Bill Davis - Build, Buy, or Partner

Hey everybody, welcome to the Future of Fitness, a top-rated fitness industry podcast for over three years and running. I am your host, Eric Malzone, and I have the absolute pleasure of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. Please stop by futurefitness.co to subscribe and learn more. Hey friends, I couldn't be more proud and excited to announce that today's episode is powered by workout, the ultimate tool for modern fitness professionals just like you. There is one thing that fires me up. It's elevating the personal training and coaching industry. For that, the Workout app is an absolute game changer. No more promoting top brands without compensation or dealing with confusing social media links. In just a few clicks, Workout's user-friendly app lets top trainers and coaches curate and share the world's most sought-after fitness brands like Hyperite, Vega, and more. Product lines covering everything from fitness equipment to supplements and apparel. Save time and boost your earnings with generous commissions and bonuses every time your client purchases the product you've already endorsed. Do not wait. Maximize your income and streamline your business with store by workout. Discover more at workout.com. That's wrkto-t.com. Just one-o. W-r-k-o-ut- go get it. All right, we are live. Bill Davis, welcome back to the future of fitness.

Hey, Eric, it's great to see you again. Thanks for having me back. Uh always enjoyed talking with you and look forward to uh catching up today.

Yeah, me too. And you know, uh the last interview we did was was quite well received. And uh now that I've had you know brief moments at Ursa and San Diego earlier, see you to actually meet you in person. Uh I think a couple times at the event, once in the plane. Um, it's uh it's it's great to you know be in real life and and meet people. So um there's so much to talk about with you, Bill. And you're so active. There's so many things going on. And I appreciate your team sending me updates and news about uh what what's going on in the world of ABC. So gosh, I guess where we could start is your thoughts on Ursa. You know, just being uh you know about a month or two um since then. What were your takeaways? How'd you feel?

Yeah, so I'll I'll come at it from two perspectives. I think you're aware, um, very proud and appreciative of the fact that uh I've been involved in a um a uh a council that was formed a couple of years ago called the Industry Partner Advisory Council, that is as a uh um a council established by URSA itself. And uh last year, um Liz Clark, president uh and of uh URSA, actually um drove uh a really positive decision by the board to actually have um three councils in particular uh be afforded uh board representation at the at the URSA board level. And so I this is my experience as being chairman of the industry partner advisory council and recently appointed to the URSA board. I got to think about or observe and participate in URSA both as a board member but also as CEO of ABC Fitness. So uh starting with ABC Fitness, um, we were just incredibly pleased and excited by uh what we observed to be a uh return to what I'd say uh a palpable level of enthusiasm and um optimism about where fitness was and where it was going. Um our booth uh enjoyed just tremendous uh foot traffic. We were able to have just phenomenal uh conversations uh throughout the uh the week. And um it also signified our opportunity uh to launch ABC Fitness' new brand, which also was just incredibly uh well received. So I would say from ABC's perspective, uh the uh show was a really uh positive uh success, and I'd say underscored by a heightened degree of optimism about where fitness is and where fitness is going. From an URSA board member perspective, um I was incredibly proud and um appreciative of all the work that goes into putting on a trade show like Ursa. So a special shout out to that entire team who made that possible. But I would say Ursa leading up to that, they've been spending a lot of time working on um defining who and what they want to be, you know, as Ursa evolves here prospectively. And I just really love the clarity of thought from that vantage point that is coming forward around advocacy, around education, around research in particular, as their three pillars. And I'd say in the context of Ursa 2023, they too would say uh it was a really a phenomenal success and an indication that uh the fitness industry is uh is very much on solid footing and uh you know looking forward in a in a very positive way.

Yeah, excellent. And I I compared to last year in 2022, I mean, what a significant difference. Wow. I mean, like just incredible. The the trade floor, I estimate was five times bigger than than last year in Miami. And the the optimism, the energy, the the breakaways that I went and attended and saw people people speak, especially the AI panel, which we'll get into later, uh, was packed. The room is packed, you know, standing room only. And it was it was really good. So you know, we heard it from ABC and Ursha's point of view. What about Bill Davis's point of view? And is there anything that you saw um that really piqued your interest? Any conversations that you heard that that were quite interesting to you? Was there yeah, any aha moments that came away from the conference?

Yeah, I think I there's two or three uh substantive themes. Um we we find ourselves increasingly in conversation around how do we make the member experience um uh more frictionless, uh more seamless, more um uh more uh technology kind of enabled. And um again, that to me implies a forward thinking by many of the folks that are operating uh all sizes of clubs on a on a daily basis. Now, I think the underpinning to that is a little bit of a recognition that the labor markets and and attracting and retaining talent is difficult, but I also think it's adjoined with the fact that they believe operators believe there's an opportunity to um differentiate and continue to differentiate based on um how seamless they make that experience for their um uh for their members. So that was one thing that struck me. And then you could not help but um just be consumed by a lot of conversation. You made reference to it earlier around artificial intelligence, uh machine learning, um, how and in what ways are those uh really attractive um uh capabilities able to aid in the uh the fitness experience. And um I was I was encouraged to hear many of those conversations, not being purely club centric, but how does it create opportunity for extendability of fitness journeys for members in and outside the club? So those would be the two um most significant themes that I personally uh was energized by and came away um really reflecting upon. I think in terms of innovation, I think one of the challenges or recognition that there were three trade shows in 18 months is the cycle or period of time to expect dramatic new innovation. It was pretty compressed. So I don't know that I came away observing um you know that much new that I necessarily saw in in Miami, uh, but um again, just a lot of excitement about what could be and what may be on the horizon, which I think sets up a lot of exciting expectations as we as we look forward to 2024.

Yeah, awesome. So we'll we'll circle back on AI and machine learning. I think that's a bigger topic that needs to be unpacked more. Uh I want to last time you were here, we discussed forecasts essentially or thoughts of what could happen in 2023, right? Uh crystal ball was dusted off, we looked at it and we and and you made some predictions, one of which was consolidation across the industry. And you know, given the um the economic uh circumstance of of where we're at as an industry, I mean, what if you put yourself one year ago and you're looking at what we're at now, you know, how accurate were your thoughts moving forward into this year? Do you do are you seeing what you thought you'd see?

Yeah. So I am um if I if I objectively were to lay my our financial expectations or performance expectations a year ago to there where they actually are today, I could say they're better, they're better than what we expected. And um but but I think it's important to unpack that because it's not necessarily universal, uh in particular from a geography and or size of club operations. We are seeing we're seeing differences in that respect. But holistically, I think when I last spoke with you, we talked about if you looked at clubs that were customers of ABC in March of 2020, where are they at in terms of recovery or returning to pre-pandemic levels? And in fact, literally in the last 45, 60 days, um holistically, we have eclipsed. So we can now say that those clubs have now uh have exceeded where their memberships um were in uh March of 2020. That's fantastic. But when you then be take that holistic set and you break it down geographically, the northeast uh region of the country is still in the mid to high 80s percent. You look at the southeast um and the west, they're leading the pack in terms of north of 100%, and then the Midwest and South uh South Central, uh, they're uh close behind Southeast and the West. And so point being is depending on where you're situated geographically, you are you are on a different uh recovery journey. But holistically, we've we've uh kind of achieved that milestone. When I look globally, um again, you see areas of the world, uh Brazil as an example where we have large presence on fire in a very positive sense in terms of in terms of recovery and return of fitness. Um uh certain parts of Europe doing very, very well. Asia Pacific, um, which was you know really slow in terms of their return, uh a little less so. And so again, geography in that sense matters. The other dimension is the um uh low price, high volume um is um, I would say outpacing in in terms of recovery that of many of the smaller boutique or smaller uh smaller clubs. So there again, there there are some differences uh there as well. But I would say um across the board, uh what is consistent is the degree of optimism in terms of individuals' commitment to their personal wellness and fitness, and it translating to a substantive return uh to uh membership and or uh club participation.

Yeah, that's great. And I think the key term that keeps coming up here is optimism. Yeah. There's there's so much uh excitement around the industry, and I couldn't say that one to two years ago. Things were kind of bleak and a little depressing at times. There was like no news, good news coming down the pipe. And um, so it's it's refreshing and it it is uh yeah, like I said, it's just energizing to hear. Uh you alluded to it earlier and we kind of started the podcast out with it, but the rebrand of ABC. Um, you know, overall, yeah, I would just had uh uh Jessica Kladniki, she's the CO of KT Tape, which is now KT, and they just went through a big rebrand. Um so it's a big deal, right, going through a rebrand. So I guess let's start off with this. Well, what is your what was your strategy behind the rebrand when you did it? Uh, and what does that mean for ABC and all of your constituency now?

Yeah, believe it or not, it it was inspired first and foremost by our internal internal reality that over the last three years, we have we have firmly embraced a build-by-partner strategy. And in doing so, we've actually effectuated four acquisitions, be it Gym Sales, Trainerize, Fitness BI, and Glowfox. And anytime a company does an acquisition, you, unless you're just buying the assets and not bringing the operations with it, you are inheriting a unique group of individuals that have their own culture, that have their own set of values, that have their own way of operating and the like. And the reality is, having done acquisitions throughout my career, a recognition that to make acquisitions successful, you have to be as attentive to the people dynamics as you are with the capabilities that that that acquisition is bringing to you. And so we were motivated to really uh promote a one company, one team, and uh common set of values uh mindset within the four walls of ABC. So that was the impetus for the rebranding. Now I'll acknowledge we didn't start with a mindset that we were going to rebrand, but as we got into the mission, vision, values work that we undertook starting in 20 uh late 21, early 2022, what I observed was to really do it well, we had to engage as many of the folks in the organization as we could in alignment around shared purpose, common values, and the like. And as I was observing us doing that work and the energy that was really building, I thought, and it was really inspired by our chief brand officer, Michelle Slade, who said, Bill, while we don't have to rebrand, if we're able to take that bold step, it is yet another opportunity to bring the organization that much closer together. Because as a practical matter, we're not asking anybody to just simply adopt what was already there as ABC Fitness, but we could create it as our own. And so we went through that journey over the last call it 12 months, and the the impact that it had in terms of people really being energized by what we were setting out to become was really important. Now, as I look externally, the message that we wanted to clearly convey was we are committing to a branded house as opposed to a house of brands. And the distinction, the distinction is that in a branded house, we are committed to the integration and the natural synergies that can come from the disparate capabilities or solutions that we have. And so we are, in fact, we recently announced the integration of Glow Fox and Trainerize as an integrated solution now available to the boutique studio marketplace. But there are five or six tangible examples that I could give you around leveraging a common a common commerce platform across our different platforms, having a single mobile strategy, having a single CRM strategy, having a single reporting strategy to where these capabilities we're taking the best that we have and we're aggregating it to where it's leveraged, whether you're a boutique operator or you're a big box operator, you know you're getting the very best in terms of that integrated capability. It doesn't mean that ABC has to have just one single platform, but we're going to look for those synergistic opportunities and leverage them as much as we possibly can. And so the branded house was really a signal to the market that that's what we're very much in the midst of uh setting out to do.

Yeah, and I can see it. I was looking on your website. Like I think if I looked two months ago, it showed all the different brands, right? Now it's just ABC. So it's very intentional. I can see that. And one of the things that strikes me, because I I've got to know some of the people from Glow Fox, I've got to know some of the people from Trainerize, uh, all characters, right? Really good people. Uh really like it, really like spending time with them. Different cultures, different people though, right? Slightly, but I could see. So when you talk about, I think probably the hardest thing I would imagine is managing cultures and getting that under time because strategy, right, tactics, those kinds of things um can be you know thought about in leadership and then trickled down. But culture is different. That's people, right? That's personality. So how do you how do you integrate cultures?

So the the secret sauce for me is um I spend an enormous amount of time uh when we're contemplating a a uh an acquisition in the um the culture fit of the organizations, not just theirs but ours and how they come together. And the way you go about doing that is spending very explicit time uh understanding how close or far apart we are in terms of shared purpose, right? What are we what are we here trying to do? And how close is what ABC is trying to do is it to glow foxes or to trainerizes? And what I have found is if you invest that time and foster that level of alignment before you get into any of the particulars of what it's going to take to effectuate the transaction, you're far, far ahead of most uh MA opportunities. And then it really does become one of culture fit, meaning you know, you could be aligned purpose-wise, but if you don't share common ways of thinking and common ways of going about treating people and treating customers and the like, there too could lie in lies some friction. And so um I I believe in investing in that level of diligence, which is hard because in many respects it's very, very subjective, very subjective. But you know, I knew within literally an hour of spending time with both Connor O'Laughlin as co-founder of Glowfox and Sherrod Mohan, co-founder of Trainerize. I knew within an hour of each that we could do great things together. And one of the things I'm most proud of is we're now well into three plus years of being combined with several of these enterprises. And today we have nine founders still part of ABC Fitness from Glowfox, from Trainerize, from uh Fitness BI and the like, Evo in Brazil. And to me, that's a testament that we we got it right up front, that it wasn't a sleight of hand or thought it was going to be something different. That that alignment has stayed true now for in certain instances four years, and in several instances two to three years, which is again, I'd say atypical.

Yeah, so it sounds like a very thoughtful, careful approach to it, which I think is just the the only way you can deal with the the humanity of it all. It's right.

People, the people aspect of business is, I mean, I'm saying the obvious, but it's the hardest part to get right. And yet, especially in MA, it's the area that is de emphasized the most and and tends to be the reason why a vast majority of transactions don't live up to their promise because that human element is not as thoughtfully considered as it should be.

Yeah. Yeah. The strategy we we you alluded to it earlier and you talked and I you and I talked about it before recording. Build by partner. Um I've heard it before, right? Um never really discussed it. But what does that mean to you? How do you know when it's the right time to build? How do you know when it's the right time to buy and when it's the right time to partner?

It's a great question. Um, the I'm gonna I'll take them in order, um, albeit buy versus uh, I'm sorry, build versus buy tends to be the hardest decision. Um optimally speaking, with unlimited resources and unlimited time, you would build, I would think you'd want to build as much as you could from the standpoint that it's organic, it's it's the most efficient use of your capital uh because it costs you a dollar to build it as opposed to a multiple to buy it and the like. But as a practical matter, because you don't have unlimited resources, you don't have unlimited time, and I dare say you don't have unlimited innovation in terms of the creativity that is happening in and around you. Buy to me is a very natural consideration. And determination of buy versus uh buy versus build, it really comes down to an objective assessment of the culture fit that I talked about before, joined with your time to market and ultimately that return on investment that you feel you're capable of making by virtue of knowing that you're going to be paying a multiple of money on what you would otherwise be able to build, be able to build yourself. So that that that acceleration of time to market has to far, far outweigh what what that uh that delay in in coming to market might otherwise represent. Um, it also may benefit you in terms of talent acquisition because they may possess skills that you may not otherwise have, and your opportunity to leverage that as well is another uh consideration. But I would just say time to market and your ability to parlay that on a multiple of money is how I think about the buy versus uh build. The other consideration in that sense, too, is you may have a vision of what you want to build, and the market may not have that yet. It may not exist. And so that could be a tension, or it may not be developed enough to where the risk warrants a buy, a buy decision. So that's another factor. The the decision between buy versus partner, as I indicated out earlier, it's easier for me. In the sense that the determining factor of when you buy versus when you partner is does it truly constitute differentiation? Because if it truly constitutes differentiation, then I naturally would like to own it. And I'd like to preserve that differentiation for a sustained period of time. I'll give you a good example. Many of our clubs as a profit center have childcare. Should ABC have child care capabilities in ingrained or embedded into our solution? Um we need to have that capability, but are we gonna differentiate it, recognizing there are phenomenal nonfitness only uh capabilities out there in the market that we could logically partner with? In that instance, I would much rather partner because we're bringing better capability to our customers. And as a practical matter, I'm really honestly not gonna be able to differentiate myself given how far advanced some of those market alternatives already are. So that differentiation determination is a is is really a key determinant as we think about buying versus uh partnering.

Yeah. And when you look at that, I guess, decision framework and strategy overall, when you look at other industries, other companies um out there, you know, that are current or historical, I'm I'm guessing you're probably a uh a study of history when it comes to business. The uh who's done that well? Who's executed on that strategy well?

Yeah. Um I well, the first the first one came to mind, and it's a little bit, it's a little bit dated, but Cisco, Cisco was phenomenal at this for decades, honestly. Um you could argue SAP uh you know is another one that has done this incredibly well at scale. Um I I am really impressed by how Intuit uh goes about doing it. Uh for those of you that know their tax uh tax software and and uh um now you know all their their uh um personal financial tracking, but they're into the whole professional realm now. So that's another one that I would I would point you to. But this build by partner to me is germane um in every industry. I could probably go through with time, you know, think about an example in virtually every industry where they've done it well. And I would assert um some of your best performing companies over time, um, unless they're just a you know kind of that rare unicorn where they're redefined, they're defining a new class of technology, what have you, which obviously exists. Um, this is a tried and trude you know approach to really uh sustain growth over time. If if you are proficient at the integration back to our earlier discussion, because if you're not, more times than not, I would assert you're likely going to destroy value as opposed to create value.

Yeah, really interesting. So uh we I want to circle back to another thing that we alluded to earlier, which was the artificial intelligence in machine learning. And it's such a hot topic. I mean, everywhere you go, people are talking about chat GPT, and we're sitting here in Q2, just people know of 2023. And uh gosh, you know, everybody at Ursa, it was talked about. It's just been all over the news, you know. Um, gosh, Elon Musk is and all these people are trying to control it, right? And and it's just a fascinating time to be a human being. Uh it truly is. And when I look at it, when we look at it in the scope of the fitness and health industry, I was listening to a talk, and I I think we've kind of people were kind of interested in the fundamental pieces, right? Like, how can this help me with marketing, right? How can this do copy for me? How can this help me with job, like basically time-saving mechanisms? But there's it's gonna go way deeper than that. Absolutely. You know, to me, I'm the most interested in how do we get to better health outcomes using this technology. So give us your kind of overall view of where do you think AI and machine learning are gonna hit the industry, and then maybe how you are looking at ways to integrate into your company and your your suites of software.

Yeah. So a couple of thoughts here. I agree with you. And I and what I marvel at, you know, around uh chat uh GPT is it just speaks to the power of technology and what could be and the pace at which innovation is happening. And again, I you know I don't want to go way too off on a tangent, but the innovation cycle that we are enjoying as a society now, it's just it's mind-blowing. And it's only going to get faster. That's the that's the beauty of where we live in in this era. Um, that being said, um it also highlights the the inherent risks or vulnerabilities that such powerful technology can have if not thoughtfully considering um you know how it could be potentially abused or create vulnerabilities that may not have otherwise existed. And there are now companies very recently that are you know actually saying we're not allowing it to be utilized in our organization until we get the security aspect of this figured out, because in certain instances, programmers were taking code with member or patient or customer data, putting it into it, and and and that information becoming you know unintentionally exposed. And and so the security uh aspects of this, you know, I would just caution people to be really attentive to that. Uh if I could put a public address out there for everybody to consider it's real. The exposures and vulnerabilities are real. Um, that being said, I'm very proud of the fact that literally a year ago, um ABC started to really thoughtfully think about um AI in particular and how it could be effectively leveraged in aiding, not just in driving efficiency of workflows, but actually improving outcomes. And so I'll give it to you from two, I'll give you, I'll give you tangible examples that we're working on in two respects. One from the club operator's point of view, but then also from a members to your point of pursuing a healthier lifestyle and the like. From an operator's perspective, we see AI having tangible um uh benefit in identifying those individuals that are at risk of a trading or leaving their fitness clubs. That could be by virtue of attendance, that could be virtue of nature of activities while in the club, that could be virtue of other sentiment indicators such as uh latency and payment of bills. There's a lot of different inputs that could help identify an individual or set of individuals being at risk or trading. And what it affords club operators to do is to engage with that member in a way that hopefully uh preserves um you know that that uh that intent to you know stay connected and hopefully continue to pursue um healthier um activities. Um that's one dimension. The other dimension on the front end is fascinating opportunities in and around new member acquisition. So the efficiency of marketing spend of am I targeting the right cohort of individuals in the right location to improve the probability of success, that my cost of acquisition could in fact go down, tremendous opportunities there, and being much more curated in the type of offerings that are being offered Eric or offered to Bill that are hopefully going to improve the probability that you and I would be compelled to engage. Another example. On the member or individual level, the ability to leverage it in their fitness programming. And we are we're doing some experimentation again in our trainerized application of can we leverage AI and potentially chat uh GPT to um actually uh aid in the development of training programs and uh nutrition programs, wellness programs for individuals based on their uh profile, their demographics, their interests, their goals, and leverage that in a in a highly kind of effective uh manner as one example. The integration of wearables and the connectivity that that opportunity represents in the information sharing, and again, thinking about um, you know, I'm in an optimal heart rate zone and doing said exercise, you know, the capacity to be able to inform that individual that you know two more minutes of at that level will produce X result. That's kind of real time how that you can imagine AI and machine learning could aid in in advancing an individual by that, what I'll call real-time coaching type of experience. So I could go on and on, but I'm trying to give you some tangible examples that we're we're in the midst of doing some piloting and experimentation ourselves as we speak uh to really assess its efficacy.

Yeah. Yeah, I think all that's fantastic. And I do agree. I mean, ultimately, from all the conversations I've had about AI, which I've had a lot because I'm just really curious about it. I use Chat GPT every day. It's just always up, and I'm always prompting with different stuff because why not? Right. Um, but there's, you know, people lie on a spectrum. There's the people who are optimistic, and there's the people who are horrified, right, of what this could do. So where does Bill Davis sit on that spectrum? Are you optimistic? Are you scared? I mean, you said both, right? Like, hey, there's some serious realities here.

I am much more on the optimistic side of the continuum. I'm probably I just naturally, given my uh demeanor, I'd call myself cautiously optimistic. But I think the potential is really powerful and real. And um, you know, I think that I think that literally a matter of years, we're going to be witnessing the positive effects that that this type of technology is going to have. I don't think, I don't think our our natural response or instinct should be one of fear and and try to uh eliminate it. I think it's how do we harness it in a way where it can produce you know positive outcomes, both at the business level, but also at an individual level. So in that sense, I'm very optimistic.

Yeah, yeah, good. Me too. Uh, you know, since I got you for a few more minutes, Bill, I want to talk to you about something that gets come up here. It's come up uh recent conversations, and then I was just in Brazil, my wife's from there, so I was there in February. That market is booming, man. Like there's something about like what is it about the Brazilian market? And I could say just from being there that, you know, I went to a couple gyms, my wife uh went to a CrossFit gym. Um, you know, so all these different sectors from boutique to uh SmartFit, which is their big you know chain down there, it's it's just busy and it's it's culturally seems to be really taking on in Brazil. So what insights do you have about that market? Why is that why is it so hot?

Yeah. Um it's funny. I so um we have a fantastic uh gentleman, uh Paulo, who who runs our Brazilian operations. Um and uh he he often jokes with me that the vanity, the vanity of Brazilians uh aids in their pursuit of uh the pursuit of fitness. Um being more recent in my exposure, I I uh I just take it at face value. So you your wife being from there, maybe you could lend some support or or you could uh disavow me of that. But that that's one perspective that you know he has offered uh for some time. But um I also think that there, and I I sense this even here in the US. Um, I think just think the options are a little bit uh more vast uh here in in terms of the the scale of different choices. Um but the I really do genuinely believe that one of the tangible positive benefits that have come out of the horrific COVID experience is people's uh recognition and taking a stock of the importance of their wellness and overall and overall fitness. I think most people are are genuinely trying to find a way to live a healthier, um healthier lifestyle. And I think some naturally are doing better than others, but I think the prospect that what you observed down there was just more of that mindset and in and behavior is is really what's at play. I don't think it's more complex or more um uh location specific than that. It's really, you know, it's you know, we we talk about we talk about certain regions of the US being more active lifestyles and the like. Um, you know, I think I think the same could be true. Um, you know, so I I don't know if you were in São Paulo or not, but I observed it there. You know, that's uh I'd put that in the category of just very active lifestyle and and really being amplified by what people experience through the COVID experience.

Yeah, I think there's a couple of things at play. Also, I I think number one that people don't really hear, don't really realize how big Brazil is. Oh, yeah.

Second largest second largest fitness uh market in the world.

Yeah, it's it's tremendously big. So there right there you have a significant uh market characteristic. And then it's right. I mean, the first time I was down there, I think was uh gosh, about 11 years ago is when I first went down there. And I still owned a CrossFit gym. My wife was telling me, like, I just we just saw it kind of pumping in and gyms starting to pop up. She's like, oh, it's gonna go crazy down here. People are so uh very very focused on their vanity and their appearances. And sure enough, like every year that I go down there, it's like, oh my God, that gym just popped up. That one's packed. Like it's just it's just an interesting thing to see. So uh it's it's uh yeah, I just want to touch, I was curious about it because it's come up so many times.

Um, and it's all I will add to it, if I may, because we have started to branch out to Latin America more holistically, and we're observing similar trends um, you know, in markets, obviously like Mexico, but Colombia, uh Panama. Um so we we're we're we're very bullish on on what we're observing uh in that region holistically, and um again encouraged encouraged it. And I and I I really back to what I said earlier about the regions of the world and the country are kind of behaving differently. There does seem to be, no matter where you are, there is element of growth. It's it's in some respects a question of at what pace or you know what rate it's occurring. So I I do think what we're observing um is is not uh you know concentrated or or limited to just Brazil or certain segments of the world. It's I I dare say more holistic than that.

That's great news. Um so for one final time or one more time, I'm gonna ask you to dust off your crystal ball, Bill, and and we can discuss like uh the economic uncertainty. I feel like we've I feel like the conversation for the last three years has been about economic uncertainty, right? Like we're in a state of economic uncertainty. But you know, in recent events, we have the Fed starting to maybe slowly, you know, hit the brakes a little bit, right? Um, you know, we're starting to see uh you know the tech sector come back. Um people are still talking about recession. Who knows? We may be in it, we don't really know for sure, right? So if you look at the remainder second half of the year, um, you know, what do you see for the fitness industry overall? And we'll we'll just kind of keep it in that that perspective.

Yeah. I've always and I I I've studied finance and economics in college. I always a bit intrigued by the fact that a recession isn't known until after it's done. It's like I've never gonna get my head around that. But um, but that being said, um, you know, the um the the trajectory that we have seen through the first um four months of the year, so through through the end of April, um, as I indicated the earlier, has exceeded our expectations. So the start of the year has proven to be better than we expected. Um, I then looked to um what is the expectation of uh expansion, most notably in terms of new clubs opening and the like. And I would observe two things for you. One is supply chain issues that kind of define 21 and 22 really have seemed to have subsided. So the lead time on air conditioners and equipment and building supplies seems to have gotten back to a a bit more of a reasonable state. So that's good. So there is optimism around many of the larger brands, around their commitment to return to historical levels relative to new club openings, which I view is smart money making a decision to um you know to continue to grow. Then the other the other dimension is um we are um witnessing a normalization and we had over the last three or four months around cancellations and freezes of memberships. So both of those have come down pretty measurably. So um I take all of that into consideration and not trying to predict if we're in a recession or about to go into recession or what have you. I actually believe that the balance of 2023 is going to be good for the fitness industry. And we did do what gives me added assurance of that is we did do a study that we talked about at Earth at one of the breakouts. And one of the things that we pulled the group, several thousand folks that we uh we surveyed was where does their fitness membership fit in the relative priorities, such that if there was a recession, where would it fit vis a vis you eating out or going on vacation and the like? And for a majority of them, they said it would be the last thing that they uh did away with, and um was encouraged by that. In terms of some recession kind of insulation of protection in the context of how people are thinking about the essential nature of that spend. The other thing I'm encouraged by, I'll come full circle back to my time working with Ursa. There's a big legislative initiative ongoing right now around the FIT Act. And I don't know if you and your listeners have kind of honed in on that, but this is all about trying to get um uh reimbursement, you know, for uh through FSA you know type uh accounts uh to um uh you know to fray or offset you know the cost of fitness activities and and and other sports activities and the like. So there's optimism that that could be yet another boost in the arm for uh for the fitness industry, knock on wood.

Yeah, and that's uh that's been around for a while. I remember you know that effort.

It really went dormant as as kind of Congress went through transition, but it it got formally relaunched in March. So it is it's on a uh new path. In fact, I'm gonna be in Washington, D.C. uh as a small contingency meeting with legislators next week. And um so I'll have a better sense of of you know how they're feeling about it, but it it does in fact have new life, which is uh pretty exciting.

Yeah, well, go get them, Bill. I'll try. Uh and it's it's right, it's uh it's P-H-I-T, Fit Act. Is that correct? Uh yes. Yeah, okay, so people can look it up. Um lastly, as as we wrap it up, how how can we help you? What uh you know, our community, our listeners, if if you need what do you need help with? What would you like to hear from people about?

Well, it just um a lot of what we talked about, and that is um first, you know, the state of the fitness industry holistically, and and um are are people, you know, to your comment questions to me, feeling a sense of optimism or a sense of you know pessimism about uh you know their club operations, one. But then two is um I I can never get enough of how is technology being thought about, how is technology being utilized to aid in in you know delivery of your uh service and offerings to your uh membership base? That um because to me, um you are at the front, your your uh listeners for the most part are on the front lines of innovation in terms of what's gonna make their lives easier and how can uh participants like ABC Fitness help in that uh in that effort.

Awesome. Awesome. Well, Bill, it's always a pleasure. Uh I really enjoy our conversations. I always have some solid takeaways, and and I would imagine that means the audience does too. So uh appreciate you spending an hour with me today in the middle of your week. And uh yeah, it's it's uh it's always great. Ladies and gentlemen, Bill Davis. Thanks, Eric. 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. 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, get in touch with me, simply go to the feature of fitness.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.