Al Noshirvani - Fitness' Place In The Healthcare Continuum

Hey everybody. Welcome to the Future of Fitness, a top-rated fitness industry podcast for over two years and running. It is 2021, and I am your host, Eric Malzone. I have the absolute pleasure of talking to entrepreneurs, innovators, and cutting-edge technology experts within the fast-paced industries of fitness, wellness, and health sciences. Stop by futurefitness.co to subscribe and learn more. Kids deserve our best. Brand X has dedicated themselves to doing what is best for kids in the youth fitness space for over two decades. Look, all major pediatric organizations agree that youth strength and conditioning and fitness programs must be specifically designed for children and coached by those specifically educated in working with children. This seems like a no-brainer. A successful and sustainable youth program comes from educated coaches who have all the tools to best serve the demographic. Brand X offers unequaled, ongoing support through ever-growing relevant content delivered monthly and mountains of information leveraging their 20 plus years of experience. As the developers of the original Kids Functional Fitness Program and Certification, and recognized as the world's leader in youth fitness, Brand X now offers Plug and Place Systems, a fully integrated and personally guided roadmap to start, build, and sustain a flourishing and profitable youth fitness program. This includes mentorship, education, programming, and a huge resource library, all offered at an affordable monthly price. If you are a coach, boutique gym owner, a school district, or anyone interested in paving a better future for our youth, you've got to check this out. For a limited time, Brand X is waiving the setup fee and offering a VIP discount on plug and play solutions. Visit the BrandXMethod.com slash VIP to get your code today. That is thebrandxmethod.com slash VIP. This episode of the Future of Fitness is presented to you by the FitTech Club, a business network run by the creators of the Fit Tech Summit, Europe's leading conference devoted to fitness and health technology. Look, friends, the fitness industry is changing faster than ever. The intersection of technology with fitness and health is growing bigger and more dynamic by the minute. Gyms are exploding figuratively, and their constituent parts are ending up at home, outdoors, on your wrist, or in entirely new places with brilliantly new concepts. Investors are pumping astronomical amounts of money into the market like we've never seen before. The FitTech Club believes that collaboration is the advantage to these times of change. That's why the club aims to bring thought leaders together to inspire them by making the right contacts at the right time and giving insights to the industry's most relevant and current trends. Here's what Melanie Lauer, CEO of Kettler and TriSports, says about the FitTech Club.

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Pleasure to be with you.

Yeah, it's uh it's a pleasure to have you here. And uh thank you to Sundeep from Scipio.ai for getting us connected and uh and making this this interview happen. And man, I I look at your resume, your history within this industry, and uh you know, there's a million questions I like to ask people like you because you've seen so much and you've been you know at the forefront of developing a lot of things that we take as I guess normal or for granted in the industry, like good CRMs and things like that, right? Uh so there's a lot of different directions, and I'm sure we'll get into some really good stuff. And I think just to get the audience uh familiar, like give us give us your background. How'd you get to be where you are and being a board member advisor and part of the fitness tech summit, all those things?

Sure, yeah, happy to. Um so um my my career in the fitness industry started uh around 2000 um when I went to go work for a company called KI Software, um, which uh had been founded by a gentleman by the name of Bob Carch, who um I think is still the director of exercise kinesiology at American University here in Washington, D.C., where I am. Um Bob sold his company and I went to go work for the for the for the person who acquired it. After several years, um, you know, I finished my MBA and I decided I was just gonna go off and do my own thing. Um and many of my customers started to call me and asked me if I would sort of be a middleman between them and the and my former company. And over time, the the CEO of that company came to me and said, you know, that he was interested in potentially divesting that asset. And uh and in 2004, October of 2004, me, my brother, a developer, and a support guy, and four buckets, uh, five-gallon Home Depot buckets started Motion Soft. Uh, the five-gallon Home Depot buckets were our were our chairs. And and um we um grew the company, um, raised about $60 million of venture debt and equip and equity. Um, and then in 2020, uh, we ultimately sold the asset, uh, sold MotionSoft to Daxco, which is one of the leading providers of club management, billing, and CRM systems in the in the fitness industry today. They've acquired a lot of companies over the years. Um, you know, during that time, you're right, I saw a lot. We were involved in building the first true single instance multi-tenant SaaS software as a service product in the industry. We signed up some amazing customers, um, which I think were the primary reason why um you know we became so good. Um, customers like Equinox, which when we signed them up had four locations, and the day we sold had 104 locations, I think. Uh Gold's Gym International, Crunch Fitness, um uh Steve Nash Clubs, now Fitness World. Uh the list goes on, Wisconsin Athletic Clubs, Mayo Clinic, uh Akron General, Cleveland Clinic. We were we were in all of the segments of the of the fitness industry. And um I think I think the people that I met along the way um were really the people that made Motion Soft what it ultimately became. So today, after selling the company, I continue to do some work for Daxco uh in a transitional transitional capacity. But the majority of my time is spent, as you suggested, um working on boards and as an advisor to companies like like Scipio.ai, which is an amazing company, um, as well as uh doing consulting work. So I sort of went to the other side of the fence. Um a lot of the club operators who you know realize that I may have some of the some of the uh secret sauce of what what gym management software companies do from a pricing and packaging perspective, uh I now work with to help them evaluate their technology roadmaps.

I guess the first question I have is that uh you're you you have an MBA and in 2004 you decided I'm gonna look at the fitness industry, right? That was rare. Like no one really looked at the fitness industry, nonetheless, as really an industry that was lucrative and profitable and you know worthy of time when there's so many other industries that were so much bigger and well established as far as market size. So walk me through that decision. What made you guys decide to focus on this industry?

So when I finished my MBA, I actually had no interest in staying in the fitness industry, quite frankly. But the only people who were calling me were fitness industry people. So I guess at the time it wasn't necessarily by choice that it played out that way, but I think ultimately it was good for me. It was good for my family, good for our shareholders, our investors, etc. Um, but that's that's really how that all came to be. I I wanted to start a you know a beltway banded body shop and provide services to the federal government once I once I finished school. Uh uh, but uh I guess you know, the world had different plans for me.

Yeah, interesting. And maybe you could fill for people who haven't got to that level of advisoring and board member, like as a board member, what do you do? Like I always look at like boards, I'm like, you know, this is mysterious like people who sit in these chairs and they they talk about you know the total direction, but what do you guys do as board members? What does that activity involve?

You know, I I always uh I've been asked this question before, and I think that what we shouldn't be doing is talking about what already happened. What we should be doing is talking about what you know the direction that a company wants to go. Now, you know, I obviously have a lot of contacts in this industry after being in it for so many years, and so um I'll oftentimes be asked to leverage my contact list or my Rolodex, if you will, for companies that I'm doing work for, um, focus on strategy, product development, roadmaps, packaging, pricing, those types of things. And, you know, boards and board members bring different expertise to a company's uh um uh as directors. Uh and one of them, uh, you know, some someone like me could be very industry folks. So I've been on boards, for example, where um, you know, I'm sort of the industry person, but then the former CFO of Assurion, the cell phone uh insurance company, uh, is um is on the board as well. And so his expertise is you know, proformas and financial statements and valuations and um tax and audit and all those types of things. So you know, different board members bring different uh different things to the table. And really at the end of the day, we're really supposed to be a sounding board to um to CEOs uh and and CFOs. You know, a lot of times um you know, boards tend to get overly involved in this in the direction uh in the operating direction of the company, and that's it's either in my view, it's it it happens for for two reasons. One, you've got you've got board members that don't know what they're doing, or you've got a company that's just headed in the right, wrong direction, and and the board needs to get more involved in the day-to-day operations. And so, you know, again, the the in my view, the the real, the best boards are the ones that can just you know provide you with strategic advice as opposed to operating advice.

How are board members generally incentivized? Is it in in general, right? Is it like equity? Is it uh you know, uh salary payment? Well, how does that work?

Um it's not often salary. Um, you know, typically what you would do is you would have an option plan for board directors and they would participate in an upside if there was some sort of a transaction. Sometimes um as as you go into public boards and public companies, they would there would be sort of an annual stipend or travel budget or travel allowance and things like that. But for you know, for startup companies, um, which are the ones that I I like to participate on, um I'm on some bigger boards and they're a little bit more complicated to navigate. But for startup companies, it's typically, well, first of all, for advisory boards, it's just your time and you know you're you're doing it with the hopes that this company makes it and you you know ultimately may be able to participate. By the way, sometimes as an operating uh in an operating role, uh, but for most companies it's equity.

And now, I mean, as we've seen so much advancement and especially in the technology side, which I love to get your feedback on, because I know you're heavily uh not well invested, I'm sure, but your time is heavily spent in in the fitness tech area. Uh but now we're starting to see more MBAs, more tech people paying a lot of attention to the fitness industry. Um how does that how does that make you feel to see that happening now 17 years later after you committed you know in a similar role to the fitness industry? What does that look like to you now?

Yeah, I th I think it's great. Um, you know, the the fitness industry has really evolved. And you know, one of the things that I think um is really interesting about it is that, you know, we were one of the first industries that got into the recurring business recurring payments business. And recurring payment business businesses that have sort of fixed operating um uh expenses and the ability to continue to grow on a recurring basis are really well liked by private equity funds and by venture capital funds. And so, you know, thinking about this, there's two parts to it, right? There's the the there's the club operator part, and there's been tremendous amounts, huge amounts of dollars that have been poured into it from private equity. And of course, this year in particular, we've seen um IPOs from F45, from Exponential, um, from several companies. Lifetime just announced, or there was a there was an article that came out that they may go be going back public. Um, so I think there's a there's the there's a general interest in the fitness industry. Um so that it's been it's been great to see that. On the technology side, um you know back in the 80s when the fitness industry started, people were doing paid-in-full memberships back in the Bally Fitness days, right? You know, lifetime memberships even. And um it was much easier to be able to support those types of um operating models with pen and paper. Today, things have gotten much more complicated. Um, people want to be communicated with differently. Back in the 80s, it was still literally sending mail to their homes. So now you've got everything from text messages to uh to emails to social media communication. The list just goes on and on and on. And there are lots of opportunities for companies that have innovative solutions to come into the fitness industry and really move the needle on these businesses and grow that top line. And whether you're saving members or allowing uh gyms to sell more memberships, whatever you do is flowing to that bottom line because of the fixed cost nature of these businesses. And so um there's the the point solutions that exist today that weren't around when I started Motion Soft are amazing. Everything from loyalty to customer relationship management, lead management to member engagement. Um they're just some amazing tools, and all of them have good ROI, which in turn draws interest from outside investors that want to come into this space. And I think the final, uh, the final piece of it is, you know, these companies, for example, that I mentioned earlier that are going public, there are lots of variables that are contributing to these companies going public outside of like you can say this is a gym and it's growing and they've got a nice top uh bottom line, et cetera, just from a revenue perspective. But you also have to think that the public markets aren't thinking about this just as gyms. They're looking at the Pelotons of the world that have been very successful and the mirrors and the tonals and all those. And they're looking at the fitness industry and they're looking at this convergence that's happening between health club and healthcare, uh, saying, you know what, there's something there. It's going to come. I mean, look at Gym Pass, for example. They've they've they've uh raised hundreds of millions of dollars from SoftBank. You know, why is that happening? Um, and it's happening because there are so many um adjacent uh or tangential um benefits to fitness that are just now being realized outside of just going to the gym and working out and pumping iron, which was the case back in the 80s.

Yeah, yeah, I I love that trend too, and it's really exciting. And I think one of the things that's it's always it's been a question since I've been in the industry is you know, we we tend to, as club owners, gym owners, coaches, trainers, we tend to kind of fight is an aggressive word, but I'll use it anyway. I kind of fight over the same 15 to 20 percent of the population that are kind of actively engaged in fitness, right? When you look at um the technology aspects that we have now and the ability to communicate better uh with people and and members and um, you know, just general population, what where do you see the opportunities for that 15 to 20 percent that are actively engaged to grow to the other people who aren't really being served yet?

Yeah, I mean digital transformation is where is the answer to that question. Like as we uh as this concept of hybrid fitness continues to develop, hybrid meaning we can be in the club or at your house, I think that's where the opportunity is, and that's where things will continue to evolve and develop. You know, one of the really interesting things about the fitness industry, and one of the reasons why we have succeeded, is that 15 to 20 percent, which you mentioned, have created a community of fitness enthusiasts. And that community is really powerful at the local level. And sure, we have churn and all that sort of stuff, but fundamentally speaking, it's a powerful community. And that's what Peloton and Tonal and Mirror have been able to recreate in the digital world. You know, it's not just the elliptical machine or the treadmill that sits in your bedroom and ultimately becomes a clothes rack. You know, these guys have created two-way communication, they've created um um gamification, they've created incentives for members or incentive, you know, the the ability for their customers, rather not members, but their customers to to um get incentivized or or uh uh I'm a I'm losing the word, but um on a for example, with Peloton, every month you get an email that gives you a summary of everything that you did uh in the previous month. And that sort of keeps you engaged. Engagement is what I was thinking of. Um and so I think that the fitness industry has the ability to do that not just in a virtual environment, but also in a brick and mortar environment. And I think that's so much more powerful because at the end of the day, you know, I'm sure many people have said this to you on uh on your podcast, but we're sort of social creatures, and yeah, great, we can definitely sit inside of um inside of our bedrooms and ride a bike and get yelled at by a monitor. Uh, but I think we get enough of that. And so um every once in a while we want to crawl out of our caves and go into the into the sweaty group X room with all of our friends and go get a drink afterwards. Um, and I think that part of the community is a part that is going to be further strengthened, quite frankly, by hybrid fitness and digital transformation. Yeah, yeah, that's crazy here.

I you know, they're with the huge push forward of the connected fitness movement. You know, I I often I've had a lot of people who are coming out with an ex Peloton of XYZ, right? Um and I think they all have a chance at being successful. I think the market's obviously big enough, but ultimately, like. It's not that besides Peloton, if you take Peloton out and you look at some of the other bigger players, there's not a whole lot of devices that have been sold yet. Like the market's still there. I mean, investors are coming in, they see the potential. So you're seeing these massive numbers of um you know private equity coming in. But we're I mean, when you look at the size of the market now for like this connected fitness side of things, how much bigger do you think it can get?

Well, look, I I think there's a there's a lot of opportunity to grow that. I mean, I I agree. I think we're just at the you know, sort of at the uh uh at the beginnings of this. Um, particularly if you start to think about some of the things that are going to come down the pike around uh prescriptive exercise, which is starting to get a foothold, um, the correlation between mental health and exercise and the opportunities that digital fitness and connected fitness will afford people that are that want to take advantage of that. So I think we're just at the beginning. I mean, I I wouldn't even venture to to to take a guess at at the uh at the percentage of growth that we'll see, but it's it's substantial.

Yeah, yeah, fascinating. So one of the things that we are discussing pre-recording was that one of the noticings you've had over the last you know 18 months is that uh you know collaboration amongst operators, which maybe not was not really prevalent prior to that. And you know, I look at myself as a you know back when I was a boutique gym owner and everybody was competition, right? It was just always competition. Um and I don't think that was a good place to be look a good way to be looking at things back then. I would have, you know, Eric 2021 would have told Eric 2015 to have a much different mindset, but that's the way it was. Um so are you starting to notice, you know, from a macro level that that that has changed?

Yeah, for sure. And I think you see it at Ursa, you see it at the state alliances that have been that have come around over the course of the last 18 months. Look, you know, there there are many reasons why fitness, which inherently everyone knows is good for you, and no one argues is bad for you, is not classified as an essential business. Right? And so um part of it comes from our inability, our historic inability to collaborate with each other, to try and effectuate change at the local government level and even at the at the at the uh um at the federal government level. Forget about the you know the international fitness market, that's a whole nother sort of can of worms. Um but I think that you know one of the things that happened for me uh at the beginning of COVID, I I remember on March 15th of 2020, leading up to that date, or about a week before that date, I got a call from Francesca Schuler, who was the pre the CEO of um of InShape Health Club. She now runs the California State uh Fitness Alliance. And you know, she said it would be a really great idea if we could get a bunch of our colleagues, as we we started to see sort of uh COVID come into the country. Let's get a bunch of colleagues uh on the phone and sort of share practices. How are we dealing with membership? Are we freezing? Are we canceling? What's our what are our policies? Let's get some best practices and see what results people are seeing. And we have continued, we continue to do that call for literally a year, almost a year and three months from March of 2020, every single Tuesday at noon Eastern time. What started out with seven folks on a call uh today is 96 CEOs, CFOs that get together on a call every Tuesday and just talk about policy, talk about pricing. Um, you know, we it's it's been amazing. And you know, I I look at one city in particular, um, so Chicago, on this call are Gail Landers, who's the CEO of the Fitness Formula Clubs, John Brady, who's the chief operating officer of um of uh uh the Midtown Clubs, Bernie LeCock, who's got the River North clubs, Mel Kleist, who's the now the now the CEO of the East Bank Club. These guys are fierce competitors. Yet they're talking to each other about what they were doing during closure and what they were doing with regard to member communication, what was their policy about freeze? And ultimately, the industry is better for it. And they can still compete on a day-to-day basis. Um, and no one's giving away, you know, what their next top class is that they're gonna they're gonna be uh uh going going to market with, but they're talking about policies to retain, grow, engage members more effectively. And I think that, you know, the fact that this call now has so many people on it, and not everyone comes every week, of course, um, is just testament to the fact that people realize that if we're gonna make change at the government level, local, state, federal, etc., we're gonna have to work together to effectuate the change. And I was really excited this past Tuesday, um two days ago, uh, we had Liz Clark, who's the new CEO of URSA, uh, join us and talk about her efforts. And I think Ursa has also grown. I'll just end this, and end with this, uh, and from a collaboration to address the question of collaboration which you asked. I think URSA has also grown. They've brought in a phenomenal leader who has lobbying experience and has unification experience to bring people together. Um, this is a person who was able to make, she came from the National Confectioners Association, basically the candy lobby. And she was able to convince people that the candy lobby was an essential business during COVID. And what did that mean? They were eligible for PPP funds if they had more than greater than 500 employees. We weren't. So you gotta sit back and say, what the hell happened? And why is that the case? Well, what she did is she basically argued that candy is food and food is essential, and thereby candy is essential. Now, why couldn't we have said that fitness is health and health is essential, and so fitness is essential. We didn't take that approach. By the way, one of the first things that she did at her uh in her new position, Liz Clark is her name, I think I mentioned that. She was able to go back to SBA and change the rules on PPP. And so today, um, organizations that have less than five or more uh less than more than 500 members in the fitness industry are now eligible for PPP funding. So, you know, it's it's it's these conversations that are going to further the industry, and we all have to be participants in them.

And I I've talked to so many people, and a lot of people agree who you know are leaders in their own right of their own sectors in the industry, is that uh you know, bridging the gap between fitness and health, right? And having fitness become kind of the uh the first stage in in health management for our population, our communities. You know, when you start to think about that concept, walk me down the road of like, what does that look like? What is that, what needs to happen for fitness to become more health oriented and and be treated in in such a way? Because I think there's a lot of you know, from the the personal trainer all the way up, love to be more in the health conversation, be seen as a higher profile profession in general.

Yeah, look, it starts the day that someone sets foot in the health club, right? We have a standard approach of onboarding members for the most part. There are certainly clubs that do it better than others. So I'll give you an example. You know, we there's a gentleman by the name of Paul Bedford. I don't know if you know Paul. He runs uh, you know, Paul, yeah, he's uh he's with retention guru, he's done a lot of retention studies. And I actually open, I actually happen to own three gyms as well. So all of I'm not just uh uh you know a technologist in the fitness industry, I'm also uh a person who likes to figure out how I can make my own gym succeed. And um I remember Paul talked, spoke at one point at one of one at an event, and he was saying uh that you know a person comes and joins, and we have a standard approach to onboarding, and everyone is treated the same way. And if you check in three times a week for the first month of membership, then your chances of you know joining or staying, not a trading, not not quitting, are exponentially greater than if you just show up. And and what he was basically alluding to is that you really need to have an onboarding process that is specific to the goals and to the persona that you're you're selling to. And so if I'm a morbidly obese person who joins a gym and have never been a member before, there's a significant difference in how I succeed than the way that a college athlete who's a 25-year-old college athlete who just graduated from school comes to a gym and joins, right? That person, he knows how he or she knows how to use the gym, they know how to use the equipment. Meanwhile, the person who's been sitting on their couch for 25 years, who is in their 50s, 60s, et cetera, who comes to a gym and joins, they're sort of left to their own devices. And all we keep saying is come back, come back, come back. Well, we all know what happens. The first day that you show up to the gym, you go in there, you start pumping the iron, you start uh running on the treadmills, and guess how you feel the next day? Like, I'm not going back. It hurt. And so I think that we need to, in order to sort of continue to make this change, we need to um be much more thoughtful about the way that we onboard people and the product that we sell people. I uh and I always tell people the you know, you could walk into your doctor's office and a gym, and and the the complexity of the products that are at a gym are are much more complex than that which you would find in a in a doctor's office, right? And and they're left to their own devices to try and figure it out. Well, guess what? They're gonna fail. Uh, and so you know, I think that as we start to figure out, you know, how to bring these two elements, healthcare and health club, together, we're gonna have to figure out how we uh treat our customers, how we treat our members, how we empower them to succeed. Right now, we're really, really good salespeople, but we're not really, really good customer success managers.

And if you if you look at the industry, maybe you could you know give us some guidelines on maybe one or two organizations that seem to be doing this really well, like really kind of leading the way in this uh customer success management. I like that.

Yeah, so um the folks over at the Atlantic Club, uh, which is a large um single-side facility, 50, 60 acres, tennis, it's a full service club spa, uh uh camps, you name it, it's a family-oriented club, have a section of their club, for example, that is um uh specific to seniors. And there it's always staff, the flow, there's always someone on there that people can ask questions of. So that there, there's an example of one. On a bigger scale, if you look at Equinox and some of the work that they're doing around movement and the communications that they have with their members around uh around movement and sleep and rejuvenation, um, those are the types of things that I think set them apart. They are um uh they're they're very invested in delivering content that positively impacts the fit people's fitness journeys. Um, and those are two very different organizations.

So I definitely want to get in and make sure that we have enough time to talk about technology uh because that's you know something that I'm passionate about. It's really why I started this podcast four years ago. It was so interesting to me that technology really was starting to hit back in 2017, was starting to hit the industry. Um and now it's way in the front, right? Um let's start with this. Tell us about the event you have coming up in November, and then we'll kind of backtrack from there.

So, you know, we start I I started the Fitness Technology Summit. It used to be called the Motion Soft Technology Summit back uh nine years ago. Uh so uh 20 what was that, 2010 uh or something like that, 2011. I can't do that. 2012. 2012, thank you. 2012. And it was really an opportunity to get um technology executives in the fitness industry to sit around the table together and exchange ideas, just sort of on the theme of collaboration that we were talking about a moment ago. Um there was not a platform or a place where these folks, who by the way, were not as competitive operationally with each other as the CEOs would be, but there wasn't a place for them to sit down and talk about what works, what doesn't work. And it wasn't about MotionSoft specifically at the time. We invited everyone's customers to come to this event. And one of the things that was really important to me is that we maintain um a very objective um approach towards putting this event on. And so I was particularly proud of the fact that we would hold this event and never once show a screen from MotionSoft products. It was really about idea sharing, panel presentations, networking, education sessions. And that's continued. And I was particularly pleased that when Daxco acquired us and they asked me to just continue to run the event for them, uh, that they um that they they sort of stood by that and they they had no intention of changing it. Now, look, the the the other side of the coin is when you're a thought leader in the industry, by by virtue of being the thought leader, you're generating business for yourself, and that certainly happened. Uh, but um uh we we've maintained this sort of objective position in this event through the years. So this year, as you mentioned, um it's uh it's in in the fall, November 3rd through 5th. It's live in Washington, D.C. Uh the website is fitnestechnologiesummit.com. Uh, and you can go on there and buy tickets. Although at this point I think we're actually sold out as of yesterday. I didn't check the number this morning. Um and uh I'm sure I could get you a ticket, Eric, if you want to come. But um, absolutely. Uh and um uh it's just a it's just a phenomenal event. It's it's it's what there's a couple of things that really stand out to me. I remember that first event was up in New York City. We've done it in Washington, Baltimore, New York, uh primarily in Washington, just because that's where Motion Soft was and we could staff it as it grew. Um, but our first event with in New York City was um uh 35 guys in a room. And uh last year we ran the event virtually and we had um almost an even number of men and women in the fitness industry. These are all C-suite executives, which was great to see, um, especially on the technology side, because that doesn't necessarily happen. Um and some and this year, some really large organizations in the fitness industry, by the way, have brought in, I know we're not you're not talking about women in particular here. Um maybe we'll get to that at some point or for per perhaps for on another podcast, but um, this year, three of the largest organizations in the fitness industry have brought in women to uh hold leadership positions in their organizations. Uh Planet Fitness has done it, uh 24 Hour Fitness has done it, Blink Fitness has done it, um uh uh Exos, obviously, Sarah Rob O'Higgin, who was formerly with Equinox, is there, uh Core Power Yoga has done it. So it's just been it's been great to see the uh the industry evolve, not just on the technology side, but also on the diversity uh side.

It's interesting too. I just had Julian Barnes on this show who uh from Boutique Fitness Solutions, and we were talking about the boutique market, is I didn't realize how heavily weighted it is uh with female operators. It's overwhelmingly that percentage is overwhelmingly female of owners and operators in that field. I think it's great, man. I I you know the um when I think of like we were talking about when I think of like the old school club operators, I just think of that. I think about you know, guys who own 10, 12 clubs, you know, maybe they're smoking cigars and kind of hanging out. And uh, you know, but that's that's no longer the case. It's it's really diverse and it's not just you know uh you know female, but it's it's it's the whole it's a whole enchilada man, it's it's a really good thing to see. Um sticky on the uh the tech side of things, I'm curious when you just to so we can kind of talk about it broadly and then we can you know kind of filter down, but when you look at the categories of fitness technology, what are some of the bigger categories as you start to organize the thoughts in the in that particular topic?

Yeah, so I think member engagement as a category. So this concept of uh surveys and loyalty and providing getting feedback from members or or incentivizing members to behave a certain way. I think that's one category. Um uh or what what some people call member sentiment analysis. That's a big piece. Clearly, um club management is a big piece. Um, and I think club, the other thing I think is really interesting, and it's oftentimes associated with club management. I think payments is a big piece, and I think it's a it's uh it's the next phase of uh technology opportunity in the fitness phase. You know, payments in this industry has always been about ACH and credit card merchant services. Um, but today there are so many things that we can do to enable transactions more effectively. I think it's a really exciting uh space to be in, generally, payments, but I think payments and fitness can really move the needle. Um, you know, things like digital wallets and crypto and blockchain and these types of technologies are uh just beginning, just beginning in some of the larger organizations uh to get a foothold, uh or actually just to crack open the door and get in. Um so I think there's a lot of opportunity there. So I'm excited about payments and what it can do. Quite frankly, I also think payment um uh intelligence, right? And intelligence is probably AI is behavioral analytics, is probably another category, by the way. But I think payment intelligence is really interesting. Like when is a person most likely to have money in their account? Um, how often should I be billing a particular member to ensure maximum collections? There's a there's a lot of intelligence around that that I think are interesting. Um and then the final thing, and perhaps it's not a category into itself, but you know, the the extensibility of applications and the interoperability of of products amongst each other, um, I think is an area that's worth exploring. You know, one of the challenges that operators in the US have is if you walk into a facility, for the most part, you get a hodgepodge of different uh pieces of equipment, um, and there's no ability for you to sort of um monitor your performance if you use all of them. And so being able to aggregate data uh is uh is an area that's uh hugely interesting to me because I think that data can be leveraged uh in other ways. Um in terms of other categories, obviously wearables. You know, wearables are huge. Uh and uh to some extent they talk to the the the interop interoperability of the products that are on the gym floor uh because they're they're most often the glue that sticks them together.

Yeah, I mean, as of today's recording being the 16th of September in 2021, it was just uh Whoop just got uh valuated at 3.6 billion with a B. That's great. I that I found that shocking. Yeah, um, you know, just given four years ago we were in, you know, I've I I've been in the wearable, I've been interested in wearables forever. I'm looking around, people can't see it, but I I have like a literally a box of wearables that I've been collecting over the years and you know, haven't used most of them in a long time. But um when you look at that, I mean what where do you see the opportunities in wearables? I mean, there's so much everybody's going after consumers. I know, you know, at Morpheus, we're going B2B to C, right? I think there's a huge opportunity there. Um but what what gets you, I guess, excited about wearables? Where do you see the future of it? I mean, connected fitness, uh, the the Internet of Things, like, you know, where where are the opportunities? What's your grand vision for it?

Look, I I think that I'll I'll I'll use a much more practical sort of uh business case. That's a B2B business case. Well, it's a B2C to be business case, which is that, you know, I would love to be able to use wearable data to work on um the design of my club inside of my facility. And so if you could take um uh the the data from wearable devices and look at where people are congregating, you can use that information and then heat map your club based on that usage. You could you could you could actually use that data to determine where a new piece of equipment is gonna be, right? Because you want to put that new piece of equipment that you're trying to highlight um in a spot. And so uh this is not different than what um uh what the grocery industry has done for years, right? If you're at the at the at the front of the aisle, right, I can't remember what they call it, it's got a name, but the you know, yeah, it's gonna escape both of us at the moment, but we'll it'll go it'll hit us both in a minute. Um but if you're if you're in the front of that aisle or if you're if you're you're at the top in the eye level shelf versus the bottom of the uh bottom of the shelves, um, you know, you uh obviously you're gonna get noticed. NCAP, NCAP. That's what it is. The NCAP. So I think that, you know, that's a type and and it it's obvious there because that's the first thing you see when you're walking in. But in the gyms, it's not like that, right? And you oftentimes can't take that piece of equipment and put it next to the front desk because front desk could be on another floor that doesn't have act, you know, uh doesn't have space for equipment. So I think that there's a there's a simple use case that people aren't even thinking about uh as it relates to wearables. The other thing is that you know, we inside of traditional gyms, not necessarily um boutiques and fitness uh where you are using schedulers and thing, automated technology-based scheduling systems, you could use wearables to start to track commission payments to your staff, to track um uh attendance and uh capacity limits inside of the inside of studios. So there's a lot of really cool things that gym operators can do with wearables. Um crunch has done some really cool things with Apple and their partnership, where you can essentially get an Apple Watch and then finance it through your membership. So they just there's a lot going on and they use that to attract new members.

That's that's an interesting idea, man. I never thought about the physical layout and how the wearables can relate to that. Uh really interesting. I mean, overall, and and you know, it's a question I'd love to ask everybody who's in the fitness industry, but when you look at um fitness technology as a whole, what has you the most excited? Like what what gets you really fired up about about the possibilities? I mean, you mentioned a few really good.

Yeah, look, I think behavioral analytics and artificial intelligence. Like if I could, if I could when a pro and and it plays to every part of what we do every day inside the clubs. If I if I could have a person walk in and based on a subset of data that I could almost visually acquire, you know, age and gender, right? Identify the package of items and services that are most um uh valuable to them, or actually most valuable for me to sell to them in order to ensure longevity, that would be amazing. Like females between the ages of 22 and 25 are most interested in this, and this is what keeps them around the longest. Conversely, right now, the only thing that we have in our systems that give us real data with regard to whether a person's gonna stay or not stay is usage information. This is a big problem, right? Check-ins. Right? That's the only variable that we can rely on. If you think about an internet application or a product, uh a software product, they can do all sorts of testing and capture uh the way that people behave on a screen by where they're clicking, how often they're clicking, what they're not clicking. And then they can use that data to determine what's the stickiest screen design, for example. Or um, if you think about Spotify and music recommendations, they're aggregating data from millions and millions, billions of people and saying that, hey, because you liked Led Zeppelin, you might also like these songs that other people that like Led Zeppelin like. So we don't have that. And so I think that when you bring all of these different tools that we've just talked about, because AI isn't gonna just happen, you've got to feed it data from uh external data sources in order to really create a rich um uh lake, if you will, a data lake, right, where everyone is dumping their data, then extract information from that. I think there's a there's a huge opportunity there. And by the way, I think that's where we are able to move the needle when it comes to attrition and retention. Um, and there are some really cool companies out there that are doing it. Um, companies like Scipio, companies like keepme.ai. Um, and uh I I think that that that's the thing that's most exciting about uh about technology in the fitness space right at the moment for me.

Yeah, yeah, I agree. And it's I've had both Scipio and Keepme.ai on this uh on this podcast a number of times so people can go back and learn a little bit more about what they're up to. And it's tough, you know, if you're uh if you've been, you know, maybe an operator or even a coach in the industry, kind of at the ground level, you people start talking about data, you're like, well, how is that exciting? Yeah, yeah, it is, it is really exciting.

Well, what I what I like to tell these companies, and I advise a couple of them, what I like to tell these companies is don't talk to me about business intelligence and artificial intelligence and machine learning. Give me a list of the hundred most likely members to quit next month. That's what I want you to do. And if you can get you have to give people something that's easily consumable and actionable, and that's easily consumable. I can I can now go do something about this. And by the way, going back to what we started out, this fixed fixed bottom line costs, right? From an expense side, if you can save like one or two members a month from quitting, that's significant because we're a recurring payments business. It's one or two members this month, that becomes with the one or two from next month, becomes three or four. Those three or four become six or seven the following month, six or eight, whatever it is. It's a it's it's a and it all flows to the bottom line, all of it.

One of the things I'd be curious, I noticed this trend through through my 15 years here in the industry was that uh retention was a focus uh for a while. And then kind of in the early 2010s, leads got cheap.

Yeah.

Right? Social media, digital marketing, all these things, leads got really cheap, right? So it's kind of like this this focus move to like, oh, we we can get as many leads as we want. You know, we just turn on this, we just click this button, leads start flowing in. And then that started to wane, and now obviously the cost of leads is going up and down, up and down. So we we saw this huge focus on lead generation for a long time, and then retention kind of fell by the wayside. Um, but now it seems to be becoming very much uh already has become very much the focal point. Have you noticed that trend as well? And what do you think has been has been driving it?

Yeah, for sure. I mean, I think that there's there's a couple of different things that are driving it. One of the things is the proliferation of the studio fitness business. And I'm talking about now, so just to be clear, I'm talking about lead generation for traditional gyms for a moment. Um and and you're right, it we it was expensive and then it got cheap, uh, and then boutique fitness came around, and boutique fitness created um sort of a uh um uh a specialized service for people that were looking for it, right? So um, and and then you layer class pass on top of it. And now I no longer own my members, and it's getting so I think those are the things that drive um uh the cost of uh of leads, and they're also the the things that really speak to why it's so important to keep the existing member that you have than to go out and find a new one because it's indisputable, right? Because leads cost something, it's always cheaper to keep the guy you have than than than the person you want to go get. And so um I think there's a bunch of different reasons. Look, and and then you look at Gym Pass and the fact that they're now going to corporations or Xiammo or some of these other companies that are out there going to corporations and saying, hey, you pay us something, and we will get you access to every single gym in New York City, uh, and you don't have to join any of them, you just join Ziamo. Well, that that's gonna change the economics of our industry pretty substantially.

So I want to respect your time. I mean, I could ask you questions forever, but when you look for let's let's just put a timeline on it, uh just for sake of conversation, like 10 years from now, right? How do you see the fitness industry being different? I mean, it's changing so fast, dude. It's a you know, everything from the connect, like all the things that we talked about today in the last 40 minutes. Well, where where what do you think it's gonna, if you had to take a stab at it and just kind of paint a broad stroke or vision of what this industry will look like? What what do you think? Uh what do you think?

Well, I hope, my hope, my hope is that the fitness industry becomes part of the healthcare continuum. And I think we be and that we become the place to go to. And I don't care whether you're a gym or a studio or a YMCA or a JCC, whatever you are. My hope is that we participate in making people's lives healthier. Not say that we make people's lives healthier, but be a part of insurance reimbursement, which some folks are doing these days in a very non-actuarial way, by the way. Um, so that that's where I hope that that's where I hope we end up. Yeah, I love it.

I really like it. Um Al, this has been uh a pleasure. Uh, I really enjoy getting your insights on it. Obviously, very smart dude. You're very uh, you know, you got your finger on the pulse of the industry, you've you're aware of what's going on, you invested a lot of time and energy in it, uh, and money, I would imagine. Um so it's been great to get your viewpoints on things. If uh one last question is, you know, I always ask this uh in the nature of collaboration and uh you know people want to reach out to you and you know for a good reason, but what do you what do you need help with right now? What's one of the biggest needs that you have in in business?

You know, look, I I own three gems. And um if you or if anyone that listens to this podcast uh has solutions, I I love being the guinea pig for technology solutions. And so um if you have, if someone is listening and they have something that they think is game-changing, um I'd love to talk to them because we're constantly trying to figure out a way uh on how we can make our business better, deliver a better service to our communities uh that that we operate in. Um so I'd encourage people to reach out and let me know what they have. And and by the way, my email is Al at Fitman Corp, f I t-m-n-c-o-r-p.com. Send me a note, love to chat.

Al, thank you so much for uh for coming on the Future of Fitness Man. It's been an absolute pleasure, and uh maybe I can bug you to come back on next year. Anytime, Eric. Thank you. Right on, ladies and gentlemen, Al Norchani. Hey, wait, don't leave yet. This was your host, Eric Malzone, and I hope you enjoyed this episode of Future of Fitness. If you did, I'm gonna ask you to do three simple things. It takes under five minutes and it goes such a long way. We really appreciate it. Number one, please subscribe to our show wherever you listen to it. iTunes, Spotify, Castbox, whatever it may be. Number two, please leave us a favorable review. Number three, share. Put it on social media, talk about it to your friends, send it in a text message, whatever it may be. Please share this episode because we put a lot of work into it. We want to make sure that as many people are getting value out of it as possible. Lastly, if you'd like to learn more or get in touch with me, simply go to the futureoffitness.co. You can subscribe to our newsletter there, or you can simply get in touch with me as I love to hear from our listeners. So thank you so much. This is Eric Malzone, and this is the future of fitness. Have a great day.