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When Ross Newman, Martin Wagen and Kent Johnson signed up for the EMBA-Global joint programme at London Business School and New York’s Columbia Business School, they had no reason to believe the decision would change their lives.
Mr Newman, a New Zealander, trained as an accountant and had been working in capital markets in New York as an energy sector specialist. Mr Wagen, a Swiss, had become an independent venture capitalist after a working for a bank and an aid organisation. Mr Johnson had been employed in oil and gas.
But by the end of their two-year course, the three men were on the brink of turning themselves into entrepreneurs, based on a piece of complex scientific research at Zurich University.
Developing the technology and analytical tools to measure and assess the grunts and groans of the earth based on low frequency vibrations may not sound an obvious way for a trio of non-scientists to make their fortunes.
But that is what Spectraseis, the Zurich-based company they run, does. Staff numbers have grown beyond 30 and the group is receiving calls from oil and gas companies around the world.
“We know for sure that if we hadn’t done this sort of MBA, we’d never have met,” says Mr Newman.
The use of seismic data to help decide where to drill is nothing new. What makes Spectraseis, established in 2003, unusual, is that it focuses exclusively on low-frequency data, hitherto dismissed as “noise”. The company makes no claim its methodology replaces established techniques, but says it is complementary.
“It was something of a revolutionary idea,” says Mr Wagen. “Even with two and three-dimensional mapping, the success rate in drilling is still only 15-20 per cent. It costs $30m to drill a well offshore. So anything you can do to provide extra information is useful, because you’d better have all the data you can gather before you start.”
The trio first heard about the concept through personal contacts with a Zurich University researcher.
“They’d published a 10-page scientific paper as post-doctoral research, and there’d been some industry backing, but things hadn’t gone further,” recalls Mr Newman. “We saw the commercial potential of the technology.”
That the three were not scientists, nor involved in the original work, was unimportant, they argued. Rather, they were entrepreneurial middlemen.
“We identified some very promising research and wanted to see if here was a market to develop. The crucial thing was to make the connection between science developed in Switzerland and the oil and gas industry, which has no presence in the country,” says Mr Newman.
The initial breakthrough came in 2004 with Petrobras, the Brazilian energy group, which supported a pilot programme helping to prove the concept and allow Spectraseis to expand its research with more scientists. A year later came Norsk Hydro. The Norwegian energy group is now a 22 per cent shareholder.
Nine patents later, the customer roster has grown to include Mexico’s Pemex, Saudi Aramco and the Kuwait Oil Company. “We’re receiving unsolicited contacts in what is a very conservative industry,” notes Mr Newman. Meanwhile, relations with Zurich University have been put on a commercial footing via a master licensing agreement for the initial research and the university also has some equity.
Mr Newman, now chief executive, Mr Wagen, chief operating officer, and Mr Johnson, in charge of marketing, firmly believe the LBS/Columbia EMBA-Global was instrumental to their success – in more ways than one.
First, the unusual nature of the course provided the glue that brought them together. Unlike conventional EMBA’s conducted over weekends, with periodic longer stints, the LBS/Columbia programme involves significantly longer time blocks.
In the first year, students study together for one week a month. That covers not only academic work but housing, which is provided by the universities. “It helps you establish much closer relations with fellow course members than if you were just doing a conventional weekend programme,” says Mr Wagen.
All praise the course’s structure, quality and the fact that its bipolar London-New York nature attracts an international, high-calibre and motivated clientele. They also highlight the fact that, after the first year’s core curriculum, second year students can pick between all the courses LBS and Columbia offer.
The second key aspect for Spectraseis’s founders was the stress on entrepreneurship, both in the curriculum and in the external support from LBS. Moral support
They single out John Bates, the school’s professor of entrepreneurship, and his role in talent spotting and even investing through the school’s Sussex Place ventures subsidiary.
“We were given moral support and encouragement, which was crucially important at the early stage,” recalls Mr Newman.
But the assistance was also practical and material. LBS helped them polish their act and put them in touch with potential investors. That came through dry runs in-house and entering business plan competitions.
The budding entrepreneurs won an internal LBS contest and a Zurich innovators’ scheme. They also took second place in the European Business Plan of the Year competition in 2003.
“That was all really helpful for us. The people who’re looking at you are real experts,” says Mr Newman.
Finally, they stress the value of alumni networks. That includes sessions using Spectraseis as a case study for today’s students.
“We keep meeting new people through LBS who could be useful to us. Also, this way, it’s a quid pro quo: we can give something back to the school,” he says.