December 22, 2009

How Mindbody grew fast in an overlooked niche: 14 tips

by Grant Buckler, Senior Writer, SoftwareCEO

Mindbody Software started in 2001 in what looks like a pretty small niche: appointment scheduling for yoga and Pilates studios.

Not as small a niche as you think.

There are 70,000 yoga and Pilates studios in the United States, co-founder and CEO Rick Stollmeyer says. Add in the related health and wellness sectors Mindbody has begun serving — like skin care and dance studios — and the company has a potential market of a million businesses worldwide.

Company Snapshot
Mindbody Software
Basics
Founded:	2001
CEO:	Rick Stollmeyer
HQ:	San Luis Obispo, CA
Headcount:	85
Revenues (US$)
2004:	$674,000
2005:	$773,000
2007:	$3.5 million
2008:	$6 million
2009:	$8.3 million (est)
Major Clients
• Alvin Ailey American Dance Theater • CorePower Yoga • Fitness Together • Power Pilates • Velocity Sports Performance
Awards / Honors
• #370 on Inc. 500 for 2009 • #840 on Inc. 500 for 2008 • Central California Small Business Person of the Year, 2009 • San Luis Obispo Green Award, 2009 • Nominated for Huffington Post's Ultimate Wellness Game Changer, 2009

In eight years, Mindbody has grown to $8+ million in sales and 85 employees. It hit #370 on the Inc. 500 list for 2009, on the strength of eightfold growth over three years.

Also in 2009, the company took in $5.6 million in financing from private equity firm Catalyst Investors, and Stollmeyer was named Central California Small Business Person of the Year.

Along the way Mindbody brought in a new partner — New York yoga studio operator Bob Murphy — and made a successful transition from licensed to SaaS.

The past eight years have been a quite a workout.

Here are Stollmeyer's 14 tips for building a healthy business.

Healthy body, healthy business tip #1: It has to be SaaS
Mindbody didn't start with SaaS, but switched to it after a couple of years with the licensed model.

So Stollmeyer is well-placed to compare the two models and the tradeoffs of each.

Originally, the Mindbody software used database synchronization to keep scheduling, billing, and other data up to date on multiple machines. But in 2003, Stollmeyer decided to ditch that and "just run the whole thing from the cloud."

Why?

"First of all," he says, "the businesses that we serve have multiple parties involved… and these people need to be able to access the information simultaneously."

Many customers need information at more than one location, and have people working at home. A web-based approach makes that easier.