Don Faul - The Future of CrossFit

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[00:02:24] Oh man, the excitement's all mine. The pleasure is all mine. As I was briefly explaining prior to this and some of the emails back and forth is, I'm such a at heart still diehard cross fitter. I don't do it a whole lot. I do cross-pity things.

[00:02:38] My wife still goes three mornings a week at the 515 crew. She's still very devoted, so I'm still in touch with them. We're watching the evolution of the brand for so long since really the inception of it. All I've heard is good things so far gone.

[00:02:53] That is not always the norm from about cross fit leadership. I'm sure we'll get into for people who are indoctrinated into the crossword world. We'll touch on the history throughout there, but dude, there's a lot of stuff I want to talk to you about.

[00:03:05] I'm just going to give a overview of your background and then if there's anything I'm missing, please plug that in. But I want to save a lot of time for the actual meat of what we're doing here. But yeah, you graduated from the Naval Academy, right?

[00:03:16] Platoon commander in the Marines. Stanford MBA. You worked at Google, Facebook, Pinterest and now CrossFit, right? So some of these things. We interest in CrossFit. I worked at actually a sports performance startup called Athos. That's right. Okay, so I got most of that right, right? Yeah, so impressive.

[00:03:37] You've done a lot of impressive things in your background. Certainly, I wouldn't call you a slouch. Seems like you work hard constantly moving forward. I know you have a passion for high-performing teams, which makes a lot of sense given your background.

[00:03:50] But here's the big, the first question is when this opportunity arose to be the CEO of CrossFit after your years of turmoil with the brand, why would you do that to yourself? What was it that attracted you to this role and what gave you the confidence

[00:04:06] to say this is the challenge I want next? It's funny. It's my first week of the job, which is coming up on two years in about a week or two actually. And it's funny, the most common comments I got first week for me

[00:04:20] was the CrossFit Games back in 2022. The most common comment was congratulations, but why would you take that job? And the first couple of times I was like, oh, interesting. And then I started to hear it more and more and I was like, gosh,

[00:04:31] what did they get myself into? But look for me actually, the start of it was back in 2014. So I was working at Pinterest at the time in San Francisco had been. I grew up playing sports, was really active in the Marines as well.

[00:04:47] I had actually, I was in my mid-30s at that point, working at Pinterest. I had really bad chronic back issues, shoulder problems and was waking up and taking the first 20 minutes to stretch out.

[00:04:59] Fitness had always been really important to me, but I was at a point in my life where I'd gotten candidly in a little bit of a rut and had a buddy of mine say, hey, what do you think about CrossFit? And candidly, I was reticent.

[00:05:08] I didn't think with that with my back issues, I'd be able to do it. I had heard all of these things, CrossFits. Maybe it's dangerous. It's a little too intense, but he was persistent. He dragged me into CrossFit gym and South Market in San Francisco.

[00:05:24] Fast forward two, three months and I was completely hooked. So I came for it. I'd say I came for the fitness. I had heard so much about it and ended up, yes, I got incredibly fit.

[00:05:38] It turns out actually my back issues, the focus on core strength and mobility were exactly what I needed. So my back has been, last 10 years has been great. I've long the way discovered this amazing community, which was totally unexpected.

[00:05:50] And so when I got a call in 2022 about the opportunity, I was already all in. CrossFit had already had a huge impact on my life and over the course of at that point eight years at CrossFit, in the affiliates that I had trained in,

[00:06:07] I'd seen CrossFit do the same thing for hundreds of other people. And so yeah, I had paid attention to what was going on at a cursory level. And I viewed at that point in 2022 CrossFit as a brand and community methodology

[00:06:21] that had some challenges without question was going through a turbulent period, but one that just had extraordinary potential. And as big as CrossFit was at that point, right, 160 countries over 10,000 affiliates, millions of people, I looked at what CrossFit had done for me

[00:06:39] and had done for so many other people and thought, gosh, there's an opportunity here. I have never seen anything like this in this industry. And there's the opportunity to reach a heck of a lot more people

[00:06:51] at a point at which society was really struggling with health, physical health, mental health, loneliness in the face of COVID at that point. So for me, it was I was just incredibly excited about both the opportunity and to be honest, the challenge.

[00:07:07] I like doing hard things and view that as kind of a next really interesting job. Yeah, yeah. Great feedback. And it's which gym was it in Soma? It was actually it was actually in I was wrong. It's not some of this financial district. It was Jim called Flagship.

[00:07:23] Flagship. Well, I left San Francisco in 08-09. So I I honestly was around at that point. OK, yeah. I also lay between Crystal Lane's gym. So that's Jack's grand grand nephew, I think, or grandson. And and then the star at St. I went back and forth.

[00:07:40] Well, that's an iconic gym. Yeah. Oh yeah. One of the best. OK, so I get it, man. Like CrossFit, it if fun, the industry was fundamentally changed when CrossFit came through like it was a freight train through the industry and everyone had a strong opinion about it.

[00:07:56] The brand is iconic and still is like, I think there's what 12, 13,000 affiliates globally still like those numbers are. I don't know if people really recognize how big the brand is. So there's incredible potential still for this to grow and become, you know, something much, much bigger.

[00:08:12] And obviously it fundamentally changed my life. Many people I know it taught what the fitness industry, I think what community really means, like how you can build a strong community and what that means for a business and a viral effect of that and retention.

[00:08:24] And at some point I had something like 97 percent retention rate month to month by doing nothing more than just running classes and having a Christmas party once a year. Right. So there's something really powerful and then the functional fitness

[00:08:36] aspect of it that came in and the model and the modality was really unique. So all I'm trying to say is there's a lot to work with here on the other side you come in because things aren't okay, right? Like they need change.

[00:08:49] So when you are going to kind of keep this simple, but what were maybe the three biggest things that you immediately identify they're like, okay, I got to get to work on A, B and C. Yeah. So, you know, I think the first thing that became really clear

[00:09:00] when I started says you said, yeah, I was it was a period of turmoil for sure. So CrossFit had gone through a bunch of change in turmoil in 2020 led to a sale of the business. New leadership came in in 2020 and then two years of real meaningful

[00:09:13] challenges ups and downs, lots of departures. So, you know, in August of 22 when I started there was a lot of uncertainty and a lot of work to be done. And so I'd say that things that became really readily apparent.

[00:09:26] You know, first and foremost we needed a vision and plan that the community that our team could get excited about. And you know, I heard on top of your crazy for taking this role the other thing I heard which was really exciting was from

[00:09:42] from everyone folks inside the company partners people in the ecosystem was we love CrossFit. We want it to be successful. We want to know how we can help. So we need to understand where you're going where we are going as a community and where we can plug in.

[00:09:55] And so that was number one articulating and vision that's you know, our team in the community to get excited about to we needed a just internally we need to plan then that we get executed again. So, you know, the vision was a what is what does the world

[00:10:08] look like if we're successful to is how do we actually pragmatically get there? How do we execute against it? And so we spent a lot of time as a team working on, you know, our goals and our strategy and how we were

[00:10:19] going to line and work together to get there on how we're going to partner within the ecosystem. I'd say that was really clear as a big opportunity CrossFit HQ had not always been a great partner within the ecosystem and we've got again, you know, 13,000 gym

[00:10:33] owners, a ton of partners who have said success in the ecosystem athletes, you know, media within the community all of which now want CrossFit to flourish and be successful. So figuring out how do we align all of our interests

[00:10:46] and work together to grow the pie to reach more people that you know, the outcome that benefits everyone. So, you know, that clear planning strategy was number two and then third piece was really our team. Our team at headquarters had been through, oh my gosh,

[00:10:59] an incredible amount of turmoil that predated the sale. Right? You go back 10, 15 years and the amount of flux and change that the team had gone through and then, you know, from 2020 through 2022, you know, a bunch of new folks who had joined the team in a really rapid

[00:11:15] period of time. And I'd say we were, I would characterize us at that point as a pretty exceptional group of individuals, but a pretty dysfunctional team. We didn't operate and work well together. And so everyone wanted to write everyone was so incredibly

[00:11:30] passionate about the company and the community and having a larger impact in the world, but we had to rebuild a culture internally, aligned around that vision and plan that we articulated where we could build trust across the organization, what we could learn how to work together.

[00:11:43] And so, you know, those were the first three things that, you know, as a leadership team, we spent time on to really start to move, move the ball down the field. How big is your leadership team?

[00:11:53] Maybe just give us an idea of who you have on it as a team. Yeah, so we're in Q and Q. So we have, you know, two folks in our team who I kind of characterized as founders. So Dave Castro, Nicole Carroll, both been around for

[00:12:04] 18 plus years at this point, really, you know, them along with, with the founder Greg responsible for building CrossFit's. Nicole is our chief brand officer. So there is no one who understands CrossFit at a more intuitive level than Nicole. Dave runs our sport and our education business.

[00:12:22] We have a guy named Jay DeCunes. Jay joins about a year ago. Jay and Lisa are affiliate and operations team. We have a, we actually just hired a CFO who's going to be starting in the next few weeks, actually.

[00:12:36] We have a chief people officer, a woman who I worked with for gosh over a decade now, who's incredible. We have a chief product officer on the band McAllister. These are product management. So really the vision for our technology and how that can help support our goals.

[00:12:50] We have a woman named Natalie DeMores who leads an engineering team. So partners really closely with Ben on the work that we do there. And let's see if I'm missing. I want to make sure I didn't miss anything. Oh, and we have our CML, our chief marketing

[00:13:03] officer, a woman named Jenna, how could it joined us about four months ago? It's had a huge impact. And so yeah, that's, that's our leadership team. We've come a long way. Everyone but Dave and Nicole has joined in the two years since I started. Yeah. Yeah.

[00:13:18] I remember being in David's ranch back in the day. Yeah. That's yeah. The original CrossFit Games is that right? Family's ranch. They're the ranch and or umas. Yeah. What? It's come a long way. Wow. Yeah. What a long way, man. Okay.

[00:13:31] So we get into here's something which I look at other fitness brands, Orange Theory, Equinox, Adabala, you know, some friends of mine, like they always have a very clear defined definition of who their ideal customer is. Now when I ask you this question, it's like

[00:13:47] back in my day when I was running an affiliate and deeply involved, it was like, well, who's CrossFit for? It's for everyone man. It's, you know, Navy SEALs working out next to soccer mobs. That was like the thing we'd always say it's for everybody.

[00:13:57] Now, okay, maybe it is right. I can argue a lot of points against that from what I've seen. So who is the core consumer of CrossFit? And I want to ask that both ways like both the actual like someone who walks into gym as a member and then

[00:14:09] someone who is an affiliate owner because you kind of serve both those. So who are those ideal consumers? Let me start with the, you know, the member, the average member and I'll answer it maybe in two ways and maybe this is a little bit of a hedge,

[00:14:22] but I'll try to clarify it. So I would say, look when we talk, we get the question is CrossFit for everyone? I think there is a perception out there and this is one that I held before I started that the average, you know, CrossFitter is,

[00:14:36] you know, post college former collegiate athlete in exceptional safe jacked. The truth is, and you know this, but if you walk into any one of our gyms, you'll see in 30 seconds that's simply not the case. Yes, there are folks like that, but you're going to find

[00:14:52] young old men, women, you're going to find folks who are really fit. You're going to find folks who are literally starting in their fitness journey and maybe have never touched a far bell or done a push up in their life.

[00:15:05] I'd say the one distinction is CrossFit for everyone? No, the only thing that we require though is the mentality and so a willingness to work hard and you know, there are a lot of, I'd say a lot of fitness brands that promise easy results.

[00:15:19] We don't CrossFit's not easy. It's hard. You know, we ask that you show up that we willing to work hard and you know what we're going to deliver is you're going to be supported by the most supportive inclusive community that will make that hard

[00:15:35] work a little bit easier. We're going to be there to challenge you and support you all along the way and over the long run it's going to what you're going to see is fundamentally lead changing results. So you know, we when we talk internally,

[00:15:45] we talk about our target is the willing. It's much more of a mindset than it is an age than it is a demographic per se. So that's that is one way and that that you know what we look then is we have an adjustable market

[00:15:55] that is extraordinarily big and it's massive. Now if you look at where is the core of our audience if you break it down through more of a traditional marketing lens, you're looking somewhere in the range of 25 to 45. Yes, we have a reasonable amount of former athletes

[00:16:11] but we also have a ton of folks who were not. That's probably the highest density. I think our average age is around 32 to 33 if you look at kind of where we index today. But again, that the breath of what the CrossFit ecosystem supports in terms of its audience,

[00:16:27] I'd say is kind of the unparalleled in the industry. So that speaks to the member. The second piece is, you know, the owner, you know, the affiliate owner and you know, this is an area again where real fundamentally different than the rest of the industry.

[00:16:40] So we have a very unique different model. So where many of the other folks in the ecosystem have a traditional franchise model, we have a model that's called affiliation. It is very different and it indexes very strongly towards giving our owners a ton of autonomy

[00:16:55] and flexibility in how they run their affiliates. And it does two really powerful things as a result. One, I'd say we attract a very different type of owner. And again, I'll broadly and grossly generalize here, but I think if we look at some of our competitors in their

[00:17:13] space who run franchise businesses, often you will go after owners who are looking at a variety of different businesses to run in the fitness industry and they're looking at, hey, should I open, you know, this type of franchise or that type of franchise? Our owners are really different.

[00:17:27] They are not motivated first and foremost, the vast majority by running and opening a business. Most of them have had their lives impacted in a meaningful sort of way by CrossFit. So they came as a member, as a coach and then decided,

[00:17:40] hey, they want to make this community, this methodology that's changed their life, their career. They want to bring what CrossFit has done to them and other people. So it's an incredibly intrinsically motivated kind of owner cohort that we have today.

[00:17:56] They measure their success by and large by the number of people, the number of lives that they changed. And this is both a blessing and a challenge for us. Candidate, we can speak to that a little bit later.

[00:18:05] So one, I think our model is really unique and powerful and that it attracts a very intrinsically motivated, very passionate owner who believes deeply in the methodology and is primarily motivated by helping other people. The second thing it does is our model gives a ton of autonomy.

[00:18:22] So in a traditional franchise model where the look and the feel and the software and the programming is prescriptively determined by the franchise or in our ecosystem, we have our owners a ton of flexibility to run their affiliates largely the way that they want to.

[00:18:38] And what that allows us to do is have, we've got 13,000 gyms that are uniquely crafted to the unique needs of their local communities. So our owners can exercise their creativity. They can understand, hey, what is my community really, really need fundamentally?

[00:18:55] And how do I create an environment that best supports that? And so you'll see, you know, you're not going to find two affiliates of our 13,000 in the world that are exactly the same. Again, that's an element that is extraordinarily powerful and has brought a lot of value.

[00:19:09] It also presents its challenges as well as we think about things like kind of scaling quality, et cetera. But so for our owner cohort, our average affiliate owner is someone who is, whose life has been changed by CrossFit and wants to open an affiliates and give back. Yeah.

[00:19:26] Yeah. Awesome, man. And I mean, there's trade-offs to everything, everything whether it's business life, like that's kind of the basic principle of life. There's always trade-offs. And I think when I, when the consumer is like, I agree.

[00:19:37] I mean, I did, and this is just from nine years of experience too, is I literally had, you know, 65 year old women in the same room as a Navy SEAL. Those are unicorns, right? Really? Like you just, you just not like you're filled with Navy SEALs and unicorns.

[00:19:51] That's just not the way it happens. Even if you could, there's just not enough of them. But I do believe in my heart that maybe CrossFit is more of an advanced modality. Like it really is. Like we're talking about, like I think it's great if someone goes

[00:20:04] to let's say an Orange Theory Fitness, they kind of get their base fitness going, they get a love of it. They start doing a little bit of functional movement. That person tends to last or tends to come into a CrossFit community, integrate better, last longer.

[00:20:18] I think when we try to throw out like, you know, hey, you know, someone who is 100 pounds overweight, right? And started to get him into a class where it's like, and this is all comes down to not necessarily the model,

[00:20:27] but how the coaching is applied and the quality of the coaching across the ecosystem. Right? So I mean, here's what I'm trying to get at. It's like, should it be positioned as like an all for everything for everyone type thing?

[00:20:39] Or should we just maybe address like, hey, you know, there's a base level of fitness that should be considered maybe beforehand and maybe we can offer that in a different way to get people more on board. And I mean, how was that conversation roll over in your head?

[00:20:51] Yeah, look, I think we believe pretty strongly that CrossFit is for and should be for anyone who's willing to put in the effort. And now what we recognize is the beauty of CrossFit, as you know well, is that, you know, we talk about we're

[00:21:04] going to meet you where you are. We have a methodology that can be again, well, the language we will use can be scaled, right? So the way that you can have a Navy SEAL working out next to someone who is doing their first level of fitness

[00:21:16] is a combination of the methodology that allows you to take a workout and adapt it so that those two people can do the same workout. It also requires a coach that has an exceptional level of skill that can support both of those athletes and create environment that works.

[00:21:30] Now, that's not easy, but it's 100% possible and there are thousands of cases. And yes, like let's acknowledge if you are early in your fitness journey, if you have never trained before getting started to harder, but I would argue, I think we would

[00:21:45] argue strongly, there is no better place, no better place for that person to start and continue their journey than a CrossFit affiliate. You're going to have a community that's going to support you, that even if you're like me when I started, I was

[00:21:57] finished in last in every workout. You'll have the rest of the class standing around you, supporting you, cheering you on along the way. You're going to have a coach who is there, who is focused on making sure that that experience isn't too

[00:22:11] overwhelming, that you're getting good coaching cues if the movement itself is unfamiliar or it can be scaled to make sure that you've got the right outcome. It's going to reach out to you after the workout. So I believe we believe really, really strongly.

[00:22:22] No, we shouldn't like honestly, we need to support. Yes, the form of 80 seals, but the folks in our society and in a world who need it the most, I would argue we are best suited to support them.

[00:22:35] Now when I look at where we need to level up as a community, I think there are opportunities for us to do a better job of making sure that every affiliate and every coach is capable of supporting a breath

[00:22:49] of different fruits because yes, the needs of a 75-year-old first-time CrossFit member are going to be different than the needs of a former college athlete. And so we've got extraordinary coaches out there to do it today. Our job at HQ, I really view our role is making sure

[00:23:05] that we are providing the resources so that every one of our coaches out there and every one of our affiliates is ready for anyone who walks in the front door and that we can create that type of experience. Nice. Well said. Let's talk about the affiliates.

[00:23:17] This is kind of the bulk of what I want to get to. I had a quarterly report that I did with Juliette and Alex Alamistiano and we talked about CrossFit and we dove into some reports that came out from TubeBrain. I work with Dan Weimar at PushPrassey.

[00:23:32] He provided some data for us to kind of mull over. So there's a lot of stuff to go and I think that the shining thing that came through is like, okay, number one, affiliates just don't make a lot of money as it stands now, right? That's tough.

[00:23:42] Like they have to have a second job. You know, it's always on the precipice of closing. You know, I know there's a lot of secondary market that's been created for business coaching around CrossFit and they've all done very well with those folks.

[00:23:54] And then but there's also like that. So I want to talk about how we're going to address that. But there's also kind of the mental aspects and I don't think this is necessarily unique to CrossFit but I think it is more prominent that there's

[00:24:06] kind of like this things that keep you awake as affiliate owner like, okay, is my coach going to leave and open up a gym two doors down? Right? Or what other affiliate is going to pop right up? You know, so there's there's issue of that.

[00:24:18] And then there's also the fight against like, I may run a fantastic affiliate but someone's going to go, you know, maybe stop in another town and go to another affiliate and it's not going to be, no one's going to care. No one's going to get a shit, right?

[00:24:30] They're going to get a bad workout. They're going to get a bad taste in their mouth about CrossFit. So it's a quality control across the network. And I know there's part of the tradeoffs of the affiliate model. But so how are you guys looking at the affiliate

[00:24:41] to support them, help them make more money, sleep better at night, be more productive and be more enthusiastic about the future of their endeavors? I'll see. So there's a lot there. Let's start with some of the data you referenced and you're 100% right.

[00:24:55] But what I would say is if you look at it, the average affiliate owner needs help on the business side. That's true. But there are a ton of affiliates financially who are flourishing and doing great. And so and when we look at it,

[00:25:07] especially those gyms, many of them have evolved over time and they've learned, you know, again, if I take a step back to run a successful affiliate over time requires two things. It requires being creating an amazing environment for your members to be able to deliver an extraordinary

[00:25:24] experience when they walk in the door, create that community, have great coaches, deliver a high standard that drives results. We've done a great job there. HQ, I would say we've done a lot to educate coaches to train coaches. The second thing requires those running a strong

[00:25:40] sustainable business over time. I don't care how good your coaching experience is. If you're an owner and you're a decade in and you're barely making payroll, barely paying the bills at some points, we're not going to make it. And so both of those things are really necessary.

[00:25:55] And I'd say if we look at that category, you know, running a successful business, HQ has largely left historically affiliates on their own to figure it out. And some have many haven'ts. Many are still struggling. Now, the good news is if we look at owners

[00:26:09] who are able to build that skill set on the business side, we see a ton of success stories and you reference too, and there are a bunch of these consulting companies who helps affiliate owners run a business. And their numbers are,

[00:26:24] the pre and post before and after are incredibly encouraging. I think over 90% of their owners meaningfully increase take home pay, meaningfully improve the number of members they support and so that they can come out of that experience with both a great experience on the floor

[00:26:41] for their members in a really strong business. So we look at that and say, okay, we need to now scale this so that every one of our owners is provided with the support and the resources that they need to run a great business as well.

[00:26:54] And so over the last year and a half, two years, we've made a really big investment in this. So it started with, we built a team. So we've got members of our team. We've got five regions in the U.S. We have over 30 or 40 members internationally

[00:27:08] of vast majority of them are existing or former affiliate owners who are working day in and day out with our owners to support them. We're doing a ton of affiliate gatherings where we bring together our affiliate owners. We'll build those gatherings around education.

[00:27:22] Some of it is just the means of connecting owners in a region who can help each other who may have been down that road and learn things that they're excited and motivated to share with other owners. We've done a ton of work on business education and materials resources.

[00:27:37] We're running webinars now on a monthly basis on education series again, where owners can learn from members of our team or successful affiliates who have been around a while. And what we're seeing is that that work is having a meaningful impact.

[00:27:52] So we're seeing better retention amongst our owners who are engaged and active with us. Now acknowledge that probably the biggest challenge for us in battle is for over 20 years, there was no engagement between headquarters and owners. There were no resources. There was no dialogue.

[00:28:08] And so we are still working really hard. We have a lot of owners who don't think about going to CrossFit.com to look for resources or attend the gathering because they never existed before. And so we are still working really hard to build those relationships.

[00:28:21] Our team's done an amazing job. Last year we met with almost 6,000 affiliates in person. So we're moving in the right direction. And I'm confident that we'll see over time that those affiliates who are engaged or investing in the business side that we're going to see better financial outcomes.

[00:28:37] And I would really say when it comes down to many of the other issues, the things that we fundamentally care about, improving and elevating the strength of that affiliate business is going to have a ton of cascading positive impacts. We're going to see those owners invest more

[00:28:52] in higher coaching credentials for the members that are going to get level twos and level threes. That's going to translate to a better experience for members, elevated quality. And so we think that piece is really, really important on the business side

[00:29:06] because it enables and allows for a lot of other things that are important not only for the individual affiliate but for the brand in the community at large because it's going to allow us to kind of collectively elevate the quality of the experience and the standard.

[00:29:19] Now what we're doing in parallel with that as it speaks to your rights, one of the most frequent things that all of you as they travel and meet with owners is that the successful owners will say, gosh, that owner down the street

[00:29:30] or I had a member who dropped in at a bunch of and said, holy cow, the experience there is night and day. And this has been, you know, I'd say one of the costs of a model that has been very fans off for a long time

[00:29:43] is that yes, we have most of our owners are doing an amazing job, but we have a subset who are not and whose experience doesn't reflect well on the brand. And so we are focused on that. The first thing we're focused on is there's,

[00:29:57] there are kind of two things that we've invested in. One, we've actually elevated requirements for owners. So we have very few requirements, but one that we have is we require our affiliate owners to have historically it's been a level one, which is our entry level training.

[00:30:11] That was the case for over 20 years. We just changed that to a level two. So the next stage in our training and our thesis there is that owners were better educated and who are more focused on a high quality coaching experience.

[00:30:25] That's going to translate to a better experience for their members. And it's going to set an expectation within their affiliate amongst their coaches that they expect a higher level of quality coaching as well. So that's been one change.

[00:30:37] And the second has been we're really trying to ratchet up the resources that we provide to existing and new owners. So for existing owners, again, we have invested massively. What's available today to the average owner if they go to our affiliates resources is night and day

[00:30:53] from where we were. And then we're making a big investment in new owners. So we'll have about 1400 speaks to the scale of CrossFit. We'll have about 1400 new gyms this year. Just a crazy number, right? It's bigger than most of our competitors in aggregate.

[00:31:10] What we're doing with those gyms is making sure in that the early stages of opening an affiliate that we are very supportive and that they really understand what are the essential decisions? How do you create the right culture?

[00:31:21] How do you make really important decisions around things like your lease, which is going to have a massive impact on your cost structure? How do we invest standards for your coaches? What are education requirements look like? So we have a kind of step by step process now

[00:31:36] that we have built in partnership with some of our most successful affiliates to make sure that our new gyms who are coming out of the gate can learn from the two decades of experience of our other owners. Yeah, awesome man.

[00:31:49] And I don't want to paint this picture of like everything should be perfect either. I mean, we know small business is tough. If you look at those numbers, like very few small businesses endure. I think like Brandon Cullen from Maddaball is a good friend of mine.

[00:32:00] We've had a podcast about, you know, like here's the reality of franchising. Like after an exponential report came out, you know, came out what major publication that was where we talked about like 25% of them fail. 50% will do okay. 25% will do great.

[00:32:14] But then they'll start to open more, you know, second or third or fourth. That's just kind of the reality of it, right? And which kind of makes me think like, okay, the affiliate models seems so unique to CrossFit and it does have those tradeoffs.

[00:32:26] You know, on one side it's a credible amount of freedom. You can scale quickly. The barrier to entry is low. People can do a lot of things with that framework that actually, you know, it's born libertarianism, right? We all know that from Ole Miss or Glassman.

[00:32:39] So, you know, but how do you maybe start to take buck up against the franchise model and the benefits that that model has without going franchise? Like how do you take those pieces and kind of go as close as you can,

[00:32:51] but still maintain all those high, those great qualities that CrossFit is now? Yeah, totally. And we'll, you know, we will never be a traditional franchise. The fastest way to kill CrossFit would be moving that direction. Oh, I know. That would not go well. That would not go well.

[00:33:05] Nor would it serve anyone honestly. It would be bad for our brand, it'd be bad for the community. So, you know, for us it's about, you know, the let's break down, you know, when we look at affiliate and franchise,

[00:33:15] let's look at, you know, at the end of the day, what's most important? And what are the problems that we want to try to solve for? And how do we solve for them by while preserving what is most important and powerful about our model?

[00:33:29] So, what I would start with is what is fundamentally essential and critical. Again, coming back to what I've told you before is one, we want to make sure we have a model that attracts and motivates and inspires independent-minded, creative, passionate, entrepreneurial affiliate owners.

[00:33:47] If we start getting into a place where a large percentage of our affiliate owners aren't in it because they love CrossFit and are in it because they want to make, I think we've done something fundamentally wrong and I think a huge part of what attracts

[00:34:00] and motivates our owners today is that notion of autonomy and true ownership and flexibility. So, we will always bias very strongly towards trusting that our owners know better than us about what it takes to create a great experience for their local community.

[00:34:16] And so, that'll be an important part of our model. Now, if we look at some of the opportunities, I think for a long time CrossFit invested a lot in education on the coaching side and very little on the business side.

[00:34:27] And that is changing, you know, and so, we are investing really, really heavily in tools and resources that we present and provide to owners. Now, in a traditional franchise world, most of those things would be mandated and required. There would be no choices.

[00:34:42] We're not going to move in that direction. And if you look at our track record over the last two years, you'll see we're not forcing these education series tools, resources. We're still leaving it up to the owner. We're just making them available.

[00:34:55] And then I think a huge part of our job and responsibility is to show our owners and show the community why investing in those things is better for them and better for their community. And if we do that really well, I think what we'll continue to see,

[00:35:07] which we've seen over the last year and a half is really good usage and adoption. So I'll give an example. We have a product that we call our affiliate programming. So the workouts that are run inside of our affiliates,

[00:35:19] our owners can choose, they can do their own programming, come up with their own workouts based on the methodology. There are a bunch of third parties, some of them run by athletes. We have an offering, a free offering that we've launched.

[00:35:31] And we've worked really hard over the course of last year to just educate owners. We made it free, we made it available and we said, hey, here's an offering. It's called CrossFit Affiliate Programming Cat. We think it's a great resource.

[00:35:42] We think it's a great way of educating your coaches and we've seen massive growth in it. We haven't required it. We've just made it available. We've now got close to 3,000 gems using our affiliate programming up from about 700 or 800 year and a half ago.

[00:35:58] That's the model that we want to try to invest in. So understand the opportunities and problems that we can help owners with, design a set of resources that solve those problems and then show our community why investing in those resources is helpful for them.

[00:36:13] There will be certain areas like our education requirement which has always been a part of the affiliation where we will have certain level of requirements. But largely we're going to try to continue to lean on giving our owners autonomy.

[00:36:25] Last thing I will say is we can't shy away from being really clear that we expect a high level of quality. And so having autonomy doesn't mean that you can deliver a shitty experience. That is not acceptable. And again, because there's a cost to that to your members

[00:36:41] and to every other affiliate in the community. And so we made a change this year. I mentioned it before of elevating the quality experience. We talked about why it's important and it did ask for an additional investment from our owners.

[00:36:56] But it was in service of elevating the quality. And by and large, it was received incredibly well. I think most owners were good on you guys. This is a great thing for the community ecosystem even though it was something that we were asking more of them.

[00:37:08] So we'll continue to do that. We're going to continue to set a high standard because fundamentally it's always been at the root of what has made CrossFit successful. We use the words virtuosity, the pursuit of virtuosity, excellence. That's how we're going to reach the next X million people.

[00:37:24] It's by elevating the standard that can expect in the average affiliate. Yeah, yeah. Great. And it's always amazed me how CrossFit has created the secondary market of products and services. I mean, we talk about the business coaching. We talk about the program design. We talk about insurance.

[00:37:38] We talk about software. We talk about website services. It's incredible how much media, like the morning chalkup never would exist if it wasn't for CrossFit. It's just about CrossFit. That's what hell, right? But I always thought like, well, why isn't HQ

[00:37:55] maybe starting to take some of these things back? It seems like I know that would piss off a lot of people, but who can do it better than CrossFit HQ if you are doing more of the business acumen, business coaching and preparatory and people that they can.

[00:38:07] They don't have to buy it. It's not a franchise. They don't have to do it. But man, if it came from CrossFit HQ, I feel like it'd have a lot of clout. Same with websites, basic website design, stuff like that.

[00:38:17] So I mean, is that something that's on your guys' radar? Have you thought about it? Where do you sit on that? Yeah, I mean, as you articulate and again, that's a decision that has had extraordinary benefits. We've got this wealth of whether it's software or programming

[00:38:31] or media, there are a wealth of offerings. It comes with the challenges as well. We've got to take software alone right now. So our gyms run on. They can use whatever client management software they want. And so there are dozens that exist globally.

[00:38:46] Challenge for us is that results in a ton of data fragmentation. So we actually don't have insight at a traditional franchise or they're all using the same software. You can see exactly what's happening. We don't have that. Now, when we zoom out and when I, you know,

[00:38:57] when we think about this and look at it, there are certain areas where we will increase our investment and those are areas that one where I believe it is core of who we are and what we do exceptionally well.

[00:39:11] And if you look at what we do exceptionally well, it's education. That's what CrossFit's fundamentally always been about. It's been about the methodology. It's been about supporting our affiliate on us, the affiliate model. And so we have increased our investment there. We are doing more business education.

[00:39:27] We will do more business coaching. We will make additional investments in things like CAP, our programming offering, which we think are essential and we'll do it both because we have competency there. It also has to satisfy it being better for the ecosystem.

[00:39:40] So I would argue there are some areas where actually having many, many options is better for the ecosystem. There are others where having a core offering from us serves everybody best or serves the majority of the community best. So we're trying to be really selective.

[00:39:56] The other piece here that we have to be mindful of is we're a super small team, HQ. We've got again 13,000 gyms, hundreds of thousands of coaches. We have a sport. We have an education business. We have affiliation and we've got about 160 employees. We are tiny.

[00:40:11] And so we have to be really mindful of not trying to take on too many things. I want to make sure the things we do, we do well. Again, they're core to what we do. And then the other piece is I think for us is how do we

[00:40:24] think about being a great partner and platform to all of those third party folks who can innovate? How do we create the conditions where they can create extraordinary value for our communities? So our endemic media, talking, leaf fitness, morning chalk up, awesome. That didn't exist 10 years ago.

[00:40:40] That's great. How do we partner with them to make sure the media that's created for our ecosystem serves affiliates and serves our long-term outcomes? Software providers, how do we partner with those folks to make sure that they can continue to innovate, that there are

[00:40:54] great options that exist in all 160 countries where we operate? And maybe there's an opportunity for us to partner with them, understand from a data perspective what's happening within our ecosystem. So real challenges there, but opportunities. We're trying to stay focused on the areas that are

[00:41:10] really core and essential for us and then be a great partner in the rest. Yeah. Yeah, man. So here's, I think probably one, I don't know. I've never walked a minute in your shoes that I would imagine like you now CrossFit is owned by a private equity birthshire.

[00:41:26] Right? And you serve a lot of people, right? You serve the CrossFit community, the consumers. You serve the affiliate owners. You have the sport which we haven't even talked to anyone. We don't have time to talk about the sport of CrossFit. Next time.

[00:41:39] Now you have private equity, right? You have your shareholders. So like when you're juggling those priorities across your job on a day to day, weekly, monthly basis, like how do you do that? Like what are the priorities there? Because everybody's going to want something different.

[00:41:54] And yeah, right now, like who's top of mind? Yeah. So yeah, you know, when I boil this down, I try to, you know, boil it down into kind of three buckets. We have our community and there are different constituents within our community for sure. We have our community.

[00:42:10] How do we best serve and support them? We have our team. Our employees, how do we best serve and support them? And then we have our investors and our ownership. And I'd say, you know, there's a exceptionally high degree of overlap between the community and our team.

[00:42:24] We have the benefit of, you know, I would argue there is, there are few organizations that are more mission driven and committed than our team. They care much more about changing lives and supporting their community than they do any sort of financial outcome. That's an amazing thing.

[00:42:40] There are areas where on the investor side, there isn't perfect overlap. I'd say there's more overlap than I'd say most folks, you know, might think. So I think it's very easy to say, private equity, all they care about is this and they care about

[00:42:55] a totally different set of things than the community. The truth is there's a really good degree of overlap. At the end of the day, what makes CrossFit most valuable for any investor? The vast majority of that are the things that are best for the community as well.

[00:43:08] You know, the more people we reach, the more healthy, successful, strong, sustainable affiliates that we have, having a really strong, robust education business and coaching ecosystem. Making sure the brand is incredibly healthy. It's well respected. It has brought awareness. It has its subjective growth.

[00:43:25] When you think about what a future owner of CrossFit might care about, it's all of those things. And actually, so the things that we're doing to educate affiliates, to improve quality, to invest in the brand, to get more members in the front door,

[00:43:39] all of the things that serve our community create extraordinary value for a future owner of CrossFit as well. Now, I'll be honest. There are areas. It's not perfect overlap. On the financial side, there are expectations we have to hit. Any business has to hit around earnings growth

[00:43:55] and profitability. And there are some areas where we have to have a really open discussion and debate. The vast majority of this is going to overlap, but there are some. You know, for me, I'll tell you, I didn't join CrossFit to deliver any sort of return

[00:44:09] for our investors in a two to three year time. I want to, but like I want to be here because it's a brand that changed my life. It's a brand that I think has extraordinary potential. I hope that folks are doing a podcast in 50, 60 years

[00:44:21] and they're talking about the impact CrossFit had on the world on health. That is, that's my success horizon. And so at the end of the day, my job or job is to tee up those tradeoffs and considerations to make decisions that are in best in service

[00:44:39] of a healthy community, healthy brand. And then, you know, really manage some of the financial tension in a way that best serves both short and long-term outcomes. It's not easy. You know, there are times when it's challenging, but again, I would say like, I'm really,

[00:44:51] if I look at where we are two years in, you know, from where I started, we started a point where the business was not helping. I would say the ecosystem, the brand's trust firm affiliates was re, our team was shaky, really shaky in 2022.

[00:45:06] If I look at where we are today, you know, closing last year, we had the best affiliate retention in the history of the company. We had the highest confidence in the future of the brand from our owners that we've seen since we started measuring it.

[00:45:19] The business is profitable again. We are driving earnings growth again. And so the team has done an amazing job. Now there's follow-ways in the CrossFit community, the whole ton of debate speculation. We changed prices and there's a lot of discussion about it.

[00:45:34] When you look at the core fundamentals, they're really healthy. We're growing. We grew last year at 24-year-old fitness brand that is already the largest in the world. We are growing again. And I expect we'll grow even faster this year. You know, we'll see when the data comes out.

[00:45:50] But if you look at the CrossFit Open-In participation, viewership, all of its up year on year. And so I'm really bullish on the path that we're on. But it certainly requires some hard decisions at times. Yeah, yeah, man.

[00:46:04] So for the last few minutes, I have you here, Don. Paint me a picture. Like let's put a timer. I know you like time horizons. So five years from now, 2029. What is your vision of CrossFit? What does the future of CrossFit look like? Yeah.

[00:46:17] So 2029 or maybe if you'll allow me, we did a little bit of the 2030s. So it gives us one more year. That this single most important thing I'd say is look at the end of the day, our mission as a company

[00:46:29] is to make the world a healthier place. And CrossFit, that word health and fitness now has been, I'd say in the last 12 to 18 months, has become, let's call it, the most popular marketing lingo, increasingly in the fitness space. CrossFit has been talking about its impact on health

[00:46:44] for over a decade. And we are at a moment in time now where, you know, societal health is in crisis, like full-on crisis. It's back. And when I look at where I would like for us to be, for CrossFit to be in 2030, first and foremost,

[00:47:00] I want us to have changed an impact of a heck of a lot more live. So we talked about size. We've got somewhere in the neighborhood of, it's called three to four million people to cross to today. We've put out this very ambitious like 30 million people.

[00:47:12] It's directional order of magnitude, really meaningful growth globally. On top of that, I'd say when you look at how people talk about CrossFit and its impact in the world, that we will be able to say that that's 30 million lives that have been changed.

[00:47:29] That is for 30 million people ushering in a state of lifelong health by virtue of the impact of cross physical health, mental health, the benefits of community belonging. And I think there's an opportunity for us at that point for the narrative broadly to say CrossFit as a brand,

[00:47:47] but more importantly as a community has had a massive impact on the way that society thinks about the importance of nutrition, of coming together in community of fitness in service of driving a state of long-term health. I were in the early stages of it now.

[00:48:04] I would like for us at that point and when you boil down how we got there. So it's a CrossFit has changed fundamentally changed the paradigm and the focus on nutrition and help. It is the easiest, most impactful way to get there.

[00:48:17] And when you boil down how we got there, it all happens through our, you know, what will be more than 13,000 affiliates who are these life changing kind of beacons of selflessness and hope in their communities all around the world.

[00:48:32] That exists today and you know, six, seven years from now we're going to be in a heck of a lot more communities. We're going to be touching a heck of a lot more people. If all of those things are true, this would be a great

[00:48:42] business like as a side effect, but we got to stay true to, you know, making sure we do our work to get more people to recognize CrossFit is for anyone who has the mentality to make the investment in our affiliates and owners

[00:48:55] to make them even stronger than they already are today. And then make sure that continue to beat the drama and the importance of nutrition and fitness as it relates to health in our society and being a part of the movement

[00:49:06] that shifts that focus on health upstream of the doctor's office upstream of drugs into those daily decisions that can be really. Yeah, right on. Well, leadership goes a long way and especially in the community like CrossFit where if left to their own devices

[00:49:21] can get a little chaotic and intense. Let's put that way. Here's what you got. You got some passionate people in the CrossFit community. That is undoubted and I've talked to people on this show or you know, in person like you want to see people

[00:49:34] passionate about a methodology and a lifestyle like go to CrossFit because it is people next door are building a house and they're one of my first CrossFit clients back in 09. So they're not they're going to be our neighbors. Right?

[00:49:47] Like that's how close that community sticks around for a while. There's so many but I joke about like I wonder how many babies came out of my gym. Lots of them right lots of marriages and babies and it's just this really cool community that at core you

[00:49:58] just got to figure out how to work with it properly and it's going to take a lot of strong leadership to do that and I'm I'm excited man. I used surpassed expectations in my in my book and man, I'm fully supported what you're doing.

[00:50:10] So thank you for all that and some people are undoubted and they're going to want to reach out and talk to you after this like where would you like people to go online and yeah, how would you like them to they can not you

[00:50:19] know, I'm Don at CrossFit.com. They can shoot me a note. They can find me on LinkedIn social as well. Cool right on. Thank you so much ladies and gentlemen don't fall Eric. Thanks so much really appreciate it. Hey wait don't leave yet.

[00:50:31] This is your host Eric Malzone and I hope you enjoyed this episode of future of minutes. If you did I'm going to ask you to do three simple things. It takes under five minutes and it goes such a long way. We really appreciate it.

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