Darren MacDonald - The Future of Tonal

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[00:03:28] It's a pleasure. Thank you. Yeah, man. This is great. Thanks for doing this. For sure. So we're at Connected Health and Fitness in Los Angeles. We're sitting here in February. So far, I guess, to start with this, like, what's your thoughts? It's day two. So we had day one yesterday. What do you think of the event? Oh, it's a great event. You know, this industry is kind of a little bit smaller than the industries that I've come from traditionally. But, you know, it's not quite a cottage industry. It is, like, you know, decent size scale.

[00:03:53] But it's like it is kind of interesting, all these different players that offer different, you know, elements of people doing payment systems, people actually having products, people service providers, et cetera, around. I thought the topics were pretty good yesterday. There was a good session on GOP-1s that I think all of us are kind of interested in hearing. I mean, a professor from Harvard talking about sort of the medical angle and some business folks around it, financing folks around it. I thought that was pretty good. So, yeah, I've been impressed. Yeah. It was good. That GOP-1 was really interesting.

[00:04:18] And I talked to the professor afterwards and Jeff Sweefel afterwards and everybody actually on the panel afterwards because I always have questions about that stuff. But, you know, the question I raised during it as well is it's all, I mean, like, bullish, whatever you want to say about GOP-1s. I'm bullish overall because, you know, I think our health care system is going to go bankrupt if we continue the way we go. Yeah. Just in metabolic disease and obesity and a lot of that, right? But is it actually driving people in health clubs? Right.

[00:04:48] Or into fitness routines? It sounds like it is. Maybe. Yeah. I mean, the things that popped for me, for what it's worth, you can stop me on any of this. No, I'd love to hear. The things that popped for me were, number one, one in eight people right now are on GOP-1s. Right. Which is like, I was thinking to myself, like, shocking. Maybe I know 15 people. And then I'm like, maybe I know 85 people that are on GOP-1s that are just not talking about it. Yeah.

[00:05:15] Because I think there's like just a quiet majority of people who are, nobody raises their hand and says I'm, you know, or a few people raise their hand and say it. So that was number one. I thought it was pretty interesting. One is, another one is the tracking of GOP-1 growth is actually tracking obesity growth, which is kind of crazy because if you just, it means that the majority of people that are not on GOP-1s are continuing to become heavier and heavier or less healthy and less healthy.

[00:05:39] So if you just take the 10% out or whatever, 12%, 13% out, that means that everybody else is continuing to get kind of unhealthier and unhealthier. Yeah. I thought that was pretty fascinating. The amount of reduction, you know, up to 15 to 20%. Like I was doing the math on what I would weigh. I think I probably weighed what I would weigh 50 pounds light. I'm to call it 220, 225. Yeah. If I was 50 pounds lighter, it'd be 175.

[00:06:04] I probably was 13 years old when I weighed 175, you know, which is pretty shocking. And then just the overall numbers, like size of that market, you know, and people paying a thousand bucks a month roughly. And then two thirds are leaving GOP-1s within one year, which is also pretty wild. Yeah. So it's like people get on it, then they get off of it. And so there's this kind of like high attrition rate coming off of the drug. The, I mean, the first stat you started with, the one in eight. Yeah.

[00:06:34] I mean, if I was just like, if you just said about that one. It's crazy. For that for a second. Yeah. And I think about my life and who I know. And, you know, I think when you look around the room like that, everyone's in the industry. Everyone's in the vertical for the most part. Everyone there is pretty healthy. Yeah. Right. Which means you probably surround yourself by, you know, with healthy people and fit people. So it's hard for us to imagine, but I know like a close family, a member of mine is in his seventies and he pre-diabetic. Like he got diagnosed. So he went on GLP ones and he's lost a bunch of weight.

[00:07:04] Right. And of course, you know, I wish they consulted me because I would have been like, Hey, we should do some working out. Yeah. It is that that's, that's the fundamental. I mean, we've been talking about GLP ones since they came out in this industry and everybody's got a very strong opinion about it. And rightfully so, because it's transformative. Yeah. Right. But I think a lot. So fundamentally, I'm just curious what your thoughts, but why it irks me so much. And I think a lot of people is that it's just another way for pharma to make a shit ton of money. No doubt.

[00:07:32] Off a problem that probably should have never existed in the first place due to food companies. Totally. Right. Yeah. I was watching this. I thought this was really fascinating. Okay. So you, you think about like body weight, body composition in Japan versus the United States. Okay. And like there's genetic differences between, you know, us and the Japanese, but by and large, they don't have to do with like our metabolic sort of composition. Yeah. What they do in schools is they actually have per school, like a staff, I think this is all correct.

[00:08:02] Okay. So, but, but what I heard was that there's a staff nutritionist that is at each individual school. They can't use. No way. Yeah. So it's because it's like ingrained in how they think about eating. They can't use preservatives. There's no food that isn't prepared that day. They don't even use pace. So things that were pre-prepared, it is all prepared fresh and nutrition is just put as like kind of at the forefront of how they think about like raising their kids, which creates lifelong habits around how people will eat.

[00:08:32] And like, you just look at, I mean, like the, it's diabolical from the way that we think about doing it, which is like public school systems today. Like they just, they're not eating healthy and they're not eating well. And hopefully that changes, but it is pretty wild. Yeah. You know, one of the things I've noticed that, you know, it's just the time of, of the season of life that we're going through here is so much of the talk of the new administration, you know, the Trump administration coming in. And there's a lot of fears. There's a lot of expectations, a lot of hopes. Like that's something that's carrying in.

[00:09:02] Like usually our industry is kind of like, ah, whatever. Right. But everyone's like, we're talking about people from high price are worried about tariffs. Right. Like, I guess I'm sure you are too. So, I mean, yeah, I'm curious as the CEO of a company that does a lot of shipping of equipment. Right. Like how, how is that affecting? What concerns do you have? What are you keeping an eye on? Are you just, are you just hoping for the best? Like, how is that? Well, I mean, does it keep you up at night? Yeah. Yeah. I mean, the, the tariff issue, I mean, so our business in particular, like, I think we have opportunities to manufacture for less expensive than we do today.

[00:09:31] So like we have mechanisms in place that we think we can offset some of like the punitive damage that will come from tariffs. I mean, to, to sort of wax on this for a second, you know, we, we manufacture abroad, adding tariffs out of Mexico or Asia or wherever is going to be impactful to the profitability of this entire category. Cause I imagine there are very few connected fitness hardware companies that are manufacturing domestically.

[00:09:55] There may be some that do, you know, that are just components that are super easy machinable that you can do in the United States by and large. I think, you know, Peloton's abroad. Everybody I've talked to is abroad. So it's going to hurt us for sure. But like I said, I think we have a lot of things that we can do to sort of offset some of those profitability problems. I actually talked to somebody who's very weird, but I know somebody in the administration called him last week and his recommendation.

[00:10:22] And, you know, without sort of prejudice, he said, buckle up. He said, move to the United States. And I was like, well, it's not quite that easy. Like we would be here if we could, but it's prohibitively expensive. And, you know, his view was like, it's going to be a very rocky road for, for a while. You know, the, the data just came out around inflation yesterday. I actually think that that was sort of beneficial to us as an, what was that? I didn't check the news this morning.

[00:10:51] The inflation index was higher than anticipated. Yeah. So because of that, you know, from an economic perspective, you would say like the consumer is, you know, somewhat stronger than they were before, but still fighting this discretionary spend impact. So if you're trying to get the economy kind of back on the right path, you know, and you still have prices that are raising, rising faster than, you know, wages are growing. It puts economic pressure on the individual consumer.

[00:11:19] If you layer tariffs on top of that, which, you know, people can argue about this, but like that's a, that is a tax that goes to the consumer who purchases. It's just kind of the way that it works. That makes the price of a product go up even further, which will pull back spending on the entire industry. So if you look at, you know, I haven't tracked food in a little while or gas. I used to look at those kinds of things, non-discretionary versus discretionary, but discretionary is still being impacted.

[00:11:46] And I just think whether it's an additional tariff in Asia or whether it's a new and post tariff on Canada and Mexico, it's, it's going to slow things down further. So I think the, what we saw yesterday with, I don't know what we have like three weeks left, you know, in the kind of one month stay of execution for Canada and Mexico, I think that'll make it harder for him to put a full kind of 25% in. So where does it land? You know, is it 0%? Is it 25%? Is it 20%? 15, 10?

[00:12:14] I don't, I don't actually, I don't know the answer, but there will be an impact for sure on the category. Yeah. And how, you know, the question will then also be like, how long does that remain in place? Yeah. You know, like Trump has said pretty explicitly, you know, fentanyl reduction has to go down, stronger border has to go down, legal immigration has to go down, crime has to go down. And so I think he's sort of put in place these things that he wants to see happen. And, you know, the president of Mexico has put 10,000 troops on the southern border and said, basically, we will help fortify the border.

[00:12:44] That kind of bought us a month, you know, but what happens at that end of the month? I don't know. And then again, you know, what are sort of the gates and what are the steps that, you know, Mexico and Canada have to go through and Asia has to go through in order to sort of like get that sort of punitive tariff removed. That is TBD. Yeah, man. That's a big, that's a big concern for you at this point. Like a really large consideration.

[00:13:06] I, you know, I feel overall, you know, when you kind of zoom back at if the people in the United States want these changes, right, which, you know, high levels sound, you know, very, it's obvious. Like, yeah, of course we want these things, right? We want secure border. We want like all these things. But I don't know if everyone really understands that that's going to come with a collective bit of pain. Economic pain. Yeah. Yeah. That we're going to have to deal with. Yeah. Right. To get these changes there. Yeah.

[00:13:32] If I were a betting person, I would say that the Asia tariff will probably stay in longer than Mexico and Canada. Yeah. That's my guess. Okay. You know, it already is. You know, I think it is 35% at Asia and it will be 25% in Canada and Mexico. Yeah. My guess is that Canada and Mexico, Canada might be like kind of the lowest rate. There's already sort of like the energy kind of version of that, which is half of the 25 or seven and a half percent, I think.

[00:13:58] Like, but I think it's going to be more painful for Asia than it is for Canada and Mexico. But yeah, it's definitely going to, you know, pump the brakes, put sand in the gears for, you know, for our industry on the hardware side. Yeah. Wow. Okay. I didn't see us going there, but I like what we did. Right out of the box. Yeah. Right, man. It's great. I love it. Your background. So, I mean, a little bit unique. I want to get into that. So you came from Petco, Walmart, unique background. And we see that a lot now in the industry, which I'm open arms.

[00:14:25] I want to see people from other industries coming in with leadership and new concepts because we're maturing as an industry. And it's, you know, we're also getting kind of pushed or welcomed into the wellness economy, which is, you know, trillions, not billions of dollars globally. So give us some background, man. Like what, you know, when you come from a company like Petco and previously Walmart, and you look at an opportunity like Tonal, what went through your head? What was the impetus for you to jump on that? Two things. Number one, I've always, I've been an athlete.

[00:14:55] I do all kinds of sports. I grew up playing all kinds of sports, football, basketball. I went to Cal to play football. Like I love sports and I've always weight lifted. I've always done resistance training. And I've joked that like there's days when like the treadmill and I have a, like a stare off and the treadmill wins. But I will typically like pick up, you know, like weights and do resistance training. And that's kind of been like a through run through my whole life. So a passion around that, I'd say maybe actually even three things.

[00:15:20] Number two, I was very kind of close to the Peloton story and the founders of that company. I was an early investor in that company. Watched my wife worked there. Like I watched that whole thing kind of go both up and down. And then three, you know, my career I would say just is defined by working in the consumer sector, you know, in some capacity or another. And I've done it in consumer products. I've done it in hardware and software before. I've worked for, you know, big e-commerce companies across, you know, Jet.com and Walmart and IEC.

[00:15:48] And I like, I've been pretty dialed into kind of like what the consumer is doing, what the major trends are for the consumer. Admittedly in a different industry, but like the end of the day, like I feel like I've got a pretty good business judgment on how to build around the consumer.

[00:16:02] And so I looked at the tonal opportunity and I thought like there are some things that maybe I can help here around better defining who our customer is, working better through marketing channels to sort of align who we think our customer is, what our message and our brand should be and be more effective in those channels to go drive our business. And, you know, there's a bunch of pieces around like retail strategy and like, you know, what the website ought to look like because it's not where it needs to be. It needs to continue to evolve and we're going to launch a new sort of version in the future.

[00:16:31] And I think that, you know, my background can kind of like help uniquely speed up the number of trainers that we're putting in a market in any given year. So that to me was like, well, actually, and I'll add sort of on the tail end of this discretionary on kind of COVID. I also felt like, you know, it was a bit of a bottom, you know, for a lot of the industry, I think. You know, everybody I've talked to. And by the way, it was that way at Petco. You don't like to talk about it anymore. Yeah, we graduated from it.

[00:16:59] But, you know, I feel like if we can get some of the discretionary stuff turned around, you know, TBD on the tariffs. But if that stuff starts to come back, the consumer starts to come back and we can get sharper on kind of the basics around like operating this company better. I feel like we're going to be in a much better place and I'll be able to have some part in kind of growing the business faster. Yeah. Yeah. I mean, you came on a really interesting time. I mean, you're right. It's the shitstorm of especially connected fitness of 21, 22, 23, 24. Yeah. It was brutal.

[00:17:29] I mean, well, no, I'm sorry. Afterwards, right? The 20 more, 22 to 24. Yeah. So when you look at the vision moving forward and maybe want to set some context like this. So I do a quarterly report with Alex Alameda-Siano and Juliette Starrett and we kind of go over all the public companies in their quarterly reports and give our thoughts and ask each other questions on it. And so I've gotten to know Peloton more than I would have about a year or two ago.

[00:17:55] And we've always said like watching Peloton and try to navigate these waters, right? Of like, it just seemed like they were just throwing shit against the wall. We're going to try this partnership. We're going to try this. We're going to evolve this piece. Right. And all the time, like, well, why don't they just stick to the core thing? Like sell more machines, get more subscriptions, like, you know, continue with the content. You're a great content creator.

[00:18:19] The overall strategy, is it, you know, like when you look at your percentage of your time and effort and energy, is it selling machines and getting subscriptions? Is it partnerships? Is it going into, I mean, you guys have the tonal training lab as a brick and mortar concept, which I love. I was telling you and your team yesterday, like I always tell my wife, if I'm going to open another gym, it's going to have strength equipment. It's going to be tonal. Right. Which I'm never going to do. She's never going to let me do that. Who can all dream. So, yeah, give us an idea. What is when you navigate forward? Right.

[00:18:48] And make, you know, tonal, which is a great piece of technology. I've been a fan for many, many years. What are the opportunities that you see? Yeah. Well, let me start somewhere a little bit funny, actually. Please. So, you talked about kind of the nature of this category and the ups and the downs of it. If you look at, like, the tonal business was on fire in 2020 and 2021 for various hyper-sperience that we don't need to go to. Yeah. And it has slowed down since those moments, like Peloton and like the others.

[00:19:15] The thing that, like, inspired me about this company or one of the things that inspired me about this company is if you look at every one of those cohorts. So, going back to 2018 and when they were just sort of selling a de minimis amount of tonal trainers through 19, 2021 through today, every one of our cohorts looks exactly the same. Hmm.

[00:19:37] So, unlike some other companies out there in the space who have seen kind of like attrition rates grow, you know, people sort of like putting their equipment away or selling it on secondary market, like every one of our annual cohorts looks exactly the same. That gives me a lot of confidence in terms of like what we ought to go ahead. Describe that. Cohort. Okay.

[00:19:59] So, look at all the people in 2018, which is a small amount, and compare that to 2020 or 21, which were really big numbers in terms of like the number of people who got a trainer. Okay. And when I say they look the same, I mean, you know, there's some curve of somebody who buys a trainer or buys a bike or a tread or a rower or whatever. And, you know, usually that curve is sort of described by people who decide, you know, this is not for me.

[00:20:27] And then they kind of get out of it at some rate. And then you look over, you know, a five or 10 year period and say how many people from that year still have the thing or are still paying for the thing. Our retention rates are industry leading. Yeah. Astronomical. Astronomical. Like they're incredible. And I'm happy to go into the reasons why, but I think that the main point that I'm trying to make is that introducing this product to consumers is like the challenge.

[00:20:57] It's an awareness building thing for us because once they get it, they keep it. So when I say those cohorts are so healthy and they all look the same, it's because people are, the same groups of people are having the same sort of impact on their life, which is that they're getting stronger faster. They love the programming. They love the machine itself. They love all the things that it does with predictive weight technology and all the features that we roll out. And so like our challenge is really because it is the stickiest thing in the market.

[00:21:24] Our challenge is just about like trying to get more awareness around it and get people to put it into their home. So there's like, I cite that because I think, you know, there are some businesses and I'm not talking just about like Peloton. You know, there are some businesses that I've seen the shape of that customer cohort change over time. It's like it was a big fad and then it fell out of favor, you know, and that's happened in, you know, all kind of categories within connected fitness.

[00:21:48] It really has an impact on our business, which is really, really cool and speaks volumes about like how transformative the product can be. So, you know, where am I spending my time? It's really trying to create the kind of like upper funnel awareness over this thing that, you know, you put on your wall and it'll change your life. And then figuring out the best methods to get people to sort of walk down that funnel and end up converting. Yeah. You know, I can go all the reasons. I think maybe I'm uniquely qualified to do this interview because I've been using Tonal so far and I know the industry really well.

[00:22:17] I mean, I could sit here and spout off without being paid or anything about why the reasons I love it. Right. You know, I've asked some people in the hallway this morning. I'm like, hey, I'm going to interview the CEO of Tonal. What questions would you want to ask him? Right. And I think everybody wants to know, like, how big can it get? Like, what is the total available market size? What do you think is realistic? Like, how many people are potentially going to put a Tonal on their wall? And I think one of the things that's, you know, it's not, it's just the way the machine has to be done. But once this thing's on your wall, it's on its wall, on the wall. Like, it's there. You're staring at it every day. Yeah.

[00:22:47] Right. And that's a good thing, you know. So that's definitely a quality of it. And I think strength. I mean, I'm like you. I've been an athlete my whole life. Strength is fundamentally the one thing that we should be doing. And as research starts to come out more about longevity and aging well, everyone knows, like, you got to be strong. Right. Right. So there's a lot of things going in your favor with this. But with all that stuff being said, and I love the direction you're focusing on, it's like, hey, let's just build a fundamental business as much as we can, not get distracted. Yeah. That makes me happy. How big?

[00:23:18] I think, you know, I'm going to demure a little bit on that question because I'm actually in the process right now kind of going through my own assessment of what that looks like. Okay. I think, you know, here's what I would tell you. You know, people quantify this as, you know, kind of $2 trillion wellness and, you know, maybe there's a $2 billion category right now. Like, I'm going to be interested in your kind of point of view on exactly how big it is. But my view is that lots of people are doing lots of different strength modalities that are not as effective as tonal. And it's a lot out there. So if you just look at our penetration, I don't believe that it's big.

[00:23:47] I would argue it's maybe even like single digit. So there's lots of opportunity for us to sort of take over mindshare. That's point number one. The point number two is like traditionally people have gotten either, you know, a Peloton bike or a treadmill or a rower or something like that. And they haven't gotten a piece of strength equipment. And that is changing. And it's changing fast. So if you look at just overall growth and strength, it's like the number one growth modality. You look at like women in strength, it's like the number one. So it's a growing kind of across the board.

[00:24:17] And then you have tailwinds of GLP-1s and people like me, you know, with a dad bod that are trying to kind of like fight off the future. You're a great band. Thank you. Thank you. And so, but then if you look at people who have not started, which I think is actually a really fascinating thing to look at. If you like, so it's number one for 20s and 30s. Okay. If you look at 40 to 50, 50 to 60, 60 to 70, it's number two and number three amongst non-starters.

[00:24:40] Which tells you that as the sort of overall market continues to grow, it's really picking off this kind of like notion and this awareness that's happening in amongst customers who are not participating saying, you know what? I should be doing something in strength. And so then I look at our businesses and say, how do we most effectively kind of pick people off that are trying to get into the category that have just not started yet?

[00:25:05] And for us, like, you know, you put this thing on the wall and you make the commitment to kind of make the purchase. You look at our retention rates, which are super high, which is kind of the output metric. Like what happens when you do it? And you look at the fact that like you don't have to sort of choose your weight because we do all the predictive weight technology behind it, right? So you just like, it's the most like low brain damage sort of activity you can do. Yeah. You pick a program, all the weights are chosen for you and you just go do it and you get stronger really fast. Yeah.

[00:25:34] And you stick with it. So like what gets me really like juiced is this notion that there's like all these people on the sideline that are kind of like peering over the wall saying like, I think I need to do this. And so it's a matter about us sort of positioning our company effectively, building the value propositions, all the reasons to believe, then going after these individual segments to make, you know, somebody kind of climb over the wall and say, I'm going to go do it. Yeah. Yeah.

[00:25:59] It's, you know, strength out of all the modalities of fitness, unless it's something like, you know, a sport, like, you know, jujitsu or even yoga, I find personally intimidating. Right. Like first time I did, I was scared, you know, as an athlete, like, but I was a guy, I was inflexible and I just felt very awkward doing it. But I think strength, you know, if you pick all the typical fitness type things, strength is the most intimidating for people to get started because you go into a weight room. Right.

[00:26:26] But there's barbells, there's dumbbells, there's kettlebells, there's all these pieces of equipment and people grunting and, you know, and you don't know how much weight to use. If you use, you know, small weights, you look like if you're a guy, you're like, you look like a weenie. Yeah. Right. Like, you know, so there's all these different things that really intimidate people against the strength game. But when you have a tonal unit, it's very smart. I like the fact, I was talking to Troy about this, Troy Taylor, like, I like the fact I don't have to put away plates anymore. Yeah.

[00:26:56] Very less ego around it. Like, I admittedly use less weight, rightfully so, on my tonal than I would in the weight room because my ego will sometimes get out of control. So I save myself. Yeah. So I think there's that factor of, like, it's very unintimidating to get into strength and it's guided you very well. And I'll, I have to say I'm impressed with the programming for someone I've written thousands of programs, right? Program is good. Like, it's explained well. Yeah. It's not overcomplicated, right?

[00:27:25] Which as a coach and trainer, a lot of us do. We tend to overcomplicate things. But it's also explained very well. So I think the programming, it's a good education that's built into about, hey, this is proper strength training. So it's like, it's such a good tool to get people onboarded. How do you create that messaging? Like, if you want to get people who are just interested, we'll call it strength curious, right? Like, how do you build that messaging? How do you tell that story? Yeah. I mean, our, our sort of, our brand right now is about powering progress.

[00:27:55] And like, that's kind of the, you know, it all sort of points towards that. Like, we are the tool. We are the utility that helps people to kind of improve their lives and make progress around their kind of strength journey. But I think like, you know, the devil is in the details, right? Like, I was talking up on stage yesterday just about this notion that, you know, amongst the 65 and older, like one in four people, a leading cause of death amongst 65 and older is people falling. Yeah. And it's not the fall, right?

[00:28:24] It's like what happens once the fall happens. And if you're 65 and older, that's one in four people per year. It's like astonishingly high. And this is related to sort of like, you know, your lifespan versus your health span and people living longer and, you know, just not maintaining kind of strength. So, like, what's the leading cause of falling? It's frailty. Yeah. Right. So, so amongst that group, people, you know, maybe that are in active aging, there is a message around like, do you want to be able to go upstairs? Yeah.

[00:28:53] Like, how great would it be able to pick up a grandchild? There's like this sort of outcome that happens with people who don't sort of preserve muscle. So that is like a nuanced sort of like argument around how we sort of like power progress to ensure that those kind of outcomes don't happen for you. You know, there are people who are sort of like athletes who are, you know, like raising kids now and the need to sort of maintain kind of mental clarity. And that the base of your pyramid is like about your body. Right. And then your emotions, your mind.

[00:29:21] And like, so that, that is a little bit of a nuanced argument. The GOP one crew. Right. Which is like you're losing muscle by and large faster than you're losing fat. And so like you need to preserve muscle. And so here are the reasons why. So I think, you know, we can talk about our brand in like very simplified terms, which is like, we're the thing that helps you to get stronger, faster and more effectively. And I can tell that story really, really well. Yeah.

[00:29:46] I think the, the, the nuances, like how do you then shape amongst the customer segments and the demographics who would participate in ways that to get them to sort of commit to it. And, you know, we'd like to do it more carrot than a stick, meaning I don't want to scare you into do it. I'd like to sort of like offer up all the reasons why this will make you a better human being. And, you know, so that, that is kind of how we shape or think about shaping the messages for, for the segments we go after. Yeah. Awesome, man. So you're here at Connected Health and Fitness. This is an industry event, right?

[00:30:16] And, you know, the Tonal Lab, Training Lab, I want to talk about that a little bit. So it looks like there's, it looks like if I'm observing that maybe there's some commercial opportunities for you guys that you're exploring. I mean, you know, this is partnership galore land here at Connected Health and Fitness, right? And investors and other executives and a lot of technology going on. So I guess the two part question is what, when you come to an event like this, what is your goal, right? Overall.

[00:30:44] And then, you know, what's the thought behind the Tonal Training Lab? Is that something that you guys are just testing out to maybe show, showcase that this can be used in that type of environment? Or are you guys thinking about potentially, you know, expanding on that to a couple more locations? Like whatever you can share. Yeah. We'd love to know. Well, as far as being here, look, I don't make any amends about it. I'm an industry newbie here. So I haven't even been at Tonal for six months yet. So this is to me kind of like, I'm here to learn.

[00:31:11] I'm here to kind of network and understand who the players are in the category and who the service providers are and offer up a point of view around Tonal and why we think it's meaningful and share some kind of industry perspective that I've learned. More broadly, you know, as we think about sort of espousing the virtues of Tonal, you know, to your point, and you met with Troy, who's like the most amazing human being in the world. We opened up the Tonal Training Lab about a month ago. No. Yeah. About a month ago. Exactly. About a month ago. Exactly.

[00:31:40] And really, like we did it as an opportunity to learn. We wanted to launch Tonal 2, which we've brought out and we did a bunch of press around it and also did it as an opportunity to engage people in the New York area and beyond. Lots of like, I think upwards of 25 to 50% of people flew in from across the country to go experience it as well. No way. Which is really, really cool. Were these like current users? Yeah. Really? Like members that flew in and wanted to go experience it.

[00:32:04] But we did it as an opportunity to get some view of like how would people respond to sort of operating a Tonal Trainer in a live environment with a coach. And like the response was like incredible. I mean, every class has been sold out. There's been a lot of enthusiasm around it, a lot of excitement around it. But I went and did it. And it was incredible. So where do we go from here? I think there are a few different things that we could do. One is, you know, we could stamp these out across the country.

[00:32:30] We could, you know, there's a licensing model that we could do with it. There's kind of a co-retail and like class model that we could do. I think at the end of the day, you know, we're looking for ways for people to see, touch and feel this thing. Because, you know, we're going to redo the website and we want to make this kind of like 2D experience become as 3D as possible. Where like you actually see some of the componentry and the mechanics and we do a better job of explaining like what it is. But at the end of the day, it's not like a treadmill.

[00:33:00] Like people know what to do with a treadmill. You step on the thing and you press on and then you speed it up and you walk. This is different, right? Like the arms articulate in different axes. You're not sure what the weight modes are. Like what's, you know what chains mode is. Yeah. You know, or what chains are. Most people don't. Most people don't know that. You know, we have burnout mode and we just launched drop sets. And there's kind of like all these things around it. And so I think that there's a greater opportunity for us to sort of introduce people to it in ways that are see touch field.

[00:33:30] Okay. Yeah. And that will help kind of drive overall sales for us. So that's kind of like if you actually work backwards from the problem, which is hopefully getting more people to experience it live physically because it converts them. That's kind of, I think, the direction that will probably end up going. But for what it's worth, by the way, I owned a tonal prior to joining the company. So I had been a customer for approximately a year. My purchase path was like I learned about it online.

[00:33:57] I was wandering down lower fifth in Manhattan. And I was like, oh, there's a tonal store. Like I'm going to go kind of wander in there and check it out. I got an incredible demo. I still need to figure out who it was that did the demo. But the guy did an incredible job. And I was like, this thing is kick ass. Demo guy, if you're listening, reach out to Darren. Yeah, yeah. You get a raise, man. I mean, he did a kick ass job. And I walked down. I'm like, I'm buying that thing. And 30 days later, it was actually really funny. It's a little bit of aversion. But 30 days later, I had it in my cart.

[00:34:27] And I told my wife, I'm like, this thing is awesome. Had it in my cart. And I'm like, I want to buy this for us. But I just like, I kind of want to make sure you're going to use it too. She goes, no joke. It's sitting in my cart right now too. No way. We almost independently of one another for Christmas had bought. Can you imagine? Kirstie, what's her back? Was she an athlete? Was she in the string training? Yeah, she. Or is she an athlete? She will, you know, she has like a funny story, but she played tennis when she was in high school.

[00:34:52] Like kind of went dormant on like a lot of like athletic activities, but then started to pick up running. And she's actually like a pretty strong runner, which is really, really cool. And then ended up working at Peloton, ran their commercial business there, which is ironic in lots of different ways. And yeah, now she did the Tahoe Rim Trail, which was 170 miles. Oh, that's gnarly. Yeah. She did a 50K last year. So she's like pretty hardcore. So she's legitimate badass. Yeah. Yeah.

[00:35:18] And she's, yeah, she's like jacked and, you know, uses the Tonal all the time now and sold to like a bunch of them in the town that I live in. So yeah, she's sort of a non-paid salesperson. So anyway, I distracted you. Yeah. Sorry. Go ahead. I don't remember where, what was I? Yeah. So how you used it and you both had it in the cart. Oh yeah. Yeah. We, I mean, I just think it would have been so funny if two of them would have shown up like, you know, in our, in our home. But that, that, yeah. Sorry. Back to the purchase path for me was like, learn about it digital. I touched it physically and then I went and converted digitally.

[00:35:49] Yeah. And so I think a better understanding of what that purchase journey looks like and how does Tonal then from the other side of the table sort of optimize the experiences in ways that get you to ultimately convert through what will likely be in many cases a digital and physical experience. So that's, that's, I think a lot of the work that we're doing right now to figure out. And again, to tie it back to the Tonal Training Lab, like what will the Tonal Training Lab be as a mechanism for sort of that physical experience?

[00:36:16] That's something we're going through a few different iterations on and, you know, we'll be rolling some stuff out soon. What's the, what's the consumer experience at the, at the training lab? What does that look like? Cause you, you took a class yourself and a lot of people knew it. And what does walk me through that? Well, so it's, it's essentially, it's a group fitness class. It's led by one, you know, in New York, it's led by one of our seven like world-class instructors. So Woody, who's here at the conference, did one that I did. She's funny. She's, she's amazing. And so you walk in and do a little bit of kind of light warmup.

[00:36:46] You sign up just to kind of like sign, you know, a waiver. And then, and then Woody walks you through a series of kind of like a custom exercise program. It's high energy. You play music inside of it. It's down in Soho. And it's actually kind of like, it's kind of awesome. So you do all these workouts and they, they walk you through a lot of the different modalities that we do. So like, we'll have, you know, chains mode and eccentric mode and things like that. And then we, we introduced drop sets, at least in the class that I did.

[00:37:14] And it was so awesome because for whatever reason, you know, maybe it's because of my role, but my, my wife did it with me too. And she was like a little bit slower to kind of get started. And so by the time she was, have you done drop sets? Yeah. Yeah. So, so she's, she's kind of going. It's way easier on tonal than real life. Like you're going to our real, like normal traditional. Way easier. Yeah. Yeah. And it way safer, safer, all the things, but it's funny. Cause like, she was kind of the last to finish her drop set and like the whole class came

[00:37:41] over and it was like, you know, like trying to pump her up and get her psyched to kind of get through it. She's got, she's on the struggle bus, just trying to get through it. And, and everybody's like hyping her up. And it was like this great community moment, you know? And, and Woody's just, she's a magician at kind of like managing that stuff too. So it's a really high powered experience, you know, very physical and you walk out with like the endorphins are just, they're just raging. Cause you've had this great muscle workout.

[00:38:08] It's not like, you know, no shade at like soul cycle, but it's like turn the, you know, the room temperature up really high. Everybody's sweating. It's like, Oh, I got a great workout, but I'm not feeling like that great. You feel really good when you walk out of the training lab. Yeah. You know, I always envisioned there and like something like that, but then also having the amenities that everyone's into, right. You got the sauna, maybe a cold plunge, you know, a lounge, you know, kind of hang out and like just a really high end experience because it's so like, if you're a coach or

[00:38:37] trainer, you can really not worry about the little things that you would do that many trainers know of like counting the reps and moving the weights and taking the notes. Like you just coach. Yeah. Just fucking coach. Yeah. Yeah. That's it. You don't have to do a little, you know, assistant type things. Right. Yeah. When I, when I was growing up and I played high school football, I had a weightlifting coach and we, he forced everybody to have a log and the log was for every one of your workouts. Like how many reps were you going to do at what weight?

[00:39:07] And then every once in a while you'd sort of get a proof point on like how you had improved over time. And so that would be like, you would try to do a max, right? You know this world well. So, so you would do, let's say, I don't know, 180, 10 reps of 180. 185 pounds. Right. And then six weeks later, you'd try to move up to, you know, one 90. Right. And you'd try to do 10 reps at one 90 and you just kind of like, we're trying to move up over time. That is really the most effective way to work out is actually tracking what you're doing.

[00:39:36] And I'm telling you things that I know, you know, but I think the average person doesn't really know. So you get like, you know, like Johnny who walks into like the hotel gym here and he's just like, I don't know, I'm going to grab 35s today and do a bunch until I get tired. And they never stay on that kind of like, they're not lifting heavy enough. No. And they're not staying on that kind of efficient frontier of like what they should be lifting. And so the accumulation over time of us doing predictive weight, because we know what you

[00:40:05] should be doing, moving you up in one pound increments versus five pound increments so that you're always like kind of lifting the correct amount of weight means that this like compounding effect over time means that like you take off with strength on tonal versus like, you know, walking up and lifting some poundage in, you know, in a hotel, for instance. So that to me is like where I think a lot of the power of what we do, it's like, you don't have to think about it. There's no log. We take care of it all for you.

[00:40:35] We make all the recommendations for you. And we put you through the programming that allows you to sort of get the gains that, you know, are really, really meaningful. And I think faster than kind of any other strength equipment out there. Yeah. It's great, man. I'm a big fan. So I want to respect your time because there's a lot of things to do at this event. I guess pay me a picture. So nice, even number. We're in 2025. So 2030, that time horizon, right? If you and I are sitting down again and doing this interview, then maybe we're about to have a beer and you're like, dude, Eric, remember when we did this interview back five years ago? Here's what's happened.

[00:41:04] Everything's been amazing. Everything went exactly the way I wanted. Like, what would that look like? Yeah. Well, I think for Tonal, we have a lot of very interesting things that we want to do in the next couple of years. And I guess I'll say, I think there's some new things that we want to do on our platform. And we think about our trainer as a platform. There's a data platform to it. There's like the AI component of it and making weight recommendations to it.

[00:41:31] We think it's a health platform sort of holistically in ways that, you know, we haven't even begun to sort of like extrapolate in ways that touch a consumer. It's really, really powerful. So I think there's a lot of things that we can do kind of in the near term with our business around potentially extending into different modalities. We already started to think, we launched Tonal 2 a month ago. We're already starting to think about Tonal 3.

[00:41:54] And Tonal 3, you know, I gave the leader of our product business and Troy, like, I think that we need to do a 10X on top of where we are right now, which I already think is the leading product in the market. But we are a hardware company that delivers software experiences and we need the hardware platforms to stay relevant over time. And there's a bunch of smaller companies that have kind of popped up. So all that is to say, you know, five years from now, if we sat down, I would like to think that we've evolved kind of our hardware portfolio and the experiences that we generate

[00:42:24] around our business such that we've brought in a lot more customers and members into kind of like the goodness that is Tonal and grown our business pretty significantly. I think there's lots of macro effects that will happen over time. You know, I can imagine there's probably some level of consolidation that still needs to happen amongst our category. Who and how that all happens, I think, is kind of TBD. But, you know, there's a lot of companies in the space that are all sort of doing the same thing and probably could do things a lot more efficiently.

[00:42:54] And the last thing I would just say is, you know, like when I think about sort of career wise, the businesses that I want to operate in, I want to operate in the ones that are growing, you know, that are constructive versus destructive. I've worked in both, but it's a lot more fun to work in ones that are growing. You know, this category has had its trials and tribulations, but at the end of the day, like health and wellness and in particular strength training is going to continue to grow. So we're sort of paddling into this, what we think is a pretty big wave of strength training.

[00:43:23] And, you know, like unless I screw things up materially, this should be a lot bigger business than it is today. Yeah. It's a great time. You guys are, you came in at a very, very good time. I think. Yeah, I really did. I haven't gotten a lot right in my life, but I think this is, this is one of them. You're sitting here, man. Something's going right. Yeah. How can we help you as an industry? When I asked that question is like, people are going to reach out or contact your team. Like, what are you looking for? Is it partnerships? Is it brands? Is it talent? Like what's most important to you right now? Yeah.

[00:43:53] Oh, good question. Yeah. So I brought in kind of two new leaders into our business that are, we're working on making our marketing a little bit more effective, redoing, you know, some of our segmentation work, our messaging, our positioning in channels. And I think that's kind of off to a really, really great start. We've also brought in somebody who's working on website, retail and partnerships. Awesome. And I think there's a lot of low hanging fruit for us in the partnership world. We get a ton of inbound right now from, you know, hotels, gyms and things like that,

[00:44:20] that want to roll out, you know, tonals into kind of their, their environments. It is a no brainer to me. I mean, how many like smaller boutique hotels have you gone to, or even big hotels that just have this kind of like, there's a lot of like worthless equipment sitting on the floor. And so we would like to get tonals into those locations. We just rolled 30 out into a hotel. We haven't made the announcement yet, but that are actually going into rooms. It's not going to the gym. It's going into rooms, which is pretty powerful.

[00:44:47] So to answer your question, you know, we're looking for opportunities to roll that out into locations that we think it has a place for, you know, a tonal and, and what I'll just finally say, one of the things that's very interesting and exciting for me is it's happening organically. So we have gyms that are reaching out to us and physical therapy and personal training who are like, they send us their like hype videos that it's like all based on tonal. And we're like $0 in this is zero. Like we're, we're not even participants other than just kind of selling it to these people.

[00:45:17] Which is a really great sign, right? Like organically, there's all this growth that's happening amongst like personal training and physical therapy using this thing that we've created. And so I think big opportunity for us is to begin to kind of like leverage that in a more meaningful way and grow that in a more structured way. So that, that's where I'm going to be spending a lot of my time too. Yeah. I love it. People want to get in touch with you. Is there a way you'd like them to do that? Do you want to connect with them on LinkedIn or yeah? How would you like to do that? Yeah. LinkedIn's a great resource for sure. I mean, if they want to learn about tonal, I would suggest, you know,

[00:45:47] going to tonal.com, I would imagine a lot of your listeners probably, probably know already, but tonal.com is a great resource to learn about the product itself and all the features around it. And then, yeah, if people are looking to get ahold of me, I think LinkedIn's a great, great resource. Yeah. Awesome. Cool. Darren, thank you so much. Yeah. I loved it. Thanks, Eric. It's been an absolute pleasure. Yeah, for sure. Hey, wait, don't leave yet. This is your host, Eric Malzone. And I hope you enjoyed this episode of Future of Fitness. If you did, I'm going to ask you to do three simple things.

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