Anthony Vennare - Fitt Insider - An Investor's Guide to Fitness & Health

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. This holiday season, the best gifts are personal. And there's nothing more personal than the gift of good health. Whether your loved one runs, bikes, hikes, plays sports, or simply wants to improve their wellness, InsightTracker is the most personalized way to make sure their body stays in it for the long haul. Gift cards and clothes are impersonal and expected. So why not get your loved ones a gift that is truly special and unique to them? This Black Friday saved $200, $200 on Insight Tracker's Ultimate Plan, the most comprehensive way to get personalized insights into their body's well-being. No two people achieve optimal health the same way. Age, genes, nutrition, and lifestyle all play a part. But no matter who you're shopping for, Insight Tracker's Personalized Nutrition and Performance System provides the most detailed analysis of their biomarker data from blood, DNA, lifestyle, and fitness tracking. InsightTracker gives them the power to live a healthier, longer life through concrete, personalized action plans consisting of proven science-backed recommendations. So head to InsightTracker.com forward slash future today to save $200 on InsightTracker's ultimate plan and enjoy 25% off site-wide to give the gift of personalized health. This episode of the Future of Fitness is presented to you by the Fit Tech 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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Thanks for having me.

Yeah, it's uh great to have you. I was, I think when we talked a few weeks ago and scheduled this interview, I realized that you uh you and your brother don't do a whole lot of interviews, man. I mean, you guys produce a lot of content, you interview a lot of people, so it's uh it's nice to have you on the show. I appreciate you making the time.

Yeah, that's gonna change. Lots to do and and and kind of get after it now. So I appreciate it. And and yeah, excited to me especially. Joe, everyone hears Joe on the podcast every week. No one knows hears from me technically.

Yeah, well, now they will. Uh yeah, it's gonna be good. Let's for people who don't know of you and your brother, um, what you guys are doing at Fin Insider, the content, the podcast, all that stuff. Maybe give us a little introduction and I guess part of the uh origin story of how you guys got into this.

Yeah, so Joe and I are brothers uh and co-founders. We've been working on businesses together for the past 12 years. Uh I am 32, he is 35, I am the younger brother, but I'm the boss, which I love to tell everybody. Um and you know, we got our start born in Pittsburgh where we still live. And um, you know, we got our start in in sports, playing sports in high school, and then I enlisted in the Marines and he went on to become an actual high school history teacher and football coach. So we loved sports, and my experience in the Marines and his experience with sports, it was, you know, really obviously you can't be involved in that side of kind of high-level athletics or anything like that without fitness. You're training and conditioning. And very early on, we got super into the fitness side of it all training, conditioning with the weightlifting from a very early age. So that was the start of it all. We were just fitness junkies, we loved it. The only reason I joined the Marines was because uh it was the fitness side of it. I I wanted to join for obvious reasons, but like the fact that you could go and be pushed the limit physically was what excited me about it. So we got our start kind of there. And you know, when I got out and you know, he was a teacher. I got out of the Marines and I opened a gym. It was the only thing I knew. I didn't go to college, I didn't have education certain spaces, I knew fitness in such a deep way. And the gym took off and I made him quit his job uh to come work with me. He came to work with me because I didn't know how to like he's the he's the operational execution side of it all. Um, and uh he came on board then and we kind of just hit the ground running. And whether it was opening multiple gyms, running different businesses, uh, we were just very deep and passionate about getting the certifications, education, training, and learning around health and fitness. And then, you know, always kind of we looked at it as like, how do you make this business better for the actual fitness professionals? Because they're the talent and they're the people that are running these gyms, running these places, controlling these classes. The reason that these studios are worth what they are, but they don't make enough of the money. And that's what kind of got us into this business side of it all. And we started doing startups and getting involved in in businesses that were, you know, fitness related but had a different spin because, like, man, this doesn't make sense. And and that kind of all led to Fit Insider, which is, you know, it started out as a side project uh newsletter and then the podcast came, and then the articles and research and jobs board. And essentially it's we look at it as like the modern industry platform. There's been a few out there over the years that are either industry groups or magazines, but they're all pay-to-play and they're all built to just be ad models and you know, talk about the basic stuff. And for us, it was how do we do the research analysis and provide the information to the whole industry about what's going on with the business side of fitness and wellness and where it's gonna go because the trainers, the coaches, the founders of these companies, we want to bring them along so that they can kind of build these companies.

Yeah. Yeah, interesting, man. I'm gonna go back on your fitness training too, because I'm just just curious. But when when you were gathering up certifications and and training and fitness knowledge to apply your gym, who were some of your mentors on that side of things, on the on the non-business side of things.

Yeah, it was didn't have any personally, because we were based in Pittsburgh, some strength coaches locally that were awesome, but it was more it was right around the time that like uh CrossFit was starting to get big early on, and then you started to see like these kind of like small internet sweaters. Like, so we just had Kelly start on our podcast, and he was what like one of the first trainers that I was reading his stuff at when he was just running ScrossFit and doing his thing there. So it was like the Kelly Star X of the world, the Mark Vestians of the World from Nexos, the the um uh Paula Quin, his stuff was just like everyone you could find uh information-wise, like buying books essentially to read and catch up. And it was that, and then um oh, what was the other one? I can't Mike Berner from CrossFit and USA Weightlifting and some of the USA Weightlifting coaches. And there was another book, I can't remember the name, but uh there was one specifically that it was about training for like athletics. And I can't remember the name, but it was it's super training? No, something else. I'll find it and follow up, but stuff like that, just like these coaches that were just out there leading the way before it was cool, before fitness was what it is today, before the brands are around. They were just kind of paving the way. And Joe and I would, you know, try we would drive around to get certified from this person or that person or go to this workshop, and then we would buy every book possible uh to kind of learn from that side of it.

Yeah, awesome, man. And uh I did listen to the interview you had with uh Kelly Starrett, and for people who you know don't know Kelly and Juliet too, who's kind of you know one of the the force behind the whole uh you know what was Mobility Wad and now Ready State, they they are great interviews. Every time I hear an interview, I listen to the one you guys did, the one Stu Brower did, the one that I had him on a few times, and I learned something new from an entrepreneurial standpoint and just life standpoint from those people are awesome, man. Um it was a really good interview, by the way. I really so tell your brother good job. Um so let's talk about exactly what it is you because uh previous to recording here, we were talking about you know, your goal for the fit insider, right? Was to, you know, kind of help, I guess, advance the fitness industry. And you know, when I started this podcast, I always talked about the uh Wayne Gretzky quote of, you know, I wanted my industry colleagues to be skating to where the puck was going and not where it was right now or even worse yesterday, right? And I feel like we have kind of the same ethos um in the content that we produce. Maybe give us like a little bit of insight on the mission and then like how do you guys the other question is how do you guys develop so much content? I mean, I was looking through your newsletters today, and it's just you guys are a machine when it comes to newsletters and podcasts. So give us a little bit of the ethos and how you guys kind of work your system and get all this content done.

Yeah, the ethos gonna at a high level, we say we're building the platform for the future of fitness and wellness and health. And what that means for us is we think that health and healthcare and fitness and wellness are all gonna be in the middle. Empowering the consumer to kind of build their fitness journey, have the right information and access. And with that, the entire industry is changing daily. Gyms aren't dead, and this whole story, we're not saying that. What we're saying is the long-term traject, the long-term trajectory of uh uh of fitness, wellness, and health is gonna be different. And it already has COVID accelerated, you know, six years into six months, and what's coming from that now is changing every day. And uh we want to provide the information for free, which is it's everything's been free, and put as much research and information and podcasts and content out there about what's happening to inform the founders and the fence professionals and the executives and the entrepreneurs that are trying to build in this space to let them, you know, empower them with the right information and access and then and bring them along and hopefully fund them one day as well. And you know, we set out to do that because, you know, we, as we said, on our journey, we kind of had to look under every rock that we could to find the information that we were looking for to build this. And previously, you know, five years ago, even it wasn't something that you did as your job if you didn't own a gym. It was something that you did on the side and that you even your friends met up and you talked about and you were in groups and you know, challenges and all of this stuff that you would do and you would build your community around it after work at CrossFit or other places, but it wasn't something you looked at and like, oh, there's Whoop and Pelicon and Tonal and Mir and all these connected fitness companies, all these you know exponentials, everything going on. It wasn't something you looked at and like, oh, I can make a ton of money in this. People did it because they loved it, and now you can make money in it. And and looking at the numbers we put out a report on personal training, um, the average trainer pre-COVID was making $40,000 a year, which is absolutely insane to me. And it was mostly part-time. So, how do we change that? And I think it's it's through access and information and kind of shining the light not just to those people, but to the to the markets, to investors, to funds, to say fitness and wellness and health is a phenomenal investment opportunity as well.

Yeah. Have you seen any numbers? And I'm just curious, and obviously it's it's tough to say because you know, a lot of personal trainers just aren't training people personally, but that same population has the average income increased during COVID, decreased, stayed about the same.

Um, I wouldn't say, you know, we don't have any definitive numbers either way, but with some of the smaller studies and things we've seen, it stayed around the same, but it's switched to them being on their own, almost like the gig economy side of finished graders. It's when they had to, they went online or they were training in parks and on their own. And gyms did not stand behind a lot of gyms, did not stand behind their coaches, their instructors, their trainers, give them the money that they needed when COVID hit and when things were shut down. So they had to kind of fend them for themselves, which was hard at first, but I think long term it's a better positioning because you see these talented individuals now shining on their own. And there's some that are shining way more than others, but I think overall the the ability to be online, just like e-commerce was early on with ShopFun and other things, like these platforms can empower these trainers and coaches to make a living, and then they can train in parks and at homes and other places. And I love that. That's how we got our service training people in their houses and in parks and stuff. So bringing that kind of back versus going to get a job at an XY, you know, studio or gym is better.

Yeah. Yeah, it's it's it's an interesting evolution of what's going on. I had um, I think it might have been right when the pandemic was starting. I had Mike from Endorphins on, and he he talks about uh the record label model, how talent was going to kind of be sought more after now as you know this digital age comes through. What he means by that is you think about record labels, they look for a particular artist, right? And they invest in that artist, they make that artist rich, they make themselves really rich. And how you know this this focus on talent uh is really going to be a fundamental shift in in a lot of the ways that we do uh you know fitness moving forward. Yeah.

Honestly, on that note though, it's the complete opposite because 99.9% of trainers weren't making money either. Coaches weren't making money. So it's not only the worst version of that, but they like they the people were getting rich off of them, they weren't making any money. And I think too, there's this focus on when we talk about digital fitness and the future of fitness, there's this focus on video, follow along video, on-demand video. I don't know why that that is what everybody holds on to, but I do not think that's it. So I'm bigger, I'm more bullish on remote coaching, I'm more bullish on you know, community events, people meeting up for fitness, that the recreationalist side of like people playing sports together and training for that. So yeah, it's funny that you know people talk and think about certain areas, and for us, it's it's not that when we try to talk about like the future of fitness or wellness.

Yeah. So let's talk about that. I mean, this is called the future of fitness, man. I mean, there's some there's some really obvious categories that people are focusing on, right? There's you know, VR AR, there's uh connective fitness, there's um wearable technologies, there's um home fitness, right? All these things. But you know, when you look at like where where do you see the most validation moving forward in particular categories and and what categories are most people missing?

I think that something that I think is really overlooked right now. It's it's not from a there's a lot of apps out there trying to do it, there's a lot of things out there, but from like the funding side and the attention side, habit and behavior change is the core of fitness and wellness, getting people to stick to things, follow along, drink the water, go to sleep on time, eat the right stuff. The basics of move more, eat less is not a sexy business. It's not a bike, it's not a thing, it's not video streaming, it's not whatever service people are providing. Uh, that's what everyone's overlooking. And we we were talking before it started. This like basics of fitness at the core of some of these businesses doesn't make sense. So that's what Joe and I are looking at first. We call it personalized well-being. It's the aspect of like, you know, accessing information and change around your nutrition, your health. Because a lot of people that have conditions that aren't fitness and wellness related, but they impact their level of fitness and health, um, as well as the kind of having behavior change and basics. There's a lot to build on, but getting the basics done right and making that a really good business, I still really haven't seen that much of it yet. So that's something we look at. And then the other side is we call, we've written about it's unbundling the gym. It was this hub and spoke model where the gym was the hub of the consumer's experience around fitness, and now it's not. The consumer is the center of the hub. And with that, we're not saying gyms are dead and people won't go to gyms and they're not awesome businesses, and not that we, you know, we would own them and any day of the week, but it's how you approach that model and how you uh you know you kind of engage and interact with the consumer as a gym and what you your your business model is based off of from that. And that also goes into the it's not gyms and then gyms you offer at-home streaming or video on demand. It's it's much more than that. Being a center of social community, almost like the old school YMCA model of getting people together, keeping them there, engaging crust. But I bring that up because it's something we're close to personally, but they do a really good job with that as well, and they always have. So I think that's another side is where is this mass amount of money that is spent on traditional studio and gym memberships going to go, even if it's down 20%. Most gyms don't make sense if their overall audience from a studio side, not the traditional gym side, but like a studio fitness side or class side or uh kind of a programming side, if their overall membership is down 20%, it's hard to make that a really good business. And I think a lot of consumers are not just working at home, but they're spending 10% of their time running, hiking, biking, they're playing pickleball, they're engaging in sports, they're being social, they're trying other things, they're going to other gyms, they're working out home a little bit more. So as the consumer shifts, that space is still wide open. And it's not just one at-home bike company or training company or just video on demand. It's it's this overall pie that is just going to be split up into a lot of different silos, and there's businesses in each, like you know, the the sleep side with Aid Sleep and what they're doing, and the tracking side with what Woop's doing. And this is just all money and attention that previously was just spent at gyms and with coaches and trainers.

Yeah, yeah, it's an interesting thing. And I I owned a CrossFit affiliate for a good amount of time. And you know, having seen like you mentioned that 20%, and that's a big deal in boutique. Like that's almost all the margins of a well-run studio, right? Especially in the CrossFit space. If you're if you're at a 23% margin in a CrossFit affiliate, you were doing really well. That was like the kind of the the high end. So you take that away, and then what happens in these communities becomes really difficult. And um, you know, I'm curious when you look at like, and I've heard a lot of people put what you said into different terminology, right? Like the new ecosystem, I think, you know. Mulane would say, or Rick Peo would say, or you know, uh Natalia Karpassova talked about, you know, the gym exploded figuratively and it's all its constituent parts landed in different areas, right? On your wrist, in your living room, uh, in your garage. And it's it's uh how how does all that get pulled together? If someone wants to take advantage of, like you said, like the new um, you know, the the consumer being the center of the hub, right? What are ways that you know the professional can still interject themselves and guide that? I mean, I presume remote coaching is a big thing, right? Because they still need that professional accountability to tell them, well, hey, yeah, you can go do a Peloton once a week and then go to your gym twice a week and play, you know, whatever, you know, squash twice a week and how balance it all into your nutrition, sleep, and wellness. Do you think that's going to be done through technology? You think that's going to be done through a well-qualified coach? What is your vision there?

Yeah, I think it goes back to the accountability specter. We call it, we actually coined it as like accountability as a service. That's what Future does. That's what Wellery does. That's what kind of some of the other systems out there do, like Noom. And that's where coaches can leverage technology and information to pull that in and use a Terra to sync all of your data in and use uh remote coaching software to provide that information. And then I think do something that previously was never done in fitness. Fitness was always a competition of my program is better than yours, my workouts better than yours, my gym is better than yours. It's not true. They're all pretty much the same across the board, regardless of how you do it and how many certifications you have. It's a matter of how do you get people moving, how do you keep them moving, and how do you engage them and provide a service for them. And I think that's what's pushed the market along is you know, really smart people in product and technology building the Pelotons and the Thumbs of World to develop what is the best experience for the consumer? Because I don't think most gyms never thought about that. They didn't think about what the best experience for the consumer wasn't. And I think what needs to happen is these trainers and coaches and professionals need to go back to the drawing board and evaluate their business model, even if they're gym owners too. Like, does your actual gym PL basic model make sense with your rent where it's at and your numbers where it's at and your things where it's at? And it's not about chasing video or other things. It's how do you kind of look at that model? Um, and it needs to be different for it to work. Uh, so for us, it's go back to the drawing board, think about that model, and then think about where you provide the best value truly, not your programming and your smarts and you're the best trainer in the world. It's kind of like what is the asset value you can provide and how can you do it better than anyone else, or at least be super competitive. And I think it's catering to the needs and driving real health and fitness outcomes, and people will stick with you. I mean, you know this from we used to own some crossway gyms too, and just in general, all the gyms that we owned, it was the community and the people sticking and bringing their friends and engaging because it worked. And I think a lot of the generic fitness bikes and treadmills and systems out there, they're offering top-level general fitness information, which is a commodity now. But I think a lot of people we say like age out of that. You're you're sticking with it, you're cycling, you're doing other things. Eventually, if you do the same workouts over and over again, you're not gonna progress, especially if you have a goal in mind, or you want to run, or you want to compete, or you want to do other things. That's where the trainers and coaches can take advantage of that. Like, I one I like really a lot. I I do his uh content, I follow his content on YouTube when I work out chain farmer is rowing, rowing specific content. He's killing it, I'm assuming, just by the audience he has. Um, it's so cool to see. Like, I love rowing and I can do that as a piece of it. He's not saying I'm the only fitness professional, I do everything. He teaches me rowing and I follow his rowing religiously. So it's that type of stuff that gets me really excited. And it's like, oh, hydro and never's not worried about what hydro is doing, he's building an awesome business. Maybe Hydro, I'm assuming, will pay him to promote and/or engage with his product one day because he's carved out that niche for himself and it's stuff like that, like the rowing or the running coaches out there and the the coaches. Are there people that are trainers for pickleball and squash that I know are making really good money online? Uh, because when we wrote about the finished creator market and kind of had that term go out first, people came to us and were like, I'm actually making money here. Like they wanted us to help and engage with them, and we got to see some of these businesses and they're phenomenal, and they're stuff you could never even imagine. Like, like I said, the fact that I know a pickleball trainer that makes over $100,000 a year coaching people on pickleball is the coolest thing in the world to me. I love that so much.

It's great, it's awesome. And yeah, yeah, it's so cool, man. I love when people when when the kind of market comes to people too. Like you really stick to a niche and all of a sudden, like something becomes popular and it explodes, right? Uh Shane Farmer, by the way, shout out to Shane. I get to talk to him quite often in Dark Horse Rowing, and he has an amazing community and he's he's quite the entrepreneur, but he always he always stays true to hey, we can start with rowing, but I'll show you a whole world outside of that, right? And uh yeah, he's great and his content's awesome. People go please go check out his YouTube. Um I want to shift to make sure we get time to this, but the I guess let's start with this. Let's start with your uh what you guys are doing on the investment side and the fun if you can kind of talk about that's very unique to me. I think it's just starting to it's starting to make a I mean, you guys have seen this for a while, it makes a ton of sense right now to to focus on this vertical. So give us a little bit of, if you can, whatever you want to you want to share with us, but what you guys are working on that side of things.

Yeah, so Joe and I set out with Building Fit Insider. Uh, when we really went full time on it, I was out for health reasons, but like that was the only thing I did other than you know go through treatment and then focus on the newsletter and podcast with Joe. And in doing that, a lot of funds and investors and startups came to us. The startups wanted advice to how to position that research information to the investors. The investors wanted us to evaluate the startups for them to invest in. And Joe and I are sitting in the middle, like, why aren't we investing in these companies? We're doing the legwork for a lot of these places. We even joined a fund, uh courtside ventures as advisors, and we're doing a lot of this way. We're like, man, we should be investing because I think we have a different perspective and we bring the fitness side into it and the wellness and health and the coach side, having been on the ground. So um at the end of 2020, we set out to learn as much as we could. So we were already advised being advisors courtside, working with different funds and in and engaging on projects, but it was I need to go back to school essentially to learn the investing side of it. So spent oh you know, close to a year kind of shattering some people and working on the fund side to make sure that we understood the basic mechanics and the the how the inner workings of operating a fund. And then, you know, we said if you look at top funds like uh first round capital, they have what's called the first round review, which is a media resource podcast information around startups, and it's phenomenal. It's an it's an awesome asset. And then Andreessen launched something called Future, which is like their media side of talking about the future of technology and white combinator has this massive community that they've built. And there's a there's a list of these like top-tier funds and groups that build media assets and communities and brands. Well, we built that first kind of organically, almost by accident, just doing the best thing we could with the content. So we had this thing, and then we went and said, We love working with founders. We are founders, we're not investors. We love backing fitness professionals, coaches, trainers, people that are in the space, as well as people that are interested in the space and passionate about it. Instead of being the middleman and helping here and there, let's go and invest our own money first. So we invested personally, Angel invested in uh 15 companies. Uh, and then we went and we just kicked off the process for what we call the Fit Insider Fund. And it's for us to invest in companies at the pre-C and C stage level.

Man, okay, so explain that a little bit to because I think the investment fund, right, at its different levels, whether it's you know, angel, um, you know, the more formal funds, but give people a little bit of insight into how the investing world works from a high level. Um, because I think there are probably a lot of people who would like to invest in specific companies, you know, within the fitness and health industry, but really don't know where to start. So give us give us at a high level what that means.

Yeah, on the on the investing side, it's companies that are growing. Uh it was it's funny, fitness pre-COVID, there was only a couple public fitness companies. And then beyond that, the investing dollars were not great. Um, if you look at where the hydros and Pelotons and others here in Pelotons origination story, like how they couldn't raise money for forever because we're like, no one's gonna buy this. It's kind of crazy now. But um and in most markets, technology otherwise, it's the startup world. It's like people funding Facebook early and buying into Airbnb early. It's as an angel or a fund or a group or a person backing a founder and and giving them money to help grow their startup so that they can build that. And when you do that, you either buy in a certain equity or you're you know buying future shares of the company uh early, early on. So uh obviously that on the general landscape, uh investing and investing, angelists and syndicates, it's all grown so much over the years, but it's still brand new to the fitness space in my mind. So um it's backing these founders and these companies early and getting a stake in that company and um and then hopefully also providing value to make sure that they get to where they're going faster and with less time and money wasted. And kind of that's our our our asset is we want to help them with money and information and access and make sure that they, you know, Joe and I have run a number of companies over the years, don't make the same mistakes we've done, as well as build towards the bigger vision. And um it's it's us, you know, investing our own money as well as raising money from other individuals to invest on their behalf.

Yeah, man, I think it's great. And I'm I'm curious from an investor standpoint. I I know you know a lot of people, especially here in the Flathead Valley of Montana, that there's actually a surprising amount of investment here. I mean, two bear capital, um, a couple different angel funds, frontier angels, and a few other ones, but they're very disciplined in the checklist of things that they're looking for when they invest. Do you guys have a few things that you're like, okay, these are mandatory, these are there's they have to have these few things before we even consider it?

Yeah, so we look at it different. And it's it's funny when a when an investor looks at a company, especially a lot of them that aren't sector specific. They're certain like they want to invest at this stage and and in technology in general. You know, for us to be very, very vertically focused with fitness and wellness and health is kind of rare. It happens, but you know, and with our kind of background, what we first do is we write the newsletters and we do, you know, 10 pages of research goes into one newsletter for a thousand words. Um, so all of that research, we have it and we have that information saved. And first we look at the startup and we don't say, is this a cool idea? Is this good potential? It's where does it fit in the market? What is the actual market potential? What are the other companies? What's everything that they track to from opportunity to investment to competitors and everything else? And we we go through that in a deep way. It's like the you know, an investment memo on a company, but we already have that, we just kind of reference what we have. And then we really dig into the other side, which I think is sometimes good, sometimes bad. Does this make sense fitness and health wise and health outcome-wise? Not just is this a good business model. And a lot of the times we eliminate stuff that I think would have been great investments, but it just doesn't make sense like morally, or like this isn't a good idea. Um, and then from there, it's you know, we have a what is it, 25-point checklist that is like our secret sauce of looking at investments. But in reality, it's it's tapping into spending time with the founders, getting to know them and trust them, build a relationship with them and see where their interests are, what their their kind of goal and vision is, and can they build this broader thing while also executing day-to-day, which is is somewhat rare. Is they can chase this larger goal and day-to-day be the person that gets the job done. And then also, where can we help? It's not just about backing winners and finding really good ideas, it's for us. Can we actually spend time and help this company? Can we introduce them to things and help them with partnerships and uh advice? And is it a space that we truly can add value? So, for example, we invested in Silofit, and I was just in your spending time with them, look, you know, working on like actual business model stuff, working with them to help them grow to their next round of funding. And and same thing with a company called Arena that we backed. It's getting them advisors and helping them with connected to investors and really um spending time on the business side of things and the inner workings of it. Uh, and that's what we like to really dive into. And then um, and then it comes to this checklist. Once we market opportunity, everything else, founder, we get along, we believe in the right things together. This is a good outcome fitness-wise, all of those things, and then we kind of go through our checklist.

Yeah. What's which one's stylofit? Give us a little insights on that one. I'm not familiar.

Yeah, it's uh, I think if you know what we work is. Yeah, it's like we work for for trainers. It's it's micro gyms where you can come and uh rent the space, which for someone who used to have a ton of leases and gyms it's awesome. I would love to. I was training people in parks, I was training people in their houses, I was signing leases for like crap warehouses with shanks handshake deals that who knew if the guy was gonna kick me out and I didn't have insurance or anything. So that start, that grind that you and I had growing, like our first fitness brands. Now it's like they have the space, beautiful equipment, access, it's professional, you can get insurance, they can help you like all of those things, uh, empowering trainers and coaches to have these spaces. So it's an awesome idea. Um, and yeah, started out in Canada, they have I think 15 to 20 locations now and they're expanding fast. They just raise a big round of funding. And um, we invest in them, join as advisors, and you know, for us, it's really helping them stay true to the fitness uh plan, the plan around the fitness professional, empowering them, being that asset for them because that's their core business model. It's easy to get distracted. So it's like, how do we stick to that?

Yeah, I love that, man. And you know, for anyone who's ever uh rented commercial gym space in the state of California, you know how valuable that is because that is an awful venture. Almost ruined me. Almost ruined me. Uh so uh I'm laughing already because it it maybe it's not that funny, but it's funny to me. You know, we talk about some of the money that's been thrown into the fitness and health area over the last like two to three years, and you know, how you're the value that you guys bring, or some of the value that you guys bring is that you actually understand fitness, you understand health. You've been in the trenches for a long time, you understand from a rational standpoint of what works with people. And I've seen a lot of ideas get really fast money and wondering, scratching my head with sometimes seemingly no plan whatsoever, right? Like they're just gonna take it's an idea, someone gave them money, millions sometimes to get this thing started, and then it's it's it's just never quite I just don't get it. So when you look at like how investors are acting within this particular vertical, um, give us some of the things that are surprising you and you know, we don't have to name any companies or anything like that, but give give us some give us some insights.

Well, it's funny. I love to say in Joe does too, like we're not investors when we say that with a badge of honor because we went and raised money for feed for one of our companies. They're not some a lot of them, not generally speaking, but like there's a lot that we engage with, they weren't the greatest people, and the way they think about things doesn't really make sense for the average person. And now with venture and investments and the opposite and the stuff that's going on the way that it is, they're kind of acting fast to defend their position. And because it right now, if you don't add value and you don't have assets and you don't have a focus area, if you're just a general investor and you're not like the top 10% of them or even top 10, commodity, capital's commodity. There's a ton of money out there and on the market, a ton of things are getting funded, and a lot of people are just throwing money at just insane things, like you said. It doesn't make sense. And I think it's investors fueling other investors to do that. They're they're investing fast, they're skipping diligence, they're not looking at things, or they invest in things they don't understand because you know the founder is great at raising money, and that's a whole other thing. There's a lot of founders out there that are they say like people say, Oh, they're very backable founder. When in reality, it's like they're great at raising money, they're great salesmen, great pitch, great process, but sometimes there's no substance behind that. Uh, and it's stuff like that that you see. Um, and I mean, we work, we mentioned that. Look at what that I don't know if you saw a documentary on that whole thing, but like stuff like that is absolutely insane and happens all the time. And that's why we're just super passionate about being focused and staying in our lane and knowing the area that we're at. And I think a lot of these things that if you look at fitness and wellness-wise, the attention from COVID and what happened to fitness and wellness and mental health and health in general was the attention for a lot of these investors. It was what they knew, it was what they engaged with. And I always say investors a lot of the time, like they live in their bubble. Like I had one investor tell me one time that there was this golf training thing that was going to be so big because him and all his friends golf all the time. And I'm like, great, that doesn't mean everybody does. It's it's it's just because you are here doesn't mean everybody does. And I think investors got hot on fitness, and then the market fueled that. So other investors competed, they tried to get into deals, valuations went up, things became valued at billions of dollars, and then you look under the hood and they sold tens of thousands of units, not millions of units. Uh, and you're like, holy crap, this company is worth uh billions of dollars, and they've only sold tens of thousands of units of this product, and they have logistical problems and things like that. It's just crazy to me. So the market and the investors are competing and fueling this kind of like uh in an inflated way right now, and that's how you end up with some ideas where someone comes along and like, here's money tomorrow, I'm gonna back this in a week. Uh, we're fast in this, and then they'll figure it out later if it works or not.

Yeah, you know, one of one of the most amazing things to me is um, and I guess it's just old school, but this is probably maybe just the way it is sometimes, that a lot of companies get started off the ground with no actual vision of how to monetize. Like they don't know how they're gonna make money someday. And that's always the one that's most curious to me. And I I I don't know, I've never seen it pan out successfully yet. Um, but I'm curious like to get your thoughts on that. Like, is that is that a huge it's got to be a red flag of some sort. If someone doesn't know how they're gonna monetize someday, although a lot of these huge companies aren't profitable. I don't think people realize that either.

It's something that Joan and I've had to kind of unlearn on the on the business side. Our first six businesses, I didn't even know you could raise money until like 2017. I come from Pittsburgh, I come from a a very, you know, uh, oops sorry. I come from a very kind of poor family, and and we didn't have money and you know, access and people weren't running companies and working at banks and all of this stuff. So uh, you know, when we first set out to build a business, it was like almost like a survival mode. It was after my father passed away, I got to the Marines, we needed to make money for our family, and everything we did up until you know 2017-18, it was like to run a business, you start a business, you make money, and you pay the bills, and that's it. And then someone came along like you can raise money. And I was like, Oh my god, someone will give you money to make more money. This is the greatest thing in the world. It was just a it was a mind-blowing like moment for us. And with that, it was you know, there were people that that's all they knew. They come up with ideas, there's no real long-term plan, and they sell that vision, they sell that story, and they raise money. And you know, we will back founders if they don't have a product or pre-seed investing, we'll back their almost like idea level, but you can have an idea and a plan and be backable. But if you're just chasing that idea and that story, for us, it's hard to be like, Yeah, we'll we'll back you. We want to at least, or at the very least, we'll come in and help you put that plan in place and think through the model and everything. Because yeah, it is absolutely insane, especially like if you've been a founder that is successful and you've sold a company or done other things, your second time around, people will just pile money on just because you've done it once or twice, and um they'll back you with literally not even an idea sometimes. So it is a crazy market right now, and it's it's great for founders, get them back to whatever. But having been a founder that's run a few companies, some that have raised money and some that were really successful, some that weren't. And when you get to that point, if you put your time and money and effort into it, raising all this money, sometimes you don't see that money. It's not your money. You it they don't just give it to you and put it in your pocket, you have to build a business. And with that, you're in that you're accountable to your investors, you're no longer just working for yourself. You have investors, you have people to keep accountable to. You have to, it's a lot of things that especially younger founders don't think about. And then they get taken advantage of too in terms of control and other things. So it might be cool to raise 10 million, but you don't get $10 million. You have a good salary, you have a good, but the company could go out of business in a year or two. Uh, and you're left with nothing but a uh, you know, a failed business. So yeah, it's it's stuff that is kind of scary now that we're on the other side of the table and we're hopefully trying to help founders not make those mistakes and chase the cool and the easy right now when that might not pay off down the road, especially. Actually, like I said before we got on the call, like as the market, though obviously like a Peloton right now, but in general, as certain markets cool off and heat up again, uh it's gonna be really hard to raise a second round at this insane valuation that you got the first time around if you didn't deliver on your your idea.

Yeah, it's it's interesting too. And some of the best businesses I know uh are completely bootstrapped. They just took a little bit longer, right? And I wonder, you know, when you're talking to companies who maybe are seeking investment, um, is there any times that you talk them out of it? Be like, hey, you don't, you shouldn't take money, right? You shouldn't take this additional risk and and over-leverage yourself.

When does that ever happen on your side of the table? All the time. I feel bad saying it sometimes, but all of the time I tell them, I say, Joe and I have run a number of what we call lifestyle businesses. They're businesses that that is you you build and you run and you can make millions of dollars, but it's not something you need investors for, and it's you doing it. It's your partners doing it. It's a great business, which is so much better than raising money. It is if you can do that, I would never raise a dime if I didn't have to for things going forward. Um, and that is something all of the time that we tell, especially now, it is cool to run a startup, it is cool to be an entrepreneur founder and put that on LinkedIn and Instagram and this lifestyle, like the Gary Veefestyle, that stuff. Like Gary's a great guy, I love his information. He's actually the reason I found out about that he can raise money. I've read one of his books, but um yeah, this lifestyle is not cool in reality. What's cool is building your business from trash if you can. Um, so yeah, it's something we say all the time, especially like there's been so many companies that come out in this like fitness creator market. When it'd be the Shopify for fitness, like we've said with our newsletters and stuff. And you see them and you're like, oh man, you're making your platforms here, your developer, your co-founder developer, you've built this thing and you're doing X. Make this a good business. Don't take an investment. Or I've even seen fitness professionals that have big audiences making a couple million dollars a year that are these like fitness creators, and they're like, Oh, I'm gonna go raise money. I'm like, you post on Instagram and sell programs and you make millions of dollars a year, and you're gonna bring investors into this. Just keep your business the way that it is and keep your stuff and own it and build it. Uh, it's not as cool as it sounds sometimes. Um, and having done both a number of times, I much prefer to build it myself. And hopefully we can steer some uh entrepreneurs in that direction and then have them own 100% of the outcome and build the business and keep that wealth. And then, you know, maybe if it it's it's like a counterintuitive thing as an investor to be like, hey, don't raise money, don't take all our money to do this, but uh hopefully, you know, it comes back around.

Yeah, it will, man. I think it's the right thing to do. And I it's interesting. I've seen a lot of really and I've been part of a lot of really great lifestyle businesses that you said, and it's it's exactly that thing. It's like uh someone who has a vision who's you know more entrepreneurial brings on a partner who's a developer. It's just that simple. It's like you have an idea, go find a developer, work with them, share the company, and then build it over a period of seven, ten years. Like that's people aren't really set out to do that. They always want the, like you said, the sexiness of the investment world of entrepreneurialism. And it's it's pretty crazy. I want to get into this topic too before uh before we run out of time, but um the market's crazy, man. You know, there's a lot of money flying everywhere. Um, people are talking about inflation, right? We're talking about market fears and crashes and real estate bubbles and all these things. Um we haven't seen, I mean, I guess, you know, I don't know. We we haven't seen what I thought we would have seen after living through 2008 personally. I haven't seen that yet. When you guys, what kind of how are you guys acknowledging market fears at this point? Is there anything that you're foreseeing that you're just treading carefully in, or do you think there's opportunities due to it? But or do you think it's just gonna stay like this for a little while? What what do you guys if you had a place of bet, because this is really kind of what we're doing anyway, is gambling at a high level. What uh what do you think?

I think kind of two main things. The first one is it feels like it's all monopoly money out right now on the market, it's just out there, it's flowing, it's it blows my mind. I like I said, not coming from where we come from seeing the wealth and the money that's putting put out is absolute bananas. And I definitely don't think it's sustainable, especially for the interest in a current market. I think it that I think that interest and that kind of darling of a certain investment, uh Peloton stock is a prime example, like one wrong movement it can drop. I'm not saying it's gonna stay there, up or down, wherever you could think it could go, but um, it's definitely not forever. Um but I actually believe that at a core level, and you saw this in some of the recessions that have happened in the past, generally speaking, health, wellness, and fitness is important overall, and people will spend a decent amount of money still to it, like still even with it, you know, not being as great of a market on it because they have to. Because without, I mean, I I lived through this firsthand recently, like without your health and your fitness and your wellness overall, it doesn't matter how successful or money you have, what you do. So uh good or bad, if you have the the means to afford that, which is a luxury in and of itself, but um people will stick to that somewhat. So I think fitness fares well versus some other markets, but I we're very weary of brick and mortar right now. Not because of digital is replacing gyms, it's because I think at a high level, some of these franchises, some of these bigger brands, if you dig into their daily operational numbers, they don't make sense long term for what's happening, especially if people are working from home or traveling or spending more time and money elsewhere and all of that stuff. That's something that I think is gonna have a rippling effect within the industry, more than just the markets being down. And I think what's gonna happen is when that does happen, it's gonna be somewhat swift. And then with that, the interest in the market's gonna go down because people are gonna say fitness is dead, or like that, it's gonna be this overreaction, just like with Peloton. Everyone's talking about how Peloton is down because gyms are up. If you break it on the left side, gyms, the the LA Fitnesses, Planet Fitnesses General gyms, big box gyms, they're always up because people could pay membership and don't go. But if you look at the number of studio numbers, they are not back to 100% normal in any way. Uh, and that has no that's not impacting Peloton in Armand, at least. It's it's the leadership and the stuff they've done and the way they've run their business and the single modality, and I think it tracks back to the fitness side. I would never, I would never just open and own one spin studio, and that's my studio. I would have diversified classes and content in multiple studios, or find a way to build a model. And and Peloton didn't do that for a long time, and now they're kind of scrambling to do that. And people like, oh, I wonder why they haven't done more. It's look at the numbers, how many people were cycling before and people want to cycle now, and how many people aged out of that system in any way, or how many people don't follow fed programs in general if there's not accountability as a service there. So I think it's more the shift in dollars, just like it's happened on the e-commerce side. It's happening in gyms and not in a digital to gym way, but a just consumer interest and habit way. And that's gonna impact the interest in the market and especially brick and mortar. But I also think there's gonna be a ton of businesses that thrive. So we're looking for things that at its very core have great business models and great plans for when it's hot, when it's not, and then kind of everything in between.

Yeah, awesome, man. It's it I was thinking when you comment you said earlier when I started my first gym in 2008, maybe it was 09 when we finally opened. Uh, people thought I was a little crazy. They're like, dude, are you seeing the economy right now? And I was like, well, first of all, I kind of burned my ships already, so I'm in. But uh I also like did a little bit of research and I was like, well, and I did enough to like confirm my suspicions so I could move forward and not doubt myself. But it was like, well, you know what goes up in in times like this? Uh gym memberships and fitness stay strong and alcohol sales. So uh I thought that was not funny, actually. Bad I love both. Yeah, I love both. So it returned out well. Um, yeah, man. Well, this is this has been super fascinating, really interesting. And I think people are gonna glean a lot of uh information and motivation from and clarity, to be quite honest, about how to move forward in in the times that we're in now because they're different, really unique, I think, and also just completely littered with great opportunity everywhere you look. So it's it's a dynamic time for sure. Um, I think it kind of sum it up is where where do you, if people want to reach you, uh maybe they want to interview on a podcast or something like that now that you guys are out in the circuit, or yeah, where where do you send them online? Where'd you like them to go?

Yeah, super active on LinkedIn uh and kind of Twitter sharing the content out that we're producing. And then the the website is you can go to fitinsider.com that's fit with two Ts. So f I t-tinsider.com and check out the newsletter podcast articles. We just launched a jobs board. We're trying to uh if you want to work in the space, it's free. And there's thousands of jobs on there. If you want to work in the space for in one of you know 100 companies, uh go work in a place that kind of fuels your passion and come into the industry. And then uh the email is insider at fitfit.co. And if you have something you're working on, idea, want to chat, whatever, just shoot me an email.

Cool, cool. And I have to uh before we go, I have to give a shout out. I think it was either I can't remember who it was, either Jim Kroll or Aaron DeJong who hooked us up for this interview. So well, thank you both of you, uh, because you're both awesome people, but whoever it was, I appreciate it. It was Aaron.

It was Aaron and Aaron introduced us and and Jim brought it around, I think. So it was both of them. They're both awesome guys. And actually, Jim is Jim's back in in town. I love seeing him, so it's really cool. And Aaron's doing such a good job. He's one of the companies we invested in.

Yeah, mover, the mover app. Um, cool. Well, hey, Anthony, thank you so much. Hopefully we'll get you back in um maybe within the next uh six to twelve months, get an update on the fund and and hear more. But it's uh been an absolute pleasure, man. I'm glad I tracked you down.

Yeah, really good to chat and thanks for bringing me on.

Yeah, ladies and gentlemen, Anthony Benari. Hey, wait, don't leave yet. This is your host, Eric Malzone, and I hope you enjoyed this episode of Future of Minnesota. 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 and 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.