Provo, Utah: Mormons, Mountains, Startups

Provo, Utah

2004 Census Population: 99,624 (estimate)

Pros: Affordable homes, beautiful Rocky Mountain landscape, presence of Brigham Young University

Cons: Lack of diversity, isolated (nearest metropolitan area is 45 miles away)

One of the best ways to grow an entrepreneurial community, it seems, is from the ground up. This Utah city's nearly 100,000 residents -- an estimated 88% of whom belong to the Church of Jesus Christ of Latter-day Saints -- develop entrepreneurial skills early on. Many members of the predominantly Mormon student body at Brigham Young University, based in Provo, embark on two-year missions at the age of 19, often in another country.

"Because students have gone on missions, they're not afraid to go out on their own," says Don Livingstone, director of the Marriott School of Management's Entrepreneurship Center at BYU. "It gives them a lot of confidence in meeting people and expressing ideas and communicating."


  Provo Mayor Lewis Billings cites the university as one of the major contributors to the city's flourishing small-business community. "BYU just draws an incredible faculty and student body, and you've seen numerous businesses spin out of it." (Among the school's entrepreneurial claims to fame -- WordPerfect, the landmark computer program, was born out of a BYU student/professor collaboration in the late '70s.)

The missions themselves can even foster business ideas: During Brian Beutler's two years in Chile, he found that some areas of Latin America had limited telecommunications. In February, 2004, during his junior year, Beutler founded Alianza, a provider of voice over Internet Protocol (VoIP services) that allows Mexican companies to call the U.S. for 5 cents per minute, as opposed to the 30 to 50 cents offered by the Mexican competition.

Beutler, 26, who recently raised $2 million in additional capital from angel investors, is hardly unique. "I've got friends that are a couple of years older than me now starting on their second venture," he says.


  Billings points out that BYU graduates who leave to work in another city often return eventually to start their own business. "They think of the time they spent at BYU and say, 'Let's check out the tax rates,'" Billings says. "Quite often they're drawn back."

Along with those competitive rates, the city boasts a low crime rate, reasonable real estate prices, and a Rocky Mountain landscape -- a big potential draw for out-of-staters. And while BYU may represent a breeding ground for entrepreneurs, not to be overlooked is the deep labor pool it provides for other companies that choose to operate in Provo.

With advances in communications, entrepreneurs are now able to conduct business literally anywhere, and Provo is doing everything to keep pace -- investing $40 million in fiber-optic infrastructure that will allow widespread high-speed Internet access for residents and businesses.


  But would an outsider feel welcome in this largely Mormon community? While Billings says businesspeople of all faiths thrive in Provo, outsiders must adjust to the fact that many businesses and shops are closed on Sundays, and the nearest metropolitan area (and international airport) is 45 miles away, in Salt Lake City.

However, Livingstone notes that isolation is one reason entrepreneurship flourishes. "We do it because we have to," he says. "Name a significant industry that's in Utah. Entrepreneurship is second nature because it's how the Utah economy functions." Necessity, the mother of invention -- and small businesses.

Thursday: A conversation with Jack Schultz, author of Boomtown USA

Friday: A look at one thriving company and where it's choosing to expand. Plus, a slide show spotlighting some of the nation's most innovative small-business cities.