We've been a primarily oil and gas company. Our names are very strong; the N-O-V have associated brand names that are really well known in oil and gas, and probably exactly why we changed it was because we were moving into other fields. We were probably an industrial first for quite a long time. We're a highly acquisitive company, mostly manufacturing. We do service, but I would say manufacturing and design and invention is kind of the engine that has worked for us, and that runs from singular products up to massive integrated systems. We all started from small companies, so the culture of this giant corporation—it's about an $8 billion corporation—is very small company. We're particularly odd that way. Everybody inside the company grew from a shop floor or out in service or doing something else, so there's a common language, and it's kind of an earthy group. The energy transition thing—when we transferred over to NOV, which is a decade ago now, with my boss I kind of suggested we had three segments at the time and I suggested a fourth that was industrial and renewables. He said no, never, we're not going to do that. I knew we were anyway, so I just started that journey. It took a number of years before he realized we were behind, and we weren't. We had around 20 different renewables or energy transition type businesses assessed, and we already had a natural leaning that way. That was happening in the company, particularly out of Europe because they became the most aware earliest. From my perspective, it was a business thing: there's growth and opportunity, and the growth was fantastic. What's awkward for us is there's a lot of government money, and that swayed us. We weren't too excited about government money because it changes with administrations. We bought a company that had a wind tower business in California, and legislation changed and suddenly the business collapsed. Two years later, legislation came back and the business was good, but we were already out. We're not going to play these games. We were used to a lot more even though it's cyclical in oil and gas; it's not a wild mood change every four years. So that was our general disposition early on. We had a lot of excitement. The first time I did a gathering to talk about where we go in this energy transition, I allowed 30 people in a room, but I mean there were 100 who really wanted to be there and wanted to talk about it. There's a lot of passionate people. We love this passionate-dispassionate thing. When we acquire businesses, it comes from inside the company—someone says I think we should buy this company, and they're very passionate about it, and then the people who do the deal are very dispassionate and they just look at it from a business side and they can take it or leave it. That's really important for buying good business because when you're emotionally buying, you don't really do fair assessments. So that third-party thinking is in the gut of us. We realized if we let our natural tendencies go—we're very operational, I'm kind of the crazy guy who wants all the different stuff, but most of the people are designed to operate and execute—we knew if we just said we'd like you to look at this, they'd say no because in the short term it looks awful. I had lots of questions around the business side, not about could we make money but more about in the bigger picture who's making money, and those aren't very attractive pictures. So I kept having to tell people, yes, I see you're concerned over the methods that people can make money in this space, but they are going to do it. My question is do you want the business? That's really the journey we went on. What we created inside the company to avoid the killing of businesses, which would have happened very quickly, we put in the bonus scheme of the leadership team and of everybody in the company that if you do energy transition things you will receive a bonus. We did that for 2 years. In fact, it almost confused the company that we were an energy transition company. I had someone in R&D reach out to me—I had to take them aside and go, listen, I know you think we're an energy transition company, but we're not. We're a business. She was like, oh my goodness, I've been lining up things that I know are good for the environment, good for employees, all those things, but if there's no business there, it's not going to last. So we very much make money in this space, which I think differentiates us from most people; you know, most people go out of business in a lot of the renewable space. Strategically, we developed a language for everybody that got them into three buckets of thinking. The first was taking our existing infrastructure of oil and gas and making it more efficient to reduce the carbon footprint, which people could understand better as we look at efficiency and costs. A ton of work went into our existing infrastructure just to reduce the carbon footprint of oil and gas. That's an easy natural for us. The middle space is probably the most fun, where we said, where do we have technology and technique over here that actually fits in renewables? When you look at the way they install fixed wind offshore, it's with jackups. Guess what, we know jackups. We are extremely successful in that space. We certainly have a majority share of design and component in jackup installation vessels. Floating is the same; it's semi-submersible. Even though there are 140 people in floating wind with designs, most of them are either EPCs, which foundationally in oil and gas were the worst for high cost and late delivery because they sell engineering, which is opposed to how we are—we're product manufacturers. We're taking gigantic systems and productizing them. The other people in the game are researching and developing floating systems; they haven't been building them for years. So we have actually risen to the top of that crowd because we productize and built out the fleet of jackups and drillships. In the far reach is just new business—what can we go into as a manufacturer? We play with a lot of things. Especially in those two years there was a lot of innovation. Sometimes we'd innovate, and the drive was always that we had an R&D group doing this, and we just asked them, where can you take a cost and cut it in half? The majority cost of what's going on—it was fascinating. We came across all sorts of things, great ideas. Some we killed because in solar we stopped doing it just because there were so many players and so little money. It didn't matter if you solved the problem; it just didn't add up. Wind towers on land—the shocker for us was one of the big costs of wind towers is the cranes that go out there to assemble. We're all waiting on weather. It turns out nobody had thought that it's kind of windy, and the most expensive thing that we rent can't operate at high winds. As they were going higher, the problem was getting worse. We designed a special crane that can work at high winds and not be shut down. Simple little things like that were really easy for us because we made cranes, we had moving systems on land. So there's lots of those stories. There's nothing we can't touch. Sometimes our people think, are we allowed to do this? But we're allowed to do anything, just make money. That's the way we said it. Then after two years, a lot of things fell off, and now we're down to a good understanding of where we can make money.
There's a natural tension; it shouldn't be there. The reality is for us at least as NOV, we're a manufacturer; we make stuff. You have to bring people to that level. Even in the leadership team, traditionally oil and gas margins are fantastic, and the margins are lesser in energy transition. That's a reality, so the question is why are we doing it? The answer is you just have to find value. If you can produce value, people will pay for it. In the gut of people, there are definitely people who are resistant as it's politicized—people like 'which side are you on?' Because I was pushing this, everyone was convinced I was a wild Democrat, maybe socialist. There were just assumptions. I drive a Tesla; as soon as that happened, I was like, for sure you hate oil and gas. I really love technology, that's why I have a Tesla, but that's okay. People are projecting. On the other side, I know my cousin works in renewables and he is a wild socialist; he's a political guy, worked in Britain for years. I met his friends in the US who are all socialists, and they're like, 'We can't believe it's a socialist oil and gas guy.' I'm like, no I'm not. My cousin says no, he's definitely not—you've seen his house. But everyone is projecting the opposite. It's a weird thing. Most people who are more on the Democrat side assume I'm a Republican. That's the core problem: everyone sees it as a polarizing subject. Energy shouldn't be a polarizing subject. In fact, when I'm on a lobby board for offshore, NAA, and we go up to DC, when I talk to people my natural angst comes out, which isn't good. The lobbyists are like can you calm down, you're offending people. They assume I'm against them and their party. I'm like I'm not; I think energy is a people issue. You have to see it that way and stop using it to beat each other up and think about how do we solve this for people. So I think it's getting it into that space. How do you get people on board? It breaks by demographics. The older folks who've been here a long time feel like you're insulting them because they feel like they changed the world, which they did. We allowed the world to have energy and to move and improve—all that stuff that gave us the society we have. They think you're insulting that and saying you're terrible, bad people. There are people who say oil and gas is bad, so they're assuming everyone who's interested in anything else is saying that. I don't think anyone is saying that—there are people who say that, but not reasonable people. Most people are really in the middle. They're not in the extremes. If it wasn't for social media pushing them out to the extremes, most people are in the middle. The answer for our society is having balance. So I think it's more getting everyone onto that page and putting it into language they can understand. The younger generation are all worried about what's next, what are we doing to the planet. Neither side wants to hurt the planet; they just don't. That's the assumption you're projecting. There's a group over here worried about the costs, and a group over here worried about the planet, but both worry about the exact same thing; they just choose to talk about one of those subjects. So it's really getting everyone on that same page of it's good for business. When you get into that, the core of our company is built on the moral case for supporting people, our families, getting jobs, building businesses that support people. As long as you're morally focused on creating value so our families can live well, if you see that as a moral driver, then you're going to do good business things.
Focus is a hard word with us. We have a lot. I'm good at not being that focused, which is probably why I have the job. That's probably helpful. We have 18 different business units with underneath them multiple business units, so it's a very complex system. Now we split that into two. For me, it's more are there—it's my job to stimulate the businesses to jump in. For example, other than data science, I don't make stuff. For years, we had people in the job that I had, and they would make products and compete with other parts of the business. Nobody called it compete at a corporate level, but everyone in the business saw it that way, so it was going to die. They were going to make sure whatever invention came out of a corporate group was going to die—it's just human behavior. What I do is spend a lot of time with the business unit leaders and with the engineering teams and with our two segment leaders and try to ask what do you need, where can I help you? When they say we'd like you to do 5 to 10 year type work, I'll say great, but I'm not going to build a staff for that. They actually like that because they pay my bills, so they don't like it when you're building up staff. With the renewables group, we took them out of our rig group, just some great inventors, and stuck them in a different area and just said have at it, invent anything. We gave them freedom and said, because one of the problems we've learned with startups is you have an idea, you convince some people to invest in it, now you're in it—you're going to spend years making sure it either works or get sold. We don't like that environment because it causes you to not kill things as fast as you should. These guys who had a job to break things—their number one thing was to keep trying to break things, have ideas and try to destroy them. Every now and again they go, we can't kill this one, it seems like it's going to live. Then, since they were already inside a business, we would bring in manufacturing and engineering from the actual business and kind of hand over in that process so new ideas live. I'm always looking for solutions that can work in a company where, when you're our size with 35,000 people, it's not normal to innovate. It's normal to just operate yourself into death—it's a slow death. Oil and gas has traditionally been a slow death, so you have to watch it because no one thinks they're in a process of degradation.
I wouldn't say it's perfect, but I think it's a way we've been going. It's been trying to create environments. You can't help how you say it. That group was particularly good at bringing up things and killing them and being able to do multiple things was part of their world. Most people are the opposite—once you have an idea you love it so much you'll do anything to make it live, and you don't even know you're doing it. Your business case died a long time ago but you're still keeping it alive. So it's not simple to get people to start just trying stuff. We had a literal playground full of 3D printers, out in the countryside with cows outside. The building was unfinished—just a bunch of desks with no walls, and they would just move around. There were tons of little machine tools and stuff they could get done, and most of their buying was through Amazon, which is against our corporate behavior; you're not qualifying your supply chain. They were doing a lot of risky out-there things, but we had to allow it as a model. It allowed us to play around in the space. I'm always thinking of that. We're working a bit with startups right now in a way that we think can work because we would never buy a startup; it's not natural for us. The startup investing game is like going to Vegas—there are so many players who don't succeed. We realized with startups we were supporting programs and giving them money, but that wasn't solving what we needed to solve because it enables—if you give too much money to startups, it allows them to stay alive when they should die. We realized because we're really good at buying companies, really good at assessing them and their value, and almost everything we've bought has grown—not everything but almost. So we thought that's really valuable for startups. We started to offer a competition and coaching thing where people come in and then they drop out based on performance. It allows them to come in and get to a certain point. We don't want to own part of the company—most venture people say wait a minute, you're not going to own part of the company? No, we don't want to. We might be their partner, and we do have an option to buy which is unlikely, but we're getting them developed, paying for some testing to happen, and then we're done. Then you're off on your own. It's new but working quite well. We were at maybe 13 or 14 contestants when I did one-on-ones with them, and they were all really good. Now they're down to 11, and we're continuing down that path of elimination. That's the beauty of my space—I get to play around, and I have a lot of trust in my job. I've been in the company 32, 33 years, and there's a ton of trust.
