Startups Reaching Critical Mass in Silicon Slope

For a long time, the tech community around Salt Lake City (including Provo, Odgen, and Orem) could point to Novell and WordPerfect as the leading firms to come out of the area. But as more companies gravitate to the region, and more tech professionals decide to become entrepreneurs, it’s clear that other firms are emerging that could eclipse those past giants.

“There are more than 646 startups and tech startup companies in the city, and 42 have launched since the beginning of 2017,” said Jeff Weber, senior vice president of People and Places at Instructure, which builds learning and teaching software. “Venture capital activity is also high here—the total funding for startups in the past 12 months exceeds $519 million. Numbers like this aren’t easily ignored.”

Unlike tech hubs such as Silicon Valley and New York City, in which startups are often quick to swallow up as much venture capital as possible, the startup culture around Salt Lake City prizes sustainable growth. “Delayed gratification and bootstrapping is inherent across the state,” said Mike Maughan, head of brand growth and global insights at Qualtrics, which sells customer-analytics software. Qualtrics bootstrapped its growth for the first decade of its existence, only taking its first round of funding five years ago.

“Constriction builds creativity,” Maughan noted, adding that creativity will probably find a better solution to a business problem than merely throwing dollars at it.

Startup Pipeline

Tech lives and dies by talent—or the lack of it. The hiring pools are pretty deep in Silicon Valley, but what about Salt Lake City? The area actually has a big advantage, thanks in large part to its university system: graduates from Brigham Young University, Utah State University, Utah Valley University and University of Utah are ready to join the workforce.

“In 2006, Utah launched the Utah Science and Technology Research Initiative, which invested more than $100 million in the state’s universities to recruit top researchers in key economic areas from around the world,” Weber said. “In 2001, Utah legislature launched the Engineering and Computer Technology Initiative to increase the number of students graduating from engineering, computer science and related technology programs. Because of these initiatives, engineering degrees across the state have increased 80 percent since 2000, and computer science degrees have increased 130 percent.”

Local coding bootcamps such as DevMountain also feed the pipeline. DevMountain offers free housing to students coming from outside the region, who make up 60 percent of enrollment. “We look at the employer as being our end-customer,” said Cahlan Sharp, founder and CEO.

DevMountain chats constantly with local companies to get a sense of which skillsets are in demand. In addition to its Web Development core, there’s an iOS program, a quality assurance class, and a Salesforce class. Finding trained faculty has required the bootcamp to do a little “bootstrapping” of its own, Sharp noted: “It’s hard to find and retain good people.”

Some former students come back and contribute education. “They want to pay it forward,” Sharp added. The new mentors can relate to what their students are going through, and the knowledge gap is narrower between the newly minted instructors and their charges: “It’s a loose pipeline, but it’s healthy.”

Casting its line into the hiring pool is Vivint, which makes “smart” security systems for homes. Around 60 to 70 percent of Vivint’s hires are local, said Starr Fowler, senior vice president for human resources: “We expect to double our employees in the next two years or so.”

Those hires will have programming-language expertise, in addition to knowledge of artificial intelligence (A.I.), machine learning, product development, and software creation. Yet despite that push, Vivint may still struggle to find the talent it needs. To fill roughly a third of its open positions, the company will have to attract talent from outside the region.

Startup Money

Utah’s salary range is in the six figures for specialized, experienced tech pros, Fowler said. One headwind for out-of-region hires is the unwritten rule that you never take a pay cut, which means that many tech pros from Silicon Valley (where salaries are often highest) simply won’t consider an offer that’s 20 or 30 percent lower than their current pay (even if the cost of living in Salt Lake City is lower than Northern California).

Vivint has found a way to compensate for that, by offering a competitive job title. “We offer experience,” Fowler said.

Despite that challenge, Qualtrics has managed to relocate about 160 hires from outside the region, Maughan said: “The cost of living here is 49.1 percent lower in the Bay Area, while salaries are 26 percent lower.” The cost of living is also lower than in Boston or New York City, two other tech hubs.

Fortunately, Salt Lake City’s growing tech industry means that, if a tech pro moves to the area for a particular job and doesn’t like it, there are other opportunities available.

Startup “Quality of Life”

Everyone interviewed for this article touted the qualities of the Salt Lake City area, including the mountain views, the outdoor activities, the short commutes, and the relative lack of traffic. Utah’s tech scene also doesn’t buy into the workaholic mentality typical in other tech hubs; people have lives, and want to go home at the end of a standard workday.

“The Utah tech scene is unique in that it is more inviting and less cutthroat than some other areas like Silicon Valley and provides more breathing room,” Weber said. “Big cities like San Francisco or New York are known for a cut-throat environment that forces businesses to make large leaps prematurely.”

“We expect exceptional work,” Fowler added. “You can do exceptional work and not be chained to your desk.”

Post a Comment

Your email address will not be published.