Feature
How Downtown Is Helping Lead Houston Into An Innovative Future
Photo: Katya Horner
Virtually everyone in Houston knows the stats: fourth-largest city in the country, routinely ranked as a great place for business, home to dozens of Fortune 500 companies. By any measure, they are impressive measurements for an impressive city.

Those aren’t the stats that concern John Reale.

“We’re the fourth-largest city on the country and the fifth-largest metro area, but the National Venture Capital Association ranked Houston 31st in the country in 2015,” he says. “Silicon Valley has $20.3 billion in investments. Chicago has $1.5 billion. Austin has $900 million. Houston? We have $161 million. The city was sixth in the country in 1990 in terms of high-tech start-up density. We’ve fallen out of the picture.”

That’s part of why he created Station Houston, a community of innovators and entrepreneurs designed to drive Houston’s economy into the 21st century. For sure, Houston has always been an innovative city. This was, after all, the city where the country’s first heart transplant was performed. But the way Reale and others see it, Houston’s future can’t just keep touting the milestones of Houston’s past.

Station Houston is located in the heart of Downtown, in space formerly occupied by Deutsche Bank. The concept is simple: members join and in return they have a place where they can have office hours, meet like-minded entrepreneurs at various stages in their start-up careers and find resources to help them grow their businesses.

“We wanted to create an ecosystem to support the people who will help create the jobs of the future,” says Reale, his passion for his cause evident. A former financier who worked in wealth management, Reale is from New York and came to Houston 18 years ago. Station Houston launched in Midtown last October, before moving into its current location on Fannin last December.

Allowing for open collaboration, the bank’s former trading floor serves as an open workspace for Station members, who come and go as fits their schedules. There’s a huge wall inviting entrepreneurs to share their successes. It’s color-coded: blue for revenue milestones, such as meeting a target or hitting a sales goal; red for team successes, such as new hires or finding a business partner; purple for product kudos such as an initial launch or a beta release; and green for funding accomplishments like reaching a crowd-sourcing target or closing a deal. The wall is covered with paper-circle shout-outs for Station businesses. “First peer-review journal article published.” “”Hired drug development fellow from the TMC.” “Groupraise $5000 12/31/2016.”

In the upstairs lobby, a big-screen offers an ever-changing slide show that lists calendar events such as seminars and talks, as well as a host of testimonials from Station members about the benefits of being a member. A huge classroom-style space has a stage for talks, and long white tables on rollers that can be moved around to create meeting places. White boards line the walls, encouraging members to share their thoughts about almost anything. “Alive 5 open for business” read one note in red marker. “I’m looking for a few people with web development skills who enjoy … breweries,” said another.

The idea is to allow for a multitude of serendipitous meetings that can help start-ups achieve their goals. Mentors, who are often also Station Members, set up office hours where newbie (or sometimes mid-level) entrepreneurs can get advice from those who have been in the trenches.

Reale says they’re already outgrowing the space – a clear indicator that the organization is onto something, reflected in its membership: at press time, there were 280 station members, 133 mentors and 132 member companies. This, says, Reale, is Houston’s future.

“We’re building out an innovation and entrepreneurship economy,” he says.

The Seeds of Innovation
It’s a cliché that if something doesn’t adapt, it will die, whether that something is a dinosaur or a construction company or a city. No one in Houston would dare say the city is dying – it’s not; it’s thriving, and is still a top-ranked relocation destination. But Reale and many others believe that the Bayou City needs to pay some serious attention to how it can thrive in the 21st century.

“Houston has always been the city that says, ‘If there’s a challenge, we can address it,’ ” says Gina Luna, CEO of Luna Strategies LLC, an advising and management company. A 20-year veteran with JPMorgan Chase, Luna went out on her own in 2016. But in 2014, she was vice chair of the Greater Houston Partnership where, she says, many of her colleagues were coming to her saying they wanted to have a discussion about how Houston could embrace not only technology and tech infrastructure, but also figure out how to attract and help tech businesses.

“We basically said, what can we, as the city’s chamber of commerce and business organization do to be more helpful,” she says. “This is a huge opportunity for Houston. It’s very important that we attract talent and companies and be a place where innovation happens all the time.”

Luna said that as she and fellow committee members began talking about innovation in Houston, there were two prevailing – and opposing – theories that emerged. One was that Houston was always a place where innovation happened, between research and development at the Texas Medical Center, at NASA and within the energy sector.

“The other was that nothing happened here,” she said. “And that’s not true.”

But she points out that Houston wasn’t necessarily seen, inside the city or outside of it, as the kind of place where entrepreneurs could come and set up shop and thrive. Cities such as Boston and regions like Silicon Valley are renowned as innovation economies. In addition to thriving tech scenes, both places have a wealth of venture capital. The result is that success breeds success. A software designer can settle in Boston, find an investor, find clients and grow her business. She can also be around fellow start-up entrepreneurs and might be able to develop a partnership or another company.

Houston, says Luna, has most of the pieces of the puzzle to do the exact same things. The key is tapping into all the talents of all the players and bringing them together.
“Between the Greater Houston Partnership, the Mayor’s Technology and Innovation Task Force and Houston businesses, we can absolutely implement the findings in the report.”

Building on Strengths, Creating New Opportunities
The Accenture/Greater Houston Partnership report, delivered in June to Houston’s City Council, found that a lot of what Houston has is already an advantage as it moves forward as an innovation leader. There’s a thriving corporate scene in the city, which invests heavily in research and development. In addition, academic-based research and development is good. The city has a great cost of living and vibrant quality-of-life amenities such as its sports teams, arts organizations, parks and restaurants that make it a place that people want to be. All of that makes the city primed as a place to invest and support further technology innovation and entrepreneurship.

“We’re seeing a rise in the use of digital technology,” says Brian Richards, managing director of innovation for Houston and the Southwest for Accenture. “And these huge legacy companies – [think ExxonMobil or a large financial firm] – are looking at how they can invest in technologies that maximize profits and productivity.”

One of the ways to that goal, he says, is digital innovation. Richards says companies want to cut costs to drive efficiency, as well as being able to create new revenue streams. But large corporations aren’t necessarily synonymous with the kinds of nimble movements a start-up might have. He says that if those large companies partner with a start-up service provider, many things happen: the firm gets a service it needs, often one driven by technology; the start-up gets business; a problem gets solved. Everybody wins.

“Some of our clients are going through massive changes,” he says. “They know they need to harness technology to make their own transitions to the next level. They need to be connected with people who help, who can drive innovation on their behalf.”

The report finds that Houston’s talent pool has a huge supply of young, tech talent, but that there are obstacles to those people developing their own businesses. Sometimes it’s the issue of visa status; sometimes it’s a lack of capital. All of those things, the report indicates, can be overcome if policy makers, businesses and entrepreneurs work together to help grow Houston as an innovation center. “This is a multi-year journey,” says Richard. “And Houston will be an innovation leader.” Luna agrees. “We can really create an environment and a culture here that says if you want to start a business, we have an ecosystem to support it.”

A Culture of Innovation
Meanwhile, back at Station Houston, Reale knows he and his team are already growing the ecosystem that will be so vital to the city’s innovation success. Station members are seeing gains in their business connections, as well as in their own growth and goals. But he wants more. Reale wants to see Houston have a thriving innovation district, where start-up entrepreneurs can live and work and interact with each other.

As Station Houston hits the end of its first year in the city center, Reale knows the organization might need more or different space. He says Downtown has been a great supporter of his organization and he sees the area’s density as a great strength.

That word – strength – is one that comes up a lot as people talk about innovation in Houston. Both Luna and Richards highlighted the city’s strengths in their discussions and recommendations for increasing the innovation economy. They and Reale understand something else, as well: “Jobs are created by new business, not small businesses, even though a vast majority of jobs come from there,” Reale says.

Being a place where people want to be to create those jobs will create a domino effect of success, says Accenture’s report. So, fostering innovation and giving start-ups the tools they need to succeed isn’t optional.“If we want the best talent to come here, we need this,” says Richards.


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