Silicon Slopes Vs. Silicon Valley: Four Tech Unicorns, Thousands Of Startups, No Frenzy

Back in 2004, when Aaron Skonnard founded Farmington, Utah-based Pluralsight, an online tech education company, venture capital firms weren’t paying much attention to the Beehive State. So Skonnard and his cofounders bootstrapped the company. Times have changed.

Pluralsight – now one of Utah’s high-profile unicorns – has drawn nearly $200 million in venture funding and serves clients that include Comcast, MetLife, Disney and Dell. In a recent conversation in his office, 20 minutes north of Salt Lake City, Skonnard, 44, described how he hoped to close the skills gap among tech workers worldwide and increase Pluralsight’s revenue from between $100 million and $200 million today to $500 million by 2020. As for the area that tech entrepreneurs have taken to calling Silicon Slopes, Skonnard says, “We have a vision for what Utah can be.”

He's not the only one. The Interstate 15 corridor that connects Provo to Salt Lake to Ogden is chock-full of tech companies and startups. In Lehi, where I stayed for a few days in February, an ecosystem of entrepreneurial activity has sprung up against the backdrop of the Wasatch Mountains. An area that used to be farmland now boasts tech campuses that would look at home off Silicon Valley’s famed Route 101. Adobe has a big office in Lehi, the result of having acquired Utah web analytics startup Omniture in 2009 for $1.8 billion; Microsoft and Ebay have outposts in Utah, too.

Among the state’s more than 4,000 tech startups, at least four are unicorns, venture-backed companies valued at more than $1 billion: Pluralsight, Qualtrics, Domo (founded by Josh James, who’d previously founded Omniture), and InsideSales. Many more could become billion-dollar companies if the stars align. Among them are Health Catalyst, a platform for health-related data from different systems; Workfront, an online project management software company; MaritzCX, a customer experience platform; and Owlet, makers of a high-tech baby sock monitor that FORBES named to its 2016 list of Next Billion-Dollar Startups. Instructure, an educational technology company that went public in 2015, has a market cap approaching $700 million, while Vivint, a provider of security and home automation, was acquired by Blackstone for $2 billion.

Utah’s Mormon culture, with its focus on family and hard work (and going door-to-door), lends itself to startups. FORBES named it the best state to do business for the third time in 2016. Fast-growing companies can count on a deep pool of young, educated job candidates from Brigham Young University and the University of Utah. And venture capital firms have caught on, pouring $2.5 billion into Utah in the last three years, compared to $1.1 billion the three years before that, according to the PwC/CB Insights MoneyTree Report. “It’s not putting a huge dent in Silicon Valley, but what’s happening in the state is pretty significant,” says PwC’s Tom Ciccolella, who leads the firm’s U.S. venture capital practice.

Outsiders may not think of Utah as a tech hotspot, but history suggests otherwise. Back in 1927, Philo Farnsworth, of Beaver, Utah, produced the first electronic television transmission. Forty-five years later, Utah inventor Nolan Bushnell founded Atari. In 1978, Alan Ashton and Bruce Bastian – an instructor and his student at Brigham Young University – started WordPerfect. More recent success stories include Fusion.io (acquired by SanDisk for $1.1 billion in 2014), Ancestry, retailer Overstock.com, Armada Skis, and headphone-maker Skullcandy. “Utah has this very rich history that a lot of people don’t know, and we don’t do a good job of telling this story,” says Clint Betts, executive director of Silicon Slopes, a nonprofit that set up recently to work with the state’s tech companies.

Thus the branding as Silicon Slopes, and a conference earlier this year – timed to coincide with the Sundance Film Festival – to showcase the area’s entrepreneurial talent. Unlike Silicon Valley, the wave of entrepreneurial talent here comes largely from people who are native Utahns or those with ties to the state from college at the University of Utah or Brigham Young. Utah’s culture remains relatively insulated, and the location has been a tough sell to senior-level tech and engineering workers, who have the option of living in San Francisco or Seattle.

“Look, we’re not the Valley. I think that’s a good thing,” says Ryan Smith, 38, cofounder and CEO of Provo-based Qualtrics, the market research and online survey firm, that is expected to go public soon. An IPO will happen “when the company is mature enough to do that,” Smith says. “It’ll be exciting for Utah and for us.” (See FORBES magazine's 2012 profile of Qualtrics for more on the company.)

The tech unicorn CEOs and other Silicon Slopes boosters are trying to spread the word about the area’s affordable cost of living, family-friendly culture and outdoor activities, including skiing and hiking. “The next chapter I think will be founders who have chosen to be in Utah,” says Brock Blake, chief executive of Lendio, an online small business lending marketplace based in South Jordan, that facilitated more than $240 million in funding last year.

Flying under the radar arguably has advantages. Because there was less venture capital in the state a decade ago, Utah’s entrepreneurs mostly bootstrapped. “There was this blue-collar mentality,” says John Pope, CEO of Orem's Jive Communications, a cloud-based telephony company founded in 2006. For Jive, that’s meant a business with around $100 million in revenue but just $28 million in VC funding. “There are a lot of people here who believe in execution over hype,” Pope says.

The next wave of companies includes three-year-old Chatbooks, which compiles digital photos into books and has estimated revenue between $10 million and $20 million. Nate and Vanessa Quigley, who have seven children, created the company because they wanted physical photos of their family instead of endless digital files. A BYU graduate with an MBA from Harvard, Nate had worked for McKinsey and cofounded a tech startup in Boston, then did a four-year stint running a TV streaming service in Florida before he and Vanessa launched Chatbooks in Provo.

Utah, he says, had just the right amount of capital – enough for them to raise $20 million in venture funding but not the excess of Silicon Valley that has raised the cost of living and made standing out from the pack so hard. “There wasn’t that frenzied feeling like we felt in the Bay Area,” he says.