“The network that you have is so critical in giving you credibility as an entrepreneur.”

Interview by Mike Sullivan

With 25 years of experience in software sales, four of them as the General Manager of KI Software, Al, with his brother, acquired the assets of the company in October of 2004 and founded Motionsoft. Since the initial acquisition of KI, Al has completed five other acquisitions and grown the company to over 70 employees with offices in Baltimore, Maryland, Washington DC, and Tucson, Arizona.

MO:
Can you describe your background and explain what Motionsoft is?

Al:
I’m the President and CEO of Motionsoft. We’re a club management and consumer services, SaaS company that also provides billing and credit card processing services. The company was originally founded in 1983, and I worked for a division of the company for several years. I left in ’99 and almost immediately started to get calls from some of the customers that I had been managing and decided that there was an opportunity in a very segmented market. My brother and I raised a friends and family round, and in 2004, we acquired the assets of the organization and started Motionsoft.

MO:
What was the strategy behind the acquisition of five other providers in your industry?

Al:
We really identified a market. It was a niche market essentially, which is the gym industry, and we saw much a bigger opportunity that was sort of an offshoot of that. So as a core product, we had a gym management and member management application. Within the health and fitness industry itself, there were no fewer than two dozen providers of similar solutions. There were a lot of legacy guys. So if you were a member of a gym and you had some technical expertise back in the ’80s, you put together some sort of a small Access database for that gym to run their business on and became a software company. There were a lot of those guys running around.

We looked at our growth both organically as well as through acquisition; we were able to go out and identify some smaller providers in the space, come up with some pretty creative approaches towards acquiring them where they were able to remain engaged, because obviously, a lot of these cases, these were lifestyle companies. We closed five deals where we acquired assets and customers of other companies, rolled them into our company, and then provided those customers with an upgrade path, because obviously those lifestyle companies didn’t really provide any long-term solution for the customers that they had. But there was a lot of predictability, a lot of recurring revenue, a lot of stickiness that existed in the relationships that they had built with those customers. We saw a lot of value in that, and the entrepreneurs that had founded those companies helped us to convert a lot of their customers over to our SaaS products.

MO:
Who are some of your customers, and what differentiates you in the industry?

Al:
We have about 2,000 customers. The majority of those customers are hospital-based facilities, commercial gyms, public recreation centers, universities, and corporate wellness centers. Then as an offshoot of that, we’ve got several consumer type businesses, and I’ll get into each of them. Initially, the gym business, we’ve always been sort of a leader in the enterprise segment. So we’ve got customers that are as large as the national chains, like Equinox Fitness, Crunch Fitness, Urban Active, and others. Then we’ve got smaller, regional guys that use our applications as well.

External to the health and fitness industry we started to see this gradual migration of businesses that have typically been pay-per-use, thinking about a car wash for example where you would drive up and pay for your wash and then you do it again the next week or the next month, however frequent you might do that, changing their business to what people are calling the subscription economy. There’s a chain of car washes out of Pennsylvania, and what they’re doing is they’re selling a membership-based solution. You pay them a monthly fee for service, and you can take your car in unlimited time for washes. It creates brand loyalty. It creates stickiness. It creates all those things that people want to address the business concerns that you would have around things like cash flow, etc. Those are the types of businesses that didn’t have an integrated payment and CRM solution, and that’s what we bring to them.

MO:
You come from a sales background. What motivated you to start a business?

Al:
I always had sort of an entrepreneurial background. I’d worked in software, but this was really opportunistic. We saw with Motionsoft, again, all of the things that someone would want both from a market as well as a company – great customers, niche market, no solutions, competitors that really didn’t deliver a complete package to otherwise small and medium size businesses. That’s really what enticed my brother and I to go out and make the deal happen initially.

MO:
If you started over today, is there anything you would do differently?

Al:
As an entrepreneur, you end up doing a lot of things with people that are either friends or people that become friends in short order. One of the most difficult things that you face at different points in your organization’s growth, people don’t necessarily fit the position that they originally started in as. That’s not to say that they don’t have other places to fit within the organization. VP of sales is a good example. Your first VP of sales could be a childhood friend that is basically making outbound calls, knocking on doors, and closing deals. Then you end up in a situation where you’ve got several people working for you, and then you go national and then you go international. That evolution, if you will, in our company’s history has required us to have different people. It’s one of the things that I probably made a mistake in terms of decision making has been not making those difficult decisions early enough. At the end of the day, the organization pays for it, because you’ve got the wrong person doing the job. No matter how badly you want them to succeed, they just don’t have the skill set to do it. I would make some of those decisions sooner. That’s one of the things I would change.

MO:
Tell us about being recognized among the “40 Under 40” in the Washington Business Journal.

Al:
When we started to go out to raise funding for Motionsoft back in early 2010, we closed a venture round. I should have mentioned earlier, we closed a venture round in August, $6.2 million venture round. We met a lot of great people. So I credit those people as much as myself for that recognition. The network that you have is so critical in giving you credibility as an entrepreneur. A lot of people don’t like to do the networking events and don’t like to go out to the local, regional, national events that either your industry has from a local perspective. CPAs, lawyers, there are so many different variables to meeting the people who can open doors for you. I credit the funding as well as this particular award to those people as much as anything that I have personally been able to accomplish.