Cluster of Praise: Utah’s IT Sector An Industry Best

Forging Firsts

One first-place finish in a state business attractiveness ranking is noteworthy.

Two are remarkable.

Three — and other eye-popping performances in related rankings — indicate a pattern that demands attention from capital investors and their site locators everywhere. IT companies have certainly noticed.

Utah is once again the top state for 2013 in the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.

In July, Pollina Corporate Real Estate ranked Utah first in its list of the Top Ten Pro Business States for 2013. Again. It was first in 2012, as well. And Utah scores first in the nation, for a third consecutive year, on Forbes’ list of the Best States for Business and Careers. That’s a lot of firsts.

Night skiing at Sundance Resort
Photo by Willie Holdman

This consistency flows from a remarkably diverse economy in an aggressively pro-business state. Utah is the only state that ranked in the Top 10 in all six areas assessed by the U.S. Chamber of Commerce in its Enterprising States 2013: Getting Down to Small Business report, released in April. The categories are economic performance, exports, business climate, talent pipeline, infrastructure and innovation & entrepreneurship. The report notes that there are more than 7,000 technology companies in Utah, and job growth in these companies is twice that of businesses outside the high-tech industry.

Entrepreneurs and investors in their enterprises agree that a Utah location adds a layer of legitimacy to high-tech business plans.

“Utah’s IT and software industry has seen substantial growth over the last five years with the expansion and relocation of major players in the industry such as Adobe, eBay, IM Flash and EMC,” says Jeff Edwards, president and CEO of EDCUtah. “The success of these companies has opened a lot of doors for us and allowed us to talk to a lot of other companies that might not have considered coming here before. Utah is now recognized internationally as one of the most vibrant IT communities in the US.”

The Entrepreneur’s View

Some of today’s coolest IT success stories are incubating in Utah. Like Qualtrics, the private research software company, founded by father and son team Scott and Ryan Smith and Ryan’s friend Stuart Orgill in 2002 in the Ryans’ basement in Provo.

“We had 20 people working in the basement at one time, so we moved to another building and continued to hire,” Orgill recalls. “We got to 40 or 60 people there and had to move out. Today we have 350 people working at Qualtrics, and we have hired more than 120 in the last two quarters — and added more than 1,400 clients.”

One day Ashton Kutcher will star in a movie about them.

The company now has more than 5,000 clients worldwide, including more than 1,200 colleges and universities (95 of the top 100 business schools) that use the Qualtrics Research Suite as their standard research platform. Corporate clients in the financial services, manufacturing, media, retail, hospitality and other key sectors use Qualtrics for market research and other applications.

Provo Mayor John Curtis
Photo by Bryant Livingston Photography

“We’re the leader right now in this space, and we feel like we’re just getting started,” says Orgill. “It was definitely cutting edge when we started. Since about 2008, companies cannot afford not to be right, they cannot ignore their customers. They have to gather insights from their customers and act on them quickly, and that’s partly why our company and the industry itself have grown so quickly.”

Orgill credits “the incredible team we have been able to form here in Utah” and Qualtrics Research Suite that he says is the easiest product to gather data on for enterprise corporations. “The most important insights a company needs to get at are the ones they don’t have yet, and Qualtrics helps deliver those from employees, from customers, from people that will potentially be using their product.”

Pretty cool, huh?

About 95 percent of the company’s work force is homegrown, says Orgill, thanks to an annual supply of about 100,000 students graduating each year from fast-growing colleges and universities in Utah. “This market is filled with a lot of very educated people, and it is home to a very strong work ethic,” which has served the company well, he notes. “We have kept the workforce bar extremely high and have not budged on that. Even though we are growing very quickly, we have to bring in very high caliber talent, and we can do both here at the same time.”

“ Utah is becoming ‘a tech magnet.’ On our street alone are three very successful tech companies — Qualtrics, Ancestry.com and Vivint. ”
— Stuart Orgill, Qualtrics co-founder

Orgill also credits Utah, which he calls a strong supporter of tech companies and an ideal location for recreational sports enthusiasts. “It’s an incredible business environment. If you come here and are energetic and active and want that kind of a work force, you have it all in your back yard — skiing, hiking, fishing, mountain biking, snowboarding. We attract a lot of people that are interested in those activities.”

“Utah is becoming ‘a tech magnet,’” he adds. “On our street alone are three very successful tech companies — Qualtrics, Ancestry.com and Vivint — one of the largest providers of home automation services in North America.”

Adobe, WordPerfect, Microsoft, Micron, Domo (a cloud-based business management platform provider), Symantec and many other high-tech companies call Utah home as well. “Our success has not been dependent on state and local government, but they have been the most supportive, helpful people we could have imagined,” says Orgill. “They have been on-site, they are all ears, just a phone call away. [Provo] Mayor Curtis is one of the best mayors I can imagine in terms of making the city cutting-edge and doing whatever he can to support business. The state economic development people are great, too, and we have definitely felt the support of all of them.

“I would also note that some might have the sense that being in a place like Provo might hold you back in some ways,” he continues. “But it hasn’t held us back at all. We raised $70 million last year.”

Venture capital investors “definitely have their eye on Utah and the enterprises they are finding here,” says Orgill. “There is a genuineness with businesses that are born in places like Utah that speaks to these folks that are out beating the streets and looking for the next real opportunity, because they know it’s not grown to flip, that there is a legitimacy there. They know it’s a real company. There is an authenticity to a lot of start-ups that show up in a state like Utah. That has caught the attention of a lot of people.”

The Mayor’s View

Provo Mayor John Curtis says it’s the people of his city and state that make the business climate so conducive to high-tech company success.

“The population is industrious and knows how to figure out ways to make things happen,” he asserts. “It’s been that way since this area was settled. People are amazed at the culture they find here. More than half the people in Provo speak a second language, there is a high percentage of college degrees, and we’re very entrepreneurial.”

As for the business community, “Provo is a great place for businesses to start and be successful — it’s amazing to look at the list of companies that have come from this area. They have an extremely high record of success.”

Quality of life is the third leg of the region’s business attraction tripod, says Curtis, pointing to close proximity to virtually every outdoor recreational amenity.

Adobe opened its 280,000-sq.-ft. campus in Lehi, south of Salt Lake City, in November 2012. More than 900 work at the new facility, which features panoramic views, a full gym and an NBA size basketball court.
Photo courtesy of cityhomeCOLLECTIVE, Erickson Photography

Google just purchased Provo’s dated fiber-optic iProvo Internet network and plans to upgrade it to the search engine’s hyperspeed Google Fiber Internet infrastructure, making the Utah city the third in the nation (Kansas City, Mo., and Austin, Texas, are the others) to win that investment.

Curtis noted in a June 3, 2013, Salt Lake Tribune article about the deal that quality of life helped lure the Google to the area. “All of our residents will have free access to the Internet,” Curtis tells Site Selection. “That connectivity available throughout the city is huge. It’s something people want to be a part of. What will our residents do with this? Imagine the benefits in terms of health care, education, community involvement — all of these things we are just beginning to explore, but they are all intriguing.”

Brigham Young University and Utah Valley University supply a steady stream of new, educated workers to the labor pool, says Curtis. “And we have available space for just about any size or type of company that wants to locate here.

“ I tend to get labeled ‘the Utah guy,’ but there is a lot of opportunity there for IT companies interested in relocating to a place with an amazing work force. ”
— David Carter, co-founder and strategic advisor, Amplify.LA

“We all have fabulous opportunities in the state, and we welcome people to look at all that Utah has to offer,” says the mayor. “As a city, we have some unique features — a fun, vibrant downtown, strong infrastructure, a stable tax base, a sustainable budget. The entire state is great; in Provo there’s some uniqueness and access on our new commuter rail to Salt Lake City in 45 minutes.”

Nearby Salt Lake City is a Delta Airlines western hub, but Allegiant Air has service right from Provo to the Los Angeles, San Francisco, Las Vegas and Phoenix areas.

The Investor’s View

“Utah is unfairly discounted,” says Los Angeles-based investor David Carter, who knows Utah better than most, having been born there and who maintains a home in his home state. “When people really learn what Utah has done, not just what it wants to do, they are blown away.”

Utah has produced an impressive crop of technology luminaries, he notes, including University of Utah graduate and Netscape co-founder Jim Clark, Atari co-founder Nolan Bushnell, Adobe co-founder John Warnock and others. WordPerfect and Novell are well-known Utah technology companies, and a whole new crop of tech companies is emerging, many of which will one day be as well known.

“I tend to get labeled ‘the Utah guy,’ but there is a lot of opportunity there for IT companies interested in relocating to a place with an amazing work force,” says Carter.

“There are some great universities like the University of Utah, Brigham Young and others that are graduating a lot of people, producing a very young, entrepreneurial work force.”

IT companies in Utah benefit from a well-managed state, Carter observes. State services and agencies are very well run, and taxes are low, which is a huge benefit relative to other western locations, he points out.

Unlike most states, Utah is actively growing its capital community with the Utah Fund of Funds, a $300-million economic development program that provides Utah entrepreneurs access to alternative or non-traditional capital.

Carter says VC investors are more confident in Utah enterprises earlier in the financing process than they used to be, and that a fledgling community of investors is taking root in the state to learn about new opportunities sooner rather than later.

“This is causing a lot more attention to be paid to the Salt Lake area, and there is a general movement to enter companies at an earlier stage.”

VC investors can be reluctant to be the first to invest in a new enterprise in a new location. “But Utah has a deep history of very successful companies that have attracted sophisticated capital and have long lifespans.

“Even though VCs invest in risky companies, they are risk averse to some things, and location is a risk factor,” says Carter. “If [a location] can diminish that risk, it’s one of those things that tallies up in the column of being able to obtain investment.”

For more information please contact Michael O’Malley at momalley@utah.gov or 801-538-8879. On the Web, go to
http://business.utah.gov.