Guest column

6 things this Houston entrepreneur wishes he’d known before starting his company

Learn from the mistakes of a successful Houston entrepreneur — from teamwork tips to reasons why you should network with other startups. Emilija Manevska/Getty Images

Recently, I was asked what it took to build a startup in Houston. It has taken me three attempts to create a successful startup, and there were a few things that I wish I'd known right out of the gate.

Whether your goal is to exit through a sale, an IPO, or turn your team of pirates into something that looks like a company, your business model will determine how you earn revenue and profits, and you want it to be repeatable and scalable to survive. With that in mind, here are the things I've learned along the way and what I wish I had known before I started my career as an entrepreneur.

Location does matter 

Houston is great for food, sports, and massive rainfall, but it's difficult to find a large pool of talented full-stack software engineers who speak cloud. I recruited some of the best, but it was incredibly difficult to find them compared to markets like Austin, Denver, and San Francisco.

I've seen successful companies build two separate offices, one for a headquarters, and another for development, but for us, we didn't need to build a massive team, so we remained close to customers in Houston and hired a remote team in California. If you need to build a large engineering team, consider a different city or go remote.

Startups have well-defined phases 

Your startup is not a snowflake. There have been thousands upon thousands of entrepreneurs that have succeeded and failed, and a few people have studied them to understand their histories and roadmaps. I wish I learned from them before I began, instead of spending every waking hour building a product, and competing with development time for research.

Looking back, we followed the same trail taken by many other B2B startups, like: Product-market fit, sales optimization, customer success, marketing focus, and eventually scale. It's important to know which phase you are in, who you need to hire in each phase, and most importantly, how your role changes in each one.

Partner roles need to be well understood 

One of largest factors on your probability of success is your team. When choosing your partners, I would suggest using an odd number of people to break stalemates, and to always have a CEO. One person needs to be in charge of execution, I can tell you first hand that committees do not scale well when you need a high velocity of decision making.

When choosing your team, make note of Cal Newport's research on career capital, which is the rare and valuable skills that one can leverage help your startup succeed. If your friend knows how to code or understands databases, ask yourself if he/she is the best in their class, because these are skills that you can hire for or contract out. The traits that accelerated our success were a unique blend of domain expertise, petroleum-specific software knowledge, deep business development expertise, and strong sense of diligence and commitment, which is what became our culture.

Finally, you and your partners need to know what needs to be done, and how you can individually contribute. Your contributions will change in each phase, and each of you need to understand how your roles will change, and be prepared to adapt quickly. If one of your partners writes the first line of code, doesn't mean they'll be the CTO when you have 150 people, the person that makes the first sale may not be the CRO when you have a 30 person salesforce. For those with a large ego, it's one of the hardest things to accept, but must be acknowledged in order for a team to succeed.

Your idea is probably wrong, but that is okay 

We used agile and lean philosophies to build our organization, and our approach was centered around what Steve Blank calls "customer discovery," the understanding of how to find a product-market fit. These methods subscribe to the hypothesis that successful startups are defined by their team's execution, and not the idea alone. We ditched our first idea after two weeks and pivoted to a new one, and we learned from our customers very quickly and created over 115 prototypes in 10 months before making the first sale. Each group of customers saw a different prototype, and each beta-tester used a different design, a different stack, a different user experience. We had to learn quickly. Agile and lean processes helped us iterate quickly and discover what our customers needed, but a highly skilled team was needed to figure out how to use the processes correctly.

Connect with others who have made it

Success is a multi-variate formula that compounds every good and bad decision unequally. If you don't know the answer to a key decision, your team can help, if they don't know, then find another team that has navigated your trail to provide advice.

In Houston, there are not many teams who have been through this, we leaned on help from the Austin network. I'm a big believer in helping the community of entrepreneurs, and I am more than happy to throw down the rope to help others in their ascent.

Money is your oxygen

Lastly, learning to hold your breath isn't a long-term strategy for deep sea dives. You'll need to know how many months of oxygen you have in your bank account at all times. There is no magic number of months for runway, but I can tell you from experience that three months is too little for oil and gas tech startups, especially when OilCo's take three to six months to sign and pay your invoices.

I can't emphasize how difficult starting a company can be. By reflecting on the points I mentioned here, I believe that I would have avoided some pitfalls, and maybe even made it a little farther in the journey.

------

James Ruiz is the founder of Houston-based Q Engineering, a data driven solutions company for E&P professionals.

Trending News

Building Houston

 
 

Here's your one-stop shop for innovation events in Houston this month. Photo via Getty Images

Houstonians are transitioning into a new summer month, and the city's business community is mixing in networking and conference events with family vacations and time off. Here's a rundown of what all to throw on your calendar for July when it comes to innovation-related events.

This article will be updated as more business and tech events are announced.

July 10 — Have a Nice Day Market at the Ion

Stop by for a one-of-a-kind vendor market - #HaveANiceDayHTX - taking place at the Ion, Houston's newest urban district and collaborative space that is designed to provide the city a place where entrepreneurial, corporate, and academic communities can come together. Free to attend and free parking onsite.

Have a Nice Day is a creative collective with a goal of celebrating BIPOC makers, creators, and causes.

The event is Sunday, July 10, 4 to 8 pm, at The Ion. Click here to register.

July 12 — One Houston Together Webinar Series

In the first installment of the Partnership's One Houston Together webinar series, we will discuss supplier diversity an often underutilized resource for business. What is it and why is it important? How can supplier diversity have long-term impact on your business, help strengthen your supply chain, and make a positive community impact?

The event is Tuesday, July 12, noon to 1 pm, online. Click here to register.

July 14 — Investor Speaker Series: Both Sides of the Coin

In the next installment of Greentown Labs' Investor Speaker Series, sit down with two Greentown founders and their investors as they talk about their experiences working together before, during, and after an equity investment was made in the company. Attendees will get a behind-the-scenes look at one of the most important relationships in a startup’s journey and what best practices both founders and investors can follow to keep things moving smoothly.

The event is Thursday, July 14, 1 to 2:30 pm, online. Click here to register.

July 15 — SBA Funding Fair

Mark Winchester, the Deputy District Director for the Houston District Office of the U.S. Small Business Administration, will give a short intro of the programs the mentors will discuss. There will be three government guaranteed loan mentors and two to three mentors co-mentoring with remote SBIR experts.

The event is Friday, July 15, 10:30 am to 1 pm, at The Cannon - West Houston. Click here to register.

July 16 — Bots and Bytes: Family STEAM Day

Join the Ion for a hands-on learning experience to learn about tech and robotics and gain insight into the professional skills and concepts needed to excel in a robotics or tech career. This event will be tailored for 9-14-year-olds for a fun STEM experience.

The event is Saturday, July 16, 10 am to 1 pm, at The Ion. Click here to register.

July 19 — How to Start a Startup

You have an idea...now what? Before you start looking for funding, it's important to make sure that your idea is both viable and valuable -- if it doesn't have a sound model and a market willing to pay for it, investors won't be interested anyway.

The event is Tuesday, July 19, 5:30 to 7:30 pm, at The Ion. Click here to register.

July 20 — Perfecting Your Pitch

Join the Ion for their series with DeckLaunch and Fresh Tech Solutionz as they discuss the importance and value of your pitch deck when reaching your target audience.

The event is Wednesday, July 20, 5:30 to 6:30 pm, at The Ion. Click here to register.

July 21 — Transition On Tap: Investor Readiness with Vinson & Elkins LLP

Attorneys from Greentown Labs’ Gigawatt Partner Vinson & Elkins LLP, a leading fund- and company-side advisor for clean energy financing, will present an overview of legal considerations in cleantech investing, geared especially toward early-stage companies and investors. The presentation will cover the types of investors and deals in the cleantech space and also provide background on negotiating valuation, term sheets, and preparing for diligence.

The event is Thursday, July 21, 5 to 7 pm, at Greentown Houston. Click here to register.

July 28 — The Cannon Community 2nd Annual Town Hall Event

Partner of The Cannon, Baker Tilly, has played an integral part in the success of Cannon member companies. Join the Cannon community for The Cannon's 5-year anniversary celebration!

The event is Thursday, July 28, 4 to 7 pm, at The Cannon - West Houston. Click here to register.

Trending News