Michael Witte says when he decided to get his MBA, he didn’t even really know what business school was about. But that didn’t stop the petroleum engineer from quitting his job with a major oil and gas company and rolling the dice.
Accepted to Columbia University School of Business, Witte took with him a big idea and worked tirelessly on it for two years. Acting as an online “marketplace,” he felt, a company could bring operators, service companies, and contractors together to improve overall efficiency in the oil and gas industry — and take a percentage of every dollar in awarded work.
The idea became RigUp, and by the time Witte graduated in 2014, it was ready to launch.
“I read a book one day and said, ‘I don’t want to waste away in this rat race, I want to start something for myself,’” Witte tells Poets&Quants. “I had no idea what I was doing but I quit my job and applied for business school. I didn’t really even know what business school was, but I ended up going to Columbia for my MBA.”
UNDERSTATEMENT: BUSINESS ‘GOING PRETTY WELL’
It was also while he was at Columbia that Witte met Xuan Yong, then working for New York-based consulting firm Citadel. They had something in common: Both attended Texas A&M as undergrads, Witte earning his bachelor of engineering and Yong getting a BBA from the Mays Business School. They had something else in common, too: knowledge of one side or the other of the oil and gas business.
“He certainly brings a great financial aspect to what we do,” Witte says of Yong, now RigUp’s CEO, “and I work more on the product and strategy side, so it’s been a good combo. We closed our seed round the day I graduated (in 2014), he got married a week later, and we packed our bags, left New York and came to Austin.”
In the two and a half years since, RigUp has done nothing but grow. Ranked 97th in the 2016 Poets&Quants Top 100 MBA Startups, the company jumped to 23rd in the 2017 rankings thanks to a $15 million Series A round last April. And that’s not the half of it. RigUp grew rapidly in the last 12 months, Witte says, expanding to 200 active exploration and production (E&P) companies and more than 12,000 sellers, or service providers. The company is on pace to do about $6 billion in awarded work to the platform — so it’s a bit of an understatement when Witte says “things are going pretty well.”
‘GO GET WORK DONE’
RigUp enables E&P buyers to work with service providers in promoting big and efficient operations. This time last year, with only about six months of traction, the company caught fire, says Witte, now RigUp’s COO, going from zero dollars in value and awarded work to a billion dollars in awarded work in its first year. Its workforce expanded to 55 full-time employees, and RigUp saw external-facing growth to Dallas, Houston, and Denver.
“We had a great year,” Witte reiterates.
He says RigUp initially raised money on a high-level analysis that outlined how oil and gas is a “very archaic industry, in the sense that you can drill about two miles down and you can turn at 90 degrees and drill two miles over and hit a 30-foot window — but you still transact on carbon copy pieces of paper. So we said, ‘We’re going to create a more efficient way of doing things.’ We wanted to create an asset-light company that enabled people to go and get work done. That’s our motto: ‘RigUp: Go Get Work Done.’”
A SUCCESSFUL MONETIZATION STRATEGY
Which is not to say everything has been smooth sailing. Witte wryly remarks that “If I knew everything then that I know now about RigUp, it would have been an easy two and half years,” but he quickly adds that “you learn every day, and that’s the truth.”
Can RigUp keep up such exponential growth? If all goes as planned, Witte says, the company’s future should be as bright as its past.
“We started when the marketplace was free, and we kicked off our business model, or monetization strategy, in July of 2016,” Witte notes. “Our monetization strategy is that we take a certain percent on these transactions — so there are billions of dollars in transactions, and we inject ourselves and offer value in a number of ways, and we’re able to take a percent of those transactions. And that’s gone very, very well.
“So the goal for this year, we have some very ambitious revenue goals, but we’d like to end 2017 as one of the most prominent service providers on a revenue basis.”
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