“If you know you want to start a business or have a business one day, don’t wait until that demarcation point in your career.”
Anthony McDaniels is the founder of RARE PETRO. RARE PETRO is engaged in creating oil and gas, mobile and cloud-based app technologies, along with providing petroleum engineering and consulting services.
Founded in 2015, RARE PETRO is designed to be the future of oil and gas technical firms. Its main mission is to work towards modernizing the industry by using and leveraging technology to drive efficiency and improvement.
They also offer traditional technical consulting services, with a focus on being more cost-effective.
From a Senior production and completions engineer, he decided to try and do things on his own, leverage his technical knowledge and experience to start with a consulting approach. He soon rolled out his first oil and gas app.
Anthony talks about his thought process and is rolling out a number of additional oil & gas industry mobile apps in the coming months on iOS and Android systems to serve the oil and gas industry.
You can do little things well in advance at that to help prepare you to increase your financial IQ, increase your network of people that you know, quality advisors, CPAs, attorneys. This is a lot of stuff that can be done years in advance.
Learn how Anthony leveraged foresight, technical expertise and listening to the “pain points” of his customers to brand and build a successful business.
Anthony McDaniels is the Founder of RARE PETRO. RARE PETRO is engaged in creating oil and gas mobile and cloud-based app technologies, along with providing petroleum engineering and consulting services. Founded in 2015, RARE PETRO is designed to be the future of oil and gas technical firms. Its main mission is to work towards modernizing the industry by using and leveraging technology to drive efficiency and improvement. They also offer traditional technical consulting services with a focus of being more cost effective. Anthony, it’s a pleasure to have you on Business Leaders Podcast.
Thank you for having me.
How in the world did you get started with RARE PETRO?
For a long time, I knew that at some point I wanted to start a business of some variety in the oil industry. Back in college, ten or fifteen years ago, I didn’t know what that would look like. I started out in the industry working a little more than ten years ago. I had a good job and was working through a boom, but I always knew that the industry was cyclical by nature and that the boom wouldn’t last forever. I started investing in rental properties and so on and so forth, and try to practice a little bit and get some things going that would help soften the blow when and if I needed to make a jump into business for myself.
After a number of years of that, two and a half years ago, it was announced that the company I was working for full time in Denver at the time was shutting down their offices in Denver and people were either getting packages or severance or relocation. Severance was my end on that. I didn’t want to leave the area anyway. I took the last so many years of investments in rental properties and the severance package and went out and said, “Now’s the time to start something.” Early 30s, you got some experience under your belt but you’ve also got the timeline and the energy needed to recoup if you make a drastic mistake. My wife and I have three daughters, five, three and one. The family is pretty well-balanced. I don’t know how it’s possible. It was weird because when I started, I had a consulting project pretty much. My pay went through the end of June 2015. Then starting July 1st, I had a consulting contract start.
Before you started your company, you studied at Mines, correct?
What was your degree?
What was your final role in corporate America?
Senior Production and Completions Engineer.
For the guy that doesn’t know what that means, what does that mean?
Basically figure out how to finish the well so that it’s ready to produce for the next 30 years and then figure out how to produce it over that 30-year period. That’s essentially it. I also knew that being a business leader and being a senior technical person weren’t exactly the same paths. They were different paths. I didn’t find the injection in my life at 33 of, “You’re not a senior engineer anymore. Sorry.” I could have gotten another job somewhere else, probably after six to twelve months, but decided to try and do things on my own, leverage my technical knowledge and my experience to start with consulting. I was able to get that going pretty much right off the bat.
It was a small contract with a company out of California that I’d known for some years, and it grew. It was me in my basement two and a half years ago. Now we have pretty much an entire office suite here in downtown Golden with four or five full-time people. It’s evolved much beyond just consulting. I wouldn’t say that it was a difficult transition for me per se to go from being a W2 employee to being a business owner because my wife and I were planning that trajectory years in advance. Preparation goes a long way. An ounce of preparation is worth ten pounds of reaction. There’s a lot of truth to that, by doing some things before you need them. Taking the risk of a small amount of money to go learn how to invest in something, go to a seminar even, read some books, invest your time, buy a rental house or two or learn about how to do stock investing on your own, not relying on a financial advisor.
Those things are very valuable. The problem most people have when they go into business is maybe more traumatic than it needs to be. It’s traumatic for a lot of people because they’re thrust into this and they adapt well, but they weren’t suited for it. There was a mixture of luck and tenacity, but you can do a lot for yourself. If you know you want to start a business or have a business one day, don’t wait until that demarcation point in your career. You can do little things well in advance of that to help prepare you. Increase your financial IQ, increase your network of people that you know, quality advisors, CPAs, attorneys. A lot of stuff can be done years in advance and for me and my wife, soften the blow significantly. The blow isn’t so much a financial, that’s one part. The blow is that most people get psychological because they’ve gone from being told pretty much everything to do on a day-to-day basis to now they’ve got to figure everything out on their own to have their own business.
For the folks, in a thumbnail sketch, what does RARE PETRO do for its customers?
What RARE PETRO does for its customers is it provides a little more modern spin on consulting and we provide modern technology application. I met a programmer two years ago after I had been consulting for about six months and I said, “Let’s put a slide rule on our phone.” It was meant to be a differentiator. I was a young 30s consultant. I had to differentiate myself. That was the intent. We did a couple more of those slide rule reference apps, put them on the App Store, and realized we could develop some effective, nice to use, and not too expensive tools of all varieties between cloud-based platforms, mobile devices, helping anything from, “Here’s a simple slide we’ll reference,” to, “Here, I need to log in and I need to see what’s happening with this,” from anywhere you have internet, not just at your terminal with the software package on it.
There’s so much that we try to offer. It’s not so much trying to be a jack of all trades. It’s not trying to have twenty different products out there. It’s trying to develop a brand of products, that brand being these are going to be easy to use effective tools, whether it’s a cloud-based platform for decline curve analysis. There will be further and further additions to that platform over the near future and in perpetuity as long as we’re around. There are so many little things.
This is what I realized in my career as an engineer in the oil industry. I would have a software package that you’d have to go to a week-long course to learn how to use the thing. I’d only use 10% of it, and 90% of the people using it would only use 10% of it. You’re paying an outrageous fee and you just need it for one or two key things. Why does it have to be so complicated, expensive, and difficult to use? What we’re designing now is tools that I wanted when I was an engineer in the industry. We have almost 150 years of industry experience in RARE PETRO. We have some 30 to 40-year experienced advisors that are excited about what we’re doing. We have advisors who have field background, engineering background, regulatory background, and they see the potential what this could be just by providing slim, easy, effective solutions.
Thinking about that as an entrepreneur, and you have depth of knowledge in your space, you go from a thought, “This would be a useful app.” What’s that crossover point from thinking to doing that happens when you want to take and come out with a new app? Do you have customers ask you for it or is it just from feedback in your staff?
It’s a myriad of things. Basically, somebody comes to one of our booth events that we’re at, or maybe somebody reaches out to us with all these ideas, “Do this and that.” In conversations with my partners, we always figure out a way to uniquely risk rank what we’re going to do. You want to be market-driven. You don’t want to put yourself in a box and think, “I’ve got the answer.” You want something out there saying, “I need a solution,” because once you develop it, you have your first customer lined up.
You’re reaching for the pain point.
We’re reaching for the pain points, but the other thing is there are some projects that come across our table that we could turn them out. Let’s say a simple animation for our customer, put it on an app on a phone so they can show other people and help them to get their sales. That’s the project that I wouldn’t say is our specialty, but it’s so low risk to us it’s such a quick turnaround. It’s that extra thing that we can provide. Unfortunately, at least from what I’ve seen, it’s not a cut-and-dried approach of, “We’ll only take suggestions from prospective customers or we won’t take our own ideas and grow them.” What I would say is there is a higher strategy level.
What we are trying to do is have three to five projects working at any one time. The reason being is two-fold. One is risk mitigation. Statistically, not every project we are working is going to go. We’ve got to put our eggs in more than one basket. The other end of why three to five is if you have more than that, you dilute yourself and you can’t give any one thing the kind of attention it needs. A lot of companies, and we’ve gone through a startup accelerator program, there’s a lot of talking about minimum viable product. What’s the one widget you’re going to sell? What’s the one product you’re going to sell?
Most companies that are startups are product companies or specific service, and that’s a lot easier to define. There are very few companies out there and they take a little longer to mature into themselves. There are companies out there also known as brand companies. For example, Nike is a brand, Reebok is a shoe. You’ll buy a shirt that has a Nike Swoosh because you know what it means. As weird as it may sound, to be in a non-consumer sector and in oil industry, we’re trying to be a brand recognition, not a product recognition, the brand being the actual goal. As crazy as it might sound, over time when somebody in the oil industry sees that RARE PETRO logo, they’ll be thinking similarly to what a consumer thinks when they see that Apple logo on a back.
We’ve got to put our eggs in more than one basket.
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They know what that generally represents for the kind of product they’re getting. When you’re trying to grow a brand and you’re trying to get market feedback on which projects are going to happen, you end up in this, “We’re going to try to work three to five things at a time.” Brand adds a level of difficulty too, because what we’re doing is we’re creating products, whether it’s an app on a phone or a cloud-based software that you’ll pull up from your computer with your internet. To the user, they might look like different products, but we’re developing these things so that they’ll work within an ecosystem with each other.
It’s very risky to put all your eggs in one basket. Usually what happens from what I’ve seen is if you have one really good idea and you’re able to execute and it’s popular, you can easily get pigeonholed into, “That’s just what you do. You guys are the decline curve guys,” and that’s the only thing everybody’s going to know you for. If that’s all you focus on, you might be able to monetize that a little quicker, but then that’s all you got, and now you’re constantly worried about your competitors.
For the folks that don’t know what a decline curve analysis is, what’s the short version of a decline curve analysis?
The short version is wells come on production when they’re new, when they’re born. They produce really high rates and then they decline over time. The energy gets drained out as you pull the stuff out of the ground. After you have a trend of data that’s declining, you’d basically draw a line through that data and you project that out into the future. You’re projecting that out with a mathematical equation that fits the early time. That gives you an idea, “How many barrels will I produce from this well before it gets non-profitable? How many barrels you get from the well and how quickly you get them from the impacts how much money can I spend to drill another well, how much money can I spend to extract this stuff out of the well.”
That goes all the way through the entire field.
That goes everywhere. Decline curve analysis might sound a little esoteric, not well known, but essentially it’s one of the key things behind a lot of the valuations that banks give oil companies, a lot of valuations that public shareholders give oil companies. A lot of valuations that even private oil companies get subjected to how much do you have to produce. Today’s production is cash flow and that’s king. You got to have it, but you need to know if this company is going to run out of production next year because it’s declining all the time. If you don’t do those analyses, then you don’t know the company that makes 100,000 barrels day to day. What if you found out that in two years they’re only going to be making 30,000 barrels? They have to drill a lot, and that definitely affects valuation at all levels.
We’re going to do in the drill downside. Let’s say that I’m out in the energy space, oil field space, and I’m a potential client or business owner listening to this podcast. How would they know that you could help and how would they start that dialogue with you?
The easiest way would be to go to our website, RAREPETRO.com. You could also call us at 720-772-7371 or you could contact us at RAREPETRO.com. It’s also on our website. The way that we would help out, between myself and the advisors we have in consulting, we can help people anywhere from some technical due diligence on acquiring an oil field all the way to suggestions on how to develop and operate and value that oil field. As you continue to go beyond just getting it, then maybe you need to produce it.
From the technology side, what we have found is that between offering consulting services and technology services and products, it’s extremely synergistic because you end up helping a customer today. Maybe they need some expertise, but then they get to know you and you get to know them. You get to see the things that they need. It’s not you’re trying to sell them up something. You’re working with them, you’re consulting for them. This is a much easier business transaction to start because people understand consulting and what it’s going to give them.
The oil field has a long history of consulting.
It’s much easier. Once somebody knows somebody’s background, consulting is a pretty easy thing to get started. “You do have the background. Give me some advice.” Then you get to know what their business needs and pain points are, and you can casually suggest, “It would help the production operations a lot if you had a cleaner way to get this data and make sure it was right.” Enter a potential technology solution. Unlike a lot of software products and technology solutions that have been in and currently are in the industry, you have this dichotomy. You have these software products that are 20, 30 years old in their platform. They’re not the best products. They’re clunky, they’re expensive, but they’ve been used a long time because essentially all the technology companies on the other side, Silicon Valley for example, they understand how to make an amazing software, but they don’t understand what it needs to essentially do, what it needs to be focused on.
You have to be from the business.
I’m thinking that what is happening with what we’re trying to do is going to be a bigger shift, not just in this industry but other industries because 40 years ago, technology was all centered around business. The people that saw the wave of consumers as the next wave, Microsoft and Apple, look what they turned into. Now we have all these wonderful technology products for consumers. You want a coupon app, there are 30 of them out there. You want a game. God knows how many they’re out there. A lot of them are free too. It’s amazing how many things you got out there. You’ve got all these people playing with open source hardware platforms, robotics, drones, hobbyists making apps. What if you take that and direct that towards industry use? I honestly think that one of the biggest next waves for tech is what I would consider industrial technology companies. Companies that, under the same roof, have the ability to understand the industry they’re supporting because of the experience and can develop in-house the products to meet those needs.
There’s a huge difference between data and intel. If you can take and make that employee where they’re doing the intel space instead of just the data massage, software is well-suited. In your company, you promote a culture of service in technological application to solve problems. How do you maintain and transmit culture within your business?
It all comes down to focus on what matters. You want to be a modern company, you’ve got to be modern in as many possible ways as you can. Take the best pieces from before the 21st century, having a central place like an office space where people can all convene. Leave out the stuff that isn’t of value anymore. It wasn’t all that long ago where you had to be in the same chair every day, regimented schedule, and punch in, punch out because people need to know how to get a hold of you and where to find you. With smartphones now, the whole game is different. If you want to be modern, you got to embrace that.
It doesn’t mean you have people come and go and you never know where anybody’s at. What it means is you just say, “This is the deadline. I need this app done. This is the deadline. I need this draft done. Get it done and I don’t care how or where you do it as long as it’s done.” There’s something there too that you can’t just go super startup tech so crazy where you got people skateboarding up and down the hallway. Focus on what matters. Focus on the work. If it helps to accomplish the project for me to provide a LogMeIn account to one of my associates so they can get on their computer remotely from home and leverage some of the software here, I’ll do it. If it helps to provide them a couple of sandwiches a week so they don’t feel like they got to choose between being hungry or leaving and out of a good zone to go out and get food, I’ll do it because to me it’s trying to produce productivity.
Everything’s about productivity. It’s not about hours punched. It’s not about what benefits you do or don’t offer. It’s about what helps develop productivity and ingenuity. Generally, ingenuity and creative thinking cannot be forced. It cannot be dictated. From my belief, true creativity and ingenuity does not come from a situation where you feel like you’re managing a work-life balance. You got to live and enjoy what you do. Hopefully, what you do and what you enjoy doing is productive. At least one of the things you enjoy doing is productive. That way, you can get stuff knocked out and get a good quality work done. Some people need 40 hours a week to go through all the little stuff on every project.
You have a series of experts inside the firm and you have a stable of experts outside the firm. One of the keys is key personnel or keeping talent. From your company’s perspective, what do you do to attract and retain key personnel?
People is uniform in every business. That is probably the most challenging part in most every business. Even if you’re just producing oil out of the ground, you still need people to help you do it. Even if you’re not selling products to a retail sector customer, you’re still needing to deal with people. My wife and I have other businesses. She has some retail stores. We learn a lot off of each other and we try a lot of things. She has some experience in dealing with rental management too and placing tenants. This would be my two bits on how to get the right people on the bus, as Jim Collins would say. You need to figure out what metrics are important or critical to you and you need to have the patience to wait for the type of people that cross those hurdles. For example, if you need somebody who can show you they can do a follow-through without knowing the result, pretty important in a startup company, then you will ask them to submit something to you before they know if they’re going to even get the job or not.
This isn’t asking for free work. This is just seeing, “Can you follow simple instructions?” There are other things you can do where you vet them out for a period of time. Bring them on as a contractor for a little bit. Try them out, let them try you out. Don’t forget, this is a two-way street. You’re not just trying them out, they’re trying you out. You want to make sure that that mixes well. What ends up happening is it’s a lot easier fundamentally to say, “I’ll put a job up that’ll pay $100,000 a year. I’m going to get twenty applicants in a week. I’m going to have as many interviews as I want out of that pool.” That’s relatively easy to find people who want to interview for high-paying jobs. Regardless of what you can or will pay, there’s nothing like having people in your company who are literally there because they like being there.
One of the best ways to figure out if somebody generally likes being there is to see if they’re willing to put out some effort for what would be normally considered fair pay, but not great pay and see what they think about that. That’s how I’ve done it. How I have attracted the right people on the bus is because I’m a startup, funded so far, and I basically want people that are willing to worry about the future potential more than what they get today.
Starting from the basement, now that you’re in your office here, there’s that top-line revenue. For you, when you were looking out as you started, what were your thoughts about growing top-line revenue? What was your strategy?
Multiple prongs. You don’t want one strategy and you don’t want one tactic. As I’ve said to some people, put as many irons in the fire as you can simultaneously so long as they do not compromise each other. You want them to reinforce each other. What do I mean by that? As an example, I had consulting contracts that were in play before I started growing the technology firm. The revenue from consulting has helped float the negative cash flow starting up a technology firm.
Let’s say I’m the person out there and I’m working for a company, and I can see that my job may be tenuous at some point. While you were working, what did you do to cultivate those potential future clients if you left? What’s a good strategy?
Reach out before you need them. Plant seeds. I had my first consulting contract literally the following day after my paycheck stopped. Before that, I had already reached out to some people and said, “I’m thinking about going into business for myself,” which I was before the severance. “Would you be open to having an arrangement with me?” “How would that look?” You don’t ever want to wait until you need something to go get it. What usually happens is you’re going to pay too much and you’re not going to get what you need. That’s not good stuff. Human network is very important. It’s probably the most important capital anybody has. Do not fall into the rut. There are many books that say this and I can tell you they’re right. You want to keep professional contacts. Do not quit and do not leave one job position and go to the next and not at least make an effort to stay in contact with people you worked with.
One of the things we want to make sure is that they don’t violate an employment contract by reaching out. Staying in contact, offer value, stay in touch and “please” and “thank you” like mom told you, is a strategy. For the entrepreneur out there going like, “I might be in that bug. What do I start thinking about?” If there was one book that you read or two books or so, that were influential in that transition period, would you mind sharing what those might’ve been?
I went on a deluge of books for a number of years. I’m going to have to break it down into series for you. Here’s a free piece of it. I got an Audible subscription five or six years ago. You get an audio book once a month. I would listen to the books on my commute. I was chewing up over 100 books. What stands at the top out of all of that is the Robert Kiyosaki Rich Dad series books. They’re as good as starting point as any. Another real good one is Think and Grow Rich and all the Napoleon Hill series. He wrote that during the Great Depression. Generally, there are always a couple of good books from the Jim Collins of the world and those types of characters.
What usually happens is I’d read one book and they would reference three others, so then you would go take those notes down and try to get to one at least. I would give another piece of advice. Read books by people you respect out of history. You will be those who you follow. Who you try to emulate is going to be who you are paying attention to. It could be autobiographies by Benjamin Franklin, for example. Read books written by people that did great things, at least in your opinion. You’ve got the Kiyosaki series, you’ve got the Napoleon Hill series, and then you’ve got people who you respect that you’re aware of either in current times or in history. Read their works.
You will be those who you follow. Who you try to emulate is going to be who you are paying attention to.
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The principles seem to endure.
It all comes from within. Your attitude about your life will shape where your life ends up.
You get to choose.
Usually what happens is it’s the small things. Do you follow up on little things you tell yourself that you promise yourself? That turns into bigger things.
Taking action and doing what you say. It’s not what you say, it’s what you do. Speaking of saying and doing, I was looking at your website and you have a RARE PETRO Podcast that you launched. What’s the story behind your podcast?
We’ve been putting out news pulses. This was an idea to provide knowledge. Over a year ago, we started putting out once per month a two or three-page summary of each major oil and gas space. Then one of our associates here said, “I’d like it if I could listen to those as opposed to have to read those.” He says, “Can we start a podcast?” I go, “Let’s start a podcast.” You can get the news then that we’re putting out in an audio format as opposed to sitting and reading it. That’s a pretty good idea.
We took it a step further and we’re also going to be putting on interviews from high-level people in the industry, CEOs, academic dignitaries in the industry, high-level people. We’re going to be doing interviews. We have our first one done up. We’re going to be doing our second one next. We’re going to be looking to provide content to people so that they can stay current with trends of what’s going on in the major basins, high-level news, and also listen to an expansion on this but all oil field focused. “Let’s talk to the people who’ve started companies and built academic programs and been all over the world. Let’s get it from their mouth, 20 to 40 minutes of recorded content.”
I think about the guys that are commuting in this energy space. There’s some lengthy commutes involved in some of these, folks. I think about as you’re in the field or where you’re going, the ability to garner knowledge that may impact a current problem you are facing. As a value add, that’s extraordinary. Anthony, thanks again for coming on Business Leaders Podcast. I sincerely appreciate it.