“Silicon Slopes” is a buzz-phrase we keep hearing more and more to describe Utah’s economic climate. It’s an icy alliterative counterpart to California’s sunny “Silicon Valley.” The moniker refers to a stretch of land from Ogden in the north down to Provo in the south, a stretch not only accessorized by the staggering beauty of the Wasatch Front but also chock-full of big business.
Though the nickname may have a chilly connotation, the “Slopes” prove a real hotbed for tech start-ups and massive software companies that value over a billion dollars. A region once thought of as somewhat sleepy is now on fire with tech incubation and innovation. And, the national stage is starting to take notice in a major way.
Utah took first place in innovation and entrepreneurship on a recent ranking by the U.S. Chamber of Commerce, second in high-tech performance, and third in economic performance. Utah also topped CNBC’s list of this year’s Top States for Business. And Utah was named as Forbes’ Best State for Business in 2011, 2012, 2014, and 2015.
Those pictured above are just a small sampling of the over 5,000 high-tech companies who call the Beehive State their home. Of that number, 79 percent of those companies are IT firms. This makes Utah the second-largest cocoon for the budding software and engineering business.
Over 66,000 people are employed by these companies and they pay, on average, 58 percent higher than the statewide median for non-agricultural work. Pluralsight, Qualtrics, Health Catalyst, and Domo each doubled their employee base last year. This added roughly 1,700 jobs to the already booming Utah workforce. There’s no question that growth in this area continues.
But some are not as startled by the recent success of the Slopes. After all, in the ’70s Utah was the birthplace of both Novell and WordPerfect, two major forerunner software companies. Then in the ’90s, a few more notable companies followed suit: Ancestry.com, Omniture, and Vivint Smart Home (founded first as APX Alarm Security Systems).
When you zoom out and look at the big picture, the flourishing of the region has really been a slow-burn that has finally fully ignited. “It’s not surprising to see start-up formation in Utah,” Ben Veghte was quoted as saying, vice president of communications and marketing at the National Venture Capital Association. “There’s a natural progression that’s been happening over the last 10 to 15 years.”
The new millennium brought with it a whole new crew and slough of business talent, the way already paved by those innovators who came before and tilled the ground.
Even the University of Utah graduates who helped found Adobe, Atari, and Pixar did their part in establishing a steady tradition of innovation coming from this state.
“You couple the second and third generations of entrepreneurs that have been in Utah for 20-plus years with the enthusiasm of these young entrepreneurs just coming out,” said Blake Modersitzki, Pelion Venture Partners’ managing partner, “and it is a nice blending of passion and talent with experience.”
And that passion continues to shine bright for the new crop of talent. Last year, Pluralsight, Qualtrics, InsideSales, and Domo all reached “unicorn” status, meaning reaching a valuation of over a billion dollars.
Beyond the realm of new talent, the Slopes have also recently caught the interest of established big business names as a venue for new facilities. Four years ago, Adobe built a large new campus in Lehi, the 680,000 square foot building now a landmark in the epicenter of the Slopes. And eBay, too, pegged Utah as the site for expansion, opening a 241,000 square foot facility in the Salt Lake Valley that quickly employed 1,600 individuals.
Venture capital funding has really exploded in Utah recently, too. Historically, the capital was sparse in the region. But, the Slopes are starting to see some new money flowing in deserving of their up-and-coming reputation. Funding showed a significant spike in just the last couple of years, with $299 million across 34 deals in 2013 surging upwards to $732 million across 55 deals in 2015.
Though Silicon Slopes still doesn’t nearly touch the flush status of Silicon Valley, some believe this lends itself to the plucky atmosphere that makes the Utah scene so unique. “The economics of Silicon Valley VC firms are designed around taking moon-shot level risks, betting that one out of every 10 startups will reach billion-dollar heights,” said Dan Jimenez, COO of Chatbooks. “But most Utah founders and investors are taking a more calculated, pragmatic approach to building companies.”
It’s almost part of the identity in the area that companies often plug away for years before finally reaching venture capital status or finding the right fit for acquisition. Vivint and Omniture both set that precedent.
And Qualtrics, one of the state’s new unicorns, toiled for a decade steadily building a customer base and revenue stream before finally being awarded $70 million in funding for their well-vetted business model in 2012. The still-limited venture capital scene in the Slopes encourages companies to grow from the ground-up and fund upon well-established foundations as opposed to taking big money along with big risks early on.
This enterprising spirit is consistent with the history of the state. The region was literally founded by pioneering people who manifested a lush community in a desert environment by a lake filled with salt. Many argue that this scrappy mentality of stubborn resilience still feeds into the identity of the region accounting for some of the success.
“I think Utahns have a natural desire to find a way and make something out a tough situation,” said Kendall Hulet, vice president of product for Ancestry. “You have these people in the desert building a city, and I just think of that, and a lot of entrepreneurs think the same way. You have to make the best out of a situation from the resources available to them.”
Utah has an uncanny ability to cultivate talent and then keep that talent in-state, too. The local universities of BYU, University of Utah, UVU, and Utah State all roll out a dense pool of tech graduates every year, having an unusual emphasis on entrepreneurship. In the past few decades, each of these schools has developed strong programs in all things IT and software.
And this is where the Mormon factor comes into play with its strong emphasis on family and community. Many of these graduates are looking to stay close to home with their careers, leading to visionaries investing their roots in their home state and repudiating the myth that one must leave to make their way. Josh James of Domo is a BYU graduate, and so is Aaron Skonnard of Pluralsight, plus the founding team of Qualtrics consisting of Ryan Smith, Stuart Orgill, and BYU professor Scott Smith. The area produces entrepreneurs with pride in their locale, wanting to do their part to continue to put Silicon Slopes on the map.
Utah is attracting a lot of out-of-state talent, as well. The local influx of companies has put a major emphasis on the need for recruiting. And though Utah has somewhat of a peculiar reputation at large, it also provides so many unique amenities to newcomers that round out the character of the Slopes. Unemployment is remarkably low, only 3.5% in comparison with the 5% national average.
So on paper, it looks like a sure bet. Plus housing prices are remarkably lower than in other tech meccas. You get more home for your money in Utah, rent and mortgage amounts stretching 6-10 times further than New York, San Francisco, or Boston. And most notable and promotable of all, perhaps, is the natural cornucopia Utah offers. Within just a few hours of Salt Lake, there are 14 world-class ski resorts, 5 national parks, 7 national monuments, and a plethora of hiking and mountain biking trails. Many tech professionals are finding it an advantageous personal move to trade a more urban environment for the natural accessibility of the Slopes.
Utah is now a place people are seeking out as a destination for success. Alex Dunn, president of Vivint, explains experiencing the shift in interest to a more Utah-centric mindset in the tech world:
“The amount of calls that I get from people I know, in Silicon Valley or Boston or New York, to be introduced to a company in Utah happens now every week.”
With business continuing to buzz with big success and bud with new ventures, many believe we are still in the beginning stages of realizing the full potential Silicon Slopes holds. The national stage is watching and now more tuned-in than ever to see what happens next in Utah.
Sources: Utah Valley, Silicon Slopes, CNBC, KSL