Ryan Smith opens up: The tech founder explains why he bought the Utah Jazz

Published Fri, Dec 18 202011:23 AM ESTUpdated Fri, Dec 18 202011:55 AM EST

A View from the Top is a Q & A series exclusively available on CNBC Pro . Alex Sherman will regularly speak with a business leader about decision-making, investing and industry news. Ryan Smith has a lot going on. Smith is officially the new owner of the National Basketball Association's Utah Jazz. The NBA board of governors ratified the sale on Friday. He acquired the team from the Miller family for $1.6 billion. The 42-year-old Smith, a lifelong Jazz fan and Utah resident, will become one of the youngest owners in professional sports. He's also spinning out Qualtrics, the company he founded and sold for $8 billion to SAP , in early 2021. Smith nearly took Qualtrics public in 2018 before selling at the 11th hour . He told CNBC he has had several chances to become an NBA owner and has always passed because he was waiting for the Jazz opportunity to arise. If his backward baseball cap didn't give him away, Smith plans to bring a lot of personality to his new roles as NBA owner and public company CEO. Here's the full Q & A: (This interview has been lightly edited for length and clarity.) Alex Sherman, CNBC: Congratulations Ryan, on several fronts! Qualtrics CEO/founder and Utah Jazz owner Ryan Smith: Thank you! There's a lot going on. To start, why don't you just walk me through how you came to buy the Jazz? I've been a huge basketball fan. I go to every game. I grew up watching, cheering for the Jazz. When we sold Qualtrics, we were one of the title sponsors for the Jazz. As crazy as life got, or when we were doing the IPO the time before, right when we were about ready to sell -- it was about this exact same time two years ago -- life would slow down a little bit when I would get in the car with the kids and we would head to the arena. That was kind of our moment. I always said if there was a time where I could work closer with the NBA -- we had worked with Qualtrics, obviously, with the league and with Adam Silver, from a tech standpoint. So, I had taken a look at a couple teams. I'd been approached to, either to buy a part of a team or an entire team, and it just never really worked out. As great as those opportunities were, the reason why it really didn't work out is because we're Jazz fans. I had talked to the Miller family. They owned the franchise for 35 years, which is insane. If you think about what they've done, not only from a Utah standpoint, but from a league standpoint. We were on a call with a lot of the other owners going through the final board vote. And every single owner and team couldn't say enough about the Miller family and how much of a staple they have been to the NBA and what they've gone through. It's truly a partnership of teams. It takes all of them to make the whole thing go. And so to be able to take over for them...you know, I approached them and they said, 'probably not now, this isn't a good time and we're not selling.' How long ago was that? In February. I think an opportunity came up to diversify. I can continue to partner with them. And so this worked out to be really kind of great timing going into the season. Gail, who's kind of the matriarch of the family, she wants to probably enjoy the last 10 or 15 years of her life in a philanthropic mode. This kind of allowed them to hit all their goals but still be affiliated with the Jazz a little bit. It's just surreal. I don't think anyone in Utah thought they would see that transition. But, to be on this side of it, it's a true stewardship. And, we say that in tech sometimes, but this is different. I've been through a lot of transactions and negotiations. There has been nothing in this process that has been about anything but the state of Utah, which is really kind of cool. It's almost like a nonprofit, for how it's gone, which is pretty cool. Did the Miller family explain to you what changed between February and this summer? Oh yeah, for sure. First of all, they received an offer. But really, it came down to did they have the setup to really go run [a team] in today's moving environment, and did they want to double down on the Jazz and on the NBA? Kind of, almost, are you a buyer or are you a seller? Are they buying more assets with the Jazz, are they growing and expanding, or are they good? I think given where they are in life, they've already done that. They've already built the arena. They've already improved the area. But that was going to continue to need to be done with this team. And, it's probably no different than a tech company where you're either in super hypergrowth mode or you're kind of down. And I think with the league and where it's going, it's definitely a hypergrowth league right now. And so we set up a situation where we could help them hit all their goals, and they still get to be part of the Jazz. I sat next to them at every game, and we were partners from a sponsorship standpoint. So all I'm doing is switching seats, but I have to make payroll now. You mentioned the Millers owned the team for 35 years. Is it your goal to be an owner of this team for 30 years? Is that part of the plan? What's interesting is Gail and I have sat down on so many occasions that I know her thoughts are she wants to spend the rest of her life giving her money away. And this has allowed her to do that. She's such a philanthropic legend. She just did a hospital here. She came to my wife and said, you guys are the exact same age that Larry and I were when we bought the team. I think that's pretty unique and a little serendipitous. I have no intention -- I've set this up in a way that we're in it to win it. What type of owner do you want to be? Because obviously the NBA in particular, there are a lot of different types of owners in this league. You can be behind the scenes, you can be the face of the franchise...As you envision yourself as the owner, what can people expect? There is a lot you have to navigate. I already see that you have to figure out 'what's your rhythm?'. To be honest with you, in my career, the best thing that I've figured out, right or wrong, is the only thing that I know how to do is be me. I just haven't looked out and said, 'hey, that's who I want to be like.' And I never did that at Qualtrics. And the CEOs I know that did do that never did as well as the ones who said, 'hey, this is just who I am.' I think Larry Miller was unique. He was unapologetic about who he was. For people who don't know you, Ryan, how would you describe who you are? I'm an operator. I'm a creative. I built my entire career on experiences. We developed a software where 12,000 brands come to us and say, hey, help us improve the experience. And, whether it's designing the experience or whether it's improving it. Like, when I look at the team, I look at the player experience. What does it mean to be a player in Utah? What's that experience like? What does it mean to be a fan? And what is that experience like? What does it mean to be in the community, and what is the Jazz experience in Utah? And that's what I'm going to work on it. How that shows up or translates, I don't know. I will tell you that my identity is not tied up as the owner of the Utah -- just like my identity hasn't really been tied up as the Qualtrics founder. My identity is tied to being a dad and a husband. I think that I'm going to be hands on. I'll be visible. There's no way I'm not going to be. You'll stay courtside? Courtside seats? I mean, that's where I sit anyway. Exactly. Yeah. So, I don't know how much I'm going to do with the media. I'm just going to operate on what feels right. It's tough to say because I don't take over for three days. But, I'm interested. I understand basketball. I get basketball. I play basketball three days a week. There's the basketball side and the business side. Each one is equally interesting to me. One from an experience standpoint and one from understanding. But we have phenomenal leadership. We have Dennis Lindsey, a world class general manager, and Quin Snyder, who is one of the best coaches in the league. And so, I don't really need to go.... just like a CEO. You just work with that, right? So, it's TBD. There are some owners that this is all they do full time. And that's not me. I'm still very, very much involved in Qualtrics. I'll transition to Qualtrics in a second, but a few more Jazz questions. Did you speak with anyone for advice? Mark Cuban or Steve Ballmer? I talked to Mark, Steve Ballmer -- about five or six owners. Did they tell you anything that was particularly surprising or interesting? Not really. I mean, I've been around it. Like I said, I had a unique view because I've talked to Mark five different times, or a couple times, throughout the years on this. And I've gotten to know a lot of the other owners in the league already just because it's where my passion has been. But they've given me different advice. No one has ever said particularly this is how you have to do it. Everyone has their own style. Steve flies down to L.A. and Mark lives in Dallas. I had a lot more questions when the thought came up around not being in market with the team. But the fact that I live in market, you know, it really comes down to, hey, how many times a week am I going to roll up there? Am I going to work from there or down here? Am I going to go to every game or not? Just curious, what are some of the out-of-market teams that you debated joining as an owner or part of an ownership group? Yeah, look, there's plenty that are out there, but I was always trying to find stuff that was close or somewhat close. You know, I had a great conversations with Glen Taylor in Minnesota and other places that just never really got down there. There are a couple of minority pieces that are still out there. You'll see them come around. That's an awesome experience to be involved in any way. The Jazz were always locked up, so I explored everything. I'd take any call around it. But my heart was always in Utah. But it was locked up. It wasn't even an option. In fact, it was in a trust that was announced to the community that it'll be here forever, in the trust. While Gail was still alive, we were able to work out a different option. That was always my first priority if it came up. What will you bring from Qualtrics from your experience founding a company and being the CEO? Because it seems to me, off the top of my head, one obvious thing might be like your use of data and analytics. Do you expect the Jazz to be at the forefront of data and analytics in terms of NBA teams? Yeah, for sure. I mean, you know, we've helped the NBA and worked with a lot of teams from a data side. I think the experience is going to be where we really step up with what we bring. Being able to really manage the holistic experience, both from a technology side -- what it means to work for the Jazz from a data side, what it means to be a player, what it means to be a fan, digital streaming. You just look at the next wave of where the NBA is going. It's basically the world that I live in. Just as we look at broader trends, just technology in general, as well as in the state. We had the largest enterprise, private software acquisition and exit of all time in Utah, when everyone told us we couldn't do it in Utah. We recruited 400 to 500 people a year to relocate here. Utah is definitely either the first or the second state for growing tech companies right now. I feel like it's every other week that a unicorn is created here. We've created Silicon Slopes . I remember sitting in the room with four of us saying, hey, let's put all of our logos in the middle and create Silicon Slopes. That's what we bring -- that building, that innovation. And I think we're in a time when we're riding one of the biggest tech waves, the biggest industry waves. And Utah's at the forefront. If look at Covid, you can't even find a house right now because everyone's moving here. And I know there's a lot of bang around Austin right now and everyone leaving the super cities, but Utah's going to pick a lot of that up. And people want to be here. They want to see it's easy, life is easy here. And you get all the benefits you would somewhere else. Everything is close. You know, the traffic's not so bad. It's one of the best places in the world to raise a family. The world has shifted from a two bedroom apartment for six grand a month in downtown San Francisco with all the problems that come with it to, 'oh, my word, I could have a house with a swimming pool and a basketball court and raise my kids and be able to roam a little bit.' I think people are getting back to that. And you think that will continue post-pandemic? 100%. And we have a new governor coming in as well who is pro-business and wants to help companies grow and move. Success breeds success. And we're having a lot of success, whether it was PluralSight, who was just acquired Sunday for $3.5 billion. What an exit for them. You have this wave of unicorns that are coming out. It's phenomenal what's going on in Utah from a tech standpoint. It should be one of the most lucrative places to play basketball in the world for how much business in young tech is happening here. How involved are you already in Jazz ownership decision making? In other words, have you been able to think about things like 'where are we with Rudy Gobert's contract?' I know a lot, but decision making can't really happen until [I take control]. Can you give Jazz fans any insight into the direction you want to take the team? They'll see it. They already see it. They know me -- a lot of them do. So, you'll spend money? That's what everyone wants to know, right? If this first year is any indication, it looks like we're already in the [luxury] tax. We're trying to deliver the best experience, and obviously you've got to win. But it's competitive. Everyone is getting better. If you look at playing in the Western Conference, I was at the game last night against Phoenix. There's no easy game. Phoenix now is Chris Paul and [Deandre] Ayton and [Devin] Booker. Every team looks like that. It's like, oh, do we have tonight? It's the Pelicans. Tomorrow it's the Rockets. The next day....it's the Clippers. Then Denver. There's no letup. We're in the game. I feel like we have a phenomenal team. We've got Rudy [Gobert], who is amazing, who does so many different things that people don't even see. It's incredible. And then, you know, obviously Donovan Mitchell. Derrick Favors wanted to be back here. Jordan Clarkson wanted to be back here. We've got Bojan Bogdanović, who is a deadly shooter and does so many different things. We've got Joe Ingles and Mike Conley. We're a deep team. And, like I said, we've got one of the best coaches in the league in Quin Snyder. For a guy that comes from an experience management company and who you just said you were gung ho on making the Jazz known for experiences, you have the All-Star Game in 2023. You must have some thoughts already on this. I told everyone in Utah that we're hosting the biggest party. There's not going to be one company in Utah that shouldn't have some sort of an All-Star lineup, whether it's the ski resorts or something else. We're super excited about what we're doing. I think the intersection between the Jazz and some of those events -- I mean, look, we haven't had the All-Star Game, but I remember the first time it was here. We got it once. It was super special. I remember that as a kid, how amazing and proud we were. We're excited for that. And I think the intersection of the NBA and different things like media -- you think about the Sundance Film Festival this year. Those intersections probably could be a little bit closer. I don't think it's been something that the Millers haven't done. I just think it's more of where the world's trending. You're talking about integrating the Jazz and the NBA in other forms of culture? If you look at the way millennials are consuming consuming media -- and let's be honest, I mean, the NBA is media content, right? They want to consume it the same way they consume all of their other digital content, which is mobile first. All these other kind of trends that are going on. So, if you look at how that plays broader content and media, they're becoming more symbiotic than where it used to be. How much did valuation play into your mind about buying team, especially during a pandemic? Not much. So, do you see this as more of a passion project than an investment for you? This is a stewardship. It could be two owners in 60 years. You don't blink when that opportunity comes up. We sponsored the jersey patch and we gave it to cancer. We raised $26 million in three years. I've seen the power of good that comes from the NBA. There's not a better platform in my mind to do good. To be in a state that I care about and to take on the legacy -- and that's what the Millers have done. They're just legends on how they've done that. If we can somehow be anywhere near them and do that kind of good, that will be a success. Last question -- it's a tech question. This is CNBC, after all. We've seen a ridiculous run up in enterprise technology stocks this year. You have some of these companies that are just massive now. Under them, you have another tier of very large companies. Is this a healthy state to be in? Do regulators need to get involved at this point? Is this the natural order of things, or are you concerned at all that maybe the valuations have gotten too high? I'm not concerned. The one thing you do have is everyone's got to take a step back for the first time in history. You've got some of these larger companies that are executing better than even smaller companies. It's like, how do you get the elephant to dance? Amazon's dancing. Google's dance. That's the difference. Apple. Microsoft. They're executing. I've been involved in one with SAP. And now we're spinning out. It's amazing what some of these larger companies are doing for the first time ever. That being said, the run up in smaller companies is well-deserved. Now, are we at a heightened market? Yeah. Or could you ask the question that maybe investors want to jump into SAAS, new technology models and just want to spin from industrial or other type of investments that they've been in? I mean, that explains it. And there's not a lot of float on a lot of these companies, and they're getting a premium. That was the way it was with Tesla. And look what's happened. We've been through this cycle. If you give a historical investor or hedge fund the ability to buy something that could be the future versus something that's clearly the way of the past, they're starting to index on the future. So, you're not at all spooked by becoming a smaller, independent company and having to compete with these giants? You're not thinking, man, these companies, because they've executed so well, they've got a lot of power these days? Not at all. We're going to be a big company.

Ryan Smith CEO of Qualtrics and Co-Founder of 5 for the Fight speak at the press conference to announce the renewal of the Five for the Fight Qualtrics Jersey Patch through the 2022-2023 season on October 21, 2019 at Zions Bank Basketball Center in Salt Lake City, Utah.

Melissa Majchrzak | National Basketball Association | Getty Images

A View from the Top is a Q&A series exclusively available on CNBC Pro. Alex Sherman will regularly speak with a business leader about decision-making, investing and industry news.

Ryan Smith has a lot going on.

Smith is officially the new owner of the National Basketball Association's Utah Jazz. The NBA board of governors ratified the sale on Friday. He acquired the team from the Miller family for $1.6 billion. The 42-year-old Smith, a lifelong Jazz fan and Utah resident, will become one of the youngest owners in professional sports.

He's also spinning out Qualtrics, the company he founded and sold for $8 billion to SAP, in early 2021. Smith nearly took Qualtrics public in 2018 before selling at the 11th hour. He told CNBC he has had several chances to become an NBA owner and has always passed because he was waiting for the Jazz opportunity to arise.

If his backward baseball cap didn't give him away, Smith plans to bring a lot of personality to his new roles as NBA owner and public company CEO.

Here's the full Q&A: