Andrew Bruce was ready for his presentation at an oil and gas conference several years ago in Amsterdam: a pitch for a data aggregation company that would help companies analyze and pay bills faster.
Then he had a few drinks, ditched the idea, and revamped his presentation. His revised plan was for a company that would use blockchain to track the progress of an industrial delivery or manufacturing order and automate payments.
“A hangover as hell,” he wasn’t sure what reception he would get, but those in the room seemed interested.
“They came to me afterwards and said, you know what, if you can automate a contract for downpipe connections, you can also use it to deliver water or diesel or deliver measurement people or services or whatever,” says Bruce. “They said I should go.”
Since then, his Houston-based company, Data Gumbo, has established itself as a leader in the new category of industrial blockchain. It seeks Series C investors, and in the past 12 months its headcount has grown from 41 to 72. More than $1 billion in deals flow through Data Gumbo’s systems, and more than 100 companies supply the company data on the work they do. efficient.
The use of blockchain – as a virtual ledger of online information exchange – is still a relatively new phenomenon. It was launched as a public ledger for transactions made using bitcoin cryptocurrency by an unknown person or people working under the pseudonym of Satoshi Nakamoto. Eventually, blockchain expanded beyond cryptocurrencies, and its ledgers can be used in a variety of online applications, such as securely sharing medical or personal information and tracking logistics and real estate transactions. .
According to the financial knowledge website Investopedia, blockchains collect encrypted information or data in groups, called blocks. Each has a certain storage capacity, and once this capacity is reached, the block is closed and then linked to previously filled blocks. New information flowing on the blockchain is compiled into a new block and then linked to the chain as well. These linked sets of information and data form the blockchain.
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Data Gumbo has started using blockchain to facilitate payments between oil companies and their contractors.
Bruce said it can take contractors up to 60 days to issue an invoice for the work they performed. Payment can take another 120 days, during which time oil companies and contractors often bicker over the quality and quantity of work done, breeding mistrust.
That’s not a problem when using DataGumbo’s blockchain and smart contracts, Bruce said.
He described the system as an Excel spreadsheet, helping to keep track of work in progress. He jumped up from his seat and began describing how it works while drawing boxes and lines on a whiteboard at Data Gumbo’s Spring Branch headquarters to describe how it works.
The system automatically downloads data from meters and other field data collection instruments, from drill pipe measurements to log times. Each of these measurements is encrypted and becomes a “block”. Data Gumbo’s system then executes the blocks, or encrypted data, through an algorithm that processes the terms of the contract. This creates what is called a “hash”, and if all the hashes match, an automated payment is sent by the oil companies to the contractors.
If a contractor is able to improve connection times by one minute, for example, and can show it through Data Gumbo’s system data, they can get an automatic bonus of $2,500 or whatever number. agreed to by the contractor and the oil company, Bruce said. . Instead of taking 180 cumulative days to process this payment, it happens automatically in seconds.
“It locks everything down so no one can mess with it. It creates a ledger for one company and a ledger for the other company,” Bruce said. “Neither party can change it and use it. They put it in the blockchain and they just create trusted and untrusted environments.
It takes a lot of data and makes it acceptable – inspiring the company’s name, said William Fox, chief product officer. He and Bruce were struggling to come up with a name when they incorporated in September 2016. They wanted one that wasn’t exclusive to oil and gas, but was also unique enough for people to relate to. remember. Fox spat out the name Data Gumbo and Bruce turned his head to look at him.
“We just started laughing and it was available for a dollar on GoDaddy,” Fox said. “When people hear about us, they’re like, ‘Oh, that’s a really stupid name.’ And then six weeks later, we see them again, and they’re like, ‘I couldn’t get your stupid name out of my head.
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While most of the company’s early work focused on energy, Bruce said, Data Gumbo is expanding into other industries such as salmon farming, carbon credit accounting, insurance agreements, commercial real estate and shipping logistics.
“Is it a product or service that can be measured electronically, and can the payment mechanism be captured electronically and executed automatically? said Bruce. “If the answer is yes, then you can use blockchain to solve.”
It can also track a company’s progress on environmental, social and governance (or ESG) practices and improvements. Investors have increasingly demanded that companies show how they are reducing their carbon footprint or investing in communities or integrating more diversity among leadership positions.
Companies can have the system track information about emissions or fuel efficiency or hiring practices to create a record of work in progress, Bruce said. They can give auditors, board members, or shareholders access to this record so they can track progress and see if it’s meeting the goals they’ve agreed to.
“Blockchain not only provides automation of contract execution today,” Bruce said. “It also provides an audit in perpetuity.”
He said the system’s adaptability and ease of use helped Data Gumbo grow to its current size. Bruce hopes the value of transactions flowing through the system will increase from $1 billion to $10 billion over the next 12 months and expand its physical footprint beyond its headquarters in the business incubator. The Cannon and its offices in Norway and London. He will also have to expand his headquarters in The Cannon, as Bruce aims to double the number of Data Gumbo employees from 72.
Even as the company grows, Bruce wants to maintain Data Gumbo’s work ethic and culture. He keeps a broom in his office to remind himself to “sweep the shed”. The term comes from his days as a rugby player in his native Isle of Man, where team leaders clean up after themselves and their teammates.
“No task – nothing – is inferior to leaders or anyone else in the company,” he said. “That’s how it is now, and that’s how it’s going to go forward.”