A new startup that's planting its roots in Austin hopes to entice oil extraction businesses and investors to shift away from speculation and toward real-time data analysis to understand the potential value of their wells.
Zeno Technologies Inc. started building its platform quietly with a small team largely based in Oklahoma and California, but it recently announced it has planted its headquarters in the Texas capital to take advantage of its tech talent pool and to be close to the massive oil and gas industry in Houston.
The company, led by CEO Sealy Laidlaw, has emerged from stealth with $5.5 million in seed funding led by Austin-based 8VC and Echo Investment Capital, the venture arm of Oklahoma-based Echo Energy, which is also one of its customers. It has also found an early adopter in Austin-based Greenlake Energy Ventures, which invests in oil and gas, renewable energy and emerging technologies. The CEO of Greenlake, Matt Gallagher, was previously chief executive at Parsley Energy Inc., which was purchased earlier this year by Pioneer Energy.
Laidlaw, who moved last week to Austin from the San Francisco Bay Area, said the oil industry is in the process of transitioning from one where value is based on land holdings and top-line revenue to one measured by cash flow, efficiency and bottomline return on investment.
"There's definitely a frustration with what's out there now," she said. "I think there's a broad recognition that there are big gaps in the market, and people have been kind of making do with what they have. I think that, for better or for worse, software has not focused on oil and gas for a long time. I think that there are tools out there that do most of what they needed to do for now but it's just painful to get the answers and we just we think there's a better way to do things."
Zeno taps into a variety of oil production data and channels to create a unified platform that it says makes drilling decisions easier. For example, Laidlaw said drillers sometimes pick spots that aren't economically viable.
"So what we're basically saying here is 'stop drilling the junk,'" she said. "Don't drill wells that are not economic. Don't drill wells that don't have the return profile that you're looking for."
And it's not purely financial. The industry is facing increasing pressure to be more environmentally responsible. Drilling low production wells just adds to the ecological impact without generating the energy and money that might have been expected.
"If we are able to help companies make the right decisions around which wells are going to be productive, all of the non-productive wells will no longer be drilled whereas in the past they might have been drilled anyways because people run a little bit more by their gut instinct as opposed to data," she said
The oil industry has a reputation for being reluctant to adopt emerging technology, especially software, which can complicate the process of landing customers.
"There is reluctance, as I'm sure you're not surprised to hear. I think people are set in their ways," Laidlaw said. "You have to make it compelling for them from both a pricing perspective, from a partnership perspective. ... What we've been trying to do very deliberately is find the right partners, find those who are going to be receptive to the technology, find those who are going to be supporters of ours who can introduce us to the right next set of customers, which is part of the reason why we've been in stealth for so long."
Zeno is one of 16 companies being incubated via 8VC's Build program, which goes beyond the traditional resources offered at venture capital firms by connecting them with experienced professionals who help with operations, finance, fundraising and more. The program develops teams to build companies focused on identified market gaps. It's premised on some of the principals that led to the rapid growth of Palantir Technologies Inc., which was co-founded by 8VC Managing Partner Joe Lonsdale.
Laidlaw joined Zeno earlier this year after several years as a principal at Valor Equity Partners. The company's other co-founders are Echo Energy founder Christian Kanady and Joel Carusone, a former executive at fintech company Kabbage. Zeno's team of about 15 full-time employees works mostly remotely.
Laidlaw is one of a relatively low number of women in the energy-tech industry. While women make up 48% of the global workforce, they only account for 22% of the labour force in oil and gas and 32% in renewables, according to a 2019 report by the International Renewable Energy Agency.
"It's not something I spend a lot of time thinking about," Laidlaw said. "I think I've always been a woman in tech. I maybe wasn't a woman in tech and energy."
Thus far, she said she's not sure how being a woman-led oil software company may be viewed across the broader industry.
"I've never had an issue with it," she said. "I think if anything, people are intrigued because we are kind of the outside perspective coming in and saying 'Alright, well I think we can do things a little bit better.' I don't look like every other person to the oil and gas industry, and I think that's a good thing. I think if you're going to sell a new way of doing things, having someone at the helm who looks a little different from the old way of doing things might help."
