Welcome to the Pipelineers Podcast, Episode 288, sponsored by the American Petroleum Institute, driving safety, environmental protection, and sustainability across the natural gas and oil industry through world-class standards and safety programs. Since its formation as a standard-setting organization in 1919, API has developed more than 800 standards to enhance industry operations worldwide. Find out more about API at api.org. Thanks for listening to the Pipelineers Podcast.
I appreciate you taking the time, and to show that appreciation, we give away a customized Yeti Tumler to one listener every episode. This week, our winner is Danny King with Eastman Chemical. Congratulations, Danny. You're Yeti is on its way.
To learn how you can win this signature prize, stick around until the end of the episode. This week, we speak to Chris Alexander with ADV Integrity, David Yole with American Aerospace Technology and Simon Bellamar with MMT about commercializing technology. This is a sit-down interview that we did at the API Demo Day at the Pipeline Research Council's Technology Development Center in Houston, Texas. So we're here at the API Pipeline Technology Demo Day at the Pipeline Research Council, man, that is a whole lot of time.
I have one more TLA. That would be at the Technology Development Center. So anyway, we've been talking as we're walking around looking at all this new tech about commercialization, and how do you take creative, innovative, new ideas, unprecedented ideas, ideas that have the opportunity to make a step change improvement in safety performance, and how do you actually get those to market? So I want to do it just a quick introduction of myself, many people probably know me, but I'll do that anyways.
I'm Russell Treat. I'm president CEO of Interact Energy Services. We have a family of companies that have various software products that we use in the pipeline space for control remandagement, process safety management, and field operations management. And I've been doing commercialization of software for 30 years.
So that's also a host of the Pipelineers podcast. You should listen. So Chris, what did you do the same thing? Just a quick introduction about who you are on your background.
My name is Chris Alexander, president and founder of ADV Integrity, which is an engineering consulting company in the Houston area. I guess what makes us a little unique, we blow stuff up. So we do full-scale testing. We also do failure analysis in numerical modeling.
I think what's really fun for me, which is why I'm on the podcast with you all, is that we evaluate a lot of technologies. And so last year, we looked at about 50 different technology companies. So I have a vested interest in seeing technologies evolve, but we're also involved in the process of helping them do that. Well, you guys also have a maturity model for technology conversation too, which is really kind of interesting because it's from some research and adaptive specific.
Yeah, because we talk about technology readiness levels, but we're going to talk about commercial readiness index, the CRI. So that'll be part of our conversation today. Great. Dave.
My name's Dave Yole. I'm a founder and CEO of American Aerospace Technologies. We have three products, the AirRanger Unmanned Aircraft System. It's a Beyond Visual Line of Site Unmanned Aircraft that can fly 750 miles on pipeline patrol.
We have the Instamaps Automated Threat Detection System, a sensor package for pipeline patrol, and the Oscar oil spill sensor, which is just coming on the market to automatically detect liquid hydrocarbon releases, both onshore and offshore. Yes, ma'am. I'm C. Ma'am Belmar, a founder, CEO of MMT.
So we have technology company. We were the first to really commercialize material verification. So this is the strength and the toughness of the pipeline when you are able to access it at an excavation site, but you can't shut it down to get a cutout. So we essentially developed technology to measure those strength properties without having to cut the pipe.
Yeah, and that's pretty unprecedented, right? That's unprecedented technology. Dave, some of the technology you have is unprecedented, correct? Indeed.
Yeah. So, so where would you say you are in the life cycle of getting your product commercially to the market? Well, I know I'm going to get a full rating at the end of this. So I will start by saying that we made our first service sales seven years ago, and we're not going under this year.
So we passed that seven year mark and some operators, which are very important. I mean, our end customers are the operators. One of them said, when I said we've been five years in business, said that's great because at that point, chances that you go away significantly reduced already. Yeah, that, you know, just like everything doubles every seven years.
If you're investing at 7%, everything has every seven years. But in terms of penetration, we were targeting having our tool use 8,000 times a year for different locations, so different excavation sites. And we have 1500 this year. So we still have some ways to go.
We're going to do like you, product enhancements to get there, but that's still the target. Yeah, thanks. I have some question for you. Where are you guys in the life cycle?
We're in what is technically known as the Valley of Death. All right. So, we have what we believe to be minimum viable products, both our aircraft and aircraft are in our two sensor systems. And we're working them into routine operations at starting with pilot projects and moving toward routine operations.
But we haven't fully launched into routine operations with any of our products quite yet. Yeah. So, the definition of the Valley of Death for people that might be listening to this and not heard that term before. Yeah.
What's the Valley of Death, Chris? Well, I think sometimes it depends on what context you're looking at. But basically, you've got all of the things done, all the technology things done. And then your challenge with really because you're an uphill climb, getting companies to bind using the technology.
So in one sense, you've done all the TRL stuff, but are people buying into using the technology. Yeah. A lot of companies never come out of that Valley of Death. Yeah, I kind of want to supplement that.
So National Science Foundation, which is a really big, and I try to promote that here with the technology that you evaluate. It's a huge source of funding to get you to the Valley of Death. Right. And they tell you a little bit how to go about getting there and it's customer creation.
So by the time you really create a recurring customer is where you can crawl out of this. Yeah. And it's really what happens for a lot of entrepreneurs that are trying to bring in new technology like this market is they think that once they're through the point that they're entering the Valley of Death, they're done. And really, that's where you're starting.
Yeah. Four years of wandering, right? The other thing is the whole nature of what you need in your company in terms of capabilities shifts, because up until that point, it's all about engineering, R&D, understanding the customer, understanding the problem, understanding the solution, and so on and so forth. And then at that point, now it's about business development and marketing.
Yeah. You're going to use the other side of your brain, right? There's two sides to your brain. Who knows?
Only on the other side of Valley of Death, right? Chris. Where do you think these guys are? That's great.
Yeah, I get to answer. Well, I know Samoan. So you don't have to be. Yeah.
I know Samoan very well, and we worked together for a long time. I mentioned 26 staying at IPC. I remember getting going over your booth. I think my observation, the TRL is very solid, but it's the adoption part that's challenged.
You said you're at 1,500 out of 8,000, right? And probably you would prefer to be closer to 4,000 at this point. We're almost halfway through the year. So I think it's the skeptics and industry, which is one of the themes here.
You know, I know a little bit about drones, but you know, and really do the aerial, but it's like the regulations have got to give you some latitude, right? So part of the TRL, the technology readiness level and the commercial readiness index, there's also a regulatory acceptance. So we got this really cool little graphics that I've written about. And for you, that's a really big deal.
You've actually got regulations working for you. Okay. And on your side, the regulations present a challenge. Yeah, because of the FAA flight regulations around the minecraft.
But also, you know, there's no regulations against digitally transforming aerial patrol using sensors instead of eyeballs from an airplane to detect and report threats. But there's also no industry standards around how you visually transform aerial patrol. So yes, we have the FAA challenges and you know, they're infamous, but you know, they're really working hard and now really focused on BD loss, you know, beyond visual line of sight, UAS, and working very hard to to enable that. But there's also for us a question on how you transform at the regulatory level, what's required there to allow adoption of, you know, digital aerial patrol.
I'm going to play the card here kind of generalizing that a little bit where when we talked about this early that this is disruptive or different technology here that requires some adjustment to how people do things. And they also going to be getting different data and chances already didn't used to pay for this. So there's a number of challenges there. And I would say that regardless of the details, there is a curve and that's Steve Blank.
I think I shared that with you where it's got to take five, six years before you can actually say that you finally becoming truly commercial. And the smarter you are about what those challenges are, the more you're going to be able to spend the time at the right place. But that's a huge effort because most of the time people that are willing to try, never did it before. So and this is more like, and this is something I'm willing to contribute as far as what is it to be in the founder's shoes, right?
But you know, it's incredible. And I glad if we can get in here because I'm shy to mention it with enough clarity to potential startup founders because it's discouraging. It's just being a great audience. You know, being a founder and taking new technology to market, it's a weird combination of pessimism and optimism.
And when I first got married, this would drive my wife crazy because she didn't know if she was meeting with Friday Russell on Monday. Because on Fridays, it was the end of the week. And I'm always reflecting on all the opportunities that were queued up and the things that we accomplished. And on Sundays, I go through the numbers.
And on Mondays, I meet with my team. And I'm like, okay, here's where we are with the numbers. Right? So it was like, and one of the things you have to learn to do is you have to manage through different contexts, right?
And once you realize that that's just the process, I don't know that it gets easier, but it's not as stressful, right? Because now you actually kind of know, and really that's one of the things that we were talking about and one of the reasons that Mark Piazza with API wanted us to have this conversation is there really is a process here. And really, you need to have full knowledge of what the process is. And you know, you've got raw development, proof of concept, the Valley of Death, which is early adoption.
And then you've got kind of institutionalization. And then you have commercialization. And where a lot of people, where a lot of people stumble is the institutionalization step, because they don't understand what that means. So I want to end this up as a question because I'd like to get you guys perspective on it.
But you hear this conversation, well, fems, they should tell people to do this API should approve this. And that's not the role, right? So good job respond to that. Yes, I'll answer a little bit.
I want to hear from the guys who are actually having to live through this. One of the keys is to get a champion or get champions within the operators, right? So if you have someone who's kind of innovated, but our industry has got to reward and not vilify folks, because when you take new technology, sometimes it's not going to work the way that you want. And so as an engineer, if you're hesitant to really advance the technology and within your organization, you're demoted if the technology doesn't work, you need more entrepreneurial mindset within the pipeline companies.
And some companies, you see that, which I think is great. And those are the companies you're able to build business with, but we just need more of that. And that's a mindset that we just need to have more of them in the industry. Well, that's an interesting observation, Chris.
I might frame that a little differently. You know, and I have a lot of direct experience with this, but in the big companies, generally, they have an R&D group whose charter is to test and understand how the momentum adopt new things. You're getting a good look for some of them. To say something about the other, something new.
Not all companies use it in the same way, not at all. So most, and unfortunately, some kind of try to use it as a competitive advantage, even though, and this is related to pipeline, pipeline has to be a collaboration, because everybody gets hurt when something bad happens. And today is that understanding within API within PRCI. But the challenge for some of those individual organizations say, well, PRCI is going to take care of this, API is going to take care of this.
But Chris and I are not talking before going live here. And it's the exact same thing. The biggest issue is when a company does not assign a true champion, somebody that believes in the potential of what you're doing that can navigate the organization for you and not risk sort of the career or their progression in that organization as a result of doing that. Those, and maybe there's a handful of organization that helped us get there that did that.
The reason we're still alive. Forget about all, I mean, all those great organizations, it's a handful of individual customers that had figured out that recipe of empowering actual engineers to work with technology companies. That's the reason we're here. So it's the companies that actually build muscle and capability around innovation.
And one of the things they have to do to be successful is they actually need to isolate that from operations, because you don't want to do innovation in operations. You want to do management of change in operations, but you've got to build muscle and capability. And you need to do some projects that fail, and you need to capture the learning and push the learning into the organization to inform what's next. And that's a big challenge, because we don't do that well in our business.
I would assert. You know, I think you hit something on the head Russell just a moment ago when you said these companies have R&D departments, right? But what's missing is that transition into operations. And that's where we are right now with our sensors in particular, is the operations folks say, well, R&D's nice, but I don't want to have to change what I do, because I already I'm doing three jobs at once today, or maybe 10.
And to add this change to my processes, you know, somebody's got to show me how it's going to work in my life, in my role in this task. And that's where I'm seeing the gap. Yeah, I couldn't. I agree with that.
And again, just kind of put some context around it. If you take and look at manufacturing science, process management science, they actually, you know, the manufacturing world, they have a manufacturing line, and that line runs at 95 to 98 percent efficiency. And the management of that line is to keep it there or a quarter percent better. Different than the people that are doing new product development that are coming up with a new way to manufacture, and they're getting it to 80 percent.
And then there's that, well, what do you do to get that 80 percent line into a factory floor and up to 90 percent? So those guys, and that's the part that's the gap that we don't really have in our business. Anybody else want to comment on that? Yeah, no, I think so.
I do think it is. It's a culture, right? And I mean, we've, you know, we do this about 30 years, but some pipeline companies tend to be a little bit more innovative, and they will kind of lead the herd in a sense. And I think PRCI provides a great platform for those companies to kind of shine, you know, and I like what API is doing having these kind of events.
You need people who think at another level, I love what John Kennedy said. He said, we need men who can dream of things that never were, right? And that's kind of both what you've done is, but you just need a partner to basically kind of go along with you. Yeah.
So I want to kind of shift our conversation a little bit because a lot of what we're talking about to some months point could be discouraging for somebody who's getting off onto this turn. I want to just clarify one thing about Champion. And this is why this, you know, it's a panel. I would not say that the Champion needs to be for more of an R&D side of things.
And that, in my experience, is why in certain cases it really worked because the person had the knowledge and influence in all the way to operations to get things done. Now, they were provided some form of account for, you know, spending time on this and having certain expenses and having a budget. But again, it doesn't mean that, you know, it's done by R&D and kind of turn over for operations. So, this is where I've seen it the most successful when the Champion, not the person that really run the initiative, but the Champion says, Hey, guys, I would like you to work with this company and see if we can get them to the point of validation and field trials.
It's generally somebody in an organization that's trying to solve a problem and they have a charter in the organization to solve that problem, or they have the kind of relationships and purposefulness in how they approach their career to solve a problem. But they're trying to solve a problem, and they see this as a potential opportunity to solve that problem. That is kind of the point of real engagement, right? So I'd like to shift a little bit if we couldn't talk about some, what are some encouraging words and maybe what are some practices that are helpful to people that are trying to commercialize product because it can be discouraging and it can be wearying.
What I would say is one of the things I've been, I've heard many, many times in my life, I believe to be true. You can't get much of anything to done in a year, but you can change the world in five. So one of the disciplines you have to build is you have to be kind of slightly unrealistic, optimistic, because that's what keeps you going. And you need to build a practice of looking backwards and really acknowledging the grounds you've covered, because it's very easy to see the ground remaining to be covered and not acknowledge the grounds you have covered, right?
So I think you got to celebrate the minor victories, the minor victories of the first day the product works, right? Yeah, we all remember that day, right? It's like, Holy crap, we have something that might be real. The first customer that buys into it implements it, right?
The first customer that tells one of your other customers or potential customers say this was really good, we just had a dinner at the API pipeline conference and I was listening to one of my customers talk to another potential customer and just sell the crap out of our product. I'm just like, this is pretty cool. I'm imprinting this into my memory. We're keeping that right there because, you know, five years ago, that wasn't even a possibility, right?
So you need to celebrate the minor victories and realize and look backwards and do that's really easy to miss it. Anybody else, what would you say is encouragement for those that are embarking on this journey? Well, it is a long road and you have to be stubborn as a bull. You just got to keep driving forward and believe in your product and you have to have a product worth believing in and you're the test of that if you're the entrepreneur.
One of the things I found that I would advise if my two cents is when you have the opportunity to talk to a champion, let him talk. Don't tell them about your product. Don't go on for five minutes about the technology or what, how it works and let him talk. Find out what his problems are or her problems are and listen and take advantage of those unique opportunities to get deeper insight into what problems they need addressed versus what you envision when you created the product were the problem you were trying to solve.
Yeah, you know, I had one of my mentors who used to tell me Russell, Selenik, tell him, asking is, and the other thing I would say about that is I'm kind of mature, it is listening and asking is being a proper engineer because what we're doing is we're trying to get problem definition, right? And we're trying to get full problem definition. That requires a lot of listening and you'll find a lot of joy in that if you'll do it because those guys know more than you do. I could just add one thing to that, you know, the R&D guy that may have helped you get there, he's not an operations guy.
You're approaching the operations guy with your R&D guy's approximation of what he needs. So then listen to the operations guy who's going to actually use it to find out what more granularly what it is, you know, he needs, probably needs help. Well, I want to build up a little bit on two things here. The first one, when you mention about being persistent for server and I think and be able to capture opportunities is somehow you have to keep that vision, right?
Because if you can somehow keep your vision healthy, keep the eye on the ball, you, that's when you see those opportunities and that's what keeps you going. But I think again, it's more in terms of evaluating risk and opportunities to still see what is it going to go to. And something that you said that I thought was really interesting also is along that way, for me, it is being nimble. It's an overused term, probably.
But what that means for me is you got to try. Worst thing that's going to happen is they'll say no, that's probably the best advice I had at the time in 16. It can frustrate a few folks, they probably won't be your customer anyway. Your reputation to go on for years.
But at the end of the day, if you don't ask, if you don't try, and if you can't find a way to select where you're going to be spending your limited time and resources, it won't happen. So it's kind of go and go and go. And I used to say, just don't look, try to go on a straight line. It's okay if you get a little bit and you get scratched a little bit on the guardrail.
Because that's how you're not going to hit the wall. You're going enough. You have to be super persistent and committed to the vision and infinitely flexible about the means to get there. And again, it's a contradiction, right?
Relentless. Relentless pursuit, right? I think there's a couple other things. I think one is, I mean, we've all been through this, right?
The frustrations, the great Fridays, the oh my gosh, Mondays, those kind of things, but I think there's a couple of kind of soft things that they never teach as an engineering school. One is about relationships, right? That when you're down, you know, and I think we've all been there, I've got a handful of people I can call them and they just cheer me up. You know, we might talk about work, we might talk about football or something, but it's just somebody that makes you feel good.
You know, the ideal thing is if they're in your industry. And then I think the other thing is as an entrepreneur to really listen to what people need. I mean, pain motivated change. So if there's something like I know specifically with you, the industry really needs your technology, right?
And so there's a great pain if your technology doesn't work. So what happens is it's not clients or customers, it's partners who are working with you. So to me, it's kind of part of the ecosystem. And then the last thing is you got to learn how to market, right?
I mean, you went to A&M, I got all these degrees from A&M, I never had a marketing class, but to build a business, you've got to be able to communicate and market. And I think there's a handful of technology companies that just don't do a good job on that. We as an industry don't do it particularly. Yeah, I know messaging.
We talked about that all the time. One of the reasons I did the pipeline or podcast is I would open up the pipeline of guys journal and read these articles, particularly on like in line inspection and integrity management. And they had all this jargon and buzzwords, and I'd read this thing, I'm like, I don't know what this says, right? So you know, just getting your head around the language is challenging, much less figuring out how to message it effectively.
And we're talking to engineers, right? So it's challenging. But that can also be really fun, because when you get it right, it just works. And you know it, right?
It just works. It just works. Again, I want to shift a little bit. We're going to kind of wrap up after this conversation.
What can organizations like PRCI and API and PHMSA be doing to help guys like yourself get your product over the finish line? Well, I really think the events like we had today and when we had in Washington, D.C., go a long way in as far as developer really understanding the greater context. And we talk about marketing here. There's a big aspect of just what I would call, I would call business development relationship, really understanding what's happening and what is not happening.
So that piece of engagement, again, varies a lot by company. I can come up with a really long number of good stories. But it is more individual organization. That's why I hear, you know, the message for API.
I think API is doing a job, right? And I think we can continue events like today. So individual members understand that they have a role to play. Nothing happens without that strong collaboration.
And I take that understanding that it has to be a collaboration. It can't be well, it's not transactional. It's really build step by step, ideally with a small group of people. Because the more people are around, the more the conversation should be around standard advocacy.
Whereas here, we're talking about working hand in hand, right? And that can only be so many people at the time. There may be task groups. If API would have a task group saying we are going to support companies just like yours, and I'll turn it over to you here, with the challenge that they have, but it just becomes focus and could be just a handful of companies.
It's like, this is what I have implications for me. Together, we want to support this more than, you know, with you to the bench and say, are you good? Are you as good as you say you are? It's an important piece.
It's a bit of a traditional role for PRCI, but in commercialization, again, it's sort of a task force concept. Maybe something to consider. It's an intriguing idea. I just learned about the CRI, commercial readiness index, and, you know, I just want very simple tactical thing that might then come as a benefit, and, you know, I'm saying this, have done PRCI research projects, is if there was some evaluation by the members or the technical review committee of a research project to give it a CRI rating, you know, and to try to put some flesh on that, so that our folks and the people that are investing in it through the membership have a general sense of where along that road the technology is.
I've learned about CRI today, so I can't wait to learn more. So I think that one of the things we could do is when you get, you know, the companies have to, well, I have to build a little context, so a couple of challenges. First, we have to realize that API, FIMSA, PRCI don't approve things, okay? They facilitate things.
That's number one, and they provide data and analytical basis for decision making. That's the first thing we have to realize. The second thing we have to realize is that competitors are going to have to compete, right? So we're not going to get a leg up from our competition in the marketplace.
We're going to have to compete. That's the first thing you have to kind realize is context. However, that being said, I think one of the things we can do is look at what about doing some joint projects or some PRCI projects that are kind of on the back end of the Valley of Death and focus more on commercialization. So there's an organization called IPIPE in North Dakota that does this really well, and they're funded by the state and they're backed by university, and they apply kind of the R&D and development process, but to the later stage.
So they're not doing original research. What they're trying to do is look for things that are out there, where if we invest in that, we can get it across the finish line, or we can understand how to apply it in practice and what benefit it's really going to give us. And I think we need more of those kinds of projects. So having what vendors would qualify to participate and how that works, and there's probably some research that needs there, but I think that would be something that would really help accelerate the overall process.
One of the things something you opened up with is what is success, right? What does good look like? And the problem is if you view success as the technology works, that's not it, right? If you want to cut away successes, we're generating profit, we can reinvest and do more research.
So I think probably we just need to change our mindset and define success as not getting to the one yard line, right? Success is getting the ball across the goal line. Success is having a meaningful safety performance impact in pipeline. If you go to business, you can't do that.
That's right. I read that in a book someplace. Just because you build a better tech doesn't mean you're going to actually accomplish that because to get there, it has to work within the company's operating plans and procedures, within their budgets. It's got to have a real performance.
Return on investment. Exactly. Right? We are a capitalist society last time I checked.
So I think there's a good news here, especially at least on the side of PRCI. Cliff Johnson had identified this piece of what I would call implementation. So it's validated. Right.
Implementation as a gap. I think the question is who's going to do it, right? I think that's an open question more for the decision makers here. And I go back to the task force just because again, I think it's got to be a handful of operators, not 20.
Yeah. Yeah. And I just want to say gentlemen, thank you for the conversation. I could talk about this all day long.
And if we get a few bourbon's in, we'll get some really good war stories about. By the way, you know what experience is? That's what you get when you didn't get what you wanted. Okay.
Cool. And you know what wisdom is? That's learning the correct lesson from the experience. And with that, we'll say good night.
You can find instructions at pipelinepodcastnetwork.com. If you have ideas, questions, or topics you'd be interested in hearing about, please let me know on the contact us by the time I find podcast network.com or reach out to me on LinkedIn. Thanks for listening. Talk to you next week.