Information technology.

• Author: Thornton, Grant
• Position: IndustryOutlook - Panel Discussion

A NEW SENSE of economic vitality and optimism about the future of the industry permeated the third annual Utah Business Information Technology Roundtable, as our panel of industry leaders discussed significant issues ranging from the quality of current deal flow in the state to the role of the business leaders in building an industry-friendly legislative and regulatory environment.

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Participants included Shawn Adamson from XO Communications, Brad Bertoch, the Wayne Brown Institute; Greg Butterfield, Altiris; Bob Carter, First Choice Solutions; Nick Efstratis, Wasatch Venture Fund; Gary Goodrich, ProPay USA; Richard Hanks, Mindshare Technologies; Greg Jones, Visual Influence; John Knab, Phonex Broadband; Darren Lee, NextPage; Rod Linton, State of Utah, Office of Technology & Science; Stan Lockhart, Micron; Scott McKinley, Northface University; Blake Modersitzki, UV Partners; Scott Petty, vSpring Capital; Jim Sorenson, Sorenson Media; Jack Sunderlage, JW Sunderlage & Associates; Wes Swenson, Forum Systems; Nicole Toomey Davis, Enclavix; and Will West, Control4.

Special thanks to Richard Nelson, CEO of the Utah Information Technology Association, for moderating this month's roundtable. We also wish to thank Grant Thornton LLP, our sponsor for this roundtable, and Jones Waldo Holbrook & McDonough PC for providing the space for the panel.

After three brutal years for the IT sector behind us, how are your companies doing, and what is your outlook for the IT industry in Utah with its ability to create very high paying jobs?

TOOMEY DAVIS: After watching what I would call carnage in our young startup industry, I'm starting to see positive upturn in the number of entrepreneurs--people coming out from under the bed, willing to start companies again. An entrepreneur is someone with vision, passion and cash, and I add "faith" now. You have to have faith, and we are starting to see more faith.

KNAB: The last three or four years have been horrific, ugly, with ferocious storms brewing. We had to cut staff in half, take salary cuts and eliminate some bonuses. But we were successful in raising a Series A round and are now doing a Series B round. We are coming out of the storm. The outlook is bright: we'll probably double our staff in the next year. Most of our competitors have vaporized over the last 36 months; I'm just glad to be standing. And the future for Phonex is extremely exciting. We have put about 12 million devices in the market, and we now think we can do over 100 million.

LEE: For NextPage in the software industry, it went very well last year and continued on this year--previous to that, it didn't. In terms of high tech industry and high-paying jobs, my biggest concern right now actually, for a state, would just be our economic development overall. The average salary at NextPage, like for many of you, is probably three-to-four times the state average. I think we have a responsibility to grow the IT industry for the future of economic development here.

GOODRICH: Propay USA is an Internet payment provider that makes payments simple and affordable. We are profitable going in our eighth year. I'm pleased that we survived some difficult times and business is booming for us. We are basically doubling every year; our challenge now is focusing and turning away business that doesn't make sense.

MODERSITZKI: Utah Ventures is one of the oldest venture firms in the state. About 50 percent of our portfolio companies are Utah-based. There are pluses and minuses for the venture world. We are starting to see valuations creep up a little bit, more money deployed and more competitive environments.

I think one of the challenges facing Utah is growing the next generation of bellwether IT companies here. It's exciting to see some of the new guys that have come out--the NextPages and Altirises. I think one way the venture community can make a difference is by looking at who the next generation companies are and how can we best help them.

PETTY: vSpring has been in existence about four years. It has certainly been an interesting challenge to start a fund and survive in the current environment. But our perspective has been that venture is really a long-term game, in terms of investing in the company, growing it, and seeing an exit. Historically, some of the greatest companies have been created in the down times, so we have continued to try to take advantage of that environment. Because of the recent investment upswing, if you see a strong deal, you can't sit and wait for a few months to take a look at it. You have to move quickly because it won't last long.

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BERTOCH: The Wayne Brown Institute is a venture accelerator that helps emerging technology companies with capital formation issues and finding capital. Client companies now have raised over $1.2 billion in private equity.

I believe the crash of 2000 was probably the best thing that ever happened to Utah's technology industry. We went from a case of having to play catch-up to where we can play keep-up. The technology community in this state has blossomed in the last four years, and the venture community in the state has exploded, which has not happened in the rest of the country.

EFSTRATIS: Wasatch Venture Fund is an early stage IT investor. MACC is a late stage mezzanine/debt investor. We see an opportunity to invest both early in companies that are emerging on the technology front, and we also see an opportunity with Old Economy businesses that need mezzanine debt financing.

We see the opportunities opening up for our companies, and think that this is a great time to be investing, and see great things ahead for our companies and the Utah economy.

SWENSON: Forum Systems is a Web system security provider. We like to hire the best and are willing to pay for it. The scrutiny placed upon private companies such as ourselves the last few years is immense, and we have to deliver every day. So we actually think it has made us better in the long run.

Our boom years are still ahead of us. We are looking at a terrific market, with many Fortune 1000 companies in our space, and have released our third product in our portfolio. We are poised for enormous growth, and hopefully will benefit Utah across the board.

JONES: Visual Influence is a small software company started in 2001, working in scientific computing with a focus on visualization products. This year we will see a 15-to-20-fold increase in revenue, which is relative because revenue last year wasn't much. But this increase comes from our customers' increases in business, where we have our products inside theirs.

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