StarZero All shows Try the podcast clipper →

Jun 28, 2020 · 21m · top-founders

Oil Drilling Software Breaks $1m in Revenue, but $6m+ raised?

Luther Birdzell · 11m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this interview, OAG Analytics founder Luther Birdzell discusses how his oil and gas AI software startup scaled past $1 million in annual revenue, achieved 100% customer retention, and structured high-value enterprise SaaS contracts with major North American drilling operators.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 37.9% of the talking time here. How this is scored →

Nathan as informed peer 5.8 Guest teaching 3.0 Guest disagreement 2.0 Nathan pushing back 4.7
05100:0010:0020:001:42–3:57 · Nathan as informed peer 5/10 Introducing Luther Birdzell and OAG Analytics' Core Platform Nathan presses on the common AI marketing trope and establishes the exact breakdown between consulting and recurring SaaS revenue. Luther describes their technical shift from self-service machine learning tools to pre-built industry solutions.3:57–8:02 · Nathan as informed peer 5/10 Engagement Lifecycle, Pilot Pricing, and Subscription Tiers Luther explains the harsh realities of oil drilling economics and G&A classification for software spend, gently correcting Nathan's assumption that a $300k contract is merely a rounding error. Nathan pushes back playfully when Luther claims to target both upmarket and downmarket simultaneously.8:02–10:59 · Nathan as informed peer 6/10 Customer Retention, Strategic Shifts, and Industry Seasonality Nathan cuts through the narrative around the product pivot to ask if revenue is flat year-over-year. Luther candidly acknowledges that growth fell short of expectations due to churn in smaller accounts.10:59–15:57 · Nathan as informed peer 6/10 Year-End Projections, Series A Capital, and SaaS Multiples Nathan scrutinizes Luther's 100% renewal claim against his small base of five customers and questions the headcount of 32 for an early-stage company. Luther breaks down the team structure and explains their sales cycle efficiency.15:57–20:01 · Nathan as informed peer 7/10 Burn Rate Discipline, Capital Extension, and Annual Growth Targets Nathan calculates implied monthly burn from recent funding and runway figures, directly calling out Luther's canned response about customer delight rather than answering with a hard burn figure.20:01–21:56 · Nathan as informed peer 6/10 The Famous Five Rapid-Fire Questions The interview concludes with standard rapid-fire questions, followed by a concise and accurate data recap from Nathan that earns praise from the guest.1:42–3:57 · Guest teaching 3/10 Introducing Luther Birdzell and OAG Analytics' Core Platform Nathan presses on the common AI marketing trope and establishes the exact breakdown between consulting and recurring SaaS revenue. Luther describes their technical shift from self-service machine learning tools to pre-built industry solutions.3:57–8:02 · Guest teaching 6/10 Engagement Lifecycle, Pilot Pricing, and Subscription Tiers Luther explains the harsh realities of oil drilling economics and G&A classification for software spend, gently correcting Nathan's assumption that a $300k contract is merely a rounding error. Nathan pushes back playfully when Luther claims to target both upmarket and downmarket simultaneously.8:02–10:59 · Guest teaching 2/10 Customer Retention, Strategic Shifts, and Industry Seasonality Nathan cuts through the narrative around the product pivot to ask if revenue is flat year-over-year. Luther candidly acknowledges that growth fell short of expectations due to churn in smaller accounts.10:59–15:57 · Guest teaching 3/10 Year-End Projections, Series A Capital, and SaaS Multiples Nathan scrutinizes Luther's 100% renewal claim against his small base of five customers and questions the headcount of 32 for an early-stage company. Luther breaks down the team structure and explains their sales cycle efficiency.15:57–20:01 · Guest teaching 3/10 Burn Rate Discipline, Capital Extension, and Annual Growth Targets Nathan calculates implied monthly burn from recent funding and runway figures, directly calling out Luther's canned response about customer delight rather than answering with a hard burn figure.20:01–21:56 · Guest teaching 1/10 The Famous Five Rapid-Fire Questions The interview concludes with standard rapid-fire questions, followed by a concise and accurate data recap from Nathan that earns praise from the guest.1:42–3:57 · Guest disagreement 1/10 Introducing Luther Birdzell and OAG Analytics' Core Platform Nathan presses on the common AI marketing trope and establishes the exact breakdown between consulting and recurring SaaS revenue. Luther describes their technical shift from self-service machine learning tools to pre-built industry solutions.3:57–8:02 · Guest disagreement 2/10 Engagement Lifecycle, Pilot Pricing, and Subscription Tiers Luther explains the harsh realities of oil drilling economics and G&A classification for software spend, gently correcting Nathan's assumption that a $300k contract is merely a rounding error. Nathan pushes back playfully when Luther claims to target both upmarket and downmarket simultaneously.8:02–10:59 · Guest disagreement 3/10 Customer Retention, Strategic Shifts, and Industry Seasonality Nathan cuts through the narrative around the product pivot to ask if revenue is flat year-over-year. Luther candidly acknowledges that growth fell short of expectations due to churn in smaller accounts.10:59–15:57 · Guest disagreement 2/10 Year-End Projections, Series A Capital, and SaaS Multiples Nathan scrutinizes Luther's 100% renewal claim against his small base of five customers and questions the headcount of 32 for an early-stage company. Luther breaks down the team structure and explains their sales cycle efficiency.15:57–20:01 · Guest disagreement 3/10 Burn Rate Discipline, Capital Extension, and Annual Growth Targets Nathan calculates implied monthly burn from recent funding and runway figures, directly calling out Luther's canned response about customer delight rather than answering with a hard burn figure.20:01–21:56 · Guest disagreement 1/10 The Famous Five Rapid-Fire Questions The interview concludes with standard rapid-fire questions, followed by a concise and accurate data recap from Nathan that earns praise from the guest.1:42–3:57 · Nathan pushing back 4/10 Introducing Luther Birdzell and OAG Analytics' Core Platform Nathan presses on the common AI marketing trope and establishes the exact breakdown between consulting and recurring SaaS revenue. Luther describes their technical shift from self-service machine learning tools to pre-built industry solutions.3:57–8:02 · Nathan pushing back 4/10 Engagement Lifecycle, Pilot Pricing, and Subscription Tiers Luther explains the harsh realities of oil drilling economics and G&A classification for software spend, gently correcting Nathan's assumption that a $300k contract is merely a rounding error. Nathan pushes back playfully when Luther claims to target both upmarket and downmarket simultaneously.8:02–10:59 · Nathan pushing back 6/10 Customer Retention, Strategic Shifts, and Industry Seasonality Nathan cuts through the narrative around the product pivot to ask if revenue is flat year-over-year. Luther candidly acknowledges that growth fell short of expectations due to churn in smaller accounts.10:59–15:57 · Nathan pushing back 5/10 Year-End Projections, Series A Capital, and SaaS Multiples Nathan scrutinizes Luther's 100% renewal claim against his small base of five customers and questions the headcount of 32 for an early-stage company. Luther breaks down the team structure and explains their sales cycle efficiency.15:57–20:01 · Nathan pushing back 7/10 Burn Rate Discipline, Capital Extension, and Annual Growth Targets Nathan calculates implied monthly burn from recent funding and runway figures, directly calling out Luther's canned response about customer delight rather than answering with a hard burn figure.20:01–21:56 · Nathan pushing back 2/10 The Famous Five Rapid-Fire Questions The interview concludes with standard rapid-fire questions, followed by a concise and accurate data recap from Nathan that earns praise from the guest.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 63.4% · guest 36.6%0:00 · Nathan 63.4% · guest 36.6%3:00 · Nathan 32.9% · guest 67.1%3:00 · Nathan 32.9% · guest 67.1%6:00 · Nathan 20.1% · guest 79.9%6:00 · Nathan 20.1% · guest 79.9%9:00 · Nathan 27% · guest 73%9:00 · Nathan 27% · guest 73%12:00 · Nathan 34.6% · guest 65.4%12:00 · Nathan 34.6% · guest 65.4%15:00 · Nathan 35.1% · guest 64.9%15:00 · Nathan 35.1% · guest 64.9%18:00 · Nathan 41.4% · guest 58.6%18:00 · Nathan 41.4% · guest 58.6%21:00 · Nathan 70.4% · guest 29.6%21:00 · Nathan 70.4% · guest 29.6%
Sharpest disagreement ▶ 9:57 Luther defends pivot against flat-growth label

When Nathan bluntly asks if his explanation is code for flat growth, Luther pushes back to emphasize honesty while asserting that the company is still growing despite missing projections.

 Hardest push from Nathan ▶ 18:24 Nathan rejects non-answer on monthly burn

Nathan calls out Luther's media-trained non-answer regarding customer delight and forces the conversation back to the reality of cash burn and runway management.

 Biggest teaching moment ▶ 7:12 Luther educates Nathan on oil company software budgeting

Luther explains that despite billion-dollar operational budgets, oil operators categorize software as G&A expenses, making them highly price-sensitive even to $300k contracts.

 Nathan holds their own ▶ 17:44 Nathan deduces burn rate from capital and runway math

Nathan demonstrates sharp financial command by taking the $3.5M raise and Luther's runway target to estimate an approximate $200k to $250k monthly net burn.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Luther Birdzell and OAG Analytics' Core Platform 5314 Nathan presses on the common AI marketing trope and establishes the exact breakdown between consulting and recurring SaaS revenue. Luther describes their technical shift from self-service machine learning tools to pre-built industry solutions.
Engagement Lifecycle, Pilot Pricing, and Subscription Tiers 5624 Luther explains the harsh realities of oil drilling economics and G&A classification for software spend, gently correcting Nathan's assumption that a $300k contract is merely a rounding error. Nathan pushes back playfully when Luther claims to target both upmarket and downmarket simultaneously.
Customer Retention, Strategic Shifts, and Industry Seasonality 6236 Nathan cuts through the narrative around the product pivot to ask if revenue is flat year-over-year. Luther candidly acknowledges that growth fell short of expectations due to churn in smaller accounts.
Year-End Projections, Series A Capital, and SaaS Multiples 6325 Nathan scrutinizes Luther's 100% renewal claim against his small base of five customers and questions the headcount of 32 for an early-stage company. Luther breaks down the team structure and explains their sales cycle efficiency.
Burn Rate Discipline, Capital Extension, and Annual Growth Targets 7337 Nathan calculates implied monthly burn from recent funding and runway figures, directly calling out Luther's canned response about customer delight rather than answering with a hard burn figure.
The Famous Five Rapid-Fire Questions 6112 The interview concludes with standard rapid-fire questions, followed by a concise and accurate data recap from Nathan that earns praise from the guest.

Statements from this episode (15)

Assertion Not checkable as stated
Birdzell: OAG Analytics has a 60/40 SaaS to consulting revenue split
“So we're about sixty-forty SAS to consulting today.”
Luther Birdzell Jun 28, 2020 ▶ 3:46
Prediction Not checkable as stated
Birdzell: OAG Analytics targets over 80% SaaS revenue within 12 months
“The goal now over the next 12 months is to refine that to over 80% SAS, less than 20% consulting.”
Luther Birdzell Jun 28, 2020 ▶ 3:50
Disclosure
Birdzell: OAG Analytics charges $50,000 for eight-week pilots
“So a typical eight week pilot, we're only charging 50 K for.”
Luther Birdzell Jun 28, 2020 ▶ 4:56
Disclosure
OAG Analytics charges $225k to $750k for annual software subscriptions
“Our annual subscriptions then start at about two 25, 225,000. 225,000 annually. And range between two 25 and about seven 50 depending on the scope of the engagement.”
Luther Birdzell Jun 28, 2020 ▶ 5:14
Disclosure
Birdzell: OAG Analytics average annual deal size is around $300k
“It's closer to the 300,000 for the current market.”
Luther Birdzell Jun 28, 2020 ▶ 5:40
Assertion Supported
The median drilling cost for an oil well is $8.4 million
“Median well cost today is about 8.4 million dollars per well.”
Luther Birdzell Jun 28, 2020 ▶ 6:31
Insight
Oil giants resist SaaS spending by categorizing software as G&A
“Most of them, they'll think about software, even software that directly contributes to enhances the way that billion dollars is deployed. Categorize as GNA and everybody's super sensitive to GNA.”
Luther Birdzell Jun 28, 2020 ▶ 7:34
Disclosure
OAG Analytics currently has five active enterprise customers
“So we've worked with over 30 companies in, through our history, and we are actively engaged with about five companies right now”
Luther Birdzell Jun 28, 2020 ▶ 8:07
Insight
Birdzell: Upstream oil and gas purchases software mostly in Q4 and Q1
“It is oil and gas, upstream oil and gas tends to purchase software in Q four, in Q one, little bit in Q two, and very little in Q three.”
Luther Birdzell Jun 28, 2020 ▶ 10:23
Assertion Not checkable as stated
OAG Analytics hit $1M in 2020 revenue purely from 100% renewals
“We had a hundred percent renewals this year. So we were over a million just on renewals that that we carried in.”
Luther Birdzell Jun 28, 2020 ▶ 11:23
Assertion Contradicted
Birdzell: Rice Investment Group led OAG's $3.5M Series A round
“The Rice Investment Group who was our largest investor coming into 2019, led our Series A with a three and a half million dollar financing that we closed at the end of March.”
Luther Birdzell Jun 28, 2020 ▶ 11:58
Assertion Not checkable as stated
Birdzell: 18 of OAG Analytics' 20 full-time staff are scientists and engineers
“So of our 20 full-time employees, 18 of us are scientists and engineers.”
Luther Birdzell Jun 28, 2020 ▶ 13:09
Assertion Not checkable as stated
Birdzell: OAG Analytics' sales and marketing costs are under 20% of revenue
“Our total cost of sales and marketing combined is less than less than 20% of that revenue.”
Luther Birdzell Jun 28, 2020 ▶ 15:04
Assertion Not checkable as stated
Birdzell: OAG Analytics' variable CAC is under $50k per customer
“You know, commissions, travel and whatnot you know, net out somewhere in the, it's actually, it's less than 50 K per customer is is our current rate and forecast going forward.”
Luther Birdzell Jun 28, 2020 ▶ 15:45
Disclosure
Birdzell: OAG Analytics plans to raise $2.5M to finish $6M Series A
“So our 2.5 million, which will complete a six million dollar series a that we bifurcated. We did the 3.5 with rice earlier this year. We're going to complete the other half of that.”
Luther Birdzell Jun 28, 2020 ▶ 16:55
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 2,600 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.

Try the podcast clipper Learn more