Ryan Smith, Qualtrics cofounder and CEO, jokes that he once had a nightmare in which he was forced to build his software company in San Francisco. Starting in the Bay Area would have completely changed the business strategy Smith used to grow the company. Smith’s father was a marketing research professor at Brigham Young University where he developed online survey software for use in his research. Smith left an internship at HP to spend time with his father, and the two decided to launch the product in their own business.
The founding duo’s first rule of the business was to avoid all outside funding, living by an “eat what you kill” model. By the end of the first year, they had 20 clients, including the Kellogg School of Management and Royal Caribbean. For four years, they relied on whatever they could bring in to fund the company, and they added their first 250 university clients.
Had they started in the Bay Area rather than Provo, this model wouldn’t have worked, Smith says. The high cost of living and competitiveness in that market could have sunk them when they’d barely begun. But Provo was the perfect incubator for their plan. “Every single one of us started here,” Smith says, referring to himself and founders of other major companies based in Provo, including Ancestry.com and Vivint. “It’s a testament to the fact that you can start something here, and you can sell it here. You can bootstrap here.”
With a low cost of living, 70,000 college students at BYU, and a deep talent pool, Provo is now named in the same breath as Austin and Nashville as excellent start-up havens. “There’s something about Provo. We want to promote it, but we don’t want to promote it too much,” Smith jokes. “There’s something about this place. It’s special.”
Though Qualtrics began by targeting the academic market, the business accelerated in 2007 and 2008, during the financial crisis. Suddenly, data-driven decision making became a high priority in corporate markets. “People said, we can’t just throw 50 bets out there anymore,” Smith explains. “We need to make sure we do five really good bets, and we need data to make sure they’re going to be right.”
Many young businesspeople who used Qualtrics in college decided to take it with them when they began their careers. Smith says that people now credit his team with the brilliant business model of targeting future corporate leaders.
“I’d like to think we were that smart,” Smith says with a laugh. “But academics were the only people that would listen early on. We built a good product, and we thought, if they have a good experience, the rest will take care of itself, and they’ll tell their friends.”
The company now serves more than 5,000 clients, and as it continues to grow, its executives are widening their horizon beyond Provo’s mountainous borders. Qualtrics just opened an office in Dublin and may look to the Bay Area, eventually. They have many young employees, but now they want to find employees who have previous experience at a large company.
There’s a debate among executives, Smith adds, about whether to invest in acquiring young talent and growing it, or in nabbing people who already have experience. “Here, we’re really a mixed bag,” he says. “We have experience and a lot of young motors. Now we just need more coaching from someone who’s been on this ride before.”