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.

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

Entrepreneurs' Organization had seven of its members give TED-style talks on April 25. Ammar Selo

Overheard: 9 powerful quotes from TED-style talks by Houston entrepreneurs

Eavesdropping in Houston

Moving the needle on something — whether it's changing the world or growing your business — hearing how others accomplished their own goals can be a beacon of hope and guidance for others.

The local Entrepreneurs' Organization chapter, EO Houston, hosted a series of seven TED Talk-style talks by members of the organization. These seven entrepreneurs discussed everything from being an introvert in a world of extroverts to the biggest security threat to American citizens: obesity. EO Talks took place at a breakfast event on April 25 at Houston Baptist University. If you missed the event, check out these overheard quotes from the day of discussions.

“When you get people involved in your organization, your job (as CEO) is alignment. Keep your team aligned with the strategic objectives of your company.”

— Paul Sarvadi, chairman, CEO and co-founder of Insperity, in his talk, "Take Care of Your People: An Entrepreneur's Journey." Connectivity is key, says Sarvadi.

“Taking care of your people is not rocket science. In fact, rocket science would be easier. It involves math and science — it works the same every day. But as soon as you put people in the mix, what worked yesterday might not work today.”

— Sarvadi continued in his talk about the importance of human resources in the the work place.

“What if everyone in the world knew what they stood for — imagine what that world would look like. We would know how we fit. We would be the best versions of ourselves. And, the world would be the best version of itself.”

— Winnie Hart, founder of TwinEngine in her talk, "What Do You Stand For?" Hart discussed finding one's identity and motivators — both in business and in life.

“Everywhere we look introverts are living in an extroverted world. It’s natural if you’re an introvert, like me, to feel a little insecure or that you feel the need to compete with your extraverted friends.”

— Darlene Gagnon, CEO and co-founder of Kinnect Global Management Services in her talk, "The Introverted Entrepreneur Competing in an Extroverted World." Gagnon says that introverts on track to be the most successful entrepreneurs with their execution skills, detail oriented nature, and ability to tune out the noise.

“It is the men in our lives that need to take action. Gentlemen, stand with us. Help us create a better presence so that we can sustain a future.”

— Shoshi Kaganovsky, CEO and founder of SensoLeak Global, in her talk, "Women Entrepreneurs—To Be..Or..To Be The Best." Kaganovsky compared how people say, "behind every great man is a woman," to how female leaders also need the support from the other gender.

“Entrepreneurship is an endless circle of reinventing yourself, being able to change, and keeping a positive attitude while doing so.”

— Kaganovsky continued in her talk as advice to the room of entrepreneurs.

“We can escape this crushing threat we call obesity. How are you going to make your escape?”

— Dr. Joe Galati, liver disease expert, radio host and author in his talk, "America's #1 National Security Threat." Galati argued that it's not Russia or North Korea that pose a major threat to the United States — it's our own health issues caused by obesity.

“We’ve all heard of the term ‘side hustle.' Maybe my dad invented the ‘side hustle.’”

— Chris Hotze, CEO and founder of Crescere Capital, in his talk, "Understanding the Power of Recurring Revenue." Hotze tells the story of how his father created a residential real estate side business out of necessity, and how that entrepreneurialism affected his own business career.

“As entrepreneurs, as long as we see control, we visualize an opportunity far greater than we see the risk.”

— Ali Nasser, CEO of AltruVista in his talk, "The Entrepreneur's Opportunity Cost," Nasser explains how entrepreneurs are hesitant to put money in the stock market, yet dive into ownership and risks for their own businesses.

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Houston is poised to lead 5G growth in Texas, according to a new report

leading the stream

Based on one key measure, Houston sits at the forefront of a telecom revolution that could spark a regional economic impact of more than $30 billion.

Data published recently by the Texas Comptroller's Office points out that as of last November and December, Houston led all cities in Texas for the number of so-called "small cells." Small cells are a key component in the rollout of ultra-high-speed 5G wireless communication throughout the Houston area and the country.

As the Texas Comptroller's Office explains, small cells are low-powered antennas that communicate wirelessly via radio waves. They're usually installed on existing public infrastructure like street signs or utility poles, instead of the big communication towers that transmit 4G signals.

The comptroller's tally shows Houston had approved 5,455 small-cell sites as of the November-December timeframe. That dwarfs the total number of sites (1,948) for the state's second-ranked city, Dallas.

"Houston is in the vanguard of small cell permitting in Texas, and not just because it's the state's largest city; advocates have lauded its proactive approach to 5G. Other cities, particularly smaller ones, are lagging well behind," the Comptroller's Office notes.

According to CTIA, a trade group for the wireless communications industry, 5G holds the promise to deliver an economic impact of $30.3 billion in the Houston area and create 93,700 jobs. The group says industries such as health care, energy, transportation, e-commerce, and logistics stand to benefit from the emergence of 5G.

"Maintaining world-class communications infrastructure is a requirement for success in a rapidly changing global economy. Small cells and fiber technology are the key foundational components for network densification and robust 5G. Cities like Houston that have embraced the need for this infrastructure will see the benefits of 5G faster than others," Mandy Derr, government affairs director at Houston-based communications infrastructure REIT Crown Castle International Corp. and a member of the Texas 5G Alliance, tells InnovationMap.

Derr says leaders in Houston have embraced the importance of small-cell technology through "reasonable and effective" regulations and processes aimed at boosting 5G capabilities. Three major providers of wireless service — AT&T, T-Mobile, and Verizon — offer 5G to customers in the Houston area.

"More small cells and fiber provide greater and faster access for the masses, enabling the connectivity that is essential to our businesses today — whether it's accepting payments on a mobile card reader, completing a sale on the go, or reliably reaching consumers where they are," Derr says.

In a blog post, Netrality Data Centers, which operates a data center in Houston, proclaims that Houston is shaping up to be a hub of 5G innovation.

"Houston has always been on the frontline," Mayor Sylvester Turner said during a 5G roundtable discussion in 2019. "It is who we are. It is in our DNA. We are a leading city. We didn't wait for somebody else to go to the moon. Or to be the energy capital of the world. Or the largest medical center in the world. But you don't stay at the front if you don't continue to lead."

Houston lands on list of nation's top spots for millennials on the move

migration destination

The Bayou City is shining as an attractive destination for young people on the move.

According to the fifth-annual study from SmartAsset, millennials are fleeing cities like Los Angeles and Chicago and migrating to other areas in search of work and a better quality of life, with Houston landing as the No. 18 spot for young professionals age 25 to 39.

In order to compile the list, SmartAsset dug into U.S. Census Bureau data from all 50 states, the District of Columbia, and 180 specific cities. According to the findings, 18,035 millennials moved in to Houston in 2019, while 15,838 moved out. That makes a net migration of 2,197, per the study.

When it comes to migrating millennials, the Lone Star State is tops, landing at No. 1 for states where millennials are moving, with more than 187,000 young people heading to Texas in the pre-pandemic year. Though some 154,000 millennials left Texas during the same time period, this results in a net gain of more than 33,000 millennial residents, the biggest net gain for the group in the country, giving Texas the lead in millennial migration for the second year in a row.

In news that is hardly shocking, Austin landing as the No. 4 hot spot overall.

While Austin ranks as the top Texas city where millennials are moving, one other Texas spot landed in the top 10, the Dallas suburb of Frisco (No. 6), with a net migration of 3,516 out-of-state millennials in 2019.

Dallas just missed the top 10, landing at No. 11 on the list, with a net millennial migration of 2,525 in 2019. San Antonio (No. 22) showed a net migration of 1,865 millennials.

The top city overall for millennial migration in 2019 was Denver, followed by Seattle.

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This article originally ran on CultureMap.