Ryan Smith: The NBA's Next Great Owner
After purchasing the Utah Jazz for $1.66 billion last October, Ryan Smith has consistently impressed — here's how.
|Joseph Pompliano||Feb 1||11|
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After almost four decades of ownership, Gail Miller, who purchased the Utah Jazz with her late husband Larry in 1985, decided to sell the team this past October for $1.66 billion.
Ryan Smith, the billionaire chairman and cofounder of Qualtrics — an experience management company based in Utah.
The interesting part?
He’s quickly become one of my favorite NBA owners already.
Today, we’ll run through why.
First, some history.
It’s no secret; you can’t buy an NBA team without being super-wealthy, so how did Ryan Smith make his money?
I’ve tweeted about it before, but here’s the story.
After his dad was diagnosed with cancer in 2002, Ryan Smith left college and headed back home to Utah.
"I just wanted to sit and be with my dad, but he had a lot of downtime between radiation and chemo," Smith says.
To pass the downtime in between his father’s cancer treatments, Ryan and his dad started working on the idea that became Qualtrics.
Ryan's dad, a researcher by nature, realized companies had no effective way to survey, conduct market research, and communicate with customers and employees.
Qualtrics — an online software platform that allowed companies to survey and communicate effectively.
Within a couple of months, Ryan and his father had a product ready to go.
The only problem?
They needed customers.
Given his father’s background, they started with colleges that conducted field research.
First up — Kellogg School of Management, which took a year to onboard.
Fast forward a few years, and Qualtrics had 250 universities across the country signed up.
The best part?
As students graduated, their penetration into universities worked as a feeder system into corporations.
"Someone took us from Kellogg to Heineken," Smith says.
As the company grew, Ryan convinced his brother Jared to leave Google and run the technical team at Qualtrics — "which increased productivity 7x."
That wasn't even his biggest contribution.
Despite being pitched 50x a month, Jared was adamant they didn't take venture capital.
In 2012, now doing around $50M in annual revenue, the Smith family got an offer that was tough to refuse.
A "legendary Silicon Valley VC" offered the Smith family $500M cash to buy the company.
Believing it could be a multi-billion dollar business, they declined.
Shortly after turning down $500M, now 10-yrs into the business, Ryan and Jared finally agreed to take outside funding.
"We started to see investors as more than just deep pockets," Smith says.
The two accepted a $70M Series A investment from Accel Partners and Sequoia Capital.
From 2013 to 2018, Qualtrics kept growing — going from 5,000 customers to 8,000.
With revenue growth north of 50%, the business cash-flow positive, and almost $400 million in annual revenue — Ryan & Jared decided it was time to go public.
But SAP had other ideas…
Knowing the Qualtrics IPO would be oversubscribed, SAP tried to stop them from going public by buying the company.
Ryan Smith declined, insisting the roadshow would go on and gave SAP 7 days to make them an offer they couldn't refuse.
SAP came back with $8B.
This time, the brothers accepted.
In the years that have passed since the $8 billion acquisition, Qualtrics eventually spun out of SAP and went public last week as an individual company.
With the stock climbing more than 50% on its first day of trading, Smith made over $150 million last week alone.
When asked why he feels the need to continue working, Smith references a work ethic he would like to pass down to his kids: "My kids need to see me grind.”
After having business success, Ryan Smith was able to fulfill a childhood dream of his.
“I dreamed of playing for the Jazz, and that didn’t work out.”
Instead, he'll own the team — purchasing a majority stake in the franchise at a $1.66 billion valuation.
The best part?
Ryan’s dad is now cancer-free :)
Outside of his amazing entrepreneurial journey, which I love, Ryan Smith has consistently impressed me with his generosity before and after becoming the Utah Jazz owner.
Here’s what I mean…
When the NBA introduced patch sponsors in 2017, while Ryan Smith was still just a fan of the team, Smith bought the rights for his companies philanthropic arm “5 for the Fight.”
Rather than use the $15-$20 million annual investment as advertising for his company, Smith raised $25 million (and counting) for cancer research.
Today, Smith and the Utah Jazz still have the only cause-related jersey sponsor in the NBA.
Now that’s amazing.
As if that wasn’t good enough, Ryan Smith has doubled down on his philanthropic efforts since becoming the Utah Jazz owner.
Here’s another example.
For every win this year, the Utah Jazz will give a 4-year scholarship to an “underrepresented or minority kid” — enabling them to attend college tuition-free.
Sitting atop the Western Conference, the Jazz have already won 15 games this year, which will send 15 kids to college without the worry of mounting student debt.
Again, that’s amazing.
In the end, Ryan Smith will ultimately be judged as an NBA owner through wins & losses, but in a world where billionaire owners are often chastised for their profits, opinions, and much more, it’s nice to see that the Utah Jazz landed a genuinely good person.
PS. Do you know how he came up with the $1.66 billion purchase price?
"I literally pulled out my phone and looked at the Forbes valuation...and I said, well, there's your offer."
Have a great day, and we’ll talk tomorrow.
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