also talk to Goldmine or Siebel CRM On-demand.  We’ll take their data in a spreadsheet for all tier 1 solutions.  On the finanacial side we have connectors to Oracle Financials and NetSuite.  In terms of customization, we can handle custom fields.  We need a little work if we have to remap some fields.

Bob:  (Being able to run a trial that is essentially a full install is a huge competitive advantage for Lucid Era.  It means there is almost no friction involved in getting the customer to see what the product means for them.  This is the sort of model most enterprise software companies only dream about.)

What platform is your software running on?  (e.g. Solaris+Oracle, etc.)

Ken:  Lucid Era is almost all Java except some core C++ for high performance.  It’s Linux and all open source.  We use Broadbase’s database which is good at queries and analysis.  It’s a column store.  We bought and open sourced it.  It’s now LucidDB.  We also run an open source OLAP engine called Mondrian.

Bob:  (This was interesting news.  It seems that LucidEra didn’t just take the tried and true MySQL route.  It isn’t surprising, because Business Intelligence places some radically different demands on the database.  But this marks the first company I’ve talked to that uses the new column store technology.  This is a technology that Michael Stonebreaker and other database luminaries have been talking about a lot recently.  David DeWitt offers a good overview of the technology.  Suffice it to say that most existing databases access the data by rows, while a column store can give you rows, it works on columns.  This yields higher performance for a lot of operations because you’re not really ready to look at rows until you’ve done a lot of column processing.  For example, to find all sales transactions > $100,000 is a matter of looking at the sales transaction column.  This is an over simplification, but the benchmarks are promising.  LucidEra has also gone after an OLAP engine, which is similar to technology Arbor pioneered that was acquired by Hyperion.  It’s another alternative to row-based databases that is ideal for slicing and dicing data in a lot of different ways when you need maximum flexibility and don’t necessarily know what questions you will ask in advance.  It’s also interesting to note that they bought the Broadbase technology and open sourced it.  This creates a community around the code so Lucid Era doesn’t have to bear the full burden of support and development by themselves.  )

How big was your Engineering team and how long did it take?

Ken:  Significant investment was made.  Bigger than many others.

Bob:  (Ken was very cagey about this one.  I have a hunch he doesn’t want to make it easy for competitors to triangulate on what it takes to build a knock off.  Given the technologies he has described, I have no trouble believing LucidEra has some technology barriers to entry.)

Is Lucid Era a multitenant app?  Why is multitenancy so important for SaaS companies?

Ken:  We are totally multitenant.  It’s important to me, not so much the customer.  It keeps costs down.  We share operational resources internally.  We have the option to put a customer on a box.

Bob:  (This is a pretty standard answer for a new SaaS company.  It is important to keep operational costs down.  A SaaS company has to achieve a 16:1 improvement in cost of operation versus on-premises to be competitive.  That’s a tough hurdle, and one that most people are surprised at when they see it quantified as 16:1.  Multitenant helps tremendously, but there’s a lot more going on than that.  It’s also interesting that they offer the option of putting a customer on their own box, presumably at a higher cost.  All SaaS companies have multiple instances, though they don’t like to talk about it much.  This is not to say they give customers the option of their own instance as Lucid Era does.  Rather, it’s an operational convenience for the SaaS vendor.  Multiple instances may be used to stage new versions of the software, to split up loads, or even to make sure there are instances available at more than one datacenter in case disaster strikes.  Depending on the economics, it seems to me that it would make sense to let customers pay more for an instance if they’re particularly paranoid about keeping their data separate.)

Conclusion

Lucid Era is a fascinating business.  They’re in an interesting place now that the old school BI vendors have largely been bought.  Even more interesting is their approach of delivering a solution rather than a tool, and getting the customer up and running as the first stage of the “sales” cycle.  Add to that some radical new technology in the form of the column store LucidDB, and we’re seeing a total reinvention of what BI means.  We’ll see more of this sort of thing where conventional vendors are relegated to the Tools category and the SaaS vendor is providing finished solutions that can deliver value extremely quickly.

Let’s keep an eye on these guys and see where it leads!