Local tech giant Mindbody dropped a bombshell on the San Luis Obispo community when it announced it had entered into a deal to be acquired by a San Francisco based private equity firm on Christmas Eve — and then almost immediately went silent about the purchase, with radio static for months.
During that time, one question swirled above the others: Does this mean Mindbody will leave SLO?
If CEO Rick Stollmeyer has his way, San Luis Obispo’s tech wunderkind won’t be moving any time soon. In fact, he says it could grow.
“We’re deeply committed to the community,” he said in an interview with The Tribune on Friday. “I live in the community. The vast majority of our long-term team members, the one’s who have been with the company for more than a decade, are right here in San Luis Obispo and the Central Coast area. We’re not moving.”
Stollmeyer spent part of Friday conducting interviews with Central Coast media outlets, marking the first time he has spoken openly about how Mindbody went from a small tech start-up in his garage to being bought for a whopping $1.9 billion.
To hear him tell it, it was a “pretty wild ride.”
“It came about when our stock took a serious downturn in the third quarter,” he said from a conference room in the company’s massive Tank Farm Road campus. “We had multiple people reach out to us — interested acquirers who said, ‘Look. You can come be part of us and you can have a more stable environment where you can grow the business into a greater future.’”
Between Sept. 20 and Oct 7, 2018, Mindbody’s stock dipped from $41.25 per share to $33, and then continued to steadily decline through December.
Stollmeyer said the company began actively exploring those outside offers during that time, and Vista Equity Partners had the top bid.
San Luis Obispo County residents might know Vista Equity Partners for its purchase of another local business several years ago: the ill-fated Shopatron.
Shopatron, now Kibo, was once one of San Luis Obispo’s up-and-coming tech start ups. The online order management software company made it on to Inc. Magazine’s list of the nation’s 5,000 fastest-growing companies in 2013, and expanded into markets around the world, including Canada and Great Britain.
In 2015, the company announced it would be purchased by Vista Equity Partners and merged with a Petaluma-based firm, MarketLive Inc. At the time, the company had about 160 employees in San Luis Obispo and 10 in England.
Soon after the deal finalized in 2016, several workers were laid off from the San Luis Obispo office in April, followed by another round of layoffs in December as the company consolidated around its new Dallas office.
Locally, many were worried that Mindbody would meet a similar fate.
But Stollmeyer said in the end, Vista’s offer was chosen because of its “unbelievable track record of success in running software companies.”
“One hundred percent of the time, the companies they have bought, when they’ve sold them they been worth more than they bought them for,” he said. “They’ve improved the businesses; they’ve caused them to grow.”
And that’s just what he wants to do.
“Vista believes, as we do, that we have a magnificent future ahead of us,” he said. “This is going to be an even bigger company, and it’s going to grow globally. I hope we’ll have an even bigger employee base on the Central Coast.”
Stollmeyer said the Santa Maria campus, which the company opened in 2016, will definitely grow from the 100 employees it currently has.
The San Luis Obispo campus — with roughly 1,000 employees — is a bit trickier to grow, he said, but not impossible. The biggest constraint there is parking and San Luis Obispo’s road infrastructure, he said, noting that the nearby Tank Farm Road desperately needs to be widened.
There’s also a chance the company could expand to the North County sometime in the future.
“We’re open to it,” he said. “We know there’s space there, we know there is a receptive city that loves business up there, we know the cost of living is a lot lower. Let’s just say we are open to the possibility, but there are no immediate plans.”
Beyond just growing the local employee base, Stollmeyer has his eyes on a larger prize: becoming an international household name.
“We’re building something that has never existed before,” he said. “That’s a marketplace for fitness, beauty and wellness. ... (With that) we are able to connect more people to the services that help them live happier, healthier lives. ”
Stollmeyer said the Vista acquisition will allow the company to make more investments in its products — maybe even acquire more companies — and work toward expanding its reach globally.
“Five years from now? I think we are actively engaging with north of 100 million people,” he said. “Ten years from now? I think it’s a billion people.”
For reference, the company had roughly 11.9 million registered app users in 2018, according to documents on its investor relations page, and about 67,000 business clients.
The company could also go public again in several years, he said, noting that Mindbody’s move to the public markets in 2015 pushed up its brand recognition exponentially, though the company wasn’t yet ready to handle the quick growth.
“It actually makes sense because if we did go public again, we would have just the whole engine running a lot more smoothly,” he said. “It’s been a lot of growing pains going from my garage, to a small local business, to a sort of a regional player, to national, to international. ... It’s not easy. It’s definitely the hardest thing I’ve ever done in my life.”
The struggle has been worth it though, Stollmeyer said — and he plans to keep going.
“I feel very fortunate to have stumbled into my life’s purpose,” he said. “I’ve put my heart and soul into this business, into this company, to providing really great jobs for 2,000 people around the world and 1,100 people on the Central Coast ... I’m deeply committed to the team and deeply committed to the Central Coast.“