July 16, 2024
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Dubroff: Mindbody growing along with Highway 101 tech corridor


Henry Dubroff

Henry Dubroff

After raising $134 million in late May, expanding its footprint on the Central Coast and rolling out an updated global expansion strategy, MindBody CEO Rick Stollmeyer is in no mood to slow down.

Nor does he see any slowdown ahead for the burgeoning tech corridor along the Highway 101 in the tri-county region.

In an extended phone chat earlier this month, Stollmeyer said the company’s decision to sell 4.4 million shares represented an opportunity to raise cash on favorable terms.

“We could pick up some tuck-in acquisitions that are complementary,” he said, adding “we don’t have any deals immediately pending.”

MindBody, based in San Luis Obispo, has been clicking along with revenue growth in the 30 percent-plus range and it has narrowed its losses.

Though still in the red under GAAP accounting rules, the software company for wellness firms said it produced more than $1 million in positive cash flow from operations in the first quarter.

In offering 4.4 million shares plus an overallotment to the public at $27.90 per share, Mindbody also raised capital at roughly twice the $13.89 share price it recorded a year ago.

Stollmeyer said the company has been expanding in the United Kingdom and what he calls the “English eight” countries such as Canada, the UK, Australia and the U.S., where English is the first language. It’s looking in major metro markets where small businesses such as fitness clubs, spas and yoga studios are tightly clustered and where its marketing messages can reach both business owners and prospective clients.

Advertising in the London tube, he said, “is the first time we’ve coordinated B-to-B and B-to-C messaging. The UK is an exciting market.”

Meanwhile, in the U.S., the company has been building out facilities in the Santa Maria Valley, where it now has 80-90 employees in front-line customer service such as billing, tech support and customer care. The Santa Maria site is easily reached from the headquarters in SLO but it cuts down on commuting time for employees and has a reservoir of talent in IT and customer service, Stollmeyer said.

“It’s one of the most underrated cities that I’ve ever seen,” said Stollmeyer, who was stationed not far away at Vandenberg Air Force Base earlier in his career.

Although investors on the Central Coast often will benchmark the stock price performance of Mindbody versus AppFolio — the two cloud-based software firms went public one week apart — Stollmeyer said what’s happening in the region is more about collaboration than rivalry.

“These are the anchor companies that spur a tech ecosystem,” he said, making it easier to draw top talent from the Bay Area or make acquisitions such as Mindbody’s recent deal for Limber, which amped up its ability to reach consumers directly.

Stollmeyer put Procore, Lynda.com (now part of Microsoft), the Citrix operations and AppFolio in that category as relative tech newcomers that have carved out successful niches. I’d add The Trade Desk, the advertising platform in Ventura that’s shot to a market cap of more than $2 billion to the mix.

Stollmeyer, a passionate advocate for helping educate the region’s workforce, recently received the top CEO award from the Best Practices Institute for his commitment to developing talent and earning respect from employees.

The company has been working on an expanded relationship with Google, whose suite of services including maps, travel and, of course, search, fit with the lifestyle of many of its wellness consumers. Mindbody now counts 5 million app users.

Not everything has been as smooth as it looked. A partnership with Under Armour to create fitness products that integrated wellness measurements faltered when Under

Armour’s retail business got caught up in the disruption that’s ripped through the retail industry and its CEO decided that stabilizing the core business was top priority.

But Stollmeyer is undaunted by the occasional misfire. He’s leading the company beyond its roots as a payments processing system for fitness centers and yoga studios. Mindbody has evolved into a “marketplace for wellness services and wellness practitioners,” he said.

• Reach Editor Henry Dubroff at hdubroff@pacbiztimes.com.