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techsuch May 9, 2021 0 Comments

Beyond Tech Unicorns: What Other States Can Learn From Utah’s Small BusinessEconomyA few weeks ago, former Utah Governor and Health & Human Services SecretaryMichael O. Leavitt spoke at a technology summit here in the state. He talkedabout where Utah’s tech sector was 25 years ago, where it is now and whatneeds to happen to keep the momentum going.“Leadership is a generational relay,” Leavitt said. “Each generation builds onthe generations before.” A quarter of a century ago, Leavitt’s administrationlaid the foundation for the state’s business growth with an objective tobecome a tech capital.The Birth of Utah’s Tech BoomAt the time, the only notable tech employers in the state were Novell andWordPerfect, and according to Leavitt, there was one VC fund in the state. “Itwas a whopping $20 million,” he said. The governor made countless visits toSilicon Valley in an effort to lure companies to the mountains of Utah. Heshared a story about his first visit with Adobe CEO John Warnock, who is alsoa University of Utah graduate. After making his pitch, Leavitt says Warnockdidn’t waste any time making his point.“Look,” Warnock told Leavitt, “You want tech jobs in Utah, you’ve got to havemore engineers. Utah isn’t investing a fraction of what it needs to. Techcompanies need engineers. Companies like Adobe can’t come to Utah unless youfix that.”Months later, Governor Leavitt unveiled his Utah Engineering Initiative, aprogram with the goal of doubling the number of engineering slots in Utahcolleges and universities. Thanks to those who followed Leavitt, and supportfrom the state legislature, along with Warnock and other community andbusiness leaders, the initiative has blossomed, with more than 40,000 studentsgraduating with engineering or computer science degrees from Utah’s system ofhigher education.Adobe came to Utah. Many have followed.When I asked Governor Leavitt about Utah’s rise to tech prominence, he toldme, “Qualtrics, Pluralsight, Domo, Medicity and Health Catalyst are part of avirtual conga line of businesses that will trace their genealogy to a periodwhen Utah declared its intention to become a technology capital, building uponthe foundation laid by companies like Micron, Word Perfect and Novell.”And the numbers don’t lie: * Utah now ranks 7th among states for venture capital activity (3rd per capita). * Over the last 20 years, Utah has gone from 1,500 tech companies to 6,700. * The technology industry now accounts for more than 302,000 jobs in the state. * One in every seven dollars of the state’s GDP is from the tech industry.Tech Culture Is One Thing, Small Business Friendliness Is AnotherThe seeds of success planted early on are ripe for harvest, as demonstrated bythe unicorns rising up out of Utah’s now well-known tech sector. Whilebuilding this incredible tech culture as done wonders for Utah’s economicdevelopment, it’s also paved the way for small business success in the state.Since 2016, Utah has added over 17,000 new small businesses, employing nearly40,000 additional employees. The state ranks second only to California onLendio’s fourth annual list of the top 10 states for small business lending: 1. California 2. Utah 3. Washington 4. Texas 5. New Jersey 6. Arizona 7. Florida 8. Colorado 9. Massachusetts 10. Connecticut Small business growth in other states has been noteworthy this year: Arizonaand Connecticut cracked the top 10 for the first time, and Texas saw a 37.5%increase in business owners getting approved for loans. The average amount ofloan dollars funded in New Jersey increased by 54% from 2018. In Florida, thenumber of loans closed increased 33% year-over-year. Yet Utah remains one ofthe stronghold states on the list, claiming a high ranking on the list for thefourth year in a row.Utah is also home to four of the top 20 cities on WalletHub’s list of the bestsmall cities to start a business, which compares the business-friendliness ofmore than 1,200 small-sized cities using metrics such as investor access andlabor costs. Beyond the tech successes of Silicon Slopes, what is it about theBeehive State that fosters so much entrepreneurship?Utah’s Startup GeneOftentimes, there’s an actual lineage you can trace from one businessgeneration to the next. From Intel and Apple in Silicon Valley to Costco andMicrosoft in Washington, all of these companies are part of the firstgeneration of major wealth-producing companies in their respective states. Thelegacy left behind by these entrepreneurial pioneers has given rise toindustries and sectors that never existed before. Leveraging those capitalresources creates a new generation of companies that attract more talent withhigher-paying jobs, who then take that wealth and create yet anothergeneration of companies.Many will argue Utah’s entrepreneurial gene can be traced all the way back toits pioneer heritage. Peak Capital & Peak Ventures cofounder Jeff Burninghamsaid, “The secret sauce of Utah is the people. This is something we just feelin our bones. It’s in our DNA. We just know what it means to bootstrap, towork hard, to be the underdogs, and just grind. When you face hard things likeUtah’s pioneers did, it becomes a part of your culture, and people here inUtah have embraced that.”Unicorns like the ones Governor Leavitt already mentioned have created a newgeneration of wealth in the state, which is now being redistributed in theform of startups popping up all over the state, not just along the SiliconSlopes. Burningham’s Peak Ventures has taken much of its wealth and investedin dozens of tech startups like Divvy, Podium, SaltStack and Filevine (Lendio,too). Burningham said he believes the state is now witnessing the fourthgeneration, or wave, of companies since the initial Big Bang of Word Perfect,Novell and Omniture.3 Keys to Planting Seeds for Future GrowthWhat can other states learn from Utah’s tech powered, small business-friendlyecosystem? And how does Utah keep the momentum building for future generationsof entrepreneurs? I believe there are three keys to planting seeds for futuregrowth. * Access to Capital. For many small businesses, limited access to capital is their number one challenge. In fact, 33% of small businesses say it’s their number one problem. In 2018, one-third of small businesses got started with less than $5,000 and more than half got off the ground for under $25,000. But here’s the interesting twist: 93% said they calculated a potential run rate of shorter than 18 months. Access to a crop of investors can help small businesses create the necessary financial runway to realize success. Additionally, access to business mentors can provide young entrepreneurs with critical advice about taking on debt, where to invest and how to implement growth strategies. * Access to Talent. When you look at the top 10 states for small business lending list, most of the states have thriving communities with significant talent sheds. In Utah there are more than 160,000 university and college students along the 80-mile stretch of I-15 between Provo and Ogden. Many of these students are already working part-time or interning at businesses long before they graduate, giving Utah companies dibs on a lot of the nation’s top talent. Being an affordable, attractive locale for startups and young entrepreneurial talent is essential for filling jobs and fueling growth. * Quality of Life. For a lot of Millennials and Generation Zs, quality of life is a top priority. Austin’s art and music scene along with its college-town atmosphere is attracting a lot of new talent. Colorado’s Rocky Mountains draw in workers with endless recreation options. In Utah, there are seven major ski resorts within 45 minutes of Silicon Slopes as well as blue-ribbon fly fishing, mountain biking and hiking. More and more companies are scrapping nap pods and other on-site perks in favor of more flexible work schedules so employees can take advantage of powder days or the caddis fly hatch. Perks like these get the attention of potential hires, especially when they’re things other states cannot match.While many states including Utah are currently busy harvesting the fruits ofseeds planted years ago, Governor Leavitt also cautioned current business andgovernment leaders there’s more work to do. “The next leaders of Utah willhave to do bold things, take some risks and invest or we will fall behind.Each new group of leaders is given a baton and hopefully a bit of a lead. It’stheir job to have the right vision and to run with purpose.”Whether it’s Utah, New Jersey, Oregon or Ohio, now is the time to plant forfuture growth.

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