In early 2019, Tony Lewis sought to relocate the tech start-up, Aumni, that he co-founded in the Bay Area of California. Despite its concentration of venture capitalists, the Bay Area had terrible traffic and a “huge cost premium” for engineering talent and office space.

After scouring a map of the US, the Greater Salt Lake City area of Utah was the most competitive place due to its depth of talent at a relatively low cost. But that was not what shifted the needle.

Instead, it was a “magical” company ski retreat to nearby Eden, home to the Powder Mountain ski resort, that convinced Mr Lewis and his colleagues to move the company and their lives to Utah.

“We were thinking, wow, this is just such an incredible location. It was a culmination of business, life and family choice of wanting to move and raise our kids in a great geography,” says Mr Lewis, who is CEO of Aumni, an analytics platform used by venture capitalist (VC) firms, which in March 2023 was acquired by JPMorgan.

Utah, renowned for its outdoor recreation and religious community, has seen an acceleration of inbound tech talent, companies and investors. In 2022, there were almost 67,500 tech jobs in the state capital Salt Lake City, an increase of 12% on the pre-pandemic year 2019, according to the Computing Technology Industry Association (CompTIA). Although still relatively small compared with major hubs like San Francisco, Salt Lake City saw greater tech job growth than the 7.3% nationally over the same period.

However, the rapid growth of Utah’s tech community in ‘Silicon Slopes’ – a stretch of cities along the Rocky Mountains from Ogden through Salt Lake City to Provo – is presenting challenges for the deeply religious western state. Investors and entrepreneurs tell fDi they worry about a shortage of talent and the strains in-migration is placing on local resources, housing and infrastructure.

Formation of the ecosystem

While the pandemic gave it a boost, Utah’s tech industry has been decades in the making. In the late 1970s, Utah gave birth to software companies like Novell and WordPerfect, an early word processing application. This was followed in the 1990s by Overstock, Vivint and Omniture, a web analytics company later acquired in 2009 by Adobe, which itself was founded by Utah native John Warnock. 

Many of Utah’s early generation of start-ups were built without VC funding, which was historically lacking. Blake Modersitzki, Salt Lake City-based managing partner of Pelion Venture Partners, says that 25 years ago companies from Utah had to move to Silicon Valley to raise later-stage financing.

“That is no longer the case. All of the [VC] firms from both US coasts are either hiring people in Utah or partnering with firms like ourselves to gain access to the entrepreneurial spirit here,” he says.

Relative to the size of the state's economy, Utah is only behind California for the number of unicorns founded in its borders between 1991 and 2021, according to an analysis undertaken by Ilya Strebulaev at Stanford Graduate School of Business. Major local exits, such as the 2018 public listings of PluralSight and Domo and the acquisitions of Divvy and Qualtrics, have created a new generation of angel investors, proven founders and former employees setting up their own start-ups. 

This is echoed by Gavin Christensen, who set up Utah’s first seed-stage VC fund in 2008, called Kickstart. Despite “retrenchment” in the venture industry, Mr Christensen says there is still “more capital than there has ever been” in Utah. He adds that a more diverse set of tech talent, entrepreneurs and investors have flocked to Utah and Salt Lake City for its bustling tech scene and unique lifestyle. 

“I don’t know that there’s another major city that’s so close to so much variety of outdoor experience,” he says, noting the skiing, hiking, mountain biking and national parks in Utah.

Growth limits?

The influx of tech talent and interest in Utah is having broader societal impacts. In the city of Lehi, the epicentre of Silicon Slopes, the local population has climbed by 12% since 2020, standing now at more than 86,000 people.  

Compared to five years ago, Mr Christensen has become more “worried about macro issues” in Utah, such as air quality, housing and education. These concerns are being collated by the state through the statewide Guiding Our Growth survey, which asks residents to share their thoughts on these issues.

“Utah knows that growth from within and net in-migration is inevitable,” says Pete Codella of Utah Governor’s Office of Economic Opportunity. But he notes that this places a strain on land, housing as well as “access to Utah’s great outdoors”.

Despite the influx of people to Utah and local colleges like Brigham Young University, the competition for tech talent has also intensified. Like any tech ecosystem, Utah is also feeling the pinch from higher interest rates, lower valuations and longer times to exit. Mr Modersitzki says companies have had to extend their runway because it has become more challenging to raise late stage capital. 

Unique religious culture

Utah is inseparable from the Church of Jesus Christ of Latter-day Saints. Members of the Mormon Church first settled in the Salt Lake Valley in the 19th century, creating irrigation systems and establishing new communities that today are cities in Silicon Slopes like Bountiful, Lehi and Provo. 

“This history is really important to understand the [tech] ecosystem,” says Utah governor Spencer Cox. He argues that entrepreneurs in Utah are very open to collaboration due to the legacy of people working together in the harsh desert valley.

There’s a real feeling that this rising tide is going to lift all the boats here

Spencer Cox

“There’s a real feeling that this rising tide is going to lift all the boats here,” says Mr Cox. “That thoughtfulness in building community, even with that rugged individualism that is so common in the western US, has made Utah a very unique place.”

Given that two-thirds of Utah’s population, almost 2.2 million people, are Mormons, much of the local talent pool learns from experiences with the church. For instance, young Mormon men often travel abroad for proselytising missions, acquiring language skills, connections and business ideas in the process.

Jeff Erickson, an entrepreneur, start-up investor and adviser, argues these experiences develop “sales-oriented skills” and a global mindset which are well suited to entrepreneurship. He adds that that the depth of software sales and customer support talent in the Salt Lake City metro area has made it more attractive to tech companies.

Utah’s strong family values have been a draw to some Mormon entrepreneurs. Taylor Brown, founder and CEO of Re:do, a software platform that helps e-commerce with returns, is one example. After living in California and Arizona, he moved back to Utah with his wife to build his business due in part to its growing tech talent pool and “family-centeredness” culture.

The makeup of the tech ecosystem also reflects Utah’s demographics and Mormonism, where women tend to work less than the US average. Only 23% of the tech workforce in Salt Lake City are women, according to CompTIA, the lowest level of any major US metro area tracked by the non-profit.

Historically, many of the entrepreneurs moving to Utah had family connections or were Mormons. But a more diverse set of people have been relocating recently, with Mr Lewis of Aumni being a good example. Despite no connection to Utah, his decision to move was because it had “one of the best dynamics” in the US: "We ultimately opted to move the company to Silicon Slopes and it has exceeded all expectations since.”

This article first appeared in the August/September 2023 print edition of fDi Intelligence