Monday, September 24, 2012

Growing Houston's startup scene

There have been both online and group meetup discussions lately about cultivating a more vibrant entrepreneurial startup scene in Houston, possibly even a startup district (more here, esp. the full comment conversations here and here and here).  There is a thriving scene, as evidenced by the recent rise of so many coworking spaces (coworking defined and HBR on the rise of them), but the general feeling seems to be that the Houston scene is too fragmented, decentralized, and lacking in technical talent availability (they're here, but the energy companies suck them up with big salaries and benefits).

Getting more concentration and critical mass seem like a good strategy.  Dispersed = invisible, no critical mass. Concentrated = high-visibility, virtuous cycles of growth. If a decent chunk of the entrepreneurial activity in the city were concentrated in a single building/district, it would get a lot more notice and many good things would happen: media coverage (including from outside the city), connections, activity, investors,  and overall growth.

The hot thing in Silicon Valley is shared houses with techies doing startups - hacker hostels - sort of a live-in incubator/co-working space. In Chicago, they recently opened a huge startup incubator called 1871 (for the renewal after the 1871 Chicago fire; NYT story).  Here's some description:
It's over 50,000 square feet, in the bustling Merchandise Mart, and can accommodate up to 300 companies, both with long-standing desk arrangements and short-term desk arrangements. The space has been laid out ingeniously. There's a large open area built on a grid with desks, meant to mimic the design of the city of Chicago, and a winding wall through the area that symbolizes the river. It's a beautiful thing to walk into, even while it is under construction. 
The thing that makes this space special, however, is just how much it can accommodate. There are multiple meeting spaces, meant to be both conference areas and classrooms. Entrepreneurs around the Chicago area will rotate within a regular schedule of speakers, on everything from sales to marketing to tech to PR...
There's a kitchen area, phone and rest areas, bathrooms that are frankly much nicer than they need to be, a coffee shop that will welcome weary travelers in the front as they stagger in each morning, and even a tiny equivalent of Sand Hill Road, in the form of a long hallway with offices down each side that investors from the area can conduct meetings in. Startups get access to phone systems, WIFI, copier services and so on, for no extra hidden fees. Which means that not only can entrepreneurs build companies within this space, they can grow, push their teams to grow and even seal funding without ever leaving the space (much less the building).
This is exactly what Houston needs.  One of the ideas I floated around the event that got some strong positive reception was the idea of a large off-campus student dorm aimed at UH and Rice business, entrepreneurship, and technical/engineering students, combined with a large coworking/incubator/accelerator space open to the entire Houston startup community. The mixing could be very beneficial for both sides. The target building would be converting the old abandoned Holiday Inn/Days Inn tower downtown (Google Maps aerial view), which has 31 stories and 600 rooms. It also has 32,000 sq.ft. of former meeting room space that could become coworking/incubator/accelerator space. There are a lot of advantages to this approach:
  • It builds critical mass for a startup district near the Houston Technology Center as well as the walkable Bagby/Gray/Midtown district full of restaurants, bars, apartments, and young professionals.
  • It has plenty of parking with a six level parking garage.
  • It's just a block from the light rail line serving Rice and the med center, and soon connecting to UH.  It's also next to Metro headquarters' bus transit center/hub.  Rice already gives students unlimited Metro transit passes.
  • Old, small, low-ceiling hotel rooms are much more easily converted to dorms than apartments, condos, or a hotel up to modern-day standards.  Dorms don't need kitchens.  Shared kitchens could be added to each floor or just a single large one at the base.
  • Rice forces ~1,000 undergrads to live off campus every year due to lack of space, generally in their junior year, which is perfect for exploring entrepreneurship since they have skills but aren't yet doing senior year corporate interviews.
  • Rice has ~2,000 grad students living off campus.
  • UH has tens of thousands of undergrads and grads living off campus.
  • If UH and Rice agree to send it students, that creates a predictable revenue stream to incent a developer and secure a redevelopment loan.  It also can subsidize the startup space to make it very cheap or even free, which will help it achieve a critical mass of activity.
  • I think students would love the social dorm environment with other students as opposed to the usual cheap, sterile apartment.  It could also offer key dorm amenities like a cafeteria, which is also likely to be popular with the startup employees.
  • For students who do not want to work for energy companies, it may help keep their talent in Houston rather than moving elsewhere after graduation.
  • It's in bankruptcy + foreclosure right now because their original plan of a low-end budget hotel doesn't really make much sense downtown.  So the availability is there.
It could be a truly incredible entrepreneurial environment, and put Houston on the map nationally as an innovator in encouraging entrepreneurship.  In my seven years of blogging, this is one of my favorite Houston strategies so far, and I hope to connect to the right people that can make it happen.

Thoughts welcome in the comments.

Update: UH and Rice get top rankings for entrepreneurship programs.
Update 2: NYT on how the Merchandise Mart building is anchoring a tech startup district in Chicago.

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At 8:13 PM, September 24, 2012, Anonymous C. Dean Kring said...

Our sentiments, exactly, which is why were looking for property at the moment for an "Extended Stay Business Bed and Breakfast Accelerator." We already have 2 letters of commitment. You may remember we're the Business Co-Op that founded Houston's first (and Texas' oldest) business incubator, AND the first Womens Business Center in the nation.
C. Dean Kring

At 11:28 PM, September 24, 2012, Anonymous Rich said...

This idea of Tory's has considerable potential. Here's a supplemental idea that can conceivably help interest the universities to send their entrepreneurs to live there, too. I've always thought that teams made of creative, energetic and exploration-oriented college students would be among the best contenders for the potentially growing list of high tech. competitive prizes available at:


& &

and especially:

(Immortality, anyone?)


As teams competing for prizes, such as those, will depend on sponsorship and advertising revenues, one need not be a scientist or engineer to be able to play a helpful role living in such a "prizes pursuing" converted Downtown dormitory. Once our local universities take an interest in winning such prizes like other universities nationwide increasingly have, the opportunity to congregate with similarly motivated folks near existing incubators such as the HTC can be a major selling-point for Tory's proposed incubator dormitory. The light rail accessibility is also appealing, as is the proximity to Randalls supermarket and a growing list of suitable fitness facilities (and corporations). But presently our area universities are still too focused chasing the inevitably declining grants greedily made available by the feds with our tax dollars. They're missing the competitive prizes boat altogether, while wondering why they can't seem to achieve Stanford's, M.I.T.'s or even Carnegie Mellon University's level of high tech. accomplishments. They need to realize, though, that the pool of grants AND student loans is drying up:

And they need to embrace the opportunity to help lobby our governments to offer more such genuinely competitive, results-driven prizes instead of grants that tend to favor Ivy League institutions which get paid to do busy-work, almost regardless of their results. Any suggested strategies towards making this potential catalyst for the desire for a Downtown High Tech. dorm finally materialize locally?

At 10:42 AM, September 25, 2012, Blogger texasvc said...

Although I really like the idea of increasing startup density, I am not sure that a common UH / Rice dorm would work. Rice's entire culture is built around the residential colleges on campus while UH is desperately trying to kill its "commuter-school" moniker as it attempts to re brand itself as a T1 school. Both schools serve vastly different student populations as well. I just don't know how you would get the schools to buy into this idea.

At 2:47 PM, September 25, 2012, Blogger Tory Gattis said...

I agree that Rice is built around the colleges on campus, but they still force 1,000 undergrads a year to live off campus. They intentionally underbuild on-campus capacity so that each college can only hold about 3/4 of students on campus. Then there are the 2,000 grad students. They all have to live somewhere.

As far as UH, not matter how much on campus housing they build, there will still be tens of thousands of students off campus. And yes, they have different populations, but UH still has a strong engineering school, and could certainly help fill an off campus dorm with those talented students.

At 4:54 PM, September 25, 2012, Blogger Tory Gattis said...

I've started referring to this as the "startup dorm", but over at a FB discussion on this ( Bryan Hassin has suggested "The Launch Pad" as a name for this development, which I think is awesome. Great fit with Houston's NASA/Space City connection.

At 8:52 PM, September 25, 2012, Anonymous Anonymous said...

Incubators are a growth industry in Austin, with the Statesman newspaper reporting yesterday that there are more than a dozen, both nonprofit and for-profit.

At 2:30 PM, October 10, 2012, Anonymous Ryan Vassar said...

You have to think of what types of business would appeal to college students, what is the major appeal for students to want to invest time in this venture. Rich I like your idea about competitive prizes as a potential for growth. Great comments!


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