Zero to eight figures
Posted on September 09, 2019 | By Stephen Kimber | 0 Comments
How Travis McDonough built a multi-million-dollar enterprise in just six years
Travis McDonough is the founder and CEO of Kinduct, a Halifax-based but world-leading data and analytics software company. You may not know exactly what that means and you may have never even heard of his company, but you almost certainly know the names of many of the clients who depend on Kinduct to become the best a man—or woman, or team, or ultimately, McDonough hopes, anyone of any gender or orientation or, perhaps especially, health status—can be.
Start with more than 85 professional teams in an alphabet soup of major sports leagues: the NBA, MLB, NHL, NFL, CFL, MLS. All Kinduct clients. Among them, many recent champions in their own worlds like the Boston Red Sox, New England Patriots, Houston Astros, Golden State Warriors and Pittsburgh Penguins. Kinduct clients all. So is the United States Olympic Committee, not to forget Hockey Canada and Canada’s Department of Defence. Did we mention Cancer Care Canada, and Heart and Stroke Canada, and…? Well, you get the picture.
Not bad for a once skinny kid—at 48, he’s still pushing 5’8” tall and weighs just 140 pounds soaking wet—who was also a self-confessed one-time hell-raiser and former serial failure living inside his own “cocktail of savage attention deficit disorder and dyslexia, the child with the dunce cap on in the corner of my classroom, always made to feel stupid.”
Not bad at all.
McDonough is the first to acknowledge he has failed many times. “I have failed academically, as an aspiring athlete, as an entrepreneur and in many relationships,” he admitted to Atlantic Business Magazine last year. But his saving grace, he adds—what has inevitably pushed him on to the next experience—is that “I have failed forward.”
You could say Travis McDonough owes much of his current success at having failed (and then spectacularly succeeded) forward to his oldest daughter, Taylor. That’s not quite the complete story, but it’s the beginning. Bear with me.
The year is 2008. Taylor is four and McDonough and his wife, Margaret, have a major life choice to make. Both transplanted Nova Scotians, they’ve spent the previous decade carving out successful lives for themselves and their three young children in the west of Ireland. Travis, a chiropractor by profession, landed in Ireland in 1998 for what was supposed to be a three-week visit and decided to stay. Within the decade, he owned a string of multidisciplinary health clinics and fitness centres, not to mention one of Europe’s largest custom orthotics suppliers. On the side, he’d even begun to dabble in commercial real estate, a world in which he had little experience but, like many in Ireland at the time, he hoped those investments would turn into yet one more good news story from the rise of the “Celtic Tiger.”
Thanks to state-encouraged economic development and tax policies, an open door to foreign investment, its own well-educated workforce being joined by increasing numbers of women and backed by a successful “social partnership” among government, labour and business, the Irish economy had sprouted and blossomed beginning in the mid-1990s. By the mid-2000s, the country had been transformed from one of Europe’s poor cousins into one of its rich uncles. The future seemed even brighter.
But… Travis and Margaret missed Nova Scotia, their extended families. “We knew we wanted to go home at some point,” Travis allows. Was this that time? “Our oldest daughter was close to starting pre-kindergarten and you know the toothpaste is about to come out of the tube. If that happens, there’s no going back.” They could almost accidentally end up spending the rest of forever in Ireland, not an awful outcome, but still… Or they could return home now so their daughter could begin her schooling and her growing up years in Nova Scotia among family and friends.
Serendipitously, the house next door to the one Travis had grown up in back in south-end Halifax came on the market. His older brother, Justin—also his best friend—had already bought the family home from their mother and was raising his own children there. What if the brothers could live side by side in Halifax with their wives, their families…?
“There are so many signals the universe throws at you,” Travis says now. They sold their businesses and came home.
But there were other signals, he admits now, ominous signals he missed completely. In 2008, in fact, the same year McDonough and his family moved back to Canada, the arse fell out of the Irish economic miracle, thanks in part to a worldwide economic crisis but also thanks to overheating in the Irish economy itself.
McDonough shakes his head. “I can tell you that if we hadn’t left when we did, I’d have been bankrupt for sure. I was so far extended in commercial real estate and different businesses that all went pear-shaped in a short period of time.” He managed to sell just in time. “It literally came down to months. If I hadn’t sold then, I’d have been holding a ridiculous amount of negative equity. Almost three quarters of my friends went bankrupt within eight months of me leaving. You felt like you had blood on your hands for leaving, but also… thank god for getting out in time.”
And not just for getting out. For getting in too.
Partly because of his dyslexia and ADD, McDonough has always found it far easier to learn visually than with traditional text-based methods. While in Ireland, he’d become fascinated with the idea of using 3D animations to explain to patients what was wrong with them. “The average patient retains just seven per cent of the information delivered to them through verbal or text-based explanation,” he notes. So he reached out to an animator he knew in Vancouver, Washington—“a brilliant animator”—and asked him to develop some animations he could use with clients in his Irish clinics.
Back in Canada, he co-founded a medical animation company called 3DRX that used digital media to not only help patients understand their problems visually but also see the movements and exercises they need to do to help them recover.
Although the business “started to get some traction,” McDonough says now, he quickly discovered that—even though his was a small healthcare start-up—his company would be held to the same prohibitively expensive and time-consuming standards for research and layers of accountability as the biggest of Big Pharma. “It was like pissing into the wind.”
Luckily, another opportunity soon opened up. Professional sports teams were discovering the potential power of data—all sorts of measurable data—that could be manipulated and massaged to provide a road map of exercise programs and training routines to improve the performance of their elite athletes. But how to harness all those bits and bytes into useable performance software? McDonough launched a second company, Leader Interactive Technologies, to do just that. “We went from a content company to more of an ingestion platform where we pulled in all kinds of data around the athlete and took the rock out of the shoe for the industry.”
Professional teams liked what McDonough was doing well enough to up the ante. “‘Now that we’ve got all the data in there,’” they told him, “‘we need to be able to visualize all this data so you need to build some type of visualization engine.’ So we built this visualization engine in the platform and then the market spoke again and said, ‘Hey, you need to develop an aggregation tool where we can compare one athlete to their history or to other athletes.’”
By 2013, McDonough had brought together 3DRX and Leader Interactive and corporately rebranded the entire venture as Kinduct Technologies Inc. And the future suddenly became the present. And the present became the future.
Sport, of course, has always been about numbers. But until computerization, statistics were limited and often crude indicators of competitive advantage. In fact, many sports cognoscenti downplayed their importance until Oakland Athletics baseball manager Billy Beane achieved on-field success with a minimalist budget in the early 2000s by employing analytics to evaluate players and make trades. His success—immortalized in Moneyball, a bestselling book and a feature film starring Brad Pitt—changed the game. And the gamers. Theo Epstein, an analytics devotee with no professional playing experience, took the Boston Red Sox and, later, the Chicago Cubs to World Series baseball championships. Nerdy Kyle Dubas became the general manager of hockey’s Toronto Maple Leafs.
Suddenly almost every team—and every sport from hockey to golf—became obsessed with the possibilities of gathering ever more and ever more sophisticated (and sometimes just plain esoteric) data, then parsing it for ever more subtle insights into the impact even small changes—the length of a pre-game sleep, nutrition, training intensity—can have on athletic performance.
Which has been where Kinduct comes in. Kinduct collects multiple streams of data from multiple sources. From its own clients and their elite athletes, of course, but also from the 25,000 fitness trainers who use its software, from the Canadian military, which has 30,000 Kinduct licences, from data beamed into the cloud from wearables like heart-rate monitors, FitBits, Apple Watches, etc., as well as from athletes’ own journals, electronic health records and the like.
But that is just where it all begins.
Travis McDonough… McDonough? That McDonough? Yes, that one. Travis is the younger son of Alexa McDonough, the former leader of both the Nova Scotia and federal New Democratic parties. A socialist giving birth to a successful capitalist, an entrepreneur with enough Atlantic Business Magazine Top 50 CEO honours to qualify for our Hall of Fame, the first CBC Innovator of the Year, an Ernest and Young Entrepreneur of the Year, a Halifax Chamber of Commerce Business Person of the Year?
Yes, all of the above. And more.
It’s not nearly as much of a stretch as you might imagine. Alexa McDonough’s father—Travis’s grandfather—Lloyd Shaw, was one of Nova Scotia’s most prominent industrialists (and also a socialist of national note). Travis’ brother, Justin, is a successful financial planner and prominent community volunteer. Their father, Peter McDonough, is a well-known, now retired corporate lawyer, who still serves as an advisor to Travis at Kinduct.
Growing up, Travis was influenced by all of them. And not always in ways you might imagine. Because his mother was on the road so much in her role as a political leader, it often fell to Peter to tend to the home fires and inculcate good habits in their children. “He took so much pride in removing the dandelions and cutting the grass,” Travis recalls with a laugh. “He’d always have us doing chores. If there wasn’t a chore to do, it was, ‘Oh, go clean up there, you know… the rocks on the road.”
While older brother Justin was the “incrementalist,” Travis was the family “hell-raiser, the major risk taker [who] pushed mom to the brink. I had a long rope and I used it. Drinking, or drugs, or women, I was burning the candle at both ends.”
And yet it was his mother he often turned to when things went south or threatened to. With equally unexpected results. At one point in his early twenties, for example, Travis took up boxing. Despite his slight stature and wispy weight, he became a force to be reckoned with. In 1992 and 1993, he represented Nova Scotia in Canada’s national amateur championships. When a boxing team from the U.S. military visited Halifax for a friendly competition with the locals, Travis was naturally tapped to fight in a match. But his opponent turned out to be a veteran U.S. Army sergeant who already had more than 350 official fights to his name. At the time, Travis had just six.
“I couldn’t sleep because I was so nervous, so I went in to see mom in the middle of the night,” Travis remembers. Here, you should remember his mother’s well-earned reputation as a pacifist and peacemaker. “I was talking with her and she was basically—not in a callous way—saying, ‘You’ve committed to this, you’ve got to do this.’” He pauses. “And what that did to build inner grit and resilience was way more powerful than if she’d said, ‘Oh you’re right, you know, throw in the towel.’ She had this tough-love type of parenting style. She wasn’t going to throw me a life preserver to get out of jail.” He pauses again. “Those are the great builders I still rely on today and those come from a place that it’s hard to figure out.”
But it was that determination, inner confidence and grit—lessons from his parents—that allowed Travis to hop on a plane in 1998, the day after he graduated from the Canadian Memorial Chiropractic College (he had previously earned a BSc in Kinesiology from Dalhousie University in 1994), and head off to Ireland where he didn’t know a single person and didn’t have a clue what he would do, except make his own history beyond the shadow of his famous family.
He did. And then he came home to write some more history.
Today, Travis McDonough is leading me on a whirlwind tour of Kinduct’s head office on the 12th floor of a high-rise office tower that overlooks Halifax Harbour. From the hallway, the office is easy to miss. No big sign or dramatic entrance area, no receptionist even. You buzz to be admitted. “Travis? Just a minute.”
You can quickly tell it is a combination technology-driven and sports-centric company, however, by the office’s “Zen Den” and its staff workout space. There are plenty of open areas too with banks of computer workstations for the company’s 80 employees—and room for more to come. There’s a mostly-occupied section for the company’s software programmers and data magicians, as well as another, significantly less populated one for the sales team. “They’re on the road,” McDonough says simply, doing what sales people do. Perhaps not surprisingly, McDonough himself is his company’s best salesperson and he too “is on the road more than I am at home,” making presentations, offering demos, taking meetings, showing up at various sports combines where young athletes get put through their paces and are measured, usually using technology and data, and put on display for coaches and scouts.
As we walk back to the boardroom past inspiration/exhortation sayings on the walls (everyone from Babe Ruth to Nelson Mandela is represented) I can’t help but note the walls are also covered with the logos of many of the 450 teams and organizations around the globe that are Kinduct clients. No photos please. While many of its clients are publicly known and even show up on Kinduct’s web page, it has more complicated and sometimes secretive relationships with others, who prefer—for competitive reasons—to keep their own connection to the data-advantaging company private. While their logos may show up on a wall for in-house eyes, McDonough explains, they aren’t for public sharing.
You may have noted that, among the many champions I mentioned earlier in this story, in fact, I made no mention of the currently most famous champion of all, the 2019 NBA champion Toronto Raptors. That’s not to say there isn’t a connection. Maple Leaf Sports and Entertainment Ltd.—the parent company of the Raptors, as well as the NHL’s Toronto Maple Leafs, Major League Soccer’s Toronto FC and the Canadian Football League’s Toronto Argonauts—is a Kinduct client. “But…”
You’ll also find very few athletes’ names mentioned in the company’s promotional materials. That’s because—even though individual team members are certainly using and benefiting from the data Kinduct ingests, analyzes and spits back out as recommendations for action—the company must negotiate with various players’ unions and associations to sift through the many and various ways athletes can monetize their own data. Last year, it signed a deal with the NFL Players Association—and Intel—to jointly benefit from their personal performance data.
Imagine being able to track your favourite quarterback’s heart rate and fluid levels in real time, not to forget how well he slept the night before and have a better sense of whether he can really make that Hail Mary pass in the game’s final 15 seconds. Imagine the possibilities for television sportscasters, for fantasy sports, for sports betting, for video gaming, even for “pro versus Joe” comparisons between sometime jogger you and your favourite sports hero?
Wait a minute! Video gaming? Sports betting? Sports data mining is clearly becoming an increasingly complicated, increasingly lucrative business. McDonough calls all this “horizontal expansion” of Kinduct’s business model. And it’s still in its infancy.
Kinduct was still little more than a gleam in Travis McDonough’s eyes when John Risley took an interest. The Halifax-based billionaire industrialist, whose own political views are at the polar opposite end of Travis’s mother, not only became one of Kinduct’s initial investors—he acquired a 15 per cent stake through his family-owned holding company—but he also agreed to step up as a key business advisor, even chairing Kinduct’s board. McDonough says he’s thankful he didn’t have to spend “a ridiculous amount of time” chasing a term sheet—the conditions under which an investor agrees to invest in a start-up—because “we had John.”
Uber-entrepreneur Risley’s investment and the symbol of confidence it represented allowed Kinduct the luxury to grow and develop without worrying overmuch about being immediately profitable.
The problem with traditional sports data management, McDonough explains, had been that the data collected was “siloed, separate, segregated. It’s everywhere except where it should be.” Kinduct’s goal was to bring it all together under one data roof. “What we do,” McDonough tells me, “is three things better than anybody: we collect all the data from the disparate sources, we pull it in and understand it through our [artificial intelligence] engines and then, more importantly, that triggers a fleet of ‘Call-to-Action’ tools, recommendations, programs, interventions essentially,” which athletes and their trainers can then put in place to improve performance, reduce the risk of injury and so on.
Ultimately, it’s what you can do with that data that counts.
“We look for trends and correlations,” McDonough tells me. “When this [basketball] player gets less than this many hours of sleep, their free-throw percentage drops 17 per cent. Or when this person’s workout in the gym is longer than an hour-and-a-half the day before a game, their chances of injury go up 37 per cent.” The more information from more sources, the greater the possibilities of cross-referencing and dot-connecting.
In early July, Kinduct announced its latest, largest contract ever—with Gatorade, the sports drink monolith that owns more than 2,000 sports properties—to measure… well, athletes’ sweat. Gatorade’s own three-year-old Gx platform technology does measure an athlete’s fluid levels before and after a workout, and its athletes wear digital patches during workouts and games to measure which nutrients they’re losing and how much. But its usefulness was limited by the fact the data was collected in a silo. By linking Gatorade’s sweat data with Kinduct’s much more fulsome database, newly developed software can cross-reference and provide more personalized measurements and exercise and nutrition plans. It’s a win for the athletes who get to fine-tune their hydration levels, and a win for Gatorade, which gets access to more information to help it develop ever more specific drinks for specific athletes and sports. And, of course, it’s a win for Kinduct, already a market leader in the field, which gets access to even more data to connect even more dots to improve the performances of even more athletes.
But not just elite athletes. Under the Gatorade deal, Kinduct is also developing a stripped-down version of its software “so every kid who opens up a bottle of Gatorade gets access to a [code and a] rudimentary version of this tool to track hydration, to track some of their data to let the youth athlete and the weekend warrior perform better.”
Growing beyond elite athletes, beyond weekend warriors, beyond sports even, is the direction in which Travis McDonough ultimately wants to lead Kinduct. Sports is just where it begins.
In 2015, Kinduct was among only 10 of 570 wannabe companies—and the only Canadian firm—chosen to participate in the first Los Angeles Dodgers Accelerator program. Co-sponsored by the Dodgers and R/GA, a global advertising agency, the event was designed to showcase companies developing technologies the Dodgers themselves might be able to use.
But it was so much more than that. McDonough and several of his key executives relocated to California for four months just to take full advantage. Those advantages included having a dean’s list of venture capitalists and tech sector players, including Amazon, Nike, Yahoo and Facebook all serving as mentors for the selected companies, who all also got branding and PR advice from the experts at R/GA. Kinduct executives even got face time with senior executives from Google, Apple, Nike, Under Armour and several professional sports teams.
The program culminated with an invitation-only demonstration day during which McDonough got to pitch his company’s wares to industry leaders, other sponsors, investors and media while standing at home plate in Dodger Stadium. It was, admitted McDonough, “very, very neat.”
And it helped open yet more funding doors. In 2016, Kinduct closed a $9-million USD Series A Investment round, led by Intel Capital. Again, Risley was instrumental, helping McDonough navigate as the company negotiated with sophisticated high-end investors like Intel and Elysian Capital Ventures. “I can’t state how beneficial it was to have John Risley inside those negotiations,” McDonough explained at the time.
While Intel’s influx of cash was important, so too were its technology resources: Kinduct collaborated with Intel to develop new athlete management software combining Kinduct’s platform with Intel’s superior technology.
But, like McDonough, Intel also saw beyond Kinduct’s sports present to a sky’s-the-limit future. Wendell Brooks, the president of Intel Capital, made exactly that point as he announced its investment in Kinduct at the 2016 Intel Global Summit in San Diego. “Data is re-inventing the way people approach sports, health and wellness,” he said, adding that the versatility of Kinduct’s offerings will not only produce “data-driven insights into human performance to benefit athletes [and] coaches but also health care providers and patients.”
Wait a minute, Dorothy! We’re not just talking sports anymore. We’re on the yellow-brick road to our data-driven future. Which is where Travis McDonough has wanted to be all along.
McDonough’s ultimate goal is the broader—the broadest—market: the rest of us, often sedentary sorts who could use a little help with our health and our lives. Seventy-five per cent of early deaths in Canada, McDonough points out, are linked to our unhealthy habits and lifestyles and the chronic diseases they often spawn. “The chronic disease prevention and wellness market is the market we’re going after,” adds McDonough, who was, after all, a Doctor of Chiropractic before he became a dean of data. That’s one reason Kinduct has commissioned a variety of health studies, all aimed at showing the benefits of its technology.
He sees a future in which Type 2 diabetic patients (to take just one example) would use Kinduct software to monitor their disease, then tweak their exercise habits and diet to maintain their health equilibrium. The same approach could be used for those with osteoarthritis in the knee, or… “We call it ‘prescriptive digital therapeutics,’” McDonough explains, describing it as a new way to “engage and activate; educate and empower.”
All of which has brought Kinduct Technologies to an interesting but tricky crossroads.
Kinduct is in the “lucky” position of being modestly profitable and can continue to grow organically, focusing primarily on the profitable, athletic side of its business. But there is another option. “Do we swing for the fences and go big? Now that there is a bigger growth story, do we bring in some of the biggest companies in the industry to knock the canvas off the ball?”
While McDonough says the company is hoping to make an official decision on that question before the end of 2019, it is clear which way he is leaning. “I think what we’ve decided to do is go for it.”
But that will raise another difficult Atlantic-Canadian-tech-start-up question. Can Kinduct grow the way McDonough wants it to, and still stay headquartered in the place where it was born and came of age?
As a proud Atlantic Canadian who chose to come home, McDonough would like to say yes. As he told Atlantic Business Magazine last year when he won his latest Top 50 CEO award: “Between the momentum in the tech startup world, to the new accelerators and incubators, our concentration of quality academic institutions, and influential business leaders such as Gerry Pond and John Risley…our future is bright.”
But it still isn’t easy conquering the world—any world—from Atlantic Canada. “We have been very good at creating services-based software [in this region]. We build stuff for other people because we can build it cheap [but] then they take it and pull it into their company outside of this region,” he says.
While Atlantic Canada needs to have more “product specific companies that have exits that spawn new technology companies, and that works its way down, right now we don’t have that… There’s some incredible companies out there in our region,” he acknowledges, “but I do think we’re still three to four years away from having that grassroots backbone that can compete with other regions who are a little bit more advanced in their life cycle…”
Which means? It’s “complicated,” he admits. He pauses, thinks about what he has said. “I wish I could say that it’s easy and you can do it from here. But I’m just being honest with you.”
Atlantic Canada may still be failing forward. Travis McDonough and Kinduct are ready to succeed forward.
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