Techs and the City
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Two names passed from the Houston scene early this year, reminding us, as only the end of something can, how quickly the present becomes the past. One was Maxine Mesinger, the longtime society columnist for the Houston Chronicle, who died at the age of 75. The other was Coastal Corporation, the energy giant founded by the flamboyant oilman Oscar Wyatt, which was gobbled up by another Houston-based company, El Paso Energy, for $24 billion. By themselves, the two events, seemingly unrelated, made hardly a ripple on the surface of Houston life. But as symbols, they tell us a lot about what Houston used to be and is no more.
Maxine—she was a first-name figure—wrote about a town that seemed always to brim with self-confidence. John Connally squired Arab sheiks around the city; Baron Ricky di Portanova and his wife, Sandra, threw legendary parties in their River Oaks mansion; and everybody wanted to see and be seen at Tony Vallone’s restaurant on Post Oak. In Maxine’s columns, divided into sections with names like “Miss Moonlight’s Memos” and “She Snoops to Conquer,” the swagger survived, even when the price of oil fell from $35 a barrel to $30 to $25 to oblivion. That self-assurance defined Houston for me. I remember a visit to the offices of this magazine by two Houston business leaders, a banker and the head of an architectural firm, in early 1985, who came to protest a story called “Is This All There Is?” about empty office buildings and a skyline without cranes and other aspects of life in Houston after the oil boom went bust. The visitors objected to the damage they believed the story had done to Houston’s image. “We must never lose the momentum, never,” I remember one of them saying, as if a collective civic will had been engaged in restoring the price of oil to its rightful level, only to be thwarted.
Coastal represented the continuing hegemony of oil and gas over the Houston economy. The company came out of the bust stronger than it had gone in, thanks to the swashbuckling Wyatt. The major oil companies were bigger, of course, but they were faceless entities, often run by engineers. Wyatt served to remind everyone that Houston was an entrepreneurial town, not a corporate town. He even enjoyed a place in Maxine’s world, for his wife, Lynn, was the city’s leading hostess and the sister of Bob Sakowitz, who was, for a time, Houston’s most prominent retailer.
That Houston is irretrievably gone; indeed, Maxine and Coastal were among its last vestiges. John Connally and the di Portanovas are dead. Oscar and Lynn Wyatt no longer live on River Oaks Boulevard. Houston society will always be around, but today’s version is more discreet, doesn’t dine at Tony’s, and reads about itself not in Maxine’s column but in a giveaway vanity sheet called Papercity. Oil is still thriving, but its contribution to the Houston economy has declined from 86 percent in the early eighties to 52 percent. The most important energy company in town today is Enron, which pioneered the trading and brokering of electricity. Amid all these changes, something has been lost, and that something is Houston’s old self-confidence.
Houston is going through an identity crisis: It is an Old Economy town in a New Economy world, and it is paying the price for getting left behind, part of which is measured in ridicule. The city was the biggest loser after Vice President Gore in the 2000 presidential campaign; the Democratic nominee impugned George W. Bush’s environmental record by running TV spots across the nation describing Houston as the city with the dirtiest air in America. In December the Chronicle reported that a study by the American Electronics Association and Nasdaq had ranked sixty cities for quality of life. Houston finished sixtieth. Among the criteria were air quality, commute time, and violent crimes per 100,000 people. Even in Texas, Houston is held up as the city not to emulate. Advocates of light rail for Austin, facing an uphill battle in a referendum last November, based their campaign on the idea that by choosing rail, Austin would be able to avoid being like Houston, sprawling and congested. The referendum failed anyway—but it was close.
I’m a Houston fan nevertheless. It has a great skyline. It has an unpredictability (the result of no zoning) that allows anything to happen anywhere. It is a city of mini-cities: the Galleria, the Village and West University, NASA, the medical center, the Ship Channel, Montrose and the museums, and now a reborn downtown. Most of all, I like that it has always been an open, inviting city; you don’t have to pay your dues or wait your turn or get the right connections before you can make your mark there. But lately I’ve had the feeling that something was missing—those new buildings with New Economy corporate names on them, the kind you see in Dallas and Austin. Without them, Houston has the look of a city that is removed from the cutting edge, getting stale, falling behind.
The numbers confirm that Houston is missing out on the high-tech boom compared with its smaller Texas rivals. Jobs involved in technology accounted for just 1.4 percent of the employment base in the Houston area in 1998, compared with 4.7 percent in Dallas and 7.7 percent in Austin. (San Jose, in the heart of Silicon Valley, comes in above 20 percent.) It hasn’t been the case lately, but for years fabulous riches could be made by high-tech venture capitalists—even so, Houstonians for the most part passed on the opportunity. Local venture-capital participation in technology start-ups is but one-eighth of the national average for wealthy households.
High tech has yet to capture Houston’s imagination. Maybe the psychological divide between a get-dirty, hands-on industry like oil and a cerebral industry like technology is just too great. The slang of the oil fields is easy on the ear compared with the often inaccessible jargon of technology. How many readers of the Houston Business Journal could see the following ad from a recent issue and know what this company really does: ” … a leading eBusiness solutions provider for emerging middle market companies. Our solutions … encompass the leading eERP, eCRM, ePSA, eInfrastructure, eBusiness Integration and eIntelligence technologies on the market”? Perhaps Dallas, with its long association with Texas Instruments and, during the Cold War, with technologically sophisticated defense contractors, was better positioned to grasp the opportunities that came its way.
How can Houston make up for lost time? A lot of strange theories postulate what it takes to become a New Economy town. (One holds, for example, that a large community of gays and artistic types is a sign of a favorable climate for high tech, an industry whose workers often have their own kinds of unconventional lifestyles.) What matters most, however, is that the people with ideas and the people with money to invest—known in the New Economy as angels—have to be able to find each other. That has not been the case in Houston. The technology industry, such as it is, is too spread out for word of mouth to circulate: from NASA at Clear Lake to the Woodlands, from the Texas Medical Center to the Compaq campus in northwest Harris County. Finally, in 1998 a group of business and educational leaders—among them Enron’s Ken Lay, Rice University’s Malcolm Gillis, Compaq founder Rod Canion, and NASA’s George Abbey—began talking about how to get the city jump-started as a high-tech center.
Their conversations led to the forming of a nonprofit corporation called the Houston Technology Center (HTC) in 1999 and the hiring of Paul Frison as its president and head cheerleader for the New Economy. Frison came to Houston from Chicago in 1975, leaving a job that required too much travel, to become the CEO of a locally based company. He wasn’t excited at the prospect of living in Houston. “I thought there would be cattle grazing in the front yard and I’d get hit in the head with a tumbleweed,” he says, quoting a line from speeches he gives around town. After heading two life-sciences start-ups, he switched over to lead the HTC at the age of 62.
The HTC’s primary role is to give start-ups with a potential of $100 million in annual sales access to venture capital and lesser sums, known as seed money, and to change the perception of Houston as too dependent on oil and gas. It has the backing of local heavyweights; BMC software founder John J. Moores, Enron, and Dynergy are among the center’s $100,000 backers. “How does a city develop a tech base?” Frison asks rhetorically. “You need a corporate base, entrepreneurial spirit, and R&D [research and development] spending. We’ve got all three. Houston is number one in the U.S. in energy R&D spending and number two in life sciences, with $500 million at the Texas Medical Center. The Johnson Space Center is NASA’s number one center for R&D.” It is the HTC’s role to help transform the R&D money into commercialization.
Houston will not become a high-tech hub overnight. A consultant hired by the HTC estimated Houston’s potential for technology job creation at two to four thousand a year. The hope, of course, is that some start-ups will hit it big and become large employers. (If not, at four thousand new jobs a year, Houston will reach Silicon Valley’s number of 1998 technology jobs in just, oh, 45 years.) It would be nice too if a major company could be attracted to Houston—say, a pharmaceutical concern that could accelerate life-sciences start-ups. But the city’s tarnished image makes that unlikely. At least Houston has gotten on the right track, finally, and maybe high tech can bring back a little of the old swagger from the heydays of Maxine and Coastal.