Silicon Cities
Why Salt Lake City is Suddenly Brimming with Startups and Innovation
Takara Small | August 25, 2016

Every month, Free Enterprise casts a spotlight on one of America’s up-and-coming Silicon Cities – those urban hotspots that are bubbling up with entrepreneurship, fostering innovation and building vibrant digital economies. In August, we took a look at why entrepreneurs are flocking to the mountainous metropolis of Salt Lake City. Here’s what we found:

The Olympic Games helped create a booming startup hub

The 2002 Winter Games are long gone, but the city and its entrepreneurs are still reaping the benefits. The international sporting event was a catalyst to improving local infrastructure and helped shine a global spotlight on the city, which had been better known for its ski resorts, outdoor recreation and as a headquarters for the Mormon faith.

It’s thanks to the Olympics that the city upgraded its airport and created a light rail system. On the surface, these may seem like minor improvements, but making it easy for business travelers to get to the city and travel within it has helped boost business growth. Meanwhile, the Games also helped advertise the city as a getaway destination for San Francisco residents, said Troy D’Ambrosio, the executive director of Utah’s Lassonde Entrepreneur Institute.

“The Games really cemented the connection with Silicon Valley and other hubs,” he said. “Some entrepreneurs, investors and venture capitalists even ended up with homes in the ski area, so that strong connection has lasted even longer than some people might have thought.”

Strong education technology sector pushing city higher

Education technology, also known as edtech, is a lucrative, expanding sector. According to a 2015 report by research group Markets and Markets, the global education technology market is slated to increase from $43.27 billion in 2015 to $93.76 billion by 2020, as more teachers adopt e-learning tools in their classrooms and online learning gains traction.

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Salt Lake City is right in the middle of that action, having attracted a slew of innovative digital education startups. In fact, a joint report by the U.S. Chamber of Commerce and Washington-based incubator 1776 this year called the edtech sector, the city’s “strongest specialization.

Salt Lake City is home to some of the biggest players in the industry, such as Pluralsight, an on-demand e-learning platform, and Instructure, an online course management system.

“When there are companies that find their wings and become successful like a Pluralsight or Instructure, they create a new type of energy and opportunity for other startups,” said Rusty Greiff, managing director and general partner at 1776. “I don’t think it’s a surprise that these companies have a direct impact on the city’s economy. When you have highly educated, highly talented employees who relocate to Salt Lake City, it contributes to local innovation that pushes other startups to bigger heights.”

Success begets more success

Salt Lake City’s entrepreneurialism is feeding its growing reputation as a strong tech and business hub, which is helping to lure more entrepreneurs from out of state. The area benefits from the influx of entrepreneurs, which has brought in more business activity and capital opportunities. In 2015, the city’s population grew by 1.05 percent, one of the largest increases in the country, according to Forbes, while the Salt Lake City metro area added more than 19,000 jobs.

“People are coming in from out of state and putting down roots,” said Val Hale, executive director of Utah’s Office of Economic Development. “Those people open offices, network and then call their friends and say, ‘Hey, you should see what it’s like in Utah,’ which brings in even more people and businesses.”

Another bonus: The city is a mere two-hour flight from tech mecca Silicon Valley, with a lower cost of living. Nate Rhodes, co-founder of medical startup Veritas Medical, which sells a technology that uses light to combat hospital-acquired infections, says cheaper overhead costs work in local entrepreneurs’ favor.

“The other benefit of starting a business in Salt Lake City is the cost of living,” he said. “It’s a quarter of what it would be in other cities—so we can pay less in rent and more to our employees.”

What’s next?

Salt Lake City certainly looks like a future tech leader, how does it take the next step to compete with traditional tech giants like Silicon Valley? According to the Innovation That Matters study, the city can start by being more open to new and outside-the-box ideas.

“While local entrepreneurs pointed to a favorable regulatory environment and good quality of life, they noted a distinct lack of openness to novel ways of thinking within the community,” ITM researchers found. “Finding ways to shift this aspect of the local culture could pay dividends for the startup ecosystem.”