A claim you cannot check from a filing
Around 2011 a small public company in Santa Barbara asked me to consult to it. Save the World Air, Inc. said its technology improved how oil moves through pipelines. It was thinly traded, it was raising money, and its story carried it, which is the normal condition of a company that size with a technical claim and no large customer yet. I had been a general contractor for years by then, running Tellus, and this was nothing like a building. That was part of the appeal and most of the risk.
The people in it were the executive running the company, the small team behind the claim, the brokers who placed its stock, and the people who read its releases and had no other way to know what the company knew. Every one of them was working from the same document: the persuasive version. A filing and a press release are written to convince, and a company under pressure to raise writes them well. That is not a criticism of the company. It is what those documents are for.
Where the company was, then, is easy to state. It had a claim that could not be checked from outside, a need for capital that had a clock on it, and a need for people who were not on its payroll to believe it. What it needed from me was two things: help with the raise, and a reader who would not take the release as the finding. What I needed was a way to test a claim like that at all, and the only way I know is to get close to the people making it and ask what a buyer would ask.
Take the seat, and ask from inside
The ordinary move with a company like this is to read it from a distance, through its filings and its press, and treat the technical claim as unproven until the company proves it. That is a reasonable posture. It is also the same information the company chose to publish, and nothing more, and it leaves the one question that matters, whether the claim holds, exactly where the company left it.
I chose the other route. A consulting seat put me inside the operation, close enough to hear what the company's own people believed rather than what they printed. The equity that came with the seat was compensation, and it aligned me with the outcome, which I wanted. I also knew what it cost: a consultant with a piece of the company he is judging judges more gently than a stranger would, and the only cure for that is a written finding that someone who was not in the room could check.
The question I put to myself before the first meeting was who besides the company was paid to say this worked, which meant reading the incentives before the claim. An engineer on the payroll, a broker with a commission and a release written for a raise all have a reason to be confident. A pipeline operator who has to put a test bay behind the technology and then keep paying for it has the opposite reason. So the tests I set for the company were an operator's tests, and the seat existed to run them from close range.
How I came at this one
The first question was who besides the company was paid to say this worked, because a filing is written by the one party with every reason to be confident. It fit because the claim could not be checked from outside at all, so the only information worth having was the kind a seat inside the company could reach. A consulting seat paid in equity bought that access, and it is why this did not stay a company I read about from a distance.