Russ: This is the BusinessMakers Show heard here and seen online at TheBusinessMakers.com. It's guest time again on the show and I'm very pleased to have with me Mark Slaughter, CEO of RigNet. Mark, welcome to the Businessmakers Show.

Mark: Yeah, thanks Russ. Glad to be here today.

Russ: You bet. Well let's start by you tellin' us about RigNet.

Mark: Yeah, I'm very excited about RigNet. It's a ten-year old company that went public on the NASDAQ last December.

Russ: Cool.

Mark: It's a company that provides remote communications to oil and gas rigs offshore and onshore all around the world.

Russ: Okay, wow. Cool. Sounds like that would be a service in demand big time. Am I right about that?

Mark: It is and that demand is growing it seems every single day. More and more applications are being accessed from the rig. It's really a small office building out there. Multiple customers. We even capture people in their off hours when they're off duty and they wanna surf the internet.

Russ: Sure. I can understand that for sure, too, out there, but it seems so obvious to me. Are there rigs, offshore rigs that don't have a direct communication still?

Mark: I think when we came into business one of the things we did do for certain rigs was introduce communications. There was just really in some cases ship-to-shore radio.

Russ: Right.

Mark: Today it's hard to envision a rig operating very long at all without some sort of remote communications back to the head office.

Russ: Right. I would imagine there's telephone communications, data, massive data communications, video communications going on all the time, is that right?

Mark: Yeah, video, voice, data. Think of it as my office next door here, you're sitting there. You wanna get on the phone and talk to somebody. You have to send a fax. You wanna get on the internet, check your e-mail. You wanna get onto your corporate network and pull down some files or upload some files. That's what you do on a rig. We're helping the office people there communicate back to their offices onshore

Russ: Right. That's interesting 'cause it's so obvious the need to do that it's hard to fathom that we didn't have that not too long ago, too. So there is at least one or two competitors sort of doing the same thing and you guys already kinda' suctioned up the market?

Mark: I think so and there's been some consolidation, including a Houston-based company called Cap Rock Communications that has been acquired by a strategic company called Harris. Harris is a manufacturer of defense communications equipment. They acquired Cap Rock because Cap Rock also serves the government space as well as oil and gas and some other vertical markets. So they were attracted to that business. They also bought another competitor. A division of Slumber Jay called Slumber Jay GCS, Global Connectivity Solutions. So they have now combined those two into Harris Cap Rock Communications. We really, outside of another company called Strados are really the only other global provider to offshore rigs. So some people call this Coke and Pepsi now.

Russ: That's cool. So what's your market share?

Mark: Well on offshore rigs today we have about a 31 percent share. That means we have our infrastructure deployed on about 31 percent of the drill ships, semi-submersibles and jack-ups all around the world and about 20 percent of the U.S. land drilling market.

Russ: Okay. So I guess when things get back to normal there'll be more of those, more platforms, more drilling going on out in the Gulf and offshore and then you'll be competing for those probably with Harris. Today I guess do you get in hand-to-hand competition on existing accounts, too?

Mark: Well there used to be four dogs in the room and now there are two. So whether they get along or fight we don't know, but there's certainly plenty of business for both companies.

Russ: Right.

Mark: We think we have a very good value proposition for our customers. Many of our customers have been with us for over a decade.

Russ: Wow.

Mark: Have every single remote site in the world with us. So we think we'll certainly capture our fair share of business out there.

Russ: Great. Well apparently you must be doing that already because you had this successful initial public offering and from what I understand, things have been going well since you've become a public company as well. Would you agree with that?

Mark: It's been a shift. We were owned by private equity investors. So that sort of private world is different than running a public company and we're only 120 days or so into this public world, but it really has been fun. We raised capital. We had a beginnings of a monetization event for the private equity guys. So we're now flush with capital and now driving the business forward. So that feels very liberating in many ways.

Russ: Well cool. Cool. I've not done that before, but I've known quite a few people that have and they sometimes characterize it as a very painful process. The road show and all that.

Mark: That is painful.

Russ: Okay. It's painful. Alright.

Mark: Yeah, it's painful. It's eight presentations a day for somewhere between - certainly more than one week and maybe as many as two and three weeks. Ours was eight days in length in sort of early December racing to complete our IPO before everybody left for holiday vacation, Christmas vacation. They wanna know each time you meet with an investor. You have to keep your smile on as if that's the first interview and the only interview you'll have, right, as you're trying to raise money. They wanna know where you are on the road show. If it's the first day, then you'll be sharp-eyed. If it's the last day you're glassy-eyed.

Russ: Now in the road show, for yours was it just going great the whole time or are there some that go better than others and are there some sessions and presentations that don't go well that you think my goodness, we might have to back out of the IPO?

Mark: No, we never got to that point. We took informal polls. So the CFO and I both did the road show with our investment bankers. We would just come out of each meeting and remember there were eight of these for eight days plus teleconferences in between meetings. There's probably somewhere between 60 to 80 to 100 meetings that you had. So we took a vote as to whether that company would invest or not and we'd go back and check once the book was filled for the IPO. The challenge for us is we were pursuing both telecomm investors and energy investors. So the energy investors knew the market we served. The telecomm investors know what we do. So we had to change the story or spin it a little bit differently depending on who it was.

Russ: Wow. So back to the technology and the telecomm people. So offshore rigs, are you primarily communicating with them via satellite communications?

Mark: Principally via satellite. That's the most ubiquitous way. It's also in our view the worst way because of the high latency, the skinny pipe that's available from a bandwidth perspective and because of that if there are alternatives in certain more developed markets, say the Gulf of Mexico or really the North Sea, you'll have some alternatives. That can be sub-C fiber, which really offers unlimited bandwidth and then terrestrial wireless applications, such as microwave, Wy-Max or even beginnings of 4Gs, just LTE that are available in the North Sea today.

Russ: Wow. That's really cool. So I would think also after the unfortunate BP disaster in the Gulf, which I understand that was not one of your platforms, but man, communications, real-time communications there can be very important for safety and for very important for keeping the landside people totally informed of what's going - perhaps even helping them make decisions. Is that right?

Mark: Yeah. In the industry it's called real-time or in the North Sea it's called integrated operations, but it's allowing people back in offices onshore at the headquarters' office to participate and even direct activities offshore. More around rig productivity, but now you can think about a safety component. We're gonna have to think about maybe the U.S. government monitoring perhaps key parameters coming in. One of the things we tested was we looked at the Gulf of Mexico and we looked at the North Sea, with the North Sea having much more of a government oversight and more pronounced integrated operations. We found that rigs we serve there use twice the bandwidth they do in the Gulf.

Russ: Wow.

Mark: Jack up to jack up, floater to floater. That to us suggests that it is an environmental disaster that happened in the Gulf, but it does suggest that remote communications will play a more prominent role in the Gulf going forward.

Russ: Wow. Okay. So we've talked about offshore. Is that all your business? Is it just offshore exploration?

Mark: No, we're also a very significant player in the U.S. land drilling rig communications market. We believe we're the largest pure play in the continental U.S. We serve through ten service centers the oil and gas drilling industry and have 300 plus unique rigs today with our infrastructure on it. That's roughly about a 20 percent share and we service that from Louisiana and Texas up to Oklahoma, the Rockies, North Dakota where the ___________ shale is located and then now in Williamsport, Pennsylvania, which is the _________ shale. So we're really becoming more national rather than just regionally focused.

Russ: So that's like 300 installations on land.

Mark: On land.

Russ: And what do you have offshore?

Mark: Two hundred plus unique installations out of about 700 or so offshore rigs that are either drill ships, semi-submersibles or jack ups and are an addressable market. So we'll have to exclude any rigs drilling in Iran or the Sudan whereas a U.S. company with U.S. management we ________ --

Russ: Right. Couldn't get in there. I know this is probably a naïve question, but you don't go into like wind energy and when they're making a big installation in a field there's no reason for you to setup a communication link there is there?

Mark: Could be. Could be. I mean as we see growth over time, we have a nice global network that we've shown great success and serving successfully oil and gas rigs, there's no reason over time that we can address other types of remote sites in other vertical markets.

Russ: Great. Okay. Talkin' to Mark Slaughter, CEO of RigNet and we'll be back with more with him after this. You're listening to the Businessmakers Show heard here and seen online at thebusinessmakers.com. This is the Businessmakers Show heard here and seen online at the businessmakers.com. Continuing on with Mark Slaughter, CEO of RigNet. Now Mark when we were talking about the competitor awhile ago you mentioned that they sort of had a military application background and maybe there's some sort of ship application, too. Does RigNet do any of that today?

Mark: Not really today. Harris Cap Rock has had a much different strategy to serve not just oil and gas, but the maritime industry, government military markets, mining, construction seeking scale whereas we believe there's value in just being a pure play provider to oil and gas. Really know in the end market not just what we do, but who we serve. That's been very important in our value proposition. But that said, we're always seeking growth and we've developed a pretty good market share in oil and gas. Where we're looking though is moving beyond rigs into other upstream oil and gas asset classes. So one would be offshore production and the other would be energy maritime vessels and then the third thing would be taking our U.S. land drilling communications business and taking that to attractive overseas markets.

Russ: Wow. Interesting. So do you have staff that's looking at those markets right now or is it something that you're keeping your eye on?

Mark: Well we feel we have network organization all around the world. So we're very well positioned to serve those markets without leaving the oil and gas industry, right. We can still focus just on that vertical. Just extend from rigs to production and vessels that serve all of that upstream oil and gas business. It works very well for us. Now longer term we might indeed look at government, military and general maritime industries as further step outs, but I would say that's more longer range and it's something more that I would study. We might look more to acquisition as opposed to organic entry into the oil and gas piece.

Russ: Okay. Okay. Real interesting. Okay. So now you say that the company is approximately ten years old, right?

Mark: Right.

Russ: And you've been here for how long?

Mark: I joined at the beginning of '07. First as chief operating officer. Then by the summer of '07 I became CEO. So almost four years now.

Russ: Okay. So were you probably brought in at the point where people thought okay, the founders have done a great job and got us to this point. We need a guy that's gonna take us to the next step and take us public?

Mark: Yeah, along with a new CFO at that time as well. The investors, which was the board of directors 'cause it was private equity investors, decided to make an ownership change from the entrepreneurs to second generation management that were probably more adept at corporate settings and running a larger company. I think you have to give the founders tremendous credit for getting the business to that point. Sort of six years into existence, growing extremely rapidly, a great founding vision. I think the vision and the basic tenants of the strategy still exist today. They just needed more professional management. Been there, done that _______ --

Russ: Sure.

Mark: So we've done a lot of work in building out the organization, putting processes in place, upgrading systems. We're not just trying to be compliant around a large company. We're still trying to grow as well, but I think what we've built on was that founding vision.

Russ: Okay. And the founders, the entrepreneurs are no longer active in the company?

Mark: Right. They were somewhat active. I came in as COO. So one of the founders was CEO at that time. He transitioned away to a board seat in the summer of '07 and then left completely at the IPO. So they're on and hopefully starting other companies, which is what they do extremely well.

Russ: Okay. And they came out okay through the IPO I would assume.

Mark: I presume they've come out very well.

Russ: Okay. That's fantastic. Alright. Now before I let you go, Mark, let's imagine a young, aspiring business person is watching right now and they're thinking, "Boy, that is so cool. I'd love to come in and do an IPO. I want a BCO someday." What kind of general advice would you give him or her just to sort of prepare for the type of opportunities that you've participated in?

Mark: Well, be open to things that may not be obvious. I wouldn't have guessed that I would have been in this position necessarily. So you can't plan too much ahead, but you need to seek out new experiences, follow your gut to a great extent and follow things that you like and are interested in. I'd say this job is maybe not as glamorous. Public CEO isn't quite what you might think looking from the outside. It's a lot of hard work. On the other hand the reason you put up with that is because you really like it and you're trying to climb some mountain out there. If you have that sort of passion, it's gonna require passion to get there. I'm convinced. It can't just be you're showin' up for work 8 to 5 and expect to get there and that's what I see. I don't' really view myself as an entrepreneur because I'm a second generation guy, but what I see in very successful entrepreneurs is that drive and passion, that dream. Something clicks and they climb that hill.

Russ: You bet. Well Mark, I really appreciate you giving us some time and sharing your story with us.

Mark: Okay. Thanks Russ.

Russ: You bet.

Mark: Okay.

Russ: That's Mark Slaughter, CEO of RigNet and you've been listening to the Businessmakers Show heard here and seen online at thebusinessmakers.com.