Bruce Smith - Hydrow & Live Outdoor Reality

Hey everyone, welcome to the Future of Fitness, a top-rated fitness industry podcast for over four years and running. I'm your host, Eric Balzone, and I have the absolute pleasure of talking to entrepreneurs, executives, thought leaders, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. Please stop by futurofitness.co to subscribe and get our interviews with summaries delivered straight to your inbox. Thanks for listening and on to the show. 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 products you already endorsed. Do not wait. Maximize your income and streamline your business with store by workout. Discover more at workout.com. That's w-r-k-o-ut.com. Just 1-0. Go get it. All right. We are live. Bruce Smith, welcome to the future of fitness. So delighted to be here. Yeah, it's uh it's gonna be a lot of fun. There's so many things I want to talk to you about. I just got to figure out how I can optimize the 50 minutes that I have with you to record all this. Um, you know, we we were just having a great conversation. I mean, I think one of the best things uh about your story, in my opinion, is that you're a coach first, right? And then you've built this, you know, connected fitness uh hardware content machine uh from that experience versus like, you know, it's it's atypical, right? It's not normal, um, I think. And you can explain more of that. And then there's a lot of really cool topics I think we can dive into. I mean, you you're interested in generative AI, you're interested in the quality of consumer information when it comes to health and fitness in general, two things that I I think are really important topics right now because there's there's huge movements going on right now. And you know, for everyone, this is we're still in Q2 2023, so who knows what who knows what will happen in Q3, right? Um, but anyway, let's start with this, Bruce. Um, give us a little bit of your origin story. How'd you get to be the CEO founder of of Hydro?

Uh so I you know, I've been an entrepreneur my whole life. Um I started when I was like a little kid mowing lawns and you know, selling stuff to the neighbors. Um and along the way I got sucked into this rowing thing and I tried very, very hard to make the Canadian national team. I did not make the team. I ended up um, you know, like very solidly mediocre as a rower and and had like a pretty giant chip on my shoulder and um ended up coaching. So I, you know, I moved to Chicago and I thought I would sneak back on the Canadian national team, but I kind of combined this like coaching thing and training and realized at some point that I just wasn't good enough to ever make it. Um and I kept working. So like I was doing like you know, jobs like flipping, flipping real estate, and I started another company in the in the late 90s. And uh rowing was just this like lead motif that kept going through my life. And I kept coaching like every afternoon. I go down to the water and I coach like high school kids or I coach masters or ended up coaching at Dartmouth. And then I ended up you know getting really curious about it, and I ended up um winning trials in the United States, and you can, if you win trials, you can go to the world championships. And so I've won trials here 10 times and have been to the world championships representing the United States 10 times. So it really was like this organic um journey where it combined all of the entrepreneurial stuff that I've been doing and this um this like thing with rowing where I tried, I actually tried to quit rowing a couple times and I just like I couldn't. And so I get getting sucked back in and and it it merged into hydro. And it's been such a fun five years because it takes everything that I've learned about being an entrepreneur and um and all of the coaching stuff, like literally, you know, from working with people to the actual product and it combines it into one exercise. And it's it's um it's been a wild ride. Really fun.

Well, I I and you've been in what I'm I think saying dynamic is an understatement of connected home, you know, fitness uh and and the category that you're in and the product that you're in. I mean, these last five years have been absolutely bananas, right? So uh maybe we start with that, like the journey from the first piece of technology uh to you know how you've raised funds to uh the peak of the pandemic, and then now that everything's kind of you know started to get back to whatever we're calling the new normal now. Like walk us if you can through, I know that's a lot of storytelling uh over five years, uh, but you know, what what has that experience been like and maybe give us some of the highlights?

So we were looking around the world um in 2017, 2018, 2017, really. Um I was working at a rowing club here in Boston. Uh it's called Community Rowing, and it's a nonprofit, and it's really not a rowing club, it's really a social service organization that uses rowing to help help people feel better every day. Or at least that's how we treated it. And I worked there for 10 years. And um the big thing was that we we realized like actually, if you take this experience of rowing and you give it to people, their day is like measurably better. It's like like people actually feel like substantially better. And it's not just the physical work, it's the community that you get from being on the water together. And we were, I was also, you know, super curious about Peloton, and I'd been watching what they're doing, we're doing in Soul Cycle and this change in fitness and how people were consuming fitness. And I always kind of scratch my head about bikes because like when I was coaching and somebody would come down with tendonitis, you know, in their wrist, and I would they would say, like, coach, I can't go in the water today. I would say, okay, you're on the bike for three hours. We were on the water for an hour and a half, you're on the bike for three hours, because it's just not great exercise. So I actually like I was um highly motivated to try and connect what was happening on the water, which I knew is so cool, um, to what was happening on rowing machines. Because what I didn't want to have happen is for a non-rowing company or a non-rowing, I don't know, group of people to start um selling rowing machines. Because I I know, like, I think everybody knows at this point that there is an inevitable shift towards higher quality exercise. And rowing is the best modality for exercise. It's like rowing and swimming and cross-country skiing, use your whole body, way more efficient than biking, way more efficient than running, better for you, that we can go into the physiology um later. But basically, we needed to connect the beauty and magic of that teamwork and that making your day better to rowing machines, because that is just so much more accessible around the world than building rowing clubs. Because I I did actually like originally start with the idea like, okay, we're just gonna build run clubs everywhere. And if there's not water, we'll make water, you know, we'll dig a hole and we, you know, like I've actually I've I've worked on projects like that. There's a there's a race course in Sarasota that I, you know, worked on with with a with a group of people and like literally like we dug the hole bigger so you could row on it. Wow. So that was like the original idea, but I think all really great digital experiences start with that analog. Like there has to be a great analog in the world. And running is like, you know, I'm definitely kind of a chauvinist, but it is it is a special experience. Human beings are made for rhythm, they're made for moving together, and those are hardwired like deep, deep, deep in your brain and places that you can't access. And when you experience it, you feel better. And so you get the amazing physical benefits and the experience being on the water. And that's why we started the company, really, is to deliver at least a percentage of that splash and sweat of being out on the river to, you know, to you in your home or wherever that may be.

And how did you go from understanding that conceptually, being a coach, having the experience, right? Undoubtedly, you put in the time, you know, in the rowing sport in, you know, uh in the community. How'd you go from that point to raising so much money, right? Over that period of time. Like that's that's coaching does not necessarily to fundraising, right? Like how do you think that's a good idea?

Coaching is antithetical, you know, coaches in particular. They're like, please do not involve me in that. Um and um so it's entrepreneurial is the first thing. But the other piece of it is um in my job at community rowing, I worked there for 10 years, and I had to like it was a nonprofit, so we had to raise money. So I had to use words to describe what was happening out on the water. And the truth is that like rowing coaches um are train and rowers are told not do not talk. You're not allowed to talk in the boat. If you're in an eight-person boat with a person steering, the ninth person is the only person who's allowed to talk, everybody else quiet. And in fact, if you do talk, you're told to be quiet, like shut the, you know, shut up. And um, the most famous rowing coach in the world, Harry Parker, who coached for 53 years at Harvard, his his uh one of his nicknames was the Sphinx of the Charles, because he literally never, he just he was like, zip it, you know, do not talk about this. So I had to develop some um descriptors around what's actually happening with rowing. And uh it really, you know, like I think that was like foundational to being able to communicate about the opportunity. People just hadn't tried very hard before. And so we had to develop this whole language about communicating what the opportunity is. It's 86% of your body, it's synchronicity, it's finding that state of flow. It is the best possible exercise. And when you track that back, so the first big institutional investor we had is L. Catterton. And their entire thesis for all of their portfolio companies is they invest in the best thing. Like whatever, like whatever the category is, they find the best thing in that category and they invest in that because they know that as long as the category is like overall solid, then that is going to be a successful company. And I think being able to articulate that was the um was the major unlock. And also just some really good luck that I built um like long-term relationships with people who who trusted me to put their capital to good use, and that got us off to a really fast start. So we got a couple investors early in the company who who knew my work from community rowing, and they were like, okay, we'll we'll back this guy. Um, he he might be able to do something. So I think, yeah, I think that's basically the story is that just being able to articulate what's happening in Ryan, you know what's so crazy is that um so in the world now, Boys in the Boat, you know, is a book. There was a New York Times bestseller um probably like 15 years ago. It is actually coming out as a major emotion picture developed, uh directed by none other than our friend George Clooney. So there's this thing happening in culture generally, where I think the language around drawing and synchronicity and teamwork is becoming actually like relevant again. You know, because 100 years ago it was the most popular sports front page of the New York Times every week.

Uh that's I'm excited for that.

That'll be good. Uh it's I've seen it, it's freaking great. It is a great movie. It's like Chariots of Fire and Miracle and Ice combined, equally like times, like Chariots of Fire times Miracle and Ice. That's great.

That's great. I've had a lot of admiration for rowing um over time. You know, I I told you before I get to uh I have the pleasure of working with Shane Farmer Dark Horse Rowing when I may. Yeah, but so cool. He's awesome. Yeah, it is awesome. Uh my time at Boston College, um, you know, I was on the both the swimming and water pool teams, and the rowing teams were the only ones they were leaving the dining hall when we were showing up after practice. Like they were up earlier than like I thought I was miserable. And then I look at these guys, I'm like, gosh, this is just you know, they're up so early, it's so dark, it must be so cold. Um, and you know, I always thought, like, God, what a unique sport and what a great, like there, and there's something about um shared suffering that creates such a strong bond. And and rowing, there is the you know, anyone, even if you've just been on like a you know, the the most common C2 rower out there, like you know, if you pushed hard, there's places a rower can bring you that's very few pieces of equipment or experiences can take you to. It can really get dark sometimes in a good way. Um and I'm looking out, like, you know, right now, as I was telling you, as we're recording, I'm I'm on the 16th floor of a building in Vancouver, British Columbia, in Cole Harbor, and I'm watching, you know, rowers come out in the morning, and I'm wondering like, how are you trying to capture that experience and putting it into someone's home? Right? Like, how did how what's your approach to that? What's your thought approach? Because that's that's not easy, right? That's a very visceral experience. You got water splashing, you got elements, you got, you know, the the team, all that. So walk us through how did you how did you approach capturing that experience and putting it in someone's home? Yeah, it's a really good question.

And it's um growers have a very particular view of themselves. And one of the things we had to do is kind of like break that, you know, like um, we had to make art, like for lack of a better description. I I honestly, like truthfully, I think all business is art, you know, like it's creative and we're trying to make something new in the world. And anybody who says that it's like, you know, just pure capitalism, like they they're misunderstanding or they're making really crappy products, you know. And so we did three things at the same time. We created software um to deliver the experience, and we built this new hardware to transform rowing machines. I know Peter and Dick Dressigak are pretty well, like I've met them many times over the years, and I really respect what they've built. I love concept twos, but it is a machine designed exclusively as kind of a Rorschach test for like, are you one of us? You know, like can you survive the pain? And rowing has this like extraordinary ability to deliver flow state faster. Like there is this um rowers we uh in our around here we call it rowing row rowing tragic, and rowers love to talk about the pain and the suffering and all of it, like the you know, that like we have up at 4 30 in the morning, and I've I did that, like I've done that for decades. Um, I would actually, you know, wake up at two in the morning to drive down from Vermont to coach at five, like miserable. And the truth is that the kernel of rowing is actually like pure joy because you're turning on um your posterior chain, your psoas, your glutes, um, all of the basically like the entire mechanism of your body is getting turned on all at the same time. And that creates this uh feeling. And rowers can articulate it. People don't have words for it because they're not muscles that you usually are aware of, but it's it's the same as throwing the perfect punch, it's the same as doing a perfect um Olympic squat, like it's this deeply satisfying thing, but you're doing it in a flow state on water, out in the river, like it is the most beautiful, it is the most beautiful experience you can have. So and rowers are like, no, it's not. Don't don't let anybody know. Please stay away. Like, let's all yeah, like don't don't bring those people. So um the first thing we did was uh try and um shoot content, you know, and we we put a whole bunch of cameras out on the water at the same time, and we broke all these rules, like uh row our athletes talk and rowers don't talk. So, but that's part of the art. Like it was it was breaking something to create a heightened version of it that could actually get translated. So the hardware is smoother, the software is seamless, and it's not the full experience. I don't mean to suggest that it is, but it is a percentage of being out on the water because you capture with you know, you're encouraged to flow to flow with the athlete to row on the same rhythm. We change the name from stroke rating. So when rowers go down the go get out on the water, they wrote like 24 strokes a minute and everybody talks about stroke rate obsessively. We change that nomenclature, so we actually call it the rhythm number because we want that, we want to plant that seed. Every time you sit down on the water, every time you sit down on the rower, you have that transformative, like, oh, I really do feel flow right away. And it we didn't know if it would work, uh, but we have an NPS of 87. And um I would say that uh almost everybody who gets a hydro, they they buy the hydro and they think they're buying a rowing machine. By their third work workout, we get these notes backs that's saying things like, oh my god, I had no idea that it was this satisfying. And I wouldn't say it's like fun, I would say it's satisfying, which is better than fun, I think.

Yeah. And you know, when you look at that the overall landscape of, you know, we'll just call it uh indoor rowing, rowing machines, right? Uh, there's I feel like it's in a it's a still emerging market for sure. Uh and feel free to you know disagree. But and and when you look at the landscape, I kind of see there's like Techno Gym. I was actually with some of the executives at Techno Gym last week, and they're giving me the tour and showing them the machines. I'm like, oh, beautiful machines, right? So you have this, I know there's like some some other ones that are like really designer like handmade, right? I can't remember what what brand it was, but Shane was telling me about it. And then you have like the workhorse, right? There's like the concept too that's just you know, in like uh in I found one in the the belly of this building here, you know, down in the home gym, right? They're like everywhere that they're just like 2004, it still works. Yeah, they're in the dark corners, right? Um so when you look at the overall landscape, where where does where does hydro sit? Like how do you how do you stack up against, for lack of a better term, competition?

Um, yeah. Yeah. So uh indoor wrong is has the highest compound annual growth rate of any modality for fitness machines. And so there is like, and that's just the process of education. Can we know we've done a some big studies, uh, we've spent a decent amount of money doing it, um, that show that as soon as consumers get educated about uh the choices that they have, they all choose wrong. And that's just so that is inevitable. We're part of that movement, you know, we tell that story. Um the other piece is that um we really like we believe in that experience of water and flow and rhythm, and it is radically different than a fitness class. And so the you know, the fitness class world is uh super compelling, the music's great, it's a dance party in your house, like get the adrenaline going. It's it's awesome. Like no no knocks and Peloton transformed the world with their product, and huge respect for what they did. We're doing something different, we're building um like a long-term connection and relationship to people, and we wanted to work so that they get connected to the athlete on the water, they get connected to a natural environment. So there are some pretty compelling studies. Um experience of nature is a key pillar for health. You know, like you need to experience nature to feel satisfied with your life. Digital experiences of nature and specifically water actually have that same impact on your brain. So delivering that immersive environment. The other piece, this is a little more nuanced, but it's worth talking about. So we film live outside, and you just never know what's going to happen. Like you really don't. And when you think about media, like, you know, dogs bark and we run into bridges and like you know, boats zip by and that stuff breaks, and and sometimes everything goes perfectly, but that's you know, rare. So uh, and we we highlight that and we have tons of cameras to capture those special moments. But think about the media that is um most interesting for a lifetime, and it all has that unpredictable element, whether it's live sports or whether it's the news, like that experience of the world we think is crucial for that lifetime relationship. And everything else is kind of like exertainment, and that has a shelf life. Um, when you inject reality, we call it live outdoor reality, which is sort of a silly term, but it's it's like that unexpected always drives, like we call that the third character in the workout. So most important person is you, second most important person is the athlete on the water, and the third character in the workout is is that experience of reality, and it is constantly driving um, I would say like surprise and delight moments. And it really like it honestly works very, very well. Um, people really enjoy it, and it and it's just getting better, like, you know, over time as we think about what's going to happen with glasses. Um, I had some Nreal glasses on the other day that um they were pretty comfortable to wear, they were quite immersive, they had a hundred fifteen degree field of view, and you could wear them and they were off your face, so you could actually like use them, and they had to be tethered to your phone. But true, we filmed you know, 360-degree content, and that's gonna be just unbelievably magical as we go forward. So so we see this as like the beginning of a really long journey. This isn't like a five-year play, this is a hundred-year company, and we want to deliver that immersive experience. It's a key pillar for whole health.

That's great. The in the experience for the consumer, um, I imagine on demand live classes. Like uh, I also heard you say, I think in an interview, that there was live one on one coaching available through. Did I did I hear that right? So give me like what what are the menu of experiences that's that a consumer has with a hydro?

Yeah, so um all of what you've described, but we're we love filming live outside live. Outside and broadcasting from all over the world. So we travel to uh where did we just get back from? Singapore. No, so not Singapore, Japan. We were in Japan for the uh the cherry blossoms on Mount Fuji. And I've seen the early shots, and oh my god, it's like so we we take you to these places, the you you know, they're just they're crazy and so much fun to go to. I'm really jealous. I, you know, I have to stay home and work, and the athletes and the crew get to go. Um so broadcasting from those uh locations all over the world. And um we have that interactive experience. So uh we do some Instagram live stuff, but we also like during workouts for milestones, if you're passing a milestone, like we have that interactive shout-out going back and forth, and especially like you know, the superpower users get really they people get excited about that. Um, you know, that that person on the other side of the world talking to you is is cool. And then uh this is the most interesting thing that I think we discovered, like when we for rowers, you sit down on the machine and you push your legs really hard. Like that's just that's a given. Like that's that's where you start your work. People who have never rode before, and that's about 97, 97% of our customers have never owned a rowing machine and never rode. So uh they sit down on the running machine and they actually don't intuitively about a third of the people don't intuitively push their legs down hard. So they they actually don't get a workout when they s when they first start. And their splits are like in the threes and the fours, like 330 or four-minute splits, which is like really, really, really slow for anybody. Like even if you're like a you know 75-year-old uh granny, like that's like a really slow split. You should be in like the two forties or something like that. So when we saw those numbers start to come in, we realized, oh, like people really need that um that opportunity to learn. So that live one-on-one coaching is something that we launched. The pandemic shifted the paradigm, so everybody's really comfortable on Zoom now. Um, I think five years ago it just wasn't realistic to think that people could do that, but now it's uh super popular and uh literally 100% uh satisfaction with that live coaching. It's really, it's really good. Oh, that's great. There are a lot of a lot of good companies in the space who are doing that live one-on-one coaching now.

Uh you know, when uh I think something that's probably on everyone's mind who's listening, because you know this is kind of an industry podcast, is like and I was talking to uh I don't go over quarterly reports. It's not something I don't do those deep dives, but I talk to people who do. And you know, I think there's something really interesting is like uh a lot of people um you know who focus on like the in-real life experiences, the gyms and the boutiques, you know, they looked at the the the pandemic darlings, right? The these huge spikes and then um and then kind of the the what they see as the demise of connected fitness. I I don't see it that way. I I look at it like I would imagine, and you can provide clarity or or tell me I'm wrong, is like if you took you know 2019 and you took today, right, and you drew a straight line, it's trending up, right? Sure, there's this huge spike, right, that happened over the pandemic. But I mean, what do you when you look at the connected uh category overall, like how are you feeling about it? What what how do you explain it to people what happened over the last three years? And then uh, you know, especially I'd imagine, you know, with when you look at like down rounds that are happening in a lot of these companies, and uh, you know, that that's it's tragic. There's people behind this, and that's something I always wanted to know. So, you know, there's real people behind this, right? So, anyway, uh give us your take on that. How do how do we look at that?

Yeah, there are two or three dynamics at play. So um Peloton got started before the pandemic was a glimmer in anybody's eye. Um, same with hydro. Like we had no, you know, nobody had a clue that that was gonna happen. And so the value proposition that we were selling, and John Foley raised, you know, uh, you know, billion dollars against was this is more accessible, less expensive, and really good, you know. And so Soul Cycle's awesome. You should still go to SoulCycle. He didn't say that actually, but Soul Cycle is awesome. You can have SoulCycle cheaper, better, faster in your house, and you'll use it more. And it turns out that that was true. And um the pandemic happened and it it it was like this gravitational pull on everybody's logic. And so all of a sudden it became the only thing, and nobody knew the outcome of the pandemic, and it's hard to remember just how dislocating that was. Like, literally, you weren't you weren't allowed to go outside. Like, yeah, I lived in Cambridge, Massachusetts, and you had to wear masks outside, like you know, bananas. And um, the pendulum swung really hard, like way, way, way over. But the way that people are, you know, the pendulum swings back. And the the basic premise around the value proposition for consumers hasn't changed. Like it's the same as it was before the pandemic. And we also know that market penetration is just like it's not like the pandemic happened, and every single person who's ever going to buy connected fitness bought connected fitness. It pulled the the people who were considering, like who were considering in the next two, three years to purchase. They all got pulled forward. So there was there was a huge pull forward in demand, but it's just a wave, and there's a big trough behind every wave. And we are starting to see the end of the trough, and actually, our Memorial Day sales, this uh Memorial Day, we're like right on track. And it's not gonna be, it'll be like another year before things look like I would say, like quote unquote normal again, but the overall market penetration is gonna continue, and you will be able to draw, as you said, draw a line 2015 to 2025. It will be a straight line with um, like call it, you know, eight, 10, 10, 12% market penetration growth every year. And for us internally, like when you compound that with the shift from less efficient to more efficient exercise modalities and uh really great products, um, we see a, you know, we continue to see a very bright future. And um, I don't think that that has changed. In 2030, when market penetration has reached 50%, that's when things will change in the United States in terms of growth. But the whole world is only like the market penetration is under 10%. So, you know, this is this is the ultimate luxury. Feeling great is the ultimate luxury, and whole health and people's ability to measure and people's ability to actually do not fattish things that they got sold in late night infomercials, but actual substantial things that really do work and are measurable, it's the ultimate luxury. And and our view and Al Catterton's view is that this is an inexorable um march forward in you know, in terms of people feeling better, and we have a role to play in that. So we're we're super bullish about it. I watching the you know, the behavior over some of the other companies, like the dynamic around the valuations was such that people were writing checks with free money, you know, like the interest rates were zero, and so money was just incredibly cheap. We um we tried to do a SPAC, we didn't, thank the goodness, you know, um, because we would have been in that situation too, where we raised like too much money, spent it all, and we're worth zero. But we um combination of you know, better lucky than good, and and maybe a little bit of good, um, we didn't pursue that really high valuation. When the world changed, we took our stock price down, uh, but not to zero. We've we've maintained really great enterprise value and uh we're continuing to march forward with that. So, and we're and we're basically done fundraising at this point. We're you know, we're in a good position as a company. So yeah, yeah, it's really it's a super interesting dynamic because you got those two things. You got the pandemic, and then you've got the inflation rate and the Fed, you know, raising interest rates. And so money has a different value now. You just can't go out and buy customers, you have to buy profitability. And um it was disastrous for companies that didn't get far enough ahead where they could become profitable really quickly.

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That's a really good question. I think that um delivering substantial, measurable value that people feel, you know, and it can't be something that's driven on charisma. It has to be something that you actually experience in your life. Charisma has a shelf life. The best TV show in the world, seven, eight years maximum, you know, and then you have to go do it again. And creating those great TV shows, like I am so grateful I'm not in that business, you know. Like we are in the business of building lifetime relationships with people and delivering real value and saying this is the best thing you can do for yourself right now. And you will feel better. And this is the um guaranteed value, the hydro high that you get every time. And I think that that creation in people's lives is what differentiates um companies that are directed with a clear North Star around whole health versus companies that are directed by entertainment numbers or engagement numbers, like it's that's that's the wrong measure. You know, you got to deliver real value, and that's that foundation for a hundred-year brand. Um, if you're delivering a kitchen sink, if you don't have a point of view about what whole health is, if you can't um if you can't build a database around personalized interventions, if you don't understand motivation, if you don't have a clear view of all of the ingredients of whole health, which is not just exercise, um, then you're doomed to not deliver value and you're doomed to eventually lose your customers.

I yeah, for people who are just listening, I'm smiling right now because one of my favorite things when I hear from executives is like, well, we're actually focused on health outcomes. I'm like, oh, thank God. Like, you know, like that's just that's uh because I think that is the North Star. I mean, if it's uh that is for the industry, and I've talked about in so many ways. I mean, we'll get into some other areas, but you know, I've heard some talks on AI and and you know, all these different tactical things, and then you know, uh someone just finally raises their hand and be like, Yeah, well, how do we get better health outcomes? I'm like, ah, that's the question, right? That's the question. I think everybody who's been in the industry for a long time is ultimately what we want. And we've uh yeah, you know, mediocre job of getting it out there, at least in the Western, you know, in the Western world. Um that that's actually a really nice segue to something I know that both of us want to talk about, which is like there is this awesome trend, right, towards um quality of consumer information when it comes to health, wellness, and fitness. You know, we we referenced Huberman, you know, he's a great uh example of someone who's taking you know proven data and information, studies, things that we can rely on, and distilling them into the public eye and giving people that information. And traditionally, I mean, you look at the fitness industry forever, it's been this. I and I used to survey people all the time who are my clients, and uh, you know, one of the biggest frustrations they always have is they just they didn't know what was true, right? Like eggs is always an example like are eggs good for you? Eggs are bad for you. Well, ask me, you know, next month I'll have a different answer, right? And that's just a small little piece of it, but I know you're noticing that trend as well. So, what does that mean to you? How are how are you seeing that unfold within uh within our communities?

It's so interesting. Um, so we're a long way from you know the promised land where people buy something, they know what it is, and it does the thing that they were promised. Um there, I think there's this kind of semi-toxic um approach that Americans have where it's like their fault. Like, you know, like we're the you know, the puritanical like, you know, take responsibility, like you're told like buy the advertiser, and then you'll get six pack abs, but you don't, and it's because you were weak and you didn't use the advertiser enough. And you know, if you just do P90X like nine times, you'll you know, you'll be awesome. And that's not the case. It's actually like a pretty and I love P90X, you know, and Tony is like the best trainer ever. But um, and maybe I've only done it like three or four times, but that maybe if you do it nine times, you really are awesome. But the overall information that people are sold is just it's like it's a very incomplete, incomplete picture. And you need to have a deep understanding of intrinsic motivation, extrinsic motivation. You need to know where you are in your own life. And when I was training athletes, like the the way I didn't like I worked with athletes um in uh the lightweight men's eight and uh some some women's boats too, but that mostly like these are people either on their way up or their way down, they're not the top-level athletes. Because when you when you're dealing with like Michael Jordan's, like kind of any training works, but when you're dealing with that like second-tier people who have been trying for three or four years to make the team and haven't made it, the only way to really make progress with them is to personalize. And they need very particular inputs because people have uh quite different uh metabolisms and quite different muscle fibers and bone structures and leverage points. And so you really need to like personalize. And that it's just so exciting to see people um start to talk about that personalization. And before, the only way to get that was to find an expert and work with them personally, and now like we have a pilot program where 32,000 of our members have given us access to Google and Apple Health data. Like it is a treasure trove. And like we know where they are, we know what they're doing, they've shared that with us, and now we can start to personalize that journey. And with generative AI, the opportunity to combine both the power of that generative AI and those insights and the personal data, it's like it's pretty magical, you know. Um, I don't want to overpromise, like, this is where we're going. It's not where we're at today, but the potential to get there is very, very real. It's first first time ever, I think, in in history.

It is exciting. And there's always certain buzzwords that come about every year uh within our industry. I mean, uh, you know, connected was kind of last year. Um personalization is is really big and for for good reasons. I'm not I'm not downplaying it. I think it's really true. Let's let's maybe walk me through that in your mind's eye anecdotally of like I always use the avatar of Susie from accounting, right? Someone who's maybe not typically you know a fitness person, right? Um maybe didn't come from a sports background, you know. Uh how do we start using you know the personalization, the the biometric data available, the technology of something like hydro, how does that start to play out in Susie's life?

So the first thing that it's really um crucial to understand who Susie is. Um does Susie love socializing? Is she a teamly person? Is she an extrovert who gets a lot of energy from interactions? Is she on her Facebook account three or four times a day? Or is she a total introvert and does she read books? And is she uh really tired at the end of the day and basically like gets home and never goes out? And so understanding her particular motivations, and it's not that we will understand Susie in particular, it's that we can aggregate the 10 or 15 archetypes of people in the world and start to build the motivation engine. And um, you know, there's some people at Stanford who are uh really digging into motivation and understanding the models for behavioral change in our you know, tiny habits and nuclear habits. Like they're a bunch of like people who have started to really divide out what it means to be motivated. So the way that our our model is um you need 10 units of motivation to actually do the work. And um most people have six or seven units of motivation. All VCs, pretty much to a person, have like 11 units of motivation. Like they, you know, they have one to spare. And so like they don't really get the model. Like when you're trying to explain it, they're like, What do you mean? You just work out, like you love working out, it's my favorite thing. Right. Yes, if I didn't look awesome, my peers would make fun of me all the time. So that you know, like it's um it's really dividing those archetypes and then parsing out first motivation, and then the exciting stuff starts to happen. Like, okay, did Susie have an athletic career, but she stopped when she was 24 and has been working like a dog until she's 35 and really hasn't done anything. What's the perfect entry point for her? And is that a group workout with a bunch of people who are just like her, three of whom live in her neighborhood? We can connect her that way. You know, we can actually deliver that perfect intervention. We know that she goes to work at seven, she comes home. Usually she's in the house at by five. We can deliver a prompt to her phone at 4:45 just before she gets home, as she's starting to consider, like, okay, I'm gonna walk through the door, gonna put my keys down, am I gonna go to the fridge, or am I gonna go to the rower? And we can get to that precise prompt moment when she is making that decision, as opposed to, hey, here's a program, you should do this. And then it's up to Susie to figure that stuff out. That personalized journey is the magic unlock. And then so you have intrinsic and extrinsic motivation, then you have that personalization piece. What is the perfect entry point? You know, is Susie like a mad triathlete who works out all the time and actually needs to back off a little bit because we also know that our heart rate, which is usually like 52 when she's asleep, has gone up to like 58. And she's actually like on the verge of being overtrained because it's been like 5860 every morning at 7 a.m. for the past three weeks. And so she actually needs to like take a day off and do like a little very relaxed stretching, and we can deliver that prompt. So it's personalizing that recipe and then finally understanding um it's not just the physical exercise, it's your quality of sleep, your ability to concentrate, and the inputs that can help you with that. And um, it gets really exciting when you start to think about all of those pieces that stack, put in nutrition and supplements on top of that, add in a blood test once a year, every six months, every three months, all of a sudden you're looking at a quality of life that lasts to 110 years old, and you feel great until you're 109 and a half. Yeah, that's all really exciting. It's some really, really exciting.

Yeah.

It's really exciting. And you know, my I guess where I go with it is uh I see all that, right? And I see the role in generative AI and how that could, you know, most people are looking at generative AI because they can write their newsletter, right? Like myself. That's cool, right? It's great. Um, it helps me write my newsletter faster. Um but the the possibilities down the road when you get into the right person's right people's hands is is really uh is really promising. You know, the thing I look at is like my hope is like how democratizable, if that's a word, how scalable is that? Because, you know, let's let's like what we're talking about is kind of like the the people, the early adopters are gonna be really into this kind of stuff, right? Um, but we need to get to the people who you know where where the health crisis really exists, which is you know, Susie from accounting, right? That's why it's such a good example. It's like how do we get to how do we motivate her? How do we capture her attention enough uh at the right time? So I mean, do you see how do you see like timelines or methods or paths to become that that scalable model where you know it doesn't cost an arm and a leg to do it and we can get it to more people?

Yeah, it's so I think it's um we're talking like five years before we see a revolution, but I think within 10 years, um it's A-B testing. So it's it's just straight up A B testing and having a pretty large footprint in the world. So one of the things with Hydro Um and the better lucky than good category is that we actually like you can't start to build this stuff until you have a pretty big community. And thanks to the, you know, the pandemic was terrible, but also thanks to the pandemic, we have a pretty big community. So we have a footprint in the world which gives us, you know, hundreds of thousands of people that we can work with. And this is just like this is straight up like what works better, a prompt at 445 or 446? You know, what works better? Hello, or hey, what's going on? Like, what works better? You know, it's it's just doing the work. And it's honestly it's data science. Um, it's a bunch of data scientists who work really, really hard behind the scenes to A B test the crap out of stuff to figure out those interventions. And the the first and most important is that extrinsic micro. motivation, like what delivers that extrinsic motivator. And once you get the motive once you get the extrinsic motivation figured out, the rest is um it's hard work, but it's it's really it's not hard because you can get like 80% the blood test stuff, um, you know, that's hard because you have to go to a doctor's office still to get your blood tested. And that is really the only way to get a really solid picture of what's going on in your body. But the heart rate um measurement is everywhere. It's on your phone. It's like it's everywhere. And you can get uh with a little bit of self-reporting and heart rate, you can get about 80 or 90% of the information that you need to make that quantum leap forward and ignite people's um ability to help themselves feel better. And that's the for for us like our product is not designed for um crazy workout people enjoy our product but it's really designed for people where the couch usually wins. You know, we're fighting the couch. Like that's our our chief competitor is in Peloton our chief competitor is the couch. And I think um that vision that you you know for Susie and accounting that's exactly where we have aimed all of our howitzers because that's how we can have the biggest impact in the world.

Yeah. Yeah the ex it it's I think we forget sometimes how emotional fitness and health is right like I uh I was talking to someone I know and love. I won't mention who the person is but you know I was talking about how I've you know been under a lot of stress lately and I've lost like four pounds. This person was like oh my God I wish I had that problem right like you know I I I comfort eat right and it's like everyone has these different emotional mechanisms that affect how they do it and it's it's so individual personalized and having you know really getting into understanding someone is really critical. You know as we kind of start to butt up on some time here I I want to get just an understanding you know for the market like where is hydro today you know and share what you can um you know about like members, numbers where where are you guys?

Yeah so we have um you know a few hundred thousand people uh we have a really solid annual recurring revenue stream puts us in probably the top five or top six connected fitness companies in the world um we completely dominate rowing you know for obvious reasons we've we've really focused on that we will always deliver the best thing you know that's we we view that as a crucial like we're we're not gonna recommend that you do a less efficient kind of exercise we're gonna recommend the very best thing that we can and um so we we feel like we're you know we've set we've established a really clear lead in the in the rowing space and looking forward to building that out I think that there will be a lot of consolidation coming up um I know a lot of the people like a lot of my peers in the industry who are um they're actively out of money and you know we're having a lot of conversations about um what the opportunities are around consolidating. I think that there will be it's not that the overall industry is um going to disappear it's that it will consolidate and the the players who are behind just like any downturn like the players who make it through the downturn and come out the other side are really going to be very strong. And we've certainly done that work. We've uh gone through a couple layoffs and we're we're in a really good place now as a company and have a stunningly great team and have had a chance to actually go back and think like okay now that we have a chance to reimagine what would we do differently and we we've gone through that process and over the past year um and this you know this recent Memorial Day stuff we saw the results and uh it's really really encouraging. And eventually you know I think um figuring out the rest of the world and we built a smaller product that's designed for homes in Europe and Asia as I said earlier the market penetration there is still really really low. And the value proposition because it is like a hardware SaaS play like even though the level of investment in Europe and Asia is a little bit different from what people spend in the USA, this is the kind of product and experience that people can access worldwide. So we see like 10 years of of really exciting growth coming up.

That's great. And I would imagine the last year has been quite a stress test for uh you know understatement.

Yeah.

What do you uh last question I always ask Bruce is you know in the spirit of collaboration and um our community what do you need right now? How can how can we help you?

Oh my God uh feedback um try hydro download the app 30 days free and uh send me a note at Bruce at hydro.com about what you love and hate um that's really you know we're just obsessed with um helping people connect through our product and building that community so it's really really amazing to get people's uh feedback and um you know we're at the size still where like we we can still um really influence the trajectory of the company so it's it's it's this collaborative really really fun process where we're constantly getting input that's I think that's the most fun part from my perspective. The other part go see this movie when it comes out um later this year and uh let people know that rowing is the most efficient and maybe most engaging exercise you can do with your body.

Awesome awesome Bruce I I really appreciate you spending some time on your Friday uh this has been really engaging really insightful uh and uh yeah very just really fun conversation I I I pulled a lot out of it so hopefully our audience did too and I'm sure they did uh yes thank you once again ladies and gentlemen Bruce Smith hey wait don't leave yet this is your host Eric Malzone and I hope you enjoyed this episode of Future of Minutes 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 get in touch with me simply go to the futurofitness dot 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