2016 Sees Utah top $1B in venture capital for the first time

2016 saw Utah companies raise over $1 billion in venture capital, a huge milestone for the Beehive State.

99 Utah companies raised $1.17 billion in 2016 according to the latest Venture Monitor report, from NVCA and Pitchbook, closing out 2016 Q4.

2016 saw total VC investments nationally shrink from their peak in 2015 (with $69.1 billion invested vs. $72.3 billion in 2015) as some of the unicorn bloat shook out of the market and skittish VCs withdrew from seed stage deals and bet heavy on later stage rounds. That’s pretty good news.

The great news is that Utah bucked the national trend with a banner year in 2016. What’s behind Utah’s growth running counter to the rest of the country.

Well, Utah does a lot with a little.

In 2015, Utah firms reported $875 Million in capital under management. That’s after coming in a respectable 8th place in the country for new commitments to venture funds: $284 million for 2015.

But in terms of total capital, that puts Utah 18th in the U.S. (even D.C. is ahead of us and they aren’t even a state). If the 2% rule held true, you could pay the management fees for every single VC Firm in Utah for less than $18 million. Muy poco.

Look at the giants in VC. CA by contrast reports over $90 billion and NY and MA are each over $20 billion under management.

Historical VC raised in Utah 2010–2016

So Utah’s capital resources are puny.

In other words, despite Utah’s local venture firms growing their funds at a healthy clip—and those firms doing an awesome job at getting Utah companies off the ground with their seed and A rounds—the companies in the state still need and capture outside investment.

Modest as locally available capital is, the remarkable thing in Utah isn’t the age or maturity of its locally sourced capital. Utah’s story isn’t about a venerable history of finance (no disrespect to the firms that have operated in the state for years). No, Utah’s story is the explosiveness of its growth.

Utah now represents 1.7% of all venture raised in the U.S., Utah isn’t the heavyweight Lennox Lewis, it’s welterweight Sugar Ray Leonard punching way above its weight class and coming on with a fury.

Utah’s on a three-year tear. As anyone who attended this month’s Silicon Slopes Summit can tell you, it’s showing no signs of slowing down.

It’s interesting to note that over half of Utah’s funding falls into the growth equity category. Ironically, this is evidence of Utah companies focusing on building their businesses in a more traditional sense, focused on revenue growth rather than growth at the expense of revenue. Utah startups, even in tech, tend to be prematurely profitable, conservatively run businesses with legitimate traction measured in long-standing metrics—crazy stuff like consistent revenue growth from paying customers.

Utah ranks 8th in the nation in terms of total capital raised in 2016 (behind CA, NY, MA, TX, FL, WA and IL respectively), but is coming off a 4th place ranking in 2015 for growth equity raises at $538 million.

Utah has maintained its 3rd place ranking for per capita venture capitalsince 2014, beating out New York for the #3 spot again in 2016 with $390.45 per person in the state.

The moral of the story is that if you’re looking to leverage a disproportionately favorable startup ecosystem, which won’t require you to mortgage your firstborn to rent an apartment nor to sacrifice your health and family for phantom productivity, follow in the steps of companies like Chatbooks and wherever you started, find a way to locate your startup here.

Source: NVCA/PitchBook 2016 Q4 Venture Monitor Report

Irrational Cynicism

unicorn bubblesFaux Bubbles

I have a theory about bubbles. I am developing a theory about faux bubbles too. I think the past six months have seen the popping of a faux bubble in valuations of private companies, especially apparent in those that are venture backed.

My theory about bubbles is that they occur when there is a disconnect in how the free market operates. There are lots of folks decrying the free market and throwing up examples about how the free market didn’t prevent this or that from happening. For me the market boils down to supply, demand, price and the motivation of self-interest ala Adam Smith. A bubble happens as an unintended consequence of trying to manipulate these principles. Because manipulations sully them.

What we have in the private VC correction is a faux bubble. It’s based not in an actual manipulation or disconnect, but rather in a fluctuation of demand created by the emotions of the herd. The overcorrection is likewise caused by the herd, not by the underlying fundamentals of the market. There isn’t enough erosion in the fundamentals for these to be long-lived.

In a recent blog post by Redpoint, the case is made that the current correction in SaaS valuations is a result of an emotional market, not one that weighs the fundamental value drivers.

I agree 100%. The current landslide in SaaS valuations is a temporary correction. Ultimately companies will trade based on their fundamentals and the industry average multiples for their group. IMO we are seeing a backlash against unicorn valuations and investors are timid about being caught out investing in stocks that everyone and their dog felt were out of whack. Current conditions are driven by fear of looking dumb to your friends because you have money invested in Snapchat and Uber.

Utah Tops the Big Apple in Per Capita Venture Capital

Hard to believe? Note the per capita qualifier. In fairness, NY based startups raised over $4.2 billion in venture funding in 2014 compared to Utah’s paltry $800 million. *sniff* Utah didn’t bring home more total money, but they brought home a lot and did it with a much smaller population. So, I don’t find it too far a stretch to say that Utah entrepreneurs are akin to the 300 Spartans at Thermopolae—only at winning over venture capitalists instead of Persian immortals.

Online Graphing

Utah’s growing ability to capture venture funding has enjoyed some pretty good press. In straight-up comparisons, Utah fares pretty well. It’s been a good season for Utah. Accolades for Utah and the companies here have been voluminous. One Inc. article even taunted Move Over Silicon Valley: Utah has arrived. Now if you’re in Silicon Valley, that seems a bit silly. But that’s because the Bay has such a HUGE lead. In fact, Utah is probably drafting Sandhill Road, close enough to fly out and back in the same day, and catching some of the slush that washes over the gunwales from the Bay Area. No matter, Utah companies are getting it done. Local firms and their ability to attract both number and dollar volume of funding deals has been outstanding in 2014.

What interested me was trying to see how Utah stacked up against the usual venture capital suspects per capita. I wanted to look at those numbers. I mean Utah lags way behind any of the biggies if we are just looking at the totals. I hadn’t seen anyone do a per capital comparison. Why would that matter? Well, I assumed that the amount of funding captured by a given population would represent a certain funding fitness that summed up all the elements at work in producing funding-worthy companies and entrepreneurs. You know, out of n population, we generated x number of fundable deals. There are other measures, for instance the Tech Startup Density reported by NerdWallet (Salt Lake and Provo made the top 20 in the U.S.). But that doesn’t tell me much of what I want to know. If I’m an entrepreneur, where do I go to marinade in the right ecosystem to build and fund a successful company. … And, what if I don’t want to live in the Bay Area?

So I compared state census data and a report from the NVCA and PwC, and came up with the following top 10 states based on venture capital dollars raised per capita. The numbers were stronger than I expected. Utah came in third in per capita venture funding raised. We were behind New York and Boston… way behind, but still in front of 47 other states and that includes New York! Utah was almost twice the national average, which skews high because of the monolithic golden state (take CA out of the mix and Utah is over 4x higher than the U.S. average per capita).

It’s no surprise to find CA in first place. Silicon Valley is practically synonymous with Venture Capital. Utah at number three, was a surprise. Edging out NY for per capita VC raised is pretty much the greatest upset since the BYU women’s basketball team upset No. 1 seed Gonzaga in the WCC tournament.

I’ll posit that the per capita venture capital garnered in Utah and other states, is predictive. It’s a canary in the proverbial coal mine, the tip, the surge within the peloton that forms a leading indicator of awesomeness to come. So, if you’re an entrepreneur with a great idea and an indomitable spirit… and you happen to live in Alaska or Montana (two states that garnered a combined total of zero funded deals in 2014), pack up your things and come out to Utah!


A Bias for Action

Sam Robinson was an early mentor in my career. Currently tearing it up as the CEO at Sam Villa, this is a man who has forgotten more about business (and particularly retail) than I will ever know.

I met Sam when I was running the marketing for the retail division of Provo Craft. The company had just completed its first $100 million year and was taking private equity money from a local PE firm. With the money came a lot of changes. Changes in management, policy, goals and culture. Sam was brought in as the new head of the retail division and became my new boss.

One of the things Sam was great at, was navigating change with repeatable sayings. He consistently preached that, as a department, we would exhibit a “bias for action.”

Now the concept of action bias made its way into the American lexicon as a result of several psychological studies, including examining soccer goalies. The keepers displayed action bias by lunging one way or the other when their best bet for defending the goal was actually to stay put. In these studies, action bias reflected detrimental impatience and instability. But despite this lesser-known reference, Sam’s use of the expression was infinitely more useful, practical and positive for us. He wasn’t reading psychology anyway—he was getting stuff done.

In Sam’s parlance, a bias for action was all about execution. No management process represents airtight communication. Nor should it be. Sam understood that the culture should dictate most of the decisions of individual employees, rather than top-down instruction through the chain of command. A culture around a bias for action was his way of instilling an ethos of productivity. If you found yourself at a momentary loss for what to do, just find a way to act. Chances are it will move the company incrementally forward.

This maxim is rooted in the same principle as “Even if you are headed in the right direction, you’ll get run over if you just sit there,” “A rolling stone gathers no moss,” and “Execute, execute, execute.” It was GTD at the most elementary level.

Since that time, I have tried to incorporate the principle of action into my habits (along with several other nuggets of wisdom I owe to Sam), and been much better off for it.

Essential Branding

A lot of advice that gets doled out is idealistic. That’s okay. Idealism gives us something to strive for. Sometimes, however, the practical application gets lost in the comparison; we end up saying wouldn’t it be nice to have those ideal circumstances, instead of the ones we are facing.

That’s what is was like for me. I was recruited by a group of friends and partners to head up the marketing for their startup. It wasn’t really their startup. It was a company founded by others and they had essentially acquired it in distress. “Startup” makes it sound like it was squeaky clean, a blank slate, the perfect untarnished foundation upon which to build a brand. Nothing could be further from the truth.

We weren’t starting with a clean slate. We had history—a string of business decisions that had led us to a current reality where the company had to either change or die.

It was a messy pile of baggage. The company needed consistency. It had flux. It needed clarity in its message. It had confusion. It needed unity around the product. It had a pile of seemingly unrelated features. It needed certainty around its purpose. It had competing visions. It needed focus. It had what I call magpie syndromedecision-makers were seduced by the allure of the next shiny new thing.

Most of all, the customer needed to be able to trust us. They couldn’t.

We were not bereft of advantages. We had a knot of skilled, smart and capable people. We needed to focus those resources to reforge our brand, and it wasn’t going to be easy. At the root of it all, we needed to change our decision-making behavior in order to execute in a consistent manner.

Enter the irony of constraints. Enslaved by the decisions of the past, our only hope of freeing ourselves and giving the company its wings lay in imposing constraints on ourselves. (An excellent read on this principle is Presentation Zen Design by Garr Reynolds.)

I believed that this could be led by marketing. If we could focus one area of the company on relentless and consistent execution, the results would encourage others to follow suit and we could establish a sense of ourselves that others would rally behind. I believed that the root of our erratic past was a lack of identity. Not identity in the sense of our logo or colors, but identity in the sense of our culture. What were our values and how did they translate into what we were all about? What purpose did we serve?

To start we needed to establish the constraints within which we would discipline ourselves to act. They needed to be loose enough that (as one department) we weren’t strangling the rest of the company, but firm enough that we were imposing discipline on ourselves and taking clear steps, however small, away from the chaos of the past. In the beginning, we just needed something that would act like bumpers in our bowling lane. If we treated each product iteration or marketing campaign as its own MVP, we needed a consistent standard for what was acceptable.

Simple as it was, our standard became, It has to be cool, and not suck.

In the terms of Scott Bedbury’s New Brand World, this became the motto that helped us make the commitment and sacrifice needed to put down the roots of our brand. If it was cool, we were interested. If it sucked, we said no.

It has to be cool and not suck, became the emblem of our company culture. As simple and seemingly subjective as this motto was, it gave us what we needed to combat both the total perfectionism and “anything goes” behaviors of the past. Culture drives consistency in decision-making, which, in our case, caused a chain reaction that helped solidify the company. We clarified our business plan, unified the product, executed a consistent integrated marketing strategy across all channels, developed consistent and clear messaging, created simple branding and style guides, and harmonized web and product design with our traditional marketing and communications efforts.

The story is still being written. It would be a gross oversimplification to say that this decision solved all of our problems for us. But it did provide the lodestone we needed to extract ourselves from the morass of the company’s past sins. It did guide us to build a solid brand and help define our culture. And, in the end, we had a company that was definitely cool—and didn’t suck.

This post first appeared on Medium.

Leadership Secrets for the Rest of Us

I had lunch the other day with my friend, Ty Kiisel. Ty is one of the best marketing minds around. He and I get together every so often to talk shop, which is to say we compare notes and experiences. We typically talk management strategies, marketing best practices and case studies.

As we spoke about management, the successes and failures we see around us, and the principles that underpin these examples, he introduced me to Dick Cross. Dick is a turnaround pro based in Boston, who has written a couple of books (also see this Forbes article on 9 Crippling Mistakes CEOs Make).

Cross is focused primarily on the attributes that make or break a great CEO. Neither Ty nor I are currently operating in the role of a CEO, so I was interested in how these ideas might apply to managers of smaller departments and teams. I’ve been fortunate to work with some great CEOs, here are some highlight topics from the article: Ignoring the Importance of Company Culture, Being too Afraid, and You are Too Smart to Learn from Anyone Else. I think these are easy to apply to the various leadership roles downstream from the CEO.


I’m a big fan of creating culture. As Brian Chesky, CEO of Airbnb suggests in his latest post on Medium (profanity warning), culture creates productivity and efficiency. Polysyllabic words that mean, it helps you get more of the right stuff done. The culture communicates values intuitively, and so it becomes subliminal training for your employees. Done right, your culture allows people to act autonomously and still be in harmony with the goals and mission of the company. How cool is that? No instructions. No meetings. No detailed project management process. Just people who get it and move the company forward on their own. That’s the power of culture. I can’t resist pulling this excerpt from the Brian Chesky article above:

The stronger the culture, the less corporate process a company needs. When the culture is strong, you can trust everyone to do the right thing. People can be independent and autonomous. They can be entrepreneurial. And if we have a company that is entrepreneurial in spirit, we will be able to take our next “(wo)man on the moon” leap. Ever notice how families or tribes don’t require much process? That is because there is such a strong trust and culture that it supersedes any process. In organizations (or even in a society) where culture is weak, you need an abundance of heavy, precise rules and processes.

Lesson: command-and-control, micromanaging, and dictatorial-style leadership are anachronisms left over from a previous generation and NOT the most efficient or effective methods for motivating people to use their initiative and ingenuity to make good decisions.


How about being afraid?Ty told me that during one of their interviews, the comment was made that many CEOs are unnecessarily afraid that they will be “found out.” That someone will realize that the emperor has no clothes. That people around them will discover that they don’t know everything about everything. As a result of that fear, they can be prone to do wacky and ultimately ineffective things trying to prove to everyone that they know it all. This undermines their effectiveness.

A colleague, Steve Fulling recently shared this article with me entitled The Trap You Set For Yourself. It makes the case that fear is crippling. You can’t be effective in creating value for your company and the people around you, if your actions are motivated by fear. If you want to be happy and authentic, you must act on what you think is right without fear.


Among the attributes of great leaders as represented by Cross and others (think Good to Great by Jim Collins) are humility, channeling ego away from themselves, building up others, etc. A reason Cross’s book works, is because leaders need great lieutenants more than they need to be great at everything themselves. Even a modest-sized company is too big for one person to have all the skills and specialization needed to operate every necessary function within it. Great leaders provide vision, then let their operators execute. They are concerned with the success of the enterprise above that of themselves. It’s an altruism that in the end raises them.

Enigma of the Creative

alberssquareI recently spoke with a colleague about a project we were working on together. He made the comment, “nobody gives a [bleep] about the design.” This statement without context could mean any number of things, but it triggered something and got me thinking. I was forced to consider that perhaps every specialization in the company includes domain knowledge that is invisible and/or unintelligible to others.

In what I expect will be a noble, but mostly unsuccessful attempt to move the needle in terms of cross-departmental appreciation and understanding, I added a short essay on design to my next report to the my peers on the senior management team.

Enigma of the Creative

Design is a powerful manipulation of human beings. What we call a first impression happens in less than 50 milliseconds, is unconscious, and occurs primarily in the reptilian or limbic brain—so called because it is considered evolutionarily primitive, preverbal and instinctual (see Thinking Fast, Thinking Slow by Daniel Kahneman). These first impressions are not interdicted by the higher, more evolved mammalian brain. In other words, our higher brain functions may dictate what we choose to do about our first impressions, but they cannot prevent the impression from occurring! 

What gets communicated in that 50 ms window? A gestalt including professionalism, confidence, esteem, comfort and polish, all of which directly impact subsequent conversion goals (read sign ups and purchases). At its heart, Design is about channeling the uncontrollable responses in the human brain in favor of the company. These impressions are driven by nuance. You may ask, what is the difference between so-so design and great design? If customers (i.e., website viewers) responses to a website fall into a normal distribution (bell curve), the game is often won or lost in the margins, the tails, the extra sigma (standard deviation from the mean). Think Moneyball.

Typography series - 01 - Type anatomy

How do they do it? What lies in the armories of designers? The most relevant tool a designer has is his or her brain. Making something feel good requires the designer to employ expertise in color theory (would love to explore Interaction of Color by Bauhaus alumnus and Yale fellow Josef Albers), typography, hierarchy, context, proportion, balance, rhythm, C.R.A.P. (contrast, repetition, alignment, proximity), line, value, shape, forms, space, texture, movement, emphasis, pattern, proportion, unity, theme, brand and communication for starters.

Designers are typically people who naturally perceive and effectively replicate the aspects of a visual image that tug on the reptilian brain. It’s taste in everyday parlance; and taste-level is almost impossible to teach if God didn’t give you a portion at birth. Among designers, the competition for those margins is fierce and science takes over beyond gut feel. Enter the A/B test. Anyone can do an A/B test, the real trick is coming up with what to test. Again, you need a creative thinker to push the margins.

In the end, Design is a powerful psychological tool in the arsenal of any company and we misunderstand it at our peril.

I’m not a blogger

I’m not. It’s an uncomfortable fact for both of us, that this copy really exists for me, not you. I’m not trying to be a jerk about this; I just want to set your expectations right from the outset.

I used to feel beholden to my blog (not particularly often as you can tell by my blogging frequency), like a diary with a daily quotient that had to be met, but not anymore. I write here when I feel like it and frankly when I have the time. Forgive my selfishness. It’s not that I don’t care about you (gentle reader), it’s that I don’t think catering to you will make this any more interesting. Maybe it’s tough love. I would like to pretend that I am independent and cavalier enough that I just don’t give a flip, but that isn’t true. I want to be liked as much as the next human. But it isn’t very likable to go around trying to be liked. In the end, you just have to do your thing and if it resonates with someone else, that’s awesome. If not, no biggie there either.

Here’s the thing, I think there are a bunch of you writers out there in the same boat.

Don’t get me wrong, I LOVE writing. I write every day (just not here).

I recently articulated something similar to myself. In my professional circles, I have many relationships that I value. But I don’t value any of them enough to forgo making my contribution in the way I believe is best. One of the things that has been good for me in my career that a long time ago, I was out of work for a substantial amount of time. Months and not years, if you are curious. After going through that, I was boldened. Since that time I have never been afraid of being fired. I don’t kowtow to anyone or suffer manipulation in my partnerships or work roles as a result of fear of being fired. This has allowed me to do MUCH better work and make a stronger contribution in all of my roles since.

The new thing that happened is that I realized that I was committed enough to doing what I believed to be right that I was not only happy to risk being fired, but happy to risk relationships that couldn’t withstand me working at my best. As I stated in an interview recently, I don’t get out of bed in the morning unless it is to try to change the world. I’m not saying I hit that goal all the time… or even very often if I think about it. But I’m striving for it every single day.

Commitments have a cost. Commitments mean you cannot accommodate everybody. Some things have to be sacrificed if you want to make commitments. And I’m at peace with those sacrifices. I’m good with it. I’m not going to fret, or stress… I’m just going to keep getting up everyday hoping to change the world.

The Evolution of Education

The face of education is changing. This has been a theme for me over the past few years.

What I think most authors on this subject are missing is that this shift is driven by a powerful confluence of factors, and not merely a comment on the advance of technology or the peculiar study habits of Millennials.

Sure the Internet has enabled the Massive Open Online Course (MOOC) trend, is facilitating a delivery channel for education. But the velocity with which MOOCs are penetrating the market is driven by the broken economics of traditional education.

Students are fed up with a product that no longer serves them. Employers are giving less credence to degrees and degree holders.    A recent Money Magazine article stated that nearly 30% of students with a much less expensive Associate’s Degree are out-earning those with Bachelor’s Degrees. The costs of education are going up (in a peculiar break from standard supply and demand economics, education pricing has soared through the recession which began in 2008). New students are justifiably questioning whether an education is worth the cost. College placement rates are dismal and the actual information conveyed in many university courses is available online and on-demand for free. Young people today often view education as a problem-solution situation. I need to know something, ergo. I look it up online. Why would I waste my time in school?

Consider what the product of an education is. Knowledge or information about a subject. A certificate authorized by a body of accreditation that tells everyone you really know what you are doing. An opportunity to network with other students. An opportunity to get involved in academia, which I define as doing research and working on projects that have not yet proven to be marketable.

Now ask yourself how many of these objectives can just as easily be obtained via CourseraEdX, Udacity, UdemySkillshare, or the Khan Academy with no unbankruptable student loan debt.

In the name of full disclosure, I am not unbiased since I work as an entrepreneur and consultant for a couple of startup companies and as an adjunct professor in the Finance department at the University of Utah.