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State of Utah
The best formula for economic development is entrepreneurship plus an educated workforce, plus venture capital. Utah's technology industry appears to have cracked the code on how to achieve such a vibrant and sustainable ecosystem.

SALT LAKE CITY — Put "Utah" and "history" together, and few people associate those two words with "technology." Yet in examining the past history of information technology at a conference here last weekend, the Utah Division of State History ended up showcasing Utah's formula for future economic development.

In a nutshell, that formula is: Entrepreneurship plus an educated workforce, plus venture capital, equals a sustainable environment for economic growth.

The first two traits — entrepreneurship and an educated workforce — owe a lot to the underlying culture and ethic of Utahns.

That last element of venture capital (VC for short) has been slow to arrive. But it now appears to be accumulating upon what has been called the Wasatch Front's "Silicon Slopes."

Val Hale, executive director of the Governor's Office of Economic Development, delivered that message at the Leonardo Museum while kicking off panels at the 62nd annual state history conference. He cited the $150 million investment in Qualtrics on Sept. 24 as bringing Utah's total venture funding for the year to $700 million. That puts Utah in sixth place nationally for VC.

Sure, there are countless regions around the country that claim title to something "silicon": Silicon Alley in New York City, Silicon Hills in Austin, or Silicon Forest in Portland, Oregon, to name a few.

Tech companies in those regions have been higher on the pecking order for venture capital funding. But their underlying regions may not have the same combination of traits that bodes so well for Utah’s future.

Take Ralph Yarro, founder and CEO of Think Atomic, a high-tech incubator in Orem and West Valley City. As with countless tech entrepreneurs in the Utah and Salt Lake valleys, Yarro was affiliated with the late Ray Noorda, CEO of Novell, the Provo-based networking company.

Yarro's subsequent investments in software spinoffs paid off in Altiris, an enterprise software management firm ultimately sold to Symantec, the software security company based in the real Silicon Valley.

"I came here in 1982 and never left," said Yarro, speaking at a conference session moderated by Hale. "I found the environment rich in all kinds of qualities — great people, great resources, intelligent and hard-working employees, great ideas — all the things that continue to rank Utah high on the workforce side. I found it a great place for me and my family to settle in, and I wanted to help it grow.”

Utah has the second-lowest unemployment rate among states at 3.6 percent, behind only North Dakota and its boom in jobs fracking natural gas. Utah’s diverse economy includes this vibrant high-tech sector that now constitutes 14.5 percent of all wages paid.

There are certainly some potential stumbling blocks. These include educational levels that are only at the national average. “We are proud to talk about our rankings for job growth,” Richard Nelson, CEO of the Utah Technology Council, said at Friday’s event. That’s not good enough, he said: “Is 25th in the country good enough to fuel the industry we have here? This state needs to be a top 10 education state.”

Long-term education and workforce issues notwithstanding, Utah’s high-tech economy appears to have crossed a significant threshold towards permanency. “The Utah environment is very, very healthy and lends itself to startups,” said Yarro.

“Success breed success,” said Chris Cooper, a VC partner at Pelion Venture partners, who cut his business teeth as a sales executive at WordPerfect, the other original high-tech company in Utah Valley.

Yarro, Cooper and the others on the panel said that Utah’s culture and economy have long rewarded entrepreneurship at the startup and mid-stage level. Referring in part to Yarro’s own experience, Cooper said, “We have that spirit inside of the state with people who are willing to risk it all.”

What’s new in the past decade, Cooper said, is a higher level of technological capability. Sometimes this is referred to as “C-level talent,” e.g., CEO, chief financial officer, chief technology officer, etc. Having that level of skill can give established tech executives greater confidence in considering a relocation to Utah.

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Yet the core force driving the technology industry remains an organic cycle of growth. It begins with an entrepreneur with an idea and a passion, moves on to become a small business with committed and well-educated employees, with some portion succeeding to become mid-sized companies. Even these are constantly being reconfigured with new leadership teams better able to meet changing market demands.

“That is the flywheel that is going to keep turning and spinning off companies” and new business ventures, said Cooper. One day, he said, we’ll look around and see that the next Google or Facebook or Symantec is based not in Silicon Valley, but right here on the slopes of the Wasatch Front.

Drew Clark can be reached via email: drew@drewclark.com, or on Twitter @drewclark