Since 2003, Logi Analytics has raised $48 million as of 2019
Customers spend between five and seven digits annually on the software, with an average of $100,000
1800+ Clients integrate Logi Analytics into their software stack, but the CEO hesitates to call his product SaaS
If you had an idea for a software product right now, how would you build it?
You wouldn’t start with code. You’d start with finding a library, API or utility that you could integrate into your product stack.
Fitting seamlessly into that stack is Logi Analytics, a company that works with your software company to embed analytics into your software systems. It was founded by Steven Schneider in 2003, and he came on the show in 2019 to talk about his still very niche market and his path to success.
The Classic Logi Analytics Use Case
When asked for a typical use case, Schneider immediately brought up Motionsoft, a company making software for managing fitness studios.
So if their goal is fitness studio management, then they’re probably pretty good at figuring out things like billing, customer signups, equipment ordering, and so on. But as it turned out, their clients – the gyms – wanted more data.
They wanted to know when the peak times were, broken down by season. They wanted to know how to predict when a customer was about to cancel so they could be offered free vouchers. And Motionsoft hadn’t had those types of analytics built into the app at all.
Enter Logi Analytics. Logi partners with Motionsoft to provide exactly the type of analytics that the end user wants, leaving Motionsoft open to focus on developing the rest of the software product.
Charging For Very Different Markets – $50k-$1M in ACV
Now, obviously people are going to be using this sort of analytics solution in a ton of different markets, not just gym management. How does Schneider figure out the pricing? After all, their engineers need to work on making the code work with software written by, well, anybody.
Every deployment has an individual, customized contract. Some are priced based on the number of end users, and others are priced based on the number of metrics provided.
It’s hard to put a real number on what the average client is paying because there’s such a wide range – from 50,000 dollars a year to more than $1 million. However, in general the typical client is spending close to $100,000 annually for the service.
And besides, the company has been around long enough that it isn’t dealing entirely in renewable licenses. About ten percent of the licenses currently maintained are perpetual licenses, after a gradual shift away from that direction since the year 2010.
Is Schneider a SaaS CEO?
One interesting semantic point that came up during the interview was that Schneider doesn’t see his product as necessarily “software as a service.” His customers sell software as a service, but he often just provides a single contract.
So if a customer buys Functionality A, they can keep using it in their product for as long as they need to. Then they can add on Functionality B at any time for another metric and another perpetual license, if that happens to be the case.
Even though he does have contract clients, Schneider hesitates to use the word “SaaS” because Logi Analytics doesn’t have any kind of cloud backend that they offer to the client. There’s nothing they maintain that keeps getting tapped over and over during the course of a given piece of software’s lifetime.
Why Clients Stop Using Logi Analytics
If you just looked at the numbers, you might be concerned at a relatively high amount of churn (10%) going on. However, this ties in to Schneider’s larger overall philosophy about how his business isn’t really SaaS. He’s not worried.
And besides, the churn doesn’t reflect badly on his company.
Logi Analytics loses customers for a couple of reasons. Chief among them, accounting for 60% of all clients that end their contracts, are clients who simply discontinued the software product they had been using – or even worse, went out of business themselves.
Other clients might sign a contract and work on integrating the product into their own software, but then upper management pulls the plug on that project and the contract gets canceled. It happens more often than you’d think!
Schneider Stayed After His Company Was Bought
So this company was founded in 2003, and it was bootstrapped up until 2007 when it received $5 million in funding.
2010 is when it started to really find its niche, and it grew slowly but surely, finally getting some really big funding rounds in 2011 and 2013. SaaS as an industry was growing at the same time, and in 2017 the whole company was bought by Marlin Equity Partners.
And it’s not a lot of founders who stay on after something like that happens. But Schneider genuinely likes coming to work, building things, and solving problems. In fact, he sees Marlin as just another investor.
Where Logi Analytics is Headed
In particular, he sees growth in the new field of businesses launching with a product stack. He’s excited about developing new products to scale with the growing market of product managers.
At the same time, he’s not focused on extremely rapid growth like most CEOs who have weathered their product through decades. He’s strongly in favor of maintaining profitability in the years to come and creating a truly sustainable business.
And finally, there are no acquisitions planned for the near future. Logi Analytics is focused on more predictable organic growth right now, and acquisitions are surprisingly tough to time well. Bookings growth seems to be the way to go from here on out.
In A Nutshell
Logi Analytics was started in 2003 as LogiXML. They produce analytics software designed to integrate seamlessly into other software products, working with more than 1,900 enterprises that pay them on average $100,000 annually for their solutions.
About the CEO Steven Schneider
Favorite business book: W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy
Following a CEO: Jerry Delinski
Favorite online tool: Salesforce
Nightly hours of sleep: eight
Family Status: 42, married with two kids
Advice to 20-year-old self: Planning really far ahead is valuable but you can never get more than one or two years out. Plan the next six months really specifically, but don’t plan too far ahead because life gets in the way.
2016 – Estimated 20M (yurbi)
2019 – 30M in ARR
2012 – 1,000 (logianalytics)
2016 – 1750 (globenewswire)
2017 – 1800+ (pehub)
2018 – 1000 (CEO on Latka interview)
Funding (source: verify wiki)
2007 – 5M
2008 – 3M
2010 – 2.5M
2011 – 10M
2013 – 27.5M
Bought by Marlin Equity Partners in 2017
Yassir Sahnoun is the founder of YassirSahnoun.com. He helps SaaS companies like Castbox and FluentU attract sales using content strategy, copywriting, blogging, email marketing, & more.