How Startups and Operators Can Work Together to Accelerate Technology Adoption

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“We are a late adopter of technology.” Said no one ever!

Often the biggest dream of an oil and gas startup is to have ExxonMobil (or any of the other majors) as their first customer. However, not understanding an operator’s culture of technology reception could be a deadly first step for early-stage startups.

Startups should know the target operator’s risk tolerance, and the best time to approach the company. You would never hear the manager of an oil company say that they are a late adopter of technology but, in reality, many companies prefer to wait and see the outcome of tests done with early adopters. Here are some suggestions for both startups and operators that could help optimize technology adoption.

For Startups

Do your homework. Learn all the critical information about your target operators and prioritize against your product development timeline. A mistimed pitch could either burn your chance or throw you into a yearlong back and forth with no light at the end of the tunnel. Here are a few suggestions.

  • First things first, you should understand the problem the operator is trying to solve as well as they do. Be prepared to explain why your product and team are the best choice to solve that problem. If you aren’t solving a problem, you will be a “nice to have” and therefore won’t get much attention.
  • For your market segmentation, categorize operators into majors, independents, and small companies. Usually it is best to start with smaller companies. This may seem counter-intuitive to what will impress your stakeholders, but you are likely to become equipped with case studies and move up the ranks faster by beginning with smaller firms.
  • For each given operator, research the comparable technologies being deployed. Also, find out the development stage at which the operator has historically agreed to field trial new technologies.
  • Find out if the operator has an internal technology team and, more specifically, if that group is housed inside each business unit or functions independently. Determine what their budget for field trials is and, if there is none, then your best chance will be to find a champion of your technology within a business unit.
  • In general, it is best to begin this search within business units, which may lead to referrals to other stakeholders. Think of who could benefit from your technology the most, and also who is the one paying for it.  
  • If the operator has a venture capital arm and you are looking for investments, proceed with this group. Even if you move forward with a business unit instead, ensure that the venture capital arm of the company knows about your field trial. This is a relationship worth nurturing since it may help raise capital for your company and, from an investment perspective, there is no better due diligence than an actual field trial with the same company.
  • Spend 80% of your time finding the right entry point and then become laser-focused on that specific company. Remember, until you have a commercial product, your success depends on successfully executing one field trial at a time.  

As you get exposure with more operators, identify the trends that show where you are gaining traction and have the clearest path to commercial and repeatable applications.

For Operators

Regardless of your role, ask how your company perceives technology. Is some level of early-technology risk accepted? One good reality check is to see how the previous failures have been treated. That will indicate what stage of technology maturity works better for your company. Here are a few other suggestions for dealing with startups:

  • Any given technology has a competing status quo. In early meetings with a developer, ensure that you give proper assessment to the technology and the value it could bring to the table.
  • There are many reasons why a technology will not work, but start with why it could work. Assuming it indeed delivers on the promise. The next step is to quantify the short-term cost it incurs to replace the status quo and the long-term value it offers. This step alone cancels out many of the technologies that are “cool” but don’t really add value.
  • For technologies that compete with in-house initiatives, think of any “1+1=3” scenarios that could accelerate or augment internal development. In some cases, an emerging technology could supplant the internal initiative. This is not always a bad thing as it would free up your experts’ time to do something else.
  • Early in the process, identify any possible show stoppers that would preclude you from working with the startup and make sure they know your key concerns such as intellectual property requirements, data sharing, specific conflicts of interest, etc.
  • Keep an open mind about the presented value proposition since sometimes startups have the right technology but the wrong message. As the problem owner, educate them on how their technology could be applied to solve problems they may have not even thought about.

Next time an early stage startup approaches your company, give them guidance on what milestones they must achieve before they should come back. If maturity level is indeed the issue, make clear that you are not saying their technology does not work—it is just not developed enough for a field trial with your company.

All of this highlights that the relationship between startups and operators needs to be collaborative to accelerate technology uptake. The aim of course is to help both sides of the table win; an operator gets a new value-generating technology and the startup gains momentum.

Moji Karimi is an oil and gas entrepreneur who has helped ideate, develop, and commercialize technology for big companies such as Weatherford and has now begun focusing on startups. Currently, Karimi is the business development manager at Biota Technology, a startup that is commercializing DNA Sequencing in the oil and gas industry. He is also a cofounder of SPE Gulf Coast Section Entrepreneurship Cell which is an initiative to educate and connect entrepreneurs, decision makers, and investors. Karimi holds BS and MS degrees in drilling and petroleum engineering, respectively.

How Startups and Operators Can Work Together to Accelerate Technology Adoption

Moji Karimi, Business Development Manager, Biota

16 March 2017