From folding card tables and lawn chairs for office furniture, Foster and team grew Newfield to 2 Tcfe proved.
“There’s ‘Joe time’ and there’s ordinary time,” former Newfield Exploration Co. board member Dale Zand tells Art Smith of Newfield founder and retired chairman Joe Foster in Smith’s new book, Something from Nothing: Joe B. Foster and the People Who Built Newfield Exploration Company.
“…Joe can see and understand a problem a hundred times faster than anyone else.”
Published this year, Smith explores how Foster led two dozen other former Tenneco Oil Co. professionals in the formation of Newfield in 1989 with a total of $9 million in employee and outside investments, growing the company to 2 trillion cubic feet equivalent of proved reserves upon his retirement in 2005.
Foster’s philosophy references Rudyard Kipling in “If:” “…If you can meet with Triumph and Disaster and treat those two impostors just the same…Yours is the Earth and everything that's in it….”
Smith writes, “One of Foster’s strongest and most persistent characteristics as an oilman is his stoic acceptance of failures and setbacks. Success often follows failure and Foster has long viewed drilling dryholes as Babe Ruth did strikeouts. Like the Babe, Foster has no fear of setting ‘whiff’ records in the pursuit of home-run success. This anonymous quote is a favorite of Foster’s: ‘Failure is never fatal and success is never final.’”
Smith peppers the book with anecdotes and succinct descriptions, such as of Newfield’s early and ascetic days. For example, office furniture consisted of what employees, who were all owners, could put together, thus meetings were held at folding card tables complemented with an assortment of lawn chairs.
Spartan use of money was evident in a Wall Street Journal article in the early 1990s in which a Newfield platform in the Gulf was noted for its “kaleidoscope of colors.” The platform was made from components from other platforms and pieces were blue, red, yellow or gray.
Six-foot Foster and all Newfield employees flew coach class—even to Australia, a 26-hour flight. Investor-relations chief Steve Campbell, six foot four, joined Foster in coach on a flight to New York just two days after joining Newfield from Anadarko Petroleum Corp., which had a corporate jet. Upon landing at LaGuardia at almost midnight (Campbell tells Smith, “Joe likes to fly after business hours because it allowed you to get in a full day of work in the office.”), Foster told Campbell, “You know what I like about flying coach? It’s so damn uncomfortable you can get a lot of work done!”
And employees found cabs, not limos. During the company’s 1993 IPO road show, which involved meetings in Boston, New York, Chicago and on the West Coast (Foster says, “There sure is a lot more road than there is show in a road show.”), the Newfield team took cabs the first week. Bobby Tudor, a Goldman Sachs managing director at the time and now co-founder of Tudor, Pickering, Holt & Co. Securities Inc., was a co-manager of the IPO.
Smith writes, “The second week, (Tudor) said, ‘Look, Joe. We’re going to get limos and Goldman Sachs will pay for them…It’s not coming out of Newfield’s pocket.’ Tudor’s rationale was that arranging the logistics for all of them was just hell on the secretaries.”
And, about that IPO, Foster says he thought it might be too soon for Newfield, which had some 100 billion cubic feet equivalent of proved reserves at the time. Howard Newman, a managing director at the time of Warburg Pincus that was a second-round investor in Newfield and currently co-founder of Pine Brook Road Partners, emphasized that the IPO window was open at that time and it was unknown when it would be open again. Smith writes, “(Newman) passed on this gem of advice: ‘Joe, you take the cookies when the tray is passed—not just when you’re hungry.’”
In Foster’s hand-written notes (Foster carried a yellow legal pad to any meeting and made copious notes; longtime assistant and a founding Newfield employee Betty Smith says, “…We never ran out of them. That was one of my key jobs…to keep a good supply of yellow tablets.”) in early 1989 while forming Newfield, he lists what he will tell the troops two weeks into the effort. Among them: start-up pains are normal; Newfield will be data-driven; networking and exposure are essential but to take care that it isn’t taking more time than it is giving back; and “we must be prepared to live with failure.”
He concludes his list with this: “Finally, when we achieve success, we must not let it go to our heads.” Find Art Smith’s book here: Something from Nothing.
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