A Surge Of Startups Is Changing Life In Utah
In Provo office parks and Salt Lake City startup incubators, tech is increasingly making a home for itself in the Beehive State. But not everyone's happy about tech’s impact on the Utah way of life.
A troop of giddy engineers is barreling out of Instructure's headquarters and onto a parking deck roof, paper planes in hand. It's a very hot Friday afternoon in a very suburban office park, and the engineering team has organized a paper plane throwing competition. These are computer developers, not mechanical engineers — Instructure sells educational software — but they are nonetheless quite excited about the game, spilling over each other on the way out the door like schoolkids en route to recess.
Meanwhile, down in a bright orange kitchen, the slightly more subdued sales team is playing a round of cornhole surrounded by the culinary bounty of your typical tech startup — jars of peanut butter, loaves of grocery store white bread, a box of Slim Jims, cases of ramen.
Instructure, which is eight years old and valued at more than half a billion dollars, makes a show of embracing the kind of performatively zany workplace culture that has become as emblematic of Silicon Valley as BlackBerry phones and wheelbarrows of cocaine once were of Wall Street. From a conference room on the seventh floor, Senior Vice President of People and Places Jeff Weber can see the paper plane competition, and, below the aviators’ feet, a large black scorch mark on the parking lot floor. Weber says it was left there during the office’s ribbon-cutting ceremony, which was conducted by a panda holding a flamethrower.
The panda turned out to be Instructure CEO Josh Coates. The flamethrower turned out to be more powerful than expected.
Weber’s office is not in Silicon Valley. It's not even in California. Instructure, along with over 5,000 other tech companies, is located in Utah. Specifically, it’s in a corporate park in Cottonwood Heights, southeast of Salt Lake City — when Coates nearly lit his staff on fire with a flamethrower, he didn’t do it amid the low-lying scrubland of Santa Clara or Palo Alto, but against the backdrop of the regal Wasatch Mountains. But sitting in a massive conference room talking about open floor plans, a war for developer talent, and the benefits of offering unlimited vacation days, it's easy to believe Weber when he looks you in the eye and says, "Utah and San Francisco are more similar than people realize."
Indeed, Utah — once a home for religious pioneers, perpetually the seat of a sort of conservative wholesomeness in the popular imagination — is changing fast.
In 2014, Thumbtack — a consumer-facing home services company that recently became one of San Francisco's newest unicorns, or companies valued at over one billion dollars — moved its customer support center to Sandy, Utah, almost 800 miles away from the company's SoMa headquarters; Jet.com, eBay, Adobe, and Netflix have all recently opened sales offices in Utah. At Church & State, a former Central Christian Church turned co-working space and incubator in Salt Lake City, would-be entrepreneurs dream up ideas, and at StartFest, a statewide startup competition, they pitch them in hopes of winning a chunk of the $150,000 prize money. On a warm afternoon, the office of Qualtrics, a research software unicorn founded in 2002, looked like a somehow even more collegiate, less foggy simulacrum of San Francisco: Coders worked on treadmills, clacked their keyboards in massage chairs, and raided a company kitchen — one of many — dedicated only to desserts.
When it opens this fall, the Lassonde Entrepreneur Institute at the University of Utah will be part home and part co-working space to a very lucky group of freshmen, with dormitory floors organized by themes like gaming and digital media. Most of the building, which is designed to look like a garage, is open to these young entrepreneurs 24 hours a day. A single street in Provo is now home to not one but three billion-dollar tech companies; though the road’s official name is N 300 W, some have taken to affectionately calling it Unicorn Lane.
Utah’s venture capital rounds are getting bigger, and more aggressive. The competition for talent has increased, putting pressure on salaries. The state is increasingly drawing cash from out of state, both in terms of tech workers moving in and financiers closing deals. New office buildings are popping up all over the place. Utahn entrepreneurs, long known for enterprise tech companies, are increasingly considering consumer plays. Meanwhile, the startup ecosystem that feeds off of all of this is bubbling with activity.
But Utah is — obviously, inherently, sometimes emphatically — not San Francisco. As the home state of the Church of Jesus Christ of Latter-day Saints, Utah's population is roughly 60% Mormon, compared with less than 2% of the national population. Mormons, as a rule, don’t drink alcohol, and as a result, Utahns consume less alcohol per capita than any other state. Less than a third of Utahns reported having a drink over a 30-day period in 2014, according to a study conducted by the Utah Department of Health. At a bar in Utah, it’s not possible to buy a draft beer with an ABV higher than 4%; major manufacturers like Pabst brew special low-alcohol-content versions of their brews to sell in the state. Many of the state’s young men leave for two years at a time to go on missions, often abroad, and many of them have children young. As of last summer, fully half of Utahns were still “strongly opposed” to marriage equality, an issue that Silicon Valley leaders such as Apple CEO Tim Cook and Facebook CEO Mark Zuckerberg have come out strongly in favor of.
Tech may never overtake Mormonism as the culture Utah is known for. But it's a swiftly growing industry in the state, and both the perks and the drawbacks are beginning to rear their heads in Provo office parks and Salt Lake City startup incubators. Executives say that Utah is about 10 years behind Silicon Valley, and they're working like mad to catch up. But the scene Utah's modeling itself after has some decidedly un-Utahn values. In chasing after California's eye-popping valuations and thriving tech scene, the Beehive State is also at risk of importing the sometimes greedy, homogeneous, exclusive, and work-obsessed culture Silicon Valley has become known for. With rents on the rise, its own brand of tech bro, and growing concerns over the state's changing way of life, maybe it already has.
If you head north out of Salt Lake City on I-15 for about an hour, you’ll reach a fork at Canyon Road. Turn east and the road will narrow and steepen as it curves through the mountains. When the roadside pioneer-themed knick-knack stores thin out and you see signs warning cars of falling rocks, you’ll know you are in Eden.
This is is not the first Mormon Eden. That one, better known as Adam-ondi-Ahman to followers of the faith, is located in what is now northern Missouri. The original Mormon pioneers ended up fleeing Adam-ondi-Ahman during what is sometimes called the 1838 Mormon War; today, hundreds of families visit Adam-ondi-Ahman every year.
Fewer visit Eden, Utah, which has, until recently, been a quiet, pastoral town with just 600 residents and a reservoir ringed by snowcapped mountains — most notably Powder Mountain. But that, like so much in Utah, is changing.
On a warm day, close to the top of Powder Mountain, a man is sitting at a picnic table, a thin band of plastic wrapped around his forehead. The table is attached to a wooden deck, and the deck is attached to a very handsome yurt. The man is alone, silent, with his eyes closed, wearing headphones; the plastic band is a “personal meditation device” called Muse. Muse, which retails for $249, helps people focus by measuring brain activity and playing auditory cues when the user is distracted: gamified relaxation. Below, on the scrubby brown-green slopes, visitors from New York and L.A. are trying their hands at archery. Nearby, a guru is holding a sack of what I'm told are magic mushrooms.
The yurt belongs to Summit, a group of Silicon Valley-ish wealthy tastemakers who have been putting on the Summit Series — a series of lavish salons for the millionaire set — since 2008. The organization has hosted events on the mountain, as well as on an island; last fall, Uber founder Travis Kalanick attended one on a boat, along with Eric Schmidt, John Legend, and Martha Stewart.
Summit bought Powder Mountain in 2013, with plans to turn it into a ski resort and modern community for the forward-thinking, a permanent home outside Silicon Valley for its community of futurists, financiers, athletes, artists, and other would-be trendsetters to rub elbows all year round. The plan, Summit co-founder and CEO Elliott Bisnow says, includes modernist, Ex Machina–esque homes for the billionaires (Summit’s backers include Ray Kurzweil and Peter Thiel) but also cheaper hostels for the artsy set.
The Muse was demonstrated during one of Summit’s so-called content sessions, a sort of a dry run for what the village will look like, as well as an opportunity for friends of Summit and friends of their friends to think about making a permanent financial commitment to the community. Ariel Garten, co-founder of Muse, was in attendance. On a shuttle ride from the peak down to the lake house, where antipasti and wine were being served lakeside, a San Francisco venture capitalist interested in the space offered to buy one of the Muse devices. He hadn’t used it yet, he said, but he was excited to try, because the meditation tech he had at home didn’t work quite right. Garten seemed pleased.
Maybe it’s the wide-open skies, or the harsh beauty of the landscape, but there’s something in Utah that seems to draw people who want to live differently. Summit hopes to create on Powder Mountain an accessible yet exclusive paradise for like-minded people to live and work communally, in beautiful surrounds, with plenty of good food. And when the first Mormons arrived in Utah in 1847, after 17 months of travel and years of persecution, they saw in the Great Salt Lake Valley an opportunity to invent a new way of living together. But as their flight from Eden suggests, it’s not easy to build a new way of life without making enemies.
Anyone driving the steep and winding road to Powder Mountain last summer would have noticed signs reading “Summit Sucks Water” plastered all over porches and front lawns. There is no running water at the top of Powder Mountain, and Summit's efforts to change that have led to concerns about whether the aquatic diversion they had planned would adversely impact Eden’s original residents. It’s the kind of problem many real estate developers face, but Summit wants to be seen as so much more than that. To that end, they’ve hosted communal dinners for their new neighbors, and even hired an intern from a local college who has family living in town. But, nonetheless, the conflict has slowed construction and, according to one observer, even hurt Summit’s sales.
Summit will likely succeed in the end. But the rift between the residents of North Fork Utah and the wealthy weekenders traipsing over their pristine mountainside is a microcosm of a similar (if slightly less colorful) drama unfolding throughout the rest of the state.
There are many reasons why tech is bubbling up in this particular place, at this particular moment in time. Office space is cheap in Utah relative to San Francisco, for one, and the weather's nice enough to entice outdoorsy types who might otherwise make their homes in Northern California. But almost everyone will tell you that Utah's real secret weapon is its people.
Indeed, ask the leaders of Utah’s tech scene about the benefits and drawbacks of their particular labor pool, and they’ll respond with the discomfiting bluntness that only an in-group observer can offer: "They don't show up hungover," says Dave Elkington, a Mormon himself and CEO of InsideSales, a company that makes an intelligent tool for business-to-business sales. InsideSales is yet another Utah unicorn, this one also located in Provo, which is 89% Mormon and the home of Brigham Young University.
“They're more loyal, on average,” says Gavin Christensen, founder of Kickstart Seed Fund and a member of the LDS Church. “Big generalization, but the perception is they're more loyal.” Christensen's fund is located on what he calls Utah's Sand Hill Road in a comparison to the Menlo Park street that’s home to Silicon Valley’s biggest venture funds. Christensen also suggested that Mormons are more industrious and hardworking. "BYU wins most sober school every year by a landslide. You go to BYU, and it's intense. Nobody smokes, nobody drinks, nobody parties," he says. "People grow up fast. They get married and have responsibilities." Christensen sees a through line between what the challenges of Mormonism teach young people — "determination and grit" — and the qualities a good startup founder need. "That's a lot of what entrepreneurship is," Christensen says.
Every year, around 22,000 students receive a Bachelor’s degree in Utah: Brigham Young University alone has more than 25,000 undergraduates enrolled, 99% of whom are Mormon. What makes Utah graduates unique is that most of them are looking to stay in Utah; or, if they are drawn to the coastal financial hubs, they eventually plan to return. Silicon Valley venture capitalist Ryan Sweeney says its ability to “retain homegrown talent” is just one reason Utah is such an appealing tech ecosystem for investment.
But before local job searches, the majority of the LDS students go on a mission — a two-year trip during which they spend every single day going door to door trying to convince people to talk to them about becoming Mormon. Christensen described the mission as a difficult couple of years in which "you face a ton of rejection."
"After I served my mission in Norway," he says, "everything else I've done in life is pretty easy."
"If you can sell religion door to door, you can sell alarm systems or software or solar panels."
And — as more than one person in Utah says with a hint of pride — selling religion may not be all that different from selling software.
"People know how to sell in Utah,” says Elkington. “We have the same engineers as everywhere. The Valley will attract a more diverse and educated engineering workforce. But I think you'd be hard-pressed to find a more talented sales community anywhere else in the world." Many speak a second language, making them attractive employees not only for the many call centers that dot Utah's corporate landscape, but also for the tech companies that need strong sales teams to push growth and bring in revenue. When it comes to tech, Utah is known not for producing the next hot app or the biggest social media platforms, but for companies like Domo, a business intelligence company, and Vivint, a smart home and security company. "If you can sell religion door to door," says Elkington, "You can sell alarm systems or software or solar panels."
When many of the missionaries who return home to Utah for jobs as engineers, or to found their own companies, were children, the state was much more rural. Back then, dairy farms blanketed much of the land south of Salt Lake City. In 1997, WordPerfect co-founder Alan Ashton, one of the state's first tech moguls, bought a plot of land roughly halfway between Salt Lake City and Provo, and dedicated it to the celebration of Utah’s natural history. Thanksgiving Point, as it was named, featured a working ranch, public gardens, and the largest collection of mounted dinosaur skeletons in the country.
Today, Thanksgiving Point is surrounded by office parks and fast-food joints. Most new development around Provo, says Mayor John Curtis, is being built on “farm-fill.” The road many of them drive to work is lined with billboards advertising jobs for coders, some of which are actually written in CSS or HTML. Vivint CTO Jeffrey Warren likes to quiz potential hirees on the mistakes he finds in them.
The billboards are, by and large, innocuous and goofy — “Have you seen the one with Abe Lincoln and the AK-47 on a grizzly bear?" Warren asks with clear delight — but they’re also literal signs of an increasingly frenzied competition for talent that could reshape Utah’s labor pool. Salaries for mid-level engineers in Utah are around $120,000, according to job boards and a few executives who were willing to share. That’s $50,000 less than Silicon Valley’s average $170,000. But they’re rising fast. One Ancestry.com executive went so far as to call it a talent war.
"Utah is San Francisco 10 years ago," says InsideSales’ Elkington. If that's true — and he's not the only CEO who put it that way — there's about to be a lot of money on the table. "There's probably a dozen companies that could go public in the next 24 months," Elkington says. Even with talk of a cooling funding environment in Silicon Valley, Utah's fecund but less crowded field of startups, just a two-hour flight away, remains appealing.
Meanwhile, venture capital has also exploded in Utah. Between 2013 and 2014, overall venture spending in the state increased from $316.2 million to $801 million, for a total increase of 153.3%, according to a study conducted by the Computing Technology Industry Association. Utah is among the top 10 states nationwide for venture expenditure. "The average deal size beats Silicon Valley and San Francisco," says Sam Stoddard, CEO of SimpleCitizen. Stoddard founded the company, which he likens to the TurboTax of immigration law, in 2014 after trying to get a green card for his wife, whom he met on a mission to Korea. Stoddard’s right: In 2014, the average venture capital deal in San Francisco was $18.4 million, while the average deal in Provo-Orem, Utah, was $51.3 million. (In the same year, Silicon Valley companies raised a total of $47.3 billion, however, while Utah companies raised only $800 million.)
While some of that money is coming from in-state investors, a lot of it originates from outside Utah, from experienced and aggressive firms that mean business. For example, both Sequoia and Accel are investors in Qualtrics, and Kleiner Perkins invested in InsideSales, which has raised more than $200 million in the past three years from out-of-state firms. "In the early to mid-2000s, there was no venture money," says Elkington. "The reason you're seeing a boom right now is the outside money."
Outside money brings with it outside culture, and outsize expectations. Ryan Sweeney is the partner at Accel in charge of the Qualtrics investment. He likes talking to Utah companies, he says, because they treat venture capital more like a loan than like free money. “From day one, even if they raise money, they act like this is the last time anyone is going to give them a cent,” he says. “The risk is that that changes as more capital flows into the region.”
And while Elkington loves Provo, he does wish one thing was different: His employees, many of whom have young kids, tend to leave at 5 on the dot; many others in the industry in Utah say the same, denoting a healthy work-life balance as one of Utah’s perks. But, for his part, Elkington wishes they’d stay a little later. After all, he argues, InsideSales is competing with the work hours of Silicon Valley.
Utopias are hard to build, and harder to sustain. The recent big-name startups out of Silicon Valley — Uber, Airbnb, Instacart — claim to have reinvented city life, but not everyone in those cities shares their vision of paradise. Those companies have also contributed to the creation of a new culture of work — one that Utah, itself a sort of living utopian experiment, is now encountering firsthand.
Dan McComas came back to Utah expressly to escape that culture. McComas founded Redditgifts, a company that was ultimately acquired by Reddit, which grew to a 30-person staff in Salt Lake City. After the sale, Reddit relocated McComas, by then senior vice president of product, and his team from Utah to California. There, McComas got a taste of what he calls Silicon Valley's "culture of entitlement" firsthand. When he ultimately lost his job at Reddit, McComas decided to return to Salt Lake to start working on a new venture, bailing on Silicon Valley altogether. "I think it's making fucked-up people," he says.
He’s not the only one who’s less than eager to turn Utah into a new Silicon Valley. Aaron Skonnard, CEO of Pluralsight, says that when he toured California tech companies, trawling for management tactics and workplace design ideas, he was put off by what he called “cultural theater” — the slathering on of childlike perks to entice people to stay at work all day. But in Utah, as the talent war ramps up, some of that recreational window dressing has, Skonnard says, become “table stakes.” Even Pluralsight has an arcade room, complete with pinball machine.
Sweeney, the Accel venture capitalist, thinks the “cultural theater” will only become more exaggerated as cash continues to follow the success of local tech companies. In Silicon Valley, he says, people tend to blame Google for starting the trend; as Utah companies try to mimic that kind of success, “you will see more of that stuff by default," Sweeney says.
InsideSales' Dave Elkington — who was slightly embarrassed by the pirate flag flying over the desks of his data scientists — is likewise unhappy with the encroachment of Silicon Valley–esque indulgence. "Candy and paid time off and zip lines and trampolines, and all of a sudden you're not getting anything done and you have no productivity. It's a huge problem in the Valley, and I'm seeing it up here already," he says. "People are just frankly sacrificing their culture to try and recruit."
Ultimately, Elkington, who has also spent significant time in San Francisco, doesn’t want to see his and his family’s lifestyles change. "You're at a soccer game, and that's all they talk about. You're getting a doughnut and that's all they talk about, the next venture round," he says. "I go to a soccer game, and all people talk about is how good our kids are at soccer."
But that lifestyle is already changing. Like Elkington, Josh Dance, a 30-year-old developer, lives and works in Provo. In the 11 or so years since he moved to Provo for school, minus a two-year absence during his mission in Cape Verde, he’s seen Utah’s tech boom change the city. The nature of Provo entrepreneurialism, once more traditional, has embraced startups and internet-based tech companies, and it’s easier than ever to access venture capital, he says.
In that time, Dance has also borne witness to the rise of another phenomenon: the Provo All-Star. Like the San Francisco tech bro, the Provo All-Star is a regional variation on a national standard, layering local flair — in this case, an enforced chastity and multilingual proficiency that is particularly Mormon — over a base of muscle tank top, aviator sunglasses, snapback flat-brim hat, and a love of hitting the gym.
The Provo All-Star is a Mormon meme, found on social media and in YouTube videos, a fictional campus fixture as loathed as he is loved for his flashy ways. Officially, the Provo All-Star (who is, yes, a resident of 'Brovo') has nothing to do with tech money or startups, but he makes for a convenient embodiment of the way the wider world is encroaching on the city that is supposed to be the spiritual center of Mormonism.
“The only worry I have,” Dance says, “is that we’re so successful that many people move in and the rent prices go up and we become a mini San Francisco.”
Rent prices are indeed going up, especially in Provo, which Mayor John Curtis says doesn't have much land left to develop to house the swelling population, which is projected to double over the next two decades. “One of the things people love is our low cost of living,” he says. “That will certainly have some upward pressure as we grow.”
And Elkington, whose startup has drawn top-level executives to Provo from companies like Google, shares the same concern. "If there's too much money," Elkington warned, "it creates bad behavior."
Members of the Mormon faith and members of the techie community share at least one thing — both have been called cultish. In Utah, those two hyper-exaggerated cultures are crashing together in a very real way, driven by the most powerful of earthly forces: cash.
Techies will tell you they were bullied in school for being nerds, but Mormons have been both mocked and violently persecuted for hundreds of years. Utah, long a home to radicals who were willing to throw off the accepted way of doing things, is in some ways the perfect place for tech to start over. They are both, in a sense, pioneers. Together, they have a chance to build something totally new, to ditch the worst of both worlds, and meld the best.
“You have to go back to the history of Utah, to the underdog story. Nobody wanted us. They kicked us out. They think we're weird. Everybody is against us. You have to understand that piece of it to understand it, I think,” says Christensen, the venture capitalist. “There's an element of 'We're going to show the world what we can do.'”