HOUSTON TECHNOLOGY CENTER
Interview with Paul Frison, Chief Executive Officer
From ABDUL QUAYYUM KHAN KUNDI,
Mar 07 - 13, 2005
Paul Frison is President and CEO of the Houston Technology Center (HTC), a business accelerator for Houston-based emerging technology companies. Paul has lived in Houston since 1975 during which he has been President and/or CEO of three public companies — LifeMark (1975-1984); NYSE ComputerCraft (1984-1986); NASDAQ LifeCell (1986-1999). He has been involved in four other start-ups by serving on the Board of Directors. His experience includes numerous mergers and acquisitions. He has raised multiple rounds of venture capital, two IPOs, and more than a dozen follow-on rounds of public financing.
We recently sat with him to explore his vision for Technology in general and Houston as center of it in particular.
Question: Houston traditionally is considered a center for Oil & Gas industries. What steps the city or HTC is taking to make technology a substantial part of the local economy?
Paul: In 1999, consulting firm McKinsey conducted a survey to identify the characteristic's required for the city to become a technology center. They contributed 4 consultants who research all major technology centers in USA on East and West coast. Their findings were that Houston is a sleeping giant. It has all the ingredients to attract entrepreneurs to start emerging technology companies. Houston is home to NASA, it has the second largest medical center after Boston, it is home to largest oil & gas companies in the world. The major issue was with the perception of Houston as a low tech city. Houston is rarely mentioned in top 10 US cities in terms of venture capital activity and technology innovation. Our strategy is two-fold, first to improve the image of the city and second to help nurture development of new start-up companies of which HTC is an integral part. According to a study conducted by A. T. Kearney there are 300 software development companies in Houston and over 1000 IT services companies in all. This is a sure sign that we are on a right path.
Question: Houston has yet to produce a nationally recognized corporation like Dell in Austin. What are the reasons for this?
Paul: Yes it is true that we need a bigger splash that could have a ripple effect and filter down. Houston is home to BMC software, which is one of the top three software companies in the world. Some of HTC clients have been acquired by bigger corporations, which have created wealth that we are expecting to be channeled back to the local economy. Houston has a large number of high networth individuals from energy and real estate sectors who are now willing to invest in technology start-ups with the help of HTC to screen and qualify candidates. Houston Angel Network (HAN) has 75 members, HTC is proud to have been the initiator of this network.
Question: According to recent venture capital investment figures, Houston is not among the top 5 cities for venture investing. How can this scenario be improved and what role HTC is playing to attract more venture funds?
Paul: Two-third of all venture funds are invested in East and West coast. It will be sometime for Houston to attract a major portion of these funds. One way of doing that is creating more success stories. Once that momentum is built it will be difficult for VCs to ignore Houston. HTC is playing a vital role in creating that dynamic environment. We are expanding our facilities to house higher number of client companies.
Question: Do you think quality of life is an issue to attract engineering talent to stimulate start-up activity?
Paul: There are many ways to look at this issue. In terms of cost of living Houston is a best place to start business as compare to Seattle, Boston, San Francisco and New York. For a start-up it is important to keep the overhead costs low to conserve cash for growth. But it is true that we need to make improve quality of life in Houston especially quality of air, road network and social events. In last 15-20 years, Houston has progressed much in this direction. We have been successful in embarking on revitalizing the Downtown, which is center of all activities now. But we have a long way to do in this area.
Question: Houston has emerged as home to a diverse group of immigrants from Asia and Africa. How is this immigrant community contributing to the local economy?
Paul: We believe in diversity and helping underserved communities to share and contribute in the local economy. HTC, for that matter is an equal opportunity employer, has many management and advisors from all these diverse communities.
Question: Many technology-centered cities have formed alliances with out-sourcing centers in India, Philippines, China etc. What kind of alliances HTC has formed in last 5 years?
Paul: We have not actively pursued this activity but we do welcome visitors from all over the world to share experiences with us. We recently had delegations from Malaysia, Japan, Indonesia and Libya. HTC is also member of National Business Incubator Association (NBIA) which is also an avenue for us to learn and share our expertise with others. HTC is a non-profit organization funded by contributions from the private sector.
For example, Reliant provided us electricity for the first two years, now Entergy has taken up this electric bill. Sterling Bank donated money so that we could buy some of the office furniture.
Question: How do you see the effects of Sarbane-Oxley bill on corporations?
Paul: The scandals coming out from some of the respected corporate names had shaken the investor confidence. It was important for legislatures to rebuild that confidence. Sarbane-Oxley is a product of that thinking. But like any legal statue and regulation it has produce some undesired consequences. I am certain lawmakers would review that bill and make it more effective. But I believe some measures were required to regain investor's trust.
Question: What is your long-term vision for Houston and HTC in terms of technology?
Paul: We believe bringing people together is a first step in creating a dynamic environment conducive to the creation of good companies. HTC will continue to provide a focal point for people to come together. We will continue our focus on the five technology sectors we have identified. In this wealth creation process, we expect people to reinvest that wealth in accelerating the growth of the local economy. Houston's Angel Network is one-success stories in that direction