Texas CEO Magazine Q1 2010: Why Texas by txceomag

Q1 2021

Businesses large and small are flocking to Texas—even through a pandemic. We think we know why.

MAJOR METRO

THE EXODUS

The unique business appeal of Houston, San Antonio, Dallas–Fort Worth, and Austin

Maher Maso on the art of corporate relocation

SPOTLIGHTS

TO TEXAS

AVOCADO

INNOVATION A conversation with Avocados From Mexico CEO Alvaro Luque

M a k i n g B O AT S B E T T E R i s P e t e r’ s j o b. H e l p i n g h i m d o i t S A F E LY i s O U R S.

Peter Bosma Quality Control Engineer | Tigé Boats | Abilene

S TAY SA F E , T E X A S

When COVID-19 reached Texas, Peter Bosma and the team at Tigé Boats made 55,000 plastic face shields to protect healthcare workers. Today, the company is back to making boats, but Peter is still protecting himself and others by working safe. At Texas Mutual, we’re proud to be on the job with Peter and 1.5 million other hardworking Texans every day. See Peter ON THE JOB at texasmutual.com/onthejob. © 2 020 Texas Mutual Insurance Company

Letter from the CEO + PUBLISHER Pandemic or no, Texas is a great place to live and do business. 2020 was a dreadful year across the United States, but we here in Texas had it so much better than people in some other states. Our geography, our culture, our climate, and more gave us some advantages that Americans elsewhere in the country didn’t have as they weathered COVID and the resulting economic woes. Indeed, many Americans in those other states took note, and many have sought to relocate to places like Texas as a result. Elon Musk is perhaps the most famous example in recent months. But he represents a large group of people from many different backgrounds and industries who have seen Texas, before COVID and during COVID, as a land of opportunity. Yes, the phrase is a cliché, but it applies. Texas is a land of opportunity, especially right now. We should celebrate that, take pride in it, and do what we can to continue building it into an even better land of opportunity for people of all backgrounds. In this issue, we partnered with our friends at YTexas to bring you content related to this topic, in which they specialize. YTexas is the premier organization in Texas focused on helping companies relocate here. On pages 12–51, you will find their pieces on the commerce, culture, and community of the major metro areas of Texas, and how each has a distinct appeal to businesses from around the country. Elsewhere in this issue, you’ll find our usual range of commentary and insight from some of the brightest minds in Texas. Flip to page 78 for a fascinating conversation with Alvaro Luque, President and

TEXAS IS A LAND OF OPPORTUNITY, ESPECIALLY RIGHT NOW. CEO of Avocados From Mexico. You probably know their Super Bowl commercials, but I think you’ll be enriched by hearing Alvaro discuss his commitment to fostering breakthrough innovation at—yes—an avocado marketing organization. In this issue you’ll also find discussions of topics ranging from the economic benefit of marijuana legalization (page 60) to three critical mental shifts for leaders (page 85) to how to get investors excited about your startup (page 72). Our Q2 2021 issue will be about economic development. We will include insights from academics and practitioners and share some recent success stories. Our mission here at Texas CEO Magazine is to help business leaders in Texas be the best they can be by providing them with useful, interesting, and relevant content. If you aren’t yet a subscriber to Texas CEO Magazine, we encourage you to become one at texasceomagazine.com/subscribe.

Lauren Daugherty

CEO & Publisher Texas CEO Magazine TexasCEOMagazine.com

FEATURES

12 WHY TEXAS?

Q1 2021 Publisher Lauren Daugherty Editor Aaron Hierholzer

BRINGING THE BEST TO TEXAS

Operations Tamara Trammell VP of Sales Whitney Bilyeu

Ed Curtis

Graphic Design Michele Rodriguez

14 AUSTIN

Contributors

Jeff Bounds

20 DALLAS-FORT WORTH Jeff Bounds

30 HOUSTON Jeff Bounds

38 SAN ANTONIO Jeff Bounds

45 YTEXAS RēLO DIRECTORY

63 SUSTAINABILITY:

57 WHAT TO

EXPECT IN AUSTIN 2021:

THOUGHTS FROM A LOBBYIST A.J. Bingham

78 AVOCADO

INNOVATION

A Conversation with Alvaro Luque, President & CEO of Avocados From Mexico 4

Texas CEO Magazine Q1 2021

To subscribe to the print or digital edition of Texas CEO Magazine, please visit our website: www.texasceomagazine.com and click subscribe. POSTMASTER Please send address changes to: The American CEO, LLC dba Texas CEO Magazine 8012 Bee Caves Road Austin, TX 78746 © 2021 The American CEO, LLC dba Texas CEO Magazine. All rights reserved. The Content in this issue may not be reproduced, distributed, or otherwise used without the prior written consent of the American CEO, LLC. The various contributors own their respective Content that is published in this magazine. The beliefs, content, comments, opinions, statements and viewpoints (collectively, the “Content”) published in this issue are those of the respective contributors and we do not necessarily agree, endorse, support or verify such Content. The Content presented in this issue is for informational purposes only and is not advice of any kind.

WHO GETS TO DECIDE?

Bill Frerking & Blaine McCormick, PhD

A.J. Bingham, Jeff Bounds, Tina Cannon, Craig Casselberry, Ed Curtis, Gordon Daugherty, Jason Dorsey, Heather Fazio, Bill Frerking, Jonathan R. Grammer, Brian Levenson, Blaine McCormick, PhD, James F. O’Gara, Joel Trammell, Denise Villa, PhD

Your use of the Content is at your own risk. The Content is provided on an “AS IS” basis, without any warranties of any kind, either express or implied. Neither The American CEO, LLC nor any person associated with us makes any warranty or representation with respect to the completeness, reliability, quality, or accuracy of the Content. Without limiting the foregoing, The American CEO, LLC does not represent or warrant that the Content will be accurate, reliable, error-free, that errors will be corrected, or that the Content will otherwise meet your needs or expectations. The American CEO, LLC disclaims all warranties of any kind, whether express or implied, statutory or otherwise, including but not limited to any warranties of merchantability, non-infringement and fitness for particular purpose. The foregoing does not affect any warranties which cannot be excluded or limited under applicable law.

INSIDE

60 3

LETTER FROM THE CEO + PUBLISHER

IS MARIJUANA REFORM COMING TO TEXAS?

Lauren Daugherty

Heather Fazio

WILL INNOVATION TRANSFORM TEXAS?

[ENTREPRENEURSHIP]

STARTUP SUCCESS:

Craig Casselberry

Tina Cannon

THE EXODUS TO TEXAS A Conversation with Maher Maso, Principal at Ryan, LLC

THE LANDMAN:

[LEADERSHIP]

Brian Levenson

OIL & GAS IN TEXAS: B.C. (BEFORE COVID) & A.D. (AFTER THE DEBACLE)

FAKE IT TILL YOU MAKE IT?

A Forecasting Session with Dr. Bernard L. Weinstein

NOT FOR CEOS Joel Trammell

ABOUT CAREERS, EDUCATION, AND THE FUTURE Jason Dorsey & Denise Villa, PhD

THREE WAYS TO EMBRACE CONTRADICTION AND BECOME A STRONGER LEADER

UNCOVERING GENERATION Z’S UNEXPECTED VIEWS

OPTIMIZING INVESTOR INTERACTIONS Gordon Daugherty

THE GAY PIÑATAS

UNDERSTANDING THE INS & OUTS OF THIS SINGULAR OIL-AND-GAS PROFESSION Jonathan R. Grammer

[LEADERSHIP]

SO, YOU WANT TO BE A THOUGHT LEADER? James F. O’Gara

56 TexasCEOMagazine.com

WILL

INNOVATION TRANSFORM TEXAS?

HOW TEXAS CAN ROCKET TO THE TOP Craig Casselberry

When SpaceX sent its SN8 Starship rocket into the blue skies over Boca Chica Beach along the Texas coast last December, space flight began to look a little different. It was a critical milestone toward the technology that could eventually take us to Mars. The flight generated enough data to be declared a rousing success. That such an industry transformation is beginning in Texas won’t surprise any Texans. Innovation and invention are not new to us. Not only is Silicon Valley taking notice; many from there are joining us here, with Oracle being the latest example, announcing that it would move its headquarters from Redwood City, California, to Austin. Many industry-changing innovations have their origin in our state. A Nobel Prize–winning Texas Instruments engineer invented the integrated circuit in 1958. The first successful heart transplant in the United States was performed at the Texas Heart Institute in 1968, and the horizontal drilling and hydraulic fracturing technologies of the 1980s and 1990s make Texas the star of the energy industry today. I know what you’re thinking: Given all these Texan breakthroughs and the corporate giants we still attract, does Texas really need more transforming? After all, in the past decade, Texas has won more awards for job growth and healthy business climate than the other 49 states combined. US executives recently ranked Texas the number-one state for business for the eighth consecutive time. And by a wide margin—48 percent of survey respondents favored our business climate compared to second place Georgia’s 25 percent favorability. Business Facilities released its 16th annual state rankings in 2020, with Texas leading as the state with the best business climate, a repeat of 2019 and a record-breaking fourth consecutive State of the Year award. Not to be outdone, Area Development presented Texas with a 2020 Gold Shovel for achievement in attracting high-value investment projects that will create a significant number of new jobs in its communities.

These aren’t hollow accolades. Corporate relocations and expansions continue at a record pace. So, yes, it’s easy to argue that we’re doing just fine in our drive to welcome business. But hear me out: There’s always room for improvement, and increased innovation—on top of what we’re already doing—is the formula to get there. It’s the rocket fuel for our economic growth. Resting on our laurels would not be wise. When it comes to directly sponsoring innovation, Texas again does a lot of things right. We have public sector organizations like the Cancer Prevention and Research Institute of Texas (CPRIT) that serve as national models. The Governor’s University Research Initiative (GURI) and The Academy of Medicine, Engineering & Science of Texas (TAMEST) are hubs for the brightest minds in the country to create and innovate. A robust innovation economy starts with a strong research base, and these are solid building blocks. Our friends at Merriam-Webster tell us that innovation can refer to “the introduction of something new” or to “a change made to an existing product, idea, or field.” No matter what form it comes in, innovation fosters a competitive economic ecosystem and drives growth. But as UT Austin Professor of Innovation Bob Metcalfe—an inventor of Ethernet, no less— has said: “Research is not enough to change the world. We must better commercialize and scale our research results for impact. That starts by showing up and educating ourselves on all forms of innovation.” Innovation is the primary currency of economic growth, and while the contributions of heroic entrepreneurs and pioneering companies are important, economically relevant innovation—on a regional scale—is mostly the product of robust and efficient innovation ecosystems. Among industrialized nations, the ability of regions to swiftly create new ideas and transform those ideas into high-growth companies is the key determinant of regional wealth creation.

Notably, even Texas public education is getting in on the act with Districts of Innovation. Big companies like Dell, IBM, Toyota, and Rackspace are partnering with school districts and offering technical training to high school students so they’ll be prepared to fill the jobs these companies are creating. Smaller companies like Texas-based Bresatech are reinventing the digital transformation journey for large companies like Amazon and Apple, and in the public sector in Florida and Texas, through a “centered out” design approach to minimize the trappings and risk of the most common mistakes an organization makes. Meanwhile, marketleader Synexis has partnered with Trane Technologies to install its breakthrough, proprietary Dry Hydrogen Peroxide technology in K–12 schools to continuously improve indoor environmental quality and reduce pathogens in the air and on surfaces. Clearly, Silicon Valley doesn’t have a lock on the next big thing in innovation and rapid-scale industries. While California’s tech companies innovate mostly with bits of information, Texas innovators tend to do so with actual atoms—microcircuits, aortas, shale deposits, batteries, and immune systems. Those last two won Texas scientists Nobel Prizes. As Metcalfe has observed, commercializing research—taking inventions from the mind to the marketplace—still needs to improve in Texas. We need to win increased federal investment in Texas research, to expand access to venture capital, and to improve our research centers. By doing so, our state will more quickly span the various valleys that keep successful research from going to scale in world markets. But we’ll get there—Texas always does. Who’s got next? Craig Casselberry is founder and CEO of Quorum Public Affairs Inc. and a 30-year veteran of Texas policy and politics. He is a former aide to two Texas governors and has provided government and public affairs services to companies, issue coalitions, and economic developers since 1994.

TexasCEOMagazine.com

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FREE ONLINE EVENT

TEXAS GUN LAWS:

WHAT YOU DON’T KNOW—BUT SHOULD DATE & TIME Wednesday, February 24, 2021 11:30 AM CST

TICKETS FREE LOCATION

URL will be sent to ticket holders.

ABOUT THIS EVENT

2020 was a record-breaking year for firearm sales in Texas, with the FBI reporting nearly 2 million firearm background checks performed across the state, along with an ammunition shortage. This surge means that our already heavily armed state is now even more so—and that many gun owners may not be well-versed in the state and federal laws that apply to them. We invite you to join us for an informative—and free— online session with Austin-based gun store owner, Second Amendment expert, and firearms safety advocate Michael Cargill. He will share his experiences and expertise, including: • The implications of Texas gun law for business owners and leaders in the state • What individual citizens should know about their firearms rights in Texas • Recent changes to and lesser-known aspects of Texas gun law

ABOUT MICHAEL CARGILL

Michael Cargill has spent the last decade championing and supporting the rights of law-abiding Texans to own and use firearms. He is the owner of Central Texas Gun Works, a gun store and training facility. He has served his country honorably in the United States Army for 12 years. Cargill has trained members of the Texas House and Senate, district judges, justices of the peace, attorneys, corporate employees, and the staff of many federal, Texas state, and local agencies on how to use firearms safely. News organizations throughout the country have recognized his excellence in his business practices and the passion he has for his field by featuring him as a frequent guest and subject matter expert. He has achieved national exposure in media outlets like Forbes, Fox Business, CNN Money, AOL, BBC World News, the Huffington Post, and the New York Times. His concern for local safety has led to features on local affiliates of Fox, ABC, NBC, and YNN. With each appearance, Cargill vigorously defends lawful gun ownership in this country, without regard to party politics.

This advertisement and the online event include information and services provided by third parties. All statements and opinions expressed by such third parties are solely the opinions and statements of such third party and do not necessarily reflect the opinions or statements of Texas CEO Magazine or its affiliates. Texas CEO Magazine and its affiliates are not responsible or liable to anyone for any third party content, opinions, or statements.

THE GAY PIÑATAS Tina Cannon

Every year in June, more and more “woke” companies temporarily update their logos to feature a rainbow. This is somehow supposed to show their solidarity and allyship with the LGBT community. I am here to tell you that if that is all you are doing as a brand to show your solidarity and allyship— well, that is a swing and a miss. The term “gay-washing” is the best way to start talking about this phenomenon. Brands simply flip their colors for a day or so to signal their supposed LGBT solidarity. Then, as quickly as Pride celebrations are over, they go back to business as usual for the rest of the year. I for one, along with millions of others, am gay year-round and expect more than a colorful placation. If you are reading this and perhaps saying to yourself, “Man, I thought splashing my logo with a rainbow was being helpful,” I say to you: Challenge yourself to do more, to be intentional. It will help your brand, your revenue, and your workforce. Here is what I mean. The LGBT consumer is loyal, beyond compare. There are countless examples of LGBT consumer battles over the years, and many brands have learned the hard way that LGBT buying power is legit. In fact, LGBT consumers’ buying power is estimated at close to $1 trillion in the US,1 and that doesn’t even include the millions of allies who stand with the LGBT consumer. 10

Texas CEO Magazine Q1 2021

What does that mean to you as a CEO? Well, on the one hand it means that LGBT consumers represent revenue, and on the other it means you need to find a way to demonstrate meaningful engagement with those consumers. About that meaningful engagement. What does that mean? How can you be intentional with your support and engagement all while increasing revenue, creating opportunities, and finding the best talent? Let’s start with procurement. Each year, you and others spend billions on products and services for your companies. Many of you have internal procurement goals for Historically Underutilized Businesses (“HUB”) or Minority and/or Women Owned

Businesses (“MBE/ WBE”), and that is great. But did you know that there are certified LGBT Business Enterprises (“LGBTBE”) that go through the same qualifying standards as any other HUB vendor? Adding LGBTBE suppliers to your procurement goals is a great way to demonstrate engagement. You can also join your local LGBT Chamber of Commerce. Why, you ask? You want to attract and retain the best talent, and the Chamber is a great place to source that talent. You can then provide employee resource groups (ERGs) though the Chamber. Maybe you want to support advocacy for your workforce; let your voice be channeled through the local LGBT Chamber. These are just a couple of ways to have an impact that go beyond a rainbow logo in June. Here’s another way to be a demonstrated ally all year long: Speak up when legislators start swinging at the old gay piñata by way of public policy. Here in Texas, it’s a biannual tradition to pull out that piñata stick and take a swing at the LGBT community. That’s not good for anyone. According to a recent Ray Perryman study, LGBT discrimination is massively and measurably detrimental to the economy.2 The study points out that billions are lost, skilled talent is diverted, and thousands of jobs are

lost as a result of this discrimination. For example, in 2015, Facebook announced a $1 billion investment in a new data center in Fort Worth; executives cited the city’s LGBT-inclusive nondiscrimination law as part of their decision. And yet Texas policymakers keep swinging at that piñata. After the legendary failed “Bathroom Bill” of 2017, the Texas legislature still couldn’t help itself: During the following session, over 20 anti-LGBT bills were filed. And as we get under way in the 87th session, the old piñata is at the mercy of the Texas policy stick yet again, with blatantly anti-LGBT bills being filed as we speak. This is not good for the prosperity of Texans. As I mentioned earlier, the Perryman study demonstrates the economic impact of this type of hateful legislation in terms of dollars and cents. Corporate investment is impacted, tourism dollars are lost, and skilled talent migrates to more welcoming areas of the country. This is not conjecture— this study points to real economic data. We are talking billions of dollars lost. I believe that standing with the LGBT community is the right thing to do, regardless of economic impact. But CEOs should be aware that this is real bottom-line stuff here, not child’s play. That’s what real piñatas are for.

Tina Cannon is currently the President and CEO of the Austin LGBT Chamber of Commerce after recently serving as the Vice President of Government Relations with the Greater Austin Chamber of Commerce. Cannon also served as a Senior Policy Analyst for the City of Austin. Prior to her work in politics, Tina was a seasoned entrepreneur, having spent many years in the Austin startup space. She served as an Entrepreneur-in-Residence for Texas State University and has been a guest blogger for CBSNews.com. She graduated from Texas State University with a bachelor’s degree in accounting.

National Gay & Lesbian Chamber of Commerce, America’s LGBT Economy, January 2017.

The Perryman Group, The Potential Impact of a Comprehensive Non-Discrimination Act on Business

Activity in Texas, May 2020.

TexasCEOMagazine.com

WHY TEXAS? 12

Texas CEO Magazine Q1 2021

Texas continues to be one of the most business-friendly states in the nation. In the following pages, YTexas—a business network for companies relocating, expanding, and growing in the Lone Star State—has collected a wide array of business and civic leaders to discuss our state’s enduring appeal, and how we can continue to stay competitive post-COVID-19. Read on for analyses of each of Texas’ major metro areas and how their culture, commerce, and community make them great places to live and do business.

YTEXAS METRO

AREA SPOTLIGHTS: Austin..................................... 14 Dallas-Fort Worth..................20 Houston.................................30 San Antonio...........................38 Rēlo Directory 2020...............45

Bringing the Best to Texas Ed Curtis, CEO, YTexas

YTexas’ celebration of business in Texas looked a little different in 2020—for obvious reasons. Nevertheless, we created a goldmine of insight from business and community leaders about why some of the best organizations in the world are choosing Texas as their home. Like many of you, I had big plans for 2020. Since 2013, I have led YTexas, an elite business network that helps support, promote, and connect companies that are relocating and expanding into the Lone Star State. In 2019 we at YTexas generated the most annual revenue in our history. Our success enabled us to launch the YTexas Foundation, which supported our first YTexas Leadership Academy, a mentorship program for first-generation college students at the University of North Texas at Dallas. This positioned us to grow the Academy with universities from around the state. In late 2019, we also signed a two-year deal with the Omni Frisco Hotel to host a yearly event honoring Texas’ past decade of success in attracting corporate relocations. The two-day celebration was slated to recognize more than 200 companies that moved their headquarters to the Lone Star State between 2010 and 2019. In a similar vein, we secured a syndicate of sponsors to host our seventh annual YTexas Rēlo Awards Gala and second YTexas Summit. With the support of Frisco mayor Jeff Cheney and his city, we were ready to go. Then came COVID-19. Sponsors called to cancel their commitments. I called off the event to avoid putting our employees and organization at risk. After speaking with our members to see what we could do for them during these trying times, I noticed a common theme: All of them were planning their next step. I realized we had to do the same. With a little luck and some resilient partners, we hosted the virtual YTexas State of Business Summit on September 24, 2020. Presenting sponsor Ryan, LLC, and event sponsors BGSF, Insperity, and DHD Films stepped up to save the day. Over a four-hour livestream event, more than 100 CEOs discussed the future of our state. I was astonished at these leaders’ willingness

to talk both about what’s next for Texas and about their day-to-day challenges. In retrospect, it shouldn’t have surprised me. With Gary Kelly showing how Southwest Airlines will lead the future of travel, Andy Roddick discussing why companies like Tiff’s Treats will lead the retail revolution, and Emmitt Smith educating attendees on how Opportunity Zones can bridge a pathway to prosperity in South Dallas, we turned a cancelled event into four hours of video of some of the best minds in Texas. As our organization’s name implies, much of the discussion at the Summit centered on one core question, “Why Texas?” As the discussions took place, one simple answer surfaced again and again: our people. The winning mindset of Texans is truly why companies want to be here. It’s the most important ingredient in the Texas miracle. The following articles, authored by business journalist Jeff Bounds, are based largely on panel discussions held at the YTexas State of Business Summit. The stories address the community, commerce, and culture of Texas’ four most populous regions: Austin, Dallas-Fort Worth, Houston, and San Antonio. Pages 46–49 list 23 companies that, despite the pandemic, chose to announce in 2020 that they were moving to Texas. To see a list of corporate relocations to our state since 2010, visit YTexas.com/Relo-Tracker.

All panels from the YTexas State of Business Summit are now available online! Watch them at YTexas.com/2020-summit. Our mission at YTexas is to be the most reliable resource for organizations looking to expand and relocate into our great state. The way to do that is not to tell them how great it is to do business here, but to show them. If you are inspired by our mission and are the best at what you do in the state, join us. Visit YTexas. com to learn more and get started. Want to get involved in the 2021 Summit? Email Yana Kolmakova at yana@ytexas.com or visit YTexas.com/summit. TexasCEOMagazine.com

WHY TEXAS?

AUSTIN

COMMERCE

The Plus Side of a Pandemic Texas metros like Austin have long been attractive to businesses stuck in higher-cost areas of the country. Today, COVID-related pressures may actually be making Austin even more appealing to businesses—particularly those in the growing tech sector. As 2020 wound down, the Austin region’s large economic base was poised to grow in the new year. Some of that expansion will come from business relocations—including many technology companies— as COVID-19 made CEOs outside Texas rethink the geographic areas where their companies operate. “From a business development standpoint, we have We’re seeing 196 active projects a lot of interest in our pipeline,” said in nearshoring Adriana Cruz, and reshoring. Executive Director of the Economic —Adriana Cruz Development and Tourism division in the office of Governor Greg Abbott, speaking at the YTexas State of Business Summit. “We’re seeing a lot of interest in nearshoring and reshoring.” Cruz says that more prospects have reached out to her agency since the pandemic began. “There is a lot of interest in medical device manufacturing, personalprotection equipment manufacturers coming to the state. In the past they automatically would have gravitated to the East or West Coasts.” The region’s tech industry will benefit from a growing focus on mergers and acquisitions and initial public offerings, according to Amber Gunst, CEO of the Austin Technology Council, a trade group.

Texas CEO Magazine Q1 2021

“With the continued success of this work, we will see more locally grown businesses taking the leap to expand and hit the $1 billion cap,” she says. “This will enable job growth and bring in executive-level talent who are experts in company pivots.”

AUSTIN TECHNOLOGISTS LEAD THE WAY

COVID is creating opportunities for many Austin tech shops. For instance, some now help the healthcare industry understand their data and how to use it to reduce the disease’s spread. “As the medical and banking industries turn more to tech during COVID, there will be an increase in the conversation of how [tech] plays a role in those fields,” Gunst says. PIMCO, a global investment manager that employs more than 250 people in Austin, adapted its internal and client communication during the pandemic by increasing its use of technologies like video conferencing, according to Pat Feigley, a Managing Director. Since the California-based firm opened its local shop in the summer of 2018, its area technology team has led the charge with automation of all types, including data processing, artificial intelligence, and creating faster, more efficient ways of doing most everything. “The business community has greeted us with open arms and our employees have really enjoyed the city.

We have found that attracting talent here has been easy,” Feigley says. “We have been one of the fastest-growing offices in the company, having started with roughly 25 people in July ’18. Our plan is to expand further in 2021.” Technology is also creating opportunities at Cedar Park’s Firefly Aerospace, a supplier of launch vehicles, spacecraft, and in-space services. The 300-employee firm moved here from California in 2014. “The next generation of the information revolution is space,” says Eric Salwan, Firefly’s Director of Commercial Business Development. “Everything you’ve seen with the Internet over the last 20 years, that’s what we’re going to see with space over the next 20 years.”

CONTROLLING A SATELLITE WITH A PHONE

The large software development industry in metro Austin is helping fuel growth at Hypergiant Galactic Systems, which builds and deploys artificial intelligence–powered satellites into low-Earth orbit. It operates the craft with a combination of industrystandard flight control software and its own product, called Hyper Intelligent Vehicle Enhancement, or HIVE for short, which helps with functions like predictive maintenance.

The company’s goal is to allow control of satellites with a handheld device like a phone. Hypergiant Galactic Systems is working with the US Air Force on building the Chameleon Constellation, a planned system of roughly 36 satellites that can be reconfigured in real time through software updates. The project has $100,000 in funding from the Air Force’s Small Business Innovation Research grant program, or SBIR, with the aim of landing another grant of up to $10 million, according to the Wall Street Journal.1 In a similar vein, Switzerland’s Acutronic Holding AG turns to partners in the defense sector to help fund its research and development. A maker of technologies in areas like motion simulation and robotics, the company’s turbines and actuators business is based in Austin. “In our experience, the government is one of the best sources of funding,” says Acutronic’s CEO, Florian Aigrain. “We’re doing first-in-the-nation type stuff.” Acutronic is turning hobby-grade turbojet engines into systems that can run unmanned aerial systems, urban air mobility craft, or even small missiles, he says. Austin is also home to one 1 Sara Castellanos, “Air Force Readies Launch of In-Orbit Network to Support AI Applications in Space,” Wall Street Journal, July 30, 2020.

WHY TEXAS?

of three Innovation Hubs for AFWERX, where the US Air Force and Space Force work with military folks, academics, and entrepreneurs. “The Air Force has a checkbook they can use for innovation,” says Tony Cucolo, a retired US Army Major General who now runs the Austin nonprofit National Security Innovation Council, which helps connect people in national security with folks who can solve technological problems. “They’ve broken the code on that and are doing very well.” He adds that SBIR grants, like the one secured by Hypergiant Galactic Systems, can be attractive sources of funding.

ARMY INNOVATION NEAR SIXTH STREET

AFWERX Austin is located downtown in Capital Factory, a startup accelerator, along with working space for the Army Futures Command, or AFC, which was created in July 2018 to modernize that military branch. “Standing up an additional Army Command hasn’t been done since 1973,” says Command Sergeant Major Michael Crosby. Though its headquarters are within walking distance of Austin’s famed Sixth Street entertainment district, the AFC has nearly 26,000 Army scientists and engineers spread out across 26 states, 11 countries, and five continents, Crosby said at the Summit. The AFC is working on machine learning that can discern friendly vehicles from foes and robotics to breach obstacles surrounded by barbed wire and mines. And like Hypergiant Galactic Systems, the AFC is building AI systems that can tell people when vehicles need maintenance. The AFC is actively recruiting forward-thinkers

for a broad range of jobs focused on modernization through innovation. The Command’s presence in Austin has also led to the establishment and growth of related jobs in the region, leveraging Austin’s entrepreneurial ecosystem in its strategy for success, according to Ellen Troxclair, the AFC’s Director for Strategic Partnerships. “We’ve invested $157 million so far in strategic partnerships with higher education, including the University of Texas, Texas A&M, Rice University, and Baylor,” she said.

A BRIGHT FUTURE, DESPITE COVID CONCERNS

What about the non-tech businesses that are also such a critical part of Austin, including festivals, live music, and travel? Jacqueline Yaft, Executive Director of AustinBergstrom International Airport, is optimistic, but also acknowledges that things will be different post-COVID.

Silicon Valley to Cedar Park in 2009, he got an unexpected benefit beyond lower costs and less regulation. “When we became a Texas company, about 30 percent of our business became the oil and gas industry,” Trevis says. “We had 12 different customer segments, but we had never been in that market.” Steve Raucher found similar growth after moving his technology company, RapidDeploy, to the area from South Africa in January 2019. The company makes software that helps cut response times for emergency services like police, firefighting, and ambulances. “We now employ 80 people in the US, including 70 in Austin,” he says.

“The profile of business travelers and first class [flights] is going to change for airlines, as will the infrastructure of airport lounges,” she says. Similar modifications are likely in store for the many events Austin hosts. “The entertainment and music festivals will come back,” says Yaft. “They might have a different way of holding them and a different way of handling the passengers and customers.” While COVID may bring shifts in many areas of society, other CEOs also remain optimistic about the long-term prospects of doing business in the state. Whether they’ve come recently or a decade ago, businesses seem uniformly pleased with what Austin has to offer. When Ed Trevis moved his industrialcomputing business, Corvalent, from TexasCEOMagazine.com

WHY TEXAS?

AUSTIN

COMMUNITY

Accelerating Change in Higher Ed COVID-19 is pushing Austin’s colleges and universities to offer more virtual classes, even as they adopt flexible training programs and coursework in entrepreneurship. Change brings opportunity, but seldom of the scope or speed that COVID-19 has created. That’s true across a wide swath of Austin’s highereducation and workforcedevelopment institutions. “Today, Austin has a rare chance for jobless residents and workers to reskill, reengage, and come out of this pandemic stronger,” says Tamara Atkinson, CEO of Workforce Solutions Capital Area, a nonprofit that plans, oversees, and evaluates workforce development activities in the Austin and Travis County area. Workforce Solutions Capital Area offers tuition assistance, childcare, transportation, and other help to train people for “middle-skill jobs,” or those requiring more than a high school diploma but less than a college degree. COVID prompted the organization to rework its Community Workforce Plan, which aims to move 10,000 people living at or below 200 percent of the federal poverty line into middle-wage jobs. “Updated for the era of social distancing, [this plan] focuses on rapid retraining for the digital environment, emphasizing safety, speed, and sufficient supports to provide pathways out of poverty for workers who lost jobs because of the pandemic,” Atkinson says.

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Despite the Austin region’s wealth of colleges and universities that focus on science, technology, engineering, and math education, its tech employers are growing faster than the number of students entering college. Workforce Solutions Capital Area is working with the Austin Technology Council, a trade group, on a study of what types of middle-skill technical training could help its clients find jobs in tech. “Our membership was eager to get involved with this, as it solves the problem of talent and offers opportunities for people looking to better their lives,” says Amber Gunst, Austin Technology Council’s CEO.

AN EVOLVING DEFINITION OF COLLEGE

Higher-education institutions in Austin are also playing a significant role in building a workforce with the skills that match the needs of local employers. In fact, COVID hit as higher education in Austin was becoming more flexible than students of previous eras may have seen. The Austin Community College District, for instance, provides fast-track options that can lead students straight to the workforce. ACC can also give students transfer options that lead to a four-year degree at another institution. It also

offers dual credit for high schoolers and programs to get students ready for higher ed. “We believe college is for everyone,” says Dr. Richard Rhodes, ACC’s chancellor. “The beauty of the community college is that we can do a lot more while still providing the same level of excellence students deserve and employers expect—all at a much lower cost.” ACC is working to move low- and middle-income residents into more stable and high-paying jobs by lining up education and training programs with employers’ needs, Rhodes says. That has happened through partnerships with the Austin Chamber of Commerce and local schools. In 2020’s fall semester, ACC provided deep tuition discounts for fast-track training programs in some of the most in-demand careers. “As in any crisis, we discover the power of community,” Rhodes says. “We are adaptable and stronger than ever.” Many have emphasized, however, that training and development cannot end once a student earns a degree. Ongoing job-related training for people already in the workforce is also vital to keep up with changes in various vocations. “The half-life of

A Helping Hand for the Unemployed Since March of 2020, countless jobs have been lost across the state of Texas. Fortunately, there’s been no shortage of programs designed to help the newly unemployed upskill for new opportunities. One is the Pflugerville Manufacturing Academy, founded in the middle of the pandemic to train locals for jobs in plastic injection molding and additive manufacturing (the latter also known as 3-D printing). The program has operated in rented space in area facilities as a way of avoiding the expense of a bricks-and-mortar location and training equipment that would get outdated. “We’re thinking we need more training for our residents who lost jobs in retail and service centers,” said Amy Madison, Executive Director of the Pflugerville Community Development Corporation, which developed the Pflugerville Manufacturing Academy in conjunction with the Texas Workforce Commission. “We’ve got plans to partner with other organizations to provide and deliver seminars and training for them in various ways.”

WHY TEXAS?

degrees is less than 10 years,” says Wade Allen, President and CEO of the Austin executive placement firm Cendea. “People need to embrace change because the occupations of the future may not have even been thought of today.”

HIGHER ED ADAPTS QUICKLY

The recession that COVID-19 created has also lent new urgency to the 60x30TX plan, an initiative whose aims include over 60 percent of Texans ages 25 to 34 having earned a certificate or degree by 2030.

Texas governor Greg Abbott and the legislature dedicated $175 million of federal stimulus funds to higher education, with the top priority being need-based financial help for students, Keller says. “We recently distributed contracts to about 150 public and independent schools to make sure we could maintain our current need-based aid program,” he said at the Summit. “It will also help public institutions provide additional emergency aid to help keep students on track.”

There is good reason to focus on education if we hope to recover from the downturn of 2020 as quickly as possible. Tracye McDaniel, President of TIP recovery faster. Strategies, an Austin consultancy, “We have the —Tracye McDaniel notes that there opportunity to is a correlation accelerate innovation in what between post-secondary teaching and learning looks education and how quickly like in a way that we’re going economies emerge from to look back on 2020 as the recessions. “We’ve seen that year it all changed,” says communities with betterHarrison Keller, educated populations really Commissioner of recover faster,” she says. Higher Education for the Texas TAKING Higher Education Coordinating Board. EDUCATION ONLINE Just as COVID-19 is changing The agency is spearheading the job market, it is also forcing work on 60x30TX. colleges and universities like While many states have made Austin’s Huston-Tillotson deep cuts to their colleges’ and University to do things differently. universities’ budgets in 2020, As Austin’s oldest institution of After the Great Recession of 2008, some 85 percent of new jobs created in Texas (and 99 percent of those We’ve seen that created nationwide) communities with required some kind better-educated of post-secondary populations really education.

higher learning, the historically black school—whose roots date to 1875—had no fully online degrees. “We had built up the infrastructure to be able to go online, but we were in this perpetual testing mode,” said Dr. Colette Pierce Burnette, who has served as the university’s President and CEO since 2015. “Higher education does not make a hard right turn. We are an ocean liner. So when COVID-19 happened, that pushed the ocean liner to turn to avoid the iceberg, so to speak.” Huston-Tillotson does not want to be fully online forever, because it wants to retain the culture of its campus. But having done the work to go online means it can find a hybrid operating model of virtual and in-person instruction. “The landscape of higher education is changing drastically,” Burnette said. “We are a stronger university and a different university.”

NEW OPPORTUNITIES ON CAMPUS Beyond new ways of connecting teachers and students, higher ed’s degree programs are adding new coursework to train students in areas that are key to workplace success but that historically may not have been part of college curriculums.

“There are 68 different programs at the University of Texas focused around entrepreneurship and innovation,” says Mitch Jacobson, Executive Director of the Austin Technology Incubator at UT’s Austin campus. Beyond running the nation’s longest-running tech incubator, Jacobson also heads the National Science Foundation’s Southwest I-Corps Node, which helps faculty build companies around something they’ve invented at UT Austin, Texas A&M, the MD Anderson Cancer Center, Texas Tech, or Rice University. He also heads up the Blackstone LaunchPad, which provides education in entrepreneurship and on how to launch companies out of UT. “The opportunities today are massive in terms of the different programs, competitions, and other things offered on [the UT Austin] campus,” Jacobson said. Those include internships, which increasingly have become part of students’ preparation for jobs in various areas. “We have 46 interns over the summer,” says Eric Salwan, Director of Commercial Business Development at Cedar Park’s Firefly Aerospace. “And we consider that a big part of our program. We have people who started as interns that now run departments.”

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WHY TEXAS?

AUSTIN

CULTURE

A Spirit of Helping Music, nightlife, and technology geeks get the most attention in Austin, but the region also prospers because of its population’s willingness to lend a hand—especially post-COVID. When Tiffany Taylor and Leon Chen started delivering hot-from-theoven cookies as an Austin business in 1999, their packaging wasn’t great and their service was only so-so. But because the cookies were delicious, customers supported what became known as Tiff’s Treats, which today has 62 stores and 1,500-plus employees. “We went through years of not making money and just working really hard,” says Leon, who has since married Tiffany. “As we’re saying why we didn’t quit, part of it was we got so much support from the community.” The Austin metro may be better known for technology and weirdness, but residents say the willingness of its people to help each other out is a hallmark of its culture— and a major reason they are optimistic it will succeed in the wake of resurgent COVID-19 and a national recession. Tennis star and Austin resident Andy Roddick, who has invested in Tiff’s Treats, says that people there supported the brand during the pandemic because of its corporate culture. He remembers overhearing an employee describing what it was like to work at Tiff’s Treats all the way back in 2007. “You’re going, ’Oh, they still love working here,’” Roddick

Texas CEO Magazine Q1 2021

says. “A lot of times, that won’t affect the bottom line right away. But all of a sudden when you need people the most, they want to be there for you.” Austin’s broader spirit of helping was also readily apparent to the Australian founders of BigCommerce, an e-commerce company, as they considered moving their headquarters to the United States. Driving past farmland soon after their arrival in Austin, one founder wanted to leave. “The other said, ’No, let’s do the meetings,’” says Robert Alvarez, BigCommerce’s Chief Financial Officer. “They went downtown and found how helpful people were.” The company now has its headquarters in Austin. Partnerships have also been on the agenda as companies and local government agencies work together to tackle problems that COVID-19 and a slow economy have brought to Central Texas. In Pflugerville, located about 20 minutes northeast of downtown Austin, a series of 7:00 a.m. Zoom calls starting in March resulted in some of the city’s manufacturers helping each other with equipment, hiring, and supply chain disruptions. “It took a pandemic to get them together,” said Amy Madison, Executive Director

of the Pflugerville Community Development Corporation, which organized the calls. “Several have wanted to work together as an industry cluster.” Elsewhere in the region, the Austin Chamber of Commerce has worked to connect struggling businesses with services that could help them survive in the heart of a downturn. “We created a pro bono marketplace so businesses that have a few extra hours can provide legal or financial support, strategic planning, whatever it is that our smaller businesses need right now to stay afloat,” says Laura Huffman, the chamber’s President and CEO. Efforts like these showcase Austin residents’ willingness to lend a helping hand, whether it’s developing brand new citywide programs—or simply staying loyal to their favorite neighborhood cookie shop.

More than just talking about diversity “There is a lot of work to do around diversity, equity, and inclusion in Austin,” says Austin Technology Council CEO Amber Gunst. “But our companies are poised to make strides in this area.” One area Austin has made progress on is women in leadership. Gunst notes that “women make up 30 percent of people in Director to C-suite roles in area tech firms. . . . This is one of the highest percentages in the United States and beats Silicon Valley. The level of female leadership we have puts us in a position to make significant impacts.” Dr. Colette Pierce Burnette, President and CEO of Huston-Tillotson University, a historically black school in East Austin, has also seen more energy going into issues of diversity, equity, and inclusion. “We’re an honest broker in that conversation,” she says. “I want it to continue and not be something where we all get lulled back to sleep when COVID-19 is over.”

WHY TEXAS?

Lifestyle in Austin’s second downtown Northwest Austin in particular has attracted many headquarters recently. Large West Coast tech companies like Apple and Amazon have expanded there, with Amazon growing its location at the retail and office complex known as the Domain (often referred to as Austin’s “second downtown”) and Apple breaking ground

on a major facility nearby. These expansions in turn helped draw the region’s first major league sports team: Austin FC will kick off its first Major League Soccer season in 2021 at a $260 million, privately financed stadium it is building near the Domain. “This is an area where companies are putting in large office presences

and where there are a significant amount of fun recreational activities being added as well,” says Andy Loughnane, President of the soccer club. Austin FC’s ownership, which includes actor Matthew McConaughey, chose the Austin area partly because the sport’s audience jibes

with the region’s roughly 2.2 million population. “Austin is a very Millennial, multicultural, and tech savvy market,” Loughnane says. “That aligns well with successful Major League Soccer markets. Lifestyle for us is important. If you love the Domain today, you will really love it in five years when development is further built out.” TexasCEOMagazine.com

WHY TEXAS?

DFW

COMMERCE

When the Going Gets Tough, the Tough Do Something Different Businesses across Dallas-Fort Worth got through COVID-19 by trying new things. Many found opportunities that will carry on beyond the immediate crisis. Be they billion-dollar airlines or upstart suppliers of motor coach services, DallasFort Worth companies are getting through a pandemic and recession thanks to the art of the pivot. Southwest Airlines managed to keep operating when COVID-19 forced stay-at-home orders in the spring of 2020.

I never in a thousand years would have believed that our whole headquarters could be working virtually. —Gary Kelly

“I never in a thousand years would have believed that our whole headquarters could be working virtually,” said Gary Kelly, Southwest’s Chairman and CEO, at the 2020 YTexas State of Business Summit. “And we’ve been functioning not just okay, but actually very, very well.” G. Brint Ryan, Chairman and CEO of the Dallas tax consultancy Ryan, LLC, noted while interviewing Kelly at the Summit that the rest of the airline

Texas CEO Magazine Q1 2021

industry hasn’t always fared as well as Southwest. “As I was preparing for this, I didn’t realize that since you started at the company, every other carrier has either merged, sold, or failed,” Ryan said. Southwest has prospered in large part by managing its costs and hedging against risks like unpredictable economic cycles, Kelly said. “And history shows that the low-cost producer wins. A lot of people make their choice on travel based on price, no matter the service. But the magic of Southwest is that we’ve been able to match the low price with great service.”

CONFRONTING BLACK SWANS

Unpredictable events with severe consequences—or “black swans”—don’t create trends but do accelerate ones that were happening anyhow, according to Tom Montgomery, Managing Member at Dallas’ Montgomery Capital Advisers.

“Whenever there’s a black swan event like what we’re facing today, entrepreneurs come up with ways to pivot,” he said at the Summit. Vonlane, a Dallas-based supplier of motor coach services, turned excess capacity from the COVID slowdown into a charter service where customers can line up buses for private trips. “Folks chartered our vehicles for family vacations this summer [2020], when they didn’t want to get on planes yet or drive themselves,” says Alex Danza, Vonlane’s founder and CEO. “COVID showed us we need a separate segment of the business and separate vehicles just for charter.” A similarly bold move by Fort Worth–based American Airlines Group brought business back sooner than some others in its industry saw. “[American Airlines] made a bet earlier this summer that

traffic would return a little faster than some of their competitors thought,” said Sean Donohue, CEO of DFW International Airport, at the Summit. “They added back flights. And it appears their bet paid off.” The airport, where American Airlines has its home hub, also benefitted from the move. “DFW has taken the position of being the world’s busiest airport at the current time,” said Jonathan Massey, Managing Principal at the architecture firm Corgan, at the Summit.

ACCELERATING OUTPATIENT CARE

Of course, the healthcare industry has been thoroughly shaken up since the pandemic began. But as the virus hit Dallas-based Baylor Scott & White Health last spring, the system benefitted from having built out its digital capabilities.

WHY TEXAS?

“COVID only accelerated our plans,” says Jim Hinton, its CEO (and a Texas CEO COVID only Magazine Exceptional accelerated Leadership our plans. 2020 honoree), —Jim Hinton in a YTexas interview. “During March and April, as much as 75 percent of our clinic visits were done through our app, MyBSWHealth. “Our biggest segment of workers are nurses, and we had an amazing response by the nursing leadership to ensure we had people on the front lines during all of this.” Today, Baylor Scott & White Health is still preparing for the future, particularly as government programs ask providers to take on more risk. They are now focusing on paying for value and quality of services rather than volume, Hinton said in the YTexas interview.

Beyond forcing DFW companies to do things differently, COVID has encouraged people to move to the area from both coasts and look at the benefits of DFW and North Texas more broadly. That means a good deal of new development in the area. “We have 2.5 million square feet that we’ve built in Frisco, and ultimately we’re going to build 10 million square feet,” said Craig Hall, founder and Chairman of Dallas’ HALL Group, at the Summit. Hall, whose firm has built an office park in Frisco and a hotel and residential tower in the Dallas Arts District, said the disease will change the use of real estate nationally. “We are looking at all the things we can do in our next office building to embrace health and wellness,” he said. At Briggs Freeman Sotheby’s International Realty, COVID prompted people to put in offers on homes they had seen online.

“Typically with an open house you might have 30 to 40 people come through on a Sunday. Now you’ve got 500 people looking at it,” says Robbie Briggs, the brokerage’s President and CEO. “June, July, and August were three of the best months that our company has almost ever had.” And thanks to Opportunity Zones, a community development program created by a 2017 federal law, developers like EJ Smith Enterprises have launched redevelopment pushes in South Dallas. EJ Smith Enterprises, run by Hall of Fame running back Emmitt Smith, acquired a 25,000-square-footplus property at which the University of North Texas plans to launch construction training programs and college-related education for community youth. “There are a number of other companies that are

going into the building,” said Smith at the Summit. “We have about 80 percent pre-leased.” Smith said that another opportunity is the Trinity River, which flows through a number of North Texas cities, including Dallas and Fort Worth. “In the next 20 to 30 years, if we’re able to turn that river into something beautiful, then that would be a great landscape that could also attract investment,” Smith said. Business executives across the region voiced similar sentiments about the river in interviews for the Dallas 500, a special publication from D CEO Magazine. “One of the questions we asked was, ’What would you do to make Dallas even better?’” said Christine Perez, editor of D CEO. “And I think about 495 said the Trinity River, get that project off the ground and make it happen. That could make such a tremendous difference for our region.”

Photo by Philip Lange/Shutterstock.com

“In 2019, our system saved Medicare $68 million,” he said. “We were able to keep half of those savings.”

MILLIONS MORE SQUARE FEET

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WHY TEXAS?

DFW

CULTURE

The New Regionalism As 140 corporate headquarters moved to Dallas-Fort Worth over the last 10 years, a new spirit of cooperation emerged among its communities. When a geographic area has one or two large cities surrounded by small ones, it’s easy to embrace regionalism, or promoting the place as a whole to companies that are considering moving there. It can be a different matter in an area like Dallas-Fort Worth, which includes 14 cities of 100,000-plus people. That sheer size makes the spirit of collaboration among its municipalities all the more striking. “As different people are moving into economic development, the regional piece is much more accepted and part of what we do versus, say, five or 10 years ago,” says Brandom Gengelbach, CEO of the Fort Worth Chamber of Commerce.

entities in the region. “If you’re in the Dallas business community, you’re already on the winning team," he said. "If you’re a member of the Dallas Regional Chamber, you’re inside the winning locker room. We celebrate a lot of wins in that locker room. But sometimes, we close the door and say, ‘We didn’t play a very good first half. We’ve got to do better.’ That’s when we lock arms, and work together to improve things. It’s that spirit of cooperation that makes the Dallas region unique.” A similar spirit informs the Texas Lyceum, a nonprofit that brings together community and business leaders from across Texas to discuss subjects that affect the state, from housing to tourism.

“It’s a healthy discussion that our country Every pitch his organization could use makes to companies starts more of,” says with the state of Texas, then Holly Reed, We’re pretty an alumnus of moves to the DFW area, DFW International proud of our Texas Lyceum Airport, and finally ability to have and principal to Fort Worth. “We and practice a heated lead at the tax couldn’t survive without discussion, consultancy those relationships we have,” he says. but then have Ryan, LLC. a meal in the “We’re pretty Dale proud of our Petroskey, hospitality room ability to have after and follow a heated President and CEO of up on that. discussion, the Dallas but then have —Holly Reed Regional a meal in the Chamber, said at the hospitality room Summit that when his after and follow up on that.” agency bid on Amazon’s second headquarters, it had Reed says the Lyceum helped to work with 45 different her build a statewide network economic development in places where she never

Texas CEO Magazine Q1 2021

would have before. “If you have a problem in a particular area, you have somebody that is a resource who, if they can’t help you, they can get you in touch with somebody else.” For Reed and others, it’s that type of regional cooperation that makes the DFW area so appealing. Of course, the entire region’s great quality of life never hurts in drawing corporate relocations to DFW. Mike Rufail, founder and Chief Gaming Officer at Envy Gaming, says that was a major reason he moved his esports franchise to North Texas. “We knew the Dallas market was going to be one of the top two or three markets for esports in all the United States,” he says. “Luckily, we were able to bring the whole company back here, and the organization is flourishing here.”

WHY TEXAS?

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WHY TEXAS?

DFW

COMMUNITY

Supporting Education in Tough Times Business leaders in DFW are lending a hand to schools that face difficult financial situations because of COVID-19. Businesses across Dallas-Fort Worth are gearing up to support schools as governments deal with the financial impact of COVID-19 and the national recession it caused. “Public-sector budgets are going to be spread thin, so a lot of traditional funding sources for education programs are going to be spread thin,” said Eddie Reeves, an area Partner at the consultancy Vianovo, at the YTexas Summit. “That means we’re going to have to get the biggest bang for the buck for what we do spend.” The Beck Group, a Dallas-based development and architecture giant, has started its own construction schools in underserved communities, according to CEO Fred Perpall (a Texas CEO Magazine Exceptional Leadership 2020 honoree). The Beck Group also participates in the Pathways in Technology Early College High School, or P-TECH, through which students can earn industry certificates, an associate degree or up to 60 hours of college credit. “We literally have adopted a high school and have said to ourselves that the kids there are going to be our responsibility,” Perpall says. “They will have in-curriculum and extracurricular support so they have resources to matriculate through high school and be immediately presented with opportunities for work.”

Texas CEO Magazine Q1 2021

Still, the 2021 legislative session will likely see an effort to reduce money for House Bill 3, which created additional revenue for schools, including some contingent upon implementing proverbial best practices, according to David Scullin, President and CEO of Dallas’ Communities Foundation of Texas. “If we peel [House Bill 3] back in a significant way—and there will be a strong push to do that—we are going to set ourselves back for a generation or more,” Scullin said at the Summit. “Our advocacy efforts are going to be focused very heavily on that.”

PUSHING SOCIAL MOBILITY

However funding turns out for House Bill 3, programs like Dallas County Promise will continue removing expense as a barrier to higher education. Graduates of high schools participating in Dallas County Promise can receive “last dollar” scholarships, which cover tuition that financial aid does not at colleges and universities that are partners in the program, including Dallas College, Southern Methodist University, and the University of North Texas at Dallas. “Texas has the third-lowest community college tuition in the country,” says Eric Ban, Managing Director at Dallas County Promise.

Promise programs statewide have different ways of preparing students for higher education and beyond. Tyler Junior College Promise, which works with six communities in East Texas, encourages its 4,000-plus Promise Scholars to do community service, according to Matthew Ramirez, Director of the program. “We’ve got high school students teaching adults how to read and write at local libraries,” says Ramirez. Promise is ultimately about social mobility, something that schools like UNT Dallas have embraced. “The school is made up of 70 percent firstgeneration college students and 85 percent minority students,” says Lesa Roe, chancellor of the UNT System.

COST-EFFECTIVE EDUCATION UNT is also retooling its training to support the needs of corporate partners like JPMorgan Chase, Liberty Mutual, and the Dallas Cowboys. “At the G. Brint Ryan College of Business in Denton, we’re embracing blended degrees, such as our sports entertainment and music MBAs,” Roe says. The college’s namesake, G. Brint Ryan, Chairman and CEO of the tax consultancy

Ryan, LLC, said at the Summit that he made a large donation to UNT partly because of the range of initiatives it is undertaking. “It’s one of the most costeffective degrees you can get in America,” he noted. UNT’s new take on education mirrors the different approach Dallas took to revive its famed West End neighborhood, which never returned from an economic hit it absorbed in the 2000s. The Dallas Innovation Alliance—a public/private partnership supporting the design and execution of Dallas’ “smart cities” strategy—is making the West End a test bed for new technologies as the Dallas Innovation District through a partnership that includes the city. “The hypothesis was that if you bring creative talent, entrepreneurs, and startups into an area, that energy, innovation, and growth of new businesses would start to transform a district like the West End,” says Jennifer Sanders, cofounder and Executive Director of the Dallas Innovation Alliance. The deal allows the Alliance to independently test things like streetlights and environmental sensors that startups have developed and are looking to commercialize, she says. Those startups can seek funding from the venture or internal innovation funds that large DFW companies run, while wealthy individuals provide angel rounds.

Photo: Travel_with_me / Shutterstock.com

WHY TEXAS?

“What we’re starting to see is family office investment,” Sanders says, referring to wealth management firms that handle all of the finances of an affluent family. “There is greater interest and tolerance for early-stage, very specialized investing.”

SUPPORTING BETTER POLICY Another advocate for regional growth is the Dallas Citizens

Council, made up of 170 CEOs and other business leaders of 110 companies in the North Texas area. “We supported the $1.1 billion Dallas College bond, the largest in its history, to invest in technical education and workforce development so high school students in our community have the opportunity to be trained in the skills and jobs of the future,” says Fred Perpall

of The Beck Group. Council members also led assistance from their companies for local small businesses, such as coaching, capital, and lowering the cost of Paycheck Protection Program loans, according to Dallas Citizens Council CEO Kelvin Walker. While the Council once endorsed

candidates for the city council and other regional elections, the group has moved away from that to focus on policy, Walker says. “We have invited many new members who have moved to town over the last few years as we look to ensure we’re shaping policy for the region for the benefit of the business community, the city, and our entire community.” TexasCEOMagazine.com

WHY TEXAS?

DFW

FORT WORTH–ARLINGTON

More Than Cattle and Roller Coasters People wear cowboy hats in Tarrant and Denton Counties, and they build some amazing stuff—not to mention helping their neighbors when problems like a pandemic surface. The western portion of Dallas-Fort Worth may be known for cattle drives, pro sports stadiums, and amusement parks, but it is emerging as a building ground for developing and testing bleeding-edge technologies. Bell, the Fort Worth–based aerospace manufacturer previously known as Bell Helicopter, is working with NASA and the Federal Aviation Administration in the region to do test flights of one of the company’s larger unmanned

Texas CEO Magazine Q1 2021

aircraft, according to Chad Sparks, Bell’s Director of Strategic Campaigns and Business Development. “Our intent is to fly that vehicle in the greater DFW area here in just the next couple of months,” Sparks said at the YTexas Summit. For Bell products like that to be useful, the company must be able to integrate into the national airspace and coordinate with local airport authorities, Sparks said. “We’re collecting data the whole time [the vehicle is in the air] because it’s a

learning exercise. It’s how we eventually get to scale.” The North Central Texas Council of Governments, a regional planning body, created a mobility innovation team to help companies like Bell establish use cases in the area’s complex airspace, according to Mike Berry, President of the real estate development giant Hillwood. “They’re also trying to position North Texas with smart road infrastructure to help with

autonomous trucking and freight movement,” Berry says. Hillwood built Fort Worth’s Alliance Airport. The Texas Department of Transportation was one of the first state regulatory agencies to allow the vehicles on public roadways. “Most people don’t realize there are semi-autonomous trucks going down Interstate 45,” says Ty Harmon, CEO and Chief of Technology Reconnaissance at the consultancy 2THEDGE.

WHY TEXAS?

A DIFFERENT TYPE OF TAX CREDIT

To spur local development of breakthrough technologies, the City of Fort Worth created a research-anddevelopment tax credit.

France-based maker of drinks and food such as yogurt. “I see our workforce shifting from labor-intensive tasks to more technically skilled personnel,” says Henry Hudson, Financial Controller at Danone North America.

In a nearly $70 million deal that the city council approved in June 2020 with startup Linear Labs, the business essentially receives grants as reimbursement for R&D expenses. Linear Labs is developing what it says is a lower-cost, higherpower electric motor.

Alcon, the Switzerland-based maker of eye care products, promotes STEM careers to DFW high school and university students by hosting them at its Fort Worth campus, where it also trains doctors and other professionals on using its technologies.

“A company can sell the value of that credit to a buyer to put money back in the project,” says Robert Sturns, Fort Worth’s Economic Development Director.

“We also look forward to continuing to partner with the city and local community partners to provide access to eye care services and testing for citizens in need,” says Wes Warnock, Alcon’s Global Head of External Communications.

The private sector is also joining forces with local secondary schools and universities to build excitement in young people about careers in fields related to science, technology, engineering, and math (STEM).

TEACHING SKILLS IN A PACKAGE

“Working with other area aerospace businesses, we created a technical school curriculum focused on advanced aviation manufacturing technology that is now a model around the country,” says Becky Redman, Government Relations Senior Manager at Lockheed Martin Aeronautics. Automation also looms in the future at the Fort Worth operation of Danone, a

To help students adapt for technological changes to their future jobs, the University of North Texas System is ensuring that all students have a base of knowledge in computing, data, and artificial intelligence, according to its Chancellor, Lesa Roe. “At our UNT flagship in Denton, we’ve seen huge increases in the number of integrated studies majors, who want to blend areas of learning to create their own degrees,” she says. “Some 77 percent of jobs are at moderate to high risk of being taken over by computers within the next 20 years.” At Rainwater Charitable Foundation, which makes

education grants focused on Fort Worth and North Texas, Program Manager Jay McCall zeroes in on getting information into the hands of high school freshmen and sophomores whose family members don’t have the experience of going to college. “We focus on closing the guidance gap,” he says. “We’re engaged with the Fort Worth Independent School District and Tarrant County College on bringing additional resources through technology and also embedding additional advisers in these campuses.”

across DFW, accelerated more than $3.9 billion in payments to suppliers, starting when the COVID-19 pandemic began. “This enabled many to continue operations and keep their employees,” says Lockheed Martin’s Becky Redman.

The virus also brought to the forefront the Seattle, state’s low costs Portland, San and businessFrancisco, friendly climate, to Los Angeles, according Brandom Chicago, New Gengelbach, York—their CEO of the Fort businesses Worth Chamber of Commerce.

are dying to get out, the talent is dying to get out.

HELPING IN A TIME OF NEED

While much philanthropic work in Tarrant and Denton Counties centers on creating opportunities, the COVID-19 pandemic showcased the willingness of the private sector to help other businesses in need. DFW International Airport decided in April 2020 to effectively waive rent payments from concessionaires and small businesses, according to Sean Donohue, its CEO. “We’re extending that through next March [2021],” Donohue said at the Summit. “It will be a $70 million revenue hit. We’re not ever going to recover those monies. But we felt it was the right decision and our board supported it.” Lockheed Martin, which employs more than 22,000 people

“Seattle, Portland, San Francisco, Los Angeles, —Brandom Chicago, New Gengelbach York—their businesses are dying to get out, the talent is dying to get out,” he said at the Summit. “We’re busy as we’ve ever been. Texas is going to be killing it in 2022 and 2023.” Amarillo, nearly 340 miles northwest of Fort Worth, found a way to do well even when the disease was at its worst. “Our manufacturing never shut down,” said Kevin Carter, President and CEO of the Amarillo Economic Development Corporation, at the Summit. “Our mayor declared all of our manufacturing essential. We had 2.1 percent unemployment pre-COVID. The last numbers that came out, we were down to 5.2 percent.” TexasCEOMagazine.com

WHY TEXAS?

DFW

NORTHERN DALLAS SUBURBS

The workforce of today is not the same as the workforce of yesterday. —Beth Garvey

From One Blinking Yellow Traffic Light Even by Texas standards, the development of Dallas’ northern suburbs has been stunning in speed and scope. Dallas’ north suburbs have become one of the state’s best growth stories by adopting the businessfriendly mindset that has spurred a 42.3 percent expansion of its population over the last 20 years.1 The Dallas-Fort Worth metro area overall added more than 1.2 million people between 2010 and 2019, the most of any metro area in the nation over that time.2 Yet even that 19 percent growth pales in those years compared to cities like McKinney (51.8 percent, from 131,117 to 199,177) and Frisco (71.3 percent, from 116,989 to 200,490). “It was a farmland in 1992, with 6,000 people. You couldn’t buy a pair of socks there,” says Maher Maso, Frisco’s mayor from 2008 to 2017. “We had one blinking yellow light for traffic.” Now a Principal in the Dallas office of the tax consultancy Ryan, LLC, Maso notes that Frisco went from six schools

Texas CEO Magazine Q1 2021

in 1996 to more than 75 today. “We were able to put more than 2,200 single-family homes on the ground, multiple office buildings, and move the Dallas Cowboys here,” he says. That success helped lure the headquarters of the Professional Golfers’ Association of America, which will shift from Palm Beach Gardens, Florida, to anchor a 660-acre mixed-use development whose initial investment will be worth more than half a billion dollars. The PGA will host in Frisco two PGA Championships, two KPMG Women’s PGA Championships, and possibly a Ryder Cup. The project includes two championship golf courses; a short course and practicing areas totaling 45 holes; a 500-room Omni Hotels & Resorts property; and a 127,000-squarefoot conference center.

PROJECTS KEEP COMING

Though the PGA announced the Frisco effort back in 2018, COVID-19 has not stopped organizations from

kicking the tires on potential operations moves to the northern suburbs of Dallas. “I’ve never seen in this organization the sheer amount of projects and capital investment that potentially is coming to the area,” said Danny Chavez, Senior Vice President of the McKinney Economic Development Corporation, at the Summit. “A couple billion dollars’ worth are on the table right now, even during a global pandemic and recession. It doesn’t seem to show any signs of stopping here.” McKinney also created an incentive-based fund for technology startups in specific industries that are interested in moving to the city, according to Chavez. An online application enables Chavez and company to pitch the startups to landlords and developers, with the growth fund “functioning more like a venture capital capability,” Chavez said. “Among the companies that have applied, the types of compensation we’re seeing, not including

their equity, is a lot of $86,000 averages wages.” Though job markets were often soft at the end of 2020, local recruiters and other workforce experts were working with employers to reconsider what qualifications they have for many roles they will hire for going forward. “The workforce of today is not the same as the workforce of yesterday,” says Beth Garvey, President and CEO of Planobased BGSF. “Organizations are deciding what that looks like for their futures. Does every job description really require a college degree?” Garvey helps teach customers to broaden their recruiting work. “What efforts are you going to put in to getting people who aren’t necessarily going to college?”

Texas Demographic Center, “Texas Population Projections 2010 to 2050,” January 2019.

Collin Baptist Association ReVision Team Meeting, “Demographic Trends and Projections in Texas and Collin County,” June 11, 2020.

WHY TEXAS?

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WHY TEXAS?

HOUSTON

COMMERCE

Change, Meet Opportunity Between COVID, tech disruption, and a slow economy, almost every area of Houston business is having to take a new road. This is how they plan to make a better tomorrow. At the 2020 YTexas State of Business Summit, one thing became clear: The coronavirus will have Houston industries doing things differently in 2021. “Sure, the vaccine will come,” said Mario Diaz, Director of Aviation at the Houston Airport System. “But we think we will have to deal with this virus for another 12 to 18 months. And the best way to deal with it is to change behaviors.” Both on Summit panels and in interviews, leaders said they planned to grow their companies in 2021 by taking advantage of the many attributes that Houston and Texas have to offer. One of those is a continuing supply of workforce talent. “We had more than 30 interns at our Johnson Space Center office and another 15 at the location where I am,” said Steve Clarke, Vice President of People & Places Solutions at construction giant Jacobs. “The talent we’re seeing coming out of college is amazing.” The Houston economy is also getting a boost from a push to build

Relocations here have been spread across a diverse group of industries, including energy, biotech and life sciences, technology and machinery, and industrial manufacturing. —Susan Davenport

Texas CEO Magazine Q1 2021

up a variety of commercial industries operating in the metro area, according to Susan Davenport, Senior Vice President and Chief Economic Development Officer at the Greater Houston Partnership. Some 60-plus companies have moved headquarter operations to the region from out of state since 2010, she says. Companies have relocated from more than 20 different US states, such as California, Pennsylvania, and Louisiana, and at least 10 foreign countries. “Relocations here have been spread across a diverse group of industries, including energy, biotech and life sciences, technology and machinery, and industrial manufacturing,” she says. “In recent years, Houston has seen a push toward the innovation sector. Just recently, Hewlett Packard Enterprise announced plans to move its headquarters from Silicon Valley to the Bayou City.” The most common types of jobs they brought involve office, engineering, technology, and headquarters work, Davenport says. Beyond the immediate health crisis, many industries in Houston are poised to see strong annual growth between 2019 and 2045 in their real gross product, or the financial worth of the products and services they produce. The Perryman Group, a Waco-based consulting firm, expects steady growth across several industries in Houston. It forecasts manufacturing

to expand 4.03 percent per year, professional services at 3.45 percent, and finance and insurance at 3.28 percent.1

THE NEW ENERGY

For some of the 4,650 energyrelated firms in the Houston metro area, the path out of the 2020 slump may include everything from consolidation to renewable forms of energy. “We’re on the road to recovery, but it’s going to be a long road,” said Todd Staples, President of the Texas Oil & Gas Association, at the Summit. “The bright spot is we have seen a little uptick in demand.” In 2019, before COVID hit hard, the oil and gas industry paid over $16 billion in state and local taxes and state royalties, according to Staples. “And even an Aggie like me can tell you that equates to about $44 million a day going to pay for our schools, our roads, our universities—a phenomenal impact for Texas,” he said. Though capacity of solar and wind power doubled over the last five years, renewable sources supplied only about a quarter of demand growth in power generation, according to Sean Strawbridge, CEO of the Port of Corpus Christi. Hydrocarbons accounted for the other 75 percent, he said.

“That means renewables couldn’t even keep pace with the incremental energy demand that we saw, let alone drive any fuel displacement,” he said. Should a vaccine help return demand growth to what was forecasted before COVID, he said, “you’re still looking at a combined nuclear, hydro, and renewables of only about 17 percent by 2050.” Still, he added, the industry has committed to developing a range of power sources, known as the “all of the above” strategy. “The big majors are already recognizing that they’re going to be relegated to niche players if they don’t diversify their energy production portfolios.” Improvements in refining technologies have made fuels 99 percent cleaner, and methane emissions from natural gas systems have declined 23 percent since 1990, even as production skyrocketed. Yet while Texas is known for its oil and gas production, it has also produced over 29,000 megawatts of wind power in the last 20 years, according to Mike Howard, Chairman and CEO of Howard Energy Partners. The company, which has a Houston office, helps turn raw fuels into forms that can power equipment and then moves them from point A to B. “Due to innovation and a lack of regulation in Texas, we’ve given ourselves

WHY TEXAS?

probably the lowest drilling cost for exploration and production,” he says.

LOW-COST MONEY

Few organizations went untouched by the COVID-related downturn, but it has come with upsides for some. For one, the slowdown has lowered the price of debt for Texas Central, the for-profit company planning to build a 236-mile high-speed rail line connecting the Houston area with Dallas-Fort Worth, with a stop in the Brazos Valley near College Station. Faced with low returns on many financial assets, pension funds have purchased interests in similar projects in Europe, according to Dr. Carlos Aguilar, Texas Central’s President and CEO. Long-term debt in this arena often comes from government agencies like the US Department of Transportation, he said at the Summit. With COVID creating delays in infrastructure works such as liquified natural gas, Texas Central was looking in the fall to land lower-cost construction financing. Slated to create 17,000 construction jobs, the project’s civil infrastructure costs—such as building tracks— will be around $20 billion. “There is a lot of unused capital out there,” Aguilar said. “We have to go through a bit of convincing some skittish money that is now wondering what to do with their funds during COVID.” The pandemic is also forcing the Houston Airport System, the enterprise fund that runs the George Bush, Hobby, and Ellington airports, to build non-airline revenue in areas like parking, concessions, and ground transportation, according to the System’s Mario Diaz. Companies may avoid nonessential business travel for one to three years, Diaz said at the Summit. In addition to familiar tactics like wearing masks, the Houston Airport System is working on using ultraviolet lights to sterilize ducts and improving

air circulation to limit the spread of airborne antigens, Diaz said. “We need to make the customer as comfortable and safe as possible.”

SPACE CITY: THE NEXT FRONTIER

Already home to 500-plus aerospace companies, Houston’s commercial spaceport at Ellington Airport recently finished phase one of its development by installing infrastructure on 150 acres of land. The facility has landed companies like Intuitive Machines, which has a NASA contract to become the first private US company to land spacecraft on the moon. The Houston Spaceport continues to seek more partners to operate from its headquarters, designed not only as a facility for launching spacecraft but also as a hub for innovation and collaboration. “We are talking to a number of other companies—I’m not at liberty to discuss them— in manufacturing of space components and even aviation products of aircraft,” Diaz said. “A number of universities are working with us on building an aerospace technical training center,” including Texas A&M, the University of Houston, and Texas Southern University. And Johnson Space Center (JSC) is seeking commercial partners to help it pursue missions where astronauts live and operate on other celestial bodies— including Mars, eventually. Known as mission control for the first moon landing, JSC is now working on the Artemis program, which aims to land the first woman and next man on the Moon by 2024. That mission will include seeking water, building a sustainable base, and investigating the Moon’s mysteries, according to Nicholas Skytland, Deputy Chief of JSC’s Exploration Technology Office. “Technology really drives exploration,” Skytland said at the Summit. “We have commercial partnerships and a lot of activity in areas like advanced propulsion systems and precision landing. How do we excavate material we find on the moon and construct

habitats? How do we live in these extreme environments?” NASA is thus looking at the design of everything from spacesuits to habitats, Skytland said. “We need these small startups that are thinking innovatively, challenging the status quo, and advancing the technology.” NASA’s largest service provider, Jacobs, moved its headquarters to Texas about four years ago. “If you’ve never been to a rocket launch, it’s a life-changing experience,” says Jacobs’ Steve Clarke. “It will get you excited about the industry like nothing else.”

PILOT TESTS GROW STARTUPS

The Ion, an innovation and startup hub launched by Rice University, recently received $1.4 million in federal funding to help form its Aerospace Innovation Hub to develop minorityled companies addressing challenges in that industry. The Ion, which anchors a new 16-acre Innovation District in Midtown Houston, will work on the project with JSC and DivInc, the latter an Austin-based accelerator for underrepresented entrepreneurs like women and people of color. To give its startups a better chance of success, The Ion helps line up pilot tests with the City of Houston and other communities for the fledgling companies’ products. “This is a way for entrepreneurs to check and tweak their solutions with that key stakeholder [pilots] so they can iron out any evaluations they may need to make before they scale up,” says Christine Galib, Senior Director of Programs at The Ion. That in turn helps fundraising because entrepreneurs can show they have validated their technologies in a real-world setting, she notes. It can also prompt the corporate venture arms that The Ion works with to take a look at the invention. Its program partners and sponsors 1 The Perryman Group, “Perryman Texas include Chevron Technology Top Ten,” https://data.perrymangroup. Ventures, Microsoft, and Intel. com/texas-top-ten. TexasCEOMagazine.com

WHY TEXAS?

HOUSTON

COMMUNITY

Creating More for a Community As new residents pour in, Houston-area students are learning more marketable skills while the public transit system is helping test more efficient ways to move people from point A to point B. With the Houston metro’s population of over 7 million projected to nearly double by 2040, business and government leaders are building a stronger society now by improving building blocks like education and public transit. The Houston school system is focusing on teaching job skills employers will need today and tomorrow as the region’s largest industries face disruption from technology and COVID-19. Texas A&M, for instance, is working with Houston Methodist on an engineering medical program that will be part of a planned complex the school system is building in the city’s Texas Medical Center. “Things like telemedicine and robotics are going to be at the forefront of medicine in five or 10 years, perhaps even next year [2021],” Ross Guieb, Executive Director of the George H. W. Bush Combat Development Center at A&M’s Bryan campus, said at the YTexas Summit. “When you have companies coming back for more of the same types of students, that’s how you build that connection.” The City of Houston, meanwhile, has built a 345mile network of bike-friendly

Texas CEO Magazine Q1 2021

lanes and trails across 500 miles. Voters in November 2019 approved a $3.5 billion bond that, among other things, will allow its transit agency, METRO, to add three light-rail lines through downtown.1 The agency reportedly hopes to land matching federal and state money for its proposed $7.5 billion METRONext Moving Forward Plan, which would span 500 miles of transit improvements and additions. “METRORapid in August debuted with the Silver Line in the Uptown area,” says Tom Lambert, President and CEO of Houston METRO. “It utilizes technology known as ’bus rapid transit’ and resembles rail, operating from platforms with a 10-minute frequency for most of the service day.” While public transit like light rail eases vehicle emissions and traffic alike, it also spurs construction and business relocations near passenger stations. “Since its inception in 2004, there has been more than $8 billion in development along the METRORail Red Line,” Lambert says.

NO DEGREE? NO PROBLEM

Higher-ed institutions like San Jacinto College have created industry-focused training programs through an employer-led coalition called UpSkill Houston.

Launched by the Greater Houston Partnership in 2014, the group focuses on the city’s nearly 1 million middleskill jobs, which require more education and skills beyond a high school diploma but less than a four-year degree. For instance, UpSkill Houston supported San Jacinto College on the school’s new LyondellBasell Center for Petrochemical, Energy & Technology. Industry leaders and employer partners provided input on the design of laboratory space and curriculum. “It is important that UpSkill Houston is employer-led, because employers best understand the skills they need in their workers,” says Peter Beard, Senior Vice President of Regional Workforce Development at the Greater Houston Partnership. In need of soft skills (such as time management and problem solving) as well as digital and job-related expertise, employers are focusing on growing the talent pool from which they recruit. One result is Women In Construction, which initially trained women in the earn-and-learn program to be pipefitters in industrial construction and since has expanded to other contractors and specialty crafts like HVAC/ mechanical. The program is

the result of S&B Engineers and Constructors working with Workforce Solutions, an operating affiliate of Gulf Coast Workforce Board, and the THRIVE program at the United Way of Greater Houston. Last fall, Beard said that UpSkill Houston was in the early stages of helping people who lost jobs in energy to move to new fields. Some may find opportunities in the tech sector, guiding development of automation systems and artificial intelligence for the cleantech and renewable energy industry, he said. “When you think about the technicians that worked on the oil well pad, there are probably similar skills and competencies needed to support solar and wind,” said Beard. People with maintenance and construction skills will likely be able to perform work needed to install solar panels, Beard said. “In the coming months, we will have more to report as we engage with the renewable and cleantech employers.”

HELPING PAY COLLEGE COSTS

In a similar vein, PK–12 organizations joined forces with higher-ed organizations to create Harris County Promise, which helps provide funding so more high school seniors can earn college credentials and degrees. Launched in January 2020,

WHY TEXAS?

Harris County Promise is a last-dollar scholarship, meaning that it covers the gap between the cost of tuition and fees and the amount paid by grant aid (including federal and state aid and additional scholarships). “We’ve got more than 50 school districts here serving nearly a million students,” said Paris Woods, the organization’s Managing Director, at the YTexas Summit. “A huge goal for us is moving college enrollment rates up from 52 percent, where they’ve been for several years.” The three community colleges the Promise program works with—Houston Community College, San Jacinto College, and Lone Star College—“are helping ensure that any credential or degree that Promise dollars earn translates directly into a workforce opportunity the graduate would not have had access to otherwise,” she added. Once youngsters reach higher education, schools are increasingly offering more targeted degree programs to help develop skills for markets that students may want to eventually work in. Texas A&M’s engineering studies, for instance, may look different from what previous generations remember. “We created a multidisciplinary approach that allows you to take classes on the needs of industry,” says Ross Guieb of A&M’s Bryan campus.

“We tailor it to fit the niche capabilities or niche field the student is interested in.” A&M also created the ENGR[x] program, which requires internships in areas like entrepreneurship or travel abroad. Guieb says he has seen two of his sons grow as leaders through participating in the famed Corps of Cadets, a militarystyle student organization. A fundraising program at A&M also helped facilities like the SuSu and Mark A. Fischer ’72 Engineering Design Center, an academic “makerspace” for building things. “We can fail, learn from it, and then do it again,” Guieb says. “Collaboration is important because you start to get leadership skills.”

FOSTERING ENTREPRENEURSHIP

Houston is also developing programs to build opportunities and entrepreneurial skills among those currently in the workforce. For example, the Rice Alliance for Technology and Entrepreneurship offers training and a career fair for those seeking internships or full-time jobs with fledgling businesses. “Almost every student we see says, ’I work for Amazon or Microsoft or Exxon today, but in three to 10 years I want to start my own company or be involved with smaller, more nimble businesses,’”

says Brad Burke, Managing Director of the Rice Alliance. In late 2020, Rice University was turning the former Sears store in Midtown into The Ion, a 270,000-square-foot innovation and startup hub that will anchor the four-mile long Innovation Corridor. “Whether they work at big companies or want to be an entrepreneur, students need skills to succeed like creative problem solving, planning when they don’t have anything at all, or creating a vision and getting people to support it,” Burke says. “We’re going to give them the capabilities they need.” Over the 20 years the Rice Alliance has been around, it has seen more than 2,500 companies go through its program and raise $21 billion-plus in funding, according to Burke. But while the Alliance may be aimed at the private sector, even government arms like Houston METRO have adopted a spirit of entrepreneurship and experimentation.

SELF-DRIVING PUBLIC TRANSIT

In 2019, Houston METRO joined with Texas Southern University to launch a pilot test of the region’s first autonomous shuttle, part of a study by the school’s Center for Transportation, Training, and Research. Operating along a one-mile stretch of campus called Tiger

Walk, the six-seat electric vehicle (with standing room for six more) provided real-world data on how autonomous vehicles, or AV, can help transit agencies better serve smaller neighborhoods and hard-toreach areas by connecting them to public transport. “METRO was instrumental in helping Texas receive federal designation as an AV proving ground,” said Tom Lambert, the agency’s President and CEO. “This helped make this project possible.” To help further the effort, METRO recently received a $1.5 million grant from the US Department of Transportation to help develop “the first autonomous, midsize, fullspeed, fully compliant vehicle for the public transit market.” Plans are for the vehicle to operate as part of the University District Project, connecting the Third Ward, the University of Houston, and TSU to the METRO system, by way of the 54 Scott bus corridor, the METRORail Purple Line, and eventually to the Eastwood Transit Center, Lambert said. The Eastwood facility has park-and-ride commuter bus service. METRO is working on the project with Phoenix Motorcars, AECOM, EasyMile, and the Federal Transit Administration. “We believe automation and electrification are important contributors to the sustainability of public transportation,” Lambert said. American Planning Association, “Toward Modern Mobility,” https://www.planning.org/ planning/2020/jan/toward-modern-mobility.

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WHY TEXAS?

HOUSTON

CULTURE

Thinking Creatively, Working Together The Houston area is combatting COVID-19 and a difficult economy with the same culture of cooperation and innovation that helped it recover quickly from Hurricane Harvey. When Hurricane Harvey flooded the greater Houston area in 2017, the world saw the region’s spirit through videos of residents using boats and other means to help neighbors.

Photo by Julie Soefer

2021 sees the Houston metro facing new challenges from COVID-19 and a slow national economy. Its population is meeting them through the same culture of cooperation and creativity that spurred the rapid rebound from the storm. “If you don’t look for opportunity now, you won’t be in the ballgame,” says Chris Shepherd, owner and Executive Chef at Underbelly Hospitality, a Houston restaurant group. “We’re here to help each other out. We have to do it together.” Having lost 70 to 80 percent of his business since COVID forced shutdowns of many public places, Shepherd found new revenue streams such as using Zoom videoconferencing to teach cooking classes out of his own kitchen. “Everybody gets a box that we’ve shipped and cooks their dinner with us,” he says. The classes will “absolutely” continue after COVID passes, he adds. The pandemic also prompted Houston’s NFL team,

Texas CEO Magazine Q1 2021

the Texans, to do things differently to serve their staffers and improve their business relationships. “We have pushed hard to experiment with all kinds of technologies to keep our business moving forward,” says Jamey Rootes, the franchise’s President. “These will enhance our operations and offerings as we emerge from a mainly virtual world. We have deployed six years of innovation in six months because necessity is the mother of invention.”

WEBINARS’ SIDE BENEFITS

Since March, Rice University’s Baker Institute for Public Policy has substituted webinars for in-person gatherings. “These virtual events have actually allowed us to grow our audience base and more widely publicize our programs,” said Ambassador Edward Djerejian, Director of the Institute, which was ranked the second best university-affiliated think tank globally in 2019.

COVID has impacted society. A series of reports looked at how the pandemic has affected low-income and underserved populations. Those came from Baker experts working with colleagues like Dr. Quianta Moore, a fellow in child health policy, and Zeinab Bakhiet, a research project manager.1 Other work has examined balancing protection of human life with safeguarding economic well-being. “The Institute also analyzes issues beyond just energy and health, such as presidential elections, public finance, entrepreneurship and economic growth, US–Mexico relations, the Middle East, and China,” Ambassador Djerejian said. “Houston’s rich demographic and cultural diversity underscores the Institute’s mission of producing research with local, national, and global relevance.”

LEARNING FROM THE BEST

Its Center for Energy Studies ranked first in its class.

The Baker Institute’s health and life science researchers benefit from working across the street from the Texas Medical Center, or TMC, one of the world’s largest districts of university research, hospitals, and related healthcare.

Fellows and scholars at the Institute’s Center for Health and Biosciences have produced research into various ways

The Greater Houston Partnership similarly leaned on TMC in setting up its Work Safe Program, a

WHY TEXAS?

set of principles its nearly 1,100 member companies could follow for reducing risk when Texas reopened in the spring of 2020. The Partnership, which encompasses 12 counties, was working last September with 55 to 60 chambers of commerce and related organizations on various strategies for initiatives at the statewide level, according to Susan Davenport, Senior Vice President and Chief Economic Development Officer. “It’s everything we’re undertaking,” Davenport said at the YTexas Summit. “We’re bringing that broad piece together, working on it in unison and making it create a stronger outcome on all fronts when we pull all these pieces together.” One of the Partnership’s initiatives—moving the region’s energy industry from fossil fuels like oil to renewable sources—took a step forward in June 2020, when the climate-technology incubator Greentown Labs announced plans to open a Houston location this spring. “Houston alone has 130 solar and wind companies,” says Dr. Emily Reichert, Greentown’s CEO. “It has an ambitious climate action

plan to be carbon neutral by 2050, actually the same as Boston’s [near the incubator’s headquarters]. By opening Greentown Houston, we aim to build a bridge between Boston and Houston by having the brightest minds in engineering and business working together on our shared global climate challenge.”

MEETING THOSE WHO DISAGREE

Though partisanship has been sharp nationally in recent years, Houston area residents are part of efforts to open lines of communication between people with different viewpoints statewide. One avenue for that is the Texas Lyceum, a nonprofit leadership forum where people from across the Lone Star State gather to discuss issues like housing, immigration, and the environment. The group’s conferences lead to widely cited nonpartisan polls and, in conjunction with state universities, policy whitepapers. “You can come from completely opposite viewpoints on a topic, have a heated discussion and disagree without being disagreeable,” says Sanjay Ramabhadran, Chairman and 2019 President of the Texas Lyceum. “You can argue about it all evening, all night, and all

early morning long. That’s where those relationships are formed.” One story circulated among Texas Lyceum alumni is of US Senator Ted Cruz playing dominoes or poker until the wee hours of the morning while discussing the conference’s topic, according to Ramabhadran, who is also a Founding Principal at Houston’s VERSA Infrastructure. The Lyceum’s 2021 President, Castlen Kennedy, remembers chatting at one conference with an African American woman about their respective experiences as parents of little boys. “She shared with me some of her fears, concerns, and challenges,” said Kennedy, Vice President of Corporate Communications and Public Affairs at Apache Corporation. “And it was a moment where I connected with somebody, where I understood a perspective that I didn’t understand before.”

AHEAD: MORE RESTAURANTS, MARKETING TO THE LATINX COMMUNITY

As difficult as 2020 was, Houston residents are meeting the future with their trademark optimism. Chris Shepherd of Underbelly Hospitality said in an October

interview that he was making progress toward getting his company’s meals available through grocery stores. He has also installed a catering kitchen. And in keeping with Underbelly’s tradition of running completely different types of restaurants, he believes he will have 10 locations by 2030, with each concept pushing the others to be better. Jamey Rootes, President of the Houston Texans, was also optimistic about his organization’s future—and looking forward to reaching out to Houston’s diverse consumer base. While the Texans have sold out every home game since their 2002 inception, Rootes and company will be seeking ways to expand their reach to the Latinx market, which in 2018 made up 37.6 percent of the metro’s population. “We have always had a robust platform, including television, radio, digital, social media, and in-person outreach, to engage the Latinx community and their love of sports,” he said. “We hope additional exposure to US football will allow them to express that passion for the local team.” Quianta Moore, “The Impact of COVID-19 on Vulnerable Families,” Rice University’s Baker Institute for Public Policy—Research Library, https://www.bakerinstitute. org/research/impact-covid-19vulnerable-families.

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WHY TEXAS?

Texas CEO Magazine Q1 2021

WHY TEXAS?

HR for what’s next You were built for times like this. And so was Insperity®. Working together with relentless perseverance and the right HR strategies in place, we can overcome any challenge and navigate a clear path forward. FULL-SERVICE HR | EMPLOYEE BENEFITS | HR TECHNOLOGY insperity.com | 800.465.3800

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WHY TEXAS?

SAN ANTONIO

COMMERCE

Preparing for the Next Act If you’re San Antonio, a recession is when companies, government, and academia prepare for how they will look tomorrow. Even as COVID-19 put a damper on the national economy late last year, major industries in San Antonio were laying the groundwork for the next version of the region’s economy. Take the defense sector. The University of Texas at San Antonio was slated in the fall to break ground on a $90 million facility to house its School of Data Science and the National Security Collaboration Center, or NSCC. Scheduled to open in 2022 on a property a bit east of UTSA’s downtown campus, the building will include 72,000 square feet of research space where partners in government, universities, and private industry can tackle challenges in cybersecurity. Meanwhile, Sandia National Laboratories recently moved a division from Albuquerque, New Mexico, to San Antonio to support the Sixteenth Air Force (Air Forces Cyber) at its headquarters at Joint Base San Antonio–Lackland, according to Guy Walsh, a retired Air Force Brigadier General who is now the NSCC’s Executive Director. The Sixteenth Air Force handles cyber warfare jobs like intelligence, surveillance, and reconnaissance.

Texas CEO Magazine Q1 2021

resulted in buyouts among The Defense Department has businesses in the “upstream” also chosen Joint Base San area of the energy industry, Antonio to lead testing for the meaning those that drill for next four years in two areas of 5G, or fifth-generation mobile raw oil and natural gas. networks, Walsh says. “One “We’ve seen a lot of of them is 5G cybersecurity. consolidation on the upstream That is being led by the Air side,” says Mike Force. The Army is leading the second part, which is Howard, San 5G integration into health Antonio–based and telemedicine. Remote Chairman and robotics will be able to perform CEO of Howard surgery or emergency Energy Partners, casualty care on the The good news a supplier of battlefield. That will all is that Texas pipeline and be enabled by 5G.” refinery services

FORWARDLOOKING MAINTENANCE

remains a strong place for upstream firms to do business.

To be sure, the COVID-induced downturn will take time to put in the rearview mirror.

—Mike Howard

“The US Bureau of Labor Statistics reported the unemployment rate for Texas was 8 percent in July 2020, rebounding from the state’s historical high of 13.5 percent in April 2020,” said Ashley Gossen, Vice President of Business Development at the San Antonio Economic Development Foundation, at the YTexas State of Business Summit. “For context,” she added, “the state’s historical low was 3.4 percent in June 2019.” The abrupt drop in vehicle use that COVID brought

to the energy industry. “There are not as many companies out there because of this.

“The good news is that Texas remains a strong place for upstream firms to do business,” Howard says. And while oil and gas companies that use the Port of Corpus Christi may have had a difficult 2020, the port is spending “a lot of money” on additional maintenance and improvements on its infrastructure, according to its CEO, Sean Strawbridge. “We’ve had a very good year. We’ve got a strong balance sheet,” he said at the Summit. “We want those customers that have been with us a long time to feel good when they write their check to us, that they’re getting value for their money.”

WHY TEXAS?

NEW WAYS TO HARVEST ENERGY Though abundant natural gas keeps electricity prices reasonable statewide, electric and natural gas utilities are looking to develop new ways of harvesting renewable sources like wind and solar. “We have introduced a new request for information and asked companies worldwide to think about bringing energy solutions to San Antonio and Texas,” says Paula Gold-Williams, President and CEO of CPS Energy (and a 2020 Texas

CEO Magazine Exceptional Leadership honoree). CPS, the nation’s largest municipally owned energy utility, received more than 200 responses, she notes.

a battery. And then you’ll find all kinds of stuff in between.” In Seguin, a city about 30 minutes east of San Antonio, building an economic base from manufacturing companies paid off when COVID hit.

“This is a place where you can do a lot of things built on the foundation of proven technology around natural gas,” she said. “We have solar and more investments to come in solar. We have batteries that are beginning to About one proliferate all over in three jobs the grid . . . where here are in you’re combining a manufacturing. generation source like —Josh Schneuker a solar system with

“About one in three jobs here are in manufacturing,” says Josh Schneuker, Director of Economic Development and Executive Director at the Seguin

Economic Development Corporation. “It’s helped keep our economy open, especially in these trying times.” Last year, the city council approved $250,000 from a utility fund to be used as small business grants for smaller firms that weren’t able to get loans through the federal Paycheck Protection Program. “We tried to leverage as much money as a smaller community can out of their budget,” Schneuker says. “Just to help keep them open and give them that lifeline was something I’ll probably never forget.” TexasCEOMagazine.com

WHY TEXAS?

SAN ANTONIO

COMMUNITY

New Ways to Give the Young a Better Chance From community college tuition to employment, San Antonio is removing obstacles that might otherwise interfere with kids’ futures. It’s one thing to talk about improving young people’s chances of success. It’s another thing for a community to do something about it, like the San Antonio metro area is. Take AlamoPROMISE, an effort that Alamo Colleges District and partners launched in fall 2019 to remove financial barriers to college for all graduating high school students in Bexar County by providing community college tuition and mandatory fees for all eligible students. “It is our moonshot to end generational poverty through education,” says Stephanie Vasquez, Chief Program Officer at AlamoPROMISE. The goal is to raise the overall college-going rate from roughly 49 percent to 70 percent in five years, she said. “We’re working with 11 independent school districts, 25 phase-one schools, and about 9,500 students we’ve been targeting in our first year,” she said. “We’re on

Texas CEO Magazine Q1 2021

track to meet our enrollment target of 3,000 Promise Scholars this fall [of 2020] in the middle of a pandemic.” While the virus largely prevented in-person internships, companies like San Antonio’s CPS Energy have done the process virtually. The municipally owned power utility has had its executives connect with the students through technology. “We’ve got to continue to keep that outreach going no matter what challenges we’re having, because big gaps in investing in students right now will cause even more problems and backlogs in the future,” says CPS Energy CEO Paula Gold-Williams.

A DIFFERENT WAY TO USE A MUSEUM When an independent authority redeveloped the old Kelly Air Force Base, it turned an old chapel on the campus into a museum whose mission includes matching young people with employers and educational opportunities.

In a little more and Boeing, all the airplanes than two and a here on the property.” half years, the While big corporate names San Antonio are plentiful on the campus, Museum of it has also incubated Science and fledgling Technology has done that companies pairing with 40,000-plus building youngsters, according to Jim cutting-edge Perschbach, President and technologies. CEO of Port San Antonio, the redevelopment The region’s authority for The startup embrace of the 1,900-acre scene in Texas emerging former base. today looks businesses is something nothing like Atop that, the property that’s happened it did when I statewide, has created an Innovation Center that moved here according to includes a research14 years ago. Iris Gonzalez, and-development —Iris Gonzalez founder of lab and a 2,500Startups San seat auditorium. Antonio, a news outlet. “The goal is to bring in hundreds of thousands of people and do it in a Disneystyle model,” Perschbach says. “It’s like the Epcot Center monorail. Every young person who comes through that facility has to drive through on their bus and see everything— the big buildings with Northrop and Lockheed

More than a decade ago, innovation districts largely did not exist in the state. “Startups and people weren’t talking in those terms,” Gonzalez said at the Summit. “The startup scene in Texas today looks nothing like it did when I moved here 14 years ago.”

WHY TEXAS?

TexasCEOMagazine.com

WHY TEXAS?

SAN ANTONIO

CULTURE

Reaching Across an Aisle San Antonio is about building relationships, even when big-picture challenges cause much of the world to look inward. It’s easy to adopt an inward focus when challenging times hit. But even as resurgent COVID-19 was holding back the national economy in late 2020, San Antonio was thinking about building bridges with others. “The game is changing when we think about regionalism, and we have room for improvement,” said The game is Jenna Saucedochanging for Herrera, us when we President and think about CEO of the San Antonio Economic regionalism, Development but we’ve got a Foundation, lot of room for at the YTexas improvement. Summit. “Our area is partnering —Jenna more formally Saucedo-Herrera with our different regional allies, strengthening our value proposition.” Those partnerships also extend outside the state to places like Monterrey, Mexico, she added. “I think there’s an opportunity to capitalize on a lot of the inbound migration to our great state and to better partner on some of the larger projects and opportunities that we’re all seeking,” she said.

Texas CEO Magazine Q1 2021

That spirit is alive in the business community with people like Laura Dixon, Head of External Relations for Spurs Sports & Entertainment, the parent company of professional teams including the city’s NBA franchise. Dixon was 2020 President of Texas Lyceum, a nonprofit leadership organization that brings people of different perspectives together to discuss significant issues across the state. “Sometimes it can get heated, but there’s always a hospitality suite at dinner,” she says. “You’re breaking bread, you’re enjoying a good glass of wine or beer, and you’re building relationships.” She recalled seeing the mayors of San Antonio and Lubbock discussing housing in their respective communities at a recent Lyceum conference. “You’ll see the mayors leave together and become friends,” she said. “They may not have had another reason to have that conversation or debate in the past.”

WHY TEXAS?

TexasCEOMagazine.com

WHY TEXAS?

Jeff Bounds is a contributing editor at YTexas who interviews member CEOs about their love of doing business in the Lone Star State. Bounds’ journalism has appeared in publications like the Dallas Morning News and Houston Chronicle and has been cited in academic studies and appellate court briefs. As a staff writer at the Dallas Business Journal, Bounds created an annual directory of business financing sources that generated yearly revenue in the low five figures. Bounds has a master’s degree in journalism from Northwestern University.

Born and raised in New York, Ed Curtis relocated to Dallas, Texas, at the age of 25 and has happily lived in the Lone Star State ever since. Over more than 20 years as a Texas commercial banking executive, Curtis witnessed an increasing number of clientele relocating their businesses into Texas. As a result, he exited the banking industry to form YTexas. In 2012, Curtis traveled the world with Governor Rick Perry and his Office of Economic Development, assisting in the recruitment of companies interested in relocating or expanding their businesses into Texas. In 2013, he founded and trademarked YTexas, an elite business network that helps support, promote, and connect companies that are relocating and expanding into the Lone Star State. YTexas has become a turnkey, go-to resource for the most current insider information about Texas’ community, commerce, and culture.

Texas CEO Magazine Q1 2021

RēLO

DIRECTORY 2020 From tech titans to an athletic conference to a Korean fried chicken restaurant chain, a whole host of excellent businesses announced they were moving to Texas in 2020. This directory features 23 of them—see the full list at YTexas. com/Relo-Tracker. Let’s keep making Texas the best place in the country to do business, and we’ll see even more top companies like this heading to our great state.

TexasCEOMagazine.com

RēLO DIRECTORY 2020

2020 RELOCATION

ANNOUNCEMENTS

TO VIEW OUR ENTIRE RēLO TRACKER, VISIT YTEXAS.COM/RELO-TRACKER

AMERICAN ATHLETIC CONFERENCE

BANORTE SECURITIES

FROM: PROVIDENCE, RI TO: IRVING

FROM: NEW YORK, NY TO: HOUSTON

Athletic conference comprising 12 schools, including the University of Houston and Southern Methodist University.

Offers brokerage and advisory services that provide relationship-driven solutions to protect, preserve, and grow your wealth.

BONCHON

BUFF CITY SOAP

CBRE

FROM: NEW YORK, NY TO: DALLAS

FROM: MEMPHIS, TN TO: DALLAS

FROM: LOS ANGELES, CA TO: DALLAS

Casual chain serving cooked-to-order Korean fried chicken, plus other traditional eats.

Makes handcrafted, plant-based bath and body products.

Full-service commercial real estate firm providing solutions to property owners, investors, and occupiers.

Texas CEO Magazine Q1 2021

RÄ&#x201C;LO DIRECTORY 2020

DZS

EATERY ESSENTIALS

FILETRAIL

FROM: OAKLAND, CA TO: PLANO

FROM: SANDY, UT TO: DALLAS

FROM: SAN JOSE, CA TO: AUSTIN

Provider of telecommunications networking equipment.

Focused on providing high-quality, competitively priced paper and plastic food service disposables.

Enables IT, risk, and information governance (IG) professionals in law firms and corporate legal departments to transform records management and automate compliance with IG policies more effectively.

GREAT LAKES DREDGE & DOCK

HEWLETT PACKARD ENTERPRISE

INCORA

FROM: CHICAGO, IL TO: HOUSTON

FROM: SAN JOSE, CA TO: HOUSTON

FROM: VALENCIA, CA TO: FORT WORTH

Largest provider of dredging services in the United States.

Supplies information-technology products like servers and supercomputers, along with related technical and financial services.

Provides innovative supply chain solutions to the aerospace, defense, manufacturing, pharmaceutical, and other industries.

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RēLO DIRECTORY 2020

KVP INTERNATIONAL

OPTYM

ORACLE

FROM: CHINO, CA TO: MCKINNEY

FROM: GAINESVILLE, FL TO: COPPELL

FROM: REDWOOD SHORES, CA TO: AUSTIN

Industry leader in animal wellness solutions—from e-collars to orthopedic braces to surgical supplies.

Develops software for automating the best decisions, primarily in transportation, from running airports to delivering packages. Its technology also improves maintenance scheduling for wind turbines.

Provides technology products and services, including the world’s most popular enterprise database software and Java, the computer industry’s most widely used software development language.

ORIGINCLEAR

O.W. LEE

PABST BREWING COMPANY

FROM: LOS ANGELES, CA TO: MCKINNEY

FROM: ONTARIO, CA TO: COMFORT

FROM: LOS ANGELES, CA TO: SAN ANTONIO

Creates and delivers breakthrough water clean-up technologies with active partnerships, joint ventures, and licensing programs.

Dedicated for over 65 years to the design and production of fine, handcrafted casual furniture.

Brewing company founded in 1844 by Jacob Best; named after Frederick Pabst in 1889.

Texas CEO Magazine Q1 2021

RēLO DIRECTORY 2020

PLAYPOWER

SALEEN PERFORMANCE PARTS

SLYNC.IO

FROM: HUNTERSVILLE, NC TO: IRVING

FROM: CORONA, CA TO: ROUND ROCK

FROM: SAN FRANCISCO, CA TO: SOUTHLAKE

The world’s largest commercial playground and recreational equipment manufacturer.

Manufacturer of high-end lifestyle performance vehicles, technical performance parts, and lifestyle accessories and apparel.

Provides a Logistics Orchestration® platform as a service, revolutionizing multi-party interaction, automation, and collaboration.

SONIM TECHNOLOGIES

SPIRE HOSPITALITY

VIO SECURITY

FROM: SAN MATEO, CA TO: AUSTIN

FROM: DEERFIELD, IL TO: IRVING

FROM: WOODLAND HILLS, CA TO: IRVING

Manufacturer of ultra-rugged smartphones.

Manages a diverse portfolio of full-service hotels and resorts and select-service hotels, including both unique, nonbranded properties and celebrated brand families, such as Marriott®, Hilton®, and IHG®.

Protects homes with state-of-the-art cameras, door and window sensors, smoke alarms, and more.

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SPONSORS YTexas is an elite business network for companies relocating, growing, and expanding into the Lone Star State. Our corporate partners are stakeholders who exchange information, process issues, and foster long-term, mutually beneficial relationships that help culturally integrate companies entering Texas.

BETH GARVEY, PRESIDENT & CEO

G. BRINT RYAN, CHAIRMAN & CEO

PAUL J. SARVADI, CHAIRMAN & CEO

Texas CEO Magazine Q1 2021

RICHARD GERGASKO, PRESIDENT & CEO

CORPORATE AMBASSADORS 2THEDGE

CPS ENERGY

MAPSPEOPLE

SAN ANTONIO SPURS

Ty Harmon, CEO & Chief of Technology Reconnaissance

Paula Gold-Williams, President & CEO

Jonas Berntsen, President & CPO

Tim Salier, Vice President of Franchise Business Operations

Consulting

AMERICAN AIRLINES CENTER Sports & Entertainment

Andrew Silverman, CRO

ANDY RODDICK FOUNDATION Nonprofit

Richard Tagle, CEO

AQUILA COMMERCIAL

Commercial Real Estate

Jay Lamy, Principal & Cofounder

ARMY FUTURES COMMAND Military

Energy

DALLAS BEHAVIORAL HEALTHCARE HOSPITAL Healthcare

TJ O’Reilly, CEO

DALLAS BUSINESS JOURNAL Publications

Ollie Chandhok, Market President & Publisher

DALLAS MAVERICKS

Sports & Entertainment

Donnie Nelson, President, BB Operations

Software

NEULINE HEALTH Healthcare

SEGUIN ECONOMIC DEVELOPMENT CORPORATION

NORDAN LICENSING

Joshua Schneuker, Executive Director

Parrish Nordan, Founder

SIGNATURE SYSTEMS

NORTH TEXAS COMMISSION

Jeff Condino, President

Frank Gray, CEO Legal Services; IP

Economic Development

OTTOBOCK NORTH AMERICA

Hugh Forrest, Chief Programming Officer

Healthcare Manufacturing

Brad Ruhl, Managing Director

ARTCOM ASSOCIATES

Dale Petroskey, President & CEO

PFLUGERVILLE ECONOMIC DEVELOPMENT CORPORATION

DALLAS STARS

Amy Madison, Executive Director

Lori Ann Flores, President

AUSTIN BUSINESS JOURNAL Publications

Heather Ladage, Market President & Publisher

AUSTIN TECHNOLOGY COUNCIL Association

Amber Gunst, CEO

BAKER TILLY

Accounting Services

Gary Boyd, Managing Partner

BARNES & THORNBURG Legal Services

John Willding, Partner

BAYLOR SCOTT & WHITE HEALTH Healthcare

Jim Hinton, CEO

BENCHMARK MORTGAGE Mortgage Lending

Brian Mckinney, CEO

BGSF

Recruiting & Staffing

Beth Garvey, President & CEO

BRIGGS FREEMAN SOTHEBY’S INTERNATIONAL REALTY Residential Real Estate

Robbie Briggs, President & CEO

BROWN BOOKS PUBLISHING GROUP

Manufacturing

SOUTH BY SOUTHWEST (SXSW)

DALLAS REGIONAL CHAMBER

Communications Solutions

Economic Development

Chris Wallace, President & CEO

Mike Murray, Commanding General

Economic Development

Sports & Entertainment

Economic Development

Entertainment

TEXAS CENTRAL Transportation

Carlos Aguilar, President & CEO

Brad Alberts, President & CEO

PGA OF AMERICA

TEXAS ECONOMIC DEVELOPMENT CORPORATION

D MAGAZINE

Seth Waugh, CEO

Robert Allen, President & CEO

Sports & Entertainment

Publications

Sports & Entertainment

Port

TEXAS MUTUAL INSURANCE COMPANY

PORT SAN ANTONIO

Richard Gergasko, President & CEO

Gillea Allison, President

PORT OF CORPUS CHRISTI

DHD FILMS

Sean Strawbridge, CEO

Video Production

Hussain Manjee, President & Chief Success Officer

FIREFLY AEROSPACE Aerospace & Aviation

Tom Markusic, CEO

FURNITURE MARKETING GROUP Office Furniture & Design

Greg Almond, President

Economic Development

Commercial Real Estate

Workers’ Compensation Insurance

Jim Perschbach, President & CEO

THE MENTOR METHOD

PROWESS PROJECT

Janice Omadeke, Founder & CEO

Staffing & Recruiting

Corporate Training

Ashley Connell, Founder & CEO

TIFF’S TREATS

Q DEVELOPMENT PARTNERS

Leon & Tiffany Chen, Cofounders

Consulting

Food & Beverage

Jeremiah Quarles, CEO

TIP STRATEGIES

Marketing Services

QUANTUM MATERIALS CORP

Tracye McDaniel, President

GRAVELY

Legal Services

Stephen Squires, Founder, President & CEO

HIREBETTER

R2G CLOUD COMMUNICATIONS

Cisco Sacasa, CEO

Todd Short, Founder & President

GORILLA CORPORATION Carlo Tortora Brayda, CEO

Marc Gravely, Managing Partner Executive Recruiting

Manufacturing; Nanotechnology

Information Technology

HKS

RECKON POINT

Dan Noble, President & CEO

Gabe Garza, CEO

Architecture & Design

Technology; Robotics

HUMANA

REGIONS BANK

Brock Purslow, Market Vice President

Marcus Angle, Commercial Banking District Director

Banking

Consulting

TOPGOLF

Sports & Entertainment

Dolf Berle, CEO

TOWER COMMERCIAL

Commercial Real Estate

Chris Oddo, Principal

TOYOTA MOTOR NORTH AMERICA

Auto Manufacturing

Tetsuo “Ted” Ogawa, President & CEO

TRANSPLACE

Book Publishing

Insurance

CEDAR PARK ECONOMIC DEVELOPMENT

INSPERITY

RYAN, LLC

U.S. CONCRETE

Paul Sarvadi, Chairman & CEO

G. Brint Ryan, Chairman and CEO

Ronnie Pruitt, CEO

Milli Brown, Founder & CEO

Economic Development

Ben White, Director

CENDEA

Executive Recruiting

Wade Allen, President & CEO

COMM-FIT

Fitness Facility Solutions

Seth Gordon, CEO

CORGAN

Architecture & Design

Lindsay Wilson, President

Human Resources

JACOBS

Construction, Engineering, Technical Services

Steve Demetriou, Chairman & CEO

KHORUS

Tax Services & Consulting

SAN ANTONIO CHAMBER OF COMMERCE Economic Development

Richard Perez, President & CEO

Joel Trammell, CEO

SAN ANTONIO ECONOMIC DEVELOPMENT FOUNDATION

KUBOTA TRACTOR CORPORATION

Jenna Saucedo-Herrera, President & CEO

Software

Heavy Equipment Manufacturing

Haruyuki Yoshida, President & CEO

Economic Development

Logistics Software

Frank McGuigan, CEO Building Materials

UNIVERSITY OF NORTH TEXAS AT DALLAS

Education

Bob Mong, President

VIANOVO

Public Relations

Eddie Reeves, Partner

VOLTABOX OF NORTH AMERICA

Manufacturing; Battery

Tom Ortman, Vice President TexasCEOMagazine.com

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THE

EXODUS TO TEXAS WHAT GOES INTO CORPORATE RELOCATION DECISIONS, AND WHY SO MANY COMPANIES CHOOSE THE LONE STAR STATE

COVID-19 slowed down many aspects of the economy—but not the corporate exodus to Texas. For years, companies big and small have decided to make a new home in Texas, including recent announcements from heavy hitters like Hewlett Packard Enterprise (moving to the Houston area in 2022), Oracle (relocating its headquarters to Austin), and Tesla (with Elon Musk moving to Texas to be closer to a new factory in Austin). To understand Texas’ ongoing corporate appeal, I spoke with Maher Maso, who has been involved in company relocations and expansions from both sides of the table, as mayor of Frisco from 2008 to 2017 and currently as principal at Ryan, LLC, where he helps negotiate and arrange major relocation decisions for the firmʼs clients, which include a majority of the Fortune 500. In the following conversation, Maso sheds light on the top factors that companies look at when they consider a move—and the common mistakes leaders should avoid. —Ed Curtis, CEO, YTexas

TexasCEOMagazine.com

And finally, companies look at the incentives available to them. Incentive negotiation is a key business vertical at Ryan. While incentives are not usually at the top of a company’s site selection criteria, those incentives often allow companies to add more jobs or make the move more attractive overall. If I go to the website of a city or of a governor’s office, they usually have a list of those incentives—tax abatements, credits, and so on. What should CEOs know about these types of incentives? First, I would say that not all incentives appear on those websites. The more creative cities and states have tools that may not be listed, especially in Texas. Here we have “home rule” cities with a lot of autonomy. Because they may not receive much funding from the state, cities may offer unique, local, creative tools. That means it’s more of a dialogue; these cities may want to know more about your company before sharing all of the incentives they offer. For example, how many jobs will you be creating? What’s the average salary? What’s the company’s investment? Is your company in the business sector they’re interested in? There are many incentive programs CEOs should be aware of when considering relocating to Texas. If a company doesn’t already have a presence here, the Texas Enterprise Fund can come into play on top of local incentive packages.

As a leader in the site-selection business, have you seen COVID change how companies think about relocations and expansions? Yes. Many companies are having to think differently and more strategically than they have in the past. Before, many companies didn’t want to rock the boat or make major changes while they had strong revenue. Well, that boat is sitting on dry land for many now, so a lot of companies are rethinking things, including where they are located. For many companies, this has been a time to take a breath and consider the major strategic changes that need to take place. When a company decides to relocate or expand into a new area, what are the usual trigger points in the decision? And why do so many end up choosing Texas? When companies look to relocate their headquarters, the number-one thing they look at is the workforce. Without a workforce relevant to their needs—which also ties into the education systems—they will not be successful in a community. They also look at transportation and how their employees and customers get around. Of course, they look too at the tax situation and the local government. Is the tax situation fair, and do government partners support businesses, or do they take them for granted and create obstacles? Every company expects to pay taxes; they too rely on the services that local, state, and federal governments provide, such as public safety, roads, quality of life, and other things a good workforce values. But they also expect the taxes to be fair. So, the site selection process analyzes the fees, taxes, and other burdens associated with any specific location. Our goal at Ryan is to have companies pay their fair share of taxes and not a penny more. Texas has done well because there is no state income or corporate income tax and less regulation, which promotes growth for all. 54

Texas CEO Magazine Q1 2021

If a company is already located in Texas, the Texas Enterprise Zone Fund can be a very attractive program that rewards employers for being in Texas as well as for hiring people in distressed areas. It’s one of the best-kept secrets. For companies with 200+ employees, the Texas Enterprise Zone Fund can help a company receive state sales tax refunds over many years, based on how much they are spending and paying in sales tax. In other words, if you’re adding a new division or renovating a building and buying new equipment, the sales tax you pay could be refunded to you. That program has been great for retaining companies in Texas and helping them continue to create jobs. Historic tax credits is another program that is very strong in Texas and in the country. It allows companies that are renovating historic places and landmarks to qualify for credits. At the city level, the number of programs is extensive. For example, some Texas cities have adopted what is called 4A/4B, which creates economic development funding through sales tax. It’s very important to understand the city you are considering, and which programs they may have on offer. Ryan has the resources to help uncover these opportunities. Plus, there are also federal programs, such as new markets tax credits. This gives companies an opportunity to get federal tax credits for renovations or relocations in certain areas or census tracts. And finally, some companies forget about R&D credits. People think of R&D as high technology, but you could be researching and developing lots of types of things—a new type of fertilizer for a tree farm could qualify, for example. At what point in the process do you think it’s best to begin having those discussions with government partners? It’s best to look internally first and figure out what the company’s goals are before announcing

any moves or starting any dialogues. Are you trying to improve the workforce aspects of your company? Are you trying to create new products or services? How many employees are you bringing or hiring? What’s your five-year plan? What’s your investment? Once you can tell that story, then you can seek out the best location for meeting those goals and have those dialogues about the programs available to you. The mistake I see sometimes is the mindset of “Let’s go after those incentives” before the company has a clear idea of what it’s trying to do. Every city feels it has a duty to create jobs, to give its residents an opportunity to earn a living and provide for their families, so they’ll be willing to work with you if you can tell them what you plan to do. I encourage my clients to think about them as partnerships, because they are—you’re not asking for a handout. The best kind of incentive is one that gives the community what it’s looking for—measurable job creation, return on investment, etc.—and that gives the company what it’s looking for too: the right workforce, a lower cost of doing business, etc. When we put these deals together, we know what companies and local governments both want, and there’s always a way to create win-win and public/private partnerships that benefit everyone. I understand that Tesla isn’t getting any state incentives for relocating to Texas, but that they got a lot of local and city incentives. But if you think about the long-term impact of Tesla to that area of the state, it’s going to be huge. Right. As I mentioned, the incentives on their own are not the primary reason companies move or build new facilities. It is part of a puzzle, and a company like Tesla will likely look at the tax savings in Texas as a long-term, forever incentive. And the same with the workforce available here; they will spend less on turnover and less on training. They are probably receiving workforce training credits, with local community colleges and the state providing them funding to do specialized training their employees may need. These relocation decisions are always a combination of several factors. Sometimes the large ones may not seem to involve a lot of incentives, but that’s just if you look at the cash paid to the company. It’s so much more than that. It’s local government permitting, taxes, transportation, education, and workforce. Elon Musk probably looked at the move to Texas as a lucrative financial move because of all those things. The area Tesla is developing was a vacant piece of land that earned virtually nothing in tax revenue compared to what it will generate with Tesla there, plus the employees buying homes there and of course paying sales tax. Those seem like things the local community will appreciate. As a previous mayor, I can tell you that local government is the best government. They’re building the local roads; they’re putting in sidewalks, hike-and-bike trails, parks, libraries; they’re taking care of public safety. Even though a company may get abatements, they’re still paying taxes in the community. And when you pay local taxes, 100 percent of them stay there—they get invested in the community, providing services you see every day. Garbage collections, emergency services, the school system that your employees may be drawn to for their children, and that’s educating your next generation of employees.

It’s interesting, too, because the community has to vote to approve giving a certain percentage of sales tax revenue to economic development. Absolutely. As you mentioned, the community is typically behind these incentives because the tools available to the city have generally been voted on by the residents. In my term as mayor of Frisco, we were very successful because the taxpayers gave us the tools needed to attract the Dallas Cowboys World Headquarters, the PGA, and billions of dollars of corporate offices. Those tools weren’t something that we made up in local government; they were supported by the residents. The community funded the direction it wanted to go. It’s rare that a company will come into a community where they’re not wanted. What is the process like at Ryan when you’re helping a company assess different locations? Because there are so many factors, due diligence on site selection can be complicated. It’s not just about local taxes. It’s not just about the workforce. It’s holistic. Are we wanted by the community? Do we have a chance to prosper longterm here? Will we partner with the city? Those things have to be looked into and evaluated, because there can be hidden dangers. For example, if you’re a company that may need public safety assistance—fire department, medics, hazmat, etc.—it’s important to assess those aspects. What’s the ISO [Insurance Services Office] rating? What’s the fire department’s response time? You may have gotten the best taxes and a great workforce, but if the fire trucks don’t show up for 30 minutes when you need them, that could be a significant financial hit to you. What mistakes should companies avoid if they’re thinking about relocating to Texas or anywhere else? I would say to you that when it comes to site selection, you can never start too early. The number-one mistake I see made in the process is that interaction with local government happens too late in the process. You can start doing that early, even if you’re not sure where you’re going. As I said, you will want to know the story you’re telling and the goals you want to achieve beforehand. If you’re thinking of moving your headquarters in two years from now, start now. At Ryan, we’re sometimes given two weeks to pick a location for a company because they’ve already narrowed it down to two or three cities. But you’re not going to maximize the programs available to you that way. If you’re handling the relocation internally, get your team together early. If you’re working with a site selection company like Ryan, make us part of that team early on. We’ll give you things to consider and steer you at a very early stage. Starting early makes for a much easier and smoother process, and we can really create some pretty interesting public/private partnerships if we have the time. Another mistake I see is making promises you can’t deliver on. That creates bad blood between the community and a company long-term. You have to be careful, because there’s a compliance aspect of these relocations, and I see many companies fail to hold up their end of the bargain. At Ryan, we handle compliance because, out of fairness to the community, we want to show that the client has accomplished what they said they would. Again, you have to keep that ongoing dialogue so there’s no surprises. Many times, a company makes a move and then doesn’t engage in the community, and then we’re called to put out the fires. That’s not nearly as much fun as putting the deals together on the front end. TexasCEOMagazine.com

FAKE IT TILL YOU MAKE IT? Not for CEOs. Joel Trammell

Recently I’ve heard a lot of people in the startup community discussing “fake it till you make it” for CEOs. I certainly understand how the concept started. Anyone with a lick of self-awareness recognizes that he or she is not fully qualified to be CEO on day one. There are so many things you can’t possibly know. So is the “fake it till you make it” approach the right answer? Unfortunately, I don’t think so.

WHY NOT FAKE IT UNTIL YOU MAKE IT? There are two words I most want my team members to use to describe me as CEO: authentic and transparent. If I am running around faking it, my team will see this. I will never establish the trust and credibility necessary for true leadership. This is also true with investors. As Gordon Daugherty writes elsewhere in this issue, to earn respect and credibility, you must understand the differences between “aspirations, exaggerations, and outright lies.”

LEARN THE JOB AND THE BUSINESS There are a couple of types of learning the CEO can prioritize. The first is a clear understanding of their role as CEO. This is the ultimate learn-on-the-job position. Few first-timers understand exactly what the CEO’s responsibilities are and how to spend their time. Start there: Talk to seasoned CEOs. Read what veterans of the role have to say about it. Even experienced CEOs need a refresher now and then, especially as fire drills compete for their time. Chief executives must also be continually learning about the business they lead. Being effective requires a deep understanding of the employees, customers, and shareholders as well as the product, market, and sales channels. This takes time. Build learning into your daily routine. In its simplest form, this can come from talking to your department heads, to customers, to the board, and to other stakeholders.

The truth is that almost no one is really qualified the day they take over as CEO of a company—even experienced chief executives. Yet if you can’t “fake it till you make it,” you also can’t run around saying, “I am clueless and shouldn’t be in this job.”

However, don’t go into these discussions assuming you have to be the smartest person in every room. Being a constant learner requires commitment and humility. This is especially true in this era of fast-moving technology innovation, evolving business models, and specialization. CEOs must absorb all they can to set the strategy and make good decisions, and let their experts do the jobs they were hired for in the first place.

So what is the right approach? It’s dealing effectively with the normal level of selfdoubt that any self-aware person has. I think the two most important traits to predict the success of new CEOs are: (1) how fast they can implement new learning and (2) their level of selfawareness. Here’s how to cultivate both.

I have found, though, that most CEOs spend too much time studying the details of their own businesses and not others. Otto von Bismarck famously said, “Any fool can learn from his mistakes. The wise man learns from the mistakes of others.” Good pilots review the accident reports of other pilots. Similarly, CEOs should spend significant

Texas CEO Magazine Q1 2021

time examining other businesses—even other industries—and integrate those learnings into their organizations.

BUILD SELF-AWARENESS Self-awareness skills are critical for CEOs. Self-awareness gives you the ability to observe the secondary effects of your actions, to understand and mitigate your areas of weakness, and to leverage your strengths appropriately. As CEOs, we have the only job in a company without a direct feedback mechanism, without someone assigned to provide guidance on how well we are doing the job. And we cannot expect that kind of feedback to come from other leaders or employees in the organization. But if we do not learn to see the truth about how we are doing as CEO, we suffer from isolation and a distorted sense of reality that some have called “CEO disease.” This means the CEO must proactively pursue self-awareness. This can come in several forms. One is writing a document about how you work best— mine is called “How to Be an Executive for Me”—and circulating it among your leadership team. Another is anonymous 360˚ feedback, which can surface truths you have previously been blind to. Yet another is simply asking your board of directors to rate how you are performing. These and more can help you know what your strengths and weaknesses are, so you can make the most of your talents and hire people to fill the gaps. • • • I will leave you with this one little secret: I have been doing this job for over 25 years, and most days I don’t feel like I have made it yet. It’s natural to feel that way. But don’t try to solve the problem by “faking it.”

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WHAT TO EXPECT IN

AUSTIN 2021 Thoughts from a Lobbyist A.J. Bingham

TexasCEOMagazine.com

Lobbyists are positioned at the intersection of business and policy, giving us a unique perspective on the question posed by this issue of Texas CEO Magazine: “Why Texas?” And in my case, as a lobbyist at the Austin-based Bingham Group, LLC, an even more apt question for me to answer might be: “Why Austin?” If your firm is relocating or expanding in Austin (or just continuing to do business here), what should you know about what’s up with the capital city in 2021? Well, let’s talk about it.

The Austin City Council

Let’s start with what’s going on with the Austin City Council. Beginning with its March 26, 2020, meeting, the Council has conducted its work virtually. City hall has been closed to the public due to COVID-19, and all boards and commissions have managed affairs virtually. This is not expected to change through at least Q3 of 2021, but even conservatively (and optimistically) mid-to-late Q4 is more likely. The fall 2020 City Council election season saw five races, with the dominant issues in the campaigns being homelessness (the easing/elimination of penalties for camping in place and panhandling) and police reform. In fact, one or both of these issues pushed two of the Council races into runoffs, which were decided on December 15. Those races were notable, as both featured Democraticleaning incumbents against GOP-affiliated challengers (Austin Council races are officially nonpartisan, but Austin and Travis County are firm Democratic strongholds). Ultimately, the two runoffs went different ways, with incumbent Alison Alter holding on to her seat and challenger Mackenzie Kelly earning a spot on the Council. This outcome will not impact 2021 Council policymaking, which is center-left progressive.

The Push for a “Strong Mayor” System

Austin’s business leaders should also be aware of a proposed change that will be decided in May 2021. Though not widely discussed, it would be one of the most significant shifts in Austin’s governance since voters approved the current 10–1 district system in 2012. There is currently a citizens’ petition drive (launched in July 2020) to shift Austin’s governing structure to a mayor-council system (i.e., a “strong mayor” system). As background, the City of Austin is currently run under a council-manager system, with power and authority to set policy resting with the City Council. The Council in turn hires a nonpartisan manager, who runs the city (including hiring and firing personnel). 58

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By adopting a mayor-council government, the mayor would take on a CEO role for the city and would be separate from the Council. The shift would also necessitate a new Council seat, as the mayor is currently considered a Council member and has an equal vote. If there are more than 20,000 valid signatures on the petition, City Council will be forced to either pass the ordinance as written or call a local election to let the voters decide. Should Austinites favor a strong mayor system, it would not go into effect until the next mayor is elected. This in itself is notable, as current Austin mayor Steve Adler is in the final two years of his second term (he was re-elected in 2018 and previously elected mayor in 2015), making the office all the more sought-after if executive authority is elevated.

Austin’s Road to Recovery

Economic recovery and the ongoing COVID-19 response will remain major issues in Austin in 2021. While Austin is known to be “last in, first out” concerning economic downturns, the impact of the pandemic on local and small businesses was dramatic, and continues to pose difficulties. Much of the fall of 2020 was spent crafting and finalizing economic recovery policy that we will see play out over this year. This included the city last September naming Veronica Briseño Chief Economic Recovery Officer (she was most recently Economic Development Director). Her role, then and now, will be leading cross-city department responses for recovery programming and funding opportunities for those impacted by COVID-19 in Austin. Some examples of this include the city’s Economic Recovery Framework, developed over seven months of stakeholder input; the $15 million Save Austin’s Vital Economic Sectors (SAVES) fund; Chapter 380 program modifications; and the Austin Economic Development Corporation (AEDC). The latter two should be of particular interest. Regarding the AEDC, its exact powers and functions will likely not be defined until later in Q1; however,

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RECOVERY

according to city documents, the corporation could help the city with development, acquisition, ownership, and operation of community development projects and affordable housing projects; promotion of employment and economic development; and promotion and maintenance of both for-profit and nonprofit creative and cultural venues. Overall, the AEDC could provide for greater flexibility and speed in making deals, as it would operate outside of the city’s regulatory framework (in addition to having its own board of directors and CEO). Another initiative I mentioned was modification to Chapter 380 agreements (so named after Chapter 380 of the Local Government Code), which authorize municipalities to offer incentives designed to promote economic development such as commercial and retail projects. Specifically, these agreements allow the city to offer loans and grants of city funds or services at little or no cost to promote state and local economic development and stimulate business and commercial activity. The city’s take would create a Recovery Lease Incentive (RLI) program. The RLI would in turn offer commercial property tax reimbursements to property owners in exchange for renegotiating leases with small businesses to address arrears and long-term affordability during recovery from the COVID-19 crisis. Thus, a participating property owner would be entitled to a City of Austin property tax reimbursement for the portion of property associated with the participating commercial lease. This reimbursement will be given following successful completion of contract terms, with lease documentation and verification by the tenant. Reimbursements will be available for one year, with potential for annual renewal. Of course, Austin is also advocating for federal relief, similar to the CARES Act. But with no certainty there, or from the state, the city presses on.

The Texas Legislature

While we already expect an active spring at city hall, 2021 also marks a legislative year in Texas. The state’s 150 state representatives and 31 state senators convened on Tuesday, January 12, for the beginning of the 87th Texas Legislature, despite the Capitol grounds having been closed to the public since last March. In whichever way or form, the state’s business will be done. The biggest change, beyond administrative and procedural shifts due to COVID-19, is new Texas House leadership. State Representative Dade Phelan (R-Beaumont) secured the necessary votes among his fellow House members (a mixture of Republican and Democratic support) to become speaker. Following the speaker’s election, House committee assignments and chair positions were assigned, and with that the assignment of filed legislation. While matters related to economic recovery, COVID-19 response, and local control will explicitly and implicitly come up, legislators have since October filed bills on a myriad of subjects related to their respective districts and to overall state policy. We see no reason not to expect a similar volume of bills to be filed over the legislative session, in the 5,000 to 7,000 range. What will and won’t be heard is a different matter. • • • There are many who have made the case for “Why Texas?” (much to California’s loss, it’s true). The overall favorable conditions in the state extend to its capital city. But when it comes to predicting the rest of 2021, our advice is to expect the unexpected, but be glad to be here (or wherever y’all are in Texas). A.J. Bingham is the founder and CEO of the Bingham Group, LLC, an Austin-based lobbying firm representing and advising clients on government affairs, public affairs, and procurement matters in the Austin metro and throughout Central Texas. He can be reached at aj@binghamgp.com. Find more information at binghamgp.com.

TexasCEOMagazine.com

IS MARIJUANA REFORM COMING TO TEXAS? Heather Fazio

Cannabis laws are changing quickly around the country, including in Texas. Hemp (cannabis with less than 0.3 percent THC1) is now legal nationwide. Thirtysix states allow safe and legal access to medical cannabis, defying federal law, and fifteen of those states have also legalized consumption for responsible adult use. With pressure mounting, Congress is closer than ever to repealing cannabis prohibition, a change that is long overdue. Legalization advocates in Texas have looked to the 2021 legislative session for hope of state-level reform as well. Before the session, several pro-legalization bills were filed. Even if this doesn’t turn out to be a year of big changes for cannabis in 60

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Texas, it’s useful to understand where we are right now—and how full legalization could offer tremendous benefits, not only for marijuana consumers but for the state’s overall economy.

fuel, and even building materials. Regulators have so far been reasonable and surprisingly receptive to input from stakeholders, including business owners, attorneys, and consumers.

Hemp: Fully legal in Texas

Smokable hemp: Still in limbo

Since 2014, when Congress created a pilot program to explore hemp farming, hemp products have grown in popularity. For one, Americans seem to have jumped headfirst into the CBD market. Hemp legalization was confirmed by Congress in 2018, when hemp was defined as cannabis with trace amounts of THC (<0.3 percent) and removed from the list of controlled substances. Subsequently, the Texas Department of Agriculture licensed hundreds of hemp farmers in 2019, and with seven microclimates in the state, some farmers could produce high-yield crops year-round.

However, one ongoing challenge comes with the state’s handling of “smokable hemp products.” According to the law, in-state manufacturing of hemp products intended for smoking (or vaping) is prohibited. The Texas Department of State Health Services is tasked with regulating consumable hemp products, and while establishing rules for retail sales, the department seems to have overstepped its authority, banning the in-state sales of these smokable products. A temporary injunction has been granted, keeping the state from enforcing this rule. A definitive determination will soon be made by the courts. Until then, any and all hemp products can be sold in Texas.

This emerging market includes cultivation, processing/manufacturing, and retail sales of hemp for cannabinoids, hemp seeds and grain, and fiber from the plant’s stock. Not only do consumers seem to love CBD oil, but hemp’s versatility creates tremendous opportunity within multiple industries, including textiles, bioplastics,

Medical cannabis: Legal . . . ish Despite the current progress on hemp, Texas is woefully behind most of the country when it comes to medical cannabis. Established in 2015

and expanded in 2019, the Texas Compassionate Use Program (T.CUP) allows only limited access to low-potency (<0.5 percent THC) cannabis. While an estimated 2 million people qualify for the program, fewer than 3,000 have registered after five years according to the Department of Public Safety. Low registration numbers are to be expected for such a newly established program, but there are a couple of other reasons so few patients chose to participate. First, T.CUP offers medicine that is only marginally better than hemp products, and the latter can be purchased over the counter or online at lower costs. Patients also are required to seek out a specialist who’s registered with the program and accepting new clients in order to gain access.

A LEGAL CANNABIS INDUSTRY IN TEXAS COULD CREATE 20,000 TO 40,000 JOBS AND SAVE TAXPAYERS MORE THAN $300 MILLION PER YEAR.

anywhere else in the country, and our market for medical cannabis remains one of the most restrictive. (Details about the rules, regulations, and licensing around T.CUP can be found on the DPS website: www.dps.texas.gov/rsd/CUP/index.htm.)

Adult use legalization: The future? Of course, many advocates call for the legalization of marijuana for recreational use by adults. In addition to the ethical and social justice arguments made by these advocates, there are multiple economic reasons to replace prohibition with a legal, regulated market. With approximately 1.5 million adults in Texas using cannabis on a monthly basis, it’s estimated that a legal market for the product could top $2.7 billion annually. According to a report recently

Many patients are also concerned about the implications of being a registered user of a federally illegal substance. Under current law, a patient participating in T.CUP would be barred from legally purchasing a firearm due to ATF restrictions. Parental rights could also be jeopardized if CPS were to find that a parent or child tests positive for any amount of THC. Many professional licenses require that a person abide by all US laws, putting some patients in a position of choosing between their career and a medicine that improves their quality of life.

published by Vicente Sederberg LLP, a

Three “vertically integrated” businesses are currently licensed by DPS to cultivate, manufacture/process, and dispense low-THC cannabis. To ensure reasonable statewide access, dispensaries may deliver their products, but they cannot be shipped due to federal restrictions. Licensing fees for businesses are nearly $500,000 for the first two years and more than $300,000 every two years for renewal. These fees are higher than

shot this year, lawmakers seem to

national firm specializing in cannabis law and policy, a legal cannabis industry in Texas could create 20,000 to 40,000 jobs, save taxpayers more than $300 million per year, and generate more than $1 billion per budget cycle.2 From all vantage points, it makes good sense to move forward with policies that allow responsible adult use. With an estimated budget shortfall of $4 billion, even conservative lawmakers have acknowledged that marijuana legalization is on the table for serious discussion. While it may be a long Heather Fazio is the Director of Texans for Responsible Marijuana Policy, a broad coalition of organizations, activists, and community leaders dedicated to realizing effective, efficient, and evidencebased marijuana policies in Texas.

have found common ground on the decriminalization of low-level possession and expanded access to medical cannabis. Advocates have high hopes that success at the Capitol this year will bring Texas closer to another multibillion-dollar industry where entrepreneurship and innovation will contribute to a brighter future for our state.

1 NTHC, the psychoactive element of cannabis, is one of more than 100 cannabinoids within the plant. CBD is another dominant cannabinoid, but it doesn’t have a euphoric affect.

Vicente Sederberg LLP, The Economic Benefits of Regulating and Taxing Cannabis in Texas, October 2020.

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SUSTAINABILITY: WHO GETS TO DECIDE? Bill Frerking & Blaine McCormick, PhD

In September of 2020, the Big Four accounting firms announced a new reporting framework for environmental, social, and governance (ESG) standards. The announcement captured attention because it marked a joint initiative between the four largest accounting firms, which is not an everyday occurrence. When the World Economic Forum’s International Business Council (IBC) championed this reporting framework—in hopes that the more than 100 global companies populating the IBC would adopt the standards for 2021—the reporting framework gained momentum. However fast (or slow) this new ESG reporting framework is ultimately adopted, it will most likely impact how companies report their sustainability performance and could be a key component of the World Economic Forum’s “Great Reset” initiative.

Reporting standards like ESG and others raise important and fundamental questions about the nature of sustainability. Do reporting standards help achieve improved sustainability and increased innovation, or do they thwart sustainability and stifle innovation by creating uniformity and ease for those reporting and reviewing? How do we know what “good” sustainability performance is? Is it possible for a company or a nation to effectively measure progress toward sustainability? Are the best intentions of companies moving us toward a more sustainable world, or could they be a catalyst moving us further away from such a world? How will we know? Let us explore those questions in light of a common example, the disposable paper cup. Single-use products are much maligned by sustainability advocates as wasteful and unsustainable. Yet single-use products, including the disposable paper cup, made a comeback in 2020 due to the global pandemic. The disposable cup has always required valuable inputs (trees, energy, water, and chemicals) and created waste, including manufacturing residuals and used cup waste. Those are often viewed as “bad” by sustainability standards. But those inputs and the resulting wastes generated go toward creating something society highly values. Historically, the disposable cup came into being as a social “good”—a way to improve quality of life by slowing the transmission of disease at community drinking buckets found in public schools, public buildings, and railway stations. The campaign hit critical mass in 1908 with the publication of TexasCEOMagazine.com

Professor Alvin Davison’s study of the contamination in school drinking cups, called Death in School Drinking Cups. In many places, disposable cups cost thirsty users one penny per cup of fresh water. On the other hand, communal drinking buckets were free, didn’t generate paper waste, and required only a modest social accommodation—sharing a dipper—to use. Nonetheless, communal drinking buckets actually lowered the quality of life among many users and imposed dire costs by spreading disease and death. Surprisingly, the disposable paper cup emerged as the most sustainable way to provide a refreshing drink of water in public places while minimizing the spread of disease.

cost, while others may not. Who should decide? In the case of the disposable cup, the market got to decide and valued the cup’s social, environmental, and economic benefits more than the perceived downsides. Sustainability is not static. Innovation and other local or global changes can, and often do, change the equation. Ill-conceived sustainability can be like an ill-conceived diet. Dieting can certainly have health benefits, but a poorly designed diet can be unhealthy and even kill you. The dieter should know what they are trying to achieve and when to make modifications or stop altogether. People typically choose to diet because they create a vision for some improved future state of health or appearance. This improved state might be about weight loss or it might be about improving nutrition. Similarly, businesses should have a vision for improved sustainability so they know what is important, why it is important, who values it, how much they value it compared to its trade-offs, and how to effectively measure future performance. Like poorly designed diets, poorly designed sustainability activities can start well but end up injuring business performance. As a business gets started on developing more formal sustainability reporting under one or more ESG standards, there are some foundational concepts and definitions that executives should clarify up front. Some good initial questions to answer include:

An illustration from a 1909 campaign against communal drinking cups.

• What is sustainability, and what determines “good” and “poor” performance?

Courtesy of The Hugh Moore Dixie Cup Company Collection, Skillman Library, Lafayette College

Disposable paper cups continue to provide hygiene and convenience to more users than ever before. And they are made with a renewable resource—trees—which is turned into pulp at primary manufacturing plants fueled in large part by renewable biomass fuels. In addition, they can be recycled or composted for future reuse where the applicable recycling or commercial composting services exist. These aspects of disposable paper cup production would be deemed good sustainability performance by most measures. The ongoing value of the disposable cup illustrates many of the challenges associated with sustainability initiatives. For most products and projects, it is nearly impossible to anticipate, properly evaluate, and effectively weigh the value of the various factors leading to sustainability with simplistic measures. Value is always subjective. How can a “standard” for sustainability capture the subjective nature of value? As is the case with the disposable paper cup, some may value hygiene over 64

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• Why does sustainability matter to this business?

• Who are the key stakeholders driving our sustainability agenda?

• What specifically are those stakeholders interested in, and what level of performance will satisfy them? • What is sustainable about our current performance and what threatens our sustainability?

• How do we know how we are performing on those issues relative to our competitors? • As we strive to make progress on those issues, are we getting more sustainable or less sustainable as a business, and how will we know?

• Who gets to decide what outcomes qualify as more or less “sustainable”?

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• How should we report our sustainability performance in an authentic and meaningful way, and does a standard (or standards) help?

is preferred (or is at least minimally acceptable) to the key stakeholders of the business. For most companies, the biggest key stakeholders are the customers.

In the pursuit of sustainability, common definitions and shared understanding are also important. It is hard to build a sustainability capability and drive performance if words and concepts aren’t clear. Following are some of the more critical terms and questions upon which to seek clarity. What is ESG? ESG is simply the acronym for sustainability reporting and measurement, often in the framework of environmental, social, and governance that is currently popular with financial, investment, and accounting firms. ESG is not synonymous with sustainability any more than a stat sheet is synonymous with a football game. Sustainability is the object of ESG reporting. ESG reporting isn’t the goal; sustainable performance is the goal. The Big Four ESG framework is but the latest among a variety of attempts at standardized sustainability/ESG disclosure frameworks. Other older and well-known examples include the Sustainability Accounting Standards Board (SASB) framework, the Carbon Disclosure Project (CDP), the International Integrated Reporting Council (IIRC) framework, and the Global Reporting Initiative (GRI), to name a few. The most valuable way to think about sustainability reporting and measurement is for a company to choose the framework(s)—or create its own framework—that most authentically represents its performance on the issues that are material to its key stakeholders. Reporting on what everyone else reports on might be easy, but it may not represent the sustainability story of a business or industry accurately or be related to what its key stakeholders value. What is sustainability in business? Sustainability is a goal to be achieved. It is a state that a business is striving to achieve based on current actions that it believes beneficial to its future. The beauty of free-market sustainability is that voluntary exchange and competition allow competing sustainability priorities to be met and avoids the “one size fits all” problem of centrally planned economies and standardization efforts. Sustainability is generally understood in three dimensions commonly referred to as social, environmental, and economic. Focusing on each dimension individually helps to reveal the perceived positive and negative impacts of an activity, which are your opportunities for improvement. Collectively, the goal is to optimize the tradeoffs among the dimensions, seeking to minimize the perceived negatives and maximize the perceived positives in a manner that

Social

Economic

Environmental

The disposable cup example illustrates how thirsty humans chose preferred social outcomes (avoiding disease and enhancing convenience by use of a disposable cup) despite worse economics (a penny per cup) and some perceived adverse environmental outcomes (resource use and waste). Yet voluntary decisions by those paying the costs and optimizing the tradeoffs created a significant market for disposable cups. And the longevity of this product proves its sustainability. Is sustainability an absolute? Sustainability is not a fixed or static thing. It is not an absolute that applies at all times and in all places. Sustainability is relative to the next-best alternative. It can be highly influenced by geography. It is not a place that is reached, but improvement that is continuous and relative to all other circumstances. Consider this question in the context of water waste and water availability. Most people would say that water availability and quality are a global problem. We contend that it’s better understood as a regional, globally dispersed problem. In water-short places such as southern Arizona, inefficient use of this life-sustaining natural resource can lead to business failure and result in human and environmental suffering. Comparatively, in places where water is plentiful, such as along the Columbia River in northern Washington, water inefficiency (or waste) is more of an economic issue and less a social or environmental one. Water inefficiency may mean that it costs a business in Washington more to pump, treat, heat, and cool water, but that inefficiency may be immaterial relative to other business improvement opportunities. As such, it is potentially unsustainable to address water inefficiency as a high priority in northern Washington. TexasCEOMagazine.com

Such inefficiency is depriving no one of water and is not degrading water quality. Further, since water quantity and quality are largely regional issues defined by watersheds, saving water in a water-rich location generally has no benefit to a water-short location in a different watershed. That is, Bill saving water in northern Washington in no way helps Blaine in water-challenged Phoenix. How do we know today if something is “more sustainable”? We often hear that one thing is “more sustainable” than something else. How do we know? And who gets to decide? Isn’t value always subjective? It often seems that the goal of many sustainability efforts is to use no inputs, have no waste or emissions, and still make valuable products and services—sort of like turning nothing into gold. At least the alchemists of old used lead in their attempts to make gold. The smartphone, one of the greatest and most popular 21st-century product innovations, certainly did not conform to this “no input, no waste” vision of sustainability. Early smartphone users likely weren’t concerned about whether their model of phone needed more rare-earth metals, generated more emissions in manufacturing, consumed more energy over its life, or used more packaging than prior model phones. In fact, products that consumers choose every day create some form of waste. Consumers showed that they valued the many benefits and enhanced quality accompanying smartphone technology rather than lament the use of expensive and non-renewable rare earth metals. Think of the time saved and convenience increased due to smartphones. Also consider the material savings resulting from the desktop and laptop computers that were never made or sold as smartphones filled that demand. (On the other side of the equation, we should also consider the addictions, lost productivity, and other adverse consequences of smartphones.) But in 2007, regulators did not try to stifle innovation or influence market choices by defining a reporting standard for a “sustainable phone.” And we should be thankful for that.

Who gets to decide? Many sustainability efforts rely on government incentives, top-down regulation, and choice-restricting mandates to change consumer behavior for the sake of sustainability—such as California’s recent zero-emissions vehicle mandate for 2035. However, as we’ve noted previously, sustainability is a dynamic, multifaceted, hard-to-predict end state. Georgia-Pacific’s enMotion paper towel dispenser illustrates a product success that defied sustainability predictions with a market-driven, bottom-up story. If Georgia-Pacific had convened a conference of experts to discuss the most sustainable way to dry hands after washing, the enMotion dispenser would not likely have been the result of those deliberations. Most likely that conference would have skewed toward “environmental” standards such as where and how to source fiber from sustainable forests, which forest certification schemes are required, how to handle the particular chemical compounds used for bleaching, and how much embedded energy from manufacturing is acceptable. It may also have tried to create new economic paths to “profits” by offering tax incentives, or suggesting a solar-powered hand dryer (despite an eye-opening 2014 study1 in the Journal of Hospital Infection about how jet-air dryers spread far more bacteria than paper towels). The enMotion dispenser ultimately didn’t have anything to do with the sustainability standards that likely would have been identified for the most sustainable way to dry hands after washing. Georgia-Pacific simply started with a fundamental “social” question: What is the unmet need in the marketplace? You need to dry your washed hands and you don’t want to touch something dirty to do it. The sustainability challenge was whether GP could make the buyer of the towels (most often not the user of the towel), the user of the towel, and the manufacturer of this product all better off so that voluntary exchange would reward its solution. The result was to look at the desired outcomes and perceived downsides in each dimension (social, environmental, economic), then seek the optimal solution among the tradeoffs. The optimal solution became a portion-controlled dispenser, which became the most popular and hygienic towel system in the market as judged by market share. What were the innovative and sustainable solutions it delivered?

Texas CEO Magazine Q1 2021

Feature • Social: The dispenser solved the primary dilemma with touchless delivery of a highly hygienic towel that remains in the dispenser, unexposed to bathroom germs until ready for use.

• Environmental: The towel is made from renewable wood fiber and sourced from among the most sustainable forest basins in the world. And the portion- control mechanism of the dispenser results in approximately 30 percent less towel use than the previous largest-share hand towel dispenser, meaning fewer towels manufactured, shipped, sold, used, and disposed of.

3. How is your company’s sustainability story authentic to your brand and culture?

4. And finally, how do you know whether your company’s sustainability actions are actually sustainable? Anything that is not economically sustainable is not sustainable. Ask yourself, how can anything that is publicly subsidized or mandated be sustainable?

So, will recent sustainability efforts and the continuing push for reporting standards in the marketplace help products and services to be more sustainable? Only time, executive decision making, and consumers will tell. But • Economic: Customers buy 30 percent fewer towels our best hope is not just in dieting our way to health or and save money, and Georgia-Pacific manufactures 30 percent less to dry the same number of hands, while having other people prescribe what will make us happy. enMotion maintains among the highest profit margin of Our best hope is in our ability to make voluntary choices among competing products and services to find those we any paper hand towel dispenser. believe will improve our quality of life and create greater We acknowledge the ease of explaining the success of the prosperity for our communities; once we see the results of disposable cups and enMotion dispensers in hindsight. these choices, we can choose to stay the course or to make Sustainability, however, is a future outcome and cannot changes. As simple products like disposable cups and paper be predicted with such certainty in the present. Since towels remind us, we need to recognize that there is often sustainability requires the optimal blend of social, more to the sustainability story than our preconceptions environmental, and economic tradeoffs, freedom of allow us to see. choice in a free market allows voluntary exchange to discover the value of those tradeoffs rather than putting Bill Frerking is Chief Administrative Officer and Vice President it in the hands of regulators and so-called “experts.” of Environment, Health & Safety at the USD Group in Houston, and was formerly Chief Sustainability Officer at Georgia-Pacific. What we ask for as consumers is transparency in the sustainability story of the products we choose. • • • The next time sustainability is on the executive agenda, we recommend the following questions to focus the discussion:

Blaine McCormick, PhD, is a management professor at Baylor University’s Hankamer School of Business in Waco.

1 E. L. Best, P. Parnell, M. H. Wilcox, “Microbiological Comparison of Hand-Drying Methods: The Potential for Contamination of the Environment, User, and Bystander,” Journal of Hospital Infection, Volume 88, Issue 4, December 2014, pp. 199–206.

1. Does your business know who its key sustainability stakeholders are and what issues they care about?

2. Does your business know what level of performance is required on each material sustainability issue to satisfy the stakeholder? And how is your level of performance material to your key stakeholders? The social pressure is to be “world class” in all categories, but the actual outcomes can range from “check the box” to “above bottom quartile” to “top quartile” to “best in industry” to “world class.”

TexasCEOMagazine.com

COMMIT TO A SAFER Over the past year, Texas employers have faced extraordinary workplace safety challenges. Use this Plan-Train-Analyze process to create a customized safety program that protects your employees and your business—well beyond COVID-19.

By following these simple steps, you can create a strong plan, develop more effective training measures, and ensure consistency and continuity in your safety practices.

1. PLAN

2. TRAIN

Your safety plan should be customized to meet the unique needs of your company. To help you get started, here are some suggestions for creating a plan that works.

Once you’ve developed your plan, implement a training program that gives your employees the information they need to work safe. These guidelines will help you create the right program for your business.

Emphasize safety with your management team. When your managers value safety, so do your employees.

Issue a clear safety policy statement. Your people need to understand there is a comprehensive commitment to safety that goes all the way to the top of the company. Put it in writing, and make it available to all personnel. Designate a point person for your safety program.

Give them real authority to implement your policies. Safety, after all, doesn’t happen by accident.

Commit the resources necessary to implement the safety plan. Good intentions need to be backed by proper training, personnel, and equipment.

Hold and attend safety meetings. It’s a great way to make information available to personnel at all levels of your company, and it demonstrates your continuing commitment to a safer workplace. Know how your company works. Creating a workable safety

Train your managers first. If management doesn’t know your

safety procedures and the proper strategies for using equipment, it won’t become part of your employee culture. Managers can ensure that your entire workforce knows and follows the planks of your safety plan.

Make employees aware of the safety aspects of your industry. It’s not enough that they know their job—they need to know

about their job. Inform workers about the potential hazards of your industry, and make sure they know how to use the equipment they’ll encounter. Emphasize the proper use of safety equipment that can lower the risk associated with particular tasks.

Teach your people to think prevention. Most injuries can be avoided by identifying the situations likely to lead to accidents. What are the causes of injuries in your workplace? Carelessness? Improperly stored equipment? Poor maintenance or housekeeping? By helping your people learn to think prevention first, they’ll be on the alert for unsafe practices and, more importantly, will start looking out for each other.

plan means developing safety rules and procedures that apply specifically to the equipment you use and the type of work taking place. The more familiar you are with the unique tasks of your company, the more reliable you can be in identifying the root causes of potential accidents.

Train–and train again. Reinforce your safety plan regularly with updates and reviews. Reinforcement creates a lasting safety routine that sustains your accident-prevention program, even as equipment changes and new employees come on board.

Follow your own rules. You set the tone for the success or failure

Make sure the training you’re providing is jobappropriate. Low-risk jobs might need safety reinforcement training

of your plan when you and your management team do things the safe way. Provide a model for your employees to follow, make your people aware of your expectations, and lead by example.

Seek employee input on the elements of your safety plan. Nobody knows the equipment better than the people who

use it regularly. Ask your employees’ advice when you’re creating the safety program, and you’ll get a more comprehensive plan and a more cooperative workforce.

quarterly or annually. Higher-risk occupations, on the other hand, might require weekly or monthly training sessions.

Make sure the training is understandable. Communication

is key to training, so avoid making your sessions so lengthy or technical that they lose all meaning. Also, keep in mind the backgrounds of your employees, and make safety training material available in a language they fully understand.

WORKPLACE IN 2021

CARING FOR TEXAS FOR MORE THAN 25 YEARS

3. ANALYZE Analysis and reinforcement are essential to getting the most out of your safety program. Use this checklist to maximize your effectiveness. Analyze incidents. Analysis of workplace accidents and illnesses

is critical to identifying hidden trends that can impact your safety record. Analyze the data, and be proactive in working to prevent future problems.

Analyze hazards. Hazard analysis relies on inspection of data with an eye toward eliminating hazards before they cause accidents. Keep track of recurring hazards from past inspections that indicate the need for more training, new processes, or improved engineering controls. Keep records. This essential step in the safety process provides the necessary documentation to track trends, assess threats to your employees, and ensure proper implementation of your plan. OSHA requires companies in many industries to keep accident records. In addition, companies carrying workers’ comp insurance are required to maintain a record of on-the-job injuries. Maintenance records and other documentation may be required, as well. Inspect. Conduct self-inspections routinely and regularly with the

express purpose of improving workplace safety. Inspections should include routine maintenance, proper use of equipment, behavior of personnel, and availability of safety materials. Correct any improper activity, make sure a safe environment is maintained, and document your findings.

Investigate. If an accident or near-miss should occur, investigate the site immediately and take corrective measures to prevent future occurrences. Interview witnesses and evaluate the worksite to identify specific causes, and then use a standard accident form to ensure consistency in reporting. Finally, alter your training, hiring practices, or procedures according to your findings. Review. By documenting each step of the process, you’re creating a company-specific guideline for updating and improving your safety plan. Regulations change, as do employees and equipment, so consider new elements when adjusting the plan.

As the leader of the workers’ compensation market, Texas Mutual is committed to building a stronger, safer Texas. We offer workers’ compensation insurance that protects employers, their businesses, and their employees from the consequences of an on-the-job injury or illness. Don’t “go bare”—protect your employees and business with the company that does workers’ compensation bigger and better than anyone else. Whether you work in oil and gas, restaurants, construction, healthcare, auto repair, or any other industry, we’re here to help.

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While the land in the Big Bend region is vast, the world in West Texas is small. This is evident in the colorful and varied history of the Holland Hotel—an architectural masterpiece, a hub of Alpine society, and a welcoming getaway for visitors to West Texas. The Holland Hotel was built in 1912 by John Holland and has played a pivotal role in the history of the region ever since. The hotel has been the setting for everything from glamorous social gatherings to significant cattle deals to monthlong poker games, and it has hosted everything from casual visits among ranchers in the lobby to sports betting by locals in the barbershop. Like the Gage Hotel and many other businesses in the Big Bend region, the Holland Hotel was the creation of a prominent cattle rancher. The community of Alpine hoped to attract the Orient Railroad to town, and one problem was the lack of a “respectable” hotel in the area. John Holland, who had already been influential in the politics and development of Alpine, stepped up and built the hotel in 1912. When he died just ten years later, he was described by a local as “one of the most vital factors in the progress of this section of the country for many years.” It is no surprise that despite many changes in ownership over its history, the hotel still proudly boasts the name Holland. In the decades after its founding, the hotel was expanded by John Holland’s son, Clay; sold to George Hotels in 1948; bought and restored as Alpine’s preeminent gathering place by Frank Hofues (owner of the legendary Blackie, the town’s beer-drinking crow); closed for a while; converted into office buildings; restored as a historically important hotel; and finally purchased by its current owner, Charles Mallory, who renovated both it and the Maverick Inn (see opposite page). Mallory proudly accepted the title of “West Texas Man of the Year” in 2014. He is certain his family visited the Big Bend area and likely stayed at the Holland Hotel, perhaps more than once. He feels that it is no coincidence that he was drawn to the area. 70

Texas CEO Magazine Q1 2021

Stay with Us We hope you’ll come see us for your next visit to Alpine—a small city with a genuine Old West vibe in the heart of far West Texas. Choose one of our individually appointed guestrooms or suites, all with modern amenities and elegant Southwestern-inspired décor.

THE HOLLAND HOTEL

432-837-2800 209 W. Holland Ave. | Alpine, Texas 79830 COVID-19 Safety Measures in Place Call for Special Rates on Groups

Over the last hundred years, this “Roadhouse for Wanderers” has served as a gathering place for prospectors, geologists, miners, photographers, biologists, archeologists, paleontologists, rodeo celebrities, ranchers, US Army aviator trainees, and many others who have traveled to Alpine to explore West Texas. While less documented than that of the Holland Hotel, the Maverick Inn’s history is rich in its own right. It was opened as Camp Grandview in 1927 by W. Adolph and Bertha Carter Daugherty. Adolph and his family were some of the earliest settlers in Alpine, having moved there in the 1890s from San Antonio. Bertha grew up on a ranch near Sanderson, Texas, and when her father died in the early 1920s, she inherited some money from the sale of that ranch. Those funds helped her start a variety of businesses in Alpine, including Camp Grandview. In the 1920s, the automobile was opening up new opportunities for Americans, including tourism. “Tourist camps” were created to house those travelers on their journeys. Camp Grandview was one of the earliest tourist camps in the Big Bend area. Located on the main road in Alpine, and straight across from Sul Ross State University, Camp Grandview was conveniently situated for travelers visiting the new Big Bend National Park, McDonald Observatory, or the university.

Bertha and Adolph lived at Camp Grandview, later called Grandview Courts, and raised their children on the property. They also had a small grocery store and filling station next door. Adolph Daugherty was an early breeder of registered Hereford cattle in the Big Bend region, and his ranch remains in the family today. In the 1940s their son, Frank, and his wife, Dorothy, took over running the inn as the Siesta Motel until they sold it to Ruth and C. D. McCollister in the mid-1950s. In 2006, Charles Maxwell, a well-known citizen of Alpine, purchased and renovated the hotel. He reopened it as the Maverick Inn. Maxwell redid everything in the hotel. He even said it would have been easier to start from scratch but, because he had stayed there many times throughout his life, he wanted to preserve the history of the property. In 2011, Charles Mallory purchased the Maverick Inn. His firm, Greenwich Hospitality Group, focuses on preserving and revitalizing charming, historic hotels such as the Holland Hotel and Maverick Inn.

Stay with Us On your next wander in West Texas, choose the Maverick to celebrate the adventurism and spirit of the Southwest. Drive your vehicle up to your front door, kick your shoes off, and get ready to relax and enjoy the great elegance of the Big Bend area. Welcome to home away from home, where coffee is hot and ready after every adventure.

THE MAVERICK INN 432-837-0628 1200 E. Holland Avenue Alpine, Texas 79830

COVID-19 Safety Measures in Place | Call for Special Rates on Groups

STARTUP SUCCESS:

A STARTUP FUNDRAISING SERIES

OPTIMIZING INVESTOR INTERACTIONS Gordon Daugherty

Texas CEO Magazine Q1 2021

[ENTREPRENEURSHIP] I often say that successful early-stage fundraising is essentially a transfer of enthusiasm from founder to investor. If the investor gets even half as excited as you are about the venture you’re working on, their investment decision is already pointed strongly in your favor. So, in this article we will evaluate some methods of transferring enthusiasm.

INVESTORS WRITE CHECKS FOR OUTCOMES, NOT ACTIVITIES During interactions with investors, you will surely inform them how much you’re raising. With that, you might get the obvious follow-up question: “Why is that the right amount to raise?” It’s a very justifiable question, but it is commonly met with a host of unacceptable, enthusiasm-killing responses, such as the amount of runway it affords, the number of employees that can be hired, or the amount of dilution the founders are willing to tolerate. To every one of those answers, my response is: “So what? Why do I care?” Investors write checks for outcomes, not activities. If you want to get them excited, tell them about those outcomes—how you’re going to use your newly acquired capital to acquire a bunch of customers, open new markets, launch new sources of revenue, secure strategic partnerships, dramatically improve KPIs, and the like. Rather than explain to the investor how you are going to spend their money, tell them what you’re going to accomplish with it. This doesn’t mean your planned activities and expenditures aren’t important. We call them the use of proceeds. The investor might ask how you plan to acquire those next 60 paying customers and what your market activation playbook looks like. That’s your chance—and obligation—to dive into the key activities that will enable you to accomplish the expected outcomes. The concept is simple. Investors don’t care as much about how you plan to use their money as they do about what you expect to accomplish with their money in your pursuit of an eventual great exit.

QUESTIONS TO EXPECT FROM INVESTORS What other questions should you be ready to answer in a way that transfers enthusiasm? The full list is very long and includes many obvious questions that you’ll intuitively be prepared for. Let’s skip those and instead cover a handful of important questions you should be prepared for, regardless of your funding stage.

Why are you and your cofounders the right ones to lead this venture?

Of course you are smart and are hugely dedicated to your mission, so consider that table stakes. Did one or more of you suffer directly from the problem you’re solving and are you therefore on a passionate mission to fix it? Do any of you have relevant experience in your industry or technology focus area? Have any of the founders already built great companies or experienced exits that made investors a lot of money? These are examples of unique team attributes investors like to bet on.

How do you acquire customers?

Take the investor on a journey through your customer acquisition strategy. What methods do you use? Which have proven to be most successful? What is the average cycle time for the buyer’s journey? What are your important customeracquisition-related KPIs, and how have they improved over time? Investors love it when they sense a well-oiled customer acquisition machine.

How do you make money?

On the surface, this is a very simple question that ties to your pricing or monetization strategy. But why just tell the investor you have two subscription offerings at $399 and $999 per month? You have an opportunity to impress them with your understanding of your monetization strategy. Things like relative sales mix across your product line, rates of upsell or cross-sell, conversion rates from freemium to paid, and information about gross profit margins all add color and dimension to your response. What interesting insights can you share about your pricing and monetization strategy?

Is the market large enough?

This might be a trick question. The investor knows you have already sized your market, but they want to see if you understand that size isn’t everything. What else is it about your market that makes it ideal for growing a great company? Is it dynamic and undergoing massive transformation? Is it highly fragmented and available for entry or dominated by a small number of behemoths? When asked this question, start with obligatory responses about the size of your market—total available market (TAM), serviceable available market (SAM), beachhead (the small segment of the market you’re going to capture first)—and then paint a more complete picture with additional favorable anecdotes. TexasCEOMagazine.com

What evidence do you have that the market desperately needs your product?

ASPIRATIONS, EXAGGERATIONS, AND OUTRIGHT LIES

The key word in this question is evidence. A ton of paying customers is obviously direct evidence, but without that, you will need to draw from the massive amount of customer discovery and related research you conducted before you started building your product, as well as the additional interactions you had with customers during the betatesting phase. Do your customers desperately need your product or do they just want it? There’s a big difference.

Most startup founders don’t realize how bad they are at predicting the future, how far they stretch their claims, and how much refactoring investors have to do as a result. The most successful entrepreneurs thrive in the face of perpetual chaos and skepticism. They have unmatched survival strengths and are regularly told to “fake it until you make it.” But there is a parallel need to earn both respect and credibility from other stakeholders, particularly investors. Understanding the difference between aspirations, exaggerations, and outright lies is a good place to start.

What unfair advantages do you have?

Aspirations

Having the lowest price or the best user experience is not an unfair advantage. These are rather short-lived advantages— not unfair ones. A really strong patent filing and access to proprietary data are examples of unfair advantages, assets your competition doesn’t—and can’t—have. It’s actually possible that you don’t have any truly unfair advantages over your competition. Many startups don’t. But if you have some special sauce that nobody else has figured out, this question gives you an opportunity to boast—and get the investor enthused.

EVIDENCING TRACTION Traction is a very special attribute when it comes to fundraising. It’s something investors will want to learn a lot about during interactions with you, and it trumps almost any other form of evidence you might have that your business is worth investing in. If you have that most genuine form of traction (paying customers), you should diplomatically flaunt it. If you don’t have it, everything else you do will mostly be hand waving to distract from that fact. If you don’t yet have paying customers, don’t give up. Instead, get creative on your definition of traction. Traction can be just about anything that serves as evidence of desirability (the market wants it) and business model viability. Work your way backward from paying customers to identify the closest thing you do have. This might start with free trials or signed letters of intent to order and progress through paid trials and firm orders that haven’t yet been delivered. If your business is of the type to not generate revenue for quite some time (e.g., it involves deep science or requires regulatory approvals), it’s time to get even more creative. Remembering my definition of traction (evidence of desirability and viability), identify other things that can serve as some level of validation. Examples include favorable reviews by a notable industry influencer, relevant awards, acceptance into a credible startup accelerator, and milestones reached toward regulatory certification. 74

Texas CEO Magazine Q1 2021

In the early days, startups have lots of aspirations. Your initial business plan is a huge list of assumptions, and most of those assumptions are actually aspirations that need to be true in order for your proposed business plan to hang together without a big pivot. Prototypical startups are often run by first-time founders who are either just starting or are early in their business career. Because of this, their forecasts (aspirations) are way too aggressive and optimistic. I’m not talking about their long-term vision and potential, but rather their predictions of what will happen in the next 90 days, and especially in the next 12 months.

[ENTREPRENEURSHIP]

Your first step is to look back at the prior goals and forecasts you and your cofounders wrote down. How many of them did you fully accomplish? In the range of 50 percent is probably typical, 20 to 30 percent is concerning, and 70 percent or greater is impressive. I’m mostly talking about the prelaunch and early revenue phases of the company, when you’re still trying to develop a well-oiled machine. The bar obviously gets much higher as you approach the sweet spot for a Series A. If your track record is favorable, great. If not, you need to quickly get to work on improving it so you can demonstrate to investors that you’re a member of the elite 10 percent that accomplishes what they say they will.

Exaggerations

Just as investors typically apply a haircut to stated predictions until you demonstrate a track record of achieving them, they’ve unfortunately learned to do the same with your claims about what you have already accomplished. This is due to the regular exaggerations that many founders make. I know—not you. But let me first give some examples to see if you still feel the same. Claim: “We have a product that does A, B, and C.” Reality: “We are actively building a product that will be able to do A, B, and C.”

Claim: “We’re currently at $25,000 in monthly recurring revenue.”

Reality: “Last month, we recognized $25,000 in revenue. Of that, $15,000 was from subscription software, and $10,000 was from a one-off services project.”

Claim: “We’ve closed $300,000 of our $1 million seed round.”

Reality: “For our $1 million seed round, we have $100,000 in the bank, $150,000 in verbal commitments, and $50,000 in indications of interest.” Claim: “We already have 10 customers.”

Reality: “We gave six of our original beta customers free licenses for six months and have two paying customers and two late-stage trials that we expect to convert soon.”

Have you already communicated in this manner? What you have to decide is how far to push these exaggerations. The investors expect you to be aggressive, boastful, and proud. And you might not actually get penalized for minor exaggerations here and there. But if you were to stack up all of the claims made above, you’re going to have a huge credibility problem on your hands. And that’s a negative hit to the desired enthusiasm transfer I talked about.

Outright lies

Like exaggerations, outright lies are discovered as investors dig deeper into your claims. They result either from something you think is a slight exaggeration but the investor begs to differ or from the way you answer their questions. Let’s use the example claim from before about already having 10 customers. If the investor asks, “Are they actual paying customers?,” you have a choice. You can answer the way the reality statement was worded, or you can say “eight of the ten are paying customers.” That would be an outright lie, because six of them have a free license. Eyeing a cash fume date that’s just around the corner can cause us to do crazy things that we would never do in more normal situations. But it’s not just your cash fume date that can cause these misjudgments in ethics. Desperately wanting to show that you accomplished what you said you would or being in the final push to get a funding round closed can offer the same tempting risk. Don’t do it! Getting caught in an outright lie crosses an important line for many investors. If you’ll lie about one thing, why not many more? Building trust with your stakeholders (not just investors) is paramount to being able to call on them during very difficult times. Nothing described here should cause you to be less bold, driven, confident, passionate, or unstoppable. Those personality traits are 100 percent compatible with building a well-oiled machine that is able to predict the future, achieve it, and do so with strong ethics and hugely loyal stakeholders. • • • Like I said in the beginning, early-stage fundraising is essentially a transfer of enthusiasm from founder to investor. Whether you see yourself as a salesperson or not, you are. And you’ve got to get proficient at it quickly. Your passion, drive, and ethical behavior will definitely get you pointed in the right direction. The rest of the skills and processes mentioned here come with repeated practice. Gordon Daugherty is a seasoned business executive, entrepreneur, startup advisor, investor, and the bestselling author of Startup Success: Funding the Early Stages of Your Venture. A proud native Texan, Gordon graduated from Baylor University. He has vast experience with early-stage fundraising from both sides of the table, making more than 200 investments and raising more than $80 million in growth and venture capital as a company executive, fund manager, board director, and active advisor.

TexasCEOMagazine.com

Quick Tips

FOR MORE EFFECTIVE MEETINGS Alicia Thrasher, CEO, MGR360

The job of becoming a great manager and leader is never done.

There’s always a new skill to learn, a new insight to uncover. That’s why, every week, MGR360 shares a short, practical tip with our community of managers. One recent theme in our Management Tip of the Week has been meetings—those things we leaders spend an average of 23 hours per week in.1 Here’s a sample of three quick meeting tips we’ve shared recently. Want to receive a weekly tip or tool for being a great leader and manager? Sign up at mgr360.com/weekly-tip. (In fact, it’s a good idea to encourage all managers on your team to sign up so everyone can benefit!)

TIP 1

DEFINE THE MEETINGS CULTURE ON YOUR TEAM

Almost without exception, effective teams have effective meetings. Though meetings are often the subject of griping, they remain critical touchpoints where your team shares information, solves problems, and more. One thing we advise managers to do is to establish clear meeting rules and guidelines up front, so everyone on your team understands what’s expected when they enter a meeting. These rules will vary with the culture of your team; there are no “right” or “wrong” meeting rules. Some example rules might be: • • • •

Every meeting should have an agenda shared beforehand We start and stop on time We meet with as few required people as possible All meetings are open to everyone on the team, unless otherwise specified • No devices at the meeting table • Everyone is expected to speak up if they disagree with a decision Set some rules, get the team’s feedback, then publish them for all to see. You’ll get rid of quite a bit of meeting misunderstanding. Leslie A. Perlow, Constance Noonan Hadley, and Eunice Eun, “Stop the Meeting Madness,” Harvard Business Review, July–August 2017

TIP 2

ADD PURPOSE TO YOUR MEETING INVITES

Every meeting you schedule as a manager should have a clear purpose. Typically, there are four reasons to have a meeting: to share information, to make a decision, to brainstorm, or to solve a problem. Start using meeting invites to add context and clarify the meeting’s purpose:

TIP 3

TRY “TACTICAL TUESDAYS”

Here’s a tip I learned from my friend Suzanne Shifflet, CFO at Gym Launch. Suzanne and her teams do “Tactical Tuesday,” which means that Tuesdays are set aside for project work, with no recurring meetings scheduled.

• Why are we having this meeting? • What’s the desired outcome (a decision, a new idea, shared understanding)? • Is there anything attendees should review beforehand?

For knowledge workers, a barrage of meetings throughout the week can severely distract from getting high-priority work done. One survey of senior managers found that 64% believe that meetings “come at the expense of deep thinking.”2 This gives attendees the information they need—and it’s a good test for you: If the purpose is fuzzy, maybe you don’t need to hold that meeting after all.

A practice like Tactical Tuesday sets up a shared respect for focused, non-interrupted work. Ibid.

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A CONVERSATION WITH

ALVARO LUQUE,

President & CEO of Avocados From Mexico

Texas CEO Magazine Q1 2021

Feature

AVOCADO INNOVATION Last year, the US imported 2.1 billion pounds—or $2.82 billion—of avocados from Mexico. It was another year of impressive growth since 1997, when the US Department of Agriculture lifted its 83-year ban on the import of Mexican avocados. One entity in particular is responsible for doubling the volume of Mexican avocados imported into the United States: Avocados From Mexico, the not-for-profit organization that coordinates the marketing activities of avocado growers and packers in Mexico and importers in the US. Based in Irving, Texas, Avocados From Mexico is probably best-known for its witty Super Bowl commercials, perhaps a surprising strategy for a produce brand. Their high-

THE ECONOMIC IMPACT OF AVOCADOS FROM MEXICO

concept ads have portrayed everything from bewildered aliens touring a museum of human culture (emoji, the infamous white-and-gold dress, a captive Scott Baio) to the Avocados From Mexico Shopping Network, starring Molly Ringwald. But even the oddest of the commercials gets the point across: Avocados are delicious. Each ad leaves you with an impression of a festive brand—and a craving for guacamole. We spoke with Alvaro Luque, Avocados From Mexico President and CEO since 2014, about what it’s like to lead an organization renowned for its original thinking. He discusses the brand’s deep commitment to innovation, how Mexican avocado growers were uniquely prepared to handle COVID-19, and what goes into prepping an ad for the Big Game. According to a recent economic contribution analysis from Texas A&M University, Mexican Hass avocados have been a tremendous benefit to the US economy. In fiscal year 2019/2020, $2.82 billion of US imports of these avocados contributed the following to the US economy:

• $6.5 BILLION IN U.S. ECONOMIC OUTPUT • $4 BILLION IN U.S. GDP • $2.2 BILLION IN U.S. LABOR INCOME • $1.1 BILLION IN U.S. TAXES • 33,051 JOBS FOR AMERICAN WORKERS

Gary W. Williams and Dan Hanselka, 2020 Update: The Economic Benefits of US Avocado Imports from Mexico, September 2020.

TexasCEOMagazine.com

Can you start by telling us a bit about Avocados From Mexico? This is a unique

organization. Everyone’s always saying that, but I can promise you that this one has a truly unique story. For over 80 years, starting in 1914, the US had a ban on importing avocados from Mexico. Finally, in 1997, they opened the market again. When that happened, the US coordinated with Mexico to create an organization they could deal with as they imported avocados, instead of dealing with tens of thousands of growers individually. That association was called APEAM [the Association of Avocado Exporting Producers and Packers of Mexico]. It currently represents almost 30,000 growers and 62 packing companies, all in Michoacán, Mexico. A couple of years after that, a law was passed through Congress that said every importer of avocados 80

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from Mexico had to pay 2.5 cents per pound every time their avocados crossed the border. This was a new “checkoff program” [a program that collects funds from producers of an agricultural product for research and promotion of that product]. Now, in order to oversee that program, the US created an association called MHAIA [the Mexican Hass Avocado Importers Association], which includes 250 importers in the United States. So, now you had these two associations, APEAM and MHAIA, and for seven years they were marketing the exact same product—the Mexican avocado— but they weren’t talking to each other. They would create completely separate campaigns in Spanish and in English. At some point they said, “You know what? This is not working. Why don’t we create a company together?”

In 2013, that company was created: Avocados From Mexico. It was the first time in history that two international organizations created a company through the government of the United States. I now run that company. I report to three bosses: the APEAM in Mexico, the MHAIA in the US, and the United States government, which has 100 percent oversight of our whole program. It’s a very unique situation. Avocados From Mexico has become well known through its Super Bowl ads. How did that come about? I came to the company in January 2014, not long after it was founded. At my first board meeting, I told the team, “Guys, we have a big problem.” At the time, Avocados From Mexico had about 60 percent of market share but only 20 percent of consumer preference, because people didn’t know about us. So we were a leader in volume,

Feature but not a leader in consumer minds. We needed something that could tell everyone, “Hey, guys, here we are! Avocados come from Mexico, and we have a whole story to tell you.” For that kind of messaging, what’s better than the Super Bowl? So, we decided in that year to become the first fresh produce brand and the first Mexico-related brand to advertise in the Super Bowl. That happened in February 2015.

our company’s essence or soul. We call it Mexicanity. Mexicanity is all those fun, positive memories you have around Mexico. If you think about your favorite Mexican restaurant, or your Cinco de Mayo party with your coworkers, or your trip to Cancún with your family and friends—it’s all those colorful, vibrant, fun memories. We said, “We want to embrace that in our brand.”

What is it like to produce a Super Bowl ad? It’s one of those things a lot of people

We decided that we’re not going to talk about politics or negativity. We want to be lighthearted. We want to tell a message that is always fun and positive. That’s a very good fit for the Super Bowl. For Super Bowl ads, you’re always looking at two extremes: Either you go super teary and sentimental or you go fun. We do fun, but it’s what we call an intelligent or a clever fun. There are a lot of Super Bowl ads that are very well done, but they are dumb. That works for some brands. But we try to use our clever fun every time that we tell a lighthearted story that has a message behind it.

aspire to but never get to be part of. For a

marketer, it’s kind of our dream, right? Being part of a group that puts on a Super Bowl ad isn’t easy, but it is very fun. We’ve been fortunate enough to do it six times now. It’s a process that starts when our fiscal year does, in July. So from July to February—seven months—we’re talking about Super Bowl, either creating ads, testing ads, testing ideas, going to the consumer to understand what they want, producing the ad, etc. And if our fiscal year began before July, I would probably start a little bit earlier than that even. It’s very cool for a small company like us, of 34 people, to take part in that process. We have a very strong roster of seven or eight agencies around the US that help us out. We work seven months in a row, nonstop, for one initiative that lasts a couple of weeks in February. It’s not only the ad during the game; it’s the whole campaign that goes around the Super Bowl. It’s very exciting. You focus heavily on making these ads funny and lighthearted and memorable. What made you go in that direction?

When you communicate something in a TV ad, it tells the viewer a lot about the company behind the product, how the people at the company think. Since the beginning, we thought that it was very important for us to define

As part of your marketing efforts, Avocados From Mexico also created a documentary series called Avocadoland. Has that been beneficial to the brand?

Absolutely. We wanted to tell a story of what we are, from the origin. For that, we partnered with a company called Tastemade and created a three-chapter mini-documentary that tells the whole story of what we are and where we come from. We thought it was going to be successful with the consumer, but we couldn’t even have imagined how much. The first two months we did four billion impressions with the documentary. Everyone was super engaged. And we now have the Avocadoland brand for perpetuity. We’re using it now to tell more of a corporate story, broken into different topics like quality and

flavor and health benefits. There’s so much that you can say in there about avocados and who we are. There’s a lot of magic in Michoacán, and Avocadoland helped us tell that story. There’s a lot of produce companies, including avocado companies, that have huge corporations behind them. Our case is very different. As I said, we’re a small team and we represent almost 30,000 small growers. Almost 75 percent of those growers have less than five hectares. There’s a magic to realizing that you’re here in the US doing Super Bowl spots that represent those small farmers, living day to day, and that they trust you. Thousands of them will never meet us, but they trust me and my team to tell the story. You’ve also worked with companies in Venezuela and Costa Rica. What can you say to readers who might be interested in doing international business in Latin America? Latin America has two unique

aspects that you need to understand. One is that, even though we’re all Latinos, it’s a melting pot. There’s a lot of different types of people and cultures in there. I’m Costa Rican, and even in Central America—a small region—we’re very different from each other. And Mexicans are very different from Argentinians, and Argentinians from Peruvians and Peruvians from Venezuelans. Every country represents a lot of different opportunities, but you need to understand the best way to connect to each of them. This is even becoming more and more true in the US: If you talk to Dominicans or Puerto Ricans living in the Northeast, they’re going to have a different culture from the Mexicans who live in the West, which will be very different from the culture of the Central Americans who live in Houston. The other thing about Latin America— and this comes from a Latino—is that TexasCEOMagazine.com

we live in a struggle every single day. In every single one of our countries, there are issues. You have a lot of people who have problems and who learned to overcome those problems. It’s a great culture, but it’s not as organized as American and European cultures. We can learn some of that from them, and they can learn from us about the struggle, the hustle, the resilience. If we have a problem, that’s not a big deal— it’s every day for us. We will overcome it and move forward. That spirit is very important for brands to understand when you’re talking to them. There’s pride in that and if you understand it, you can communicate better with them. Do you have any insight for us on Venezuela in particular? It has been heartbreaking to see refugees flowing from there. It’s a very sad story. I’m Costa

Rican, but there are two other countries that are in my heart: Mexico and Venezuela. I only lived in Venezuela for two years, but it seems like every single friend I have now is Venezuelan. In my personal life, I’m surrounded by Venezuelans! And why is that? They’re positive, happy people, and transparent. If the country were more organized—and it’s not their fault, really—Venezuela could be a Dubai here in America. They have so much oil, so many resources, that they could be wealthy for the rest of their lives. Unfortunately, these guys got into trouble more than 20 years ago, with a bad government and a bad decision.

Now, governments end at some point, and I think this is going to end. When it does, you’re going to have all the Venezuelans who learned the lesson—and learned a lot of great things from other cultures and companies and countries—coming back to their country. That’s going to be a jewel. You’re going to see all those people, all those funds, all those investments coming back into a country that’s still going to be very rich in terms of resources. But they’re also going to learn that they have to be careful politically moving forward. At the end, it’s going to pay off. Not soon enough, but it’s going to happen. And they deserve it; they’re great people. Venezuela is a happy country. You really enjoy living there. Let’s talk about supply-chain issues. Before COVID, food supply chains were not something that Americans had thought much about for decades. That’s an incredible testament to our system. Then bam, they became a problem. How did that play out with avocados? We

were very fortunate. That’s part of the magic of the story of Avocados From Mexico. Every single country that produces avocados eaten in the US grows them on plants that have one bloom. That’s why you only find avocados from California in March to September; the plants only have one bloom. The same is true in Spain, in Israel, in Kenya, all the places that grow Hass avocados. Only in the state of Michoacán—not even in other parts of Mexico—do the trees have four blooms instead of one. That means our supply is nonstop throughout the year. The other great thing about avocados that’s very different from other fruits is that they can stay on the tree for a long time. If you have a nice strawberry,

Texas CEO Magazine Q1 2021

you need to pick it or it’s going to go bad. It’s a race against time. Avocados are different. When they’re ready to harvest, they can stay in the tree up to six months, and they only get slowly, slowly better. They only start triggering fast once you pick them. We don’t have the pressure of moving product fast before it goes bad; if there are issues in the market, we can hold the avocados on the tree. With two advantages, I was not too worried in terms of supply. I was worried about how we were going to get organized across two countries in a pandemic like this—from supplying them in Mexico to marketing and selling them in the US. Of course, when you’re picking fruit in the fields, you can’t just work from home. But everyone organized very, very well, probably because the response was not very government-driven at the start. Since then, we haven’t had any big issues in the supply chain. Of course, the first two weeks of March were crazy. Everyone went and bought whatever was out there. Then we hit reality and had four weeks of selling around 40 to 60 percent of our budget. But we moved fast and created a strategy that addressed the short and long term. We were able to not only recuperate, but we broke a record in July, importing 2.1 billion pounds of avocados in one year. Really, the supply has been very steady, almost since the beginning. I read that in 2020, Avocados From Mexico was listed on Fast Company’s 100 Best Workplaces for Innovators. How does that work at an avocado company? Do you purposefully work on creating a culture of innovation? Yes. We were very happy

for that recognition, especially as a company of just 34 people. We always wanted innovation to be a big driver for us. At the end of the day, what we offer is just one brandless fruit. We cannot innovate in areas like product

Feature

development or packaging or design. Our innovation has to be different. It has to be around ideas: How can we advertise differently, merchandise differently, create new experiences around this fruit? When we got the recognition from Fast Company, putting us alongside companies like Google and Alibaba, we knew we were going the right way. It’s one of the first steps toward becoming the most innovative produce company in the world. That’s my objective. What advice do you have for other CEOs on how to foster that kind of innovation and creativity on their teams?

They need to be always looking for the next thing, something new. We don’t settle. We go in, do the Super Bowl, and then say: What’s next? My message to the company is that we always need to reinvent ourselves. Now that we are dominating the US market—with more than 85 percent

market share, almost doubling the market in six years—it’s very easy to get settled and not do anything else. My job is to break that mentality and say, “We need to keep on going!” We created our own innovation champion within the company. That person reports to me. We’ve been trying to educate every single employee on how important it is to innovate. Last year, we took almost 70 percent of our company to Yale for a dedicated conference about thinking differently. That’s the type of investment I’m very proud to do. The other thing is that if you do things right, you can compete with whoever you want, no matter how small you are. You just have to be creative enough. It doesn’t matter if you’re 34 people; you can create your own story. When we got into the Super Bowl, we knew we wouldn’t ever have the numberone ad there. We can’t go out and hire

Brad Pitt. We can’t compete with the Budweisers and Coca-Colas and Procter & Gambles of the world. But in digital, we can go out and win. We’ve been the only company to be in the number-one or number-two spot in the Super Bowl Digital Championship for the past five years. That’s where we want to be. Even though we have a lot of fun, I still have certain financial responsibilities, like any CEO. Our board is very happy because they’re seeing the market grow. And we just did our new economic output study with Texas A&M; I was very happy to see that our economic output in the US is $6.5 billion. We’re creating more than 30,000 jobs in the US. So, doing Super Bowl ads is fun, but at the end of the day we are creating a very good economic story for Michoacán, Mexico, and the US. We’re creating an economic output, and we’re feeding people. That’s an important part of the story. TexasCEOMagazine.com

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[LEADERSHIP]

THREE WAYS TO EMBRACE CONTRADICTION AND BECOME A STRONGER LEADER Brian Levenson

From the minute we’re old enough to kick a ball, we’re bombarded with messages about success, many of them contradictory. How many times have you been told that confidence is the key to winning? Or humility? What about adaptability? Perfectionism? Over my years as a mental performance and executive coach, I’ve worked with CEOs, professional athletes, and leaders in all areas of government. And while all these elite performers have their own strengths and weaknesses, the best of the best move seamlessly from preparation to performance and back again. I’ve explored this powerful framework in my recent book, Shift Your Mind: 9 Mental Shifts to Thrive in Preparation and Performance. The core idea behind Shift came to me in 2012. The Giants had just improbably won the Super Bowl, defeating the New England Patriots, who were considered the favorite. In the week leading up to the game, Giants coach Tom Coughlin explained to the media that all season long, he had told his guys to be “humble enough to prepare, confident enough to perform.” I couldn’t stop thinking about the simple idea that our mindset in preparation should be different from our mindset in performance. After studying my clients and the performers I personally admire— people like Coughlin, Beyoncé, and the late Kobe Bryant—I came to a conclusion. The preparation mind and the performance mind are not just different. In fact, they are often binary opposites. Therefore, what we think—and when— dictates how far we can go and what we can deliver. We need to embrace, and practice, both the preparation and performance minds to be our best. TexasCEOMagazine.com

THE PREPARATION MIND AND THE PERFORMANCE MIND ARE NOT JUST DIFFERENT. IN FACT, THEY ARE OFTEN BINARY OPPOSITES.

In Shift Your Mind, I identify nine core binaries that define the differences between our preparation and performance mindsets (see them all at strongskills.co/book). When we’re aware of these binaries, and when we learn how to use them correctly, we can experience our full potential and find joy in the process. In this article, I’d like to look at three of these binaries: Future and Present, Analysis and Instinct, Selfish and Selfless.

FUTURE AND PRESENT Thinking of the future can give you a goal to work toward, but in the moment of performance, you must stay present to seize opportunity. Jake Thompson is the founder and Chief Encouragement Officer of Compete Every Day, a lifestyle and gear brand 86

Texas CEO Magazine Q1 2021

devoted to helping people lead better and achieve more. As a single guy in his 20s, Thompson devoted all of his time to starting his business in the hope that he would be established by the time he was ready to settle down. During our conversation on my podcast, Intentional Performers, Thompson explained that he focused on future rewards, not the present hardships of giving up social and career opportunities to launch his company.

of goes away.” Thompson knew that all his prior work meant that one failure wasn’t the end. By relying on future planning in preparation, he could keep going in the moment of performance.

Later, he was able to lean on these skills in a moment of crisis. After an unsuccessful event, he began struggling with selfdoubt and negativity on his trip back.

While training for the Olympics, world champion swimmer Katie Ledecky wrote the number 565 on her pull buoy (a leg float used in swim workouts) as a constant reminder of her goal to swim 3:56 (56) in the 400-meter and 8:05 (5) in the 800-meter freestyle competitions at the 2016 Olympics. That 565 was Ledecky’s version of a vision board, an

“There’s a phrase I went back to on that drive,” Thompson said. “’I messed up, but the best is still ahead of me.’ And when you believe that, the idea of quitting kind

ENVISION THE FUTURE Some people think that having a vision board is woo-woo, but the greats use them. If you’re not much of an artist, consider a non-traditional version.

His goal in journaling, Chambers added, is to “compartmentalize and categorize,” so that his work stress doesn’t spill into his performance at home or vice versa. By producing data about his daily performance, Chambers can better prepare. With better preparation, he performs to his highest standards.

FIND YOUR WILL

Remembering that analysis in preparation mode can hone your instinct in performance mode, try this simple exercise for yourself. WILL is an acronym for four crucial questions that can help you analyze your opportunities for growth. Ask yourself these questions after every performance: 1. What went well? 2. What can I improve? 3. What did I learn about myself? 4. What did I learn about my situation? With this Well-Improve-LearnLearn analysis done, you will, like Chambers, be prepared for higher performance in the future.

SELFISH AND SELFLESS

everyday reminder of her goals. A few years later, she came within fractions of seconds of her goals and broke a new world record in the process. Katie Ledecky’s vision became her guide. How can you represent your goals visually?

ANALYSIS AND INSTINCT Over time I’ve come to realize that nobody is a “natural.” Instinct comes through deep analysis. Assistant Men’s Basketball Coach Brandon Chambers of Texas Southern University maintains good habits through daily journaling. “It’s a great way for me to self-reflect,” he said. “Every two or three weeks, I’ll go back and take notes on those days and where things are at and where I can improve and get better.”

Kevin Lavelle is the founder of the Texas performance menswear company Mizzen+Main and senior VP of the nonprofit Stand Together. He’s also a father of two who wants to spend quality time with his kids. Lavelle described to me the balancing act that his life requires. “I want to sleep more,” he said. “I want to work out more, I want to eat better, I want to be more attentive, I want to do more work . . . It’s not possible! [The key is] allowing myself that freedom to say, ’You know, I worked a lot later than I intended to. I’m not going to get up in the morning and work out because I need my sleep.’” Sounds counterintuitive, doesn’t it? Yet this founder and former CEO of a highly regarded and innovative company does his best to put himself first when he needs it. When we lose sight of our own health and personal goals, we limit our capacity to lead.

PRACTICE SELFISHNESS

Maybe you can relate. Many high performers are “team players” who struggle

more with being selfish than being selfless, but when we’re preparing, we sometimes need to focus on ourselves, like Lavelle does, to stay sharp. One of my favorite questions to pose to clients at a time of conflict is: What advice would you give to your best friend in this situation? Try this exercise. Think about the last time you had a friend or a coworker who was in need of advice. How easy was it for you to help that person see the possibilities if only he or she took the time to focus inward? Did you find it unusual to ask that person to focus on his or her own needs and goals? Next time you find yourself struggling, treat yourself like a friend. • • • Through my work as a mental performance coach and podcaster, I’ve been privileged to meet some extraordinary leaders. All of them know that the person they are on the big stage does not need to be the same as who they are away from it. Intentionality is the key. The preparation and performance minds can be strengthened like muscles, until the shift between them is seamless. It’s that “and” that is important: not choosing one mode or the other but embracing both at the right times. Shaka Smart, head men’s basketball coach at the University of Texas, put it perfectly when we discussed how contradiction and polarity fuels my work. “To me, what’s underneath what you’re talking about is consciousness,” he said. “If we are highly conscious and we are aware, if we drop any resistance to what’s going on, then we certainly can choose to be ’and.’” The best leaders don’t just practice. They embrace that “and” as they shift their minds in preparation and performance. Brian Levenson is the founder of Strong Skills (strongskills.co), which provides executive coaching and mental performance coaching, speaking, and consulting to leaders across the country. He is the author of Shift Your Mind: 9 Mental Shifts to Thrive in Preparation and Performance. Connect with Brian on Twitter at @BrianLevenson. Listen to the Intentional Performers podcast on iTunes or at strongskills.co.

TexasCEOMagazine.com

OIL & GAS IN TEXAS: & A.D.

B.C. (BEFORE COVID)

(AFTER THE DEBACLE)

A Forecasting Session with Dr. Bernard L. Weinstein The oil and gas industry in Texas still anchors our great state’s economy, despite the setbacks of a wild year. In 2020, our energy sector faced the one-two punch of a spiraling price war and a global pandemic, resulting in depressed prices and thousands of job losses. Where does the industry stand now, and what does its future hold? To gain some insight, Texas CEO Magazine recently hosted a forecasting session with Dr. Bernard Weinstein, Associate Director of the Maguire Energy Institute at Southern Methodist University’s Cox School of Business, where he is also an adjunct professor of Business Economics. Dr. Weinstein focused on the outlook for the oil and gas industry in Texas, which, though recovering, still faces myriad uncertainties and challenges.

B.C.: “BEFORE COVID” HIGHS Since the US Shale Revolution began a decade ago, the United States has been catching up to other oil-exporting countries— and doing so quickly. By the end of 2019, Dr. Weinstein noted, we had reached all-time-high oil production levels of 13 million barrels per day. Texas was and is “the big kahuna when it comes to oil production,” he said, “accounting for 42 percent of all US crude oil production.” We have surged from producing under 2 million barrels a day to contributing more than 5 million barrels daily. Thus, Texas has played a major role in making the United States the top oil-producing country in the world, overtaking Russia and Saudi Arabia from our third-place spot in 2016. 88

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Paralleling the US oil boom is our growth in production of natural gas, both dry and liquified, which has doubled over the past decade. Once again, Texas is a key player, outranked only by Pennsylvania in volume of natural gas produced. All this adds up to what Dr. Weinstein described as an “incredible achievement” for the country: the fact that we have reached energy independence. We now export more energy than we import, with Texas being an undeniable driver behind reaching this milestone.

PRE-EXISTING CHALLENGES However, even before COVID, the industry faced several challenges, which Dr. Weinstein enumerated: • Oversupply. “There’s too much oil and too much natural gas,” said Dr. Weinstein, noting the irony that we had once been worried about running out. “That’s helped keep prices low, but oversupply is not good in the long term.” For one, we’ve seen a shortage of space to store oil, and we’re also flaring natural gas in many cases rather than capturing it, especially in the Permian Basin. • Pipeline wars: Litigation, protests, and delays have plagued the construction of pipelines. Whether it’s confrontations over the Dakota Access Pipeline, governors flat-out vetoing pipelines, or developers walking away because of the accruing cost of lawsuits and delays, these projects are not easy to finish—or even begin, in some cases. • The growth of renewables: Lots of wind and solar is coming onto the power grids, “displacing both coal and, to a lesser degree, natural gas.” • Dislike of the industry: Dr. Weinstein noted that the Trump presidency seems to have fueled environmentalists, who portray the petroleum industry as destroying the planet. Five states have banned or are in the process of banning fracking, including Vermont, Maryland, and New York.

[VISION]

THE POST-PANDEMIC REALITY FOR OIL AND GAS After the pandemic began, said Dr. Weinstein, “we went almost overnight from consuming about 100 million barrels per day globally to 75 to 80 million barrels per day.” That steep drop in demand had a depressing impact on prices: We saw oil go from $60 per barrel at the beginning of the year to $40, “which seems to be the new normal.” He also pointed out that the number of active oil rigs has dropped from almost 1,100 in January of 2019 to fewer than 300 last October. It’s been a “rough ride” for oil producers, said Dr. Weinstein. “Everybody’s losing money. There’s a lot of consolidation, mergers, acquisitions occurring in the oil and gas industry today . . . the focus is on preserving capital and showing a positive cash flow. Energy is now one of the smallest sectors in the S&P 500,” making up just 2.6 percent. He also noted that the only oil company now left in the Dow Jones Industrial Average is Chevron. Since the lows of the pandemic, energy production has increased somewhat, but progress is slow. That includes the Permian Basin area, which continues to produce, albeit at lower levels; Weinstein described it as Texas’ Energizer Bunny.

HAVE WE HIT “PEAK OIL”? The question on many minds in the petroleum industry is whether demand and production will rebound, or whether we’ve already hit our peak. Dr. Weinstein “sticks with the consensus,” forecasting that 2030–2035 will likely mark maximum global oil demand. He points out that oil demand has probably already peaked for the wealthy, developed OECD nations, and will slowly fall between now and 2045. “But as the rest of the world industrializes, demand is going to continue to grow, and the growth in global oil demand is going to offset the decline in oil demand in the developed world.”

TEXAS: THE KING OF WIND With the new Biden administration, Dr. Weinstein doesn’t “think there’s any question that we’ll see an attempt to roll back some of Trump’s deregulatory actions on the energy front and a push for more so-called clean or green energy.” When it comes to one form of such energy—wind—Texas leads once again. We are currently the “king of wind,” with 29 gigawatts of installed wind capacity across the state. (Behind us are Iowa and California.) “We’ve been subsidizing wind like crazy for 20 years,” said Weinstein, at both the state and local level in Texas, and at the federal level overall. “For $71 billion in subsidies, we’re getting a whopping 3.6 percent of our energy from wind and solar.”

THE FUTURE IS NATURAL GAS Though 2020 saw declines in production of natural gas, as with oil, Dr. Weinstein stated that this is forecast to pick up in the second half of 2021, with positive year-over-year numbers from there. “When it comes to fossil fuels, the future is natural gas. We may reach peak oil demand in 2030 to 2035, but the demand for natural gas is going to continue to grow, mainly

because more and more natural gas is being used to generate electricity both here and around the world,” as well as to back up wind and solar, “when the wind’s not blowing and the sun’s not shining.” Texas is poised to be a big part of that natural gas future: “We’re number two in dry natural gas, but we’re number one in liquified natural gas. That’s some really good news for Texas.”

Despite declines in production of natural gas in 2020, we are on track to see positive numbers going forward for dry gas, though not for gas production associated with oil production. Source: S&P Global Platts Analytics.

For Dr. Weinstein, hydrogen is another fuel to keep an eye on, with “tremendous potential, particularly for power generation and transportation.” And what about nuclear power? “I don’t think we’re going to see new investment in nuclear,” said Dr. Weinstein. “If we really want to have a clean and green energy future, nuclear has to be part of it, but it’s out of favor right now.” • • • Dr. Weinstein ended on a sanguine note, stating that “we’re not looking at the end of oil. We may be looking at the end of peak consumption in the developed world, but that’s not going to be the case worldwide. I don’t think there’s any reason to be pessimistic about oil, particularly here in the state of Texas.”

Globally, fossil fuels aren’t going away anytime soon. Source: Energy Information Administration

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UNCOVERING GENERATION Z’S

UNEXPECTED VIEWS ABOUT CAREERS, EDUCATION, AND THE FUTURE

Jason Dorsey and Denise Villa, PhD

A FULL 48 PERCENT OF GEN ZERS AGES 16 TO 24 WHO ARE CURRENTLY EMPLOYED ARE NOW CONSIDERING CHANGING CAREERS BECAUSE OF THE UNCERTAINTIES CAUSED BY THE PANDEMIC.

For the first time ever, there are five different generations of employees and customers side-by-side in the marketplace. This is creating all kinds of new challenges for even the most experienced CEOs, employers, marketers, and leaders across Texas. The newest generation, Generation Z, is driving numerous new trends and shaping the future. This rapidly emerging generation is diverse, connected, and vocal. Over the next five years, Gen Z will become the fastest-growing generation in the workforce on a percentage basis. Moreover, now that they’re up to age 24, Gen Z also offers the most important preview of the future, from consumer preferences and behaviors to communication norms, investing approach, recruiting strategies, and much more. What does Gen Z think about the future? That is exactly what smart leaders need to know now, especially as Gen Z will become the cohort of employees and consumers that will support growth for years—and likely decades—post-pandemic. TexasCEOMagazine.com

WE FOUND THAT GEN Z VALUES EMPLOYEE BENEFITS VERY HIGHLY WHEN CONSIDERING A JOB, USUALLY IN THE TOP THREE MOST IMPORTANT CONSIDERATIONS. At our research and strategy center, The Center for Generational Kinetics, we continually study each generation to uncover their hidden mindsets, perspectives, and behavioral drivers—as well as what works (and what doesn’t!) to unlock their potential as customers and employees. In our latest State of Gen Z study, now in its fifth year, we specifically asked Gen Zers to share their beliefs, views, and approach to the future as well as the impact of the pandemic on them at this formative time in their lives. The insights they provided were fascinating, surprising, and actionable. We found what CEOs and organizational leaders need to know to bridge the gap in accurately understanding and engaging this generation at the most critical period in their emergence into adulthood. Before we share five of the key research findings, a bit of background about Gen Z: This new generation does not remember 9/11; for them, it has always been history. They also do not remember a time before smartphones or social media. In fact, they consider the 1990s vintage! Yes. Vintage. This generation is the most diverse in US and Texas history, and they deeply want to make their mark on the world. 92

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What are some key insights we uncovered in our latest State of Gen Z study? Here are five important findings that leaders need to know:

1. Generation Z believes that

COVID-19 is their generationdefining moment. They view this experience as the one that is most deeply shaping their views, attitudes, and beliefs about the future. This is particularly pronounced for older members of Gen Z, who are ages 18 to 24. This group was expecting to become more self-reliant as they ventured further into adulthood, yet so often they had their plans derailed right when they were getting their feet under them. In fact, our studies have shown that during the pandemic, Gen Z was the generation most likely to

lose their job, lose work hours, or see a reduction in pay.

2. COVID-19 has impacted

how Gen Z views their relationship with their parents. Of all Gen Zers currently living with their parents in the US, our national study found that 45 percent plan to continue living with their parents longer than they originally planned. In fact, 50 percent of Gen Z males said they expected to live with their parents longer than originally planned—so don’t turn their bedroom into your new home office just yet.

3. Gen Z has the most

confidence in healthcare workers during this period of time. In our national study, we asked Gen Z

benefits very highly when considering a job, usually in the top three most important considerations. Our research shows that this rapidly emerging, exciting generation presents a huge opportunity for business leaders to understand them, adapt, and grow with the generation as they drive more influence, purchasing power, and workforce importance. Right now, Gen Z is developing their brand loyalty, choosing career pathways, and influencing every other generation through social media. This is the time for leaders to learn about Gen Z and take action to unlock their potential. In future columns, we’ll dive into specific actions for leaders, in areas ranging from employment to marketing. For now, take the first step and ask a Gen Zer how the pandemic has impacted their views about the future—it’s a conversation worth having. It’ll show how a singular global event can impact different generations in the same exact city or region differently. Uncovering that generational context can help each of us become better leaders and come together when we most need it. what organizations and professional roles they have the most confidence in right now. The number-one group they selected was healthcare workers (doctors, nurses, medics, etc.). Of all the organizations and roles we asked about, the group Gen Z had the least confidence in was US government leaders, including the president and Congress.

to go to college or whether they even want to go. When we step back and look at the larger age range of 13 to 24, 40 percent of all Gen Zers are rethinking their career because of the pandemic. That is a huge number given the size of the generation and the amount of resources and schooling that is going into helping them prepare now for their future.

a lot of career and education second-guessing. A full 48 percent of Gen Zers ages 16 to 24 who are currently employed are now considering changing careers because of the uncertainties caused by the pandemic. Going even younger, 40 percent of all high school students ages 14 to 18 are reconsidering where

Gen Z is finding positives amid all the challenges, changes, and uncertainty. More than half of Gen Z—59 percent—believe they will begin saving more money because of the pandemic. That bodes well for the generation who also says they want to graduate college with as little debt as possible. In our other recent studies, we found that Gen Z values employee

4. The pandemic is causing

Jason Dorsey works with CEOs and leaders to solve generational challenges and drive growth. He is a global keynote speaker, researcher, and strategic advisor. Jason has served on public and private company boards, cofounded The Center for Generational Kinetics, and received over 1,000 standing ovations. He is the coauthor of the bestselling book Zconomy: How Gen Z Will Change the Future of Business— and What to Do About It. Learn more at JasonDorsey.com. Denise Villa, PhD, is CEO of The Center for Generational Kinetics, the leading generational research, speaking, and strategy firm. She advises CEOs, entrepreneurs, and leaders on specific ways to bridge generations and solve challenges. She is the coauthor of the bestselling book Zconomy: How Gen Z Will Change the Future of Business—and What to Do About It.

TexasCEOMagazine.com

THE

LANDMAN Understanding the ins and outs of this singular oil-and-gas profession Jonathan R. Grammer

George W. Bush, Aubrey McClendon, and T. Boone Pickens. The three names bear commonality in that each immediately brings to mind patriotism, capitalism, and wealth. They also share another common element, in that each spent time in the early stages of their careers as petroleum landmen. What exactly is a landman? Spend enough time in Texas and youâ&#x20AC;&#x2122;re bound to run across a landman or hear the word used. Yet many remain unclear as to what a landman is and what their career entails. 94

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The Origins of the Profession The first formal education curriculum for petroleum land management was established at the University of Oklahoma in 1958. However, the prominent use of landmen in the United States oil and gas industry began long before that. In 1859, oil was first discovered in the United States in Titusville, Pennsylvania, and so began the long and arduous process of obtaining oil and gas leases. Although some oil and

gas companies own the rights to the oil and gas that they extract from the ground, most are pumping hydrocarbons under lease rights. In short, the mineral owner executes a lease granting the oil company the right to enter oneâ&#x20AC;&#x2122;s property, drill for oil, and produce and transport it off site. This is done in exchange for both an upfront cash payment, or bonus, as well as an interest, commonly referred to as a royalty, in any future production. To negotiate this lease contract, the oil company will most often

does the need for the landman. Generally, once the lease has been acquired, the landman’s services are no longer needed. This structural fact of the industry, combined with the volatile and unpredictable price of oil, has led the landman’s profession to become very transient. In the first few years of my career, I worked as a landman for three different clients in two states. The projects ranged in size from just over 1,000 acres to more than 100,000 acres and had timetables ranging from two months to over a year. Many landmen start out similarly. Reservoir development exists all over the United States, and all of these areas at some point need the assistance of a petroleum landman.

The Landman’s Day-to-Day

turn to their landman, who will conduct the research into the legal ownership of the minerals, prepare the documents necessary for acquiring the lease, arrange payment, and many times handle drillingrelated and post-production issues with the mineral owner and/or landowner. Though an oil and gas company may develop and produce a particular reservoir for many years, the acquisition stage of the leases associated with this development

may be very short. As such, there is no economic benefit to retaining a full-time staff of landmen with the company; often, these services are contracted out only when needed. A company may be involved in only two or three acquisitions projects in any ten-year period, most lasting between a few months to upwards of two to three years. However, when the company is satisfied that sufficient acreage has been acquired to meet their drilling needs, the acquisition of oil and leases comes to a conclusion—as

The job of the petroleum landman begins with contact from the land manager associated with a particular oil company. The land manager is usually a full-time employee of the company and often serves as the general counsel as well. The land manager will show the landman where the company would like to acquire leases, often using a geologic or topographic map. The land manager will also explain (1) the terms of the lease being offered, including royalty and length of lease, as well as (2) the threshold amount of acreage that needs to be acquired before the company can justify the next stage: exploration. In order for the company to justify to their financial lender that a particular project has long-term potential for multiple drilling opportunities, it will need to first obtain the appropriate amount of acreage to do so. As discussed previously, this can range from merely two or three “sections” (640 acres each) to over a hundred sections of land. Once the threshold acreage has been determined, it’s time for the landman’s next task: researching the deed records pertaining to the project. It’s commonly forgotten that in the State of Texas, the owner of the rights to the minerals underneath the ground is often different from the owner of the surface. You can find TexasCEOMagazine.com

out who the surface owner is at any local tax appraisal district, but if the minerals are unproducing, their ownership can only be determined through research in the county courthouse. The records can either be kept in the local county courthouse or in the title and abstract company. Many title companies, while offering services and documents more closely associated with real estate transactions, also make available records for landmen researching the mineral rights. If this resource is not available, then the landman must go in person to the local county courthouse. A landman will usually begin by looking at the original deed, or patent, from the granting body. In Texas, the original granting entity is usually the governor or merely the State of Texas. While the first legitimate grant of land in Texas occurred in 1731, the patents spoken of here were usually granted between 1836 and 1904. From that point, the landman will begin to research the historical chain of records as the property is sold or conveyed from one party to another. Beginning shortly after the turn of the 20th century, when oil began to be discovered in commercial quantities in Texas, the reservation of mineral rights likewise began to appear in the deed records. As the surface interest in a particular property was sold, landowners would keep to themselves—or “reserve”— the rights to the minerals in the event that oil and gas were ultimately discovered in the future. After the past 120 years of activity, there are now multiple owners of mineral rights under any given tract of land. The landman will ascertain these individual owners as well as their proportionate share of ownership and reduce these findings into a report and ultimately into a lease for each owner to sign. For the most part, a drilling rig will very rarely commence operations until all of the owners have been taken under lease. This can range from one or two owners under a single tract of land to more than two hundred depending on the amount of conveyances that have taken place over the years. 96

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At that time, the landman will begin to research current addresses and telephone numbers and locate the appropriate mineral owners to begin the lease negotiation process. Depending on the location, an oil and gas lease can be acquired for anywhere between $15 per acre, such as in some areas of northwest Kansas, to over $5,000 per acre, such as in some areas of central Oklahoma. These prices are also dependent upon the price of oil and thus may quickly descend to become almost valueless within a few hours. Based on the speed of the project and the experience of the landman involved, oil and gas leases can be negotiated over the telephone, via email, or through the mail service, but most astute landmen still prefer to meet their mineral owners in person, if possible. In addition to the cash payment made up front, the lease carries with it a royalty provision, usually ranging between 20 to 25 percent of the after-cost proceeds of the production from the well associated with the mineral owners’ share.

LANDMAN OR LANDWOMAN? While the oil and gas industry is still male-dominated, there are many female landmen working today. It may sound odd, but the masculine term— landman—is traditionally used to refer to both men and women in the profession. This

Landmen of the Future

is codified in the bylaws of

Clearly, the landmen of the past and present serve a very specific but critical role in the oil and gas industry. But what is their future? Though landmen are historically associated with the petroleum industry, the services around acquisition of lease rights for an oil well are very similar to those used in acquiring energy leases for wind and solar energy. Increasingly, these alternative energy leases have developed into a beneficial avenue for landmen as they seek to broaden their experience and sustain their careers when oil prices are depressed. With every passing year, it becomes more common to see solar farms, wind turbines, and oil and gas wells occupying the same landscape, especially in North Central Texas, West Texas, and the Texas Panhandle. This has created new opportunities for Texas landmen, and created new avenues for surface and mineral owners alike to use their services. We’ve come a long way since the heyday of George, Aubrey, and T. Boone, but it looks like the core function of the landman is here to stay.

the American Association of Professional Landmen, though that could change at some point in the future.

Jonathan R. Grammer is a landman, attorney, and founder of both Grammer Land & Exploration Corp. and Grammer Law Group, P.C. Born and raised in Austin, Texas, he currently devotes his time to his business in the Texas Panhandle, Western Oklahoma, and Central Texas. Grammer’s business consists of projects ranging from electrical transmission to solar development to oil and gas development. He is the father of three and married to his wife, Claire, also an attorney.

SO, YOU WANT TO BE A

THOUGHT LEADER? James F. O’Gara

“A thought leader is an individual or firm that prospects, clients . . . even competitors recognize as one of the foremost authorities in selected areas of specialization, resulting in it being the go-to individual or organization for said expertise.” —Profitable Brilliance, Bruce H. Rogers and Russ Alan Prince

What CEO or business owner doesn’t want their company to be known as a thought leader in their space? Yet, with the noisy world we live in today, this can be challenging. Every single day, there are more than 7.5 million blog posts published on the internet,1 2 million articles, posts, and videos published on LinkedIn,2 and 100 million photos and videos shared on Instagram.3

Adding to the noise and the clutter is not the answer. However, producing relevant thought leadership content that affirms the position you want to own in the mind of your target audience is. True thought leadership is about change. Changing how buyers think about or view the world. Changing how they approach problems and challenges because of the insights you deliver. But, don’t get confused. Creating change is not simply about creating more content. It’s about executing a long-term strategy to own a specific thought leadership position on a topic that actually matters to your target audience. So, if you want thought leadership to be a growth driver in the business and truly differentiate your company, your entire executive team must be prepared to make a serious commitment. Thought leadership takes guts. It demands drawing a line in the sand, taking positions on topics that your target audience cares about, and putting disruptive, earthshaking perspectives out in the marketplace for the world to judge. In fact, according to authors Craig Badings and Liz Alexander, “Thought leaders are brave; explore areas others don’t, raise questions others won’t, and provide insights others can’t.”

[LEADERSHIP] Being a thought leader means being fearless. You can’t waffle. You have to know precisely what you want to be known for and then commit to owning that position in the minds of your customers. When it comes to thought leadership, philosopher and author Mel Thompson said it best: “If you don’t stand for something, you stand for nothing.” But, what does a thought leadership position look like and sound like? Here are a few examples: “We have a vision and a plan to ensure that renewable energy drives [X] percent of businesses in the next three years.” “We see a world in just five short years where mobile devices are completely replaced with wearables.”

Great thought leadership starts with getting your leaders in a room, digging deep into their hearts and minds, and leading them through a deliberate, intentional discovery process. According to author Cheryl Kim, “Thought leadership is at the center of a strong executive positioning plan. It focuses on an idea or problem that you are passionate about, and that you will continue to be passionate about.”

To land on a meaningful thought leadership position, your discovery process should be rooted in your business strategy and your company’s higher purpose, vision, mission, and values. During this process, you must answer some tough questions:

“We believe that cloud computing is history—we see a new computing environment that will drive business by 2025.”

• What do we want to be known for?

The secret to establishing a meaningful thought leadership position for your business is conviction. You can’t be afraid to share your vision of what could be or how things should be. Maybe that’s why Craig Badings and Liz Alexander said, “A hallmark of true thought leadership is the confidence to take the route that 99.9 percent of industry experts don’t even see.”

• What ideas and visions for the business have we discussed behind closed doors, but have been uncomfortable sharing publicly in the past?

A HALLMARK OF TRUE THOUGHT LEADERSHIP IS THE CONFIDENCE TO TAKE THE ROUTE THAT 99.9 PERCENT OF INDUSTRY EXPERTS DON’T EVEN SEE. —CRAIG BADINGS AND LIZ ALEXANDER

Texas CEO Magazine Q1 2021

Many times, you have to go to a place that has been taboo in the past. Leaders must be willing to surface and debate points of view that have been uncomfortable or shut down by others who have said, “We can’t put that out there” or, “We don’t want to show our hand” or, “That’s kind of our secret sauce.” When this happens, remember what business growth expert Jay Baer said: “A thought leader is someone with proven expertise and experience who isn’t afraid to share it with the world.”

• What points of view across our leadership team are truly unique and ownable?

• What convictions do we have to share that are at the heart of our customer’s business? • How do we want to change the conversation and the status quo in our industry?

Answers to these and other deep questions will help you define the defensible, intriguing, and ownable position that you want to share with the world. A position that truly matters to your target audience, that makes them stand up and say, “Hey, this company thinks differently; we need to hear more about their point of view on this topic.” Many experts believe that thought leadership will become the only lasting means of competitive differentiation in the years ahead. With that said, the thought leaders who exist here and now didn’t earn those positions overnight. It took time. That’s why business leaders who clearly define and remain committed to their thought leadership strategies today will become the sought-after brands of tomorrow. James O’Gara is CEO and founder of OnMessage, a strategic B2B communications consultancy based in Dallas, Texas. OnMessage specializes in translating go-to-market strategies into compelling stories that accelerate growth. He is also the author of 40+ Ways to Increase Organizational Clarity, Alignment and Performance. 1

Worldometer, “Blog Posts Written This Year,” www.worldometers.info/blogs.

Jimit Bagadiya, “309 Social Media Statistics You Must Know In 2020,” SocialPilot blog.

Lindsay Kolowich Cox, “The Ultimate List of Instagram Stats,” Hubspot blog.

7 Benefits a High-Performing Website Brings to Your Business Many CEOs consider a high-performing website to be their business’s most important asset. The website isn’t just the first place where people experience your brand — it’s where they go to learn what you do, to purchase (or experience) your products and services, to get help from your team, and even to look for their next job. Now more than ever, it’s not “just a website.” It’s a tool that gives your business several distinct benefits.

Workhorse [SMB] is now offering an eBook that shows how to achieve the above 7 benefits.

A HIGH-PERFORMING WEBSITE PROVIDES THESE 7 IMPORTANT BENEFITS 1. Provide a Cornerstone Brand Experience 2. Generate More Leads 3. Recruit Team Members 4. Provide Important Customer Service 5. Generate More Referrals 6. Streamline Operations & Cut Costs 7. Build Marketing and Consumer Insights For CEOs striving to maintain or grow their business—especially in this time of uncertainty—these benefits are critical to success. Building a high-performing website requires a distinct approach, a team of experts, consideration of technologies, and an understanding of budgets, timelines, marketing goals, operational goals, brand strategy, and more. Workhorse [SMB] was founded on the principle of bringing affordable, high-performing websites and marketing to small businesses. Located in Austin, Texas, Workhorse [SMB] has helped more than 300 businesses create websites that drive results.

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LEADERSHIP