FORBES: "Survival of the Fittest"
If it is survival of the fittest in today’s world of Internet startups, then Mitch Thrower, founder of RaceGate.com , and his team of athletic entrepreneurs have more than a running start.
Thrower is fit–so fit, in fact, that last year he finished his sixth Ironman Triathlon, a 2.4-mile swim, followed by a 112-mile bike ride and a marathon run. Cofounder and CFO Scott Kyle is also a triathlete, as is the company’s marketing coordinator, chief technology officer, executive recruiter and graphic designer.
What may truly give this La Jolla, Calif.-based RaceGate team their Darwinian edge, however, is that they were smart enough to recognize and target some 19 million others who are serious enough about their favorite sport to compete.
Calling itself the gateway to the sports you do (as opposed to sports you watch), RaceGate is a web site for runners, swimmers, bikers, surfers, sailors, triathletes–16 groups of enthusiasts so far–who pay fees to join in 310,000 sporting events around the world. Combined, these athletes spend about $15 billion on event registration fees, travel, equipment, clothes and food.
The idea for RaceGate.com emerged from the frustration Thrower and Kyle often experienced when they registered for a race. It was an enormously ridiculous process, says Thrower. To enter, he explains, he would have to go to the back of a magazine to find the event, call the phone number, wait sometimes two or three weeks for an application, mail it in, and hope the race hadn’t sold out. It occurred to him and Kyle that the alternative to this obsolete and cumbersome process was to create a way to register online.
They envision RaceGate as the Ticketmaster for registration and the Moviephone or Yahoo! for event information. Choose your metaphor, but their plan is to make a profit by solving a set of problems for consumers. We couldn’t see how it wouldn’t make money, says Thrower. Neither could Ron Taylor from Enterprise Partners, a venture capital firm in La Jolla, Ca. This spring his firm provided $5 million in the first round of venture capital. Unlike many other business proposals he has seen, Taylor believes RaceGate makes sense for the Internet because it reduces a time-consuming process into a few keyboard strokes, and it services a large, targeted niche of athletes who already spend time online.
Taylor also likes the fact that RaceGate can easily and cost-effectively target its athletes by obtaining the mailing lists of race events around the world. Once they have the customers, he says, there is enormous business potential. People who do this sort of thing are crazy about it. They train. They buy stuff, whether it’s shoes or running gear. So there’s a great opportunity, once you’ve got them online, to sell them things.
The selling possibilities can make you as breathless as an out-of-shape runner on a 5K run. RaceGate is still working out its pricing structure, which will likely start out charging minimal, if any, fees to attract as many people as possible. Theoretically, athletes will eventually pay a fee to register for recreational and competitive events. Race directors will pay to create their RaceGate web pages. Sponsors and product manufacturers will pay to advertise. Sporting goods companies will share revenues for products that sell on the RaceGate site.
In addition, people will be able to buy their airline tickets, rent their cars, and book their hotels with special discounts. Athletes will also be able to purchase premium services, such as the Injury Wizard to troubleshoot their sports injuries, and they’ll be able to create their own homepages to keep a schedule of their races, track their performances, or download photos and video of themselves.
RaceGate.com plans to formally launch its web site this month. So far, it’s been testing its product and aggressively positioning itself to take the lead in the market. In this year’s Bay to Breakers race in San Francisco, the company signed up some 21,000 of the 55,000 registered runners and expects to double that in the next few years.
RaceGate recently purchased its main competition, Enter Online, which has the race registration technology the company plans to adopt, as well as GetSetGo, another online registration company that it acquired for its contacts and client list. In May, RaceGate announced a partnership with Road Runner Sports, a leading catalog retailer of running shoes, apparel and accessories. It also has formed a partnership with Triathlete magazine (where both Thrower and Kyle once held top positions).
"In a way," says Thrower, "founding an Internet business is like running in the Ironman Triathlon, one of them most grueling athletic events in the world. First, you are swimming, surrounded by thousands of other dreamers elbowing to get funded. Then, on your bike, you pedal as fast as you can to launch your business. Once you have established your position in the race or the market, you start on a long, hot 26.2-mile run for revenue and profit. And trust me," Thrower concludes, "the run is always the hardest part.”
Read original article on Forbes.com here.