Why You Should Start a Company in... Salt Lake City

It used to be, if you were serious about starting a tech company, you went to Silicon Valley. But emerging entrepreneurial hubs around the country are giving startup aspirants options. In this series, we talk to leading figures in those communities about what makes them tick.

John Richards is not unusual as Salt Lake residents go. He spent several years outside of Utah building expertise in a particular field — in this case, as a tech entrepreneur in Seattle — and returned to the state when his alma mater, Brigham Young University, offered him a teaching position. Richards coined this the “Mormon Mecca Effect,” in which members of the Church of Latter Day Saints return to Salt Lake City to start businesses. Salt Lake also boasts a history of tech giants in Novell and WordPerfect, and a pair of successful startups in storage device maker Fusion IO and Web analytics software firm Omniture which was sold to Adobe for $1.8 billion this year. Adobe now plans to add 1,000 jobs to the area, as well. Richards, who recently founded the incubator Boom Startup, spoke with us about what makes the tech scene in the Salt Lake City area - which some call the Silicon Slopes - unique.

What makes Salt Lake City a great place for startups?

Well, to start and run a company and hire people, it’s going to be less expensive than Washington state, where I came from. The climate is better than somewhere in Texas that’s always hot and humid. It’s got the same kind of outdoor feeling and access to ski slopes and the outdoors like a Colorado. So it’s a lot more attractive than people think if you haven’t been here.

The funny thing too is you can’t deny the reality that what might be looked at as a quirky weird thing is the Latter Day Saints or the Mormon Church, which might be looked at as a weird weakness or something to people. But in reality it starts becoming a real strength because a lot of the people here are generally healthy and hardworking. I think they have one of the highest hours per week spent at the job of any location and this workforce is very stable. There’s a high birth rate so there’s a population that’s growing and it needs to keep feeding that. And you can’t deny the reality of the missionary experience that a lot of people in Utah have for the church. They come back with a lot of foreign language capability which is one reason major companies are having call centers here. EBay, Google, and others have massive call centers here because of this language capability that’s not found many other places, especially towards the center of the country. So you have an affordable workforce that has a lot of loyalty to their employer and they have a lot of language skills.

Also, being a missionary for the church they pick up a lot of sales skills in sometimes a hostile or tough environment and that leads to businesses that just have that kind of can-do-it pioneer attitude of starting a new business. Another thing I’d add to that is that it has leading universities like the University of Utah and BYU which both ranked number one for different aspects of technology and commercialization. A lot of student and faculty ideas and research and technology are coming off of those two campuses and leading to businesses. All that together is one combustible mix.

Are there particular types of startups that do better there?

I think Utah has a natural tendency towards two types of things. Definitely towards technology with software, internet, and some of the legacy companies that have been here and started such as Novell, WordPerfect, and we have Altiris and other ones that have done well. Then certainly the University of Utah is such a leader in medical devices. Its medical school has been world famous for the medical devices.

Does Salt Lake breed or attract entrepreneurs?

I think it both breeds them and attracts them. There’s certainly one aspect that is interesting that is kind of a Mecca effect; a Mormon Mecca Effect. People relocate to Utah for family and religious reasons after gaining skills and wealth elsewhere and come back to this area and contribute to the economy and the ecosystem. For instance, I achieved some of the things I’ve achieved and then relocated to Utah and brought that here.

Even the non-religious part, I should mention like Park City. Park City has become such a world renowned and popular ski place that more and more folks have relocated from California to Park City with wealth and executive experience and entrepreneur and venture investing experience. They relocate to Park City where they might have had a winter home or second home and now they make that their primary residence because they just want to get out of California or wherever they are. That’s usually something you wouldn’t see come to a place like Utah. I’ve really noticed that in the last year or two.

What are the talent strengths and weaknesses in Salt Lake City?

I think there are two weaknesses. We definitely do not have enough software engineers for the fast growing tech sector. So what I mean by that is there are lots of startup and emerging companies that can’t find that skilled software engineer to join their team. That’s an issue for Utah and generally around the country—the universities and their computer science departments aren’t spitting out the right type of software engineers for this re-surging tech market and that’s a problem beyond Utah’s borders. That’s a problem that even faces Utah’s universities which are great universities. They don’t really spit out the right software engineers for the marketplace.

The other weakness is when companies have achieved a mid-company status, let’s say $5 million to $20 million in sales with some profit and positive cash flow—there’s really not enough C-level executive talent to take them to the next stage. So a lot of times you have to try to attract from out of state and get them to relocate here and there’s some issue there. A lot of times we see that companies get sold before the founding team or the managing team has taken them as far as they can go and they get sold out when they could’ve had they just gotten a stronger C-level management team in they could’ve developed a little bit more. I see that happen. So those are the two things that sort of the community in Utah is aware of and is trying to address.

Is Salt Lake City a billion dollar exit playing field?

Certainly, and this is something – I was an early investor in a company called Omniture. Omniture was started by two BYU students and it was so amazing to watch them go from scratch to having a $1.8 billion exit to Adobe. Their exit of around $2 billion was such a great thing for the state and a great testament to what’s going on here. You know, you have the legacy of Novel and WordPerfect that have been in that billion dollar range you’re talking about then here’s a $2 billion one that was started by two students and over time that’s going to build up. It’s kind of a snowball.

For more from this series:

  • Why you Should Start a Company in...St. Louis
  • Why you Should Start a Company in...New York
  • Why you Should Start a Company in...Los Angeles
  • Why you Should Start a Company in...Chicago
  • Why you Should Start a Company in...Boulder

Laura Rich is a freelance writer and co-founder of Recessionwire.

[Photo by Skyguy414]

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1 Comments

  • Jeff Drake

    Nice article, but I wanted to point out a significant misprint: I’m not sure that either “the Church of Latter Day Saints” nor “the Mormon Church” exists. Salt Lake City is home to the headquarters of The Church of Jesus Christ of Latter-day Saints, whose eponymous members make up some 60% of the population of Utah.

    On a related note, the Latter Day Saints are indeed an actual group, but most of them live in the Bible Belt, particularly Wisconsin and Missouri.

    Otherwise, great article. Any way you could make the correction?

    Thanks! :-)