“The oil and gas industry creates tremendous value,” says YPO member Dakin Sloss, Co-Founder and Chairman of Tachyus, which creates technology to optimize energy production for the oil and gas industry. “Most of our friends in Silicon Valley have a very different take on the industry. As a result, there’s a lot of technical opportunity because a lot of our smartest technical inventors have an ideological bias against the industry.”
Prior to launching Tachyus in 2013, Sloss and his company co-founder interviewed hundreds of petroleum engineers, geologists and executives to determine how best to deploy technology in the sector. They wanted to know the data used, decision-making processes followed, challenges faced and biggest value drivers determined. Out of those conversations arose a consistent response.
“The number one driver of value in the oil and gas industry is reservoir management,” says Sloss. “State-of-the art numerical simulation is great for long-term predictive accuracy and long-term decision making. However, it is quite limited in its ability to be used for day-to-day and even week-to-week decision making because it can take months or years to build up the input geomodel and days to run a single scenario.”
The company co-founders spent more than three years figuring out how to speed up the existing simulation capabilities and solve that problem. The result: Data Physics, which combines physical modeling and machine learning to empower engineers to quickly predict mechanical equipment failure, production responses to stimulation, relationships between completion design and initial production, and fieldwide forecasts for any given injection redistribution. The Tachyus platform enables operators to explore millions of scenarios and identify optimal operational and development plans, and has helped more than 30 fields around the world increase production by 16 percent on average.
Roll up your sleeves
The global oil and gas industry is massive. More than 4 billion metric tons of oil are produced worldwide each year, and global demand for oil is projected to continue to increase through 2035. And there are still many challenges — technical, administrative and operational — to solve in this industry.
The number one driver of value in the oil and gas industry is reservoir management.
Entrepreneurs who want to succeed in the sector should be prepared to roll up their sleeves and get their hands dirty. At the outset, Sloss and his co-founder each lived with a customer operator for six months, helping with odd jobs ranging from fixing wells to completing geology reports and petroleum engineering exercises.
“It’s really important to understand the customer and make sure you’re interacting on a day-to-day basis,” says Sloss. “Otherwise, you’re going to miss what the actual need is.”
Even with that hands-on experience, Sloss says they realized early on that they needed sales and marketing professionals who had established relationships within the insular community. “The best you can do is hire people who are already in the network and believe in your vision and will help you spread that,” he says.
Prepare for ups and downs
It’s not an easy industry to break into. When Tachyus was founded, oil was at USD120 a barrel. By the time they were ready to go commercial, oil prices had dropped to USD25 a barrel.
“Like everyone in the industry, we had to scale back, go into hibernation mode and wait until the market was ready to think about things other than bankruptcies and layoffs,” says Sloss. “That was a tremendously difficult learning experience, but we came through that stronger on the other side.”
If your people are not learning and growing then your company is not going to learn and grow either.
Get the right mix of talent
Part of their success stems from the combination of oil and gas talent with Silicon Valley software and data science talent at both the employee and investor level. Tachyus hired its first oil and gas executive within the first year. Today, one-third to one-half of the team comes from the industry.
“There are always learning experiences building a team and company culture,” says Sloss. “Balancing a moving fast and breaking things type culture with a culture of safety and conservatism and finding the right balance between those is really important.”
The company has a set of values followed on a day-to-day basis. The most important of those is self-awareness, which underpins the ability to execute and to collaborate. “Knowing oneself sounds like a really basic and obvious thing but it is actually really difficult to do and requires a lot of introspection, reflection, patience and curiosity,” says Sloss. “When you’re solving difficult technical challenges, you need to be honest with yourself about how it is going before you can be honest with someone else about it.”
That culture of self-awareness and honesty coupled with a growth mindset has helped the company continue to push ahead, evolve and perform well. “Building something new is inherently learning a new area, a new process, a new system,” says Sloss, “and if your people are not learning and growing then your company is not going to learn and grow either.”