Terralliance, gambling on oil exploration

In the startup environment, it is a habit to talk about successes to keep our hopes alive for the future, but it is a big mistake to forget the failures of the past and not benefit from the experiences of the past. For this purpose, the Ecomotive team has collected the experiences of a series of failed startups, so that reviewing their failed stories may be a basis for the success of new startups in Iran’s startup community. This collection will be published and made available to the audience in the form of the story of failure. We review the fourteenth part of this series, which deals with the failure of the Terralliance startup.

Trallence Technologies Inc., in 2002 by a former NASA engineer; Erland Olson was founded in Newport Beach, California. Olson was no expert in oil exploration, but he had spent 14 years at the Naval Laboratory Project in Pasadena. A project related to the launch of American unmanned spacecraft. Then, because of his concerns about the water crisis, he started looking for water. But during his search, he reached the oil fields and the thought of finding this treasure did not leave him. Olson’s mission impossible was to design an algorithm that would tell engineers where to drill for oil. Olson, high-ranking investors such as Goldman Sachs And Kleiner Perkins convinced for this unusual activity, so that Kleiner made the largest corporate investment up to that time, amounting to $93 million.

Tralens had not yet found much oil, but its founder and owner believed that it would be done and the revenue from the contracts would ensure the future of him and his company. In August, Olson after several months of negotiations with the Singaporean investor giant; that’s mean TemasekAt the same time as the price of oil increased to 145 dollars per barrel, he agreed to invest. In this way, Temasek invested 1.1 million dollars in the company. Even younger investors like Passport Capital They entered this game to promote their name as energy investors. In total, investors invested more than half a billion dollars in the company, which was a testimony to the ambition and boldness of this company despite its small achievements.

What is certain is that Trallence lost a gamble on oil exploration, and whispers of its decline began in August 2008 at a meeting among investors. In their meetings, they expressed concern about Olson’s policies, because despite being a newcomer to the oil industry, he behaved like a Saudi prince. His list of purchases ranged from oil wells in Turkey to Soviet fighter jets.
The work progressed to the point where an auditor alerted the judiciary about possible violations of the anti-bribery law in Olson’s contracts. In this way, some members of the board decided to close the CEO’s case and demote him. In early 2009, Olson was fired, and with oil prices and Temasek shares plummeting, Trallence’s situation was in disarray, as the company faced a slew of lawsuits and accusations.

In the spring of 2009, Tralins was trying to restore its reputation by entering the field of “green energy”. On the other hand, Olson, who had already been kicked out of the company, founded a new company to continue his oil discoveries in the world and sought to attract capital. At this time, accusations were made by the company’s board of directors against Olson, that he had hijacked the company’s intellectual property and started a new business based on research and files that belonged to the company. But Olson called these accusations baseless. Nevertheless, the genius who one day was looking for water and then oil, must now seek to recover his lost reputation and credibility.