The $8 billion price tag for the acquisition of Provo-based Qualtrics may have come as a shock to some, but that such a successful company calls the Wasatch Front home isn’t anything more than business as usual.
The experienced analytics company finalized an offer it had received from the German tech giant SAP on Sunday. The megadeal is purportedly the second largest acquisition of a private software company, with Facebook’s $16 billion deal to acquire the messaging service WhatsApp in 2014 sitting in first place.
It’s a big win for Utah and the future of the state’s business climate, but it didn’t come out of the blue. For years, the governor’s office and the Legislature have laid the foundation of a business-friendly environment. Utah has an economy ranking second in the nation, the state has a relatively low cost of living and a high quality of life, and its infrastructure is well-suited for commerce. Those factors combined have made it the third best state in the country for business, according to a July report from CNBC.
Additionally, Utah’s universities have been successful at churning out qualified graduates eager to stay in the state and grow their own ideas. Qualtrics CEO Ryan Smith graduated from Brigham Young University, where his dad — a partner in the technology development that forms the base of Qualtrics — was a professor. Ben Dilts and Darrell Swain, two co-founders of the successful company Lucid Software housed in South Jordan, hold degrees from BYU, as do the founders of Vivint Smart Home. The University of Utah's Lassonde Entrepreneurship Institute reportedly turned out 329 student-created businesses in 2017 alone.
These should be viewed as promising successes, especially as the weight of Silicon Valley begins to dissipate. Of course, the Bay Area still boasts an economy larger than Switzerland and Saudi Arabia, but its influence is waning, according to The Economist. Although it’s home to three of the world’s five most valuable companies, a small exodus has begun, and 46 percent of its residents plan on leaving the area in the next few years. Venture capitalists have started throwing their cash elsewhere, too. Nearly two-thirds of Silicon Valley investors are putting their money into startups outside of the Bay Area, reports The Economist.
That could be a harbinger of good news for Utah’s workforce. Professionals around the state told the Deseret News on Monday they are optimistic the Qualtrics success story isn’t a one-off. “This is powerful validation for the hundreds of local businesses who are building in that same broad space,” says Sid Krommenhoek, managing partner at the Lehi-based venture capital firm Peak Ventures.9 comments on this story
Despite the positive outlook, basic business sense warns of complacency in times of plenty. Without the right planning, the roots of entrepreneurial success can wither even as high-profile companies reap their rewards. Managing intense population growth is an obvious concern as more businesses move to the state. An over-congested I-15 corridor could mark a swift end to any desire of settling along the Wasatch Front. And the state should be wary of companies asking for remarkable tax breaks. Once those incentives are used up, the temptation to up and leave grows strong.
In the meantime, Utah should congratulate its entrepreneurial spirit and hope for a prosperous business environment for years to come.