Startup Houston

Dr. Howard Schmidt is a native Texan, a long-time Houston resident and a serial entrepreneur.  He grew up San Antonio and moved to Houston to attend Rice University, where he got a BS in electrical engineering in 1980, and then a Ph.D. in physical chemistry in 1986.  Since then he has been involved in four technology start-ups, including SI Diamond Technology, an early nanomaterials company that he took public in 1993.  In 2003, Dr. Schmidt joined Rick Smalley’s research team as the Executive Director of the Carbon Nanotechnology Laboratory.  Schmidt is now a Research Fellow in the Chemical and Biomolecular Engineering Department at Rice, mainly focused on developing energy-related applications of single-wall carbon nanotubes.  He also serves as Senior Nanotechnology Advisor to the Advanced Energy Consortium, and is on the board of Axion Power International. Dr. Schmidt has agreed to become a regular contributor to Startup Houston; this is his first post.

The Advanced Energy Consortium (AEC) just officially announced its first Request For Proposals (RFP). This is big news for us little (nano) people, and it seems a good topic with which to kick off a new column on nanotechnology, commercialization and start-up companies.

And it fits in nicely with my personal perspective on technology and start-ups. For me, technology is pure fun - it’s using science, engineering, imagination, persistence and a little luck to solve a problem, make something work, make some novel material, etc. But starting a company is serious stuff. There can be fun involved, of course. Watching a new company progress and grow is big fun. But you don’t start a company for fun; you start a company to make money. And money comes from customers. Customers fork over money because you and your technology solve some problem they have. Many technologists start companies because they love their technology, not because they have a customer asking them to turn pro and sell them a zillion copies of their new widget.

And that is what makes the AEC and their RFP soooo cool. It’s a collection of well funded customers that are telling us what they want to buy. The AEC sponsors include six integrated exploration and production companies (BP America Inc., ConocoPhillips, Marathon Oil Corp., Occidental Oil and Gas, Shell and Total) and three major well services companies (Baker Hughes Incorporated, Halliburton Energy Services Inc., and Schlumberger). At this point they’re looking for basic micro- and nanotechnology research and development services. Eventually, the hope is that this research will generate fieldable technologies for locating and extracting oil from known reservoirs. They’re essentially shopping for technologists that they hope to pay to develop new tools that they will eventually buy to produce oil.

In general, my expectation is that this R&D activity will spawn new materials and sensing methods; some may get used directly by the majors, but most will get bundled into a package and distributed by the service companies. A likely play for entrepreneurs is to manufacture the materials and components and then provide them to the integrating service companies. Talk about soup-to-nuts market pull!

The RFP is open to all bidders (universities, small businesses, large companies, national labs, you-name-it) world-wide, although I would have to predict that academic researchers will gain the lion’s share of the contracts. They have an advantage in cheap labor (graduate students) and extensive facilities for characterizing new materials. But something nanotechnologists usually do not have is a) a working knowledge of hydrocarbon production and b) experience at commercializing some new widget.

This makes for an important opportunity for Houston entrepreneurs. Since Houston is the energy capital of the world (right?), there are plenty of working and retired experts here in oil and gas production. Those academic researchers will be well served by teaming up with O&G experts to round out their teams via consulting or subcontracting arrangements. Similarly, if you have a killer idea, you could find academic researchers to help perform the research or characterize the materials. You can find potential partners by trolling the ‘research interests’ websites of individual profs at the local research universities, Rice and UH. UT and TAMU are not too far away to collaborate with, either. Most professors are quite approachable if you a) know what you’re talking about and b) can provide some complementary resource. They’re amazingly pressed for time, and complete experts at evaluating ideas quickly (from peer reviewing each other’s papers and proposals), so don’t take it personally if you get a ‘no’ pretty quickly. Also, keep a look out for PR coverage of breakthroughs from AEC funded research over the next year or two. They’ll also turn up at events like the Rice Alliance meetings. Those research products will need experienced entrepreneurs to make the commercial transition.

Overall, I think this bodes well for generating a number of great start-up opportunities in Houston. Happy hunting!