SALT LAKE CITY — Is the $8 billion buyout of Provo-based Qualtrics an anomaly or simply the first sign of a maturing Utah tech sector, with more megadeals to come?
Weigh-ins from those running college programs for budding Utah entrepreneurs and some local venture capitalists reflect confidence that not only is it not an aberration, but that the next company capable of hitting Qualtrics-like success is already doing business.
And, the deal itself could prove to have seismic impacts on the homegrown tech sector by bringing one of the biggest European tech concerns to Utah, attracting new talent and investment thanks to the global attention being paid to the buyout, and through inspiring a wave of entrepreneurial interest from those who can see themselves as the next iteration of the Smith brothers.
Qualtrics co-founder and CEO Ryan Smith himself noted in an interview with the Deseret News Tuesday that his company's long-running success, coupled with the SAP acquisition, only bodes well for those who may follow.
"All of this will help Utah," Smith said. "I think this is the second-biggest acquisition of a private software company behind (Facebook's $16 billion acquisition of) WhatsApp. It just shows there's nothing you can't do from Provo, Utah."
Troy D'Ambrosio, executive director of the University of Utah's Lassonde Entrepreneur Institute, agrees with Smith. He noted the inspiration to take a chance on a new idea often comes from being able to see oneself in others who have "made it."
"Qualtrics is something that started out of university and is relatable and would-be entrepreneurs can see themselves in it," D'Ambrosio said. "They think, 'I can build a company and get there.' We now also have capital here and experience to draw from to enforce all those activities.
"I expect this to have … long-lasting effects on our startup community."
D'Ambrosio said he also believes SAP's presence itself will have impacts not unlike another tech giant that gained entree to the Beehive State via an acquisition.
"I think the analogy to look at, with SAP headed our way, is how Adobe bought Omniture and continued to expand here," D'Ambrosio said. "SAP may not be as well-known (as Adobe) here in Utah, but in the tech industry they're about as big as it gets."
D'Ambrosio said the level of student interest in entrepreneurial pursuits shows no signs of waning and the growth, measured in startups coming out of the U., has been explosive.
A major contributing factor is the simple cost of getting a new product or service in front of customers. Typical startup costs of $10 million to $20 million in the mid-'90s fell to between $5 million and $10 million in the early 2000s, and are now around $50,000 to $100,000, D'Ambrosio said.
Gavin Christensen, founder and managing partner of Cottonwood Heights-based venture capital firm Kickstart Seed Fund, said not only have launch costs come down, but the state's tech ecosystem has evolved in a way that's been self-replicating.
"In the state's tech sector, a lot of what we have today is the result of the liquidity and success of companies like WordPerfect, Novell and others," Christensen said. "Now we're seeing companies like Pluralsight and Qualtrics that were bootstrapped to success … and their founders actively backing Utah startups.
"And, those new startups will have a lot of advantages that these guys didn't."
While Christensen sees the SAP acquisition of Qualtrics as "a watershed event" he also believes that there are Utah-born businesses that will be following on the heels of the Smiths' success, and doing so in part by adopting some of the same ethos that's driven Qualtrics.
"Qualtrics got to where they are by assembling a great team and being driven, patient, very fiscally responsible and scrappy with their money," Christensen said. "We know a number of companies that we've invested in that have the same characteristics that are getting to scale. And there are definitely more beyond that."
Scott Petersen, executive director of BYU's Rollins Center for Entrepreneurship and Technology, also believes the Qualtrics home run is a preview of things to come.
"I think that this is just the beginning," Petersen said. "It's not an outlier. We have an amazing tech sector here with very successful self-funded and venture-backed companies. I could give you a list of a dozen here in the valley that you're going to hear a lot about."
Petersen also believes Qualtrics' success will help power the increasing interest among students at BYU to pursue creating a job for themselves via entrepreneurial pursuits rather than seeking more traditional employment.
"Students get excited by the opportunities that come with having their own business," Petersen said. "Not withstanding, it's a hard path but they're willing to take a swing and work at it."
Sid Krommenhoek, managing partner at Lehi-based venture capital firm Peak Ventures, said news of the Qualtrics deal reflects back to startup founders that the hard work can pay off and you don't need to have a Bay Area address to reach the highest levels of success.
"It signals you can build and grow, and continue to grow, right here in Utah," Krommenhoek said. "It's another spotlight, from a respectable group, on something wonderful happening here.
"We all have a piece of the Utah story … and this reinforces the message from the fledgling startup to the big tech firm and from our universities to our politicians that we should wave our Utah flag proudly and grow with this."4 comments on this story
Krommenhoek noted the interest Qualtrics earned from SAP will help inspire, and draw attention to, other startup efforts working on cloud computing platforms. And, it could even help fuel Utah businesses in their quests to achieve even bigger outcomes.
"This is powerful validation for the hundreds of local businesses who are building in that same broad space," Krommenhoek said. "Ryan (Smith) would be the first to tell you that he expects continued innovations in cloud software in our state and there will be those who achieve things and continue to raise the bar.
"And, those who will set their own bar."