Global
19 November 2020

Building Innovation Ecosystems: How Houston Thought Bold to Transform Startup Hubs

Written by Clara Scheinmann

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"My ultimate goal was to show every community they can build their own ecosystem."

In order to harness the impact of entrepreneurs, of new technologies, and innovators, an ecosystem involving many parts is needed. Creating a group that is bigger than the sum of their parts is what can connect new ideas to economic development and social progress. How to build one is a question many municipalities and state governments ask experts and look for examples of. 

Cities like Boston, Austin, San Francisco, and New York responded to the 2008 recession by forming large innovation ecosystems to support these emerging startups, bringing together essential stakeholders (government, academic institutions, industry leaders, and venture capital) to make it as easy as possible for other entrepreneurs to launch new businesses, creating new jobs and solutions for the market. Now we can look to Houston as another prominent example of a city transforming itself to embrace innovation and collaboration.

I recently had the chance to catch up with Robert Pieroni, Director of Economic Development at Central Houston Inc. and a MassChallenge Texas Board of Advisors member who is transforming Houston’s downtown startup ecosystem. 

In our conversation, we covered topics including Houston’s big vision for its ecosystem, their holistic approach, and advice for other cities seeking to build out their own innovation ecosystems. 

Here’s what Robert has to say: 

Clara: Tell me about your big vision for Houston’s downtown innovation ecosystem.

Robert: So, we know clusters of innovation are emerging across the world. These physical ecosystems, also known as “hubs” or “districts,” emerge from the collaborative interaction among the key players from across the entrepreneurial spectrum – entrepreneurs, mentors, investors, corporations, service providers, universities, etc., that align to form a regional hotbed of innovation.

The physical innovation ecosystems are tremendous drivers of economic growth. But, only 4% of the world’s population has access to an innovation community. Those who are unable to access these geographically centralized ecosystems are shut out from the advantages and opportunities they offer. So, I said “‘what if…?’”. What if, we establish a vibrant inclusive hub that will become the center of gravity for technology and entrepreneurs in downtown Houston. 

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Robert Pieroni, Director of Economic Development at Central Houston Inc. and a MassChallenge Texas Board of Advisors

I wanted to create a place for all Houstonians. We know that the tech world is very divided and archaic by nature and hierarchical. But, we wanted to make sure that we were thinking about inclusivity from the very beginning. We are going to become a powerful engine for economic growth and vitality, generating jobs and higher wages for all Houstonians. 

I believe you can innovate anywhere – you don’t have to be on a coast. Talent and brainpower are everywhere and what has been constraints for all these years has been access to these physical hubs. Before our hub, people would often as me, “where do I go?” I believe we have now solved that problem.

In traditional economic development, the idea has always been to import great jobs in large numbers. Clearly, we all saw this a few years ago with the bidding process for Amazon’s second headquarters. I believe in true economic development and the purest form of job creation, which is about net job creation. I started asking what if a lot. The first what if was “instead of trying to attract the next unicorn to Houston, what if we build the next unicorn in Houston?” 

Clara: My guess is there are many ways to approach this work. How did you approach it?

Robert: We took a very holistic strategy approach to developing the ecosystem. Entrepreneurial support organizations such as MassChallenge will fill a niche, but they won’t develop the ecosystem alone. The question was how to build the ecosystem that enables everyone to scale acceleration and then get them to stay through wrap-around services? There needs to be an understanding of every mechanism that supports the innovation ecosystem in order to figure out the components and how they interact with one another. 

In addition to the scale MassChallenge would bring, I have always believed that you need to take care of who is in your backyard which is why we brought gener8tor’s gBETA pre-accelerator program to focus on local rooted founders. We went from having no accelerators, to two top-10 ranked accelerators co-locating in one innovation hub here in Houston. 

The next big question for us was how we keep our talent from leaving, which is what every community is looking to address and that is where the real estate component came in. Creating the village helps startups and entrepreneurs more seamlessly navigate through the stages of startup production, but the development of a vertical village is how we will keep them here. We partnered with a local building owner and locally operated co-working space provider to ensure the startups have a place to scale, grow, establish, expand, and mature in the future all in one mid-rise.

When you put all these components together you have a lot of new job growth opportunity by the startups. We are currently working on developing our generational pipeline of inclusive digital technology talent. We intentionally designed the 17,000 – SF hub with a 15-student classroom. The hope of the classroom is to work in collaboration with different organizations to develop an employee pool for the 1,000+ startups that will be accelerated through the cohort over the next 10 years. I want every MassChallenge company to hire their first employees locally right from our hub. We can program the curriculum for their future employees future needs. We are upskilling the community and reskilling the community while building new companies in Houston.

The need to have shared language for the ecosystem is critical. There still needs to be a lot of education about what the different components of an ecosystem are: many people don’t know the terminology of what a pre-accelerator, incubator, accelerator, so it can be challenging for them to understand how that supports economic development.  

Clara: What part of the ecosystem were you most concerned about when you first started doing this work?

Robert: When I started, I worried about venture capital, because that is what everyone told me to worry about. But, not so much anymore. My sense is that if you create enough critical mass of quality, there isn’t a person in the world who isn’t going to show up to look at it. This has been the thought behind the scale of bringing together MassChallenge, gener8tor, Impact Hub, and the Cannon: If you build enough worth, people are going to show up because they want to know what’s there. Look at the number of applications we get for MassChallenge Houston. We have 12 fortune 500 HQ’s in downtown Houston alone. That’s very unique.

So my main concern is the fact that we are very volatile to energy in Houston. When energy is down and there are layoffs, the amount of engineering talent that we could lose is massive – potentially devastating to the community. Secondly, we are one of the most diverse cities in the United States but yet when it comes to bringing the startup community together, there wasn’t a singular place to do that. I was concerned that if we don’t hurry up and foster that, then our diverse talent will start to leave. As an example, a few years ago, I got a call from someone who was looking for his next opportunity as an engineer. At the time, I had recommended that he go to Silicon Valley. If someone were to ask me now, I could help get them plugged into what’s going on right here in Houston. 

Clara: Where does MassChallenge fit into this larger picture?

Robert: You have to look at the entire startup lifecycle and partner with diverse organizations who are working to enable and empower local entrepreneurs from different parts of the ecosystem. Partnering with thoughtful ecosystem components enables it to flow into each other and intertwine.

This led me to bring MassChallenge to Houston because at the time we did not have a high-impact accelerator in Houston. I anchored our ecosystem with MassChallenge because it provides scale and an ability to transform our market. Boston is also helping to validate the Houston startup ecosystem. There is a lot of talent locally that Houston needed to tap into, this potential was being underserved by our market. Thanks to our resident partner MassChallenge we believe we can now serve the community before they look to leave the community.   

Clara: What advice do you have for other US cities earlier in their journey towards developing a strong innovation ecosystem?

Robert: First, be intentional in every aspect from the start. Make sure you are strategic and thoughtful in every aspect from physical location, accessibility, to diverse organizational partnerships.

My ultimate goal was to show every community they can build their own ecosystem. We are creating something right now in Houston that can foundationally change the entire landscape. I truly believe that you’ll see these vertical villages everywhere. It might not be to the same scale as a downtown Houston. You don’t have to build it at a mega scale, you just need to be thoughtful to make sure you are creating an ecosystem and not just one component of an ecosystem.

Just be the first you and do it better than anyone else thought you could. There is still some background and understanding in order to get there, but if you identify which pieces you need and are strengths of your region, then you can build on it and everything else will come.

  1. Government buy-in
  2. Financing
  3. Pre-acceleration
  4. Acceleration
  5. Incubator 
  6. Real estate partner
  7. Operational partner
  8. Corporation buy-in

Take the risk and be calculated about it. If you believe you’re doing it for the right reasons, building it the right way and for the right outcomes, be willing to be the collateral damage if you have to be. Not all of these projects go through because you are shaking up the norm and disrupting the status quo. This is why it's hard because most people by nature are risk adverse but at the end of the day, stick to your vision. If you built a strong solid vision, then run with it. Don’t deviate because people might tell you to deviate. As they say “vision without execution is hallucination”.

Clara: If you had one “do-over” from your work to date, what decision would you change?

Robert: I’m not sure if I have a “do-over”. I think my biggest question would be: Did we build it big enough? 

Clara Scheinmann is the Director of Ecosystem Engagement at MassChallenge. 

 

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