A Letter from Xuan
We recently shared with employees, partners, and stakeholders the story behind some notable changes taking place at Workrise as we begin the latest, greatest chapter in the company’s story: fulfilling our original mission to become the supply chain platform for energy. In the interest of full transparency as we continue to evolve and grow, here’s a lightly edited version of a note sent to employees by Workrise co-founder and Executive Chairman of the Board Xuan Yong.
Accept the challenges so that you can feel the exhilaration of victory.”
— General George S. Patton
Team - When I think of my fearless co-founder I think of this quote from Patton, the top U.S. officer who rallied the troops and rolled up his sleeves to get tough jobs done during World War II. Mike embodies this ethos more than anyone I know. He has served as our COO and our CEO. Yet beyond the titles, Mike has been the leader who has executed valiant efforts across our company’s history to run through brick walls. He has consistently risen to face head-on some of the biggest challenges our business has encountered.
I’ve known Mike since we were both undergraduates at Texas A&M #gigem. He was, and is, one of the brightest individuals I’ve ever met. More importantly, he is also one of the grittiest and most determined. I’m blessed to call him a friend, business partner and co-founder.
You may not know that the procurement platform we’ve just launched was the original vision for the business. It is so exciting to see that vision come to fruition thanks largely to Mike’s tireless commitment. I received a note this past Christmas from an early E&P customer. He wrote, “Xuan, you guys pitched us this 8 years ago. So cool to finally procure more than just labor with your software.”
When we first rolled out our vision to customers, our app looked like this:
But we couldn’t get any traction. I recall some of our company’s darkest days. We were several months away from shutting it all down in 2016. We brainstormed on how to turn this thing around, and decided that Mike would lead a reconnaissance team to gather information from the frontlines.
The team traveled 267,272 miles visiting more than 1,600 rig and frac sites that year. And through that discovery process we soon realized that our vision was arguably too audacious to accomplish in short order. We would need a meaningful beachhead to realize our vision brick by brick.
Patton’s beachhead was Sicily. Mike and the team found that ours would have to be labor. In energy, there’s a concept known as the “great crew change” — the skills gap created when older workers in the field reach retirement age and there is a dearth of younger workers to replace them as new generations turn away from careers in energy production. This labor shortage would provide us a pain point to solve for procurement teams for years to come. And so we would begin addressing energy procurement for customers by solving their skilled labor problem with immediacy.
Around 2017-18, we saw the need to dig in on M&A strategy. As Patton marched across North Africa and led his troops to that famous victory in Casablanca, Mike worked with signature grit and determination to find the MSAs that we were unable to secure organically. MSAs are the coveted “master service agreements” that allow energy companies to conduct business with counterparties. It was an opportune time to purchase transferable MSAs, as there was near-term pain in the commodity markets. This led to our purchase of critical agreements in our core energy market, enabled us to enter the renewables market, and would also allow us to test our MSA thesis in the construction industry.
Our strategy of acquiring MSAs would lead to record revenue growth in our energy business as we would quickly be able to sell our product to more clients. But unfortunately, the strategy would not play out as planned in non-energy sectors, leaving a dent in our returns. In late 2021, we made the decision to unwind those high-cost investments. The macro environment was turning and we did not have the luxury of continuing to burn cash to gain market share in our non-energy businesses. When I had to take a step back in my role as CEO to focus on repairing my health after learning I had a unique heart condition, Mike jumped in without hesitation.
He executed with precision the “leaner is meaner” strategy, exiting our bad bets and shedding costs while continuing to fund worthwhile investments. We would subsequently exit and sell business units that were burning approximately $30M of cash/quarter at trough while simultaneously ensuring our core energy business improved from -$14M in EBITDA to 1M in EBITDA over the next 8 quarters. And importantly, we were able to continue to fund our B2B procurement platform. Given the size and scale of our labor business with customers, we now had a seat at the table to launch new value-add products to energy procurement organizations. The decision to fund B2B would be prescient. Mike’s leadership throughout this time period was inspiring.
While the macro environment would not be kind to some tech companies, we weathered the storm safely thanks to the efforts of Mike and the team. Since I’ve committed to the General Patton analogy, this was our Battle of the Bulge (where during the war the execution of rapid, decisive, difficult maneuvers turned the tide decisively in the Allies’ favor). Mike’s execution of rapid, decisive, and difficult maneuvers would allow the company to regain control of its own destiny and realize its original vision.
Workrise does its best work when it fights from a position of strength. The strategic moves we’ve made under Mike’s stewardship over the last two years have positioned the business for just that. Energy is a long game. Since 1900, humankind has increased energy consumption per capita from 14GJ to 60GJ globally (a 4x+ increase). In 1900, the average human life expectancy was 30 years. Today, in countries with access to energy, it’s 80. Humanity’s ability to harness energy to create and produce is something that defines us as a species, which is why energy demand will only continue to increase from here.
Thanks to our General Patton, we are in the perfect position to partner with our clients in the energy industry to drive towards an exciting future. Now that we’re here, with the wind at our backs, we’re excited to welcome our next CEO, Mick Hollison, to take us to the promised land.
Regards,
Xuan
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