Bluware. Start to sale in five years and one post

 Bluware was the result of a merger of two tech companies. One was a software company (actually TWO software companies, Hue and Headwave, but for the purposes of this post we will just call them Hue. Maybe I will elaborate more later) and a services company called Bluware.

Hue was an infrastructure company that specialized in moving large amounts of data very, very fast. This had to do with the way we stored data (as objects) as well as the compression techniques we used to store data both losslessly and lossy. The lossy was for use of the data, the lossless compression was for archival purposed (the lossless compression was round tripable and checksum equivalent) 

Bluware was a company that was created to fill the niche of oil companies needing developers, but not wanting to deviate from their "core competencies". The result was that Bluware created a company filled with amazingly competent developers who could work on a project throughout its lifetime and deliver to the clients (well, mostly Shell Oil) something they didn't really want to do on their own.

The merger of the two companies created a juggernaut tech company that could leverage ideas coming from clients so there was a built in market along with new software that nobody else could touch.

The data structure created by Hue turned out to be very well suited to deep learning techniques, and the collaboration with the clients meant that we created a product nobody had seen before - a true interactive deep learning module that eliminate the black box nature of deep learning while speeding up interpretation time by two orders of magnitude. (yes, that is right. by 100 times. One client told us what used to take them two months now took them two hours)

That was then leveraged into a 40% compound annual growth rate and a 20% EBITDA.

THAT was then leveraged into the sale of the company to an old-line Canadian geo-software company that was looking for some new markets and new ideas:

Bluware acquired

I took this opportunity to retire.

Another intermission - and a VERY late post

 Will you look at that. The last time I posted something here it was 2014. Now, it is not.

Blogs have mostly gone away. Facebook has come (and gone from my computer, anyway), Twitter has come (and will maybe go? uncertainty there.) and TikTok is here to stay.

And yet, here I am, back in the saddle again.

From 2014 to 2018 I was still on the Board of Directors for PGS, but was time limited out in the summer of 2018.

Before I left, though, I had some interesting trips:

Outside of  Tromsø:

That was about my last trip to Norway, as a board member.

But as fate would have it, and as you all know, that wasn't really the end. As much as I had hoped that this would be the point at which I would fade into irrelevance and retirement, it did not happen. 

In late 2017, we merged three companies together. Bluware, Hue, and Headwave. Bluware was a consultancy offering software developers to oil companies. Hue was a software company that had developed a platform for moving and manipulating large volumes of data. Headwave was an application software company focusing mainly on pre-stack seismic data, but it was really so much more.

I was on the Board of Advisors for Bluware and Hue, Board of Directors for Headwave.

Then in the middle of 2018, we raised some capital from EVPE and Shell Ventures. They insisted that I join as CEO, and so here I am again.

But I can say this with great confidence. This is the best company that I have every worked for. The best people, the best products, the best board, the best investors.

I will write more later.

 

TerraSpark - great technology looking for a home

I had a nice short respite after Object Reservoir - I called it a sabbatical, and then started the game again with a company named TerraSpark.

This was a phenomenal technology that came from years of research that started with ARCO back in the 1980s.

The company itself was a spin-off of the University of Colorado, which is where the technology ended up for what you might call an incubation phase. 

There were essentially three bits of technology that could be mixed and matched in order to get a much better idea of what was going on underground in almost any circumstance. Well, as long as you had seismic data.

The first let you automatically pick faults (fractures with displacement) in your data. You need to think about it for a second, but this is harder than it sounds. Faults are really the absence of something rather than the presence of something. When a geophysicist is trying to pick "horizons" or a given formation that may represent oil bearing rock, you generally see a well defined reflection in the seismic data. (Think of seismic data as a sonogram. The horizons are equivalent to the baby's head or bones, or whatever you see in there). Faults exist where the horizons are broken. It is hard to come up with computer rules that let you automatically decide where these breaks take place.

The second lets you "wrap" a geobody (think of a big intrusion of salt) from the outside (shrink wrapping) or the inside (like blowing up a balloon). Again, the hard part is building the computer rules to make this happen quickly.

The last, and most amazing technology lets you move the seismic data back in geological time, to let you see what the seismic would have looked like when the formations were being laid down as beaches, river beds, or deltas. This originally would take days (thing of taking a bunch of pieces of paper, rumple and tear them, deform and invert them, and then algorithmically restore them to flat pieces of paper. Wow!)

As with most new technology, a big part of the problem we faced was convincing our clients that this was something they NEEDED, not something they WANTED. Since they were already finding oil, this was a tough call. 

Another big problem was the performance. 

Computers needed to catch up with the software. It did, but by the time it did there was not much "runway" (some call it cash) left to spend on sales and support.

My role in the company was two-fold - see what we needed to do to increase penetration of sales, and to find a home for the company. I have three transactions in two years, and now I needed to capitalize on that experience.

We had to reorganize the company just a bit so that we could last longer with the cash we had. We also moved the financial part of the company down to Houston so that I would have better and faster access to that information.

And then we started a "process" to get the company some attention.

We hired an investment banker to help with the process, and then contacted all the likely acquiring companies to spark some interest. That was started in the summer of 2013, and by the fall of 2013 we had three "Indications of Interest" that we could work with.

It was an interesting process, but in the end we had CGG Jason as the obvious best fit for our technology.

CGG was to take almost all of the employees (15 of 19), the assets, the leases, and the furniture.

Those negotiations took another couple of months, but by January we were ready to close.

On January 15, 2014, we had our closing conference call. This makes 4 transactions in 40 months for me.

My employment was terminated on 2014.01.31

Object Reservoir. Two sales in one

I stayed with TIBCO for a respectable amount of time so that the technology could be transitioned to the new organization. I have not worked for a big organization for quite some time, so I figured it would be best to move to another small company.

The company was Object Reservoir, a software company that used Finite Element Analysis [FEA] to perform oil and gas reservoir simulation. (Most software used Finite Difference Analysis, as it is "cheaper" from a processing standpoint) It was founded by an old friend of mine several years ago and had sort of a tough time throughout the years.

My task was to see if we could pull the company out of a skid, or lacking that, get what we could get for the technology.

The technology was really quite spectacular. I would like to say that we moved on from the FEA an analytic solution to what was essentially a Big Data problem. The company had come up with a science based analytic and heuristic solution to the question everyone was asking at the time - how do you best produce unconventional gas wells?

We were Big Data before Big Data was cool.

But then gas prices collapsed, and we collapsed with it.

The company had built up a very nice consulting business based on our technology. And besides that, we were able to convince several oil companies to share their gas production data (very proprietary) so that we could perform these analytics across reservoirs so that we would not be influences by local anomalies .

These engineers were good at what they did, but more importantly, they were reservoir and petroleum engineers. We were able to get a small bidding war for that part of the company - and we ended up selling them (as a unit) to Weatherford.

That gave us some time to focus more on the software side of the business.

One problem we faced, however, is that we still hadn't solved the problem of either wet gas or oil. The physics are hard, and though in conventional reservoirs solutions have been found, there has simply not been enough data (big or otherwise) to determine the accuracy of the algorithms.

But we dedicated our scarce resources on solving these problems - but it all sort of caved in at the end.

So we started another "process" to get the software a good home.

It was a short sales cycle, and we were able to work with Halliburton to put the software, and the people, at the Landmark Graphics division of that company.

That was two years that was a lot of work, but ultimately a disappointing end. 

OpenSpirit. Sell!

As I mentioned below, OpenSpirit was a sort of a venture funded company.

One of the venture companies who invested in us was Kenda Capital, who took over the Shell Technology Ventures funds, and then added additional capital from Coller Capital and the Abu Dhabi Investment authority. These two funds make up just under 50% of the ownership of the fund.

OpenSpirit, while not the largest of the Kenda portfolio companies has the distinction of being one of their more profitable ones. So Kenda decided it was time to "set us free" and gave a very strong directive, via their Class Two director, to put the Company on the market.

I worked with the Chairman of our Board to review and evaluate various investment bankers to help us with this task. We talked to some local Houston i-bankers, and also several based in California. We finally decided that the Company would be better represented by an investment banker without ties to the oil industry - as we felt that our value would be optimized by a horizontal player, not an oil field service company.

We decided to use Holihan Lokey, and never looked back.

We pitched over 20 companies with the deck. I traveled to San Francisco several times to find the best place for the Company to land.

We found that TIBCO was most interested, and they showed their interest very early. We got an LOI (that is, letter of intent) in November of 2009, and started negotiating immediately.

The Company's investors were not too thrilled with the offer. Well, let me put it this way. Not all the investors were happy with the offer. There was a certain amount of politics being played regarding our technology, and who would be the best steward thereof. But we all were finally in agreement that TIBCO would be an excellent acquiring company.

That conclusion was reached in February of 2010.

From February to the end of September, we did nothing but negotiate the terms and conditions of the deal. Very few of the contentious issues surrounded the price of the Company. They all revolved around indemnifications and representations and warranties. Again, discretion does not allow me to go into great detail regarding these issues, but let me say that the legal fees around this deal became a major cost to all sides concerned.

But we did manage to get the deal done and closed - right around September 21nd.

Then I started working for TIBCO as their VP of OpenSpirit.

OpenSpirit. Back to the software world

In January of 2003 the CEO of I/O let the company know that he was leaving to join Halliburton. That made working for the company much less attractive to me.

Around the same time a headhunter started calling me asking if I would be interested in joining a small software company that was recently created out of an industry sponsored consortium. I think my first interview was in December of 2002 I finally received an offer in May of 2003.

I started the job June 1, 2003. OpenSpirit had 18 employees at the time, and under $2 million in sales. Our cash position was precarious, and I was brought in to try and take this company to a stage where we could sell it.

The Company was dedicated to upstream (that is, exploration and production), subsurface (that is, seismic data and interpretations, well log data and interpretations, and other information associated with the view of the earth model), middleware (software that performs operations between data and applications. Think of plumbing.) Our clients were mostly the Information Technology and Data Management departments in the oil companies. The users were mostly geologists and geophysicists.

My first day on the job was in Stavanger, Norway. The EAGE (European Association of Geoscientists and Engineers) convention was being held there. We also had a user forum in town. It was an eye opening experience. The team was good, but the clients had many, many issues with the software. (Most of it focused on the speed of the operation and what sort of data the application move)

The company was funded with a reasonable amount of capital for the market size. There were a couple of other companies that were started at the same time with similar goals (Trade Ranger and PetroCosm were the two biggest. They each had investments of about $100 million each. We had, to this point, about $4.5 million)who crashed and burned well before I even started with OpenSpirit.

The Company was funded by Schlumberger Technology Company, Shell Technology Ventures, and Chevron Technology Ventures. Later, we added Paradigm Geophysical as a balancing partner to Schlumberger.

We did go through several small rounds of capital before we brought in a large round when Paradigm joined. In a small company like this, cash was always the problem that was hanging over your head. It didn't really help that nobody in the company has any experience working for a start-up. I would have company meetings regularly where I would express my discomfort at the state of our Balance Sheet. I found no commiseration. But by virtue of the fact that we were small and lean, we were able to make money for almost every year I was running the company.

We grew pretty strongly in the middle years of my tenure. We had a good team, though at times rather dysfunctional. I won't go into the details, but suffice it to say that management was fired, management quit, and the company survived in spite of both events. (de mortuis nil nisi bonum).

The decision to sell the company, and the process we went through deserve their own post.

Input/Output: My life in manufacturing

You may have noticed a theme in most of my jobs to this point. The only company that actually made anything was Exxon. (S/N notwithstanding).

But now I was about to embark on a new branch of my career. I/O (now called Ion, if you are at all interested. Or maybe Inova, depending on what part of the company you are looking at) made stuff. We made seismic acquisition stuff. Geophones, Hydrophones, Seismic Cables, Land Acquisition Systems, Vibrator Trucks (not as sexy as their name implies), and everything to support the acquisition of seismic data.

Collecting seismic data is really doing nothing more than recording sound. Granted, you are recording sound from thousands of different sources located either on the trackless ocean or buried in the ground over many square miles, and then the sound waves need to be reconstructed so you can see what they bounced off of, many thousands of feet underground. (crazy stuff. The largest Seismic Vessels now (from PGS, thank you very much) can tow as many as 22 streamer cables, each about 8 km long. They are the largest man made moving things on earth). You can imagine that you need to know exactly where those geophones are located, and when, exactly you deploy the "source" of the sound waves (either explosives like dynamite or the vibe trucks mentioned above). It is complicated.

I was hired to run the Land Data Systems group. We were responsible for the new digital "geophone" (actually a MEMS accelerometer) the Central System, which is the computer that keeps track of where all the data is coming from and then puts it all in the right place, and the sales thereof.

It was a hard time in the oil business, and not many oil companies were collecting land data. And not many service companies were buying new seismic equipment. But we had a net technology (Vectorseis is what we called it) and were sort of effective. I had to cut my staff from over 160 people to under 70 people (which was not fun), outsource some manufacturing, and try and learn about things like "Long Lead Time Items" and "Inventory". Neither of these were too important (or even existed!) in the software or data world.

I had a good time learning these things. I would walk around our factory floor and pick things up (which you can't do with software) just to hold in my hand something I made.

We did pretty well considering the environment. We increases sales in the year I was there from about $3 million a quarter to about $8 million a quarter.

But soon enough some headhunters came calling. I was destined to get back into software. I worked for I/O for 14 months. There was such a strong culture there (and such a great CEO, who quit before I did) that I still consider myself an I/O Alumni.