Arkansas Leaders See Utah’s Excessive-Tech Success as Mannequin for Financial Transformation | Arkansas Enterprise Information


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Throughout talking engagements and interviews in his first few months in workplace, Arkansas Commerce Secretary Hugh McDonald repeatedly talked about one state he felt Arkansas ought to flip to as a mannequin for financial improvement: Utah.

Particularly, what McDonald was referring to is how Utah, which has a inhabitants about equal to Arkansas’, has been in a position to develop into one of many high states within the nation for entrepreneurs and for high-tech industries, starting from web startups and biotech companies to prescription drugs, protection contractors and fintech corporations.

And in different areas, in response to nationwide survey after nationwide survey, Utah ranks at or close to the highest. In its newest “Finest States” rankings, U.S. Information & World Report listed Utah as first for its financial system and financial stability, fifth for schooling and fourth for infrastructure. General, U.S. Information ranked Utah as first within the nation in its 2023 “Finest States” survey. (Arkansas ranked forty fifth within the survey.)

In 2020, Utah additionally got here in first as the most effective state to start out a enterprise, in response to Forbes. The 2023 “Wealthy States, Poor States” survey listed Utah as first within the nation for financial outlook.

“We glance to Utah as a state that has been at this for some time,” McDonald instructed Arkansas Enterprise. “They’ve been profitable, and we need to attempt to study from their successes and implement these issues which have labored [in Utah] right here in Arkansas.”

Following Utah for example, McDonald and different commerce officers are working to create an ecosystem that attracts in startups, enterprise capital {dollars}, entrepreneurs and a talented workforce that will diversify the state’s financial system from one largely pushed by agriculture to 1 that can also be powered by a powerful high-tech sector.

Hugh McDonald

“One of many issues I need to do with the Arkansas Financial Growth Fee is to refresh its financial improvement technique,” McDonald stated at a Little Rock Rotary Membership assembly earlier this 12 months. “I need to place better emphasis on entrepreneurship and small enterprise. We need to construct that [entrepreneurial] community, that ecosystem and assist it as a state quite a bit higher.”

There are some components which have helped Utah obtain financial success within the tech and entrepreneur area that Arkansas in all probability will not be capable of replicate. For one, Utah is just not too removed from Silicon Valley. The state has benefited from its proximity to San Francisco-area entrepreneurs and corporations trying to transfer someplace extra inexpensive.

“We’re method cheaper than the Bay Space or Silicon Valley,” Phillip Dean, chief economist on the College of Utah’s Kem C. Gardner Coverage Institute, stated. “We now have an ecosystem like Silicon Valley that’s rising right here.”

Utah raised its nationwide and worldwide profile with the 2002 Winter Olympics in Salt Lake Metropolis, which leaders say contributed to vital progress.

“Utah, we form of flew underneath the radar for a very long time,” Lance Soffe, director of focused industries within the Utah Governor’s Workplace of Financial Alternative, instructed Arkansas Enterprise. “The Olympics in 2002 was the beginning of us being acknowledged, and it has gone nowhere however up since then.”

It appears unlikely that Arkansas will land an occasion on the size of the Winter Olympics any time quickly. And recruiting from the West Coast is tough, as former Gov. Asa Hutchinson discovered. Early in his tenure, he shifted his technique from attempting to lure California tech corporations to supporting homegrown companies. 

However there are different ways in which state leaders imagine they will observe Utah’s instance.

Emphasis on Analysis

Utah’s universities have an extended historical past in internet-related analysis. In 1969, the College of Utah in Salt Lake Metropolis turned the fourth node related to ARPANET, the primary model of the web.

Phrase processing software WordPerfect was developed at Brigham Younger College in Provo, Utah, and College of Utah professors based pc graphics agency Evans & Sutherland within the late Sixties.

That early analysis created a pipeline of scholars who graduated and began their very own corporations, serving to the IT sector to organically develop. College of Utah alumni embody John Warnock, co-founder of Adobe Inc. and Ed Catmull, co-founder of Pixar.




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The essential function universities in Utah have performed in analysis, in addition to coaching future entrepreneurs, is a foundational element for the sustainable progress of know-how sectors, in response to enterprise leaders.

They imagine it’s one thing that different states, like Arkansas, can replicate.

“We had some very sturdy entrepreneurs popping out of our universities, and that led to extra sorts of high-tech improvement,” Kelvyn Cullimore, president and CEO of BioUtah, a life sciences commerce affiliation, stated. “The analysis universities are an actual basic piece in what we do.”

The College of Utah’s popularity in analysis factored right into a standoff final 12 months over who would develop into the following chancellor of the College of Arkansas. Daniel Reed, a pc science professor from the College of Utah, reportedly had the backing of the UA System president and highly effective enterprise leaders, together with the Walton household, who believed Reed would assist advance analysis and improvement on the Fayetteville campus.

The job went to Charles Robinson, who had been serving as interim chancellor and vowed to proceed constructing on the U of A’s Carnegie Basis standing as an establishment with “very excessive analysis exercise.”

Robinson took over after the U of A logged a report $184 million in analysis expenditures in fiscal 12 months 2022. This 12 months, the college broke floor on a one-of-a-kind silicon carbide chip analysis and fabrication facility and began constructing the 144,000-SF Institute for Integrative & Modern Analysis (I3R).

“There may be already plenty of groundbreaking analysis occurring on our campus, however we’re at all times in search of methods to enhance,” Robinson instructed Arkansas Enterprise in December. “We’re creating new positions for tenured and tenure-track college, which can enhance our analysis output throughout all disciplines in addition to meet the educating wants of a rising scholar inhabitants.”

Elsewhere in Arkansas, some universities are beginning new packages that will enable graduates to work in cutting-edge tech sectors. The College of Arkansas at Pine Bluff is establishing a Heart for Biotechnology and Nanosciences to “assist advance the financial and analysis productiveness of the state, area, nation and world group,” in response to its web site.

Beneath McDonald’s management, the Arkansas Financial Growth Fee is attempting to focus schooling on workforce improvement. Officers with the AEDC say a objective of Gov. Sarah Sanders’ administration is to “reshape the state’s workforce to fulfill the calls for of various business sectors.”

“A key to assembly this problem is to create an schooling system pushed by the wants of employers,” an emailed response from AEDC stated.

This 12 months, Utah lawmakers handed a invoice for the creation of the Utah Innovation Lab, a nonprofit that allocates authorities funds to offer seed cash to startups. Cullimore, who testified on behalf of the invoice, stated it sends an necessary message to universities that there’s assist for analysis.

Kelvyn Cullimore

The $15 million fund “can be managed in a method that targets the interpretation of mental property from the colleges within the state to be an investable idea,” Cullimore stated. “Not solely is the signaling necessary in that regard, but it surely opens the door for added funding to return in exterior of the legislative appropriations.”

Utah has not relied on incentives or subsidies to attract companies in. Cullimore, who has additionally served in native authorities, stated he believes avoiding subsidies is a technique that works long-term.

“It’s not at all times the case, however corporations that go the place the best incentives are, are under-capitalized,” Cullimore stated. “And if you’re under-capitalized you’ll battle. Submit-performance incentives entice a greater kind of firm.”

Serving to Founders

Entrepreneurial assist organizations have additionally performed a key function in Utah, notably a nonprofit known as Silicon Slopes, which has additionally develop into the moniker for an space round Lehi, Utah, the place dozens of tech corporations have places of work.

Based in 2015 by a gaggle of tech executives, Silicon Slopes serves a number of functions. It created a model for Utah’s entrepreneurs and startups. That branding introduced in additional corporations, and it additionally piqued the curiosity of enterprise capital funding, which was nonetheless siloed in Silicon Valley.

“The entire objective was to deliver capital consideration or consciousness, and to deliver expertise, and for the state to be acknowledged as a know-how hub,” Clint Betts, Silicon Slopes CEO, instructed Arkansas Enterprise. “Our objective was fairly easy: model the state.”

The outcomes have been sturdy. U.S. Information & World Report ranked Utah ninth for enterprise capital funding in its 2023 Finest States survey.

To bolster the Silicon Slopes model, the group created a “world class tech summit,” Betts stated. The annual summit attracts in tech large heavyweights, like Meta CEO Mark Zuckerberg and Apple CEO Tim Cook dinner. The 2023 Silicon Slopes Summit, occurring this week, options executives from Google, Yahoo, ESPN and Time.

“The summit is an enormous deal,” Betts stated. “The truth that we’re attracting Zuckerberg and Cook dinner, I feel that put us on the map as a lot as anything as a corporation.”

Clint Betts speaks on the Silicon Slopes Summit in 2022

When it comes to authorities assist, Betts stated the state has “finished actually, very well with placing the entrepreneur on the heart of the group and the ecosystem.”

“Placing entrepreneurs on the heart and having entrepreneurs lead [development], it has actually helped the group speed up tremendous, tremendous far,” Betts stated.

These working to construct Arkansas’ high-tech sector say that is an strategy that the state can undertake.

“We now have to comprehend that financial builders don’t create corporations, entrepreneurs create corporations,” stated Lee Watson, founder and CEO of the Forge Institute of Little Rock, which works to create public-private partnerships for financial and nationwide safety initiatives. “The financial improvement institution is critically necessary to the combo however so is everybody else.”

Watson continued: “Teachers are a vital stakeholder. Traders are a vital stakeholder. Company establishments are vital stakeholders. However on the finish of the day, all of their jobs are to do these issues that assist the entrepreneur.”

To assist present such assist, AEDC in June introduced it was restructuring its Small Enterprise and Entrepreneurship Growth Division to consolidate and higher leverage its sources throughout the company. The company stated that in distinction to earlier financial management underneath Hutchinson, “a brand new emphasis has been positioned on small enterprise and entrepreneurship,” including that “nurturing and supporting innovators, tech startups, in addition to mom-and-pop companies is vital for financial improvement.”

Arkansas can also be steering funding towards entrepreneurs. McDonald stated this month that the state is funneling $45 million it obtained from the federal authorities to enterprise capital companies to fund startups based mostly in Arkansas.

In Utah, financial officers say they’ve been reactive, as an alternative of proactive, permitting industries to organically develop, then offering no matter assist is required to assist them proceed to flourish. Decrease taxes and fewer rules have additionally helped.

“We now have finished every thing we are able to by means of totally different avenues to speed up [growth] and foster it and to verify rules don’t get in the way in which,” Soffe of the Utah Governor’s Workplace of Financial Alternative stated. “Completely different industries are available and discuss to the governor, and we additionally exit and go to onsite and pay attention to what’s wanted and ask, ‘What can we do? Is there something that’s getting in your method?’”

Decrease taxes have been a part of Sanders’ plan to encourage enterprise progress. In her first 12 months in workplace, the Republican governor has twice minimize the state’s particular person earnings tax and company earnings tax charges.

Sanders’ objective is to section out the state earnings tax. She has stated it places Arkansas at a aggressive drawback with neighboring states like Texas and Tennessee, which don’t have an earnings tax.

Outdoors the Workplace

Past Utah’s concentrate on analysis and business-friendly authorities insurance policies, the state has labored to advertise its pure sources and outside recreation actions.

A 2021 survey, spearheaded by the College of Utah’s Kem C. Gardner Coverage Institute, discovered that entry to outside recreation is the “primary issue for tech sector staff to reside and work in Utah.”

Lance Soffe

“From my entrance door, I may be snowboarding in 22 minutes,” Soffe stated. “I can experience my mountain bike out my entrance door. I don’t imply get right into a automobile. That is without doubt one of the greatest carrots for the youthful generations, the software program builders and IT employees.”

Arkansas has taken an identical strategy, highlighting its pure facilities to lure new employees. A key element of Sanders’ administration is to develop the state’s outside financial system to create extra jobs and assist entice extra expert employees. After taking workplace in January, she created the Pure State Advisory Council to advertise the financial impression of out of doors infrastructure funding.

Outside facilities have been an necessary promoting level in regional recruiting efforts, as effectively. In 2020, the Northwest Arkansas Council launched its “Life Works Right here” marketing campaign that provided entrepreneurs, tech employees and others in artistic industries a $10,000 money incentive to relocate to the realm — together with a free bike to affix the realm’s quickly rising biking group. Inside a pair months, greater than 20,000 individuals utilized.

Cullimore, and others who’ve witnessed Utah’s explosive progress, say it developed over a number of generations, cautioning different states to not count on new sectors to instantly thrive. High quality of life, schooling and assist for entrepreneurs are key elements — however so is gauging the nationwide notion of a state and dealing to rebrand if crucial.

“Spend the cash to rebrand,” Cullimore stated. “When corporations are serious about the place they will go proper now, what would make them consider Arkansas?”

He continued: “I might say having 30-year plan based mostly on the place you need to go and the industries you need to entice, and that shouldn’t be wishful pondering, however based mostly on what sort of sources Arkansas can supply to assist that. Give attention to what [the state’s] strengths are. What’s it that we do effectively? What can we develop and do effectively? Have plan and perceive it’s simply going to take time to get there.”

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