As tech executive and entrepreneur Jon Belmonte recalls, back in the late 1990s, if you could move a real world community of like-minded people onto the web, you had yourself an internet company. And if you could get those people to execute transactions online, you might actually have a real business. One of those companies was Active Network, which aimed to deliver Web-based software for all types of event and activity registrations, payment processing, analytics, and tracking to an industry that was, at the time, doing this work mostly by hand.
“Active pioneered a solution that enabled organizations to collect and manage money and data online and in real time,” said Belmonte, co-founder of LeagueLink, which merged with other companies in 2000 to help form Active Network. “This saved organizations time and money, and helped them grow efficiently. The consumer benefits were equally compelling – instant confirmation that your registration or purchase was completed and accepted, transacting from the comfort of your own home, access to real time schedule and availability information, etc…”
Active Network was formed by combining several great startups and a pretty large group of strong entrepreneurs and executives who wanted to attack this big new market opportunity. The first two companies to come together in San Diego were ActiveUSA and Racegate. ActiveUSA, founded by Jim Woodman, was the first company in the space to expand across multiple verticals, including endurance, team sports, and parks and recreation. Racegate, founded by Scott Kyle and Mitch Thrower, focused heavily on endurance sports. There were several other companies that joined the party early on, prior to the company formally becoming Active Network in the early 2000s.
Below we take a deeper dive into how Active Network eventually grew into the world’s largest activity management technology company, and what some of its early San Diego-based players are up to today.
Year Formed: 1999
Platform: Active Network, which began as an online race registration portal, has grown into a SaaS technology platform that provides intelligent and intuitive registration, secure payment processing, and data services to help organizers drive increased participation and revenue while streamlining administration.
Endurance: Active Network first filed to go public in 2004 but withdrew the offering as investors soured on IPOs for young tech startups. The company finally went public in May 2011, raising $127 million.
The Sale: Active Network was acquired by Vista Equity Partners in 2013 for $1.05 billion and is now based in Texas.
Jim Woodman, Co-founder, Active Network
The Scoop: Woodman first founded ActiveUSA in Miami, Fla. As CEO, he raised an initial $5 million in venture capital and another $15.5 million during a 50/50 merger with San Diego-based Racegate.com in November 1999. The two companies became The Active Network and grew to profitability by 2003. But there is much more to it than that, as Woodman explained.
“When I wrote the business plan for ActiveUSA, it was just me as the sole founder and I was required to take out a key man life insurance policy in order to raise venture capital. My original business plan was to build a registration platform for endurance sports, teams and leagues, plus parks and recreation activities. So you can definitely make the argument that I was the only stupid or naive enough founder to think we could do everything. It certainly was not easy.”
Backstory: “As a 24-year-old I started directing triathlons in Texas because I really had no direction or thought as to what I should do with my life. My only experience had been competing in the Hawaii Ironman in February 1982. I first directed the Bud Light USTS race in Austin in 1983 and then went on to create the President’s Triathlon Dallas, which became the largest participation event in the world from 1984 to 1986. By 1986, we had almost 2,400 participants, which would be an enormous event even by today’s standards. As a race director, I quickly learned the inefficiencies of mail-in registrations and all the associated problems with incomplete forms and illegible handwriting. By the time the Internet started getting traction in the mid to late ‘90s, I had been publishing my own sports magazine for nearly 10 years in my native Florida and became fascinated with technology and database-driven websites. After creating a database-driven website for my magazine and its events calendar, I realized the next logical step was to tie registration to the website’s events calendar. I had always been thinking of better ways to do registration since my years as a race director. The Internet made perfect sense and I couldn’t understand why nobody else was doing it or had thought of it.”
And so, Woodman mentioned his idea to triathlon and cycling friend Lance Armstrong, who invested $100,000 in initial seed money in late 1997 about a year after the famous cyclist had been diagnosed with cancer.
“From there, I wrote a business plan and started pitching venture capital firms,” Woodman continued. “Since I had bootstrapped my magazine, Florida Sports Magazine, raising money was a total new experience and I learned a lot talking to attorneys and making the pitches. I raised an initial $5 million for ActiveUSA. Since the company was founded in Miami and I was still running my magazine, I used my magazine employees to start working on Active.”
During that time, Ticketmaster was doing a make or buy analysis for event online registration, and after interviewing a lot of companies, decided to merge ActiveUSA with San Diego-based Racegate. After the 50/50 merger, Woodman moved, with 11 of his employees, to San Diego.
“I agreed to move to San Diego because there was much more of a tech scene in California than Miami, Florida,” he said.
Dot Com Scene: In the late 1990s, the local tech scene and industry was experiencing a lot of excitement and exuberance, especially dot-coms. Woodman described how Active fit into that scene.
“It was an absolutely crazy period. Money was being thrown at dot coms with no business models, and our VCs were telling us to spend more and hire more. I was really troubled by all the money we were spending ($2 million a month), and vividly remember having a phone conversation with one of our VCs and he told me it was ‘a different world’ and I had to shed my old bootstrapping mentality and become ‘the biggest, fastest.’ Once dot coms began to implode in April 2000, these same VCs were telling us to get rid of half our workforce and cut down the spending as much as possible. Instead of the pendulum swinging back to the middle, it went way to the other side. It was, cut expenses with no thought to how the business would grow and survive.”
Survival of the Fittest: Woodman pointed to key acquisitions in 2000-2001 that set the foundation for Active’s survival. The first was a company called RecWare that had client server software for park and recreation activities and transactions.
“Without an existing platform to build online registration, I realized I needed to befriend the owner of RecWare and convince him to buy into our ‘hosted’ software vision and buy into the fact that online registration was the future and he could be part of it,” he said. “This was not easy for me as all he was reading about at the time is how all the dot coms were going out of business. We were not even close to profitable, and I convinced him to take a half stock half cash deal. When Active went public in 2011, the hosted application parks business became a huge part of the story, and the RecWare acquisition set the foundation for us to purchase a major Canadian company called Class Software Solutions in 2004. With RecWare and Class, Active was free to connect millions of park and recreation registrations for online transactions.”
The other acquisition was a company called eteamz that Woodman said ran out of cash but had a tremendous amount of viral growth in the sports team website business. “At the time, it became the Geocities version of sports teams. They were being courted at the time by a company called MyTeam, which had raised $52 million. MyTeam had paid Little League $3 million to be their official provider of website software building tools, yet eteamz, who paid nothing at all, had four times as many teams on its platform. Both Active and MyTeam realized we needed the eteamz platform and its million or more teams. After being turned down by our last offer to purchase eteamz, we had lost the deal and eteamz was going to go to MyTeam for an inflated all stock transaction. The difference was $500,000 in stock value, and the total price they were asking was $11 million in value. We had offered $10.5 million, but I knew the eteamz founders preferred Active. I couldn’t sleep the night we were turned down and came to work the next morning and called either the VCs or lawyers (I can’t remember which as we were negotiating with VCs, lawyers, and founders of eteamz).
Long story short, we stayed at the office very late, until 5 am Saturday, to wrestle the deal away from MyTeam, signed the documents, and by Monday morning, the folks at MyTeam could not believe what had happened. Before September 11, we had an offer from Ticketmaster to buy us for $46 million (we were going to take it), and we had a term sheet from a VC. There was also a distant option to have the VCs from MyTeam invest in Active. After September 11, Ticketmaster’s stock had dropped too much and they said they couldn’t do the deal, and the VC pulled their term sheet. Our only option was the MyTeam investors, and they agreed on a 90/10 deal. Had we not wrestled away the eteamz deal, we would have had no leverage with MyTeam, and Active would have shut down by the end of 2001.”
Fodder: “My most difficult negotiation, however, was talking the owner of the Active.com domain name into selling us the domain name at a time when names were being sold for millions of dollars,” Woodman said.
Instincts: “I learned some hard lessons at Active as I didn’t have the confidence that my instincts were usually right. I deferred to the guys with MBAs from leading business schools and later learned that they really didn’t understand the business from a consumer’s perspective. As an athlete, race director, and sports magazine publisher, this business and its consumers were in my blood. I understood better than anybody how athletes think and what they want. My frustration with the management team led to my finally giving up on my baby and leaving at the end of 2006 and resigning from the board.”
Pathway to Success: After Active, Woodman moved on to other local tech and science-related companies, including Pathway Genomics, where he spent two-and-a-half years, and Premier Nutra Pharma, where he currently serves as VP of Business Development.
“At Premier Nutra Pharma, we are taking over an existing facility in Carlsbad to produce high quality supplements as gummies, soft gel capsules, liquid bottles, and stick packs,” he said. “I’ve always been fascinated by nutrition and performance so this is actually right up my alley. Over the past year, I have learned a lot about manufacturing under GMP and am excited about the the recent passing of the 2018 Hemp Farm Bill and how the FDA will regulate this industry. There is tremendous potential with cannabis – I’ve seen it first hand – and I’ve immersed myself in studying all the pros and cons.”
San Diego Innovation: “I see a lot of innovation and tech activity here and, other than our crazy cost of living, San Diego has a wealth of talented individuals to draw upon,” Woodman said. “Finding great coders is always a challenge these days wherever you are. But it’s great to see how many people are constantly coming up with ideas, writing business plans, and chasing the American dream. Silicon Valley has gone beyond the startup phase as most investors there are looking at mezzanine level investing, while here in San Diego it’s a lot more low key and more conducive to startups in my humble opinion.”
Mitch Thrower, Co-founder, Active Network, and also launched Active Europe Network as Co-founder and CEO.
Thrower is a financier, entrepreneur, author and a 22X Ironman triathlete. After Active, he founded and is currently Chairman of Events.com, an innovative cloud-based event management platform that provides a state-of-the-art, mobile-first SaaS application that enables the full event life-cycle, connecting event organizers and event goers. Thrower also serves as Chairman of The La Jolla Foundation, a 501c3 foundation whose primary initiative is Project Active, which provides funding, mentoring, encouragement and education to areas of world tension, specifically sending sports equipment to children in war zones. Thrower is an active investor and speaker around San Diego.
He was also President and Chief Operating Officer of Triathlete Magazine, the world’s largest triathlon magazine where he also served as Chairman, and served as the Chief Interactive Officer, Strategist & Senior Correspondent for the Competitor Group (CGI), the active lifestyle industry’s leading media and event entertainment company.
Jon Belmonte, Co-founder, LeagueLink, which merged with other companies in 1999 to help form Active Network. He served as Active’s COO from 2000 to 2011, and then CEO in 2013 during the take-private sale to Vista. He has since founded Cursive Labs, Spoutable (sold to Proper Media in 2018) and Cedar Ridge Ventures.
The Active Years: “Active was at the forefront of moving the activity world from offline transactions and communications to the Internet,” Belmonte said. “By removing most of the friction from the transaction process, we felt like we had a meaningful impact on increasing participation rates, and making it easier to lead an active lifestyle (whatever that meant to each consumer). In terms of a business model, Active was a pioneer in combining online utility of transactions and data management with an engaging, interactive online community focused on finding and excelling at your activity of choice. Those are two very different business mindsets – functionality-driven technologists and creative media folks – that came together and scaled a business working hand-in-hand.”
Leading the Way: For Belmonte, a personal highlight of the Active experience was helping support the growth of so many early employees of the company. “Those first several years, our growth was really driven by team members with little or no relevant work experience,” he said. “But they were talented, passionate and resourceful. Many of them went on to become that next generation of functional leaders, general managers, and key contributors at the company; that was incredibly rewarding.”
Dot Com Insanity: “The company generally did a good job staying grounded and rational during the heady dot-com days. No super rock bands at the holiday party, no private jets to Hawaii for the sales team (despite their repeated pleadings). For example, 10 years in, most senior executives still shared hotels rooms when traveling together as a way of saving money (setting the tone for how we treated our money). We certainly spent money, and in hindsight we could have been more efficient with resources at times, but we were pretty responsible relative to the rest of the tech world at that time. I think that was in part due to being located in San Diego, and therefore away from much of the dot-com insanity.”
Growth Spurt: Over the course of 15 years and through a mix of acquisitions and organic growth, Active grew to more than 4,000 employees across 35 offices globally. By 2013, gross revenue was over $450 million, and the company was posting strong positive EBITDA. “During that time, Matt (Landa), Dave (Alberga) and the rest of the exec team did a great job shifting from one of a fast-paced start-up to a more deliberate, process-driven company,” Belmonte said. “The complexity of working across four primary market segments – sports, communities, outdoors, and business – and over 35 subsegments, required that.”
Culture: Belmonte remembers that Active’s culture was really focused around ownership and accountability. “You had a very deep team of people that genuinely wanted to make a big impact on the company’s success. There were so many important contributors over the years – way too many to count. And regardless of level, they all really “owned” their part of the business like it was their own company. That had a huge positive impact on the overall results, and it’s what allowed us to overcome the myriad of challenges we faced. It was also amazing to see how many close friendships formed out of the shared Active experience. As such, you see lots of former Active leaders and team members working together at new companies.”
Fast Forward: As Active’s headquarters relocated to Dallas, Belmonte moved on to other endeavors. Along with Josh Schlesser from Active and four other local entrepreneurs, Belmonte helped found Cursive Labs, a startup studio who’s mission was to apply a rigorous proprietary methodology to creating and scaling several companies at once. “Within a year, one of the companies – Spoutable – distinguished itself, and we all focused on driving its success. After three years, Spoutable was acquired by Proper Media, where Josh and I (and several other Active alumni – Marea Blue, Carson McGrath and Renee Griffith) are helping lead and scale the combined company.”
San Diego Ecosystem: “San Diego is a fantastic place to start and scale a successful tech company with lots of smart, creative, and driven entrepreneurs working on interesting and valuable ideas,” Belmonte said. “There is plenty of strong talent around (hiring managers and internal recruiters in every city complain about the challenge of readily finding great developers; it’s not just San Diego); and the folks within the tech community are generally collegial and supportive. And this past year has proven that there is plenty of quality money being put to work in San Diego, if the team-idea-market-execution equation is strong. For example, PeakSpan Capital – which is based in San Francisco and New York – has led Series A rounds for five very strong tech San Diego companies within the past year. Those guys have figured out San Diego is a great place to spend your time and place your bets.”
Dave Alberga, Active Network’s first CEO led the company for over 12 years, and then as an operating Chairman and board member through the sale to Vista. He is now a board member to San Diego-based companies GovX and Citadel Research, and an investor in San Diego’s Semantic Research and Lennd, as well as Peloton Cycle, Robin Hood Brands, GenG, and Rise Festival.
Prior to joining Active, Alberga was in LA building CitySearch as the COO of city guides. “It was a great entrepreneurial experience working with a deeply talented team,” he said. “When the Active opportunity came along I had been at CitySearch for over three years and I felt like I was ready to take on the challenge of running my own organization.”
Going the Distance: “I arrived in La Jolla thinking my role at Active would be a two-or three-year assignment, at which time the company would be bought and merged into someone larger. Little did I know within a year-and- a-half there would be a near complete collapse of the US financial markets and we would be set on a path of over 11 more years until liquidity for our shareholders.”
The Bubble: “It was certainly easy to raise money at the time (late 1990s/early 2000s),” Alberga said. “Valuations were through the roof, and Wall Street was paying very little attention to the long-term economic viability of many dot com businesses.”
Technology Revolution: “We brought automation to a huge but highly fragmented and underserved Industry sector. The challenge was further exacerbated by the fact that our average customer was small, poorly financed, and often technologically unsophisticated. With that said, we developed systems and a business model that delivered real advantages to our customers. In some ways, we led a technological revolution that lead to scale and growth in a number of sectors that have not seen real growth in years.”
Ecosystem Builder: “Another accomplishment of the company was its development and training of a whole new generation of business leaders who have gone on to both found and run a significant number of businesses in San Diego and beyond since,” Alberga said. “It makes me really proud to see those who were able to achieve success at Active now creating jobs and building interesting businesses. I think it’s a testament to just how well we recruited, and how much we demanded from those who rose within the ranks at Active over the years.”
Personal Best: “Active was a fun but not an easy place to work,” Alberga said. “We grew from zero revenue in 1999 to $.5 billion in 2013, all with a very small average customer size. Growth like that demands a lot from an organization. It breaks both systems and people. Acquisitions added increased complexity. All of this activity required a nimble and hard working team spread across the world to manage. It also created opportunity for anyone looking to advance their career. We tried to build a true meritocracy where responsibility and compensation went to those who proved they could get stuff done while building capable teams. We tried to not let anything else get in the way of that. It was so satisfying to see relatively junior people at the start of the company rise to run $100 million businesses, or large functional groups, because they worked hard and earned it.”
Future Success: After Active, Alberga went on to form or invest in a myriad of other local companies.
“As a private investor, I’ve found the best indicator of future success of a startup to be its leader,” the West Point grad said. “So, I generally stick to investing in those I have worked with and had success with in the past. If you’ve proven yourself to be a great leader with good business sense and drive within one of my previous ventures, or within a company on whose board I have served, you are far more likely to get my help in starting a company than someone I’m not personally experienced with.”
San Diego Attraction: “We found San Diego undergrad programs to be a great source of young, trainable, and motivated talent which could be built into very high functioning teams. One upshot we found of being in San Diego was lower turnover of top performers compared to that experienced by companies in the Bay Area. We also found that the San Diego lifestyle is very attractive to a percentage of people who have gotten experience in the bigger tech centers but are looking to escape the rat race that comes with it.”
Then & Now: “It’s never easy to build a business of real value, not then and not now,” Alberga said. “With that said, I think the maturing of internet related technology, along with the rise of social networks, have made getting a product to market more efficient, and easier and less expensive to reach your target audience. While institutional investment investments are still relatively easy to find, the money is smarter now and more focused on backing experienced company builders with solid ideas than it was in the mid-to- late 90’s.”
Editor’s Note: This is part one in a series about the early pioneers of online race and activity registration, the subsequent companies they went on to create and run, and how they are still “active” in the San Diego tech ecosystem. Read part 2.