Shawn was 21 years old, and he knew what he wanted to do with his life.
Well, maybe not his life. But he saw an opportunity to make some cash.
He’d grown up in South Texas, a rancher’s kid who grew up among cattle and a changing world. More and more ranchers, family friends, had mentioned they were leasing their mineral rights, allowing oil field operators to drill for oil on their property. Newer drilling techniques opened up new opportunities in untapped land, and everyone wanted in.
So that day, 21-year-old Shawn saw a way in. He’d been accompanying his father to look at steers on a ranch not far from his own, and they’d leased some land for drilling. A gate guard sat by the entrance. “I could do that,” Shawn thought.
He talked to an uncle who worked with the oilmen building pipelines, the uncle talked to some other folks, and soon he had instructions: show up at this ranch at 6 o’clock, bring your RV. He didn’t have a RV, but that was no great problem in South Texas, and soon he’d borrowed one and showed up at the crack of dawn.
“That’s how it got started,” Shawn says. “No grand plan or anything. I just saw an opportunity and filled it.”
It was a primitive, lonely life. If Shawn was lucky, he was able to find a power pole and get his RV some electricity. Most of the time in those early years, he wasn’t.
“They don’t drill these wells in pretty places,” Shawn says. And there weren’t many generators then.
The worst days were when nobody showed up to come through the gate, and it was just him, his RV, and miles of open plains, hot and musty. As workers came through, he’d record their name, plate, and car make on a yellow legal pad, maybe chitchat a little. That was the job.
But it was a job that kept growing. It wasn’t quite boom years yet, but the leases were multiplying – and the need for gate guards with it. Shawn moved around with the RV for a few years, and then started hiring people to take the jobs he couldn’t. Suddenly, he was running a business.
The boom that changed everything
In 2008, the fracking revolution hit a gold mine, under a massive shale deposit known as Eagle Ford.
Experts called it the biggest discovery of new oil reserves in the United States since 1968. For South Texas, it was a boom like nothing they had ever seen before. Oil production jumped exponentially, and so did jobs, oil leases, towns, everything – almost overnight. Before Eagle Ford blew up and after Eagle Ford blew up became a way of communicating time.
For Shawn, and his business, it was like being on the crest of a powerful wave and just barely paddling enough to stay in front of things. The sheer volume of work was insane, overwhelming. Safety requirements changed. Electronic billing became standard.
Around them, people’s fortunes changed overnight. People who had just been getting by became multimillionaires in the blink of an eye. And Shawn’s company had 10 times the amount of business they’d had just a moment ago.
They scaled fast, and screwed up fast, but it didn’t matter, there was money everywhere, and just as many ideas. They didn’t focus, Shawn admits now. They didn’t see the inefficiencies that hid in the details, because everyone was doing things in a bit of a backwards way.
“We work with a client today who’s literally tracking deliveries in an Excel spreadsheet – but they were doing it with paper not that long ago,” Shawn says. “Millions of dollars of oil they’re tracking, with what’s essentially a post-it system.”
They kept growing. One phone call increased their business by 50%, Shawn says. They were still paying cash for everything, just trying to keep up. If they didn’t take the job, someone else would – and they didn’t always negotiate to make sure it was a good deal for them too.
“Pennies are not my thing,” Shawn admits.
Pennies, on the other hand, are Al’s thing. Al joined the company after working with them as a consultant, compelled by the culture that Shawn had built. In Shawn’s parlance, GAS (Give A Shit) stands for their service standards, a commitment to provide the best experience possible for their 3 clients – the land owner, the operating company, and most importantly, their guards.
“It was perhaps the most bizarre business I’d seen in my entire life,” Al says, laughing. But for Al, that was part of the appeal.
“This company is very much customer centric in the way it’s run. Most companies have a company profile where they run their business in one way. With this type of business, you really have to be flexible and run it in the way the operating company wants.”
Al added a level of standardization and cost-conscious thinking they hadn’t had before, while maintaining that flexibility. Cost/benefit discussions joined GAS as company philosophy. Al made everything more efficient, made everyone more conscious of costs – and benefits, for the right investment.
“Nobody was allowed to say ‘This is the way we’ve always done it,’” Shawn says.
That mindset led to their biggest innovation – one that would take them beyond being an added expense to oilfield developers and turn them into a value-add: the development of an electronic logging system to replace those yellow legal pads that had been the mainstay of gate guards since Shawn’s time.
Building a Better Mousetrap
“We clearly needed a quicker way of getting info,” Shawn says. They were calling in to guards at many locations all over South Texas, checking in 2 times a day, and it wasn’t enough. In 2011, they hired a technologist, a guy named Luke, to build them a proprietary software that could track everything across all their leases. Luke had worked for sports leagues before all over the world, pulling information from various software programs into one dashboard to optimize performance and efficiencies. Now he applied the same logic to all this data coming from the leases, the guards, the constant traffic in and out. They call their innovative system DLS – for Digital Logging Solution – and it’s changed everything.
“All the time, these ranch managers have their job to do on these big private ranches. Their big concern is speed. He’ll see somebody in a maroon Ford at 2:00 in the morning, look up the DLS log, and within a few seconds he can figure out who it is, who they work for, why they’re on the ranch.”
For safety and security, out there on the Texas plains, it made a huge difference. It alerts of any banned drivers or vendors that aren’t supposed to be on the oil lease, notifying the guard. Any lease rules or safety issues can be enforced through DLS.
But it also meant they could be even more of a value-add – because now, not only were they providing better information about the security job they were doing, but they could track and verify loads delivered or hours worked by vendors, thus allowing them to partner with procurement.
Wiser, Leaner, Cleaner
These days, the Eagle Ford boom has died down and Shawn & Al’s business has resumed a more manageable scale, but far more efficiently than they did in the past. The instant multi-millionaires have left and the labor market for gate guards isn’t quite as insane as it once was. But for Shawn and Al, things have settled to a good place.
“This go-round, I’m a lot wiser – and we’re a lot leaner. I wasn’t ready when Eagle Ford blew up, but I know how to run the business at this scale today.”
Part of being leaner? Cleaning up their financial situation. The rapid growth in the boom years had forced them to take out a patchwork of loans, needing capital to cover expenditures until invoices came in. Seeking a better solution, they finally found Far West Capital.
“Far West Capital took the time to figure out what we did, how we did it, and why we did it,” Shawn says. “They immediately wanted to meet. And when we met, they took the time to really understand our business, to make it clear they wanted to partner with us to build something.”
For our part, we got creative – setting up a unique deal that packaged their old loans into something more manageable and enabled them to get capital to keep building. Shawn’s our kind of client, the kind of guy who immediately said “I’ll come tomorrow” when we asked to meet. We’d ask difficult questions, and they’d always have an answer – even for the stuff they weren’t as proud of.
“I’ve always heard horror stories about factoring, and I haven’t seen that,” Shawn says. “A couple people I’ve talked to have had bad experiences – the firm is hard to deal with, the bank’s gone south, it’s hard to reach someone, whatever it is. We’ve had the opposite experience with Far West Capital. A good experience, a seamless experience.
They’re not getting in the way of us running our business.”
Far West Capital is in the business of funding the goals of high-growth entrepreneurs. Know a great company in need of capital to unleash their potential? Send them here, and we’ll give them a call.