What Makes Salt Lake City A Great Startup Destination?
Hundreds of miles away from the startup epicenter in Silicon Valley, tucked between the Oquirrh Mountains and Wasatch Range, is Salt Lake City, a metropolitan area home to 1.2 million people. Between a number of local concert venues, the Utah Jazz, University of Utah, BYU and countless other local activities, Salt Lake City has become a budding urban environment.
In 1869 the Central Pacific and Union Pacific Railroads joined in Ogden, a town just outside of Salt Lake City, to drive the final spike (known as the “Golden Spike”) that officially connected the east coast to the west coast by the first transcontinental railroad system. The railroad was a catalyst for an industrial expansion in the Salt Lake Valley, and an economic foundation was built on industries including mining, salt production, and ranching. The railroad and industrial boom established a long standing tradition of innovation, hard work and prosperity. These societal attributes can still be seen around Salt Lake City as innovative, startup technology companies have begun establishing offices across the valley.
For a startup ecosystem like the one in Salt Lake City to grow, significant M&A events must regularly take place (at least every few years), which result in a windfall of capital that founders can use to start new ventures, invest in other startups, or in some cases do both. This trickle down from liquidity events drives the future startup ecosystem and spurs growth. Without this trickle down the ecosystem would be starved of the needed capital and valuable experience that feed startup growth. Lucky for the Salt Lake Valley, M&A events have been on display for years and could be attributed to the expansion and growth of local technology.
Much like the semiconductor industry set the foundation for growth in Silicon Valley, the Salt Lake valley has its own foundational company. Novell was founded in 1979 by Ray Noorda and Drew Major in Provo, UT (south of Salt Lake City). Novell, a software and services company is like the “Golden Network” that propelled the Salt Lake Valley into the high-tech industry much like the “Golden Spike” propelled the valley into economic expansion 110 years prior. Novell was eventually acquired and integrated into Micro Focus International in 2014.
According to Kem C. Gardner Policy Institute, over the last 10 years Utah has the second fastest growth rate for technology jobs at 4.9% per year. With one third of the state’s population living in the Salt Lake Valley, most of this job growth is taking place in the areas surrounding Provo, Salt Lake City and Ogden.
So what makes Salt Lake City such an attractive city for high tech startups? Aside from the city being a culture-center for innovation, the Salt Lake Valley has become an ideal startup ecosystem for several other key reasons:
Cost Savings - Overall, the cost to start and run business operations in Salt Lake City is lower than places on the west coast. Office space, cost of living, etc. all come at a reduced cost compared to Silicon Valley. For example: a senior software engineer in San Francisco earns an average base salary of $135k per year while the average in Salt Lake is $95k, according to Glassdoor. As you can imagine, at scale the $40k annual difference is a major capital savings for companies. The average direct asking price for commercial office space in Salt Lake is $24/sqft while in San Francisco, the average is $80/sqft. Again, you can imagine at scale the cost savings are significant.
Access to talent - The Salt Lake Valley is home to the University of Utah and BYU, two of the largest universities in the Rocky Mountains. Between them both, they produce thousands of business student graduates each year. In addition to a strong culture of business education, there are multiple accelerated software development bootcamps locally that produce youthful engineering talent. Software bootcamps such as The Tech Academy, DevPoint Labs, V School and Bottega are proving great education and talent to the surrounding areas. Having access to young and energetic talent fuels local companies as they grow and expand.
Quality of life - Easily accessible recreation is one of the main attractants for local residents. Hiking, skiing and many other outdoor activities are only minutes away from most areas in the valley. Additionally, with a lower population density than major metropolitan areas such as LA, the Bay Area, or New York, getting around the valley is not an agonizing task. Salt Lake also hosts world class conferences, concerts, sporting events and many other activities providing no shortage of weekend activities for residents.
As the Salt Lake Valley has advanced in the world of technology and local companies have become more mature, larger companies from the coasts have taken notice and have moved some operations to “Silicon slopes” as it is known. Companies like Adobe, Intel, Microsoft, NetSuite and Applied Materials have all set up offices in the area sourcing local talent and taking advantage of the reduced costs of operation. While Silicon Valley can never be replaced, Salt Lake is pulling from its storied history of entrepreneurship to form its own startup ecosystem tucked away in the mountains.