June 9, 2015

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Beyond Tech

Article

STATE OF THE INDUSTRY

Utah’s Tech Sector Boom is Bringing Unprecedented Opportunities and Challenges

By Adva Biton

June 9, 2015


“If you don’t know what’s going on in [Utah’s] tech industry, you’re missing the growth engine of the state.”

These are the words of Richard Nelson, president and CEO of the Utah Technology Council (UTC). He’s not exaggerating—with over 5,000 tech companies representing 7,000 jobs and nearly 10 percent of the state’s payroll, it’s important that Utahns recognize what’s going on in their own home state.

After all, the rest of the country has begun to take notice.

Earlier this year, the Brookings Institute identified three Utah cities—Salt Lake City, Ogden and Provo—in its list of the nation’s top 15 cities with the highest concentrations of advanced science, technology, engineering and math (STEM) industries, called “super-sectors.” The U.S. Chamber ranks Utah at No. 4 in STEM job growth in the United States and No.1 in employment growth in the Western Region. The Beehive State also ranks No. 3 for entrepreneurship and innovation in the U.S. Within the last year, Utah tech startups raised over $730 million in venture capital funding.

In short, Utah’s tech industry is booming in a way that’s left industry veterans impressed, energized and optimistic for the future.

Bringing the Big Players to Utah

Make no mistake—while Utah’s technology sector is currently garnering national attention, it wasn’t so long ago that the “Silicon Slopes” were not on the national map.

“I used to get ridiculed by investors and entrepreneurs saying: ‘What’s in Utah? [You] don’t have any good companies,’” says Robb Kunz, founder and CEO of BoomStartup, a lean startup accelerator. “Our brand as a state was about the outdoors and skiing and nobody took us seriously. In the last 18 months, we’ve started getting national recognition. There are good things happening. I don’t get ridiculed now. There’s a huge transformation in how people out of state are looking at the state of Utah.”

His experiences are echoed by Jeanette Haren, CEO of educational technology company Truenorthlogic. “[Investors] would say, ‘Oh, I’m not flying into Utah,’” she says. “Then, after I raised money and ed-tech went boom, they’d call me and say, ‘When can we invest?’ There’s a totally different mindset. New York money isn’t afraid of Utah now.”

What changed? How did Utah go from being largely ignored to its place last year as the sixth-most popular venture capital (VC) funding destination, according to The Wall Street Journal? According to industry vets, there’s plenty to recommend Utah to the nation. For one thing, the state’s business-friendly policies and relatively low cost of living are attractive to companies that are fed up with paying accelerating costs in areas like Silicon Valley.

“It’s a whole other universe of expenses [in the Bay Area],” says Kim Jones, CEO of digital communications agency Vérité. “The work ethic here is very strong. There isn’t the tax regulation that you’ll get in California. Having a business in California is a whole different ball game. San Francisco is running out of room, IT talent, just about everything.”

A New Yorker piece entitled “How Utah Became the Next Silicon Valley” published in February 2015, postulates that Utah’s tech boom is partly due to its capable talent pool of STEM-educated graduates from universities like Brigham Young University, along with its tight-knit business population and government. High quality of life, low cost of living, entrepreneurial spirit, a business-friendly government, highly-educated local talent—it’s all come together to make Utah a very attractive destination for investor dollars.

“It’s become a perfect storm in a very positive way,” says Nelson. “When you have early-stage capital to fund viable ventures, you can start to attract talent, including senior talent. They attract each other.”

“It used to be that companies had their headquarters in Silicon Valley, offices in Utah. It’s flipping now. They want a remote office in Silicon Valley so they can still say they’re there,” says Kunz. “Once [they] get here in Utah, the vibrant ecosystem that we have in the startup community, people say: ‘I had no idea.’”

Keeping Tabs on Talent

While there’s plenty for the tech industry to be optimistic about, veterans like Haren and Nelson preach a more cautious optimism. It’s easy to applaud the work Utah’s home-grown talent has done, but it’s important to remember that the tech industry nationally has a talent shortage. If Utah wants to keep ascending, it can’t rest on its laurels.

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