Startups, Talent and Branding Hot Topics at Tech Entrepreneurs Roundtable
Salt Lake City—With the technology industry’s boom in the state, there was no shortage of topics to discuss at Utah Business’ annual technology entrepreneurs’ roundtable. The nearly 15 participants examined funding for startups, luring talent, Utah’s brand (and whether or not said brand is a problem), and how the state should strategize when it comes to the industry’s growth.
With Facebook’s recent move to build its data center in New Mexico rather than Utah, participants debated whether or not the state should have pushed harder for the tax-incentive package that would have promised the company up to $260 million over 20 years. For Bret Jepsen, managing director of Utah Capital Investment Corp., the data center would have been the next step in showcasing Utah’s growth as a technology hub to the rest of the country.
“What frustrates me is that I’m not sure we’re seeing the forest for the trees sometimes when we have an opportunity like Facebook,” said Jepsen. “I realize there’s tax incentives, there’s frustrations that people have, but it’s sort of like the Adobe phenomenon. It’s the eBay satellite office. I know that this is not going to be Facebook’s core office, but …the more brands we can get to locate anything here in Utah, the better it is for the tech community. Just because it gets people comfortable.”
It’s that intangible value—beyond the projected permanent jobs for the center, which were only estimated between 50-300, depending on reports—that made the incentive package worthwhile to Cody Broderick, CEO and founder of inWhatLanguage. “It’s really frustrating. There’s so much hidden value, long-term value that you can’t even see. You can’t capture it,” he said.
For some participants, whether or not Utah should have pushed harder for the data center should have been weighed against the state’s overall strategy for the industry’s growth. Would getting Facebook’s data center here truly provide that intangible cache, making others want to locate, or re-locate, their companies here? Or would providing the tax incentives merely be allocating money to a company for relatively little gain, and take the money away from home-grown talent?
“There’s an opportunity-cost to any deal. Do we have a strategy as a state to say, ‘Who do we want? Because I’m going to give up something to win that deal. That’s going to cost me something. What’s my strategy? Is that what I want to build?'” said Jason Wells, CEO of Convirza. “We could build this state around other things. We could focus on other areas. We could give those tax incentives to another company that might bring in jobs or cache or those other things.”
<“I think it is problematic that you give [the deal to] someone like Facebook, or whomever, who goes around and [pits] all the cities against each other in Utah to see who will give up the most to take them,” added Andrew Laver, life sciences cluster director for the Governor’s Office of Economic Development.
For others, the breakdown of the deal with Facebook was a benefit to the technology industry. Clint Betts, CEO of Beehive Startups, who moderated the discussion, said he believed the deal would have been a “short-term win.” With the state having several billion-dollar companies that, Betts said, should IPO within the next two to three years, why shouldn’t the state focus on building up those companies and incenting them to stay?
“It would have been great if Novell were still here, or WordPerfect was still here. Because it put this stake in the ground. These are really great tech companies that were born and raised and grown here. That piece of it, I think, is a legitimate counter to ‘Hey, let’s just go grab logos and give up a bunch of state money and a bunch of resources in order to just grab one company,'” said Betts.
“I guarantee that Pluralsight or Qualtrics or InsideSales or Domo—none of them get any state subsidies to that level, and they add tens of thousands of jobs to the Utah economy. I don’t know if we take it for granted because they’re here,” agreed Frank Maylett, CEO of Rizepoint. “…We should help them build and grow here instead of getting 20 jobs and burning through millions of gallons of water just to have the logo. I think it’s probably a good thing.”