It looks like the NBA ownership ranks are adding yet another tech billionaire.
Ryan Smith, the 42-year-old CEO and co-founder of online survey software company Qualtrics, has agreed to buy a majority stake in the NBA’s Utah Jazz in a deal worth $1.66 billion, ESPN reported on Wednesday. In doing so, Smith will follow in the footsteps of fellow tech billionaires Mark Cuban (Dallas Mavericks) and Steve Ballmer (Los Angeles Clippers) as the latest tech billionaire to buy an NBA team.
Smith, whose purchase still needs to be approved by the NBA’s Board of Governors, is buying the team from its longtime owners, Utah billionaire businesswoman Gail Miller and her family, who have owned the Jazz for nearly 35 years. The deal values the Utah Jazz franchise at just above the most recent estimate from Forbes ($1.55 billion, in February).
Smith, who has an estimated net worth of about $1.3 billion, according to Forbes, told ESPN that he’s a lifelong Jazz fan and that he approached the Miller family “a couple times” in recent years about buying the team.
“I grew up watching the Jazz. This is the team I cheered for,” Smith told ESPN.
The exact terms of the transaction have not been disclosed. CNBC Make It reached out to representatives for the Jazz, Smith and the Miller family to request more information on the deal, including whether or not Smith will use any debt financing as part of the purchase (the NBA allows prospective owners to use up to $325 million in debt to finance the acquisition of a team).
ESPN also reports that the Miller family will retain a “minority interest” in the Jazz. The Millers, who own chains of car dealerships and movie theaters throughout Utah, originally paid a total of just $22 million for ownership of the Jazz in 1985.
Who is Smith?
Smith dropped out of Brigham Young University in his early 20s to start Qualtrics with his dad, Scott (then a marketing professor at BYU in Provo, Utah), as well as his brother, Jared, and former college roommate, Stuart Orgill. The bootstrapped company grew out of the family’s basement in Provo and it now employs over 3,000 people with more than two dozen offices across nine countries.
In 2018, German software giant SAP bought Qualtrics for $8 billion, turning Smith into an instant billionaire.
Smith, who stayed on to serve as Qualtrics CEO after the sale, studied business as an undergraduate at BYU. In the summer 2001, he was interning with Hewlett-Packard in Palo Alto, California when he learned that his father, Scott, had been diagnosed with throat cancer, according to The Salt Lake Tribune.
Smith returned home to Provo and took a semester off of school to be with his family, during which time Scott began to conceive of the idea of creating an online survey tool. As a marketing professor, Scott knew the value, both to marketing professionals and academics such as himself, of an online tool to make it easier to gather market research data.
In between chemotherapy treatments, Scott and Smith worked on developing an early version of the online survey tool, which allows users to create custom web surveys for clients and customers and then analyzes the data from those surveys. Within a year, Scott was recovering from his cancer treatments and the pair already had 20 clients signed up for subscriptions to their online survey product, according to TechCrunch.
(Most of their first clients, including a professor at Northwestern’s Kellogg School of Management, were academics like Scott who were looking to use the product to conduct marketing field research.)
Smith dropped out of BYU after his junior year to focus on Qualtrics (he’d eventually finish his degree in 2016), and he and Scott recruited Smith’s former roommate and a BYU accounting graduate, Orgill, to join the team to officially launch Qualtrics in 2002. Smith’s brother, Jared, then working as a product manager at Google, helped further build out the technical side of their software product and quit his job at Google to become Qualtrics’ president.
Starting in the basement
They bootstrapped the company, running an office out of the basement of their family’s home for the company’s first five years of existence. By 2004, Qualtrics had 20 employees working in the Smiths’ basement.
“Parking got pretty crazy with the neighbors,” Smith told BYU Magazine in 2013. “They would always complain when it was garbage day because there would be 20 cars outside blocking the garbage truck from turning around.”
Meanwhile, the company had to get creative to make room for about two dozen computers in the tight basement. “We were dragging wires and doing everything ourselves — literally from laying sheetrock to wiring and putting on the ends of Internet cables. It was baling wire and chewing gum,” Smith told The Salt Lake Tribune in 2012.
Because the Smiths did not take on outside investors initially, the company could only grow as quickly as they could add more clients.
“You really have to kind of be blunt, eat what you kill,” Smith said at a TechCrunch Disrupt conference in 2015 about Qualtrics’ early bootstrapping days. “It forces constraint, and when people are constrained, they get extremely creative and scrappy. It’s everything — it’s hustle, you gotta be innovative. ‘We’re going to this trade show, figure out [if] you can get this booth for free because we can’t afford it.'”
Within a couple of years, they had sold subscriptions to more than 250 colleges and universities and Qualtrics was making around $100,000 per month, according to TechCrunch.
By 2009, the company was seeing $1 million per month in revenue, allowing Qualtrics to move to their first office, which was still just a 3,500-square-foot space in Provo.
In 2012, Smith reportedly turned down a $500 million offer to buy Qualtrics and instead bet on his family company by taking on a $70 million investment from Silicon Valley venture capital firms Accel and Sequoia Capital. Over the next five years, Qualtrics raised another $330 million (over $400 million overall) in VC funding from Accel, Sequoia and Insight Partners, valuing the company at $2.5 billion in 2017.
When asked why he finally took on outside investors after waiting more than a decade to do so, Smith told Gigaom in 2012 that his family initially wanted to maintain full ownership of Qualtrics, but he ultimately decided that raising outside cash was the only way for the company to grow quickly enough to reach its full potential.
“I wanted to turn one dollar into five, and only venture capital can help you scale like that,” Smith said at the time.
After seeing $289.9 million in revenue in 2017, with a list of over 9,000 customers that includes huge brands such as Microsoft, Mastercard and Under Armour, Qualtrics prepared to go public in the fall of 2018. The company planned to raise around $200 million through the IPO, but instead SAP swooped in and bought Qualtrics for a whopping $8 billion in November 2018. The Smith family’s share of that deal was reportedly around $3.3 billion.
Now, Smith is on the verge (once the deal is approved by the NBA) of becoming the latest tech billionaire to enter the world of professional sports.
Ballmer, the former Microsoft CEO, paid $2 billion for the Clippers in 2014 and Forbes now values his team at $2.6 billion, while Cuban’s Dallas Mavericks are valued at an estimated $2.4 billion by Forbes after the “Shark Tank” star paid just $285 million for a majority stake in that team in 2000. Meanwhile, Joseph Tsai, co-founder of Chinese e-commerce giant Alibaba, also bought the Brooklyn Nets for $2.3 billion just a year ago.