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Ep024: Learning From Your Customers with Paul Liberato - Transcript

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Dave: Well, my guest today is Paul Liberato, the president of BLP company. I've been really excited looking forward to having Paul on the podcast. Paul, welcome to the show.

Paul: Thanks, David. Appreciate it.

Dave: Yeah. I do this different ways, sometimes I just read somebody's bio and sometimes I like to just walk through it. I decided to take the second approach for the interview today. Partially I did this because I don't know your entire backstory and I've known you for nearly two decades. Why don't we start at the beginning? Are you a native Texan?

Paul: No. My father was a Navy fighter pilot. My two brothers and I... Actually, Frank was one of my brothers, he worked with me for a while. We'll talk about him a little bit later. He was born in Jacksonville, Florida along with my brother Mark, and then my sister and I were born in Pensacola, Florida, while my dad was out on the aircraft carriers just depending on which carrier he was on. One of the carrier groups was based out of Jacksonville and one out of Pensacola. Eventually he actually went out to San Diego, so we were out in California for a while too. But we moved to Texas when I was, I think, about five years old. He retired from the Navy and took a job in the aerospace industry. He was a safety flight specialist, an aeronautical engineer, but he built a safety features onto jet aircraft. Pretty smart Naval Academy graduate. He loved the Navy and left line. Anyway, we mostly grew up in Texas.

Dave: In what part? What part of Texas?

Paul: Arlington.

Dave: Sure.

Paul: Growing up, it's funny. Nobody ever heard of Arlington. But now the Texas stadium is there. Everybody knows about Arlington. But when we moved there in the early 60s, I think it was six or 8,000 people their total.

Dave: Oh, wow.

Paul: Yeah. It was a pretty small place.

Dave: I understand that when it came time for college, you were drawn West to the great plains of West Texas, huh?

Paul: Yeah. I've always been really serious about my academics. When my brother Mark went to Texas Tech and I saw how many pretty girls were there, I knew that was the place for me. When you're 17, that was the main reason. But now Texas is a great place. I loved going there. My youngest son went there. It's a wonderful school and there's really. When you're out in West Texas, there's really nothing else to do. If you go to UT, you got Austin and you've got all the beautiful hill country around you and M Town, the same thing. You go to Tech, you better like Tech because that's all there is out there. There's top plains and deserts. But I love it up there. My brother Franklin went there and my brother Mark went there and it's a great place to go to college.

Dave: That's great. And for those people not from Texas, Tech is in Lubbock, Tech's out in West Texas on the high plains. You graduated from Texas Tech, what was your degree in?

Paul: Actually I double majored in communications and history and I had a minor in economics.

Dave: Okay.

Paul: What I wanted to do was I wanted to be a TV sportscasters. I've always loved sports. My last few years, I had to put myself through college so I wasn't able to do an internship. Back in those days, and probably still, I don't know, but it was really difficult to get on anywhere if you didn't do an internship. But since I had to work full time as a bartender and a waiter, I didn't have time to do an internship. I added the economics part on the bottom. I thought maybe that would help me get a job. I graduated from 1982 and didn't really know what I wanted to do. So, I just applied around and I ended up going to work for a fortune 500 company called Deluxe. They printed checks for banks.

Dave: Oh, yeah.

Paul: Yeah. Great company, they called us little blue because we were a lot like IBM-

Dave: Which is big blue. Yeah.

Paul: Yeah. They were big blue, we were little blue. But it was a great company. I learned so much working for Deluxe. I worked for so many great people and it was just a first-class organization from top to bottom. Even then, I left there, Deluxe, I started working in '82, I left in '89. But a lot of the stuff that I still incorporate into my business and how I operate, I learned from Deluxe. That was just a wonderful experience.
I started with Deluxe in Dallas as a sales trainee. Then I had my first sales territory in Dallas. I was there for about a year or two and I got transferred to Seattle, Washington and took over the major cast in Seattle for a couple of years. That's where I got married and had my first child, a boy. Then I got promoted again into the management group in Los Angeles. Company's based in Minneapolis, but we had a regional headquarters in LA. I went down and joined the management group in LA. I was there for a couple of years.
Then they moved me to San Francisco where I was taking care of Bank of America and Wells Fargo for the company, which are our two largest customers. Then I got recruited to be a West coast marketing vice president for MasterCard. I've worked for MasterCard for a while. While during this, I was in communication with a family friend of ours from Corpus Christi. He was with a new company called Billy Pugh Company.

Dave: This would be Jimmy Storms?

Paul: Yeah. It sure was. It's Jimmy Storm. Mr. Storm was a friend of ours and he contacted me and said, "Hey, would you be interested in taking a look? A friend of mine is selling this company, he has got a great reputation. They did back to the products and I think I can help you put something together." I was 29 years old and flew to Corpus Christi and met Billy Pugh. He's a very interesting character, great story... There're tons of great stories about Billy Pugh, but he was definitely that old school off shore old guy.
He grew up with Red Dare and of course Mr. Storm, our guys Gus Glasscod. A lot of the pioneers in the offshore oil and gas business. Those guys were a different breed. I had a chance to meet Billy. We were able to put together a group of investors and I sold everything I had, retirement houses, everything to put my money in. I got there in the summer of '89 and we went live with our management group and taken over the company October 2nd of 1989. I just turned 30.

Dave: Wow. What do you think Mr. Storm saw in you, given that you didn't have an oil and gas background and given your relatively young age, still in your twenties? What do you think he saw in you that he thought you'd be the right guy for this?

Paul: It's a funny story, but there was actually a specific event.

Dave: Okay.

Paul: He had actually come out to California for a wildcatters convention and Carmel. We lived in a place called San Ramon, which is where Chevrons headquarters is, East of San Francisco, South of a Walnut Creek. Anyway, he came out to visit, he spent the night and I told him, "Well, I'll just drive you down to Carmel the next day." It was not that far. He hopped in the car and we were driving down. That was back in the days when we used Dictaphones, I don't know if you ever saw a Dictaphone or not-

Dave: Yap. Yap.

Paul: I was the only guy... This was 1988. I actually had to caller phone back then and that was a big deal. But it was one of those phones that was attached to the floor of your car. I'm dictating letters. Of course these days it's really not considered a good thing to be multitasking while you're driving.

Dave: Sure.

Paul: But I was dictating letters, talking on my cell phone, driving the car and talking to him all at the same time. We pulled up to Carmel and we pulled over and he said, "Well, that was the most amazing thing I've ever seen." I said, "What do you mean?" He said, "I was watching you do all these things all at the same time and you were doing them all pretty well." I said, "Well, I appreciate that." He said, "I'm just curious." He said, "Have you ever thought about running your own company? You just looked like the guy that would be good at that."
As a man, I think, "I think every young person, but like an opportunity to work for themselves and be an entrepreneur." He said, "Well, if I run into the right situation, I'll let you know." I said, "Well, that would be great." I really thought he was just being polite. For the people that had ever met Jimmy Storm, they'll tell you he was one of the kindest people you could ever meet. Highly successful guy, very well known, but also one of the kindest, most thoughtful people you ever meet even.
Anyway, I just thought he was doing Mr. Storm, just being a nice guy, I don't know. Maybe a few weeks later, three, four weeks later, he called up and he said, "Hey, remember we talked about that on the car." I said, "Tech. Hop on a plane, I want you to come take a look at something.
I flew down and Billy Pugh and he picked me up at the airport and we went out and ate barbecue and talked about the offshore oil and gas business, which I knew absolutely zero about. But it all worked out. It was one of those things that was really funny because a lot of people ask, "What made you think you would be a success and a business that you didn't know anything about?" I think like a lot of things. It was really common sense. I mean, how do you treat your customers? How do you treat your employees? Are you honest? Do you handle your finances conservatively? Do you do business and above board?
A lot of stuff that I learned from Deluxe. One of the beautiful things about it was my brother, Frank came to work with me. I'm not an operations guy. Frank is very much an operations guy and I knew I needed somebody to help me. So I've been there not quite a year and hired Frank on. One of the beautiful things about our relationship was that he felt the same way I did. Growing up in the same household, we had the same value system and we never... In all the years, I think Frank worked with me for 20. He's retired now, but probably 28 or nine years. I don't think we had more than really a half a dozen disagreements.

Dave: That's great.

Paul: Great relationship. Like I said, we were always thinking the same and that turned out to be a great situation for us.

Dave: That's great. Thank you for that background. I guess the company, Billy Pugh had founded the company about 30 years earlier than that, right? I think in the 50s?

Paul: Yeah. Yeah. In fact, I'm just about to pass him up. There's only been two presidents of Billy Pugh Company, Billy Pugh and me. He started in '57 and-

Dave: '89.

Paul: Yeah. 32 years. I started in 89 and 2021 will be 32 years. Yeah, just about caught up to him. But it's been amazing, how fast it's gone. I just can't believe that it's been that long. You can do the math on this, I've actually been president of Billy Pugh Company longer-

Dave: Longer than…

Dave: Yeah. Yeah. I was just going to say, at some point you're going to have to find you a sharp young 29 year old to sell this thing to, I suppose, huh?

Paul: Like Billy told me when I took over, he said a new broom always sweeps clean. I guess I was the new broom. Maybe that's what we need. We need a new broom around this place. We've still got... I tell you the funny part about our company, you'll get a kick out of this. We were having our normal Christmas party this year and I told everybody, I said, "I just turned 31 years. How many people have been here longer than me?" You couldn't believe how many hands went up.
We have so many people work for us for 30 plus years. We have one individual that worked for us for well over 50 years, Ramirez. Started when he was 18. He's 73. He's worked for us for 55 years. A lot of people that for us in their 30s. The good news is, we have a lot of wonderful tenured employees. The tough news is they're all like me, they're all getting older. We're trying to bring people in the best we can, to refresh them. They just continue to do a wonderful job and we're so blessed to have them.

Dave: No, that is great. What the heck is an X904. I was on your website and I saw that, but I couldn't really make heads or tails of it. What the heck is X904 and what does it do?

Paul: Well, it pays all the bills.

Dave: Okay.

Paul: It's an interesting story because when we took over the company, Billy Pugh... I have to back up just a little bit, so I can give you some perspective it gt going because there's a... The X904 actually has as a parent and that's called an X870. That parent was born in the 50s. Billy was working as a deck hand in Offshore Corpus Christi and working on a drilling rig called the Mr. Gus. He saw some guys getting transferred from the boat up to the drilling platform and they were using a cargo net, you can imagine. They took the four legs of the cargo net, set it down, and the guys would basically just hang on the best they could onto this cargo net and they pick them up and then they would untangle themselves, when they got up on deck and they dropped them down on the boat.
Billy was watching it and he came up to the superintendent, he said, "Man, it really looks like a dangerous thing to do. I think I've got an idea that will make it safer." That was before the days of stop work authority, when you can stop jobs. Basically they just told him to get back to work or find something to do. A few days later they had a horrific accident. I don't remember all the statistics, but I know at least a couple of people got killed and some injuries as well.

Dave: From the very same activity?

Paul: Exactly. Yeah. They were transfer some guys over and I think they dropped him on the deck. Anyway, it was a fatality accident. They went and they found Billy and said, "Okay, you were telling us the other day about this idea you had. Why don't you go out and show us what you got." Billy went home and he made the first personnel transfer device and he called it a X871. That became really the industry standard until about 2008 or 10. People use that all over the world. It's one of those kinds of things, David. It's like a Coca-Cola or Kleenex tissue or a Xerox copy. No matter what transfer device you use offshore, it's a Billy Pugh.

Dave: I see.

Paul: The name is synonymous with the activity that it's doing. Getting back to the X904-

Dave: Hey Paul, before you go there, you're saying that predecessor product was basically used for 50 years or 45 years?

Paul: Yeah.

Dave: 47 years. Did it have a patent or anything? What made it so durable?

Paul: Yes. The patent ran out I think in the 80s, Dave. But we were so well known and I just don't think those safety guys wanted to be the guys that said, "Hey, we can save 20% if we use this copy product." They knew that's the industry standard, they knew that we built from the best quality products and that we don't really have any... The accident rate that we had was so incredibly safe. We've never had a structure related action on one of our products so.

Dave: I see. There used to be a saying a few decades ago in the IT world that nobody got fired for buying IBM.

Paul: Right.

Dave: It sounds like that was the case of Billy Pugh. Nobody got fired for buying Billy Pugh products.

Paul: You know what, is funny you say that because I really do. I think that has come up before. I think I've been in meetings where somebody actually used that term and said, "You never get fired for buying Billy Pugh." That's funny. I'd forgotten about that actually. But I have heard that and they've used us in that context. But it was a good product. It worked for years. It was a very safe product. But as things move along with everything else, people want improvements and they want things that are better.
We got approached by one of the major drillers, which was Diamond Offshore and one of the major operators, BP approached us to say, "Look, there's some other things coming out of the market right now that have some features that are appealing to us. We really like working with Billy Pugh Company. We're going to like most of the things around the current product that we use. But we'd really like to see if you could develop something that would be similar to what we have, but to incorporate some of the safety features that might help to become a better product."
Frank and I immediately got to work on it. We spent a lot of time just talking to people. It was a two-pronged approach. We talked to people from all major drillers. We talked about major operators. We talked to crane operators. "What do you like? What do you not like? Do you want to stand up? Do you want to sit down? You want to face in? You want to face out? Do you want to have a seatbelt on?" It was lots and lots of options and hanging below the train and get transferred back and forth.
One of the things that we did as well, which we really found to be helpful is, we went back through all the accident data and tried to figure out, when accidents did occur and there's not a lot of them, but there was some, what was happening that was creating these problems when these people were getting hurt? Really, we came up with the three major areas, which was, people were either falling off... Like we had a guy years ago that had a heart attack while he was being transferred. He fell off and thank goodness he survived. But we've had people that... Well, the crane operator, let's say it's really heavy winds and the basket starts to swing well, we've had people that were the crane operators swung the basket into a hard point, like a leg of a rig or a leg of a hand rail and they're riding on the outside of this thing.
The third one, there was something going on about then in the industry called the drops program, where there was a real emphasis on things falling from overhead landing on people. We really didn't have any data that showed anybody had been hurt by something falling on them during a personnel transfer. But we knew that the potential was there because you've got all that rigging over your head. Those were the three things that we concentrated on. What we wanted to do, wanted to create a scenario where it was a similar as possible to the X871 because people loved the X871. The guys offshore never wanted to change. They just liked that product.
I just had a guy tell me from one of the rigs... I was talking to a guy from Australia a couple of days ago, and just told me, "You know I really like this one, but I really miss the old rope baskets because I just enjoyed riding those things." It was a great product, but we wanted to improve on it and we did find some areas where we could improve. We made it as close to possible. But we incorporated these additional safety features. What we did, the old 870 models, they were made out of rope on the perimeter so they had vertical ropes that were collapsible. The basket would come out on the deck, the guys would stand and hold on the ropes and a rattle the outside of the baskets.
Well, on this new one, it was very similar, but you would take a half step in and the ropes on the outside, even though they look like normal ropes, they're actually stainless steel wire rope encased in double braid nylon. You can imagine you're stepping about a half a step in, and then you have these tension ropes around you, there's a tensioning device in the center and it tightens those ropes up. If you swing into a hard object, would you just bounce off. Those ropes behind you keep you protected. You've got that working for you. Then we've got a grading, basically an expanded metal grading over the top of you to protect you from falling objects from above, which we didn't have on the X800 series.
The third thing was keeping people from falling out. That was the trickiest one by far. That was really, really difficult because you don't want to be overly restrained in a personnel transfer. What I mean by that is, if you're going from a ship up to a platform or vice versa, you really want to be able to step away and get to a safe place as soon as possible because sometimes, if you're six, eight, 10 foot feet, that deck is pitching around. You don't want to be struggling trying to unhook yourself from something that might be slide around the deck. So you want to be able to... The thing that I loved about that 800 series, they could just set it down and step away and walk away. What we came up with, was a quick release carabiner.
You can imagine, Dave, like when you jump out of an airplane and you pull the rip cord, well that's basically what this is. You don't have to do anything to manipulate. All you have to do is pull. It's a spring loaded 5,000 pound carabiner that attaches to the person that's riding the basket. When they sat down, just as they sat down, they're holding on to these ropes, they pull the carabiner, it pops loose and they step away. It might take them an extra... God. I don't know, maybe 10th of a second or whatever to get off. It was a good compromise. It was a funny thing. The Knotel Ford where the Ford comes from, that was the fourth prototype we built. We had a 901, a 902, a 903 and a 904.
The 904 was being tested on a rig called the Ocean Confidence. I can't remember whether they're operating it. It may have been the Gulf of Mexico. We were working with a guy named John Odd, who was the HSE manager back in those days with Diamond and he was critical. A bunch of guys helped us with in the industry, my gosh. But anyway, John was helping us and he let us test this thing on Ocean Confidence. We did 100 surveys and we asked the guys offshore to rate the basket, the X904 from a one to a five, five being excellent, four good and all that. Anyway, I don't know if you've spent much time offshore, but that's probably the toughest group of guys you're ever going to run into. Just physically tough and just tough period. They're a rough audience if you can... You know what I mean?

Dave: Sure.

Paul: That's just the culture out there. If you can make those guys happy, you've really done something. We got our surveys back and John called me and he said, "Well, we got 100 surveys. We want to document 100." I said, "How did we come out?" He said, "Well, you got 70 fives and 30 fours and nothing below a four." In terms of how they rated it. Then we gave them a section to write comments on. He said, " Paul, they just loved it." That's when we knew we had something and we went live with the program. Diamond was the first one to buy them for all of their fleet. After that, I think just about every major driller that I'm aware of has them now. We probably sell 90% of those overseas. Fun little side story, my brother, Frank came up to me... Frank was a huge part of the design of this. Let me get to this part of the story and I'll back up on the design part.

Dave: Sure.

Paul: Frank came and he said, "Okay. We got this new 904 and we're finally done." But he goes, "How many of these things do you think will sell?" I said, "I don't know. It'd be great if we could sell two a month."

Dave: Okay.

Paul: As it turns out, that's probably 70% of our business, trust me, it's a lot more than two a month. It was a paradigm change for the offshore guys. Think about it. They're used to paying say 15, $1,600 for an X800, maybe 2000. Now they're going to pay 18,000, 16,000, 20,000.

Dave: Oh, wow.

Paul: What we used to tell him is, "Paul, that's just so much more than what we're used to and it's okay. If we save one person, if we prevent one accident, how's that investment look to you now?" They said, "It looks pretty good."

Dave: Was there much resistance to the crew, to the 904 versus the 800 series? Or it was a pretty quick-

Paul: That's a great question. Yeah. The biggest part was that restraint system. We call it man positioning because it's really not a fall restraint. Basically, it's a man positioning system to hold a guy in place so that he doesn't go out of the basket. I was at a boil show in Lafayette and my phone rang and the guy said, "This is the HFC manager for the rig." I forgot which drilling contractor it was. "We're doing a test on the X904 and quite frankly, one of our guys won't get on it." I don't know how this guy got my number, but he did. He said, "Would you mind talking to him?" I said, "No, put him on." This guy was real Cajun, a word that people use offshore for people from Louisiana. It's not a derogatory term for people. We'll call them occasionally.

Dave: Okay.

Paul: This Cajun says, "Mr. Liberato, I'm not riding a no crab trap." I said, "What did you say?" He goes, "It looks like a crab trap to me." I said, "It's not." He said, "I liked the old ones. Why did you have to change?" I said, "Well, just try it. Just let them pick you up and try it. If you don't like it, you don't have to do it anymore." Because I knew he liked it. I said, "Just try it. If you have a problem, call me back." Anyway, I never heard back so I'm assuming everything went fine and they ended up buying the product. But that was the funniest thing. That very, very heavy Cajun accent told me he didn't want to ride in a crab trap.

Dave: How long did it take? Was it like six months or a year before the guys who initially didn't like it because of the restraint that they warmed up to the idea or-

Paul: No. Honestly, for a big change as it was we had very little resistance. We did a lot of surveys even after we went live with the product, we still had to get these other companies on board. I just kept the same surveys that I used when we were developing it. We got so many positive comments, so many positive comments and it was just... The X904 is the best thing in the world for what it's designed to do. It just is. The pushback was unbelievable in terms of how minimal it was. That's what I was going to get at a second ago.
The reason why is, is that we've been asked a million times, my brother and I, "How did you guys come up with this?" That was really something. We kind of did, we kind of didn't. What we did is, we're just good listeners. We spent two years researching and developing this thing. Two years. We talked to literally, probably 1000 people and that was hundreds and hundreds, I bet it was 1000 people. I would have luncheons for the drilling contractors and we just talk. Bring the crane operators in and bring the rig hands in and bring the roundabouts, roughnecks and just say, "What do you like? What do you not like? What do you want?"
We learned so much from that. We started building the prototypes, that really helped because we take those and we would test them and then they would come back and say, "I didn't like this. I didn't like this." Basically, we did design the thing, but we literally had 1000 people helping us. I think that's why the pushback was so minimal, because we didn't rush to get it to market. We really spent a lot of time making sure that it was exactly what was needed for the application that it was going to be used for.

Dave: Okay. Well, it's a novel idea to ask your customer what they want and then give it to them as opposed to just building something and then try to convince them to buy it. Okay. What year did that come out?

Paul: Probably about 2008, maybe six or eight. I have to go back and look. It's been around a while. But it makes up obviously the majority of our business model and it's just been a wonderful product. One of the beautiful things about Billy Pugh Company and I can't take credit for this, it was like that when I got there, is that because we have the reputation that we have in the industry that we serve, people approach us on a regular basis with they have a problem. Whether they had a potential accident or they did have an accident, or they just need something that works a little bit better.
We'll get a phone call and we'll be approached by either a driller or an operator boat company and say, "Look we had this happen. Do you think you guys could have maybe a product based solution that might prevent this from happening or just create a safer situation for us?" We had something funny happened years ago. We were fortunate we had a few things like this come up where we just backed into something really good. When I took over the company, Billy told me, he said, "Paul, they will never attach a tagline to a personnel basket." A tagline, if you're familiar with the term, it's just something that you attach to any a load below a crane, and it helps you just guide it in.
It's like a rope hanging off the bottom and then you got say a big basket full of something and then you've got a person down on the deck, whether it's the deck or platform or even on land. The rope will come down, then they'll grab the rope and they'll guide you down to the proper area that they want it. Well, Billy told me, he said, "Don't ever attach one of those to a personnel basket." I said, "Why not?" He said, "Well, because that's where a lot of the actions happen and we don't want to be associated with that." I thought, "Okay." After Frank got there, he and I got talking about it and we were like, "That doesn't make any sense to us because if they're going to attach a rope to it anyway, then we've got a potential hazard out there. So let's try to figure something out that'll work better."
We came up with this, it's called a tangle resistant tagline. Basically what it does is, is that it, the way that it's designed, it won't wrap around anything and it won't catch on anything. Those were the two major concerns is that, as your load comes down, that rope would wrap around like a hand rail or anything then you've got a real problem on your hands. Or if it would catch you in a pinch point where... What happens when people have a rope is right at the bottom, they tie knot in it. Now that we've got a knot at the end of it, it's running across the deck and that knot hangs into something and then you've got a problem there with a crane operator. He may not see it. Then next thing you know, he's got a tremendous amount of tension on that load and it can create a real problem
So, we created this tangle resistant tagline. Well, what the funny part was, when we built it, we just built it to attach to personnel matters. There was a fellow that worked for Noble Drilling, their HSE manager years ago. He said, "Paul..." He's still a close friend of mine, by the way anyway. He said, "Why not use that on every load you have? Not just personnel baskets." We were looking at the trees and not the forest. It went from us selling a few hundred of these things to thousands and thousands of them because people were attaching them to every load, whether it had a personnel basket or anything that they were carrying. We started out with this thinking this is going to be a really a small product and ended up being one of the best things that we were selling in terms of volume. It was really pretty amazing. Like I said, we certainly didn't anticipate that.

Dave: That is a great story. By the way, what makes it tangle resistant?

Paul: What we do, I'll try to describe it the best I can, where it makes sense. But we'll take a regular three saran ropes, just like you see it anywhere, we stretch it out where it becomes very tight and then we take another rope, smaller diameter, and we wrap it extremely tight, where there... Imagine that rope, that three strand rope that you got tight and it's making a circle, it's going in circles. We would attach it to an electric motor and maybe we would take another rope and we would wrap that rope on their horizontally. Like you were putting a line on a fishing reel, basically, okay?

Dave: Yap. Yap.

Paul: We run that thing with those coils right next to each other, super tight all the way down, the whole length of that rope. Then we terminate at the end where we have something called service, which is a term that we use for rope or there's no knot where it terminates at the end, it's served. There's no place at the bottom. If there's anything sticking out or lumpy that can catch. Then we dip it in a hardener and a UV protector and an urethane. Basically, if you can imagine this, now so you've got this rope, a center rope with this other rope attached to the outside of it, wrapped around the outside of it so when it strikes something, the tighter the diameter gets, the more of those horizontal ropes resist turning on each other, if that makes sense.

Dave: I see. Yeah.

Paul: The inside diameter is basically going to keep that rope from wrapping on anything. It just physically won't do it.

Dave: I see.

Paul: The rope that's wrapped around it, the tighter you pull on it to try to make it a circle, the more it fights you to making that circle. In terms of the... That's the tangle resistant part, and then the snag resistant part is the fact that we dip it and then we serve it. There's really no way for somebody to tie a knot on the end of it or for the anything sticking out that could catch on something. The two major areas that are a problem are again, rapping and snagging and the rope won't do either one of them.

Dave: Got you. So it's the best of both worlds, because it sounds like it's rigid enough. I'm guessing there's also a little more rigidness too, than a regular rope, right?

Paul: Yeah. It's got a little bit more weight to it as well, which is nice because if you're working offshore in any windy area, if you can imagine what a small diameter rope looks like, it looks like a snake whipping around there. This thing doesn't do that. It's pretty stable. You don't want to make them too heavy, but a little bit heavy and a little bit step is a wonderful thing when you're working with high winds like that.

Dave: Yeah. I can imagine.

Paul: Yeah. Like I said, it's almost comical that particular product, because we really didn't... That was something that was just going to be a little specialty product for our personnel and that turned out to be something that we just we really had a lot of success with.

Dave: But it sounds like the genesis of it was like the X904 that you had a customer who had a problem who sought your help. Rather than just blowing them of, you were committed to serving them and trying to help them. You were rewarded unexpectedly with this larger market for it. Does that about summarize it?

Paul: Yeah, it does. I think part of the advantage that my brother and I had going into it since we didn't know anything. Again, we knew enough to where we feel is that we could run the business on a day-to-day basis, just do the right thing. But because we're always learning, we're always listening and we were always using the people in the industry to help us, and they were very willing to help us. My brother used to say, Frank, "Our learning curve is pretty much vertical." It was.
But we went from 1989 not knowing much of anything to the last several years being considered an industry expert. But we had the hands on education and the opportunity to work with just about every operator and contractor I can think of. The great thing about offshore oil and gas is amongst other things is, that people are always willing to help each other. It's not one of those things where people keep their secrets close to the vaster. One driller has an advantage because they're a little bit safer.... No, they don't want that. They want everybody to be safe.
They want to share information to just make a better industry in general. I just think that's unusual. I don't know how many other industries would like that, but they really do. They meet, they take care of each other, they share information. That's been a real bonus for us too, because we'll be working a lot of times with a product, with a variety of companies and they're all very open and to helping us and providing resources because when we develop new product and we've got to go off shore... I remember years ago when we were doing the 904, I don't think this would happen now, because this was many years ago.
But BP actually gave me a helicopter and flew me around all over the Gulf. One day I had my own helicopter. I could go check on and see how everything was working with the new 904 route them out on their platforms. When I showed up to the shore base, the pilot was in there drinking coffee. I said, "When do we leave?" He said, "Whenever you want to." I said, "Well, where's everybody else?" He said, "Just me and you today, bud." That's pretty cool. Yeah, I don't those are... We still have those days, but it was sure a lot of fun and I had a blast. They fly around the Gulf of Mexico, in my old helicopter.

Dave: Sure.

Paul: It was great.

Dave: The 31 years, 32 years now that you've been at the company, is it just all been smooth sailing, just one great success story after another, or did you guys have some challenges?

Paul: Well, when you're in oil and gas, especially in offshore oil and gas it's a bumpy ride.

Dave: Because of the cycle called nature.

Paul: Yeah. It's been tough. This last really starting by last April, has been the most difficult time in our whole company's history. We've managed to get through it. We managed to stay financially strong through it, but we thought we had been through some tough downturns, but I've talked to a lot of guys that are old enough to have been around during the downturn in the 80s, the early mid 80s and they said this was much worse. This one was much worse. To give you an idea, I talked to somebody the other day and they were telling me that in the Gulf of Mexico, there's like two or three drilling ready for work. Now. Back in the early 90s, it would be 100, 120.

Dave: Wow.

Paul: It's just been extremely tough. It's been a double-edged sword right now, too, because not only with the commodity prices down with being an oil and gas, but with COVID. People weren't able to even do regular maintenance, plug in abandonment stuff, pipeline stuff, just up keeping their equipment. It's really difficult. It's been tough. We're starting to see a little bit of a crack in the ice in terms of activity. We're probably busier now than we'd been. Well, I know we are since COVID started, but it's been tough.
We went through some downturns in the early 90s. We've probably been through three or four. Thank goodness we've been able to weather all of them. That's probably been the single largest challenge for us, is just... It's frustrating sometimes when we really feel like we do a good job and we build wonderful products. We take a ton of pride in what we do. But it doesn't matter if people aren't working offshore, they're not drilling wells and producing wells and working on ships. We don't have any need to do it. Doesn't matter what a great job we do or what great products we manufacture, nobody's using them, they don't need them.
That's probably been... It's most certainly has been the most frustrating parts. The wonderful part about it though, is that the core group of employees that we have has stayed with us. Like I said, we're so fortunate to have them. They've stuck with us throughout all of this. It hasn't been easy on anybody, to me or them. Again, like I said, we managed to get through it pretty much unscathed, I'd say. We started to see a little bit of increase in activity, so we're thankful for that.

Dave: Yeah. I've got a question. Warren Buffel, once asked how he was able to be successful in spite of the fact that he was not in New York and he asserted that he was successful because he wasn't in New York, he had more time to think, and there was just less going on. It just struck me, a similar thing that is it been an advantage or a disadvantage all in all being in Corpus versus say being in Houston?

Paul: I think it's probably been a little bit of both. What I mean by that is, from a customer access obviously Corpus Christi is not the center point of the world for offshore oil and gas. It's been a little bit of a disadvantage. I know from in 1996... I actually moved to Houston and just to get closer to our customers and then Frank pretty much took care of everything that was going on at the factory. But I think from that standpoint, there would have been some real benefits to being local and to be able to not only just to have that local accessibility, but also to be able to show the customers what we do.
We love having people come into our factory. That's one of the best things, because I think once they see how well organized and clean and what great attitudes our employees have and how much pride we take, I think it makes them feel better about the relationship. But the advantage to be in Corpus Christi, I believe is we just have such an amazing workforce down there. It's just culturally, you don't have the movement that you have in big cities.
The people down there, they get a good job with employers that take care of them and they just stay. They're happy and it's a small town. Corpus isn't a relatively big city, but it has really a small town attitude. I just don't know that we could have operated with the quality employee on a consistent basis anywhere else other than Corpus Christi. It's a wonderful place to operate a business, especially a business like ours. If I had to do it all over again, I wouldn't change a thing. I would definitely stay in Corpus Christi.

Dave: Okay. How did it end up in Corpus? Is that just where Billy Pugh lived?

Paul: Yeah. Billy was from there. Strangely enough, that drilling rig, the Mr. Gus was working I think off of right there. Strangely enough, that's where the whole personnel transfer device industry started was in Corpus Christi, just coincidentally and Billy was from there. He started up on a little place up on the Lhead, if you know much about Corpus, right there on the water. Then we moved over to a little factory right on Water Street that used to be the postal center where they brought in all the bulk mail. About 10 years ago, Frank and I went over and bought some land over by the airport. We built a purpose-built facility over there. We have three buildings right there about two miles from the airport specifically for building Billy Pugh products. That's been a real nice change for us. It's a nice complex.

Dave: Okay. As we're around in the home stretch of the interview, how do you decide what to do in house and what to outsource? For example, I know that the wire rope you use, or at least some of it, I think you actually procure that from another customer of ours.

Paul: Yeah. We work with a couple of companies there locally. One is called Kennedy Wire Rope, and one is called Industrial Fabricators. When you talk about a classic sales situation, I think both of them are classic sales situations. As the salesperson, that's where you want to be in the middle of. What I mean by that is that those two companies have literally integrated themselves into our production process. We literally can't do without them. They're such an important part of our business and such an important partner. Kennedy Wire Rope for the testing that we do... We have to do a lot of testing on our products. We're a little company down there in Corpus Christi, but we're ABS type improved, we're ISO-9,000 approved.
We have people coming in and auditing us on a regular basis. Whether it's someone from overseas that maybe has an order going to India or Malaysia, or Indonesia, they may want to come in and send them outside inspector in. We have to do a lot of testing. Kennedy provides that testing for us, they provide quality products for us. When we have something that is a special need or a special new products, what we need someone to work with us to design terms of working loads, they're like a sister company to us. Industrial Fab, the same thing. We do a lot of our own welding, but some of the welding that we do as much more technical on our products.
As of for instance, the aluminum welding X904 is very technical. The quality standards have to be absolutely 100%. We actually subcontracted our welding on some of that more difficult stuff to them, because that's what they do. We're a manufacturer assembler, whereas they are strictly a company that does that type of work. The quality that they give us is incredible. Those are really the two main companies that we subcontract to. Obviously we do all the assembly in-house, but the component parts, we're really tied at the hip with both of those companies and they do an incredible job for us.

Dave: Yeah. That's always interesting because you contrast that with like Elon Musk at Tesla, where he's trying to vertically integrate as much as he can. Henry Ford, that was his whole thing was to try to be as vertically integrated. But I know that starting 20 years ago, or so there was a new theory that evolved focus on what you do best and outsource the rest. It's sounds like you subscribed to that second mindset of-

Dave: Really well.

Paul: Yeah. If we had the expertise that those guys have, and we wanted to invest that money, then we probably would vertically integrate. But because they're right there, they provide such good service and quality. From an investment standpoint, it's just much more economical for us to work with those guys and have them subcontract those component parts. No, they don't do any finished parts for us, but they do such a wonderful job on the component parts. They're right in the middle of our QA-QC program. It's been a great relationship.

Dave: Okay. I know you outsource some other specialty services. I know we've worked on some different tax projects for you guys. How do you decide on when to do that stuff in house, or have your CPA firm do it or outsource it to someone like us?

Paul: I do want to go public. We've been working with you guys on our IC disc program. I don't know, Dave, how many years you and I talked about it, but I know we used to meet up at OTC and you'd tell me about this IC disc this program. I think something changed in the law or something that made it... I don't remember all that stuff, but that made it more relative to a company like ours. Was it a law change or something? What changed we got going on this? Was it just made making the decision or was it something that actually happened?

Dave: I think what it was, there was a predecessor program that went away in 2006. That program was really easy and the disc, there was way more complexity to it. I think that when you were comparing the disc to the old program, it just seemed so complex that I think it just created some resistance. I think that's just what it was. It was just you guys had a lot of other stuff going on and on the surface, it just seems so complicated, but-

Paul: Well, you should've been more aggressive with us because once we got going, we saved a tremendous amount of money. Being a small US-based company that exports most of our equipment, to not take advantage of that would not have made any sense. Like I said, it was a very, very successful program. In terms of sourcing other stuff, it just depends. We have a CPA firm that we worked with for many years and they do a great job.
Like you said earlier, we bring in people that are experts in their field and finding the very best one that makes it fit with us and then utilizing the products and services. We really believe in the relationship part of it as well. Once we develop relationships, we try to keep them for a long time. And just about, well, everybody, whether it's you or our CPA, which is Austin Adamson or Kennedy Wire Rope, we've done business with all those people for many, many, many years. They just provide great products and services. Like I said, the relationship is a big part of that.

Dave: I know for me it's a lot more fun doing business that way, where you're not just beating up... I've always looked at it as, I view our suppliers is just important as our customers as far as those relationships, because you need both to be successful. I can appreciate that. Well, can you believe that we're almost an hour in?

Paul: Well, you told me I was going to go fast. I did. I've got notes here. I didn't get to half of this stuff.

Dave: I know. We may have to have you on for around two then. I guess. Well, I appreciate you taking time to be on the podcast. Was there anything that I didn't ask you that you wish I'd asked you?

Paul: Just quickly, we're real proud of the fact that we... This goes back before I got there, but it's still attached to Billy Pugh Company and we designed the rescue system for the Apollo missions. If you watch any of those old Apollo movies, I think the ones Tom Hanks and all those guys were in, when the capsule dropped into the ocean, they actually dropped the Billy Pugh Company helicopter rescue basket down there to pick up the astronauts. The one that was used for the Apollo Moon missions is in the Smithsonian.

Dave: Is it really?

Paul: Down in Corpus Christi, yeah. But we've got our own little display, a purpose-built display by the Smithsonian that has our... It's called an X872SF helicopter rescue device. We're really proud of that. The fact that our companies in the offshore oil and gas hall of fame and Galveston week. Probably if you go down there and you're going to see a drilling rig, you walk in the front door and first thing you see is the Billy Pugh Company X904 right in the front door.

Dave: You mentioned that.

Paul: Yeah. We've developed a lot of other products maybe not as financially successful as the X904, but certainly things that have created a safer work environment for the offshore oil and gas business. Like I said, we just feel real blessed to have the relationships that we do and the trust of the industry. It's been a great 31 years coming up on 32 years and hopefully we'll have 32 more good ones.

Dave: Well, I hope so. Well, Paul, just on a more personal note, I just really wanted to thank you for giving us the opportunity to help you all for the last 15 years or so. Also, just want to thank you for your friendship. You've been become really one of my favorite people, so I just want to thank you for that.

Paul: Well thanks Dave. The feeling's mutual and I appreciate you having me be a part of your podcast, means a lot. Thank you.

Dave: All right. Well with that, we will wrap up. Paul, I hope you have a great afternoon.

Paul: Great. You do the same. Thanks, Dave. Take care.

Dave: All right, bye.

Dave: There we have it. Another great episode. Thanks for listening in. If you want to continue the conversation, go to That's I-C-D-I-S-C We have additional information on the podcast, archived episodes, as well as a button to be a guest. If you'd like to be a guest, go select that and fill out the information and we'd love to have you on the show. That's it. We'll be back next time with another episode of the IC Disc Show.