LucidLink CEO: ‘We’re Building Towards An IPO’ After $75M Round
‘We raised money to accelerate our business growth, not because we were in need of raising money for runway. And that’s fundamentally different. I’ve got friends who run companies where their runway was getting short. They were in a position where they had to raise money, and they got a very different deal than we got. The reason we did it is to accelerate,’ says LucidLink CEO Peter Thompson.
Funding For Future Growth
For LucidLink, a provider of storage technology that allows real-time collaboration primarily for the media and entertainment industry and other heavy data users, the new round of funding it closed just before Thanksgiving is an opportunity to pour fuel on the fire of growth with an eye toward a potential IPO, according to CEO Peter Thompson.
Thompson, in an exclusive meeting with CRN, said that the company’s new $75-million funding round, which brings total funding in the San Francisco-based company to $90 million, comes at a time of intense growth for the company.
“We raised money to accelerate our business growth, not because we were in need of raising money for runway,” Thompson said. “And that’s fundamentally different. I’ve got friends who run companies where their runway was getting short. They were in a position where they had to raise money, and they got a very different deal than we got. The reason we did it is to accelerate. And the reason we are successful is there just aren’t that many companies who are experiencing growth during these times.”
LucidLink, founded in 2016, wants to eliminate the need by content creators, particularly media and entertainment companies, to pass massive files back and forth between multiple users who are collaborating using the data in those files. Most technologies, Thompson said, involve sending an entire file across the Internet using a service like Google Drive or Dropbox, or even sending data on a hard drive via FedEx.
“Every single solution that I personally have seen and we’ve evaluated over the years are focused on either delivering the file faster or making replicas of that file in different places and trying to preempt the need to access the file,” he said. “What LucidLink is doing is giving direct access to where it is stored. And we are doing a combination of things that allow you to stream the reads and writes to provide performance as if it’s local.”
Given that LucidLink cannot actually see the encrypted contents of the files its customers access via the company’s technology, it is now looking to expand to new areas, Thompson said.
“I know companies who have literally gotten rid of their NAS devices and their file servers and said, ‘We’re just going to put everything on LucidLink,’” he said. “So we believe that’s our end game. It’s a really smart way to leverage the cloud while keeping the way people work intact.”
There’s a lot going on at LucidLink, including looking at strategic priorities for 2024 and maybe someday an IPO. To learn more, keep reading CRN’s full conversation with Thompson.
LucidLink is a storage collaboration platform. And by that I mean that we’re a collaboration platform for storage that’s differentiated from all of the other collaboration platforms out there which are for individuals or for messaging or for these kinds of things. We are focused on teams who are collaborating, usually using a set of tools and a workflow. The underlying data that is essential for that collaboration to take place until now had to be moved from place to place, depending on which tool is used, where your team is, and what part of the workflow it’s in. We are making it a lot easier with one single source of truth that any of these tools can use. And we’ve addressed the issues around the performance of the tool or the individual accessing that data.
How does LucidLink work?
Essentially, we allow you to mount the cloud in a way that operating systems are used to seeing, software packages are used to seeing, and people are used to working with. That used to be in an office on a LAN, going to a file server or a NAS. But now they can be anywhere, and go to the Lucid mount point, or the ‘L drive,’ depending on what system you’re on. You use it like it’s a local drive.
LucidLink handles all of the complexity around three primary things. One is performance, making the application treat it like it was local storage, not having to download entire files or entire sets of data first. Users don’t have to think about anything. They don’t have to learn a new tool or break their workflow or their muscle memory or any of that kind of thing. They can just use it like plugging in a drive.
Secondly, we handle contention between collaboration users who may be on different sides of the U.S., with different connections, different internet connection speeds, different platforms, yet need to collaborate without stepping on each other.
And third, because we’re utilizing cloud resources as the back end and doing this over the internet, we add a layer of security. We have a zero knowledge model, which means that only our customers have everything they create, whether that’s the file content, folder, structure, file names, metadata. That all gets encrypted on the customer side. They have the only key that will decrypt it, and they have full control over who gets access to those keys. LucidLink doesn’t. The cloud provider doesn’t. And we’re the only ones doing this type of file service with full encryption. The cloud providers provide encryption, but it’s encryption at rest, not necessarily encryption throughout the entire lifecycle of the data.
Aren’t there several providers of cloud-based file systems that do something similar?
They are attacking the same problem, but in very different ways. Every single solution that I personally have seen and we’ve evaluated over the years are focused on either delivering the file faster or making replicas of that file in different places and trying to preempt the need to access the file. What LucidLink is doing is giving direct access to where it is stored. And we are doing a combination of things that allow you to stream the reads and writes to provide performance as if it’s local.
The issue is that if you do one of those things, essentially you’re still moving entire sets of data around or entire files around. If you want to work on a project, you might need 10 terabytes worth of data. And somehow it’s got to get to you first. Even if you need a portion of it, you might have to wait for hundreds of gigabytes to download before you can use it, and then it needs to be synchronized back or reconstituted back. So technologies like file sync and share, or file acceleration technologies like FTPS (file transfer protocol secure) and UDP (user datagram protocol) are all figuring out how to get the data faster. What we’re saying is, we’ll give you direct access to the data where it is, and you only have to access the portions that you need, as you need it. No one else was doing that.
LucidLink just unveiled a new $75-million round of funding. Why the extra funding?
Early this year, we saw that our business has been taking off with nearly 5x ARR (annual recurring revenue) growth in the last two years. And even under current macroeconomic headwinds, our business wasn’t slowing. The rate of growth slowed a little slightly, especially in Q4 and Q1. Now we’re back to full growth. Our other metrics have been fantastic. We’ve seen 140 percent NRR (net revenue retention) rates. So what we said is, with so many companies pulling back and our business fundamentals strong, this is a time for us to really double down and keep doing what we’re doing. We’ve got a little bit of white space to increase that gap to make our mark while everyone is being cautious. What we’re doing is working, so we can be more aggressive. So we thought, ‘Alright, that’s great, but is now really a good time to raise money?’ With all of the compression of valuation and the pullbacks, investors not investing as much, we just didn’t know if this would be a good time to raise money. So we decided to test the waters. And we were blown away by how strong the feedback was from investors coming to us saying, ‘Hey, we heard you out in the market. We really want to have a chat with you.’ So it turned out to be a good thing for us.
We raised money to accelerate our business growth, not because we were in need of raising money for runway. And that’s fundamentally different. I’ve got friends who run companies where their runway was getting short. They were in a position where they had to raise money, and they got a very different deal than we got. The reason we did it is to accelerate. And the reason we are successful is there just aren’t that many companies who are experiencing growth during these times.
What kind of growth are you talking about?
We were still private. We haven’t actually published our revenue figures. Over the last two years, we’ve done almost 5x growth, and this year, or next year, we’re targeting to double again. We’ll see what the economy does and everything, but just given the feedback from our customers and the new markets and everything that we’re doing, yeah, we expect that will double again.
Is LucidLink cashflow-positive yet?
Well, we could be, but we’re finding the line between aggressive growth and fiscal prudence. So because we’re so well funded, we have a path to profitability, but we’re measuring that against staying aggressive and keeping our foot on the accelerator to grow the business.
LucidLink’s customers include the likes of A&E Networks, Adobe, Spotify, Shopify, BuzzFeed, and others in the media and entertainment, advertising, post-production, and others. Talk about the company’s client base.
It’s what we’re calling creative industries. We have a lot of architectural firms and engineering firms who have the same needs for large engineering diagrams and projects where you’ve got all kinds of assets that you need access to, whether it’s video, photos, plans, all kinds of things. We have gaming companies who are doing that. So really what we’re looking for are teams who are creating in a collaborative way that have to use these large sets of files. We actually don’t even know what kind of file is in the system. We can’t see it. We are a general-use file platform. But we know who our customers are and primarily what types of packages they’re using. So as we continue to grow, we are expecting to add adjacent industries. We already have some customers who said, ‘Hey, we started using this for our marketing department, and it works so well with the toughest, biggest, hardest-to-deal-with files that we should just put the whole company on it.’ I know companies who have literally gotten rid of their NAS devices and their file servers and said, ‘We’re just going to put everything on LucidLink.’ So we believe that’s our end game. It’s a really smart way to leverage the cloud while keeping the way people work intact.
Who would you say are your primary competitors?
I’ll give you one provocative one. It’s FedEx. Because these files are so big and getting it to users is so difficult, they’re trying to use some of the other services. It’s easier for somebody to say, ‘You know what, I’ve got to get 10 terabytes to Joe by tomorrow. There’s no way I’m going to do that using Google Drive, Dropbox, [IBM] Aspera, Signiant, any of those. I’m going to copy it off to a drive and ship it to Joe via FedEx overnight. He’ll get it tomorrow morning. He’ll start working. When he’s done, he’ll ship it back. And then we’ll reassemble it.’
That happens all the time today, especially in these kinds of workflows. You’ve got your file sync and share guys like Google Drive, Dropbox, Box. They’re fantastic products. I’m not dissing them at all. They aren’t intended to be used for these large collaborative production workflows. They were made for people to share Office documents and PDFs and things like that. And they’re fantastic. I use them. But they’re not made for that. Then you have the UDP file acceleration products. MEGA (MEGA encrypted global access) I think is one. And Signiant. And what they’re saying is, ‘Okay, you’ve got a big pipe. We can help you efficiently utilize that pipe, but you’re still sending the file, the entire file or the entire set of data.’ So that’s, again, going back to users have to move data around. Our whole reason for being is not to have to move the data around, to allow access to the data where it’s stored.
What sales channels does LucidLink work with?
First of all, we tend to identify the big tools that are being used in these workflows. So in in the creative video and digital marketing and some of these industries, Adobe is clearly one of the biggest tools. So we mapped our channels with their channels. We said, ‘Okay, who are the biggest channel partners there so we can have customers in common?’ Within the AEC space, the architecture, engineering, and construction space, Autodesk is one of the major tools. So we work with some of the primary Autodesk resellers.
Any plans for an IPO?
We’ll do what’s right for the company. We don’t need to IPO. But we’re not looking to get acquired. So we’re building towards an IPO. We think that will allow us to concentrate on building the business with the right fundamentals and size. And if the timing for the market is right, when we get to that point, then we’ll do it. And I would guess if that is to be, it’s probably two to three years out.
What are some of your strategic priorities for 2024?
We want to do a couple things. One is we’ll be hiring. We need to build a team to support the growth we’re seeing. We’re going to be focused on hiring additional engineers and developers because we have a fantastic roadmap. And we just are not big enough to execute on it as quickly as we’d like.
People associate LucidLink with video and that type of media production. As I said, we don’t know what’s being produced on it. So we know that it’s applicable to adjacent workflows and adjacent industries. And so we’ll put some work into expanding there.
There will also include geographical expansion. I’ve got lots of people in the U.S. and EMEA right now, but almost nothing in Asia Pacific. So we’ll be growing some of our geographical footprint as well. I think those three things will keep us pretty busy.