RigUp

Editor’s note: RigUp has rebranded as Workrise.

The industry that powers our world is a massive one, employing over six million energy workers in the U.S. and spending over $100 billion on services alone. Yet modern software, payments, and mobile solutions elude the energy industry. 

This energy labor market is powered by highly skilled and highly paid independent contractors. The American Petroleum Institute estimates that 50% of these skilled workers will retire in the next five years, and the remaining 50% is largely filled by tech-savvy, mobile-first millennials. 

With an impending industry labor shortage and a generational workforce shift underway, we believe it’s time for better software for the energy labor market. Xuan Yong and Mike Witte certainly thought so in 2014 when they founded RigUp, a labor marketplace that empowers the people who power the world. RigUp’s marketplace matches energy contractors with operators and services companies seeking to hire highly skilled labor.  

At a16z, we are investors, operators, and students of marketplaces. Labor marketplaces have historically been hard to build—disintermediation leads to churn and labor homogeneity drives fast competition. So what makes RigUp different? 

Energy industry workflow before and after RigUp.

It comes back to the energy labor market. The temporary nature of work (average job duration ranges from two weeks to six to 12 months), complexity, heterogeneity, specialized skills by job type, and the tendency to work for multiple operators across various geographies creates the perfect storm for a vertical labor marketplace. In addition, in many pockets of the U.S., workers still drive up to three hours to pick up their paychecks. Workers get paid only after they submit paper invoices and often many weeks after the job is completed. Moreover, the nature of the role requires that independent contractors are continually certified and insured. Insurance for any single contractor is prohibitively expensive without an intermediary aggregating risk on behalf of the workers. 

Before RigUp, contractors also relied heavily on fragmented, offline agencies to help them find new roles, but these agencies have thrived on obfuscation, high fees, and a lack of visibility into the full opportunity set available for workers. RigUp stands alone in serving the energy labor market with much-needed technology and has oriented their marketplace to provide increasing returns to both sides.

By effectively maintaining the industry’s leading database of energy market workers—along with their validated professional experiences and updated safety certifications—RigUp fundamentally allows for better matching of supply and demand, resulting in significantly improved time-to-hire and visibility for both the independent contractors searching for the right projects and the energy companies looking to fill jobs with higher quality personnel. A win-win! Not only do workers have faster access to the roles they want, RigUp allows workers to get paid faster, access health insurance, accumulate reviews and build their reputation, and manage their up-to-date certifications all in one place.

We’ve been tremendously impressed with Xuan and Mike, both Texas natives who have spent their lives focused on the energy industry. While investing in public owner-operators, Xuan saw the way the labor shortages affected both the smallest and largest companies and the massive costs resulting from rising non-productive time. As a petroleum engineer, Mike experienced frustration with the lack of technology for labor in the industry firsthand. From the very beginning, their north star has been to empower the worker through economic opportunity and a sense of community across the strongest emerging network for workers in the energy industry. Getting a marketplace up and running is hard, and RigUp was no different. Both Xuan and Mike have demonstrated incredible grit as they continue to execute on their product vision and mission.  

In addition to the large market opportunity, unique value proposition, and mission-driven founders, RigUp has all the attributes we look for in a Late Stage Venture Fund investment. My partner Scott Kupor described me as a “business model snob,” and marketplaces with network effects are as good as it gets! RigUp’s marketplace is showing signs of these network effects as more operators place and fulfill jobs on the platform, and more workers increasingly find their jobs via RigUp. We estimate RigUp has ~2% market share in their core market, but see 20%+ market share in some of their most mature sub-categories, suggesting increasing returns the longer RigUp operates in a market. More than 5,000 contractors find work through the RigUp platform, and over 250 energy companies and operators find workers there.  

The flywheel of change is working. RigUp has accelerated as they’ve reached scale and expanded their market opportunity. RigUp is expected to generate over $2 billion of run-rate gross service volume on its platform this year while growing over 200% year-over-year.  While RigUp began by serving the upstream industry in the Permian Basin, they’ve since expanded to over 100 energy service categories in every oil and gas basin in the country, as well as renewables, midstream, and power/infrastructure. RigUp also offers access to training to workers on the platform and new entrants to the industry. 

Given the impending labor shortage in the energy industry and the shift to a new generation of workers, we believe this offering is potentially transformational. We are thrilled to announce that we are leading RigUp’s Series D investment as part of our Late Stage Venture Fund, and that I will be joining the board. Welcome to the a16z family, Xuan, Mike, and team! We are so excited to work with you!