When the state of Utah comes to mind, a tech startup hot spot isn’t necessarily the first image that appears.
Oddly enough, over the past few years its state capital of Salt Lake City has slowly grown its tech startup sector. With low taxes, cheap real estate and fresh talent from local universities, there have been myriad tech startups that have sprung onto the scene.
Before we jump into the post, there are a few quick facts about Salt Lake City and its tech startup scene:
- Salt Lake City is the capital and the most populous municipality of Utah. The city had a population of 192,672 in 2015.
- GDP of Salt Lake City: $70,176 million (2015)
- Median household income: $47,243 (2015)
- There are more than 646 startups and tech startup companies.
- There have been 42 startups launched since the beginning of 2017.
- Total funding for the past 12 months is $519,898,731.
What may surprise some is that the U.S. Chamber of Commerce ranks Salt Lake City as number one in innovation and entrepreneurship, number two in high-tech performance and number three in economic performance. With tech giants like Adobe and eBay flocking to the city to open up large office complexes, Salt Lake City is poised to become the next tech startup mecca center.
In this week’s Tech Center tracker series, PYMNTS talked with online learning management platform company Instructure‘s SVP of people and places, Jeff Weber, about his experiences in the Salt Lake City tech startup scene and how the city is becoming a competitor on the big industry stage.
Here’s an excerpt from the conversation:
PYMNTS: Can you describe your personal and/or professional experience with the tech startup community in Salt Lake City?
JW: I’ve been in the Utah tech scene for almost two decades. In my time working in this industry, both as a consultant and in-house, I’ve seen rapid, incredible change across the Beehive State. Utah is an exciting place for innovative minds to be right now. What began with a few colleges and a few tech-related companies has now turned into a fully-fledged tech startup community mirroring Silicon Valley. I’ve seen Silicon Slopes build from companies like Novell and WordPerfect in the ’70s and ’80s and Iomega and Omniture in the early 2000s to thousands of startups and hundreds of established tech companies laying claim to the land against the Wasatch Mountains and the pool of young, enthusiastic talent coming from Brigham Young University, University of Utah, Utah State University and UVU. The Utah tech community is now home to big players like Adobe, Ancestry, Qualtrics, Domo, Pluralsight, Insidesales and Instructure, some of which are valued as unicorns (billion-dollar startups).
Utah has a thriving tech community that fosters the next generation of tech entrepreneurs — making room for the next big idea and the next big innovator. Government initiatives like the Utah Science Technology and Research (USTAR) initiative and organizations like the Utah Technology Council and the Utah STEM Coalition are all bent on inspiring and nurturing tech within the state. I’ve had the chance to be apart of this nurturing and it’s been very rewarding to help Utah continue on its growing legacy as a global tech contender.
PYMNTS: What do you think makes Salt Lake City (or Utah as a whole) an attractive location for both entrepreneurs and investors? Is there anything people may find surprising about operating a business there?
JW: A few things always come up: affordability, quality of educated talent and quality of life.
People would be surprised to find out how affordable Utah is. Salt Lake City is ranked as America’s sixth most affordable city. Additionally, the state has amazing universities, with BYU, Utah State University, Utah Valley University, University of Utah and others, which means that there’s a lot of talent already built into the state looking for positions in Utah rather than relocating out of state.
In 2001, the state legislature launched the Engineering and Computer Technology Initiative to increase the number of students graduating from engineering, computer science and related technology programs. The number of engineering degrees awarded across the state has increased 80 percent since 2000, and the number of computer science degrees awarded has increased 130 percent.
Many are also attracted to quality-of-life factors, including good schools and outdoor recreation opportunities, as well as 14 ski resorts and five national parks.
PYMNTS: How does the tech startup scene in Salt Lake City differ from other cities in the United States?
JW: The first major difference is that the average investment per deal is higher than those of Silicon Valley, Los Angeles or New York. There’s a lot of opportunity here for investors.
Even back in 2001 Utah’s governor, Michael O. Leavitt, told The New York Times that “it has become clear to me that Silicon Valley has a challenge. They have reached natural boundaries geographically. Traffic has become a huge problem. Those have become significant inhibitors…. We have workers, we have space, we have proximity.”
The Utah technology scene is a lot more inviting than other cities and provides a bit more breathing room. I think that in packed cities like San Francisco or New York, it’s a pretty cutthroat environment and businesses can be pushed out of the nest a bit too early. I think the lower expenses of Utah, combined with the inviting culture of the state, gives startups a bit more room to grow and find their footing.
PYMNTS: What are some of the challenges facing startups in Salt Lake City? Are there any initiatives to help address those barriers?
JW: At the moment, the major barrier facing startups in SLC is attracting talent from out of state. Too many people are underestimating the growth of the state or have a perception that Utah isn’t an enjoyable place to live, and it has made attracting new talent from outside of Utah a challenge.
This problem will likely change over time with continued growth. People who have moved here to start their careers are surprised by how much they enjoy living here and how much Utah has to offer, compared to SF or NY. In fact, many executives I’ve helped recruit to Utah have stayed in Utah as they’ve moved on to other companies rather than leaving. Additionally, there are now more job opportunities for partners or spouses who move to Utah, which eliminates some of the relocation concerns.
PYMNTS: How has the Salt Lake City tech startup ecosystem changed in recent years? What do you think has sparked this transformation?
JW: We’re seeing a lot more investment funneled into major technology companies in Utah relative to other tech hubs in the U.S.
The increase in unicorn companies in the state has sparked that transformation. More people are staying in Utah, and some are moving here from out of state.
PYMNTS: What is Salt Lake City’s FinTech sector like? How has it changed or grown in recent years?
JW: It’s definitely been a growth area in the state. Companies like Lendio, Snap Finance and Progrexion have found success in the state for small business lending, credit financing and localizing financial services for small businesses.
Companies like American Express and Goldman Sachs have built out significant locations in Utah, which has helped to import large numbers of experienced talent in this sector.
Utah ranked number one in the country for small-business lending by state, with an average loan size of about $37,000.
The FinTech sector is growing in the coming years. Utah produces great talent in both the technology and finance sectors, so it’s natural that we’re going to see even more innovation and collaboration.
PYMNTS: Which sectors of the technology landscape are thriving in Salt Lake City? How do you see these industries evolving in the coming years?
JW: Edtech is thriving in Salt Lake City. With companies like Instructure, Pluralsight, MasteryConnect and others, I’ve noticed that education is a major driving force in the Salt Lake City tech startup space.
One of the major areas of development is enterprise technology. Many of Utah’s startups are finding ways to build value and streamline processes in enterprise companies. There are also companies like DOMO, Qualtrics and Lucid that are finding ways to improve enterprise functions.
Biotechnology companies like BioFire Technologies have also excelled and continue to rapidly expand and grow in Utah.
PYMNTS: Is there anything else you think people should know about Salt Lake City role as a global tech center?
JW: Utah has an ecosystem of entrepreneurial activity that is unlike anywhere else in the world. What used to be farmland is now ridden with startups, popping up at a speed not unlike some areas of Silicon Valley. Utah has more than 4,000 tech startups and several established tech companies. It’s no surprise that Forbes dubbed it the best state to do business for the third time in 2016 and that venture capital firms have spent $2.5 billion in Utah in the last three years.
Silicon Slopes is a global contender shaping many different facets of tech — from EdTech to home security and automation to DNA testing to experience management software and beyond.