Inside Lightspeed: Leading Lightspeed to profitable growth with Dax Dasilva 


Gus: Welcome to the Inside Lightspeed podcast. Powering the World's Best Businesses. Lightspeed is the Unified POS and Payments platform for ambitious entrepreneurs to accelerate growth, provide the best customer experiences and become a go to destination in their space. This podcast may include forward looking statements that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our filings with U.S. and Canadian securities regulators. I'm Gus Papageorgiou, Lightspeed’s Head of Investor Relations.


Gus: Welcome, everyone, to the latest Inside Lightspeed podcast. Today we're joined with our CEO, Dax Dasilva. Dax, thanks for joining us today.


Dax: Thanks for having me on, Gus.


Gus: Dax and I are here to discuss several topics, but in general, we're going to discuss the shift of the Lightspeed culture from one of growth, growth, growth to a more balanced approach of growth and profitability, assessing where the company is today and talking about where Dax wants to take the company in about 3 to 5 years. 


So, Dax, just getting into it - the one thing I wanted to talk about first is your approach to leadership. I'd say having known you now for about three or four years, you're probably more of an introvert than an extrovert. You know, you were once the original developer of the Lightspeed product, and I think you're pretty happy with that. And then one day you found yourself thrust into the CEO role which you said in the past is not something you were incredibly comfortable with. So you know, now that you are an established CEO, a well-respected CEO, what is your approach to leadership as a CEO of a company that is, you know, a lot more mature than it was when you first started it?


Dax: Yeah, I think Lightspeed has caused me to, you know, really develop not into an extrovert necessarily, but somebody that loves engaging with people because there's incredible people that are helping to build Lightspeed. From the early days when I went from becoming a developer to becoming the leader, there was a transition to make in the early years, probably after year two, where it just didn't cut it to just be the guy that was programming until four in the morning and then coming down the back stairs of the connected condo apartments that we had as the early office. What they wanted is they wanted guidance. They wanted to understand the vision. Eventually the company needed a spokesperson, needed somebody that could talk to investors, talk to media, and also talk to the company and address the company and lay out the future.


And so that's sort of been the development that I've embraced and is ever more necessary to be the communicator, especially when we're making the kind of transition that you alluded to of being a company that's been so oriented to growth and we're always going to be a solid grower to one that's balancing growth and profitability. And so people need to hear from the CEO about how we're going to do that.


Gus: Yeah, and I think that that's important, especially now that, you know, we are at a kind of a junction, I'd say, in our progress as a company that, you know, look, there's been tremendous progress. I mean, we IPO'd around $70 million a year in revenue. Now we're expecting to be over $1 billion this year. How do you think, you know, what is your approach to kind of guiding the company from this, from the past in terms of the culture was very, very growth oriented to one where we need to kind of balance that to more profitability and growth. How do you think the culture needs to change within Lightspeed to get there?


Dax: I think the greatest thing that the leader and the leadership, you know, the executive leadership of the company can do in a moment like this is bring focus, because I think when you're in growth, growth, growth mode, there's lots of exciting opportunities because there's a tremendous number of ways that we could be serving this large TAM of customers that have complex needs in retail and hospitality with with software.


And there's regions that are ready for digital transformation of these businesses. And so I think it's choosing the focuses of where we want to win, where Lightspeed has the right to win. That's the value that we can bring as leaders. Because when you're growing and trying to grow everywhere, it's very difficult to have a balance of profitability. That's just a land grab. And there's moments in the market where, you know, that's encouraged, that celebrated, people that can grab the most market share the quickest, that can be rewarded by the markets. But I think the current mood of the market is one that actually reflects where Lightspeed really should be as we near our 20th year.


You know you mentioned we are about to near $1 billion in revenue. You know we're turning 20, we're exiting our teens and you know who do we want to be as an adult? I think it makes a lot of sense for us to be balancing all of the incredible growth that's ahead of us, you know, with that ethos of profitability.


And that's going to take focus. Where are the areas that Lightspeed is going to focus its energy and win.


Gus: And you're absolutely right, it does require focus. But I think, you know, the positive side of this is there is so much opportunity that we are in a pretty privileged position because we can choose where we want to grow. There is there's a lot of things we could be doing. There's a lot of things our customers want us to do. And so, it is kind of a bit of a privilege that say, okay, you know, there's the opportunities. Well, almost limitless. And it's kind of up to us to decide where we play and how we execute.


Dax: And that's certainly the case. And I think that, it's not just focus. The focus comes from, you know, understanding the market. What are the choices that we're going to make? You know, where is Lightspeed going to focus energy and be great because there's tremendous need for our product, our vision for how you can make the complex, simple. You know, that's what Lightspeed's been good at from day one, offering solutions that help complex businesses, businesses that have a lot of inventory, that have complex workflows in a hospitality setting.


We can take those situations and through technology, help that become understandable to the business owners so that they can thrive. They can thrive versus the big box versus the franchise versus the multinational. And we can make local businesses competitive. And you know, that approach can be applied in so many different ways. And so there is so much tremendous opportunity for Lightspeed. And that's what's exciting. There's a real need for applying what we're really good at doing with technology for our customers.


Gus: Yeah, I want to get into, you know, where we fit within the whole landscape of our competitors and our customers. But before I get there, as you said, the mission of this company is to really help small businesses, help entrepreneurs build successful businesses. And I think that's why people at this company are so dedicated that I think everybody here really believes in this mission and is very proud of it. Right. Like, you know what we're doing. I think really matters. I think it really helps people improve their businesses and grow their businesses. And I think that is a testament to the culture of Lightspeed. I think that's why the company has been so successful in the past. And I think it's worth pointing out that, you know, the challenge in front of us now is moving to a stage of profitable growth.


But meeting big challenges is not uncommon for this company right? I'd say that the history of Lightspeed has been characterized by several pretty bold moves forward. Right. Like in 2013, we moved to the cloud. A lot of software companies didn't and they've suffered as a result. Right and now, 100% of our revenues are cloud-based. In 2014, we expanded into restaurants and into Europe, and now almost 40% of our locations are in hospitality. Almost half are locations outside of North America. In 2019, we launched payments and over a third of our GTV is now going through our payments solution, and 60% of our revenue is from transaction-based revenue. So these have all been pretty bold moves forward and they've all been very successful. And I think that, you know, addressing the move to a balance of profit and growth, I think, the culture of the company is one where we take on these challenges. And in the past we've been successful.


Dax: Yeah, it's a culture of achievement. And I think we do the best when we are focused on a goal. It's part of our DNA, you know, And I think that that's why we do take on big challenges because I know that we can win and I know that we can achieve. And yeah, those are remarkable transformations.


You know, cloud, hospitality, payments in terms of the profitable growth phase, it's the new normal. You know, it's us at a mature stage as a 20 year old adult. It reminds me a little bit of the bootstrap days, you know, pre-investor where we were very profitable. We ran the company in a very common sense and practical way and it's a little bit back to our roots. You know, before the venture capital money came in, before the public markets injection of capital and that I think that is very grounding for Lightspeed and it's crafting who we are in that grown up phase. It's exciting.


Gus: It is. And I think again, I think it is a testament to the culture of the company and the culture of this company has been heavily influenced by yourself, and I think you once said that at Lightspeed, every year you rewrite your job description. I think that's definitely true. That's something I've noted since I've been here. And then, you know, you have to start doing things that you might be uncomfortable with. I mean, you know, we recently had to reduce our workforce. That's something you've never done as a CEO.


Dax: No


Gus: Nobody liked doing it, but it was necessary. And we recognize that had to be done and we did it.


Dax: I find that it's absolutely necessary as a leader and maybe other folks in the company might feel this way, too, because of the amount of change and transformation that happens to continue to deliver on our mission. But, you know, throwing out that job description and reevaluating how you can best serve the company in every new iteration of the company is, I think, an important part of how we stay agile, you know, how we don't get stuck not being able to make the transitions and the evolutions that we need to make.


It requires internal transformation, internal transition, the willingness to let go of how you craft your identity inside the company. And if the leader is willing to do that, I think everybody is given permission and a model for how to do it. And that's the thing is that we ask talented Lightspeeders to do incredible new things, maybe sometimes things that they’re not familiar with or things that are new to them. But if you're not willing to do that yourself as a leader, it's difficult to ask that of your people. If you can model that successfully for them, then they'll have the courage to do the same.


Gus: Yeah, I think that's absolutely true. Looking ahead, I mean, you've been back at the CEO role now for about five months. You were kind of involved in the company, you know, as exec chair, but much more involved in the details now that you've been CEO for five months. What's your assessment of where the company stands today?


Dax: Yeah, the company has got some incredible assets. You know, we have the best products I've ever seen at the company. We've got an incredibly talented workforce. I think there's definitely a show-me story in regards to the market in terms of other things that they want to see. And those are the same priorities that we have, you know, showing increased software growth and so on and increased profitability. But yeah, I think we're in a good place. We have a great platform from which to build.


Gus: And I would say also from my assessment too, is I think we probably have the strongest team that I think we've had since I've been at Lightspeed.


Dax: Absolutely. Yeah, the talent is incredible. The exec team is so aligned. One of the remarkable things about Lightspeed is that we operate with a great deal of confidence and that desire to win and that desire to find focus. But there's a great degree of humility. You know, we are listeners. We are people that often realize that we don't have all the answers that we need from our people, from our customers, from our shareholders. Still the best solutions. And that's why I think we find such powerful ways to implement some of the big transformations we talked about earlier. And it's not from approaching those big opportunities with arrogance. I think how the company has done well is being humble, but being bold, you know, and I think that that's the combination that characterizes how this company has thrived.


Gus: You’re right. I think there is a degree of confidence in the company, especially with our core platforms. I just want to maybe touch on this, because I know that you've spent a lot of time with investors. I think one of the common misperceptions is that we tend to get lumped in with competitors that, you know, I would characterize as electronic cash registers, right? So if you were to try to position the company to investors, like how would you describe, you know, where we fit in, what our solution provides? Because I heard you use the term it's a light ERP, and I agree with you. But how is that different than a lot of our customers will go into a coffee shop and they'll see, you know, a screen there where you can tap your credit card and they think, well, they're competing with Lightspeed, but I don't think that's the case. Right?


Dax: Well, it's easy to confuse Lightspeed with a number of other commerce players because when you are at the point of sale, you may see a payments terminal that's branded, and for some solutions, that's really where most of their offering lies — is in the payment terminal, and maybe some basic software to interact with the cashier. But where Lightspeed’s main value is, of course we do that piece of the puzzle, we do that payment capture and that payment terminal. But we are the backend system. We are the light ERP. We are that management piece running the operations for that sophisticated retailer or sophisticated hospitality merchant. And so, you know, we're there operating system, and that's where there's a big distinction between folks that are helping businesses collect payments. We're helping businesses collect payments, but we're also helping them run the entire operation.


Gus: And I think evidence of that was, you know, last year we launched our Unified Payments solution and it was us asking our customers to switch to our payments solution, which may have been a bit of a nuisance to them. But I think in the end we saw a lot less churn than we expected. And I think it gave us the confidence that, you know, our solution is very valuable to them and the fact that they are willing to make that switch when we ask them to do so, you know, with maybe a little bit of hesitancy, but they did do it for us. I think that just shows that they value the solution a lot more than just a simple payments offering.


Dax: Yeah, it has got so many layers of value and it's so deeply entrenched in people's businesses in a very positive way. You know, it's a way for them to have a competitive advantage against all the other businesses they're competing with, whether it's, you know, on the streets or in the neighborhood or online globally. So it's the source of truth for all their data, for their inventory, for their staffing. It's a powerful part of how that business shows up and how it succeeds.


Gus: Obviously, from your perspective, we have great products, which I totally agree. Great team. We are highly valuable to our customers. And again, I think that the less than expected churn that we saw from unified payments is evidence of that. So I think we're in a very good spot. If you look to the future and, you know, if you look at our growth levers, maybe talk a little bit about what are the growth levers we can pull to continue to grow in a very profitable way in the future?


Dax: Well, you know, certainly we're trying to grow our locations, in particular the ICP locations. That's our ideal customer profile. That's customers over $500,000 annually of GTV. Those are the customers that have the degree of complexity where they really benefit from Lightspeed. Payments has been such a driver of growth; continues to be as well as the related financial services like Capital or or same day deposits.


In addition, you know, once we've landed a location, we have so many modules that we can offer to a customer to allow them new vectors of functionality and new ways for them to grow their business. So lots of levers to grow.


Gus: Yeah. And I think especially on the last point in terms of the modules, going to One Lightspeed, going to two core platforms, I think what investors need to understand is all the innovation is occurring on those platforms. We're still maintaining some of our non-flagship platforms. Obviously there are quite a few customers on them. But in terms of what's exciting, where the innovation is occurring, that's all on the flagships which we should see a proliferation of modules as we continue to invest in developing them for those flagship platforms.


Dax: That's the advantage of being able to take the best of technology from all of our different acquisitions and basically create these flagship platforms that are the best of the best of retail technology, hospitality technology, and then focus all of our energy to making them unbeatable for our segment. And that module growth path is exciting for customers because they can now continue to do incredible things that continue to change and transform and grow their businesses at scale.


Gus: And I think you also, again, you talked about our ICP locations earlier on when we were discussing focus. I think it's important to know that we can't be everything to everybody; that the customers we're after are more sophisticated, more complex, have heavy inventory needs, have very complex workflows in hospitality. And so it's important to know that that's who our customers are, that's who we're after, and all locations are not the same. Yes, there are locations that we can grow into our ICP, but for us, it's really about finding the right customers where they're really going to benefit from the Lightspeed software.


Dax: Absolutely.


Gus: Moving on now to some of the other topics that come up with investors. Obviously you're well known, your charitable organization Age of Union is well known and you've been very involved in that. You've done some remarkable things with conservation. How do you balance, you know, being the CEO of a high growth technology company, but also having these interests in your charitable organizations?


Dax: Age of Union's been a real highlight for, for the period of time where I was exec chair and had more time to dedicate to projects of conservation and we also went into some film production, won an Emmy for one of our film investments called Wildcat. And yeah, there's a lot of elements of those projects that continue. But thankfully there's really great teams in place given all that I have on my plate as being the CEO of Lightspeed and so that work can continue without me having to be involved day to day.


Gus: Obviously, one of your motivations as a shareholder is to be able to help to finance these charitable organizations of yours. So that keeps you motivated to make sure that Lightspeed’s successful in the long term.


Dax: Yeah, if Lightspeed’s successful, then I can continue to do more incredible conservation work, other kinds of investments that, you know, for me create a better planet. I also feel that the work that we do in Lightspeed, you know, with our customers is creating a more sustainable future. It's the local businesses that are making the more sustainable, community oriented decisions for their business. So they represent, for me, the future of sustainability. So I feel like what we do at Lightspeed, which is creating a more conscious consumerism through our merchants and the things that we're doing in Age of Union through conservation, for me, I want to feel purpose, as do the people at this company want to feel purpose that we're creating a better world, a better planet.


Gus: I think I speak for everyone at the company that, you know, I think what we, everybody here, I believe, thinks that what we do is important to helping small businesses is very important on so many levels, not just building stronger communities, but also on the conservation aspect as well. I mean, I think that what makes us leaders so dedicated is that they believe in the mission of this company. Right?


Dax: And what's remarkable compared to, you know, let's say another company that's doing software on analytics, is we can walk down our city streets and see a lot of our customers. You know, there's this opportunity that's so tactile. You can see the work that you're doing in action. And that's so rewarding. It's such a pleasure to be able to travel through Europe and go to a restaurant and see Lightspeed lit up on screens or as far as Australia in a retail store. So it's rewarding because you get to see your work out in the wild.


Gus: Yeah, it's rewarding, but it can also be annoying. Every time I go into a retail store and I see Lightspeed, I always pepper them with questions until they finally shoo me out the door. But yeah, you're right, it is kind of a thrill that you actually see your product and your company in the field. That is a bit of a thrill. 


Okay. So November 20th, we are going to have our Capital Markets Day where we’ll give a more detailed view of where this company is going to be, probably give a, you know, 3 to 5 year plan. But, looking forward from what you've seen of the company, what you know of the company, where do you expect Lightspeed to be and lets not give a specific timeframe but let's say somewhere between 3 to 5 years. Where do you expect Lightspeed is going to be?


Dax: Yeah, I definitely want to grow the locations that are using Lightspeed. That's a big part of our focus right now. Because the more folks that we can bring on to the platform, the more value we can add, the more we can bring them on to more modules and really be a part of their success story. I think that the Supplier Network on our retail product is going to help really change the game for how people are doing business, because not only have we redefined the experience, the customer experience, the merchant to consumer experience. Now we're helping innovate the merchant to supplier experience of how they get their inventory and replenish it.


And that's a really exciting aspect of the moat we're building in retail and the value that we're building in retail. And you know, over time, I think it's those flagships that we're really focused on making better and better.


Gus: And I think over time, I mean, we expect that all of our customers will be on our flagships. I mean, we're not going to give specific time right here, but at some point all Lightspeed customers will be on the flagships.


Dax: Yeah, it is a matter of time because we are selling most new customers, new businesses primarily on flagships unless there's folks adding locations to older installations. So that's a big factor as well. As you know, we will have people migrate because there's more exciting technology being evolved on the flagships and as people grow their business, they're going to want that extra utility.


Gus: Right. And again, doing all of this in a profitable way, right, where we expect to continue to grow our top line. But the goal, I think, will be to continue to expand margins not just this year, but into the future.


Dax: Yeah, profitable growth is, you know, our new way of approaching the overall business. You know, I think everything has to be done with that balance in mind and that just helps us build a stronger and stronger foundation to do all the creative things that we want to do and all the investments in new opportunities we want to run down. It's the new Lightspeed, it's our new mindset and it's why and back.


Gus: That's great. So I think, you know, we need to wrap it up here. But what I want to leave with investors is a sense that, you know, this company has a history of taking on some pretty big challenges and being very successful at them. Our challenge now is that we want to grow profitably. We have great products, we have a great team. We have, you know, the muscle has been built to continue to expand payments penetration. Financial services are still in their infancy; I'd say Capital and Instant Payouts are still features that we are growing. And I think that the total company is behind you, right? I think everybody buys into this vision and the need to be profitable and there is very little resistance. I think that people are totally behind you and that’s where we want to be in three or four years.


Dax: Excited to be leading us in this really exciting period for the company.


Gus: Okay, Dax, thanks for joining us today. And I want to thank everyone for listening in today and we look forward to speaking with you on the next Inside Lightspeed podcast. Have a great day, everyone. Thank you for listening to Inside Lightspeed. If you aren't already, be sure to follow Lightspeed on LinkedIn, Facebook, Twitter and Instagram. Our handle is LightspeedHQ. Original music for the episode is composed by Timothy the Player. The episode was edited by Jonathan Beaton and produced by Lightspeed. See you next time.