There are funds for the startups available but investors do not see projects to invest in. One can't simply copy the Silicon Valley success into present-day market and conditionselsewhere without the analysis of all market variables. The key component of Silicon Valley's success is not the investment but the understanding of the customer base for the products. This customer base in Houston is very different. Business in Houston was historically oriented towards the large corporate buyers of technology and engineering products. 15 years ago, these corporate buyers were shopping and closing the deals with direct access to the providers. Today they have built massive digital procurement machines that effectively filtering out small businesses.
This is the problem not only for the Oil and Gas Industry. In fact, it is amazing how much all corporations have in common: large hospitals and oil and gas companies, for example, havemore in common than most people realize. You will ask me how they could besimilar when the businesses are so different?
The answer is simple:similarities are in:
- The"command and control" management of the corporate organizations,
- The way they control technology deployments and
- The heavy overburden of "protective" procedures and bureaucracies.
Silicon Valley was and is oriented on consumer base and technologies deployable on billions of devices without corporate procurement barriers. Houston business is built around vertical subject matter-based expertise in engineering, subsurface, medical and aerospace industries. Technology deployments were difficult in all corporations because security and business protection are the main IT drivers, which provide a robust cover-up for slow action. There is also a large number of small players with demographics distinctly different from “consumer tech models of East and West coasts”, especially in oil and gas, for whom there are small gains and rather large expenses and disruptions in buying digital technologies even today.
While there are plenty of funds seemingly available for start-ups, the landscape is missing sustainable projects for investors. CEO of Station Houston, Gaby Rowe said in her recent interview to Houston Chronicle that “Station Houston will give up its broader role trying to develop an innovation ecosystem and stay focused on startups”. Startups are not sustainable in the absence of the customer base.
Without the development of robust ecosystems which include realistic consumer models, HoustonInnovation Ecosystem will remain on life-support of a constant investment for a foreseeable future.