As the modern fitness craze has proliferated beyond what any of us could have previously imagined, new tech has sprung up to satisfy this newfound obsession. Whether subscribers of the healthy living lifestyle simply have a strong affinity for kale or attend spinning classes on a daily basis, the need for technological mediators is palpable. Enter MINDBODY. Beginning in a garage, MINDBODY has grown into one of the most prominent resources for those who strive to lead a life of wellness. Rick Stollmeyer, the company’s co-founder and CEO is the brains behind the operation and has led MINDBODY to become a successful public company. Rick took the time to sit down with TechDay to discuss how going public influenced the company overall and offer advice to other founders looking to follow suit.
How has your job shifted or become more difficult given the day to day volatility of public markets?
I actually have a lot less stress now than before we went public. What I’ve found is that being a CEO of a public company affords me the opportunity to interact with a much broader audience. The run up to IPO allowed us to bring in a level of talent across the company that we probably wouldn’t have otherwise. When you have a talented team in place everything comes together more easily and proficiently.
Do you feel more pressure from the institutional investors you have now as a public company or the VCs you had when you were a private company?
I wouldn’t say the pressure is more or less in each scenario, but very different. The IPO definitely had moments of stress, but the lessons learned and motivation they resulted in were invaluable. What kept me grounded was going back to our core values and keeping focused on our team, customers and long-term vision.
Anyone who has taken money from a VC is on a time clock with one of three endpoints: you go public, you get bought or you become wildly profitable and can pay off the VCs with huge profits to them. That third endpoint rarely happens, so there are really only two paths, you’re either going public, or you’re selling. Once you go public, you can turn your focus from getting there, to your sustainability and success.
What pleasantly surprised me in working with these substantial banks and investors when we ramped up for our IPO, was just how human the whole process is. The investors are engaged, intelligent and highly dedicated people. They want to meet you, talk with you and ask pointed questions that will help them understand the business at a very deep level in order to make those qualitative and quantitative decisions. You can’t write an algorithm to make smart investment decisions – at the end of the day it is individuals calling the shots.
What was the moment that compelled you to become a public company?
In retrospect, we went public in a very tumultuous period where high-growth companies were being looked at with much more skepticism than today. We saw the door closing on the opportunity to go public and felt we needed to go out before that door was shut. Since then, very few tech companies of similar size and metrics have been able to go public – although I think that will be changing soon.
Going public dramatically increased the size of our audience, investors, customers, consumers and other stakeholders. It was the right time for us to make this move.
What advice would you offer for entrepreneurs who raised large amounts of money contemplating a path towards IPO?
It’s imperative to have a long range vision. It is easy to get caught up in watching the stocks go up and down, so it is key to focus on why you exist as a company and what your company priorities are. By keeping those things top-of-mind, you will be able to better enjoy the day-to-day and keep working towards your goals.
Additionally, I would say it’s important to have people around you who have been-there, done-that in terms of going public. People who have already bumped into the walls that you don’t even know are there yet are invaluable during the run-up to IPO and afterward.
What did you find most challenging about the IPO process?
For weeks before and after going public there is an enforced quiet period – it was excruciating. It was a successful IPO but the stock initially didn’t perform the way we expected. Media was quick to criticize and we couldn’t explain that the nature of our business is in recurring revenue that needs time to build. All I wanted to do was answer those critics, and I couldn’t. Once we were un-muzzled we could clarify our business model – how we achieve a scale and momentum so we can continue to grow and be profitable.
Have you seen any effect on MindBody's user base after going public?
The vast majority of our customers are very happy and enthused about us. Going public created major brand awareness and we continue to build on that. It’s extremely exciting to see how much our consumer user base has grown as well. Our MINDBODY app has over 3.5 million registered users and purchases on the app have grown 145 percent year over year. We expect that to continue, in fact, to accelerate, because there is a network effect happening. Ultimately, the larger our consumer base grows the more business potential it creates for our customers.
What new innovations can we expect to see from MindBody in the near future?
We have earned our way into a new echelon of partnerships that we think will be deeply impactful in expanding our reach to a much larger audience, and bringing far more people into the businesses that we serve. We recently partnered with Deepak Chopra and his Jiyo app and we just announced a partnership with Under Armour. The businesses we serve in general use less than half of their available classes and appointments each day. Connecting them to the broader audience of our app and these partners will help fill those classes and appointments. What we are building is a global wellness services marketplace - and that vision, which was crafted in my garage, is coming true sixteen years later.