In today’s fast-paced online world, change is a constant reality for Utah’s Internet leaders. We brought a group of Internet experts to discuss how they are contributing to that change, and how they are adapting to it. They also discussed the implications of social media, the future of online advertising and consumer-focused products. And though today’s economy is tough, the panel agreed that Utah’s technology industry and entrepreneurial spirit continues with vibrant growth.

Our panel included:

Kimball Thomson, Next Phase Communications

Jeremy Hanks, Doba

William Borghetti, Sendside

Matt Cupal, Genetree

Devin Knighton, Mozy by Decho

Brock Blake, FundingUniverse

Amy Rees Anderson, MediConnect Global

Stead Burwell, Alliance Health

John Sperry, Mindshare

Rachael Herrscher, Todays Mama

Kelly King Anderson, Startup Princess

John Edwards, Move Networks

We’d like to give a special thank you to Kirton and McConkie for sponsoring this event.

The Internet has thrown a curve ball at traditional consumer products. Today’s consumers understand that technology can produce new products in record-breaking time. Are any of your business models shaped not just by technological trends, but by consumers telling you what they need and want?

SPERRY: I think one of the toughest things today’s businesses are experiencing is when a customer asks for something, you then must try to figure out if you should actually do it or not. It’s tough to try and figure out which customers you need to say, “no” to. In the past, there has been such a terrible tendency to say, “yes” to everybody. As a business, you want to say “yes” to everybody, but you’ve got to figure out which people and requests to say “no” to and it’s not easy. I think that’s probably the toughest thing to figure out as a business.

REES ANDERSON: When it comes to innovation and listening to your client, the problem that pops up is that the client doesn’t always understand or know what could be done, so often their requests of what they need or want are based on their limited knowledge. So what we’ve learned is to listen to what the client’s problem is and then tell them what innovation will help solve that problem, rather than saying, “What product features do you want?” We think of it as, “Here’s what problems I can solve for you now.” Then we think about presenting a product to solve their other problems later. By listening, you are able to go back with something that works. So I think that helps drive the innovation, too. Just make sure you know the core problem before you start developing.

HANKS: If your business isn’t listening to your customers, you’re not going to be in business very long.

The Internet has led to an enormous shift in communication and information creation. Discuss the pros and cons of information and data management in today’s world.

HANKS: I think there is a trend shift regarding data. When you look at the online world, one of the significant shifts that we are all going through as a culture is the sheer quantity of information and data that is being created. Before the Web, if you wanted to create data, it was a very time consuming and labor-filled process. Even medical records were written on paper. I would guess that in every way, shape or form it’s now just easier to create data. At Doba, we’re constantly trying to figure out how we deal with all the vertical product data.

I recently saw a chart that showed that within a year period of time, we create more data than the entire civilization that came before us. It’s within a year now. And it’s accelerating. It’s really mind blowing when you start to look at how much data there is produced each year. For example, the amount of data that Doba creates from the service that we offer is astounding, and then you add that to the amount of data that is being produced by another company and another company—it’s an enormous amount. I think managing this data will be the next greatest innovation.

CUPAL: It’s all about harnessing data. I think all of us have a certain amount of data analysis that we’re doing. There are massive amounts of information and I think we’re all wondering, “How do I make something useful out of it?” Whether it’s intelligence on your customer information or applying it for SEO to get better attraction to your site, or, in our case, trying to understand the science behind human ancestry, it’s all about harnessing that data.

HERRSCHER: When we talk about harvesting that data and making it useful to customers, it’s also something that should be considered from the angle of, “What are my customers saying about me? What data is there about my company? What are they saying about me on Twitter? What are they saying about me on Facebook? What are they saying about me on all of these different networks?”

There is so much conversation and so much data, so as a business or even as an individual, it’s important to know what people are saying about you and your business.

KING ANDERSON: Another thing to consider is what should we really care about and what should we not? Do we really need to spend a lot of time going through and searching to find out what people are saying about us? But it can obsess you if you don’t find the right balance.

BORGHETTI: It’s almost like the amount of information that surrounds you on a daily basis that either has your name on it or your company name on it or somebody you’re interested in, you can drown in the sheer volume of information. I think it’s definitely a challenge that we’re fighting and we’ll continue to fight, without any sort of easy answer in the future.

One of the things I was going to comment on as we talk about trends is knowledge management. There’s all this business intelligence and mining data that you have in your system, the drivers behind that clearly are revenue, right? We’re all sitting on this latent asset. And the question then become: “How do I mine this information to create something that’s new, a new product or service?” I can go back to either new customers or existing customers and drive revenue. You’re not really looking at that from an efficiency standpoint, saying, “How do I reorganize these data tables so I can use less space?”

So, I think that the single, biggest trend that I’m seeing right now, talking to people in the business community, are: What are things that I can do to be more efficient in terms of revenue generation? Can I sell more of what I have currently without having a higher head count? How do I compress the cycle? If it takes me 60 days to close a deal, how do I close that deal in 45 days or how do I close it in 30 days? And how can I have better visibility into really what the funnel looks like and how it’s being developed?

I think there is always going to motivators for efficiency, and we’re all seeing that right now. Overall, I think the real value is saying, “OK, if I can get an extra $1 million in revenue right now, I don’t have to lay people off and I don’t have to worry about all those other efficiencies. It’s sort of akin to you’re driving down the freeway fast, and as soon as traffic starts to slow, you start looking in your rearview mirror. And that’s really what we’ve been doing over the last six to nine months—everybody’s been looking in their rearview mirror saying, “What’s going to hit me from behind?” But I think now, once that sort of initial phase has beyond a trend, it’s all about revenue.

SPERRY: Well, the thing that’s kind of exciting to me is that now is the time to build out capability. That’s the thing I keep coming back to sitting and discussing around the table with executives, is it’s a great time to build capability. Today, in this really poor economy, it’s a time when everyone else is cringing and scared, which means that it’s really time to fire up and build out.

In the past, we had employees that went for 14 months without pay. We’ve been through the whole venture thing. But I think today’s economy kind of feels like the dot-com era. But it’s still a great time to build out capability, a great time to look for those new opportunities and a great time to say, “OK, I have all these people saying they need these things. I can chase that money and revenue, or I can figure out where I want to focus in on and what the capability is to actually build out right now.”

HANKS: I think one of the dangers is the idea that we’re capable of building anything without significant investment. Twenty years ago, just to build anything was a significant investment. But today, if I have an idea, I can make a phone call right now and depending on the idea, my director of engineering could have it done by the end of the day. Twenty years ago, everything was significantly more involved to plan and actually go build. And now things can move so quickly that there are 10 times or 100 times the amount of things that are possible. And even without capital, even not worrying about the rear-view mirror and just doing what’s in your control, it’s still limited down. And trying to gain the skills and the knowledge of how you make those prioritizations, I think that’s one of the biggest challenges that we have. And, we’re all teaching ourselves how to think differently because of what the world has done around us. While it’s good in one sense, it’s also a danger, because you can get hit with 100 things at a time.

What are a few of the guiding principles or rules that you’ve come up with to prioritize the demands you receive from customers and the ideas that pop up in your own mind?

HANKS: You just have to get good at saying, “No.”

SPERRY: Kill the ideas a few times; if it lives then revisit it.

HANKS: Exactly. So you just immediately dismiss everything. And I have to do that myself, just because I have too many ideas. So that’s how I approach the world. I say “no” and then if it keeps coming back, then maybe there is something there to it.

BORGHETTI: I read an article that talked about the input of the customer on product design. And they used the analogy of the iPhone. They said, “Do you really think that Steve Jobs listened to customers when he built the iPhone?” And in some respects, from a development standpoint, it almost takes an entrepreneurial-type of a personality. It’s more of a trend-setter that can make decisions as opposed to saying it’s a validation of all sorts of points of input.

HERRSCHER: The speed of development is insane. We launched a platform that has as much capability and functionality as Twitter, but has a few more features. I hatched this idea when I was eight months pregnant and we launched within a few weeks. And it’s because of how fast those code bases develop and how fast that technology gets out there. And you’re able to shoot out there and say, “Well, heck, I’m going to launch this.” And it’s almost too fast for you to think through and say, “What am I going to do after I put that up?”

Another thing I’d like to add is we forget that in this really tough economy, it can also be a great economy. You can get much more aggressive—whether you are in tech or any other business, if you can look at the opportunities that are there right now and maybe turn off the news for a minute so that you’re not so depressed and realize what a great time it is to be in business.

REES ANDERSON: Regarding prioritization, we need to help keep our employees prioritized, too. I’ve actually hung a sign up in the hallway of our offices saying, “Is what I’m doing right now leading to a sale?” People can get distracted so easily by every bright, shiny star out there. We have had to literally restrict 90 percent of the company from getting on Facebook, Twitter or any of those other outlets because it kills their entire productivity. We’ve taken away access, period, to anyone we could. It’s that big of a time killer for us. When we started looking at the time employees were spending on that stuff, it was killing the company. In today’s economy, you’ve got to focus them on what’s going to bring in money. I’m lucky because my company is in health care and it’s a great space to be in right now. But most companies are just fighting to stay alive—even the biggest of the companies are fighting to stay alive right now. So you’ve got to keep your priority on bringing in cash. Getting access to capital can be done, but it’s extremely difficult.

EDWARDS: The comment about scarcity of cash being a good thing rings true to me. We raised $67 million over the last year and I have noticed when you have a lot of cash, you tend to not know how to say, “no” to as many things as you could. And you tend to broaden out way too broadly. And then you go through a quarter and you’re at the end of the quarter and you realize you didn’t get anything done. So, I think the idea of living really close and generating cash in the business is critical. But by doing that more, using that as the life blood for the company and getting balance between equity, debt and cash flow—it’s all a really important point of having a successful business.

What other Internet trends do you see developing?

KNIGHTON: At Mozy, we see that the current recession has led to more companies using cloud-based services, whether online backup, like Mozy, or some of the others. Cloud-based services are becoming more and more attractive to businesses. The reason it’s becoming more popular is it’s less expensive. For example, for our small- and medium-sized business customers, rather than them having to invest in a lot of extra data center technology and software, the hardware, the bandwidth, they can come to us and we can back them up and they only pay for what they need. So whether it’s an organization like United Way or whether it’s General Electric or Wind River, these customers are coming to us faster right now because of the recession. It’s saving them where they can move those capital expenditures over to the operating side of the balance sheet. So we’re preparing for that increased demand and we’re seeing it.

HERRSCHER: Cloud-based services are amazing. I can get new servers added in minutes at barely any cost to me. So there are such inexpensive ways to do business now with more technology. And it also speaks to the speed of being able to do things. So we’re in a great spot for where people want to be and save money.

HANKS: Cloud-based services open up an interesting can of worms, though, because, again, it’s a significant paradigm shift. I have 160 gigabytes of data off my lap top that goes to Mozy, which I love. But, there is something disconcerting about the fact that a lot of that information is very private, very personal, very sensitive kind of data, both about my company and about me personally. So I think that that’s an interesting kind paradigm shift for people to get comfortable with.

The other dynamic, too, is from the day of the Internet, the first service was application service providers, then it was software as a service and now it’s cloud. It’s all the same thing. It’s basically just that the Internet allows you to do things with computers and processing power and networking that you couldn’t do before. And there is so much hype about cloud; I think it’s just the latest marketing spin people have given it.

I still come back to the fact that I don’t we’ve even scratched the surface of where things are going to go. And that’s the problem that we have—all the experience that we have and everything that we know could be gone in 10 years. And as much as I want to think I know where things might go so I can align that with my business, I have diminishing capability of being successful in that because there is just this raw amount of data and changes that are happening that we don’t understand. The underlying changes are going to have big, big impacts on our companies. And none of us have a crystal ball to plan for it. And then ultimately, if we all win, it’s probably more luck than anything. CUPAL: Who would have thought that Twitter would have been at all successful?

BORGHETTI: The interesting part of these technologies that we call “successful,” like YouTube, is that they don’t really have commercial viability. It’s really interesting to see how things evolve. I think YouTube is a really flawed business model inherently because no one is really willing to cough up the sponsorship and the advertising dollars in a traditional model to monetize that content.

EDWARDS: The Internet is driving those types of ads down and the click through rates are going way down as well.

BURWELL: Logic is really important to me in terms of commercial viability. You’ve got to be honest with yourself and your company about how viable it is and where the core functionality is and what the core problem it is solving. The question is: Is your business a standalone business model?

EDWARDS: A question I ask myself before starting something is, “Will the day come when they will discontinue that or change it?” Right now, the Internet market is supposed to drive more opportunities for advertising, except advertising went down last year 20 percent. And I just wonder where it’s coming from to pay and how it’s going to generate a return. And I’m not down on it, that’s just a question I ask all the time.

BURWELL: Having a lot of money allows you to do illogical things, even though you can convince yourself, dishonestly so, that you could make a go of this. And that’s the same situation a lot of entrepreneurs are in. When doing something new, I try to always ask, “Does this make sense? Can this thing sustain? Is it a sustainable and profitable business at $15 million? Can it be viable?” You know, can it viable? Viability should be all of our questions. And then what are the paths to increase viability, profitability, sustainability and growth? Though the economy is tough, it’s also a great time because it forces everyone to be really honest with yourself and your company and its core viability. It also gives us better perspective and ability to say, “no” and figuring out how you should prioritize. If you’re honest with yourself and you have a really good sense of core viability and really believe in it, then you can begin to marshal resources and do certain things to drive the business.

CUPAL: A lot of the social tools, like Twitter or Facebook, infuse themselves into other kinds of businesses, like Diabetic Connect for example. And Genetree has tools that can be used to either communicate with customers or reach out and let customers interact with each other, but not necessarily as a standalone business.

BLAKE: One of the challenges that I think businesses have right now is business is so easy technology-wise. It’s not easy, but you can very quickly create a new feature, a new application or a new program, and you can do it very fast. And, there is a lot of innovation happening. The problem is a lot of times you don’t know how it will turn out. With podcasting, for example, podcasting came out and a lot of companies built their entire business model around these new innovations. And six months to a year out, you find out that podcasting was kind of a fad and weren’t as big as you thought they were going to be. And then your whole business model that was focused around podcasting goes down the drain. So there is a balance between being innovative and being on the edge of technology, but then also being too close to building your business around a fad and then suddenly watching your business crash.

KING ANDERSON: The mom entrepreneurs that I’ve worked with have experienced what you’ve described a lot. When they name their company or their products, they think about what’s going on now. But, they have to look at the bigger picture. A lot of the startups that I am working with are not thinking about the long term of what they want to create. They’re thinking about the here and now and getting their product to market.

Where do you think online advertising will go?

HANKS: I think the problem to that question is assuming that advertising as we’ve known it for the last 50 years is going to be what’s still here 25 years from now. As people change, how they interface with themselves and with each other and with companies will change drastically, and I still think we’re too early so we don’t see what’s coming yet. I have a five-year-old little girl. Who knows, maybe it won’t work for Coca-Cola to spend $300 million a year to convince her to buy Coke. I think all companies need to realize that they will probably have to approach advertising in a drastically different way.

EDWARDS: If you incorporate a business model that’s wholly dependant upon advertising, I think you’re in trouble. I think that you have to drive into your business model other ways to get income, whether it’s membership fees or requests for information and lead generation, or transactional referral commissions that you get. You’ve got to do something else besides straight up advertising.

If you look at the curve of advertising from size of market down to the element of the transaction, then you’ve got television up here, you’ve got a huge size of the market that you reach relative to other things. Although that’s dropping, there is a massive fragmentation in media right now. The television has lots of coverage and lots of reach, but not very many people buy something on television. Instead, the television is used more for branding and cult action. As you come down and you get requests for information and as you get lead generation and as you move right into a transaction, you’re probably going to be some other medium. To be successful, you have to combine your strategies into a common strategy to make it work. Overall, I don’t think advertising as a pure play, long term, is going to make it.

BLAKE: A lot of our angel investors are all across the state. And for the last two years, we’ve seen so many advertising plays, it’s just unbelievable. I can’t think off the top of my head one deal here in the state that was done that was a pure advertising play. And the angles were getting a lot of flack because a lot of entrepreneurs were saying. “Well, they won’t invest in this and that.” But they had seen so many and there was just a little wrinkle difference. And now the Angels are starting to say, “That was smart that you didn’t invest in these.” Because a lot of those companies, most of them, actually have gone down the drain.

KING ANDERSON: My company is currently seeking sponsorships from companies to sponsor online events, that sort of thing. I think entrepreneurs need to learn how to rephrase their pitch to sponsors and investors. They need to emphasize that their company isn’t just going to make money by doing online advertising.

Another thing that we are seeing in that our “mom” brands or brands that are trying to reach mothers or women, are paying big money in sponsorships. For example, Arm and Hammer, they’re sponsoring a lot of “mom” events. Nintendo is another example, it’s having Nintendo parties for moms and their kids, and they’re giving out their products. They do this because they know who is purchasing.

HERRSCHER: I think if you can give people a real life experience, your business will spread. That’s why I like to partner with local restaurants to kick off meetings and invite women and a bunch of bloggers to attend. Overall we have a phenomenal experience. And that experience then spreads.

When you think about your daughter, how is Coke going to get to her? Somehow they’re going to have to show her a fabulous experience with Coke in her life. They need to make her love it from an experience perspective, as opposed to just placing it in a newspaper 10 times and hoping she’ll keep seeing it.

BURWELL: Advertising today really is more of a sponsorship and CPM or banner versus what it used to mean. Lead gen systems are much more complicated and much more involved than throwing up a banner or a sponsorship deal. The problem is that some of these ad models and the businesses simply won’t work because there is no appetite for them. A lot of businesses probably don’t have the ability to build the monetization engines beyond that. Then the cost of building monetization engines beyond CPM or sponsorship deals are much more significant. The investors won’t invest in these businesses when you say that you’re going to build this front-end thing and we’re going to build some other monetization vehicles to build a revenue. I don’t think investors will invest in those type of companies. You know, they definitely won’t invest in that type of path to build a business.

Is Utah evolving as a place you can develop a meaningful tech business? Is the infrastructure in place to help start-ups get off the ground and turn into something substantial?

EDWARDS: I certainly think you can build a meaningful business in Utah. I was part of the growth of Novell. It grew to be a good, solid business. And I grew another company, I-Link, to good business. And now I’ve built Move Networks, which is growing into a great business. All three of these businesses were decent-sized businesses. So from my experience, Utah is a great place to start and grow a business. I think the real question is a comparative one: is Utah good or better or worse than the Bay area, L.A., New York and other places? I think that’s a complete analysis where you’ve got pros and cons on both sides of the ledger in terms of costs of doing things. Overall, though, Utah is definitely a place where you can start and grow a business for sure.

HANKS: I agree that you can grow a strong business in Utah. One of the caveats is that you have to compare things comparatively. Are we Silicon Valley? No. But, Utah has less than 1 percent of the United States population. I’ve had people bemoan that fact that we don’t have enough Fortune 500 companies. But if you do the math, what’s 1 percent of 500? If we have five Fortune 500 companies in the state, we’re average. And if we have six, we’re above average. That’s the thing you have to realize: Utah has less than 3 million people in the entire state. You know, the Bay area has 10 million people. You can’t compare apples and apples; it’s apples and oranges. With all that said, I believe that there is more entrepreneurial energy here than in most places.

EDWARDS: I think the infrastructure for entrepreneurial work is less developed than some other areas, though.

BURWELL: I think Utah County has already proven to be a place where you can build big companies when you classify them as IPOs. We’ve had Novell and today we have Omniture. So I would say that Utah County has already proven that its can build big businesses.

Salt Lake, on the other hand, has not demonstrated an ability to build a technology company. There’s not enough corporate infrastructure. So, that’s a huge negative. We really have no large technology corporate headquarters in Salt Lake.

BORGHETTI: I think part of the problem is that we don’t have enough of the right type of employees. The strong, educated people are all employed. They’re all working. And you’ve got to come to the table with not only a compelling opportunity from a career perspective, but a great compensation package to lure these people away from where they’re currently working. And that is a very tough environment to grow a company. We’ve struggled with that big time over the last year. Now the pendulum is swinging a little bit, since there are more people in the job market. So it’s easier to find some of these folks and easier to attract them.

When I was putting my software company together back in 1997, there were no infrastructure for investment here. We spent all of our time on the West Coast and on the East Coast pitching our story. There was just a complete lack of sophistication and understanding about what the Internet was and how it worked. So overall, I think Utah has grown a lot. I think we’ve matured a lot as a community. I think the challenge hits when you get to be 100 or 200 employees and you question whether you can grow your company correctly.

SPERRY: I have never concerned myself with having thousands of employees yet. I’ve never concerned myself with that particular problem and I’m growing my business. In my experience, our customers have never concerned themselves that we’re from Utah. That has never been an issue at all. And a lot of our customers, like Mozy, we’ve never been in their offices. We make a presentation, go to a meeting, we talk to them, they sign up online. So it’s never been an issue for us.

KNIGHTON: There is something interesting about the Utah dynamic that we are seeing, and that is the family connections. After we were acquired, the company, EMC, acquired another company out of Seattle and put us together to form this new entity, Decho. And so now we have offices in Montreal, Bangalore and still Utah. Yet, Utah continues to be the one office that’s growing and expanding quicker and faster. We’re going to need more space. And that’s because as we’re trying to hire and recruit, we find that in these other areas outside of Utah, there is some family connection and friend connection and somebody wants to come back to Utah. They have been gone a long time and now they want to come back. And the more that connection has a role and people come back, the talent pool will grow.

EDWARDS: I would agree. I would say that I haven’t had a hard time getting really key individuals to move to Utah. Utah is a great place to live. Most of them do find that the economic trade coming from New York or Los Angeles is a really positive one. But at the same time, I haven’t felt that there was a strong need to do that, that we could be distributed, that we could leverage talent. So I think it goes both ways. It really depends on your business as to whether or not the talent is available.

But, I’m a big believer in a distributed workforce, so I have employees in many locations. And if I could do it my way, we would all work out of our homes and save the driving time. So I’m really comfortable with having workforce distributed. But, there is benefit to being together, but I haven’t tried to move people here. We like people to be able to meet with Time Warner or Disney—we like them close to the customer.

I do, however, believe there’s an issue around venture capital and availability of capital and the raising of capital and the overall funding infrastructure. It tends to be less developed here than in other places. I think that I love the Silicon Slopes branding that’s going on simply because it’s bringing attention to the area and creating some branding around what we do here and that’s great.

KING ANDERSON: For women entrepreneurship, Utah has got to be number one in the country. And for me personally, Utah has been great. We’re having an event in Disneyland. You’d think that Disneyland would draw a lot of moms. I was surprised that we had more people sign up for our event in Park City.

HERRSCHER: And from the social media perspective, we have a lot of really huge bloggers and people on Twitter and other kinds of social media personalities out there. I have people from all across the country says that Utah is “Twitterville.” They are just amazed at the people and the bloggers and the women who have a huge presence that come out of Salt Lake.

SPERRY: Utah also had a nice showing of companies in Fortune 500 last year, which shows something.

HANKS: Utah always leads, percentage-wise, per capita. In fact, the Provo and Orem area has been at the top for several years in a row as far as percentage per population.