Can HPE make Houston’s tech sector a contender?
Officials working to build ecosystem that will attract talent
Jennifer Sterkel, a California native, was well settled in her San Jose, Calif., home of 22 years when she received an offer from her employer, Hewlett Packard Enterprise, to relocate to the company’s new headquarters in Houston. She didn’t hesitate a second.
“I basically checked the box ‘nope’ and sent it back,” said Sterkel, director of HPE’s executive communications group. “I didn’t even open it.”
But not long after, Sterkel came to Houston on a business trip, and found time to explore. After discovering great restaurants, friendly people and other amenities, she called her husband, Bryan, and urged him to “come out here and join me, and bring an open mind.”
Sterkel and her husband are now living in an upscale mobile home park in north Harris County, waiting for their new home to be built in Woodlands Hills. Meanwhile, both HPE and local economic development officials are hoping more Jennifer Sterkels will follow as they seek to build the workforce to support the region’s tech sector dreams.
The arrival of HPE, which formally opens its headquarters Monday, comes at an auspicious time as the technology community here seeks to coalesce into a haven for both startups and established businesses. If the amount of money flowing into local tech firms is any measure, those hopes are being realized.
In 2021, venture capitalists bankrolled local startups to tune of $2.4 billion, more than tripling 2020’s $713 million, according to a new report from Houston Exponential, a nonprofit that advocates for the city’s tech community.
Because of its size and its legacy —
HPE’s roots go back to the earliest days of Silicon Valley — the company has the potential to play an outsized role. Focused on cloud computing, financial services and systems management, it has a stock market value of more than $22 billion and generated revenues of nearly $28 billion in 2021.
Houston’s tech leaders hope HPE will bring talent, influence and investments to the table. In turn, HPE’s executives say they want to draw from a diverse and increasingly well-educated talent pool, as well as attract other tech workers to the region.
HPE is also interested in taking a stake in promising local startups that may fit with the company’s strategic focus, which it calls “edge-to-cloud.” Edge-tocloud is a technology in which critical data is no longer confined to big servers and data centers, but available anywhere to ever-more mobile workers and businesses.
“It’s not just the moving of the headquarters,” said Antonio Neri, HPE’s chief executive officer. “It’s the ability to create a vibrant ecosystem in different locations around the globe.”
But HPE is not yet the 900-pound gorilla in Houston’s tech room. Interviews with both HPE executives and local tech leaders say the company has yet to make make its biggest mark here — but both are optimistic.
New style
HPE, the product of a 2015 split-up of the consumer and business sides of the legendary HewlettPackard, announced in December 2020 that it was moving its headquarters to the Houston area from Silicon Valley. The company was already in the process of building a 440,000square-foot campus in an area south of The Woodlands called City Place, née Springwoods Village.
City Place, rising from virgin grassland, is designed as an office-park mecca, complete with retail, dining, smoothly manicured boulevards and a park. Among HPE’s walking-distance neighbors are the local office of Hewlett Packard, the consumer yin to HPE’s business-oriented yang, and Exxon Mobil, which also is moving its headquarters to the area.
Both HPE and HP already had a significant presence here due to Hewlett-Packard’s 2002 takeover of the Houston company Compaq.
But the City Place location is almost 30 miles from a designated “Innovation Corridor,” a four-mile stretch along
Main Street that extends from the Texas Medical Center north to the University of Houston’s downtown campus. At the corridor’s geographic and spiritual center is the Ion, a 266,000-square foot hub (once the old Main Street Sears building) designed to house startups and venture capitalists, foster collaboration and serve as an outpost for key technology, energy and health care companies in the area.
Among the recognizable companies with space at the Ion are Microsoft, Chevron Technology Ventures, the Houston law firm Baker Botts and the world’s largest oil field services company, Schlumberger. HPE doesn’t have an office there yet, but Rishi Varma, the company’s general counsel, and Ion Executive Director Jan Odegard say they have talked about it.
Varma said HPE is looking to make a significant investment in the Ion while getting space and a high profile in the building. Both HPE executives and local tech leaders, meanwhile, wave off questions about whether the headquarters’ distant location is an impediment, citing the ascendance of cloud computing and other technology that allows people to work and collaborate from anywhere.
HPE’s headquarters in fact, is designed to serve a new, post-pandemic working style in which employees don’t spend all their time the office, but rather come in as needed, docking laptops at any desk or grabbing portable power banks to plug in and work anywhere on campus
“We’re not focused on one hub or one location in Houston,” Varma said. “We have not solved traffic in Houston, but getting to and from places is not going to be as big of a hurdle.”
Outsized presence
If you want to see just how HPE might interact with Houston’s startup community, you might look at education. HPE has an outsized presence at the University of Houston, which pre-dates its headquarters move.
In 2018, HPE gave $10 million to fund the Hewlett Packard Enterprise Data Science Institute, part of the UH Division of Research. The institute conducts deep-dive research into complex problems surrounding data, and works with other academic and research departments to bring data science into their courses.
It allows HPE to mentor students, provide internships and tap into a diverse, educated workforce, said Pradeep Kumar, senior vice president at HPE and the company’s liaison with UH. He’s also on the curriculum board at the UH Bauer College of Business.
“One of the big things about the headquarters coming in here is there will be more people who can mentor these kids and help them get ready for the future,” Kumar said.
Knock, knock
Although they have yet to come knocking on the doors of Houston-area startups with cash, HPE executives say they expect the company to become player in the local ecosystem, just as they are in the San Francisco Bay area. HPE would do so through an investment arm known as Pathfinder.
“We’re starting to find opportunities and look for ways in which we can invest,” said Varma, the general counsel. “And because we are the largest tech company headquartered in Houston, I think we want to make sure that we have a visible presence in this tech community.”
Pathfinder, typically in collaboration with other venture capital entities, tends to invest in late-stage startups, which have welldeveloped businesses, products and markets. It also looks for emerging companies that offer products and services that can complement HPE’s.
Pathfinder has invested in 37 companies since 2015 split. Ten have had exits, in which they either went public or were acquired by other companies.
Of the remaining 27, 16 are headquartered in the San Francisco/Silicon Valley region. There is only one Texas-based company: Cellwize, in Southlake, a suburb near the Dallas-Fort Worth International Airport. It serves mobile wireless carriers with products for 5G network deployment and management, a business that HPE is targeting.
For now, only one of HPE’s portfolio companies has a presence in Houston. Dragos, based in Hanover, Md., is a cybersecurity firm with an office in the Sawyer Yards area south of Interstate 10. HPE includes Dragos in its portfolio of services, offering it to customers who need real-time monitoring of and protection against cybersecurity threats.
HPE has started exploring Houston’s startup landscape, recently landing a seat on the board of Houston Exponential. Executive Director Serafina Lalany said HPE has the potential to become a force because of its size and history of investing in startups and education, including UH.
Lalany said HPE already has indicated an interest in getting involved in local events such as the recent Tech Rodeo conference, which brings together tech incubators, startups and venture capitalists in a weeklong event that runs concurrently with the Houston Rodeo.
CEO Neri agreed that his company will be instrumental to what happens next in Houston’s tech ecosystem.
“Hewlett Packard Enterprise is going to play a huge role in bringing in capital (to Houston) because we have an exciting strategy,” Neri said. “There is no reason why Houston and Texas couldn’t become a destination for a lot of the investments going forward.”