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Houston is winning the competition to establish tech hubs in Texas – MarketWatch

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A crumbling Sears department store is being converted into a sparkling, state-of-the-art space for early-stage tech startups to receive financing and expert advice. The shell of a Baker Hughes Co. facility that manufactured oil and gas equipment is home to a bustling “maker lab” for 33 tenants. A 300,000-square-foot complex incubating the next tech ideas for the likes of Johnson & Johnson and AT&T Inc. is known affectionately as “the cookie factory,” because it was originally the home of Nabisco. 
These scenes from Houston are part of an attempted industrial resurrection for the nation’s fourth-largest city, which is trying to move from older companies that were a part of the city’s oil-propelled boom to an economy based on fostering technology. The crown jewel of this renaissance could be the gleaming new corporate headquarters of Hewlett Packard Enterprise Co. HPE, -0.97% in northern Houston — when the sprawling, 439,000-square-foot complex designed in part by HPE Chief Executive Antonio Neri opens in early 2022, it will be home to about 3,000 people, making HPE the city’s eighth-biggest employer.
“Every company [in Houston and elsewhere] is an IT company now,” Neri told MarketWatch in a 30-minute video interview last week. “They all need to turn their talent in different directions, and reinvent themselves.”
HPE’s decampment to Houston offers a vivid snapshot of a new tech frontier where the energy industry, three major local universities, the world’s largest medical center, the mayor’s office, and the local tech ecosystem are working hand-in-hand to accelerate research in medicine, climate change and cloud computing.
A confluence of events — stepped up by the pandemic and a steady migration of Californians to Texas — has helped Houston shed its image as an oil town and position itself as the hardware-solutions tech nexus to Austin’s business-to-consumer software/app focus, and the old-school sensibility of Dallas (the global headquarters of AT&T Inc. T, -1.77% ). San Antonio, too, is part of the mix, as a data-center destination.
Houston’s resurgence is part of a Texas tech wave: Oracle Corp. ORCL, -0.82% is relocating its corporate headquarters to nearby Austin, and Tesla Inc. TSLA, -2.51% is expanding operations to the state capital as well.
“I want the rest of the world to know how much Houston is changing,” Amy Chronis, managing director of Deloitte Houston, told MarketWatch. “The wakeup call was Amazon looking at candidates for HQ2, and Houston not making the second cut. Not enough technological talent was their reason. It was incorrect, but it lit a fire here.”
Seen through the prism of old, established facilities converted into accelerators and incubators, Houston may be America’s preeminent new tech hub. Sure, the pandemic played a part in a recent migration of tech workers from California to Texas, but the trend was already in motion, as energy companies and medical facilities pivoted to tech.
“For years, Houston was lagging the rest of the county in its innovation-engine system. Houston was always an industrial, major organization city,” Bob Harvey, CEO of Greater Houston Partnership, the business organization for the 12-county region that functions as a Chamber of Commerce, told MarketWatch. “What we didn’t do well was startups. Houston is now showing up in lists of tech talent.”
What has changed is an intertwined economy that includes three major universities in the area: Rice University, the University of Houston and Texas A&M University. The likes of Chevron Corp. CVX, +1.49%, Shell RDS and Halliburton Co. HAL, +3.70% are working more closely with local tech startups in an attempt to expand their businesses after relying for years on in-house R&D, and cloud giants such as Microsoft Corp.’s MSFT, -1.67% Azure, Amazon’s AMZN, -0.24% AWS and Alphabet Inc.’s GOOGL, -1.72% GOOG, -1.69% Google Cloud are placing more talent in Houston to work with the energy industry.
Change is coming, but with deep Houston roots. In 2001, then-Hewlett Packard Co. merged with Compaq Computer Corp., based in Houston, for $25 billion in one of tech’s most controversial mergers. By the time the corporate dust had settled, in 2015, HP was split into HPE and HP Inc.
To be sure, an influx of startups has set the stage for HPE’s return. The appeal of a massive labor market teeming with engineers, a booming enterprise market, a low cost of living, and a thriving health industry led to several sizzling startups to open second headquarters in Houston.
Among the transplants are Roboze Inc., an Italian-based robotics company specializing in 3-D printing of high-spec parts for energy and aerospace industries; autonomous driving unicorn Nuro; fintech firm Bill.com; and Solugen Inc., a green tech company that processes and cleans water in petro-chemical plants.
In a state teeming with tech expansion, Houston appears to be the hot spot, as Austin grappled with flagging funding over the past year. Venture-capital investments in Houston increased to $753 million in 2020 from $284 million in 2016.  Last year, Houston-based health-care companies generated $256 million in VC funding, accounting for $1 of every $3 VC dollars raised there. 
“One way to keep people in Houston is to get more venture funding and develop talent here,” said Sandy Guitar, managing director of the HX Venture Fund. She knows from personal experience: She founded a company in Palo Alto, Calif., and commuted there from Houston for years.
Talent has always been in Houston, which ranks first in the U.S. for tech workers in non-tech companies, according to a Cyberstates study in April 2021.
Yet Austin, home of the SXSW digital conference/musical festival/film festival, has traditionally been Texas’ tech darling.
“Austin did a good job of being viewed by the coasts as the tech center of Texas,” Harvey of Greater Houston Partnership said. “But it has become more expensive and crowded. Plus, what Houston has to offer is culture, professional sports and a more diverse community.”
What also distinguishes the Houston tech scene is the nature of its mission. Many of its companies are tackling big problems — health, climate change — that require “hard tech,” said Dr. Emily Reichert, CEO of Greentown Labs, the largest climate-tech startup incubator in North America. Its tenants include SolarFi, a maker of solar-powered pods, and Katz Water Technologies.
Ambitions are equally sky high at Texas Medical Center (TMC) Innovation, a 300,000-square-foot facility that was the former home of Nabisco, the cookies and snacks subsidiary of Mondelēz International Inc. MDLZ, -2.00%. One of TMCI’s occupants, Johnson & Johnson’s JNJ, -1.57% JLABS, works with Stellanova Therapeutics, which is developing an antibody that targets fiber blast cells that protect cancer cells against treatment and promote cancer cell growth, and biotech firm Tvardi Therapeutics. Tvardi, which is developing medicines for cancer, chronic inflammation and fibrosis, just landed $74 million in funding.
Pharma and medical devices are the focus at JLABS, Fiona Mack, the lab’s head, told MarketWatch.
Meanwhile, catty corner from Greentown Labs is The Ion, a six-story, 266,000-square-foot art deco building that opened as a Sears department store in 1939. When the tech and innovation hub opens in the fall, it will be home to Chevron Technology Ventures and Microsoft Corp., according to Jan Odegard, Ion’s executive director.
“Eventually, we want to turn midtown here into a 15-minute city,” Odegard told MarketWatch, referring to a major business/lifestyle movement among the under-40 crowd in the San Francisco Bay Area, Phoenix and elsewhere — where people work and live within a 15-minute driving radius. This is an especially novel approach in a metropolis like Houston, where it often takes an hour to get from one location to another, traffic pending.
On the other end of town, in an industrial section, the $37 million East End Maker Hub was once home to Baker Hughes Co., one of the world’s largest oil-field services companies that was acquired by General Electric Co. GE, -0.89% in 2017. The 307,000-square-foot facility (yes, it seems everything in Houston is large) houses 33 local manufacturers, fabricators, crafters and innovators. One standout is Volumetric Biotechnologies Inc., a Houston startup that makes 3-D-printed human organs. It has leased about 11,000 square feet.
“We have it all here — welders, shop artists, robotics, all manufacturers, a prison-entrepreneurship program,” Mike Pittman, vice president of real estate for Urban Partnerships Community Development Corp., told MarketWatch.
Halliburton Corp., which reported $14.45 billion in sales last year, is taking an in-house approach. The multinational conglomerate just opened a new tech center to “lower the friction” between itself and startups. Its initial cohort, NanoTech Inc., is a material-science company focused on fireproofing and insulation technologies that recently completed its $5 million seed round of financing.
“This is a front door for the company to engage with companies, and expand into areas where Halliburton is already working,” Dale Winger, managing director of Halliburton Labs, told MarketWatch.
At the Greater Houston Partnership’s first State of Technology event in April, HPE’s Neri struck a familiar theme: The original Silicon Valley startup, whose roots extend to Palo Alto, Calif., in 1939 as Hewlett-Packard Co., moved its corporate headquarters to Texas to take advantage of a large, diverse talent base.
There is some personal history there, in addition to generous state tax breaks. Neri, who lived in Houston from 2007-’15 while working as an HP executive, acknowledged that HPE has to do “way more work” in inclusion and diversity, and that the task is more easily achievable in Houston than in the more competitive San Francisco Bay Area. He promised a new facility in Houston in 2018, and announced the corporate headquarters move to Houston in December 2020.
HPE’s new campus serves as a blueprint for the hybrid work experience — an interconnected phalanx of office space, amphitheater, gym and cafe. HP Inc. HPQ, -1.88% and Exxon Mobil Corp. XOM, +1.83% also have facilities in the same Springwoods Village development just north of Houston.
“I made a promise in 2018 to build a new campus in Houston,” said Neri, who had a major hand in its design. (Neri also studied art in Argentina for nine years and has taught art, specializing in drawing and painting.) “It’s really the best of both worlds, with major operations in Houston and San Jose.”
HPE will maintain a large workforce focused on product innovation in San Jose, Calif., though it is in Houston that HPE has its second-largest workforce, behind India.
“The talent is in Houston and Silicon Valley,” said Neri, who will spend most of his time in Houston, with other executives sprinkled between the two regions. He also mentioned the geographical advantage Texas offers for traveling to Latin America and Europe for business.
Pradeep Kumar, who as senior vice president and general manager of HPE’s Pointnext Technology Services group, leads a $6 billion business that employs 17,000 people. HPE reported $27 billion in 2020 sales; it employs about 60,000 worldwide.
“There is always competition for up-and-coming talent in [Silicon] Valley, and it will continue despite antitrust backlash,” Kumar, a Compaq veteran who has lived in Houston for 23 years, told MarketWatch. “We have an advantage in Houston with college grads and existing talent. It is our city’s time.”
Much like anything dealing with John McAfee, 'Running With the Devil' has quickly devolved into heated debate, controversy and possibly a lawsuit.
Jon Swartz is a senior reporter for MarketWatch in San Francisco, covering many of the biggest players in tech, including Netflix, Facebook and Google. Jon has covered technology for more than 20 years, and previously worked for Barron’s and USA Today. Follow him on Twitter @jswartz.
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Biden begs for money for 2024 Campaign from local SF Bay Area tech leaders and talks AI

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Biden discusses risks and promises of artificial intelligence with tech leaders in San Francisco

SAN FRANCISCO (AP) — President Joe Biden convened a group of technology leaders on Tuesday to debate what he called the “risks and enormous promises” of artificial intelligence.

The Biden administration is seeking to figure out how to regulate the emergent field of AI, looking for ways to nurture its potential for economic growth and national security and protect against its potential dangers.

“We’ll see more technological change in the next 10 years that we saw in the last 50 years,” Biden said as the meeting with eight technology experts from academia and advocacy groups kicked off.

“AI is already driving that change,” Biden said.

The sudden emergence of AI chatbot ChatGPT and other tools has jumpstarted investment in the sector. AI tools are able to craft human-like text, music, images and computer code. This form of automation could increase the productivity of workers, but experts warn of numerous risks.

The technology could be used to replace workers, causing layoffs. It’s already being deployed in false images and videos, becoming a vehicle of disinformation that could undermine democratic elections. Governments, as well as the European Union, have said they are determined to regulate and put brakes on AI before it is too late.

Biden said social media has already shown the harm technology can do “without the right safeguards in place.”

In May, Biden’s administration brought together tech CEOs at the White House to discuss these issues, with the Democratic president telling them, “What you’re doing has enormous potential and enormous danger.”

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White House chief of staff Jeff Zients’ office is developing a set of actions the federal government can take over the coming weeks regarding AI, according to the White House. Top officials are meeting two to three times each week on this issue, in addition to the daily work of federal agencies. The administration wants commitments from private companies to address the possible risks from AI.

Biden met Tuesday at the Fairmont hotel in San Francisco with Tristan Harris, executive director of the Center for Human Technology; Jim Steyer, the CEO of Common Sense Media; and Joy Buolamwin, founder of the Algorithmic Justice League, among others. California Gov. Gavin Newsom was also in attendance.

Biden is also in the San Francisco area to raise money for this 2024 reelection campaign. At his first fundraiser of the night, Biden spoke about what he saw as freedoms under siege, particularly for the LGBTQ community and with the overturning of abortion protections by the U.S. Supreme Court. And as president, it’s his job to help safeguard the right to choose.

“I think the American people need to have the confidence that we’re going to do what we say we’re going to do,” he said.

Climate change has also been a priority in Biden’s speeches at the fundraisers. On Tuesday, he told a group that he expects that John Kerry, the special envoy for climate, will soon return to China for talks on reducing carbon emissions.

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Associated Press writer Barbara Ortutay in San Francisco contributed to this report.

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Microsoft makes case for Activision merger amid EU scrutiny

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Microsoft makes case for Activision merger amid EU scrutiny

BRUSSELS (AP) — Microsoft’s Xbox video game division on Tuesday announced new partnerships with Nintendo and chipmaker Nvidia as it tries to persuade European regulators to approve its planned $68.7 billion takeover of game publishing giant Activision Blizzard.

A key audience for the announcements were the European Union antitrust regulators who held a closed-door meeting Tuesday with executives from Microsoft and some of its competitors, including Sony and Google.

Microsoft announced a 10-year agreement with chipmaker Nvidia to bring Xbox games to Nvidia’s cloud gaming service. Microsoft also said it has now signed a similar deal with Nintendo, formalizing a commitment it revealed late last year.

What it does not have is an agreement with Xbox’s chief rival, PlayStation-maker Sony, which has sought to convince antitrust regulators around the world to stop the Activision Blizzard merger.

The all-cash deal, which is set to be the largest in the history of the tech industry, faces pushback from regulators in the U.S. and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

The European Commission, the 27-nation bloc’s executive arm, has been investigating whether the merger would distort fair competition to popular Activision Blizzard game titles. It’s scheduled to make a decision by March 23.

Microsoft first announced the agreement to buy the California-based game publisher early last year, but the takeover has also been stalled in the U.S., where the Federal Trade Commission has sued to block the deal, and in Britain, where an antitrust watchdog’s provisional report said it will stifle competition and hurt gamers.

Microsoft, which is based in Redmond, Washington, has been counting on getting approval in either the EU or Britain to help advance its case in the U.S.

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Microsoft’s president, Brad Smith, said at a Brussels news conference after meeting with regulators Tuesday that he was “not in a position to say exactly what was said in the hearing room” but emphasized that Xbox has a much smaller share of the market than PlayStation does in Europe, and asserted that the deal would be good for the industry by bringing more games to more people.

“For us at Microsoft, this has never been about spending $69 billion so that we could acquire titles like Call of Duty and make them less available to people,” Smith said. “That’s actually not a great way to turn a $69 billion asset into something that will become more valuable over time.”

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Amid ChatGPT outcry, some teachers are inviting AI to class

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Amid ChatGPT outcry, some teachers are inviting AI to class

LEXINGTON, Ky. (AP) — Under the fluorescent lights of a fifth grade classroom in Lexington, Kentucky, Donnie Piercey instructed his 23 students to try and outwit the “robot” that was churning out writing assignments.

The robot was the new artificial intelligence tool ChatGPT, which can generate everything from essays and haikus to term papers within seconds. The technology has panicked teachers and prompted school districts to block access to the site. But Piercey has taken another approach by embracing it as a teaching tool, saying his job is to prepare students for a world where knowledge of AI will be required.

“This is the future,” said Piercey, who describes ChatGPT as just the latest technology in his 17 years of teaching that prompted concerns about the potential for cheating. The calculator, spellcheck, Google, Wikipedia, YouTube. Now all his students have Chromebooks on their desks. “As educators, we haven’t figured out the best way to use artificial intelligence yet. But it’s coming, whether we want it to or not.”

One exercise in his class pitted students against the machine in a lively, interactive writing game. Piercey asked students to “Find the Bot:” Each student summarized a text about boxing champion and Kentucky icon Muhammad Ali, then tried to figure out which was written by the chatbot.

At the elementary school level, Piercey is less worried about cheating and plagiarism than high school teachers. His district has blocked students from ChatGPT while allowing teacher access. Many educators around the country say districts need time to evaluate and figure out the chatbot but also acknowledge the futility of a ban that today’s tech-savvy students can work around.

“To be perfectly honest, do I wish it could be uninvented? Yes. But it happened,” said Steve Darlow, the technology trainer at Florida’s Santa Rosa County District Schools, which has blocked the application on school-issued devices and networks.

He sees the advent of AI platforms as both “revolutionary and disruptive” to education. He envisions teachers asking ChatGPT to make “amazing lesson plans for a substitute” or even for help grading papers. “I know it’s lofty talk, but this is a real game changer. You are going to have an advantage in life and business and education from using it.”

ChatGPT quickly became a global phenomenon after its November launch, and rival companies including Google are racing to release their own versions of AI-powered chatbots.

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The topic of AI platforms and how schools should respond drew hundreds of educators to conference rooms at the Future of Education Technology Conference in New Orleans last month, where Texas math teacher Heather Brantley gave an enthusiastic talk on the “Magic of Writing with AI for all Subjects.”

Brantley said she was amazed at ChatGPT’s ability to make her sixth grade math lessons more creative and applicable to everyday life.

“I’m using ChatGPT to enhance all my lessons,” she said in an interview. The platform is blocked for students but open to teachers at her school, White Oak Intermediate. “Take any lesson you’re doing and say, ‘Give me a real-world example,’ and you’ll get examples from today — not 20 years ago when the textbooks we’re using were written.”

For a lesson about slope, the chatbot suggested students build ramps out of cardboard and other items found in a classroom, then measure the slope. For teaching about surface area, the chatbot noted that sixth graders would see how the concept applies to real life when wrapping gifts or building a cardboard box, said Brantley.

She is urging districts to train staff to use the AI platform to stimulate student creativity and problem solving skills. “We have an opportunity to guide our students with the next big thing that will be part of their entire lives. Let’s not block it and shut them out.”

Students in Piercey’s class said the novelty of working with a chatbot makes learning fun.

After a few rounds of “Find the Bot,” Piercey asked his class what skills it helped them hone. Hands shot up. “How to properly summarize and correctly capitalize words and use commas,” said one student. A lively discussion ensued on the importance of developing a writing voice and how some of the chatbot’s sentences lacked flair or sounded stilted.

Trevor James Medley, 11, felt that sentences written by students “have a little more feeling. More backbone. More flavor.”

Next, the class turned to playwriting, or as the worksheet handed out by Piercey called it: “Pl-ai Writing.” The students broke into groups and wrote down (using pencils and paper) the characters of a short play with three scenes to unfold in a plot that included a problem that needs to get solved.

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Piercey fed details from worksheets into the ChatGPT site, along with instructions to set the scenes inside a fifth grade classroom and to add a surprise ending. Line by line, it generated fully formed scripts, which the students edited, briefly rehearsed and then performed.

One was about a class computer that escapes, with students going on a hunt to find it. The play’s creators giggled over unexpected plot twists that the chatbot introduced, including sending the students on a time travel adventure.

“First of all, I was impressed,” said Olivia Laksi, 10, one of the protagonists. She liked how the chatbot came up with creative ideas. But she also liked how Piercey urged them to revise any phrases or stage directions they didn’t like. “It’s helpful in the sense that it gives you a starting point. It’s a good idea generator.”

She and classmate Katherine McCormick, 10, said they can see the pros and cons of working with chatbots. They can help students navigate writer’s block and help those who have trouble articulating their thoughts on paper. And there is no limit to the creativity it can add to classwork.

The fifth graders seemed unaware of the hype or controversy surrounding ChatGPT. For these children, who will grow up as the world’s first native AI users, their approach is simple: Use it for suggestions, but do your own work.

“You shouldn’t take advantage of it,” McCormick says. “You’re not learning anything if you type in what you want, and then it gives you the answer.”

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Associated Press writer Sharon Lurye contributed to this report from New Orleans.

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The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.

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