Gateway to High - Tech Heaven? - Industry Trend or Event

Industry Standard, The, August 14, 2000 by Robert S. Boynton

Utah's natural beauty isn't the only incentive for companies to locate in Gov. Mike Leavitt's state.

It's a blistering June day and Gov. Mike Leavitt is campaigning through the small towns of southwestern Utah. Sporting shiny loafers, a crisp, blue golf shirt and a head of impeccably groomed brown hair - every follicle staunchly defying the blasts of hot desert wind - he looks so well scrubbed it's a wonder he doesn't squeak when he walks.

At every stop, a team of clean-cut young campaign aides plants signs reading: "Mike Leavitt: Road to the Future." By noon, Leavitt's bus is roaring through Moroni, population 200, a hamlet named after the angel who, according to Mormon belief, gave the golden plates holding the sacred Book of Mormon to the prophet Joseph Smith. With Mormons representing 70 percent of Utah's population, and nearly everyone in Moroni a believer, Leavitt (himself a member of the Church of Jesus Christ of Latter-day Saints) is dutifully cultivating their support.

To non-Mormons, the town is better known as the turkey capital of the world: Moroni produces 5 million birds every year, some of the choicest of which have been barbecued for today's lunch. After the picnic, the campaign moves to a nearby town hall, where Leavitt lays out his plans for Utah's future.

Sounding more like a visionary venture capitalist than a politician, Leavitt describes the "E-Utah" program that will enable parents to keep track of their children's progress in school via the Internet and talks about the importance of high-speed bandwidth for rural communities. Members of the audience nod knowingly at his comments, since nearly every home in the area already has access to a high-speed fiber-optic connection. Around here, Mormons and the Internet go together as naturally as vanilla ice cream and hot apple pie.

In fact, Leavitt is on the campaign trail in no small part because of his promotion of -- even obsession with -- computer technology. Despite being the most popular governor in Utah's history -- he won re-election in 1996 with 75 percent of the vote -- Leavitt has been forced by the right wing of Utah's Republican party to suffer the indignity of a primary against a little-known challenger. In an ugly May convention, he and Sen. Orrin Hatch were even booed. The right wing was angry because, among other things, Leavitt opposed a referendum to permit concealed weapons in churches and schools -- a favorite issue among gun-rights activists who argue that an armed student body might have averted the Columbine massacre. And he had betrayed Utah's libertarian convictions by advocating Lazes on Internet purchases -- a proposal he made while a member of the Advisory Commission on Internet Commerce. "Last year we said Utah's Gov. Mike Leavitt would enter history as the man who most wanted to tax the Internet in its in fancy," warned a Wall Street Journal editorial. "He may exit the governorship for the same reason.

In a state best known for skiing, Donnie & Marie, basketball and polygamy it might seem strange that technology and Internet taxation would loom so large. Strange, that is, unless you know that Salt Lake City recently nudged out San Francisco as the city with the highest per capita personal computer penetration, according to Scarborough Research, a market research firm. (Overall, Utah ranks fourth among the most wired states in the union.) Home to Iomega, Novell, WordPerfect and MyFamily.com, Salt Lake City has long played an important part in the new economy. "Ten years ago, Silicon Valley, Seattle and Salt Lake were the only three places in the world making high-quality software," says Brad Bertoch, head of the Wayne Brown Institute, a nonprofit venture capital facilitator. Although Salt Lake has stumbled recently, largely because of WordPerfect's misfortunes, it may be poised for a comeback.

These days, when not groveling for votes in the wilds of Utah, Leavitt is working on his Silicon Valley-Utah Initiative. He would like California's Internet and high-tech businesses to expand here, thus creating the techsavvy critical mass required to spawn new, Utah-based companies. "If we create a Silicon Valley-like culture and become the vogue place for entrepreneurs to grow out their companies, we'll make Salt Lake not just a tech capital, but also a venture capital," he says between campaign events.

To this end, he has been making the rounds of Silicon Valley's top tech companies, dot-coins, and law and VC firms. Unlike other tech-hungry governors, the consensus is that Leavitt actually knows what he's talking about. "He was very impressive and had a sophisticated understanding of the issues surrounding the Internet," says Kleiner Perkins' Ted Schlein. A technology adviser to erstwhile presidential candidate Bill Bradley, Schlein says he is a good judge of politicians. "I would characterize myself as a Mike Leavitt fan. If he called me, I'd call him back and see if I could help him."

Actually, Leavitt believes Utah can help Silicon Valley solve a big problem. Namely, how do companies - both large and small - continue to grow in the face of soaring real estate and labor costs, crippling traffic, tremendous job churn and a scarcity of engineers? To Leavitt, the answer is obvious. A short commute to California (it's a 11/2 hour flight to San Jose), Salt Lake offers relatively inexpensive housing and labor, minimal traffic and access to three top-flight research universities. With one of the earliest computer science departments in the country, the University of Utah produced Internet entrepreneur Jim Clark and Adobe CEO John Warnock, and both Novell and WordPerfect were founded by its professors. Add the state's exquisite natural beauty and outdoor activities (skiing, hiking, biking, boating) craved by lifestyle-minded dot-commers, and Leavitt thinks he has an enticing proposition.