In 2010, I believed that the entire energy industry was ripe for innovation and would be led by technology-adept, information age-minded entrepreneurs. Our grand experiment on SURGE was to prove (and accelerate) this theory by making bets on great people, great teams, and great ideas.

Early on it occurred to me that there will only be a few winners in the accelerator space based upon having a true and sustainable value proposition [something that you do very well and are passionate about that solves a customer problem that they are willing to pay for in the quantity necessary to make money that is unique to everyone else].

As Ash Maurya writes, “Once a startup achieves some level of initial success, it is inevitable that competitors and copy-cats will enter the market. If you don’t have a defense against them, you stand a real risk of being made extinct by these fast-followers.” And by the time you read this note, at least two accelerators, incubators, co-working spaces, insert new term here, will open up around the corner from you.

In the case of Y-Combinator, they own Silicon Valley. If you want to fast track your team, idea, company, get accepted into Y-Combinator. In the case of Techstars, they have breadth and reach. Instead of competing for Silicon Valley, they decided to own the rest of the world and form large and lasting corporate partnerships and investor relationships. Being in the Techstars network as an entrepreneur is bar none.

Where does that leave the rest of us? There are a few others on the Seed Accelerator Rankings list that have innovative business models and impressive traction. What makes the chart difficult is that it is measuring all of us using the same metrics; however, not all of us have the same purpose, profit motive, nor business model. image1

SURGE entered Houston in 2010 as a for-profit seed accelerator that focused exclusively on energy. We had local competition that lacked a strong unique value proposition…but wait…this was our great debate and something to discuss and consider. Who was our customer? SURGE was built upon and guided by being “entrepreneurs 1st.” While SURGE built a true value proposition to energy entrepreneur’s around the world (we offered access to the customers, the experts, and energy-knowledgable investors), we were unable to compete against our local competitors when it came to sustaining our revenue model.

The SURGE Lean Canvas

SURGE Lean Canvas 2.0While our long-term model was to generate returns from exits, we are still only 5-6 years into the cycle, and exits were never forecasted to come for another few years. And with the current state of one of our focus industries, oil & gas,  and the lack of innovation of our Texas-based utilities, the exit timeline has only extended. This forced stress upon our short-term model: generate sponsorships to pay for the lean cost structure.

Who is our customer? I still believe it is the entrepreneur, but our revenue model (at least until we birth a unicorn (save this conversation and read one of my last posts) is dependent upon our partners to pay for our annual budget, not our focused customer.

SURGE 2.0

While I am now a professional surfer, my mind, heart, and soul is still deeply connected to SURGE’s awesome entrepreneurs and multiple industries within energy that need to be improved, dramatically. Energy needs entrepreneurs brave enough and big enough to take on the largest players head-to-head. A few of these ideas will not be birthed inside of an accelerator; however, they could be and may still happen.

When we started SURGE, world domination was always on our mind. We believed that while Houston is the best HQ for an energy accelerator (largest number of customers, experts, and investors across the entire energy value chain from upstream oil & gas, to midstream, to downstream, to power generation, and even cleantech), there are other places around the world that excel in key technological and customer specific areas and having a “global footprint” was important for a few reasons. First, while Silicon Valley continues to lead in generating electron entrepreneurs across all industries…energy is special and requires deep domain expertise. Second, in order to sustain our short-term business model (covering our overhead), we needed to capture the financial support of the energy industry. Houston alone is untenable (strong local competition, need to have larger footprint, closer presence to check writers).

We started down the road to build an alliance of the top energy focused programs around the world. We lacked the resources to pull this off…but I believe it must be done and the result will have a global impact.

Proposal

I propose that the key leading programs around the world should unite and work together to accelerate the best energy startups from around the world. I believe a global alliance will be large enough and close enough to open up the checkbooks of the largest energy customers to support (sponsor) to program. An alliance will grab the attention and support of key institutional and angel investors to write larger checks for capital necessary to create true momentum. An alliance will attract the best entrepreneurs in the world that can leverage the global mentors, partners, investors, and customers.

Key Energy Programs

 

Written by kirkcoburn

Founder & Managing Director @SURGEVentures, Founder @SiriusXMPGATOUR, Founder @ChiefOutsiders, @LTRaceSeries Buckle Holder, Blessed Husband & Father

4 comments

  1. Great read Kirk. All the energy programs and check writers could unite but looking at the other side of the ecosystem how does the oil and gas industry slow adoption cycle fit into this? I’ve seen at least a few energy startups who do have all the money they need (or even more than they need), yet have a hard time penetrating the industry, Tachyus would be a good example.

    1. I have talked about this phenomenon…technology companies are not operators, but rather service companies selling to operators (from Upstream to Electric Power). Until there is an operator that values the service as a competitive advantage vs. a way to reduce costs, technology companies will continue to struggle with an inferior value proposition compared to business as usual. I will write soon about what I am doing. It is my belief and desire to become a technology company that happens to be an operator. On the upstream side, if Tachyus became an E&P company and used its IP to make better buying/drilling/production decisions, it could change the game. My former boss, Michael Dell, would have failed if he only tried to sell his superior value proposition to IBM. He instead decided to just compete head to head. So Moji, who is competing head to head against the incumbent operators using a superior value prop?

      1. Interesting, before the downturn of 1980’s the operating companies were actually very technology driven, see the history of Amoco and Exxon in-house technology development as good examples. They would hire service companies to do the job but the attitude was more like “this is what’s happening”.

        When the downturn happened a lot of talent from operators migrated to service companies and throughout 20 years the relationship changed to service companies developing all technology. The operator attitude towards service companies changed to “we need your help to do this job”.

        A more recent story is the one of Turnkey E&P Inc. Bob Tessari is one of the legendary drilling visionaries, he is the guy who invented mobile top drives and a technology to drill with casing instead of using drill-pipe, therefore, drilling wells much faster and better. He tried to commercialize this technology via his company TESCO but faced massive resistance from operators. Eventually he decided to do it on his own by starting an operating company around the technology:

        “Turnkey E&P Inc. (Turnkey) is a Canada-based company. The Company enters into the oil and gas acquisition, exploitation, development and production business is based on the benefits of the Casing Drilling technology and the business opportunities presented by utilizing this technology.”

        Here is how they structured the IP:
        https://www.sec.gov/Archives/edgar/data/1022705/000118143107070256/rrd179258_22414.htm

        This didn’t workout unfortunately and the company went out of business. I think because to be a stand alone operator you will need such integrated system across the board for exploration, drilling, production, and reservoir management (2008 crash didn’t help either). I’m not sure if anyone can pull it off independently or be able to separate the has to be done stuff from things that could be impacted and improved by targeted technology application.

        To answer your question, I don’t think anyone is competing really. They are just smaller operators but not around solid technology. Most E&P startups are founded by people coming from big name operators. I’ve yet to see one that’s formed by technology heavy hitters from the service side. Oil and Gas is definitely past due for disruption. Looking forward to your plan Kirk.

      2. I’m also interested in learning about your plan, Kirk. I shared my team’s plan and current development with you ( during and after the Surge application period) and I noted a piece about you recently that involved cutting costs in the oil and gas industry. As an operator who is bringing digital transformation and using data ( as I explained to you earlier), I can’t wait to learn about your approach!

        Kelly Zimmerman
        Founder, Energy-Hub

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