How MindBody put San Luis Obispo on the tech map

Long before MindBody became the publicly traded company it is today, CEO and co-founder Rick Stollmeyer had the future of the local tech industry in mind.

From the beginning, Stollmeyer, who started the San Luis Obispo-based software firm out of his garage, said he was focused on being “actively involved in the local tech ecosystem.” He set out to build relationships with Cal Poly department heads and professors, worked closely with administrators to integrate the university more into the community and with the Center for Innovation and Entrepreneurship, which gives Cal Poly students the skills to launch businesses.

Through those early efforts, Stollmeyer was able to identify the best talent and mentor other technology professionals, some of whom would land in leadership positions at other firms or go on to lead their own startups.

“It comes from an altruistic desire to help others succeed, and you start locally with that type of thing,” Stollmeyer said.

In many ways, MindBody has and continues to serve as an example for others in San Luis Obispo County’s burgeoning tech industry of what’s possible outside of major tech hubs such as Silicon Valley.

“Thanks to the technology we all live with today, you don’t have to be in an urban center to run a global company,” Stollmeyer said.

“You can serve people across oceans and choose to live in a place that you really enjoy,” he added. “There are great stories like that in SLO.”

The story of MindBody, which makes online management software that helps owners of beauty, health and wellness businesses to seamlessly schedule appointments, process payments or manage staff, is one that began with an idea to merge technology and the wellness industry.

Founded in 2000, as HardBody Software and then MindBody a year later, Stollmeyer offered businesses desktop software. When he realized that model was not scalable, he shifted gears.

 Rick Stollmeyer is co-founder and CEO of Mindbody, which celebrated the grand opening of its new headquarters in San Luis Obispo in April 2015. David Middlecamp - dmiddlecamp@thetribunenews.com

With the help of co-founder Bob Murphy, MindBody developed a subscription-based business model built around web-based software. In 2005, MindBody Online was released — a cloud-based software as a service business management solution — and soon, the company obtained $1 million in angel financing from Pasadena Angels and Tech Coast Angels. More investment would follow, and in June 2015, MindBody went public on the Nasdaq stock exchange (MB).

The company continues to grow, with 1,316 employees and 10 offices on three continents. More than 55,000 local businesses and 316,000 wellness practitioners in more than 130 countries use its software.

MindBody put SLO on the map

It’s no secret that MindBody is an important asset to the community, say those familiar with the local economy and the tech industry.

“A company this large in this region provides a necessary critical mass to create and sustain high-quality jobs,” said Mike Manchak, president and CEO of the Economic Vitality Corp. of San Luis Obispo County. “The benefits are on many levels, and it is similar to having our region’s own Microsoft, since it is one of the largest e-commerce/tech companies between L.A. and the Bay Area.”

It puts “SLO on the map of a place that is a positive place to do business,” Manchak added. “And enabling employees to benefit from the IPO (initial public offering) and the shares is a great benefit and incentive to get bright minds to be in our region.”

Many of those bright minds may start their own companies and, in turn, create more head-of-household jobs, something the region desperately needs, he said.

Jonathan York, director of Cal Poly’s Center for Innovation and Entrepreneurship, said, “Rick knew right from the start that to grow a big technology company in town, you had to have a place where we grew small companies.”

Stollmeyer, he said, has long been an advocate of the university’s programs — such as the SLO HotHouse — that help young people to pursue their own startup dreams. Many young entrepreneurs worked at MindBody while they were in school.

MindBody has helped to attract more senior talent to the community, York said.

“I’m meeting some amazingly skilled technology people who are living here, but wouldn’t be here but for MindBody,” he said. “They’re putting down roots, and maybe they will start another company one day. It’s a virtuous cycle.”

One company with ties to MindBody is Hathway, a San Luis Obispo-based business that helps companies around the world develop mobile applications, websites and campaigns. In 2012, MindBody hired Hathway to develop MindBody Express, a next-generation mobile app. Hathway worked closely with MindBody to develop the first versions, and eventually, the project was brought in-house.

“Because of their skills, it accelerated the pace of bringing the product to market,” Stollmeyer said.

Key to other companies’ growth

Jesse Dundon, co-founder and CEO of Hathway, said MindBody found out about the company through his wife, Kayla, who used to work at MindBody.

“One thing about Rick and the team at MindBody is that they do care about the SLO community and they do a lot for their employees and also for a lot of local businesses in the area,” said Dundon, who in 2015 was named to Forbes’ 30 Under 30 in marketing and advertising. “Rick was involved in the SLO HotHouse, and he is the one who brought me into the HotHouse. It was at his urging that I would consider that, and it was a good thing.”

Dundon credits MindBody as being “instrumental to its growth.”

“It was a fairly significant engagement (development of the mobile app) that allowed us to make key hires and provide head-of-household jobs,” Dundon said.

Despite being an inspiration to other companies in the area, Dundon also views MindBody as one of several local firms helping to tackle a major barrier to recruitment and retention of top talent: trailing spouses. Often, potential hires may not consider or turn down a job because their spouse or partner cannot find a job.

“We actually have worked and still work with MindBody and other local tech companies that want to recruit someone but their spouse doesn’t have a job,” Dundon said. “We circulate their résumé around. We work collectively as a community.”

Momentum is building in the county’s tech community, Dundon added. He pointed to other notable technology firms with a local presence, including Rosetta and Amazon.

“MindBody, which has gone from a true startup to multiple rounds of venture-capital funding to a company that’s gone public, and that has done it all from SLO, is inspiring and proof that you can do it,” he said.

MindBody’s presence is not unlike some of the other companies, among them Aeromech Engineering, which was purchased by Lockheed Martin, that have “come in and gone big in different ways,” said Joshua Erdman, president of Softec, the Central Coast software and technology association. MindBody is a Softec sponsor.

“These large names get the attention of students,” he said. “There’s a lot more tech here on the Central Coast than what many are aware of. Many are behind the scenes and do not get recognized until some larger companies are recognized by Wall Street.”

MindBody is building awareness of the Central Coast, not only as a technology player, but as the home of other, non-tech businesses.

“In the lobby they have this wall of greenery, and that is there because of a startup (Z Living Systems) that came out of the SLO HotHouse,” Erdman noted.

However, Erdman and others say the growth of a large technology company such as MindBody has not been without its bumps.

To grow, MindBody and some of the larger tech firms — Rosetta, Amazon and Lockheed Martin — have hired significant numbers of employees, and that has meant some smaller employers lost top talent because of the promise of higher salaries.

“It created a kind of vacuum,” he said. “Payrolls will eventually increase, but it will be a growing pain. With the economy and extra money being brought in, that will filter down to some of the smaller businesses, and make it more viable to charge what we need to to be salary-competitive.”

Ty Safreno, CEO and co-founder of San Luis Obispo-based Trust Automation, a specialty manufacturing company, called MindBody a role model to other startups. But he remains skeptical that the efforts of MindBody and other larger companies experiencing rapid growth can be easily replicated.

“They are superstars and everything we need in a region, but we can’t duplicate it because we don’t have the space,” he said.

Safreno said there’s little room for businesses that need larger facilities to expand in the city, and he fears that business growth will falter if nothing is done to improve local infrastructure.

Local infrastructure a key to other firms’ growth

“MindBody was able to build a building, but the rents for many of us that can’t afford high rents put everyone in a bind.”

Michael Codron, community development director for the city of San Luis Obispo, acknowledged that a key issue for some companies could be the cost of land, given the demand for a spot in a popular city such as San Luis Obispo.

But from a regulatory standpoint, the city has plans in place to allow for larger office facilities in the southern part of the city — or near the airport area. Some infrastructure improvements need to be made to roadways, such as widening Tank Farm Road and getting the Prado Road extension done, he said, which will “go along way toward helping people to commute.”

Some businesses are also looking to build new office complexes in the downtown area.

“All of the infrastructure is there,” he said. “It’s just a matter of folks putting proposals forward. Obviously, if there is a lack of available office space right now, people need to be planning long term to get those type of spaces constructed.”

Stollmeyer sees workforce housing as a critical need to recruit and retain millennials, who like to be close to work and to feel connected to other people.

“We can create, over the next five to 10 years, the right amount of density in the city that will have people biking and walking to work,” he said.

Despite these concerns, MindBody is as committed as ever to remaining in the community where it got its start, and being an inspiration to others working diligently to do the same, Stollmeyer said.

“Whether it’s a small startup in the SLO HotHouse or in someone’s kitchen or garage, or a substantial company in SLO now hiring dozens of people, you can have a truly global reach.”

This story was originally published November 16, 2016 at 7:01 PM with the headline "How MindBody put San Luis Obispo on the tech map."