Q: Joe, can you provide a little overview and history on Xpansiv? (JM): Xpansiv is the result of a three year collaboration between global experts in data science, quantitative standards, distributed ledger technology (DLT), enterprise software and commodity markets (broadly). Common among the Xpansiv Collaborators are two things: (a) a “Systems Approach” to problem solving and (b) a common belief that the next generation of business solutions (regardless of sector) will be science-based and data-driven. Our original hypothesis in late 2014 was as follows: Commodity markets are functioning with incomplete information and emerging technologies (DLT, Big Data, AI) combined with the dynamic, rising profile of external risk factors associated with commodities (climate, water, land-use, etc.) present a “perfect storm” for a science-based, data-driven digital transformation of the commodity sector. Before writing a single line of code, we spent 2.5 years aggregating and integrating information from producers, exchanges, traders, buyers, industry associations, technologists, policy makers, NGO’s, etc. to determine a technology architecture that would enable the scalable digitization of commodities. In mid-2017, we proved the concept technologically--successfully refining raw production data into Digital FeedstockTM (a unique, immutable record & transactable title for every unit of production) from over 4,000 natural gas wells. We have since seen almost universal interest in the Xpansiv Platform in our initial target markets: natural gas and renewable fuels. Simultaneously, we have built a world class Team and Board of Directors while also securing $3M in Seed investement from targeted individuals/organizations with expertise in technology, oil & gas, commodity exchanges, market creation and sustainability.
Q: It is all about the data, what do you mean by that? (JM): If “data is the new oil”, then “commodity production data is the new Permian Basin….and 2018 is the new 2006”. The bulk of Permian Basin oil and gas reserves were not cost effective to extract prior to the introduction of hydraulic fracturing and horizontal drilling technologies in ~2006. Similarly, raw commodity production data has not been cost effective to extract, refine and deliver to market prior to advances in information technology. If we use another analogue, commodity production data is the equivalent of “gasoline”at the turn of the 20th century- it is a mere byproduct of production, but has not been seen as valuable. However, commodity production data—data that is currently generated in the process of producing and transporting raw materials contains a wealth of information about the internal constituents (higher value components) and external properties (GHG emissions, water usage, etc.). Xpansiv acts as a “digital refinery” through the application of data science and deep domain expertise with emerging technologies (distributed ledger, AI, machine learning) to transform commodity production data into Digital FeedstockTM. Digital Feedstock fundamentally improves commodity market function through improved accuracy, product differentiation and increased liquidity.
Q: Will, maybe you can share why you have invested in Xpansiv and where you see the company headed? (WS): If we look across traditional industries like transportation, communication, banking, or manufacturing, they are all being transformed from traditional business environments supported by technology into new business multi-sided platforms driven by digitization. Nowhere is the impact digitization more apparent then in the field of commodities. There is a tremendous amount of IP, trade secrets, and experience being applied here at Xpansiv. As an early stage investor I am always looking for entrepreneur’s or proven teams with domain expertise. I believe domain expertise comes with a deep understanding of an industry, a track record of success (or failure at times) in an industry, a history of building successful products/solutions, innovations in the industry and constant self-education. Domain expertise separates the strongest from the weakest in any industry because it is fundamental to survival and involves constant evolution and adaptation. It requires one to think, learn, work, and evolve. The digital transformation taking place in the global commodities market creates an enormous opportunity for entrepreneurs like Joe and his team, who have deep domain expertise but know how to innovate, adapt, and scale a business in a cost-effective manner. Personally, I have been very impressed with both the speed and global strategic base of investors who participated in the $3M Xpansiv Seed capital round. With a Series A lead term sheet already on the Xpansiv table, I fully expect the company will close this capital round by end of June this year. I am also convinced my investing in this digital platform and assisting in launching it commercially will change the world and personally it is inspiring to take up the challenge to change the world.
Q: Will, can you share your view on the progress at Xpansiv to date? (WS): As an early stage investor for the past 28 years, I firmly believe that people are the most valuable asset in any company. At APV we do not simply invest in ideas, we invest in brilliant, capable people who can implement new ideas. Frankly, ideas are cheap, real value is in the execution. The co-founder of another one of my portfolio companies, Ted Tanner, Jr., captured it best when he said “We invent the future by executing on brilliant ideas,” and frankly, our APV investment decision has always been wrapped around that quote.