Startup Success with Data Gumbo: Managing Burn and Growth Rate
In October 2017, research firm CBInsights decided to dig into startup success. What they found was a startup graveyard. According to their data, 70% of tech startups fail and most do so within 20 months of their inception.
58 out of 200 startups polled “post-mortem” listed burning through cash as their reason for failure. They’re talking about their startups’ burn rate, or the speed at which a new company spends its capital to finance overhead before generating positive cash flow from operations. Companies that burn without growing are doomed to fail. On the other hand, companies who grow too quickly without the cash to spend can drown in their success. Where’s the point of diminishing return? Where’s the line and how do you walk it?
One of The Cannon’s founding companies, Data Gumbo, saves oil and gas drilling and production firms money by improving efficiency through blockchain smart contracts. They’ve thrived through a few rounds of funding and have successfully grown their startup. I sat down with Data Gumbo’s Business Development Director, Maxine Aitkenhead, to discuss burn rate, growth rate, and how to manage both in a burgeoning startup.
Interview with Data Gumbo’s Maxine Aitkenhead
EF: So Maxine, Data Gumbo is relatively young but you’ve navigated risky waters and experienced recent success. Talk to me about how you managed your burn rate.
MA: We utilized what Houston available office-wise after a few months. Before that we’d meet at home or at Andrew’s warehouse. Andrew (Andrew Bruce, CEO) has a warehouse with an office in the back and we’d meet there once a week and hash things out. Two months in we decided we needed actual desk space and we went to a shared community space. About a year later William (William Fox, COO) and Ove (Ove Sandve, CTO) joined us in the office, but only when they needed desk space as well.
Everything came from our own pockets, Andrew, William, Ove, and me, then we got our first round of investment. Then in October 2017 we got our first client and continued to hire, including interns. Now we’re getting more and more investment, and we’re looking for the big one so we can go big with this.
Data Gumbo’s Maxine Aitkenhead
EF: That’s a great segway into my next question. How did/do you manage growth so as to not drown in your own early success?
MA: The way our product is set up, because we built it ourselves, we don’t have to reinvent the wheel every instance; every customer. There’s a lot of tweaking and identifying what’s going through the product. Still, these aren’t basic transactions. These aren’t smart contracts you can use for real estate or something like that. Industrial data is a much bigger blog and requires a much bigger space. The fact that we can efficiently handle the size of the product the industrial market needs in our own system. It helps us manage our growth and move forward confidently. Now we need the money to expand the product and hire sales for future business.
Another important part of this was the evolution of the product from just getting data in a logical area that’s time stamped and cleaned up to looking at what’s useful and what saves money for the customer, many of whom don’t have access to their own data. Many companies who control their equipment have to buy their data back from manufacturers. We can put it all in one place, time stamp it, and clean it up. We believe in the product and kept going based on that.
EF: What do you think separates Data Gumbo?
MA: Silicon Valley can obviously do blockchain, but they don’t know the industry like we do. I would site examples and case studies where you can save phenomenal amounts of money based on our conversations with operators and drilling contractors. We can facilitate the conversation and identify KPIs because we’re from the industry.
For example, one of the major operators did analysis on their own data and found that by saving a minute on connecting pipe (for every pipe they connect over a year) would save them $257 million/year. That’s just one KPI, so you can imagine if you applied that scenario to multiple different systems on a rig you can create efficiencies everywhere. There’s so much money left on a rig, and every penny counts.
For more on Data Gumbo, the premier oil and gas blockchain provider, visit www.datagumbo.com.