Houston voices

3 things Houston entrepreneurs need to keep in mind to run a lean startup and reduce risk

Lean methodology aims to help startups reduce risk and helps entrepreneurs make better, more efficient decisions. Miguel Tovar/University of Houston

There are few things riskier than launching a new business. You could run through a mine field and have a better chance at living than launching a successful, long-lasting business. In fact, the Harvard Business School even reported that three out of every four startups fail. Fortunately, a new process has come to light that was designed precisely to reduce the risk of starting a business. Lean startups champion trial and error over detailed planning. Customer feedback over "gut feeling." Cyclic processes of design over traditional development.

Some lean startup ideas have already gone mainstream because they've proven to be so effective. The principles of "minimum viable product" and "startup pivot" have become so engrained in modern business that even university business colleges have begun to teach them.

There are three key aspects of the lean methodology.

Educated guesses

Number one: Instead of spending a year conducting research and planning long-term, lean startup entrepreneurs go with the idea that all they have on the first day is a bunch of unproven ideas. Guesses, really. These entrepreneurs forego the traditional business plan and opt instead to give a Cliff Notes version of their big idea using a template dubbed "business model canvas." It's pretty much a diagram that shows how a business generates value not just for its consumers, but for itself.

Field work

Number two: Lean startups use an "out and about" method for testing their ideas. It's a kind of customer development. They go "out and about" and basically interview potential customers, interested people, and people on the fence about all aspects of their business. How's our pricing compared to others you've seen? Do you like our product features? What do you think of our strategy? Lean startup entrepreneurs amend their ideas based on the feedback they get from customers. That's the beauty of the lean method: it's based on your willingness to change directions based on new information. Sound familiar? Well, it should. I just described pivoting. A lean startup concept now adopted by major corporations.

Agility means stability not fragility

Number three: The software industry bore a method called agile development. Agile development cuts down on wasted time because it emphasizes the ability and willingness to change directions and adapt fast. That's what agile means. To move quickly. There's a company named RoofProtect Pro that created a chemical they thought would appeal to homeowners looking to reduce shingle rot. Turns out there wasn't really a demand for reducing shingle rot. It wasn't as big a deal as the RoofProtect Pro founders had hypothesized. However, after speaking with business owners they discovered there was a demand for something to help reduce rust and deterioration of signage. RoofProtect Pro went back to the drawing board to build and test a prototype for a chemical that reduces rust and staining on different material like concrete and metal. A year later RoofProtect Pro became SurfaceSustain and obtained over $2 million in venture capital funding.

Now that's agility!

It's no surprise, then, that in the high-stakes world of business, a methodology designed specifically to reduce risk would prove successful. Lean methods don't guarantee success, of course, but the principles it holds dear do help strip away a lot of wasted time and energy and have proven to be highly efficient. Now, if there's an antidote to riskiness, it's got to be efficiency. Efficiency tightens a business to bare bones so there is little room for big risks to hurt your venture.

------

This article originally appeared on the University of Houston's The Big Idea.

Rene Cantu is the writer and editor at UH Division of Research.

Trending News

Building Houston

 
 

According to a report, Houston has grew its tech workforce more than other major metros over the past year. Joe Daniel Price/Getty Images

When Americans think of tech hubs, Silicon Valley or even Austin may initially come to mind. However, Houston appears to be making a play for tech-hub status.

Citing data from career platform LinkedIn, the Axios news website reports that Houston has seen a healthy influx of tech workers since the start of the pandemic. In fact, Houston ranks second among 14 major U.S. labor markets for the number of relocating software and IT workers between March 2020 and February 2021 compared with the same period a year earlier.

Miami grabs the No. 1 spot for the gain in software and IT workers (up 15.4 percent) between the two periods, with Houston in second place (10.4 percent) and Dallas-Fort Worth in third place (8.6 percent), according to the LinkedIn data.

"Young engineers and recent college graduates see Miami, Houston, and Philadelphia — not San Francisco, New York, or Seattle — as the hot new places to jumpstart a technology or creative economy career," Axios notes.

At the bottom of the barrel sits the San Francisco Bay Area, which suffered a loss of 34.8 percent when comparing the arrival and departure of software and IT workers. Interestingly, Austin experienced a loss of 8 percent in this category.

The shift from traditional tech hub to emerging tech hub is likely to continue as employers and employees alike further embrace remote work. A survey commissioned in April by the nonprofit One America Works found 47% of tech workers had moved during the pandemic. In addition, 3 in 10 tech workers anticipate living somewhere different than they did during the pandemic.

The CompTIA tech trade group says the Houston metro area is home to 243,908 tech workers. The Houston area's tech workforce grew 12.3 percent from 2010 to 2019, according to the group.

"Houston has been a center for world-changing innovations in energy, life sciences and aerospace for over a century. With science and engineering breakthroughs ingrained in the fabric of Houston's economy, the region has become a thriving hub of digital technology talent and companies thanks to our access to customers and expertise," says a report released in March by the Greater Houston Partnership.

One employer taking advantage of that talent is Bill.com. In 2019, the digital payments company opened a Houston outpost — the company's first office outside Silicon Valley.

"Though the city's technology industry is still developing, it offers a breath of fresh air compared to overcrowded late-stage tech markets like Austin and Denver. Ultimately, the breadth and depth of Houston's talent pool and the neighboring educational pipelines made it an ideal location for a second home," Vinay Pai, senior vice president of engineering at Palo Alto, California-based Bill.com and a Rice University graduate, wrote in April 2020 on LinkedIn.

Trending News