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 invoices faster.
Then he had a few drinks, scrapped the idea and revamped his presentation. His revised plan was for a company that would use blockchain to track progress of an industrial delivery or manufacturing order and automate payments.
“Hungover as hell,” he wasn’t sure what reception he would get, but those in the room seemed interested.
“They came up to me afterwards and said, you know what, if you can automate a contract for drop pipe connections, then you can also use it for delivering water or delivering diesel or delivering people or measuring services or whatever else you want,” Bruce said. “They said I should go for it.”
Since then, his Houston-based company, Data Gumbo, has emerged as a leader in the new industrial blockchain category. It’s seeking Series C investors, and in the past 12 months, its workforce has grown to 72 from 41. More than $1 billion in transactions flow through Data Gumbo’s systems, and more than 100 companies provide the company with data about the work they’re performing.
The use of blockchain — like a virtual ledger of the online exchange of information — is still a relatively new phenomenon. It was initiated as the public ledger for transactions made using the cryptocurrency bitcoin by an unknown person or persons working under the pseudonym Satoshi Nakamoto. Eventually, the 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.
Blockchains collect encrypted information or data into groups, which are known as blocks, according to financial knowledge website Investopedia. Each has a certain storage capacity, and once that capacity is reached, the block is closed and then linked with previously filled blocks. New information that flows onto the blockchain is compiled into a new block, then also linked to the chain. Those linked sets of information and data form the blockchain.
Gumbo’s recipe
Data Gumbo began using the blockchain to make payments between oil companies and their subcontractors easier.
Bruce said it can take 60 days for subcontractors to write up an invoice for work they did. Payment can take an additional 120 days, during which the oil companies and subcontractors often squabble over the quality and amount of work done, engendering mistrust.
That’s not a problem when using DataGumbo’s blockchain and smart contracts, Bruce said.
He described the system as like an Excel spreadsheet, helping to keep track of work being done. He jumped out of his seat and began to describe how it works while drawing boxes and lines on a whiteboard at Data Gumbo’s Spring Brancg headquarters to describe how it works.
The system automatically uploads data from meters and other data-collecting instruments in the field – everything from drill pipe measurements to connection times. Each of those measurements is encrypted and becomes a “block.” Data Gumbo’s system then runs the blocks, or encrypted data, through an algorithm that processes the terms of the contract. That creates what’s known as a “hash,” and if all the hashes match up, an automated payment is sent from the oil companies to the subcontractors.
If a subcontractor is able to make a one-minute improvement on connection times, for example, and can show it through data in Data Gumbo’s system, they can get an automatic $2,500 bonus or whatever figure the subcontractor and oil company agreed to, Bruce said. Instead of taking a cumulative 180 days to process that payment, it happens automatically within seconds.
“It locks the whole thing down so nobody can monkey with it. It creates a ledger for the one company and a ledger for the other company,” Bruce said. “Neither side can change it and use it. They put it in blockchain and they just create a trust and non trusted environments.”
It takes a vast amount of data and makes it palatable — inspiring the company’s name, said William Fox, chief product officer. He and Bruce were having a hard time thinking of a name when they were incorporating in September 2016. They wanted one that wasn’t exclusive to oil and gas but was also unique enough for folks to remember. Fox spat out the name Data Gumbo, and Bruce turned his head to stare at him.
“We just started bursting out laughing and it was available for a dollar on GoDaddy,” Fox said. “When people hear about us they say ‘Oh, that’s a really dumb name.’ And then six weeks later we see them again, and they say ‘I couldn’t get your dumb name out of my head.’”
Other applications
While most of the company’s work in the beginning was energy focused, Bruce said, Data Gumbo is expanding into other industries such as salmon farming, accounting for carbon credits, insurance agreements, commercial real estate and shipping logistics.
“Is it a product or service like can be measured electronically, and can the payment mechanism being captured electronically and executed automatically?” Bruce said. “If the answer is yes, then you can use blockchain to solve.”
It also can 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 footprints or investing in communities or incorporating more diversity among leadership positions.
Companies can have the system monitor information about emissions or fuel efficiency or hiring practices to create a ledger of the work being done, Bruce said. They can give auditors, board members or shareholders access to that ledger so they can track the progress and see if it aligns with goals they agreed to.
“The blockchain doesn’t just provide automation of the contract execution today,” Bruce said. “It also provides an audit in perpetuity.”
He said the adaptability of the system, and the ease of using it, helped Data Gumbo grow to its current size. Bruce hopes the value of transactions flowing through the system will rise to $10 billion from $1 billion in the next 12 months and to grow its physical footprint beyond its headquarters in The Cannon business incubator and offices in Norway and London. It will need to expand its headquarters in The Cannon too, as Bruce aims to double the number of Data Gumbo workers from 72.
Even as the company grows, Bruce wants to maintain Data Gumbo’s ethos and work culture. He keeps a broom in his office as a reminder to “sweep the shed.” The term comes from his days as a rugby player in his native Isle of Man, where the leaders of the team clean up after themselves and their teammates.
“No task — nothing — is beneath the leaders or anyone else in the company,” he said. “That’s the way it is now, and that’s the way it will be going forward.”
shelby.webb@chron.com
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