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Leadership is a Generational Relay

(Utah Technology Innovation Summit, Keynote Address by Governor Michael O. Leavitt) SALT LAKE CITY – I congratulate Governor Herbert for organizing this summit.  He is a thoughtful leader I admire greatly.  The decade of his service has been one of great prosperity in Utah.

Leadership is a generational relay. Each generation builds on the generations before them.  Then it becomes their duty to prepare for those who come next.

Utah’s Olympic history is a good example.  In December of last year, Utah became the U.S. bid city for the 2030 Olympic Winter Games. That is a tribute to the living legacy of the 2002 Games. I must confess that the idea of hosting the games again brings a big smile to me face. But it will take more than our collective smiles to bring the Olympics back to Utah. We will need to refresh our venues, update our technology, but the skills are still here and so is the community spirit that produced the best ever Winter Olympic Games.  The same holds true if we want to continue to develop Utah’s tech community.

An amusing story from the 2002 Games will demonstrate my point. I love short track speed skating. It’s this extraordinary mix of roller derby and ballet. Most of you will remember Apolo Anton Ohno. I loved watching him compete and I watched him win a silver medal. That’s right … he also got two golds, but the one I remember best was when he lost the gold to a character from Australia named Stephen Bradbury. Bradbury received what was called at the time, “The most unexpected gold medal in Olympic history.” He won the 1000 meter after all of his opponents were involved in a final turn pile up, including Apolo Ohno. Bradbury glided by the scrum and became the first athlete from the Southern Hemisphere to win the gold. His strategy was to cruise behind the main pack and hope for a crash. He felt that risk-taking by favorites would cause a collision from which he would benefit. I saw him at the Olympic Village after he won his medal. I wished him good luck on his next race. He said, “I think I’ve used up all my lucky charms!”

We had a saying in the governor’s office after witnessing his race. We said he was “slow enough to win the gold.”

The technology sector, in all of its forms, has generated a disproportionate piece of the state’s most recent prosperity. It will likely be the driving force in our economy for years to come, but unlike Stephen Bradbury, we can’t rely on someone else’s misfortune.  It will take leadership at the state level, and from the technology industry.

I want to tell some stories about how parts of the Utah tech sector came about. Things you may not know.  Hopefully, it will stimulate your thinking about what needs to happen in the 2020’s to assure our prosperity continues into the 2030’s and beyond.

Beginning in the early 1990’s, state and local leaders asked ourselves three basic questions.  Ironically, they are the same three questions we need to be asking now.

  • Question 1: How can we protect life quality as the state begins to grow? Quality of life is the goose that lays the economic golden egg for Utah. As you know, many aspects of our life quality are now vulnerable – free flowing traffic, clean air, access to recreation, and affordable housing.
  • Question 2:  How can we meet our workforce needs?  Access to qualified workers who have competency to use and develop the technologies of the future will be table stakes in the next quarter century.
  • Question 3:  What are Utah’s best economic opportunities? States and communities need economic beachheads. By this, I mean industry sectors where natural advantages can be invested in to build serious comparative advantages.  Our future leaders need ideas about what the economic beachheads will be for our state.

Answering these three questions goes a long way toward framing an economic vision.  I want to comment on each one. First, quality of life.

Twenty-five years ago, (1994) Utah was growing at about the same blistering pace it is today.  The freeways and major roads, particularly along the Wasatch Front, were as congested as Southern California.  Seriously, the freeway was more than 30 years old; it was two lanes on both sides.  Bridges and overpasses had cracks.  It was a critical problem. I proposed the Centennial Highway Fund, a $4 billion dollar, decade-long commitment to rebuild Utah’s highways statewide. The centerpiece of that effort was a plan to replace and dramatically expand the 1-15 corridor through the Salt Lake Valley. The plan called for us to spend $2 billion dollars, tearing down 130 structures at the same time.  And we proposed to use an innovative process called “design build” that had never been tried on a highway project before – but was necessary if we were to finish before the Olympics.  What could possibly go wrong, right? It was the most consequential political or economic risk I have ever taken, but it worked.  We finished that project on time and under budget.

A few months ago, I was stalled in terrible traffic on 1-15.  I thought, this shouldn’t be happening, we built these roads to accommodate 15 years of growth.  Then it hit me.  It’s been 18 years since we finished it. This is a great example of the generational relay. The highways we built have been a primary layer of the economic foundation upon which our state’s economic expansion has been built the last 18 years.  But the running room we created is about gone.

Leaders of this state will be required to update that foundation for the next 18 years.  Maintaining Utah’s quality of life – part of which is keeping drive times safe and manageable – is an essential piece of the puzzle.  Preserving it must be part of any economic vision. The next leaders of Utah will have to do bold things, take some risks and invest or we will fall behind. What about Utah’s work force?  Twenty-five years ago, we established an objective to become a tech capital.  I actually have to chuckle looking back.  When I was first elected governor, the State of Utah became only the second state in America to have a website.  We implemented the use of email in the governor’s office.  There were only two notable tech employers in the state – Word Perfect and Novell.  At the time we had one venture capital fund in Utah.  It was a whopping $20 million dollars. We aspired to be more.

We developed a plan.  It included building the ecosystem required to attract and build those jobs.  For example, internet access was very limited.  We needed to wire the state.  People needed to learn how to use these tools.  We take this for granted now – it’s  ubiquitous – but it wasn’t then.  We were in a race.  If we wanted to play a meaningful role in technology we had to attract investment funds, law firms and accounting organizations with sufficient capacity and reputation. We set our sights on Silicon Valley.  I set a goal to be in Silicon Valley more often than the governor of California.  By the way, I was.  We had a simple message and strategy:  Grow your businesses out in Utah.  Your workers are commuting an hour and a half each way because they can’t afford housing.  We have an abundance of quality workers, an unbelievable quality of life.  Your workers can buy a home on a reasonable salary, they will love the recreation and atmosphere of the community.  And, you can be in Salt Lake City from Silicon Valley faster than it takes to drive from Stanford to Berkeley.  There was a long-term strategy behind this.  Our belief was that once tech companies were in Utah and the ecosystem in place, we would begin to see a start-up culture develop in Utah – and it did.

History will show that the strategy worked in both the short term and the long term.  One example: I had called on a fast-growing company called eBay.  I made our grow-out pitch, not once but several times. Out of the blue they called us. The message was direct.  We are growing so rapidly we’re about to explode.  We need expansion and fast.  We’ve narrowed it down to a site in Utah and one in Arizona.  We need capacity for 400 people in four months, can you help us deliver it? A meeting was held in the governor’s office.  It was all hands on deck.  We got local government officials, landlords and utility companies together.  We put together a plan, and they came.  Once here, they found the quality of the workforce high.  The facility and the number of jobs in Utah grew rapidly. I had a conversation with an eBay employee a couple of years ago.  She said, “there’s a piece of lore that makes the rounds about how the site ended up in Utah.”  She said, “the story is that you called Meg Whitman and told her you understood the decision was between a site in Utah and one in Arizona, and that you talked her into choosing Utah on the basis of your personal eBay user rating.  Is that true?” I said, “Yes, it’s true.” I’d been selling a few things on eBay to understand how it works, so when their CEO Meg Whitman told me we were competing with Arizona I said to her, “I have a suggestion on how to decide. Check and see if the governor of Arizona has an eBay account.  If he doesn’t, then I think you know where you should be.  If he does, compare his user ratings and then go to the highest one.”  Maybe it was just a coincidence, but we got the deal the next day.  There are stories like that about the arrival of many of the earliest tech businesses on the scene. Fidelity, Goldman Sachs and others.

On another visit to Silicon Valley I paid a call on John Warnock, the CEO of Adobe and a University of Utah graduate. I made my pitch.  When I was finished I waited for his reaction.  There was silence as John stared at his shoes, and then at me.  Finally, when he spoke he practically shouted at me.  “Look,” he said.  “You want tech jobs in Utah, you’ve got to have more engineers. Utah isn’t investing a fraction of what it needs to.  Tech companies need engineers.  You’ve got good universities, but they don’t have capacity.  Companies like Adobe can’t come to Utah unless you fix that.” I have to admit, I wasn’t expecting his response and I was taken aback.  I returned to  Utah and began doing homework.  John Warnock was right.

I called a group of people together from the universities and our tech community and asked a simple question: “I want to know what it would take to double the number of engineers graduating from Utah colleges and universities and how long it would take.”   A few months later I called John Warnock back.  I asked him to come to Utah for my State of the State speech to the legislature.  There was a special reason I wanted him there. As I addressed the legislature and the people of Utah that night, I proposed the Utah Engineering Initiative, a serious program of investment in our engineering schools with a clear goal:  Double the number of engineering slots in Utah colleges and universities.  The legislature embraced the engineering initiative and has, over the ensuing years, appropriated generous amounts of money to build capacity in all of our colleges and universities.

But there was more to this vision than just money to universities.  It was clear just having capacity in the engineering schools wasn’t enough.  We needed emerging students who were academically ready to fill seats in engineering schools.  We had to up our game in public education, too.  We improved curriculum in our schools and began promoting math and science among students, especially female and minority students. As part of the engineering initiative we built five new charter high schools specializing in math, science and engineering.  Each would be tied to a college or university, and we would produce graduates who left high school with both a high school diploma and an associate degree.  They could matriculate directly into the engineering schools.

It worked.  Since that day John Warnock chewed me out in Silicon Valley, the number of engineering and computer science graduates each year has steadily increased.  In total, 40,000 students will have graduated with engineering or computer science degrees from Utah’s system of higher education.  Those engineers have fueled a remarkable story of technology growth in Utah the last two decades. Incidentally, it is worth noting that Adobe did come to Utah and so did John Warnock.  As most of you know he and his family donated money for the engineering building at the University of Utah. Every time I pass their beautiful building on 1-15, I think of that story. But, Adobe wasn’t alone.  We have gone from 1,500 tech companies to 6,700.  Utah is ranked 7th among states for venture capital activity and 3rd when measured per capita.  Utah’s tech industry now accounts for 302,000 total jobs, and accounts for one in every seven dollars of GDP in the state. This is a striking achievement.

Yes, leadership is a generational relay.  The engineering initiative of 18 years ago is not enough for the next eighteen.  It’s time to double it again.    Having workers of the 21st century has to be part of an economic vision.

The third key question deals with economic beachheads.  An economic beachhead is an asset that forms a critical mass that can be built around.

Another part of our strategy in the mid-1990s was gaining a foothold in the advanced microprocessor world.  We started a conversation with Steve Appleton, then Micron’s CEO, and the company’s principal shareholder, J.R. Simplot.  The company was headquartered near Boise and they needed a major expansion.  They were trying to decide whether they should expand in Boise or another location.  We saw this as a potential game changer for Utah.  We believed an abundance of smaller ventures would follow, creating thousands of family wage jobs.  The competition for the Micron plant was intensely competitive.  It boiled down to Utah and Nebraska.  As we got close to the end, we had two advantages:  Our workforce and a superior physical site.  However, there was a problem.  The site they wanted wasn’t for sale. I met with Steve Appleton the CEO and he told me Mr. Simplot says it’s either on that site or not at all.  I asked for a meeting with Mr. Simplot.

J.R. Simplot is one of the most colorful and remarkable men I’ve ever encountered.  He dropped out of school in the 8th grade and became a billionaire growing potatoes in Idaho.  He was plain spoken but a really big persona.  Every time I saw him he was wearing a Stetson hat.  He and his friends started nearly every day with a 5 a.m. breakfast meeting at a diner outside Boise. “Mr. Simplot,” I said.  “We want your new plant in Utah.  What do we need to do for that to happen?” “Well,” he said, clearing his throat, “I love that site up against those hills.  It’s a beautiful piece of land.  If we build it in Utah, that’s where it will be, but they tell me it’s not for sale.”  “Mr. Simplot, we need you in Utah. I hear you loud and clear—that site, or no site.  I’m going to do everything I can to make it available, but I need two things from you.  I need a commitment that if it’s available you’ll be fair with the people who own it now, and that you’ll build the plant – soon.”  There was a long pause.  Then he said, “you get that land, and we’ll build the plant.”

There were basically three families who owned the land. Some of them had farmed the land for many generations. I met with one of them – Brent Beasley, who I knew personally – and made a strong request of him, asking that he think about it.  I also arranged to meet with the other  families – the Batemans and the Holbrooks, if I remember correctly – the next Saturday morning. That Saturday we gathered at a home in Lehi.  Sitting in the living room there were members of each family from multiple generations.  I explained why I was there. I had grown up in Southern Utah, where we farmed land that had been in our own family since the area was settled. I knew they had turned down many buyers previously. I said, “I know what I am asking you to consider is an extraordinary request, but I’m here as an elected representative of the people of Utah. I’m here on behalf of thousands of Utah families who want their children to be able to stay in Utah and earn a living.  If Micron builds their facility in Utah, it will launch an entire industry – a 21st century industry.  It will set off cascading growth in this area that over the next half century will enable tens of thousands of families to earn a living and educate their children. It will mean that some who would otherwise have to leave the state will be able to stay.  Your land could be put to many uses, but this is likely a once in a lifetime opportunity to do something this lasting.”

They were very gracious to me, but it was a sober meeting with no conclusion.  I simply asked that they discuss it and let me know. A few days later, March 13, 1995, I had another conversation with Brent Beasley, who told me he would agree to a discussion with Micron.  A short time later, I spoke with a representative of the farming families, who conveyed a similar message. Mr. Simplot, in turn, lived up to our handshake deal and in July 1995, two months later, they started moving dirt to build the plant that is now so prominent in the economy of that region.  Billions of dollars were invested and a Utah economic beachhead was born.  Thousands of Utahns are employed and tens of thousands more will be in the future.  I’m confident Mr. Simplot was fair with those families, but they didn’t need to sell.  It was a sacrifice of a heritage asset in order to establish an opportunity for future generations. As you drive along the road to Alpine and marvel what has occurred in that region, say a little ‘thank you’ to the families who stepped up when asked.

That economic beachhead has been part of the economic expansion of Utah during the past 20 years, but it will not be enough for the next twenty. What should we be pursuing next?  Once again, the relay.  There are enormous opportunities to build economic beachheads.  An economic vision of Utah’s technology future requires identifying new beachheads and investing wisely in the ones we have.

I would like to conclude by talking about the technology sector’s role in the creation of Utah’s technology vision.  My impression is that while Governor Herbert hasn’t formalized a decision about his future, people in both parties are in the early stages of planning campaigns.  Obviously, the race for the Republican nomination will depend heavily on the governor’s decision. Between now and six months from now, when candidates begin announcing their campaigns, they need to figure out the answer to the question, “So, why do you want to be governor?”  They need to know why they are running and where they want to lead.

Candidates for governor need to offer an economic vision.  It seems critical to me that the tech community engage with them.  They will be seeking your support and when they do, they need to be able to answer the three questions we have discussed today.  What can we do to protect our greatest comparative advantage – quality of life?  How should we be preparing the workforce of the future?  What opportunities do you see? What economic beachheads would you focus on, and how?  Do them the favor John Warnock did me and the state of Utah.  Teach them, help them understand.

Remember, leadership is a generational relay. Each new group of leaders is given a baton and hopefully a bit of a lead. It’s their job to have the right vision and to run with purpose. You can help them finish their lap strong.

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