Scattered across the country, Andy Smith and four partners have attracted in nearly three years some 500,000 members to their social website promoting diet and fitness. During that time, DailyBurn has attracted more than a half-million dollars in seed funding and launched two iPhone apps.
Those numbers, and especially those apps, drew the attention of Joey Levin, CEO of Mindspark Interactive Network Inc. in White Plains. Mindspark owns numerous websites that allow users to connect with friends, play games, customize graphics or download electronic greeting cards.
“Kind of blindly, we called Andy to say, ”˜Hey, can we talk?”™” Levin said, during an interview at his office.
Several weeks of talks ended May 20, when Mindspark announced it acquired a majority stake in DailyBurn for an undisclosed sum. The deal ushers Mindspark into the health-fitness realm as well as into the era of mobile content delivery.
“We hadn”™t ever marketed anything in the diet and fitness category and we know there”™s a big opportunity there,” Levin said. “And so, we felt we could bring that strength to DailyBurn.”
Launched in 2007 as Gyminee and renamed last year, DailyBurn has attracted members to free as well as to three paid levels. Members can join fitness forums keyed to such specialties as weight loss, running and even workout music. They can also use the site”™s customized exercise plans, nutrition tracker and detailed meal planner. DailyBurn also provides nutrition information on more than 332,000 food products stores in the site”™s FoodScanner database.
Smith, DailyBurn”™s CEO, told members on the site”™s blog that they can expect more from the site under Mindspark: “You can expect to see new features and overall improvements to the complete suite of DailyBurn products. You can expect more content, more apps, more platforms and more partners. You can expect a better experience and a toolset that will help you reach your health goals even faster.
“You can expect us to be around a long time and continue to be here to motivate you toward a long, healthy life,” Smith added.
Mindspark”™s acquisition of DailyBurn marks Levin”™s first deal since succeeding John Park as CEO back in November. Levin came to Mindspark from its parent company, Barry Diller’s publicly-traded IAC/InterActiveCorp., where he was previously senior vice president for mergers and acquisitions and for finance. That background fueled trade-magazine speculation last fall that Levin’s mission was to grow Mindspark through acquisitions.
“We don”™t have a quota or a specific goal around M&A, but we”™re absolutely looking at things,” Levin said. “To the extent that there are opportunities available, then we’ll absolutely seize them. We”™re growing nicely organically. But if we happen to come across M&A opportunities that fit, where we think there”™s real incremental value, where we think there”™s real synergy, then we”™ll do that.”?Those opportunities, he added, don”™t necessarily have to be fitness or broader lifestyle websites like DailyBurn: “I would say it”™s more that we’re offering users compelling products. It”™s probably more around social than it is around lifestyle. But we look for compelling products that can be fun, or can be interesting, or can be valuable. And this was one of those.”
He said Mindspark”™s interest in DailyBurn was enhanced by its successful launch of two iPhone apps ”“ a mobile FoodScanner accessed by scanning the UPCs of food products; and a free mobile DailyBurn app that tracks exercise, nutrition, and progress toward a user”™s goal weight. Levin cited the apps as “a strong contributor” to the deal.
Going forward, Smith said, “You can certainly expect (DailyBurn) apps on a lot of different mobile platforms, and iPad is certainly under consideration.”?Like DailyBurn, Mindspark is looking to capitalize on the growth of the mobile Internet. Last month, Apple officially listed more than 200,000 applications available at its AppStore ”“ double the 100,000 announced by the company last November. As of May 29, Apple iPhone apps accounted for 97 percent, or 202,889, of the total number of 208,268 apps available through unofficial application seller App Shopper.
That growth is not expected to draw users away from websites of app developers. “You need to have both because you want to be able to drive customers to your company in any way that you can. The app is really a shortcut to a web site,” Mark Stevens, founder and CEO of Internet marketing consultancy MSCO in Rye Brook, said.
Stevens ”“ author of “Your Marketing Sucks” ”“ said companies like Mindspark face a challenge in developing applications for iPhones and other mobile devices. While the first apps consisted of games and fun sites geared to younger users, today there”™s a broader range of users, from kids to seniors, served by apps.
“The big growth will come in the non-cool arena,” Stevens said. “While there will still be apps for things in the cool arena, the basic app that”™s going to be evolving now is taking a pragmatic, more difficult thing to do. They”™re going to prevail over the cool ones.”
Levin first heard about DailyBurn from user and colleague Timothy Allen, Mindspark’s senior vice president of product and marketing. It came as Mindspark, like DailyBurn, was searching for ways to grow.
“We were in the process of exploring different options, and we were raising money to build out our team,” Smith said. “We already had built a good core product, and so we were certainly interested in a partnership thing. This one seemed to match up really good.
“A lot of the people that Mindspark has on staff, we were going to have to hire anyway,” Smith added ”“ namely marketing and business-development professionals who could help him and his colleagues, who are more techies at heart. “Hopefully, it”™s going to help us do the stuff that we wanted to do a lot faster, so that we didn”™t have to hire all this staff.”
Last year, DailyBurn raised $525,000 from FF Angel LLC and a group of angel investors that included StumbleUpon”™s Garrett Camp, “The 4-Hour Workweek” author Tim Ferriss, and WordPress founder Matt Mullenweg. While capital for startups has shriveled with the economy in recent years, Smith said that was not a key factor in selling DailyBurn to Mindspark: “We had VCs ready to do deals. I think it was more that we thought it was the best strategic move.”
Smith will relocate to a new office in the New York area ”“ though it has not been decided if that will be at IAC’s Manhattan headquarters, or at Mindspark”™s White Plains offices at Gateway (1 North Lexington Ave.), where the company bases its 160 employees. Levin expects to increase that number incrementally, with “five to 10” new hires expected to be made quickly, in tech and office roles, and more as the company grows.
Smith”™s colleagues are staying put, though new hires for DailyBurn are expected to join Smith in the New York area. “We have tons of great ideas for better products, more tools, more content ”“ a better DailyBurn, and we needed to expand our team to do so,” he said on the site”™s blog.
DailyBurn”™s brain trust extends to San Francisco, where Mullenweg, Ferriss, and a third adviser, Stew Langille, are based; as well as Huntsville, Ala., where Smith has been based till now; and the Denver area, where Blankenship lives.
That explains how Smith and his brother-in-law ”“ Stephen Blankenship, DailyBurn”™s chief technical officer ”“ could launch the company in the Huntsville incubator BizTech, then a year later make the Class of 2008 at TechStars, a Boulder, Colo., boot camp program for entrepreneurs, which netted the company another $15,000.
The day of the announcement, Ferriss, Blankenship, and Smith could be found in one spot.
“Super excited about the next chapter for @ HYPERLINK “http://twitter.com/dailyburn” dailyburn,” Blankenship tweeted on his Twitter page.
“Congrats to @ HYPERLINK “http://twitter.com/dailyburn” dailyburn!” Ferriss chimed in from his page.
Smith”™s page featured a reply to Ferriss and another supporter: “Excited about things coming!”
Five days later, Smith tweeted a link to a photo of Mindspark’s door, adorned with a paper sign: “Mindspark welcomes DailyBurn.”
“Does this make it official?” Smith added.
