Your company has machinery and drilling equipment all over the world, some located eight miles underground or in places so remote that cell service and Internet aren’t available. FlowCommand provides real time data and performance reports no matter WHERE your assets are. Jeff Garoon explains how they do it.
Russ: Hi, I’m Russ Capper and this is HXTV, championing Houston’s innovators and entrepreneurs. Coming to you today from the Microsoft Technology Center in Houston. My guest: Co-founder and COO of FlowCommand, Jeff Garoon. Jeff, welcome to the show.
Jeff: Thanks for having me.
Russ: You bet. Tell us about FlowCommand.
Jeff: FlowCommand makes sensors and software to help oil and gas companies reduce their operating expenses. Oil and gas companies have a tremendous amount of assets that are geographically distributed and very difficult to access, and so we give them very lightweight Cloud connected sensors that allow them to monitor everything in real time.
Russ: And they’re monitoring it remotely?
Jeff: Exactly. So, we make a variety of sensors, very lightweight, things non-intrusive. And so customers can basically take out these devices to their remote sites, slap them onto the outside of a pipe, stick them onto the top of a tank, and be able to, from their phone anywhere they have internet, be able to know everything that’s happening in their assets.
Russ: So interesting because I’ve been hearing about the digital oilfield forever, but it seemed slow to really get started. But you guys are in business and are monitoring upstream oil and gas wells today, right?
Jeff: I think not only has it been a fairly slow rollout, there have been a handful of companies that have come in fairly early on with claims of artificial intelligence and things like this. Often, when those companies have gotten into the customers, the E&Ps, or service companies or things like this, what they found is, the core data, the underlying data is not there. And so what we said is, in order to get to that step 2 and step 3 of analyzing and actuating on equipment, you have to be able to measure very well first. We’ve started at this core layer, this measurement layer, to say, before we move onto these next steps, let’s make sure we can really get in there and measure very well first, and in order to do that, we have to accomplish a few different things. One is, we have to be able to measure anywhere in the world, right? Because we have very remote places. And number two is we have to do it very inexpensively because you’re often coming out of an operating budget where you have to make the economics very obvious to the end user.
Russ: Ok, you said a lot there. Number one, if I go back to the beginning, you said you make your sensors?
Russ: Ok, meaning you’re not buying off the shelf sensors, which I think exist, don’t they?
Jeff: They do to some degree though there are some inherent challenges that exist in those as well. We do make our own sensors. What we kind of said when we started the business is there are some very clear barriers to entry to putting sensors out in the field; namely, they’re either very expensive or they require a lot of maintenance. So, we said, let’s take this huge wave of new sensors that’s coming into existence as a result of autonomous driving. When you think of those types of sensors, they’re non-contact. They’re distance sensors, acoustic sensors, lidar sensors, and we said, how can we take these types of sensors and apply them in this industrial application?
Russ: Ok, so you’ve also already admitted that these wells are all over the planet. You must get into places where there’s no Wi-Fi, too. What do you do then?
Jeff: Very much so. One of the big challenges when we come into these assets is that you may have some existing infrastructure, you may have the availability of cellular service and oftentimes you have nothing. And so, we design devices that are individual nodes, and so they don’t rely on existing infrastructure. So, I can back up all the way from 2G, 3G, 4G to satellite if there’s nothing there. I don’t have to have half of a field with service and half without. We can make sure that we cover the entire field.
Russ: Does that add more expense to the whole process when you use satellite?
Jeff: It does. And so, it’s been kind of our responsibility to figure out great ways to compress that data so that we’re not impaired by the cost piece of that.
Russ: How long have you been business?
Jeff: We’ve been in business since 2015. We were kind of, early on, very deep into the R&D stages of the business. At the beginning of 2016 we went through an accelerator called Y Combinator, and then for the next about 12-18 months or so were very deep into developing the product, getting our first customers, getting equipment out into the field so that we can test and validate it, and now we’re in a phase where we’re more expanding into new geographical areas and deeper into some newer product development.
Russ: Ok, and along the way, as I’ve heard, you’ve been quite successful at fundraising, too.
Jeff: Yes. We just finished our third fundraising round in January of this year. Those funds will largely be put towards increasing the staff of the company. We’re hoping from January 1 of 2019 to January 1 of 2020 we’ll double the headcount of the company.
Russ: Ok, and you have offices in Houston, San Francisco, and Mexico?
Jeff: Exactly right. And so, we have the three offices right now. The reason we are distributed in that manner is so that we can access the talent pool of software engineers in San Francisco. In Mexico City, we have a variety of clients throughout Latin America, and so that office serves as our operations and business development, and then everything else is here in Houston.
Russ: Ok, so you’re doing business in Mexico and Latin America.
Russ: What percentage of your business is there?
Jeff: It’s about 60% of the business that’s in Latin America. I would have never thought this early on in the business that we would have ended up going international, and there’s been some kind of interesting things that have happened that have pushed us in that direction. Namely, a bunch of countries in Latin America that have started to or have completed denationalizing their oil production, and so what that means is new, smaller, multinational bank-backed operators that come in there and try and operate them with higher excellence.
Russ: Oh, wow. So, I remember probably about five years ago there was a guy named Mark Mills out of the Manhattan Institute that wrote this book called Shale 2.0, but it was all based on the fact that you haven’t seen anything yet. The minute we start pulling in the digital technology that’s being developed, the top is going to blow off again. It seems like that’s exactly what you guys are doing.
Jeff: I think this is where the direction of the industry is moving, and so what you’ve seen historically is every time there is a big downturn, the oilfield service companies are really pressed to make big shift changes, and when they come out of that, when some commodity price comes up or some new area is discovered, that’s when the operators really get to show kind of what they’ve learned from that downturn.
Russ: Ok, but you mainly work for the actual producers themselves, not the service companies?
Jeff: We work for both, actually. For the operators themselves, we’re largely looking at performance of wells, making sure there are no leaks that are happening, making sure that we’re properly managing our infrastructure. And then on the oilfield service company side, those service companies are going in and selling certain types of operations or services or things like this, and so often we’re coming in to help them prove the value of the services they’re providing.
Russ: What did you do before FlowCommand?
Jeff: I was a completion team lead at Occidental Petroleum in the Permian Basin.
Russ: Very interesting. Before I let you go, share your perspective. Where do you want the company to be five years from now?
Jeff: It’s a great question. I think we generally think on even shorter terms than five years, and so it’s hard to extrapolate that out, but we’re really focused on taking this really heavy R&D of new devices and expanding that portfolio. So, looking at what it means to things like sensors and additional non-contact devices, and reducing the costs even further so we can take all of these devices and kind of blanket the oilfield. So that in the same way that you can operate your Nest remotely, or your garage door remotely, these high revenue producing assets, we should be able to see them from our phone from anywhere in the world.
Russ: Fantastic, Jeff. I really appreciate you sharing your story, and good luck in obtaining your goals.
Jeff: Thank you.
Russ: You bet. And that wraps up my discussion with Jeff Garoon, Co-founder and COO of FlowCommand. And this is HXTV.
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