Cover Story

 

Can Utah Fuel Your Startup?

The Pros and Cons of Starting a Business in the Beehive State

 

When you talk to Utah's entrepreneurs with respect to the current local environment for startups, you get a mixed bag of responses. Most agree that now is the best time ever to start a business in Utah and that the resources for local entrepreneurs have never been better. Yet, it's clear that Utah still needs to mature with respect to funding sources, our image and our talent pool. However, we're getting better in all of these areas day by day.

Launch sat down with a group of five individuals who are either entrepreneurs or work with startups everyday. The group discussed what we are collectively doing well in Utah to foster entrepreneurship and also talked about what we could be doing better.

The roundtable consisted of Craig Bott, president and CEO of Grow Utah Ventures; Brian A. Cummings, director of the University of Utah's Technology Commercialization Office; Nicole Toomey Davis, director of Utah's Centers of Excellence program and CEO of Enclavix; and Jeremy Hanks, CEO of Doba. Chris Knudsen, a local entrepreneur adjunct business professor at Westminster College, agreed to participate and be the moderator for the discussion.

 

Chris Knudsen: Today we are here to discuss the state of entrepreneurship in Utah. What are we doing wrong and what are we doing right?

Brian, you are in a unique situation right now because you are active at the University of Utah Technology and Commercialization program, helping to spin off companies formed around university-developed technology. Before that, you started some companies in Texas. What is entrepreneurship like in Texas compared to Utah?

 

Brian Cummings: I was in Texas for 12 years where I started various companies. I wanted to do more equity deals and that is how I got involved with the University of Texas Commercialization Office. From there I was recruited here to the University of Utah to help them grow this office.

Texas is very different mainly based on the population and the dynamics. What attracted me to Utah was the culture. I just get the feeling that I'm in the right place at the right time here.

The state of Utah and the University of Utah are building this whole technology ecosystem to drive economic development. They are building the right support mechanisms to have the right amount of resources and funding in place.

It is very different here than it is in Texas because so many huge cities - San Antonio, Austin, Dallas - they all vie for the same pools of resources and they fight amongst each other whereas in Utah, it just seems to be a more collaborative effort and people want to move toward a common goal. It was extremely attractive to me that everyone was so focused on that common vision. That really does set Utah apart.

 

Chris Knudsen: The program Brian is heading up constitutes a "pipeline" designed to spin off some great companies. Nicole, tell us about your state-run Centers of Excellence program and how it participates in helping to form companies from Utah's technologies.

 

Nicole Toomey Davis: The Centers of Excellence program serves the entire state. Any college or university in Utah can apply to participate in the program if they have a technology that has commercial merit and commercial value. This year we have 16 fully funded centers and then we have five centers that just have a business team.

The University of Utah alone has 1,000 pieces of technology that could potentially be used to form viable businesses. Not all of them are ready right now to be a business, but let's just say 20 or 30 percent of them are. The Centers of Excellence program alone can't do it. You don't have to go through the Centers of Excellence to license university technology and start a company. My passion is to encourage entrepreneurs in the state to go shopping. Go shop at BYU, go shop at Utah State and the U of U. They have technologies and they are anxious for you to license those technologies and take them out and build a business on them.

 

Brian Cummings: I often get the question of how do I get plugged into the U of U? It is simple; you just pick up the phone and dial 801-581-7792 or visit tco.utah.edu. We invite people to come and see what technology is available for someone to form a business around.

 

Chris Knudsen: Do you have a problem now finding people to run these companies?

 

Brian Cummings: We do have problems finding good talent and it is critical, as any venture capitalist would tell you. Without the right management team a great technology is certainly not going to go anywhere. In starting companies we want to make sure we have access to the right managers, CEOs and CFOs and to see that the right team is in place and that is very difficult to find. It is not that the people are not here in Utah, it is how you best access them. We are trying to start initiatives to try and tap into this talent pool better because the people are here we are just not doing a good job at finding them and how we can do that better would go a long way in helping to build better companies.

 

Chris Knudsen: Jeremy, you run a rapidly growing company. What are some of your struggles?

 

Jeremy Hanks: I struggle from the standpoint of is there enough talent in Utah? Are my engineers the best in Utah? I think they are. We hire very carefully. We have invested very heavily in our employees and we have invested in our culture.

My biggest fear is that I end up competing with other successful Utah technology companies for the same top percent of employees and we can't go deep enough into that employee pool.

 

Chris Knudsen: Have you noticed anything unique about Utah's entrepreneurs?

 

Jeremy Hanks: It seems to me some business owners in Utah feel like they have to justify themselves. We don't give success and credit when it is deserved. There is always this caveat that I'm in Utah so I have to work harder to justify my success than someone else. It seems like there is kind of an image problem for ourselves. I get into that mode. I talk to members of our management team and it seems like we are in high school and there are different groups and we really want to be in the popular group, but we don't think that we are because Texas and California and New York, they are the popular group.

We are always feeling like we are hanging out with these guys and we are trying to justify why we are cool. I think that the attitude needs to be that we are cool. Look at what is good about Utah and highlight the positives.

 

Chris Knudsen: Is that conveyed to you by outsiders or is that an internal thing?

 

Jeremy Hanks: I think it's a little bit of both. I think that it is more our own doing. For some reason we feel like we have to prove our existence. In the last three years we have been in the top two or three states per capita in representation on the Inc. 500 but does anybody hear that? Why are we not broadcasting that out to the world?

 

Chris Knudsen: Craig, what are some good things you've seen recently?

 

Craig Bott: One thing I think we do very well is entrepreneurial innovation. The innovation is extremely creative here. We are making a lot of products and services. There is a lot of entrepreneurial energy. A lot of people want to be entrepreneurs. I think we are doing some wonderful things with funding that. Ten years ago there were not adequate funding resources. Even a year ago there were only 15 active and organized angel investors. Now there are about 60 who are making investments. That is a good sign. That means that the successful entrepreneurs are willing to give back, see an organized way to do that, and see the opportunities through the University and other high profile entrepreneurs.

 

Chris Knudsen: What could we do better?

 

Craig Bott: Sometimes we struggle to find that entrepreneurial spirit throughout the state. We struggle to find that entrepreneurial spirit of the same degree in the northern part of Utah. In the South it is really a vacuum there in terms of role models, success stories and resources. There has only been one venture-funded deal in Washington County over the last four or five years. So we are still very isolated to just a couple of counties almost. It is difficult to take even a 30-minute drive north and find the same level of resources, interest and activity as you find in Salt Lake and Utah Counties.

The other thing I think we could do better is that we have a lot of organizations spending money and undertaking initiatives to encourage entrepreneurs, but they are not really coordinated. We have small business development centers. You have some nice tech center programs and we have some private groups like Grow Utah Ventures, but there isn't much coordination between these groups. We have to figure out better ways to coordinate them and put them where they need to be. We could do a little better job at that.

 

Chris Knudsen: Are our entrepreneurs getting enough experience?

 

Craig Bott: There is value in experience and successful entrepreneurs understand that if they don't have it then they need to get it. The better entrepreneurs can get it through others like partners so they don't have to personally get it but they have to recognize that they need it. If they don't recognize that they need it then there is a real detriment, but it is here. You can have expertise on virtually every topic from someone who has done it before you have. It is really an entrepreneur understanding that there is a gap in my experience and I need to get that gap filled and I can tap someone in the community who can help with that. Entrepreneurs who don't understand that become very narrow.

 

Nicole Toomey Davis: Having a peer group is crucial. I encourage entrepreneurs to have a support network. Go to the events and meet people.

 

Jeremy Hanks: Entrepreneurs solve problems they just don't complain. I would help in a second but I don't get a lot of people asking me. I am more than willing to sit down with entrepreneurs. They just have to come and ask me. Entrepreneurs have to find those mentors. They are there and they are willing to do it. If we implement that into the culture here that would go a long way in seeing a lot of success in some of the startups.

 

Chris Knudsen: Does Utah have an image problem and can we do anything about it?

 

Jeremy Hanks: Yes, but I don't think it's just us. I see a lot of regions that are trying to become the next Silicon Valley. Utah will never be the next Silicon Valley and I think our culture is the prime reason. Most of my employees would never work 80 hours a week. They would all quit. I could go to California and I would find no shortage of people to do that. I think that we can say that our lifestyle is better and it is different.

There are some misconceptions about our state. I've come across a lot of things lately that talk about Utah as the scam capital of the world. We have the highest percentage of multi-level marketing companies anywhere in the world. Utah County has twice as high of a percentage of those companies as anywhere else in Utah. We have a state legislature who just changed the laws to be the most favorable in the world for those types of businesses. As an entrepreneur, I just don't see eye to eye with that. That is a legitimate black eye that we have as a state.

 

Craig Bott: I think our entrepreneurs need to focus on value creation - something that has lasting value. I can't think of anything to take more pride in as an innovator than creating something that has value that continues even after you are not involved in it. There is a difference between wealth creation and value creation. If you focus on value creation the wealth will come.

 

Nicole Toomey Davis: I think our image does hinge to a certain extent on how many big companies you have. So how do we build those long-term big opportunities? We don't want to be Silicon Valley; we want to kick their butt by having a better lifestyle and people who can make better decisions because they are working in a more reasoned manner. If we commit to hard mental work we will have a huge strategic advantage. This is what the state is trying to foster. We can't out spend, we can't outbid but we can out think and we can out execute as a state. I think that we can turn that "weakness" into a super strength if we are strategic about it.