Sunday, 2nd of August 2009 at 01:43:13 PMAziz Gilani, a local VC writes on his personal blog http://texvc.com/2009/08/02/what-houston-really-needs/about what he thinks Houston needs to compete and the main conclusion he comes up with is that we are suffering from a relative lack of engineering research at our universities. I consider Aziz a personal friend, and I helped plan the party that got this conversation started in the first place. With that said, I think that his post is technically correct, but misses some of the big picture.
As someone who sees entrepreneurs and helps startups every day at the Houston Technology Center, I don’t know if the schools are the issue here. Yes, we could all use more talented researchers and more research commercialization, but that’s not the only place where innovation comes from. Houston is ranked 10 worldwide by number of patents (http://images.businessweek.com/ss/09/04/0422_inventive_cities/11.htm) due mostly to the engineering focus of our energy and medical industries.
There are probably thousands of interesting research studies sitting on the shelves of our current universities, but without entrepreneurs commercializing them, they will continue to languish. Making the leap from the lab to the marketplace is extremely difficult under even the best of circumstances. It is nearly impossible without help from people who ‘have been there and done that’.
I believe that the scarcest resource in Houston is not venture money (good money always chases good deals) and it’s certainly not entrepreneurial talent (we’re a city with an entrepreneurial spirit embedded in our DNA) – it’s mentorship. There are simply not enough investors/angels/consultants/incubators to help grow and support the ideas coming out of universities and our large corporations.
The ‘C’- and Director- level talent pool is still too small and it needs to be grown for the next wave of entrepreneurs to pick from to create new businesses. The only way to do this is to create successful large businesses that spin off talented and hungry managers. It’s difficult to name many spinoff companies from Compaq or Lexicon that thrive in Houston today, but just up the road you can name dozens of former Dell and Trilogy execs that have started or joined new startups.
Creating this mid-level group of support personnel that understand the startup life cycle is the single most important (not to mention fastest and cheapest) way to compete in the global market place of ideas. Silicon Valley continues to succeed because of the low barriers to move from company to company, which creates a high velocity of ideas and best practices.
It’s not about technical talent, it’s about business talent in every discipline but engineering.
Marc Nathan
Director of Entrepreneur Development
Houston Technology Center
Thanks for the kind words Marc. I love this town, and think it has great things going for it. I wouldn’t live here if I didn’t think that it could compete.
The crux of my post is that if there was anything I could change, I would increase university research funding.The University of Houston “Tier One” initiative is focused on this point and could greatly benefit the startup scene.
I agree with you that mentorship is also helpful. In fact, I think I have an initiative brewing that could help out.
Management and strategy are at the root of successful businesses, especially technology businesses. Strategy is the core requirement of success, not technology or IP. Thanks for the opportunity.
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Both points have merit, but I could not agree more on Marc’s point that relevant business talent available to connect with technologies (and the people who develop) them is a much bigger gap.
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My 2 cents: http://80legs.wordpress.com/2009/08/03/the-what-houston-needs-debate/
My response to Aziz’s Horses and Jockeys post about the same subject:
http://texvc.com/2009/08/02/horses-and-jockeys/#comment-2186
I don’t want to continue the ‘you’re right, no – you’re right’ love fest that’s been going on between Aziz and I for the last few days, but suffice to say Aziz is absolutely right in his original assessment that we need more research dollars in our universities and Shion Deysarkar is right about Tech Transfer offices needing more attention: http://80legs.wordpress.com/2009/08/03/the-what-houston-needs-debate/
I’m very much a Jockey-type of guy when it comes to betting on startups. This is from my website which you’ll notice I haven’t changed for several years: http://bulldogfinancial.com/services.html
With that said, I believe that the discussion on ‘What Houston Needs’ isn’t about ideas or entrepreneurs themselves – but about the mid-level group of supporters and helpers that make startups turn into winners.
This is the ‘Trainers’ in the Jockey-Horse analogy. Both Jockeys and Horses need experienced people to help with training strategy, care and feeding whether a startup comes out of university research, tech transfer, a business plan competition or someone’s garage.
If we used the analogy of chicken and egg – chickens are always people and eggs are the ideas that hatch into more chickens.
It’s the people that matter and creating and fostering a tech community starts and ends with the people it produces.
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I think we also have to pay attention to the death march going on in SV right now. WebGuild points out the “fleeing” going on citing over 12% unemployment.
http://www.webguild.org/2009/07/fleeing-silicon-valley-part-4.php
Value creation is an important point, but so is a solid understanding of the startup life cycle. Houston lacks a group of entrpreneurs which can take what are seemingly great ideas, vet them, validate them, reiterate and execute to a plan. This is both a cultural and procedural issue.
However, I don’t believe this source of talent will come directly from a pool of corporate managers or spinouts. Startups cannot operate on the same terms as big business and it is extremely challenging for corporate managers to transition into the lifestyle required of a founding member of a startup team.
Here is where a research institution filled with brilliant, ramen eating, Phd candidates can be a big pool to draw from.
I would recommend that we as group apply our efforts on delivering a methodology / educational experience which shares how a startup should begin its existence and find its way into a stream of supporting revenue. Share how the budding entrepreneur can build a “customer focused” business.
I’d like to highlight Robert’s “execute to a plan” reference.
That means you have a product or a service design that doesn’t suck. Lots of people have good ideas. Few people have good products.