Swinging back from a 2020 that bore the worst economic impacts of the COVID-19 pandemic, 2021 is closing out as a banner year for innovation companies in general, and Utah tech concerns in specific, with the past 12 months a veritable highlight reel of monster deals, unexpected recoveries and record growth.
Just two years after a deal worth $8 billion interrupted customer experience innovator Qualtrics’ public stock offering plans just days before fruition, the company finally made it to the markets in January. While industry watchers pummeled German software giant SAP for overpaying on an acquisition that set a record at the time, the move looked a lot more prescient as Qualtrics raised $1.5 billion ahead of its stock launch and a spectacular new valuation of $15 billion.
Qualtrics founder Ryan Smith and CEO Zig Serafin rang the opening bell at the NASDAQ exchange to celebrate the market debut on Jan. 28, even as the hubbub from some other seismic Smith-related news was still dying down — his purchase of the Utah Jazz from longtime owners and Utah philanthropists, the Larry H. Miller family, in a deal reported to be worth over $1.6 billion.
What the heck is an NFT?
It’s hard to fathom why, and how, 15-second clips of NBA stars throwing down slam dunks or artworks that exist only in the digital ether are generating hundreds of millions in sales in newly emerging markets that are close cousins to bitcoin and other cryptocurrencies.
Especially when you learn that most of that same content remains widely available to anyone else who wants to view or copy it even as “ownership” is transferred to a person and certified by a unique digital identifier known as a nonfungible token.
Welcome to the world of NFT.
Deal traffic generated by NFTs measured in the tens of billions of dollars in 2021 and included a slew of mega-sales that drove headlines and investor interest alike. Digital artist Mike Winkelmann, who works under the name Beeple, snared $69 million in an auction for one of his digital collages; Twitter founder Jack Dorsey’s first tweet sold for more than $2.9 million; and pop musician Grimes snared over $6 million for a group of works that included music videos and digital art.
In May, tech entrepreneur and cryptocurrency innovator Justin Sun told the Deseret News there’s a lot more at stake with nonfungible tokens than meets the eye. He sees their emergence as a step toward democratizing those assets both from a collector’s viewpoint and, perhaps more importantly, on behalf of creators and artists.
“Basically our idea is in the future everybody can sell and receive payments for their artworks for almost zero transaction fees,” Sun said. “This enables lots of possibilities. Great art work will come from those who are now creating small artworks. With a million new creators who can access markets, there’s going to be another Picasso. It’s about building a very friendly environment for those creators to grow.”
A three-horned Utah unicorn
Pandemic-related restrictions and rampant unknowns related to the public health crisis quashed tech investment activity in 2020 but pent up demand helped drive a 2021 that saw a slew of megadeals involving Utah companies.
And while the $500 million in secondary market investments that Lucid announced in June wasn’t the year’s biggest deal, it was notable because the Utah collaboration software innovator saw a one-year valuation increase that vaulted from $1 billion to $3 billion.
That ascension was driven by an annual revenue growth rate north of 100% for products that are proving to be very well suited in helping companies navigate the unique challenges wrought by COVID-19 and the changing world of work.
“Last year was certainly an interesting and challenging one for everyone,” said Lucid co-founder and CEO Karl Sun for the June story. “Going into COVID-19, none of us knew what to expect. Almost every knowledge worker went remote … and began looking for better software tools to stay connected and be productive.”
Where there’s smoke
Traeger Grills has amassed a widespread and devoted fan base among outdoor cooking enthusiasts and busted into the public stock markets in July, raising over $400 million and riding an early surge in share value.
The company, based in Salt Lake City, was coming off a year that saw sales skyrocket amid pandemic-induced isolation that drove a slew of new interest in home cooking. In its SEC filing, Traeger reported $32 million in net income on revenues of nearly $546 million in 2020, blowing by $363 million in revenues and $29 million in net losses the year before.
The stock event marked the second time CEO Jeremy Andrus, a BYU and Harvard Business School grad, has helmed a Utah-based company into the public markets. The first was for Park City’s Skullcandy, the onetime hipster-favorite maker of headphones and consumer electronics. Andrus joined Skullcandy in 2005 and helped grow the startup, founded by Rick Alden in 2003, from less than $1 million in annual revenues to almost $300 million in sales in 80 countries ahead of taking the company public in 2011.
Originally based in Oregon, Traeger caught the eye of Andrus after he heard a slew of customer testimonials that seemed unusually enthusiastic for a company that specializes in outdoor cooking gear.
Andrus and investment partner Trilantic North America acquired the company, moved its headquarters to a new building in Sugar House, and Andrus took the helm as CEO in 2014.
“We’re not looking for simple improvements like better handles or a nicer paint job,” Andrus said in a 2017 Deseret News profile. “We’re working to disrupt and innovate in an industry whose most recent benchmark was the advent of propane in the ’70s.”
Couch in a box
Another Utah company that saw meteoric gains as a result of home isolation amid pandemic conditions was online home goods retailer Overstock.
Predictions of the e-commerce giant’s impending demise were rampant in early 2020 and the company’s stock was hovering at an all-time low on March 13 of that year — the day President Donald Trump declared a national emergency in the face of the rising COVID-19 threat.
But less than two years later, the company was hitting record performance numbers, its stock value had risen over 2,000% and the oft-maligned furniture and home goods retailer was outperforming many of its competitors.
In a September profile, Overstock CEO Jonathan Johnson said home isolation served to accelerate a consumer trend that was already in play well before COVID-19 hit.
“Over the last decade the home furnishing market has been migrating to online sales at a rate of about 1% to 2% a year,” Johnson said. “At the end of 2019, about 23% of those purchases were online.
“The pandemic has accelerated that and what have been three to five years of growth has happened in months. We’re now looking at about 36% of purchases happening online.”
A blessing from on high
Cook, who took over the reins at Apple after the company’s legendary founder Steve Jobs died from complications related to pancreatic cancer in 2011, delivered what might be the best compliment ever for Utah’s booming tech ecosystem.
“What I look for when I go places is people who want to change the world,” Cook said. “Technology should serve humanity and not the other way around. And that’s what I see here.”
Ugly, but delicious
Abhi Ramesh had a lightbulb moment when visiting an apple orchard near his hometown of Philadelphia as he watched the farm owner moving carts of apples that were picked from the ground and deemed too unsightly for a grocer’s bin. Instead, the still edible fruits were headed for a cider mill, or the garbage dump.
“I saw the farmer there rolling thousands of apples that had been picked up off the ground into a shed,” Ramesh said. “I asked him about it and he said they were misfit apples that he couldn’t sell through traditional retail channels because they were misshapen or had a little dent or scar. He told me they try to sell them to secondary markets where they can become apple sauce or cider, but most of them would probably be tossed out.
“That’s really when things started to click for me.”
Ramesh’s idea would lead to the launch of Misfits Market in 2018, an online discount grocer specializing, initially, in less-than-perfect organic produce that could be easily accessed and affordable for Philadelphia residents, where large portions of the population live in functional food deserts.
Cut to 2021, and Misfits Market has attracted over $560 million in venture investment, earned a valuation north of $2 billion and, in November, opened a massive new distribution center in West Jordan that has the capacity to supply its growing customer base in the western U.S. The facility has created over 150 new jobs and could add hundreds more if current growth continues.
Misfits Market has also expanded its inventory, offering 500 products and is aiming to grow to offer a couple thousand. That’s dwarfed by a typical grocery store that may have 40,000 items available at any one time. Misfits’ curated selection, Ramesh said, ends up making it easier for customers to find and purchase everything they’re after.
“No one really needs to spend three hours at a store browsing through tens of thousands of items to find what they need,” Ramesh said. “About 95% of most customers’ grocery lists are the same every week. We don’t need, for example, 30 different types of peanut butter to choose from. We have three or four.”
