Recipe for success

Houston needs these 4 ingredients to be a world-class innovation hub

Houston has the potential to be a leader in innovation — we just need four things. Getty Images

Is Houston innovative? We put a man on the moon, are curing cancer, and are performing engineering miracles in the oilfield daily. But we don't have the Googles or Amazons of the world or a bustling startup or venture capital scene.

Painfully, Houston was the only one of the 10 largest U.S. metros not to be among the 20 final locations for Amazon's HQ2. By most measures of innovation leadership, Houston is hardly number one in Texas, let alone nationally.

This is a problem. Today, technology innovation is integral to success whether it be using artificial intelligence to improve oil production or patient care, and companies and entrepreneurs will go wherever they need to for the next growth opportunity. If we want the next man-on-the-moon success in Houston and to defend our leadership in energy, health care, etc., we need to be a leader and destination for driving innovation.

So, how does a city like Houston transform itself into a digital technology and innovation leader? That was the core question for a strategy that I led for Accenture working with the Greater Houston Partnership and the mayor's Technology and Innovation Taskforce in early 2017.

After analyzing successful innovation ecosystems around the world, we identified four critical components that make a city a world-class digital innovation location:


Courtesy of Accenture


Talent
You need talent with the right skillsets and mindsets. A modern digital ecosystem needs developers, designers, data scientists, and more. They must also have the right mindset and be able and willing to take risks and do difficult things.

Houston already has tremendous amounts of STEM talent but doesn't produce enough talent or retain enough of the locally-grown talent. To jumpstart, we are going to have to import it initially. The main focus is attracting a large digital company to Houston (e.g. Tesla, Google). This would simultaneously bolster our talent base and image, while also providing opportunities for Houston students to stay and pursue their careers in digital innovation.

Collisions
World-class cities manage to create collisions between talent that spark huge opportunities. Think Steve Wozniak meeting Steve Jobs and Bill Gates meeting Paul Allen. Importantly, they must also collide with customers, investors, other start-ups, academia, people of different backgrounds, and even lawyers (sigh).

In Houston, we've seen this same network effect with the Energy Corridor and Texas Medical Center, but we need a similar setup for digital innovation. That's why the planned Innovation District in Midtown, funded by Rice University, is a game-changer.

Resources
Houston has significant capital in corporations and high-net-worth individuals but is short on angel or venture capital, which would otherwise bring not only money, but also mentorship and connections for young companies.

Detroit had success overcoming this with a 'fund of funds' model, pioneered by Chris Rizik. Local corporations invest in the fund-of-funds which, in turn, invests in venture funds from outside of the state. Their primary motivation should be to earn a return for their investors, but they are asked to look at local companies and spend time in the ecosystem.

The Houston Exponential Venture Fund led by Guillermo Borda recently had its first close of $25 million, and I'm optimistic it'll double or triple in size in the near future.

Impact
Successful ecosystems know how to scale and turn a small company into an international Goliath in just years.

For Houston to be successful in scaling, we must align startups to our local industries, and they must stay and grow here. To solve this challenge, Houston is focusing on becoming famous in certain core themes, including robotics/autonomous systems, data science, industrial IoT, and cybersecurity. These are what our industries – and the world – need, have large inflows of venture capital, and are what Houston has unfair advantage in.

At the end of the day, all four ingredients are essential; none can go to zero or the multiplying effect won't happen. We have to get all of these areas right, all at once. No one company, institution, or sector of the economy can solve the challenge alone. That's why organizations like Houston Exponential and the plans for Houston's Innovation District have been popping up so solve this problem and create connections.

It's an incredibly exciting time for Houston with so much momentum, growth, and demand. We have made bold bets in the past, with our port, TMC, the Space Center, and many more. It'll be a mistake not to carry that legacy forward with a bold new bet for the twenty-first century.

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Brian Richards is Houston innovation hub director at Accenture and board member at Houston Exponential. Read more about him and his career here.

Houston came in at No. 5 for best cities — with populations of more than 1 million residents — for startups. Photo by Tim Leviston/Getty Images

When it comes to cities with over a million residents, Houston's at the front of the pack, according to a new study. But, there's a catch.

Last month, Commercial Cafe rounded up the 20 top cities for early-stage startups and entrepreneurs, and Houston missed the list. Now, the commercial real estate blog has broken down the data into three top ten lists based on city size, and Houston has claimed the No. 5 spot on the list of cities with 1 million or more residents.

The study took into account education, affordability, startup financial success (calculated from Kickstarter data), millennial population growth, among other aspects. Houston in particular was called out for being the most affordable major metro and for having the third best startup survival rate.

"The city is home to the fourth-largest percentage of millennial residents out of the total population, and saw the fourth-largest growth in number of millennial residents," the report reads. "Houston ranked fifth in group for the share of population holding a bachelor's degree or higher in a tech discipline. The rate at which the number of such residents has increased placed Houston seventh for tech education growth."

Outpacing Houston on the larger cities were Dallas at No. 1, San Diego, California, at No. 2, San Jose, California, at No. 3, and Los Angeles at No. 4. San Antonio also made the list, coming in at No. 7.

Texas cities were sprinkled throughout the two smaller cities list. Austin came in at No. 1 for the cities with 500,000 to 1 million residents, as well as claimed the top spot in the best cities regardless of population. Fort Worth ranked as No. 10 on this mid-sized city list.

On the small cities list for metros with less than 500,000 residents, Arlington came in at No. 6 for its location and startup density. The city also made the top 20 regardless of size, sliding into the No. 19 spot. Dallas, which topped the large cities list, came in at No. 15 on the size agnostic list for top startup cities.

Recently, Texas was named a top city to start a company by personal finance website, WalletHub, based on similar statistics.

"[I]t's clear why Texas would come in at No. 1," Susan Davenport, senior vice president of economic development for the Greater Houston Partnership, says responding to that study. "These are all areas where the Lone Star State consistently excels and why Texas continues to attract both entrepreneurs and existing companies across industry sectors."