Chris Craytor - AI Strategy and 'Affordable Luxury' Success in Mid-Market Clubs

Hey friends, welcome to the Future of Fitness, a top-rated fitness and wellness industry podcast for over five years and running. I'm your host, Eric Malzone, and I have the honor of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. If you like the show, we'd love it if you took three minutes of your day to leave us a nice supporter review wherever you consume your podcast. If you're interested in staying up to date with the future of fitness, go to future of fitness.co to subscribe and get weekly summaries dropped into your inbox. Now onto the show. One theme keeps coming up: the right technology can make or break your business. That's why I'm thrilled to introduce our new presenting sponsor, Perfect Gym. Perfect Gym isn't just another gym management system. They are part of the Sport Alliance Group, Europe's leading fitness software company that has officially entered the US market. Now, I've seen this movie before, but here's the difference. They've opened up a U.S. headquarters in Boston because they understand that the American market deserves dedicated, localized support. After digging into the platform, one benefit especially stood out. They are simplifying the nightmare that keeps business owners up at night migrations. These guys were able to migrate one mega client with more than 250 locations in six different countries in just 20 days between two payment runs, no disrupting operations, no member loss, one seamless operation that simply works. Now, if you have ever switched platforms, you know how terrifying that process can be and how truly impressive that feat is. At a high level, here's their secret sauce. They give the power back to the operator. Instead of forcing you into their closed ecosystem, their Perfect Gym Marketplace connects with over 120 integration partners. So want to use your own app, your preferred payment processor, Class Pass for booking? No problem. Whether you're running a single studio or managing a multi-location enterprise, Perfect Gym was built from the ground up for multi-club operations. They've invested a ton into this platform, and now they're bringing that European engineering excellence to America. The migration experts have arrived. Check out perfectgym.com where enterprise level sophistication meets operator freedom. Today's episode, The Future of Fitness, is brought to you by Flex, the only HSA FSA payments infrastructure built specifically for leading fitness and wellness brands. I have been so impressed with the Flex team and their vision to transform how people pay for fitness. They built a platform that makes HSA and FSA spending steamwork, unlocking a new revenue stream for brands and giving consumers easier access to products and services that keep them healthy. Here's why Fitz matters. Flex helps fitness brands increase average order value by up to 50%, and boost checkout conversion by 30%. That is not just incremental growth, that is transformational revenue powered by consumer dollars that are already set aside for health and wellness. What excites me the most is that Flex is changing the game for the entire industry, to bridging the gap between healthcare and fitness by making it simple for consumers to spend their free tax dollars on the products and services that help them feel and perform their best. Flex works with fitness leaders like iFit, Johnson Fitness, Tempo, and Allo Moves. Honestly, this is a no-brainer, and I rarely say that. If you want to see how Flex can drive growth for your fitness brand, visit with Flex.com. That is with Flex.com. Now onto the show. Hey, thanks for having me.

That's good to see you again.

Have we done this?

I was just thinking we did one a long time ago during COVID and all the mess. Yeah.

Yeah. Okay. Well, it's very different now. And you know, to kind of set the table here for all the things we get to talk about, which I think are really important, really meaty topics for our industry, because I didn't realize until I saw you on my schedule this morning. I'm like, this is actually the exact guy I want to talk to right now. Because you know, we've talked about a lot of the HVLP movement, how they're crushing it, private equity's coming in, what happens to the mid-range providers, right? The regional health clubs, the mid-price point. You're right in there with ACAC, you know, 15 locations now. And then also preventative health and what's going on in that space. Everyone's trying to figure this out. Like, well, how do we get the merger between, you know, the medical communities and the fitness community? And it turns out you've actually been working on this problem for a long time. You know, there's a lot of people making noise, but you've been actually out there doing the work and figuring out how to channel these things together and what the offerings look like. And uh, you know, Weld Health works with over 10,000 gyms now, right? So there's a lot to talk about. And let's just start with this, Chris. Chris, for people who aren't familiar with you, maybe give us a little bit of your background and then we'll get into these topics that are really actionable.

Well, happy to do that. And and first of all, honored to be here. Thanks, Eric, for having me. We ate you know, ACAC is a regional fitness club chain based in Charlottesville, Virginia. Been around a long time. I've been with a group for 21 years. Uh I'm the CEO of that organization. And then I'm also uh the CEO of Welled Health, which is essentially a clearinghouse for preventative health programs operating between the community-based organizations like health clubs, pharmacies, JCCs, YMCAs, et cetera, and the larger health club or healthcare rather community. And been doing that for a number of years now, probably about 10 years, in some way, shape, or form, working on this problem with a little interruption for COVID in between. Uh really excited, like I said, to be here. Uh, I think that on the fitness club side for ACAC, you positioned it correctly. We're a family-owned business. We have uh kind of moved along at our own pace regionally and opportunistically. And, you know, how to how to navigate the fitness world in that part of the market is interesting. We tend to focus on, you know, those who are either new to exercise or for some reason haven't been a member of a gym before or maybe don't feel comfortable in all the traditional gym environments, as well as families and the already fit. And we've been able to carve out a successful niche in our markets. So really excited. I'm sitting here in what will be the 15th club. It's on its way, I guess. And so we're just uh working through that process. Hopefully about a year from now or a little bit less, it'll be open.

Yeah, fantastic. You know, and whenever I talk to you, I think I saw you in like a coffee shop last in each like in Las Vegas at HFA. And whenever I talk to him, I'm like, man, this guy really has a nice portfolio, like personally, of your business, right? Like you're an operator for you know a great solid regional chain, and you have this Well Health thing, which seems to like they kind of feed together with your experiences. And and I just I admire like this personal portfolio of entrepreneurship that you put together. I think it's really it's really nice. And I remember asking you, I'm like, How do you do it all? You're like, I I have great teams, yeah. Great team.

Yeah, that's exactly right.

Yeah.

Hey, look, I'm looking my lights went off, Eric. But now we get to like you get to cut this phone out of it. We get to go to like the part where I go and I hit the the motion the motion detector that turns them back on again. That's what you get for a new building. There it is. See, we turn it on. There it is. There we go.

That's fun. Yeah, it's like a nightclub feel.

Right. I guess like you know, you're absolutely right. I mean, so to finish your thought on good teams, absolutely. Like, we've been I've been lucky to work with great people in both groups, and I think that that is absolutely essential. You know, the the concept of having the ability to convince great talent to join your organization and your mission is, I mean, that's just one of the most essential roles for any CEO, anybody running a business, that if you can't convince great people to to jump on board, then maybe you have to really rethink what you're doing. They're what they're gonna be what propels you forward. And what I find that's interesting is as companies grow over time, you're able to continue, if you're achieving a success, continue to attract even stronger and stronger team members to your group, that you can be more selective on who you decide to bring on board versus, oh wow, this person's willing to take a chance on me. I hope it works, right? At the early days, that now you can go, yeah, you hope you got lucky, right? That you picked the right people. And I have been able to be lucky. Now it's like, wow, we're getting the number of applicants we get for jobs and the opportunities that they potentially have then to grow are are greater. So that does uh that does create some momentum and allows us to go further.

Yeah. And I want to circle back eventually, uh, because I asked this question of every executive now, especially. And I think you're in a unique spot, but how artificial intelligence is playing into your roadmap from business operation. We'll we'll circle back to that, but I just want to tease the audience a little bit with it. Let's let's talk about like, so how would you categorize ACAC? And then leading to the question of, you know, I've had a lot of conversations recently on this podcast and offside off of the podcast, where it seems quite evident that the next three to five years are gonna be the years of HVLP, right? Huge private equity pouring into you know companies like Crunch and EOS. We've all heard those headlines, right? They're they're opening more gyms. That's just gonna happen, right? And they have a ton of branding and marketing dollars to go behind it. So, you know, when you look forward and you see this very predictable near future, uh, you know, and your price point, I think you said it's around $100 a month for your for your clients. So, you know, definitely in that mid-range, below lifestyle, you know, below a lifetime type category or Ecinox and also, you know, higher up than a typical HVLP. So what are you seeing? What's the plan? How are you going to survive and thrive in this next period of time coming up?

Yeah, well, it's a great question.

It's the question.

Yeah. I mean, it's a really a vital one for us, right? We have about in the summertime, we end up with about 1,800 uh team members. So, you know, there's a lot of other people who want to know the answer to that too. I think we feel like where we live is this kind of affordable luxury category. We try to make our facilities top-notch. We're aggressive reinvestors. You know, any club owner who does not regularly reinvest in their facilities will then find themselves faced with competition who's brand new and then be facing an uphill climb as well, because now their facility is not in a place where they can compete without additional investment in the face of potentially declining membership. So that's one. I think two is really finding ways we can win. Right. So on one hand, you mentioned like the very high-end providers, you know. I mean, Lifetimer is a great brand. You know, Equinox has a great kind of reputation and brand in the big cities for what they are and what they are not. And likewise, you know, we can never compete on price against $15 or $20. You know, that's just not who we are. So the question is what battles do we win? And where do we, where can we focus our time, energy, and attention? So I would just say that one thing that's driving my thinking now is really around how to build better community structure within our organizations. So you mentioned AI as a concept, and I think that, and I read this and I don't care who said it, that the community engagement is the antidote for AI. And so what I mean by that is, you know, when you look at the world out there that that is so disconnected and so driven behind screens, what is it that we all crave and what kind of personal connections do we want? You know, there's a reason why, you know, Taylor Swift sells out every concert immediately when you can still watch the concert video at home. That there's a presence of being there with other people that still matters to us as social beings and to understand that there's somebody who knows your name, somebody who's willing to help you, or even events and and programs and activities you can become involved in that are special, right, for us as an organization, that we can recruit people to be there and be with us and feel like they're part of something, that we're a place that they belong, not just a place that they go. And so, how do we create and foster that, not just among our members, but also among our team members, to feel like when you walk in, it feels great. You know, it's interesting. I took my brother who knows my business very well and has been to the clubs, and I took him around some of the other locations we had, and and I said, Well, what do you think? And he's like, Everyone's so nice, everyone's so happy. And it's amazing that we take for granted all these businesses we walk into, and there's grumpy people just you know, begrudgingly giving you maybe one more spoonful of guac on the pole or whatever. It's it is it is interesting that if you can create an environment that feels really good for that member, you can differentiate yourself. And then the last piece I'll mention is um, you know, from a from a facility perspective, if you can keep it clean and really invest in that, if you can be thoughtful on the design and make it feel more welcoming, you're already so many steps ahead of others who simply just don't execute on either one of those. And the clean we all get, like how much you know, how much money are you gonna put towards this process? But the second is actually, okay, how comfortable are you when you walk in? Do I feel like I'm someplace special? Or am I in some place that is just like every other place in town? And I'll I'll use an example of we all have hometowns, we all have restaurants and favorite restaurants and favorite coffee shops and all of this. No one ever says, like, my favorite coffee shop in my hometown is Starbucks. We agree, Starbucks is awesome. It's great, it's consistent. If I'm on the road or run an airport, I know I'm gonna get there. But you're never gonna tell your friend who's just visiting, say, hey, where should I go and get a cup of coffee? Oh, you should just go to Starbucks. You're gonna say, Oh no, go to this place, they have the best whatever, right? So, how can you as a club in our price point be that be that answer, right? As opposed to being, you know, just that, you know, very much cookie-cutter experience. And that's what we try to cultivate. And it does seem to work. What I will say is that it does lead to a better retention story. And if we can keep members for longer, you know, we're gonna be more successful, obviously.

I really like the term they use of affordable luxury category. I think that's that's very I could tell you probably put some thought into that term because it it it just clicks to me, right? So when you talk about like the service offerings, well, walk us through like what uh maybe one of your your idealic clubs that you have, like what's the square footage and what are the service offerings? You know, is it group classes, is it personal training? Do you have pools, saunas? Like, yeah, what do you guys offer?

Well it's I see this as both a weakness and a strength. We have all sorts of different clubs, like none of our clubs are the same. So there's no like cookie cutter prototype that they're all looking. So I have some that are, you know, call it 18 acres of land, 100,000 square feet, water parks and all of this. And then I have some that are 10,000 square feet, more neighborhood clubs that exist to support the larger clubs and facilities. So there isn't like a one-size-fits-all approach. And what's even interesting, in the same market, you know, you may have submarkets. I'm in Richmond, Virginia right now, and within each submarket, you're going to have different, I would say, amenity sets to appeal to the market in that location. So I have a suburban club here, 17 tennis courts, outdoor pools. We'll see from 2,500 to 3,000 people on a given day in the summer. It gets pretty busy. You know, what matters there is we better have a basketball court for those teenagers to go in and shoot hoops in. I'm here in the city of Richmond, closer in. We don't need a court here. It doesn't necessarily make sense. It would be a waste of space for the market that I'm serving here. So we spend a lot of time figuring out exactly what is important to have at each club and then delivering on that. We have two style, we have different styles too. We have urban clubs, four stories, rooftop pool, bar up there, all that feels great. We have some that are just single level. You know, you kind of walk in and can and have a little more visibility of what's what's in store. So what I will tell you is that we, as we're thinking about the design of the new club, it's gonna feel different, I think, than anything else we've done. And that's uh very intentional. I've started looking at what other clubs, club groups have been doing, but also thinking even beyond the states. Like there's some really cool stuff happening overseas. Like you whether it be in Europe or places like Australia, and if you go and look and find those great clubs, you're gonna see some awesome ideas. And I'm like, okay, I haven't seen anyone doing that here. How can I bring that in and make it make it make sense for us? You know, I've seen you know, groups like Chelsea Piers in New York. You see their new flat iron location, not to name drop too much. I walked in there and I was amazed at how many people were just sitting holed up in the front lobby working. I'm like, oh my God, there are more people working than working out in this place. Like it's a paradigm shift. Just like when I was at the University of Florida in 2021 and all the cardio was empty, but every single cable, machine, and rack was full. You know, so I think we as operators pay attention to that kind of thing. And so the new club represents our best ideas today. And if it works here, then I turned back and go put that stuff in the old clubs and say, you know what, this really took off in the new club. How do I fit in the old one? So that's kind of how we do things.

Yeah. What are some of the things that you're noticing right now that seem to be hitting that are new-ish? Because it like the workspaces. I mean, that seems to make a lot of sense.

Yeah, I mean, workspace for sure. You know, again, going the concept of we're a club and not a gym. And a club is a place you hang out, not a place you go in and get out of. Recovery, I think obviously we've talked a lot about recovery and people are doing various themes around this. What I would say is being in New York recently, a few times, and seeing some of the cool concepts that have been built there, looking at even what's happened in Europe. I mean, the idea of a spa, for example, in Europe and multi-temperature water, I mean, that's been forever. Saunas, like amazing. But what I found that's really interesting is associability of the recovery genre and the degree to which it isn't a solo activity. What I mean by that is how how good does a cold plunge feel on your own? It's like, do I really want to do this? Versus doing it as a group and the motivation of being with others. Or alternatively, in a sauna, when you're having a conversation with a friend or sitting there with somebody, how does that feel versus just going and doing it on your own? Like those kinds of things I think are really interesting to me because that is part of that connection that I want to build. And I feel like most clubs did what everyone else did. Oh, I need to have a sauna. Let me put one in. Okay, I need to have a cold plunge. Well, let me just put a hole in the ground and make it cold instead of being a hot tub. Is that really what is gonna move the needle? I don't know about that. Right? So I do believe that there's a better way to approach that modality. And then the last piece is I think on studios, you know, the need to hybridize studios and change the workouts. So one of the concepts I've been thinking a lot about is that our studios and boutiques are fantastic at creating new exercise modalities that are awesome. We have club, as club owner operators of multi-sport type clubs, have typically built studios for either a multi-purpose or single purpose. I'm going to build a cycle studio. I am going to build a boxing studio, whatever. I really see that having the combination workouts and being able to do a little bit more and have a little bit more variability in those spaces is going to be pretty critical. And not just in terms of square footage and efficiency, right? But in terms of just overall enjoyment and keeping people active and motivated to do new stuff, right? Like, oh wow, I'm taking the same cycle class every day at 1015 or every Monday at 1015 or something. That's awesome. But then over time, it's like, you know, it's kind of the same. Can I try something different? And so as an owner operator, how often do I want to renovate my studio? Not that often. It's pretty expensive. So what do we do to create more um more of a more of a broad-based workout approach inside those studios so you can do more than just one type of class? Those are things that I'm paying attention to.

Yeah, it's really interesting. Uh it's really interesting the way you you bring that thought approach. And what kind of competition are you guys seeing? Like when you feel it, right? Is it coming from HVLP? Is it coming from boutiques? Or yeah, how what's what's your sense there?

Yeah, I mean, I have a lot of respect for operators that we compete with. I mean, first of all, I would say that every fitness center is competes with one another. Because there's like most of the I mean, people have multiple memberships, it's true, but in some way, shape, or form, anybody who's like coming in and saying, hey, I'm gonna offer a fitness experience, and I have somebody who's maybe uh primarily invested in strength, you can open an eye, you know, a strength-based gym around the corner and that becomes a competitor, even though on a scale they're really not. I would just say that we look at competition as a way for us constantly to be better, more so than I worry about, okay, if they're leaving us to somebody else, well, why? Like, I don't say, oh wow, this person's doing, you know, this competitor's coming in, I'm scared or anything like that. It's more like, okay, if they're leaving us to do that, that's a better price-to-value proposition, potentially. It's something where they feel like, yeah, for that price, it's a it's worth it. So then how do we get better? I would say philosophically, we're not gonna ever try to compete on price, because at that point we've lost fame. You know, it's a pretty easy thing to say, is that I can't be a $15 club overnight, no more than I think planet thinness can be a hundred dollar club overnight. I feel like we during COVID we lost a lot of people to the home gym. A lot of them came back. I think now what we'll find is that people will people like to vary their workouts, and so the challenge would be that people like to go to a number of places. So that's a challenge for a group that's a multi-sport gym because we're trying to be the antithesis of that is hey, do everything underneath our our roof. But now, like, especially in more urban environments, I want to go to a cycle studio for this, I want to go to a yoga studio for that. I want to go, and they can be so good at what they do because they specialize that like I could never be as good as they are at that one thing, only one thing they do. So we do see a lot of that kind of what I would say, more uh desire to vary the workouts. And that means that they would not necessarily just be a member of us, they would actually be more of a carte. Think of it like buying cable versus buying, you know, the streaming services you pay.

That's a good analogy. And this question I have to ask it. So artificial intelligence, you know, within, especially I think in in the operator space within our industry, there's a lot of pressure to adopt AI. We all know that's very valuable, but I think a lot of people are frozen in some way with well, where do I start? Like it's much more than you know, writing a job description with Chat GPT, right? There, there's a lot of very targeted ways to do it. I mean, there's you and I know V very well, and you know, what they can do from engagement and acquisition and retention. And then there's, you know, online reputation management with reviews and things like that. And then there's, you know, the experiential point of in the gym, like Evelyn Webster from SoulCycle was there, and she talks about how they can find a member's musical preferences and match them up with the right instructor based on that, and that drives retention. So there's there's so many different ways that we can pull in artificial intelligence. So when you look at it strategically, because you can't apply it all at once, right? You also have to train your staff or get them up to date and make them feel comfortable about it. So, what is your general AI approach at this point? And what could you advise other club operators on when when when putting it into their systems?

Yeah. I would say it's a pretty important tool that a lot of our team uses on their own organically, just say that. Like we use the Medalli service, you know, and MXM, and even writing responses to our members is helpful. You mentioned reviews to come out of the same milk. You know, the thing that I'm working on right now that I'm probably investing the most time in is actually an internal AI tool. We are using a service to essentially make it easier for our own team to find answers. And I know this sounds like wait a minute, like not that cool or sexy. Okay, just to be clear. But we like in most health clubs, you have a lot of people who come in and start their day and they don't know everything. So what they want to know an answer. Well, they don't know how to navigate to find stuff on the website. So what do they do? They have to give a bad customer experience, put somebody on hold, bother somebody else who does know the answer. So we basically started building out our own internal chatbot where you can essentially type in your questions and get answers. So what's our mileage reimbursement rate for the company? I don't have to now ask accounting for that or my GM. You know, what time does this club close? What's the price for a swim lesson? How do you do this in our member management system? You know, what are the different codes we call if there's an emergency and how to deal with it? What's our protocol for XYZ? What are all our SOPs for the business? Like, you know, what's the SOP for team member memberships? What is the SOP for out-of-town guests? Like all these different things that a club person, we put all these rules in there, and then we take somebody, give them some basic amount of training and say, know all these rules, please.

Yeah, read this book.

Yeah. Our our team member handbook. Am I allowed to, you know, I don't know, you know, have six piercings in my lip and work the front desk, you know? Do you have a policy on grooming standards, right? Now we're not the Yankees or anything like that, where you can't have a beard, but do you get the idea? And so we built that. And it's fun. Like, I think what we're finding is if I can take time away from somebody having to answer and ask that question, now I'm giving better customer service and it's real time. I'm on the phone with somebody. Hey, what time do you close today? Let me check. What time does our club close today? And you get an answer immediately. What is that? That's just easier and faster. Yeah. Right? Yeah. So that's what we've done, and I think it's pretty cool. And it's, I know that it's less fun from like an exciting thing, but I do believe these kind of applications are interesting because what knowledge I give it is totally bespoke to us. If if you had a gym eric, like it would be different policies, you'd have different rule sets. And it's also really hard to train on all of this. It's so hard. And if you look at our business, you know, as a multi-sport, we have personal training in the aquatics and spa and cafe, and we have a preschool, and we have tennis, and you know, you have all these other businesses, all that have their own policies and procedures. So that's why we give them that tool. So that that's fun. And it's actually really cheap, to be perfectly frank, to do this. It's not an expensive thing, it's not hard to maintain. I mean, I built it version one, so it can't be that hard to do technically, you know. I don't be a programmer to do it. So I think that's where we've uh it's been it's been cool, and I would recommend people do that just for their teams to help them out, especially if you have bigger, more complicated clubs.

And are you doing that? Well, two questions on that. How did you identify that that was a really good use of time and resources? Was this a problem that you kept recognizing over and over again? Um within your clubs?

We'll we'll turn our lights back on here. Yeah. Yeah, that's true. This is a really cool thing. So we'll get back over here. This motion motion detector somewhere over here. There it is. I should stay over here. There it is. Yeah, I think I'll I'll answer the question in just a second. So it's funny that we have a dark mode. It actually does make it more authentic. Yeah. I identified a problem, which is this. Our front desks, when we have a lot of check-ins every day, they're really busy places. So when someone's on a phone trying to find an answer, while someone's in front of them trying to check in, you are then, and you're maybe one or two people there. That's a negative customer experience, right? Also, what I've what I've found, and listen, we actually do um uh what we call call rail, which is a service that allows us to listen to some of the calls that come through so we can get better understanding of the interactions and better coaching.

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People would rather give some answer when put on the spot, right or wrong. Like it's really hard for someone to say, I don't know. And so often people are getting the wrong information. And so that then causes further problems. So the idea that we can have the correct information at their fingertips will then solve further problems down the road. You have faster front desk interactions. And then you also now have this daisy chain of everyone asking everyone who knows the answer to such and such question. Because you think about it, if I'm type, if you if I'll use mileage reimbursement rate because I brought that up earlier, what's our what's our reimbursement rate? What is our travel policy? Instead of me now calling somebody in an HR department or whatever and taking time out of their day that now they can't do the thing they're supposed to be doing, these are just static answers. So it seems to me that whatever I can do to make my payroll more efficient is a win. The number one cost I have in my entire company is payroll. So if I can make that more efficient, then I feel like I'm so anyway. It's kind of like starting a pretty expense start, right?

Sorry, yeah, we had a connection issue there, Chris. But the reason I like this particular line of conversation is because I feel like as we further go into the world of AI, critical thinking is gonna be the most important thing. Like, okay, yeah, we have these tools, but before we jump into it and we just start making everyone use it, like where's the best application of it? And that's very human, right? It's like you have to look at the whole, it's a feeling, it's a sense that you've had from operating for so long. Be like, okay, no, I know for I'm very confident that this is the biggest problem we can tackle with you know the least amount of effort that will produce the best outcome for for this company at scale. And I think that's something like I really want to get that across to people operating in any kind of whether you're an executive or GM or you know, any kind of company is like when you're looking at AI, it can be overwhelming, but just start simple like what's the problem that I can fix that's you know, would be what what is it, the the book, the one thing? Like, what is the one thing I can do today that would make everything else easier or unnecessary? Right. And I think that's the kind of approach that you have to take to artificial intelligence in this day and age. And uh yeah, that's that's really and one last question on this is uh how did you do it? Did you like train your own JAT GPT and feed it your own data? Like essentially what happened?

Well, you can go. I mean, I'm happy to I don't want to plug it, I'll plug a company, but you can go on custom GPT. It's I think $99 a month, if you can believe it. And you can upload, I think, 20,000 documents, you can link it to your website, you can just just throw PDFs up there, whatever you want, and you just go. Like I said, it's not hard, but I think what's really interesting, and you brought this up, it's like there's an ROI element to this. There is some really sexy stuff out there. There's no question. You know, you talk about a soul cycle imagining people's music they like and all this kind of thing. I'm like, man, that's really cool. Okay, I just took it to the practical ROI, like, okay, what's practical? How do what's a practical use for this thing? Because what everyone put pressure on me to do was make it member facing. And say have this member-facing thing, right? And like that is a lot of people having access to something and then saying it gave them the wrong information and not working. My team will be more patient with me than my consumer. So the threshold for a consumer, if the consumer gets it and it doesn't work on day one, they're like, Yeah, that area, their eye, that piece of junk, it doesn't work. Gave me the wrong information, it did you whatever. Like the, you know, I didn't like the result that it gave. Whereas my team is like, I can use them as a feedback loop. Hey, it's missing this answer or whatever, and then I can go fix it. And they're more patient. Um, then would be unleashing it to my 70 sub plus 70 to 80,000 members who all of a sudden are hammering it and then just you know, then abandoning ship because they didn't like their first experience.

Yeah, I love that. Very valuable uh thought process there, Chris. And I I think that's something I want people to take away. So with the time we have left, I want to pivot over to your other business, Weld Health, right? And what you guys are doing there. Maybe take a moment just to tell us like what exactly it is that you guys do. And because I know you've been working, you've been working at this for a while, right?

Yeah, I've been working with Weld for 10 years, off and on. You know, COVID interrupted that. So, you know, I describe it as a as a clearinghouse. So if you imagine you go to your doctor and you know, the doctor has to submit your visit information through insurance and it goes and gets paid and comes back, and then the insurance company tells you, hey, did I get paid on this or did I not? And the doctor has to figure all this out. There was nothing like that that was connecting the payer network, healthcare generally, and our industry. This doesn't exist. The data was incomplete, the data was not structured, et cetera. So we built well, we really focused on medical fitness programs, and ACAC has been known for delivering those for some time because we had all this data and it was just siloed in Excel spreadsheets and really not protected well, to be honest with you, back then. So we wanted to build a platform that allowed that program to scale, which we did. And we built in connection for medical billing, and we were really looking pretty good. And then in 2020, obviously, when COVID comes around, medical fitness was very, very slow to restart. But we found the aggregators out there, whether it be on the Medicare advantage side of the house in terms of senior-based programs or alternatively, now commercial-based programs, commercial insurance-based programs, are really starting to take off. And when that happened, we had adapted our medical software to meet that need of streamlining this because all too often clubs didn't know who was supposed to be in their club and who wasn't. They didn't know, well, did Eric's benefit run out or did it not? And then how do I train the staff to make sure that they're doing everything properly to enter them in? And then how do I make sure I'm getting paid in all of these problems? And so we found that by applying some technology here, we could solve that problem at scale. And then fast forward now to working with a lot of the largest club groups in the country and really continuing to develop and hire to support that team and the technology. And it's been a been super fun. What I what I will tell you is my number one goal is to figure out how to make our industry part of the overall healthcare system. And I really believe that technology was a big barrier among many to that. I feel like we've solved the, at least in part, the technology issue. We're never done solving it, by the way. It's always a problem, right? But it's always got to be worked on. Software is a Ferris wheel, you don't get to get off of. But I think that we are getting closer to having that solved at scale in a way that's consistent. And now the kind of the government powers that be, I think, are waking up to this. What I mean by that is the new administration is very focused on prevention. It really wants to see more happen in this in this realm. And there's a better pathway now for funding for these types of programs, at least from uh from government-based insurance programs, than there ever has been before. So we're we're very optimistic that there's good progress and momentum towards really connecting fitness industry writ large with the healthcare industry. And we we're happy to be a technology partner to help support that.

Okay. I mean, that that's something that we would all love to see happen, right? It's been talked about for a long time. I think there's um varying levels of optimism there on what can actually be done. So let's you know, if if let's say by 2030, right, that gives us a five-year span. Like, what do you think realistically, we can do to connect or merge with the actual healthcare system and be you know a significant part of the preventative health of our communities? Like what's what's realistic in your mind?

Yeah. So it's a great question. So I would say a few things. One, I think it is realistic that in before that date that we see coverage for specific programs. And I'll mention one and it's fall prevention. So one third of ER visits over the age of 65 are related to falls. And because of that, you have a lot of downstream health effects that you have a shorter lifespan and more expensive medically anyway, lifespan after a fall. So if you can prevent a number of falls, you then will lower the cost of care. Medicare is very much enthusiastic about finding a way to solve that problem, right? So I think you're going to find that certain programs will be funded by 2030 as part of a broader strategy around prevention. Medical costs are not going the right way. They have not been going the correct way, and there's a lot of reasons for that. I have a nice slide deck about that for the reasons why. But I think that if we think that people are going to start funding the club, like paying to reimburse a personal trainer for their services, right? That becomes a lot trickier, in my opinion. I think it's easier to fund a program than it is to fund turn a health club into a medical billing organization. I can tell you, having done that, that can be challenging. It's tough to do. We bill at ACAC for our programs through Medicare for diabetes prevention, and through Weld, we've helped hundreds more do it. I can tell you it's not easy. And I don't know that every club is cut out to do it. So the question is, what actually allows us to have more widespread adoption? And that's a more programmatic approach. When that happens, I'm not sure. It could be 2027, it could be 2028. They did require the rule that all physical activity or all EHRs will require to have a physical activity measurement inside of them. So just like blood pressure is measured, physical activity can be measured inside of that EHR. That is a 2027 has to happen. You're seeing now Medicare Advantage is now going to be judged on the plan quality based upon their ability to provide a physical activity support. So that's a new change that's coming in in the next couple of years. So these things are happening. So I just believe then you're going to have more programmatic funding. The question will be is that program purely virtual? And then what role do we as a club group play in the kind of in-person, right? And you know, that's you saw recently a hinge in OMADA going public, right? Great companies have been around for a long time that are in the digital space. I think that the question that I think needs to be answered is how do we as physical location providers, at least in my part of the industry, participate in that potential. And we've got to create an easy solution for the payer community to make that happen. And we've got to find a way to keep it, and this is the trick, is how to make sure that we eliminate the you know, or reduce drastically any potential fraud, waste, and abuse that could happen from introducing a whole new concept. So, yeah, what I think will happen in some programs will be funded by then. I don't think it'll be this broad-based, all exercise and gym memberships are funded by 2030. I think that's just too big. And but I think those programs are going to offer opportunities for folks at the right level to participate and not only help people, but potentially get new members. You know, the key of a medical program is if I come to an ACAC for a medical program, there's a good chance I continue on as a member of that health club. So these are leads you're getting paid to take, right? So I do think there's a lot of opportunity for clubs that choose to participate here. That's a long answer. Sorry.

So no, that's a great answer, Chris. And the follow-up question I guess I have is that I don't know, maybe it's just me. I've maybe I'm the only one who thinks like this, but I've always wondered like, is there gonna be a day when a doctor sees a patient and writes a prescription for exercise, right? And boom, they show up to the gym. And now I've talked about that numerous times, but a lot of people truly believe that with the way health insurance is set up, that their motivations or incentives aren't necessarily to get us healthier, right? Maybe that there's more money in keeping us sick. I'm not actually believing that. I just I think they're incentivized to be profitable, right? I don't think they're, you know, necessarily evil like they want to do people harm. They just want to make a lot more money. And they have to, because a lot of them are public companies and you know the street demands it. So I think there's a little incentive, but when you look at the overall uh alignment of incentives through the, you know, the providers to the clients to, you know, the whole how the whole thing works, like what what do you what's your gut or what is your experience tell you? Like, can we align incentives properly to make something like that ever happen?

Yeah. So first, I think with governmental healthcare, I think Medicare and Medicaid, you're gonna have a higher degree of potential incentive alignment for a couple of reasons. One, Medicare, you don't ever lose it. So for the federal government to then reduce the cost of Medicare, hopefully you keep people healthier longer. You know, I think that's so they would be motivated. On Medicaid, very interesting. Uh, we're working with YMCA, the YMCA group, Dr. Gloria Winters and her crew at the at Y Enterprise Chaired Services to actually facilitate statewide uh Medicaid contracts that we help manage for YMCAs. So think the entire state, everyone who's covered under these lives, and we're already up to millions of lives that are part of these programs, are able to use YMCAs in the state at no cost for membership and potentially other services like summer camp and swim lessons and other things. So we're seeing that that there already is some motivation there. I think you're right. Like in that, in that health insurance companies, there is that cynical side that says, you know, I think someone famously said this at a conference I went to. Unless it's going to happen in the eight next 18 months, I don't care about prevention because that's how long they're going to be my insurance client. You know, I think they just know that that companies switch plans all the time, and so they don't want to invest in it too heavily. Or we'll say this, I think physicians themselves would love to help their patients. Our experience in delivering physician-referred exercise programs is is really, you know, taught us a few things. One, doctors are super busy. So when someone comes in and they're not getting enough exercise, the doctor wants to say, well, then this is what you should go do. Right? What is that answer? Well, that is a potential referral. So with WELD, we did build, we built actually the ability for direct fire base, so electronically, direct referrals from EHRs directly into Weld. So you can actually receive that referral from the doctor. If they want to issue an exercise prescription, we can then be the pharmacy that fills it. So we essentially are the pharmacy software in clubs. There's a cool project about to start in North Carolina that will deliver on this. We work on that with a great group. And this is from a wide-ranging group. Think YMCAs, think um medical fitness centers, UNC Healthcare, a lot of folks involved in this to try to be able to create those pathways on a statewide level and then hopefully national level for direct reimbursement for specific programs. So what they'll do is they'll say, hey, you know what, Eric, I would love to send you to the YMCA as an example. Here you go. I think you should be in their commit to get fit program and send you to that program. You can refer to a program, but that's not going to be something that's covered necessarily by insurance. So to go to the topic of what gets covered is a little different than that. In the Oregon State study, this is like a 2015 study, so it's probably not relevant. 83% of medical schools didn't require any exercise education to graduate. Like most of them don't, and doctors don't know how to prescribe. Exercise generally, but I don't think they're there in that office with that patient looking out for the healthcare company or the insurance company. They're not like, you know, United didn't want what wouldn't want me to do this, right? Or Etna wouldn't want me to do this. I think they're like, how do I help Eric? Right. The thing is they don't have an answer. And if we can potentially be that easy button, you know, for those Staples fans out there to send send people to, they would love to do it. I think that ultimately they just had not been given the the pathways to do that yet. And that's what we're trying to provide.

It's great. I'm so I'm so happy to hear you say all this too, because you know, I think it's really easy for us as a uh a society to paint these evil pictures of villains and when when really like the conversation's so much more nuanced and contextual and there's so much more to it, right? And there's rarely just a small group of people, you know, smoking cigars and in their in their rooms just laughing about how they're destroying the world and making billions of dollars doing it. I just don't think that exists that often.

No, I don't I don't think so either. I mean, I think geez, healthcare is really challenging. Oh my gosh, it is so tough. Now, granted, it's maybe a trap of their own making or what have you, but it's not an easy industry to be a part of, you know, and and I respect that there's a lot of challenges on the other side of the table that I don't know about. I will just say that when it comes down to it, I think we have to come the fundamental thing I believe is that we as an industry have to come up with a solution and present that solution in a way that allows the other side to feel like, you know what, this can work for us. And there's a lot of art in that. I don't think we've cracked the code, obviously, but I do believe that each time that we kind of go through these processes and these events, meeting various conversations with the powers that be or pilot projects, you know, that that have been started that we've been a part of, we get a little bit closer to defining how that's gonna work.

Awesome.

So yeah.

Last little segment here is as I as my time is wrapping up with you, but longevity is a category. I want to get your take on this because we're just chit-chatting about it.

Yeah.

You know, it's I was just had a conversation about we're still kind of figuring out longevity. I'm still a full believer in the category overall, though it needs some definite defining um as far as like, well, what are the service offerings? Uh, who's actually interested in this? What's the pricing model, you know, to make it all sustainable? Obviously, there's a lot of uh, you know, Lifetime in the Miure program seems to have a really nice setup to kind of figure this out because they have the RD, they already have the membership. But how are you guys looking at longevity as a category and how do you personally feel about it as an industry? You know, are you excited about it? Do you think it's gonna still early? Are you guys looking to start uh bringing some of those offerings under your under your roof? And if so, like where are you starting?

Yeah. Well, the big I'm I'm I'm a believer in it myself. I hope hope to have it, right? I think I would be a potential consumer of it and trying to figure out what would work. I think it's a great industry. I think it's here to stay. I think we talked about that earlier as well. Like it's it's really powerful, and I think it's a great message. And you know, what what I would where my question lies is in what role do we have in my world operator-wise to to to play in this? What are we supposed to do? And what I think lifetime has is a lot of credibility, right? So that you know, for example, if I just started Chris's gym and then I said, hey, by the way, we're gonna offer longevity services, I'm not sure how successful I'd be because no one's coming to me for that, right? So I think it's gonna be easier for your established players with strong brand equity and a history of delivering quality that are gonna be trusted to deliver longevity services that are not gonna be seen as essentially just a money grab, right? What's interesting is how many clubs, there are the subset of clubs that have started out. I think what's the one in LA that's like a thousand a month Monarch or others that were you come in and it's like, look, you're spending you're spending a thousand dollars a month with us, but you're gonna get all these other services that are around your health optimization. That's a great word, by the way, from from Eric. Thank you. Uh I like that. But like that, that is something that someone comes into them for that purpose. Like if someone's willing to spend a thousand dollars a month on that, they're not gonna be like, oh, I'm gonna come to the gym and maybe get that for 50 bucks cheaper. So what I'm worried about is like, you know, hey, how do we play in this? What I see happening is that clubs are gonna start partnering with people who know how to do it. And there's gonna be value in reintroducing our members to a broader, subbroader group of providers who can perform these services in a way that we as a club are not equipped to do. So think of it in this way of this. I have 75,000 members. I'm pretty sure there's a service out there that would love to have all 75,000 of my members as potential candidates for their longevity services and hope to get three or four hundred of them to enroll. Is there a RevShare model by me introducing those people to a trusted source? And I think that that's where a lot of clubs are gonna go is say, wait a minute, I think this is an awesome idea. I would rather partner than execute. For the clubs that are really good, like a lifetime, they're gonna have the ability to execute. But I think for the rest of the groups, who can you partner with to add benefit to the value of being a member with you at your club? And can you pick the right partners to supplement your membership in a way that makes sense for your brand? You know, and I think that's where I will point our direction is who which who can we partner with rather than what can I execute? Because quite frankly, we already have a lot of other things we do really, really well. And there's a lot of hubris in our industry where it's like, nah, I don't need this consultant who's already figured it out. I can do it myself because I'm worried about paying the 5% to this guy. Then you spend all this money starting something, then it turns out you'd have been better paying the 5% and the franchise fee, right? So my lessons learned in 21 years of doing this is like, you know, partnering isn't always a bad thing. And that's probably the direction I would go if we're gonna start introducing it at our clubs.

Yeah. Well, it's a usual question of an executive, right? Build buyer partner. And I think it's it's very nuanced, but uh, once you kind of look at it from that perspective, it's actually pretty clear. If you're honest with yourself, right? The Hubert's giving away.

If I think about well, just like go ahead. Last thing I'll say is like member management systems, a lot of club companies that have developed their own. When you get to a certain size, it makes sense. But when you're too small, you better be buying something that already exists, because otherwise, you know, it's gonna be a road that that ends in disaster at some point. So anyway, I know we gotta go. We're at time, looks like I've taken up all yours, but yeah, you know, fun conversation is always I got a few more minutes for you, man. Okay, good.

Yeah, yeah, it's really good. And like you said, you know, once you get on the software train, it's a Ferris wheel you can't get off of anyway. So uh I think people don't realize that either. Everyone, I've now like Dan Lamora from PushBress is a good friend. He's always he's daring people. He's like, I dare you to start a software. I dare you, because he's been doing it for 12 years and it's never ends. It's never ends.

Tough business for sure. I mean, I can tell you that it is a challenge. I will say AI has helped on the software side, you know, where you know for in some instances it's great. On the other hand, it's not quite perfect yet. So it's like you can't overrely on it, but it does speed up the pace and it turns really bad developers into slightly better developers, you know. I think you're still gonna have that top-tier talent, is gonna be top-tier talent. And I don't know that that goes away anytime soon. Yeah.

Awesome. Uh last question, Chris, is you know, as an industry, uh, like what's a big challenge that you're facing right now? And basically what I'm asking is if people are gonna reach out to you after hearing this, what what would you like to hear from them about? And how would you like them to reach out?

Oh gosh. You know, we're trying to think the biggest challenges we face now in terms of our own industry, our own clubs. I think anyone can reach out to me about anything. I don't care, open book, I'm saying hi to me on LinkedIn, whatever, it's super fun. I love talking to people because I always learn something from the conversation, and I'm always happy to share. I think that the biggest challenge we're gonna run into is I think how do we manage capital in our industry? And I know this is a bit of a big issue, but you know, when you mentioned earlier the the private equity getting into our space and the nature that there's a lot of capital that they can deploy very, very quickly, and it's much harder for an independent operator to deal with that. What are the ways in which we as an industry, and what I'm curious about, are gonna facilitate the growth of the new entrepreneurial models in an environment that rewards that continues to put a higher reward on capital? You know, if you go back to the 80s, you could build a racket club and have it make sense. I don't know how you afford to build indoor tennis courts anymore, right, versus buy them. Right? It's an expensive proposition. You know, right now if you looked at independent clubs building new facilities that aren't private equity backed, I don't know anyone else who's doing it. Like I'm in one that we're doing, and I think we're either smart or idiots, right? Like, I mean, this is the kind of thing where you want to be right, but man, there aren't a lot getting built. When's the last time you heard about a racket and tennis and swim club just getting built by somebody with an idea? Right? And so to me, the biggest challenge I think facing our industry is how do we encourage that next group of entrepreneurs, not necessarily a studio, which is fairly easy to fund, but in worlds like ours, doing large-scale innovative models to even get started, because you know, you look at a group like the St. James in DC, which, you know, is a one-of-one kind of thing, like when's the last time anything of scale got built? And if we ask ourselves that, we'll know, okay, there's a there's an interesting problem facing our industry, is that most of the clubs that are 40 years old are these kind of big health racket swim and tennis clubs, but no one's building any new ones anymore. And so, what's the future of an industry where these are the long-lasting players, yet they're a dwindling breed in terms of you know being new construction? And if anything, they're disappearing because they're being taken over and redeveloped as some other form of real estate. So, anyway, I think that's an interesting challenge. I love talking to people about that kind of stuff, but you know, every day you wake up and there's a new challenge for sure.

Yeah, yeah, awesome, man. Well, Chris, this has been uh value-packed, dude. I think we covered a lot of really, really critical topics for the industry. And I I um, you know, with all of your experience and uh and success in this in this field, it's it's uh it's great to get your input. So and you all obviously do in a very humble and authentic way. So thank you. It's been an absolute pleasure. And uh yeah, ladies and gentlemen, Chris Crater.

Yeah, Future Fitness Podcast is amazing. Hope everyone listens and also subscribes. And you know, it's been a great to be here. And once again, thanks so much for having me.

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