Russ: Welcome back to The BusinessMakers Show, coming to you today from Station Houston, where my guest is John Reale, Co-founder and Managing director. John, welcome to The BusinessMakers Show.

John: Thanks, Russ. Great to have you here.

Russ: You bet. Tell us about Station Houston.

John: Station Houston launched on March 1st, really excited about that. It’s a community platform that was designed to help stimulate the innovation economy here. So, what we do is we service entrepreneurs; help them by providing access, providing community, and really opening up ideas to them as far as how they’re going to build their businesses, and give them the support and infrastructure that they need to do so at scale, attract the right capital, and find the right people.

Russ: Ok, and access and infrastructure means that includes the facility. I mean, do they all office right here, or are some members not actually office-ing here?

John: Yeah, a vast majority of our members are here every day. So, we have two types of memberships for us. We have what we call our express members, and our member vernacular is modeled off the New York City subway system. There are our express members who have dedicated work spaces with the idea that they’re going to get there faster. And then our local members who have shared work space, which is more first come, first serve. So, all of our members have, you know, a similar type of thing. They have access to our conference rooms, they’ve got Wi-Fi, they’ve got lots of free coffee, which they really love, and all the other things you would ask for as far as printers and everything at an office space.

The other thing that they get that I think is that the real value is access to the programming that we’re providing and the collisions of different mentors, of different capital providers, of different experts from legal or software development, or structuring, whatever those things may be, to help them think through and access very easily who are the types of folks who can help me think through my business and how do I build it.

Russ: Ok, now I noticed you haven’t used the incubator word or the accelerator word yet. Are those words passé now or do they kind of fit here too?

John: As we build this, what we’ll do is invite folks who have different accelerator type programs to be part of Station, where they can run those parts. There may be a future where Station has an accelerator, but for now we are focused on just being a community platform, helping entrepreneurs who are trying to build software companies, and providing all the access of the resources here in Houston to do so.

Russ: Ok, members. How many members are there now?

John: Yeah, so this is exciting Russ. We opened our doors 60 days ago and we have just about 60 members that make up about 33 companies right now. So it’s really exciting, so we have everywhere from the people who are moonlighting during their day job who are coming here in the evenings to work on their idea to really get some structure and direction about, you know, how do I take this concept? I know how to solve this problem and turn it into my venture. And then we have other members here who have received funding, whether seed or Series A funded, maybe have 4, 5, 6 employees even.

Russ: That are here all the time?

John: That are here all the time, which is really exciting.

Russ: You can’t spend the night here, can you?

John: Uh, you know, 24/7 access. Entrepreneurs don’t really sleep that much, Russ. You know this from your life and experiences.

Russ: Absolutely. Ok, so, I assume it costs to be a member.

John: It does. We charge a membership fee, and, you know, our real goal in all this is how do we keep, one of the challenges, as you know as an entrepreneur, is always the eternal struggle of costs vs. value. So, you know, for dedicated members, they pay $400 a month and for our express members, they pay $250 a month. So, really you could look at that via cups of coffee. If you’re going to work out of a coffee shop per day and you realize it’s a pretty good arbitrage when you get access to some really amazing entrepreneurs that are here in town that we create these office hours and schedule them to be here to visit with.

Russ: Ok, but there’s no equity contribution from the start up to be part of this.

John: No. No, we have some plans in the future as far as how we can participate, and how we’re looking at having financial resources to invest in our companies, but there’s, you know, one of the things that was really important to us is how do we take away barriers, right? I mean, as an entrepreneur, when you’re going to market and you’re thinking about; what’s my target segment? what’s my landing market? You’re looking for the least amount of barriers. And, when we look at Houston as a whole, in this backdrop, we want to create community, we want to create density. I mean, that’s our real objective as far as our phase I here is how do we create high tech startup density? And so, to do so it’s, we’ve looked across every single barrier and said, how do we have an answer for that? So, there’s not equity ask in doing so.

Russ: Ok. So, what triggered it in the beginning to, hey, we need to do this in Houston, Texas?

John: Yeah, so one of my cofounders, Blair Garrou, as you know, is one of a venture capitalist here in town with Mercury Fund, and Mercury Fund’s business is to fund companies and look at great entrepreneurs, focus in sciences as well as software in the middle of the country. So, Mercury Fund’s offices, when you look around the country, they spend the majority of their time in Cintrifuse in Cincinnati, and 1871 in Chicago, and the Capital Factory in Austin, and, you know, have a partner out in Ann Arbor so you know, so Blair and his colleagues have been running around throughout the country realizing that all these co-working spaces keep popping up, and that becomes this common access point for the innovation community and the startup community.

And you look around and it’s like, there isn’t one in Houston, so one of Mercury Fund’s advisors, Emily Keeton, who is a long time corporate development and strategy executive in the digital media side and she’s brilliant, she saw these problems and started working with Blair to say, how do we solve this? I met Emily through one of my board members via TiE, which is another entrepreneurship organization I’m involved with here in town. And, when I heard about the problem I thought, like, you’re completely right, and because of this problem set I think it’s really hindered some of the growth of the innovation economy and startups in general here in Houston.

Russ: And as you know that’s just not right, is it?

John: No, this is our home, right? And so I’ve spend years working in Houston as well as being on the road helping to build or fix or grow other kind of early stage companies, and when I think about, you know, our home, where we plan on living, and the future that we want to have, it really resonated with me to get involved.

Russ: Yeah, and everybody talks about Houston as being this really happening, entrepreneurial city, and it sort of has some history in certain sectors, even technology, when you include Compaq, but boy, when the digital world came along, particularly, it seemed like we just didn’t participate and still don’t participate. So, I mean, I noticed already you said you’re mainly focusing on software here, right?

John: Yes. You know, phase I is to focus on software, Russ, because you know software is scalable. Software converges with every industry, you know, so I think even when you’re looking at things like a Tesla of the world, or, you know, even how Google expands into different markets, you know software becomes this common interface between heavy industry and industrial internet of things, as well as every other industry, so it’s this great point of convergence. And when we look at, you know, the industries that we do really well here in Houston, which are healthcare, which have been space, which have been energy, it’s just great convergence points to do so. So our first focus is software, and we’ll see. I think like everything else, our goal is to build high tech startup density, and if we’re, as we get successful in doing so, there’s a reason to go branch out into hardware, or something of the sort, will continue to do so.

Russ: Good. I mean, I applaud what you’re doing here and it sounds very needed and exciting. I’m a little bit perplexed, you know, there’s other entities in Houston that were supposed to do that. There was the START thing, there was, of course, HTC, been around forever and I think a few others sort of common entrepreneur working space. But the fact that you drew so many so quickly kind of indicates that there was a demand here without a supplier.

John: You know, we think so. We think that there’s a demand. You know, guys like Gaurav and Apurva; star, terrific guys, you know, doing a great job. So when I think about why we’ve had somewhat of this ground swell, you know, Eddie Egan over at the Baker Institute, who is the McNair Fellow for Entrepreneurship, he’s called this more of a ground swell, and I think one of the reasons he’s been supportive is it’s been a bottom up movement. You know, Blair interacted with Emily, which I got involved, and then other folks in the community, and Grace Rodriguez, and Chris Root from our team. I mean, it created this ground swell and for all the other folks here in town that we touch and talk to in different ways because we all serve as mentors, whether it’s to OwlSpark or to Surge or RED Labs, or any other platform here in town.

I think we’ve been living what we’re trying to do, so I think that that’s created maybe some good connectivity points and some credibility that we really care and we’re going to do this.

Russ: Sure. Just using the mentor word, I mean, you have a whole army, it seems like, of mentors playing roles right here, right now.

John: Yeah, Russ. You know, and that’s the secret sauce, right? I mean, when you’ve got round trip entrepreneurs, when you have investors, when you have people who really understand and who have been there and done that, and can talk to you. This morning I was talking to a new member, and we were talking about his technology and what they were doing and got some really good interest, but how do I really take this to market? Where do I go? What’s my landing market? Who do I sell? How do I sell it? How do I structure a pilot program? Having those types of mentors be part of Station is really our differentiator and, you know, that’s a number that will continue to grow and ask more people in the community to give back and be part of what we’re trying to do to build the Houston that I think we all want to live in.

Russ: Wow. That sounds cool. I mean, talking about all those road blocks and important decisions reminds me, perhaps you too, what it’s like to run a startup. I think I did it back before they had invented mentors, so we just had to do it ourselves, but, well I’m really applauding what you’re doing. Share with us your vision. What do you think that Station Houston will look like 5 years from now if everything goes as planned?

John: Yeah, so I see Houston as this thriving, innovative tech city. I mean, I say this to folks when they ask, but when I think about the Texas Medical Center, I think of, that’s what I think of for Houston. Of a thriving tech community that, you know, one of the things that Houston, for all of its wonderful attributes, it’s a city of the globe. It’s really a worldly city. We’ve got the most diversity, we’ve got all these wonderful young people, we’ve got great universities, we’ve got great mature industries. But all these points come together, you know, we’re the leading city where people come through for so many parts of the world to interact with the United States. It brings to us so much diversity to tap into as well as folks who are just experts who have seen so many different problem sets. So, I see this future of Houston that, you know, I don’t want to, I’ll use a, probably a good analogy to like Chicago.

Chicago four years ago launched this awesome platform called 1871, and the folks there have been so supportive of what we’ve been doing. JB Pritzker foundation teamed up with the state of Illinois, they created space, they put money in, they put resources and Chicago Ventures was involved, and it was the community of entrepreneurs who really helped launch this. Well, fast forward four years later, and what has Chicago done? Their venture capital investment in 2015 was nearly double what it was just four, five years ago. It’s paying off, and it’s, you know, when you look at 1871 and how they’ve expanded, and how they’ve created a life sciences co-working platform and accelerator called Matter, there’s now about 500 companies that office at 1871. There’s been hundreds of millions of dollars invested in venture, you know, just by virtue of 2015, and 1.1 billion of recorded venture investment.

But then for the third year in a row, Chicago is rated like the top city for investment. Over 3 billion dollars of investment, I think 20,000 new jobs. You know, very mature companies relocating their headquarters because they see it as a place where this is where people want to live. This is where innovation happens, and I think that’s a really great barometer and roadmap for Houston to follow, to say, you know, what’s, what is the real art of the possible, and what happens when the community unites and works together to do so.

Russ: Well, John that’s impressive. I wish you good luck. Make it happen, man.

John: Thank you, and please come back. You are a friend to Station and come back and do more shows.

Russ: Well, I do, I want to. I want to get updates along the way.

John: Oh, you got it.

Russ: Alright. And that wraps up my discussion with John Reale, Co-founder and managing director of Station Houston. And this is The BusinessMakers Show.