Contributor: Dr. Hesam Panahi
Editors Note: Dr. Hesam Panahi is a clinical assistant professor in the Bauer College of Business and founder of RED Labs, the university’s startup accelerator. Panahi teaches courses in management information systems and entrepreneurship, and is the organizing faculty member for 3 Day Startup. The following post details Panahi’s experience building the first startup accelerator at the University of Houston.
Starting a university accelerator is hard, but advancing an ecosystem is even harder.
This week marks my two year anniversary as a clinical assistant professor at the Bauer College of Business. A few people have asked for me to blog about my experience with RED Labs. I figured that the anniversary, along with the opening of the upgraded RED Labs space, was good timing.
There were three factors that served as catalysts for the creation of RED Labs: the college’s existing mission to help entrepreneurs, the unfortunate cycle of academic activities, and the path less traveled.
Bauer and Entrepreneurship
As an undergraduate and graduate student at Bauer, I vaguely recall people walking the halls of the business building wearing fancy jackets with patches. I later learned that these students were part of a chosen few, the WCE students. At UH, the entrepreneurship major has existed for over two decades. The Wolff Center for Entrepreneurship (WCE) is one of the top undergraduate entrepreneurship programs in the nation. The WCE caters to entrepreneurs of all types and is a three semester program that includes intensive mentoring, specialized classes, and unique opportunities. However, as a result of this breadth, there was never a focus on technology or startups, and startups have special needs that are different from small businesses.
Meanwhile, many of our activities at the university are project-based and hands-on. In my mobile apps class, we apply lean startup principles to building an app. We send students out to identify their market, talk to customers, and prove that they’re working on a problem worth solving. At the end of the semester, students demo a preliminary version of their apps. The hope is that they have enough momentum to keep going. This has yet to happen.
We noticed this again after our first 3 Day Startup; the students had an incredible weekend and made significant progress. The energy throughout the weekend was outstanding, and by Sunday night, everyone was ready to keep working on ideas. But, that didn’t happen. Why?
I believe that at least part of the problem is that there’s not enough support and infrastructure to keep them going. I’ve seen this happen over and over again, and many hopeful projects have been abandoned because students weren’t convinced it was worth pursuing — a startup culture and the necessary density of activity at UH didn’t exist yet.
The Path Less Traveled
Another problem is that educators don’t encourage students to start companies or join startups at the University. This seems odd, considering that Houston is a great city to live and create in: low cost of living, business-friendly, and the perks go on and on. We have the most engineers in the country, but they rarely create or join startups. Together, UH and Rice graduate thousands of talented scientists, engineers and developers a year. As faculty members, we should support talented students who are even remotely interested in startups and connect them to the necessary resources.
Maybe it’s because faculty aren’t convinced that it’s a good career choice. As a faculty member, I believe I have a moral obligation to constantly think about what I can do to maximize opportunities for my students. Many UH students work full-time to pay their way through school, and they expect considerable value for their degree. While most students are content with a 9-5 job and a high corporate salary, others seek unique experiences that are fulfilling from more than just a financial perspective. They enjoy working on challenging problems and embrace the uncertainty and long hours that are associated with creating and working at a startup. As much as I despise cliches, they want to go the path less traveled. We haven’t done a very good job of illuminating that path for them. RED Labs wants to solve this problem.
Realizing that there was a gap, we began to talk to others in the startup community. Where could UH add value in the world of startups? What was missing? How could we create an environment focused on student success, but one that would also help Houston advance?
After a few conversations and proposals with our Dean and the chairs of the MIS and Entrepreneurship department, I was given an overwhelming amount of support from Bauer. The WCE agreed to support our initiative, funded us, and gave us the resources we needed to get started.
We officially launched the RED Labs accelerator program on February 27th, 2013. We were able to secure a space in Melcher Hall that is reserved exclusively for RED Labs companies. We created a “startup curriculum,” which included guest speakers on business models, venture capital, angel investing, legal issues, user experience, and more. We hand-picked some of the best mentors in the city to work with our students to help them refine their business models, go out and talk to their customers, and build their products. We forced them to practice endlessly for demo day. We gave them unlimited ramen noodles and coffee.
Our first class of the RED Labs accelerator program graduated on May 29th and consisted of six companies and 12 founders. Since graduating three months ago, 33% (4 out of 12) of our founders have joined startups as early employees. While it’s still too early to tell, we think we’ve had a really great start.
Our Goals and Where We’re Going
You’ll notice that the metric I’m citing for RED Labs isn’t dollars raised, but the number of human bodies we’re injecting into the world of startups. Let me be clear: we want our RED Labs companies to grow and become successful, and we’ll do everything we can to support them. An accelerator is designed to kickstart a company and its founders by connecting them to the right resources to succeed. But we have a much larger vision than just accelerating UH companies — we want RED Labs to serve as the conduit through which skilled tech talent and early startup employees emerge.
We realized early on that where we could add the most value was not just to create an accelerator program for a small set of companies, but to become a hub for tech entrepreneurial activity at UH. This includes creating a solid set of tech talent that can be hired by emerging startups in Houston. I would argue that students who graduate from RED Labs are much better equipped to handle the uncertainty and the flat organizational structure of startups. They understand the frustrations of starting a company, having gone through a similar experience at RED Labs.
The best time to learn about and engage in startups is while you’re in college — when you are young, energetic, hopeful, and free of many constraints. You might fail, but the lessons learned will make you a better person, regardless of the career you end up pursuing. And, if as a result of going through RED Labs, a student makes the fundamental decision to join the world of startups rather than the corporate world, then we’ve made a measurable positive impact.
We’ll continue to push the boundaries of what’s happening in entrepreneurship at UH. While we’re focused on software startups and students right now, we’re very interested in other areas and want to include faculty as well.
But this is not just about UH. This is about Houston. We’re working hard with others in the Houston community to establish the infrastructure and ecosystem that this city needs (and deserves) to nurture and grow startups. We’re talking to SURGE, OwlSpark, Platform, START, the City of Houston, the investment community (HAN, Mercury, and others), the startup evangelists (Cleanweb, January Advisors), and countless others to execute on this vision.
We’re just getting started.
To view more posts by Dr. Hesam Panahi, please view his blog.