Fitness Industry Review 2020 - Jim Crowell

Hey everybody, welcome to the Future of Fitness, where we talk with entrepreneurs, researchers, and practitioners in fitness, wellness, and the health sciences. I'd like to give a big thanks to our sponsors, Level 5 Mentors, helping entrepreneurs achieve the highest levels of freedom in time, money, relationships, health, and purpose. Also, Certified Course Creation, helping entrepreneurs create accredited online certifications that are not only lucrative but highly scalable. Go to level5mentors.com or certifiedcoursecreation.com and learn more. I am your host, Eric Malzone. And once again, welcome to the future of fitness. Doing really well. There is a lot to talk about. We are November 19, 2020. And by the time this gets released, it'll probably be, you know, definitely December. And I thought it'd be a great time to do a year in review. And I never, and I couldn't think of a better person to do a year-in-review on the health and fitness market than you. So let's uh let's dive into it if you'd like.

Yeah, let's do it, man. I've uh I've certainly tried to pay attention to the market as a whole and what's happening in the the VC space, who's getting funded, but certainly health and wellness has been very, very interesting because it's so tied to what's happening with COVID, what's happening in technology, what's happening in medical, what's happening with Apple, you know, Amazon. So it's it's there's been a lot that's going on.

Yeah, it's been it's the year of change is an understatement, right? And I think what we could probably give for people who haven't listened to our interviews on the show on the future of fitness previously, Jim, give people a little bit of background on you and then maybe what you're currently doing, because I know your year has changed quite a bit as well, personally.

Yeah, yeah. I I just I decided to change everything up. So uh I was a Penn State guy, played tennis for Penn State, and have been an athlete my whole life and have loved the idea of training and fitness. And frankly, I probably enjoyed training for tennis, which was my college sport, more than I enjoyed, you know, going out to tournaments and competing. I just loved the idea of getting better at things. And so I was a hedge fund trader coming out of school for five years, loved what that taught me in terms of you know how the world really works, how money flows, etc. But towards the end of that, I realized I wanted to be back in the health and wellness arena just because I just felt drawn to it. And so I ended up leaving the hedge fund to open up CrossFit Gym with a buddy of mine up in Pittsburgh, and we did really well, opened a second one, did really well again, and after four years, decided to sell that to my business partner at the time and moved down to Arizona to work with OPEX Fitness, which was OPT at the time. Uh, worked my way into the CEO role there and just really helped them build out global coaching education, a gym licensing business, remote coaching one-to-one, and just built some really good relationships and understanding of what was happening in and around the fitness world. And I decided to leave this year when was it, July, so July of 2020, and have been doing advising and investing, you know, typically around the fitness and wellness space, but have made a couple investments elsewhere. And I love the idea of being a part of this evolution of fitness because I believe that fitness is a very immature market in many verticals. So, you know, it's like are big box gyms immature? Probably not, but even they're going through metamorphosis right now. And a lot of boutique gyms, a lot of online coaching, a lot of technology is very, very immature. So you're seeing a lot of money go in, you're seeing a lot of investments either work or blow up. And there's just there's a lot to be discussed.

Yeah, yeah, there is. And if if you could give our listeners some contrast, what would you consider a mature market?

Uh boy, let's go to let's go to restaurants. You know, it's like if you go out to a restaurant, let's put COVID aside, you got a pretty good idea of what type of restaurant model will work. And of course, technology is getting put into those as well. You're now seeing, especially with COVID, people are eating from home a lot more. But in terms of successful restaurants, let's assume when COVID lifts and a vaccine is out, people will ultimately want to go back out to restaurants. You probably know what type of model is going to work. Um, and you have a significant amount of competition, and the people, meaning the restaurant owners or the conglomerate owners, they either have competitive advantages or they have to run extremely, extremely efficiently to survive. That's an efficient market. In fitness right now, you're seeing so many new things come out. You're seeing brand new markets that don't have competition yet, but you're also seeing, again, with COVID in the technology space, you're seeing lots and lots of competition coming in. And you're also seeing a lot of legacy brands. Let's just say Equinox is a great example, right? You're seeing legacy brands that have immediately shifted to an online ecosystem. So where people thought there wasn't competition, there is now becoming competition. So you're seeing a jockeying for who's going to take the lead in a lot of these big categories. Because I'm a big believer that in the big categories, usually there are only a few players who win. And what I mean by win is that the there are they get higher margins basically because they have competitive advantages. You know, it's a I I think, you know, I at least I try to think like I believe Warren Buffett to think, right? And it's those companies that can create sustainable competitive advantages that have the most likelihood of success. And so those haven't necessarily been built impenetrably yet in the fitness market.

Yeah, it's it's really interesting because I, you know, being both of us being gym owners for uh a good chunk of our lives, I just felt that there is the industry was so I mean, it is young. I mean, just by simply, you know, your the the biological age of of the industry, it's young. And everything seemed, everyone was just always seemed to be just figuring it out as they go. And when I sold the gym and even just started this podcast, I wanted to be part, I want to start educating myself on where the industry was going. And I have, you know, I've done a lot of interviews, I've talked to a lot of interesting people like yourself and got an idea of, well, what kind of technology is entering the market? What about wearables? What about all these different factors, right? Genetic profiling and testing. There's so many different pieces of technology that could affect this industry. And uh now we've just seen this accelerant called 2020 poured on top of it. And I guess one of the questions I want to ask you, Jim, is what has not been a surprise? I mean, you know, just seeing maybe like like I was talking about things that you saw coming that maybe just are moving much faster now.

That's a great question. I I think that what doesn't change are the principles of human behavior and the principles of customer experience design. So let's just take a couple of examples. Uh, one of the big things that has been trying to evolve for gosh, let's just say even five years, but has accelerated dramatically in the last year or two, is the gym management software space. And the reason why I'm trying to connect this to experience is because so many large, whether it's private equity companies or the individual gym management softwares that are coming onto the market are all kind of trying to solve this question of, well, how do we make a software that works for every type of gym? And I don't necessarily think that that's going to happen because I think that the models are so different that it creates a user experience. And by user I mean gym owner, that is too complicated for most gym owners to get into, or it's too complicated for them to offload it to somebody who is, you know, a part-time general manager. And so you start looking at those types of user experiences, and that's not changing. You have to make things simple. And I think we're seeing fitness getting simpler and simpler and simpler. Now, don't get me wrong, some of the new technology adds more work, but the systems that are reducing the work are winning. So an example that I know intimately well is TrueCoach. You know, they sold this year to a big player, and they are a one-to-one online coaching platform. And they did a very, very, very good job of beginning to dominate that market. If you were an online coach who wanted to do one-to-one, particularly in functional fitness, you were going to true coach. Um, and they made the user experience very, very clear. We're going to save you time and help you make more money. That was it. Their user, or excuse me, their USP was not, we're going to store the most data, though they did store a lot of data. Their USP was not, we're going to be one-to-one and one-to-many. It was very clear, we're going to save you time and make you money if you coach online one-to-one. And clearly you could do that in person one-to-one as well. But they made a simple user experience that coaches could get on board with. It wasn't perfect, but they got going with a lot of momentum. They built out a really good marketing funnel. And then it was so easy for them to get investment in the future because they were onboarding coaches, they were learning their market, and they were very clear as to what they were. You're seeing that happen over and over. So user experience and simplicity is not going to change. You have to make things simple. The other thing is that you actually have to add value. So, you know, I'll go back to gym management software. There are a dime a dozen now. You can sign up for a myriad. There's probably 25 different examples of things that I could sign up for if I'm a micro gym owner, for example. So there's no shortage of competition. So the question becomes how are you adding value to me while retaining that simplicity? So simplicity first and then value second, in my opinion, or you could call it lowering barriers and then adding value. That's never going to change. And to me, that just goes down to the psychology of us as humans and us as customers and users. The gym business clearly with COVID is changing a lot just because gyms are having to open and close and it's a very, very stressful time for them. But I do think that the gym experience has shifted and will continue to shift into buckets of people. So if you want community, you're probably less likely to go to something like a 24-hour or an anytime fitness because those are more designed for you're on your own. Now, certainly there are personal training in some of these spots, so I'm not trying to paint them completely in a corner. But if you want community with all kinds of amenities, you're probably looking at lifetime, or you're probably looking at maybe an Equinox. If you want hardcore training, you're probably looking into something like CrossFit F45, etc. Like those buckets to me are just becoming much more defined, and that will continue on.

Wow. So flip side of the coin, Jim. What are one or two things that have surprised you about 2020?

Well, I didn't I didn't expect January 1 of 2020 that we would have a global pandemic. So that is that has clearly been a big surprise, I think, to everybody. Um I I and I was chatting with you before this conversation today, and I mentioned this, but I'm saying the same thing that I said back in February and March, which is this is a minimum of 12 to 18 months. And I said this to a number of coaches and gym owners, you know, when I was talking to them at OPEX. I said, you're not going to believe that it's going to take 12 to 18 months, and it is. And if you think about where we are, we're maybe nine or ten months into this thing, and at least in theory, we're getting pretty close to vaccines. Now, how long it takes to get a vaccine out is let's just say, you know, warp speed, which is what they're calling it in the United States, maybe three to six months, absolutely best case scenario. Absolutely best case. Um, that's assuming that people are taking the vaccine, that's assuming the logistical systems are good. But it's catching people off guard that we're still in this, though many, many people were saying back in March that it was going to take a year and a half. So again, I go back to human psychology and say that people didn't really deeply understand how long this is going to take. And I think that people need to also recognize that even once a vaccine is out, the perceptions of people are going to be recency-biased, meaning they're going to be worried about things like catching a virus, even if it's not as much COVID, because that's just the way that our human brains think. So to go back to your question on what has changed, I think that people are clearly now going to be worried about things being cleaner. They're going to worry about contracting other types of viruses because it's fresh in their minds. And then those things separate, people are now directly thinking technology first. They're directly thinking of online experience first, in person second. And so I think that that will remain for a while because that's where money is flowing. So look at the money that's gone into Whoop. That is clearly an online first idea because it's cloud-based and you get a wearable and you can use it kind of wherever. Look at the money that's going into tonal at home, but it's web cloud-based. Like I don't need to go into an in-person experience to use this tonal. And in-person, yes, is at home, but I don't need to be in front of employees of another business. That shift in mentality is big because that is destroying a number of gym models that thought that in-person only was going to work. Now, I'm not saying that we're going to go away from in-person forever. I don't believe that. I think that people will want to be around other people, but I do think there's going to be an amount of time as well as, you know, a sort of re-entering the in-person market phase that we're going to need to get through. And I'll say the same thing that I did about the length of the virus. That's going to take a while. So these companies that are coming out to the market, the ones that are being funded are cloud-based. They're online first, even if they want to have an in-person experience at some point. That's a big, big, big shift. In terms of like data collection and everything, I wouldn't say that that's changed. Everybody wants to collect data.

One of the things that surprised me this year, and when people had talked about it, but now it's it's become such a clear everyone's really defining it at a granular level is what is a hybrid model? Like you touched on it, the in-person, the online, but combining both and having kind of this hybrid service offering, right? If you're a gym or you know, health club chain or you name it, I mean, anybody who's offering fitness. Where do you think, like what have you learned about the hybrid model this year? And then where do you think it's going?

It's a it's an interesting conversation because for people in the brick and mortar fitness world, 12 months ago, hybrid meant group training and individual or personal training in the same gym or some derivative, right? Like you might have some gymnastics class and a boot camp and a CrossFit and a personal training or whatever. It now means online and in person. And that is being driven down into people's brainstems at this point. So the market is going to start to assume hybrid to mean that. Now, when gyms open back up and the pandemic is not as much in people's minds, I do think that hybrid will quasi also mean one-to-one and one to many. Hybrid, though, I mean, frankly, it's a difficult conversation because if you're a local gym owner and you're trying to compete with, let's just use berries as an example. Berries, the headquarters, is building the online component of Berries now. Those gym owners aren't doing it. And that's a massive, massive help to a gym owner. If you're a local gym owner and you're trying to build an online experience, uh, and let's just use group training as an example, you're in trouble. And I hate to say that, but you have to realize that. So you're either going to need to amend your service offering to make it feel different or go more of a one-to-one delivery, or you're going to have to find platforms that allow you to deliver the same type of experience that something like a berries is offering. Because you can't like the idea that a Zoom video class is going to compete with Berries, or, I mean, look at Zwift, you know, for biking, look at all these different examples of really interesting technology that are being built. Like, local gym owners can't do that. So you're going to have to get out of that thinking, and you're going to either have to find technology that you can connect to, or you're going to have to change your service so that you can deliver more communication type value. I mean, OPEX is very well known for one-to-one coaching. Um, they were okay when gyms closed because they just took the experience online and communicated really effectively with their clients. It doesn't mean it's easy, it just means that that service works online and you can charge more for it because you have higher touch points. But people are going to want the experience that they signed up for. And so a lot of gym owners need to realize that what your clients signed up for might not be what you deliver to them. So you're going to need to get creative to keep them involved. And you're going to also have to create buy-in through your communication if you want them to stay.

Yeah, there's been a lot of surprises in this, man. I mean, when I think of the hybrid model, I think of it kind of uh, you know, Adam Zeit, who we both know, who's now in IntelliVideo, you know, talks about, you know, you have to have an online live streaming, you have to have an on-demand component, you have to have an in-person component. And that can either be done, you know, if you're a solo gym owner or even just a fitness professional, really, you can now do that. So there's it's interesting where, you know, maybe there's a lot of value to being nimble, right, right now. Or not maybe there is. You know, you can be a one-or two-person show and start to build a really solid business because the necessity of having a gym isn't there anymore, uh, if that makes sense. Like you don't, the the gym isn't the hub, right? It's not where everything happens anymore. People are, you know, look at the sheer number of home fitness equipment that's being, you know, just they can't even keep it on the shelf, right? People are building out home gyms, or they're, you know, vesting in tonels and mirrors and all the different devices at home. So people are now kind of decentralizing the gym. And I say this, and also what I was telling you about pre-recording is anecdotally, yesterday I went to the gym on a Monday and it was busier than it's ever been since the pandemic started. I don't know why. Um, but you know, there's it's just so regional, and there's so many factors that come into play. But I do think, you know, looking at what Adam said about that type of model that they're creating is really interesting. It's like, hey, you know, and that's not going to hurt long-term. Hey, if you do have an on-demand, you do have a live streaming, and you do have an in-person service offering, you've all three of those, you're going to be fairly well situated at a base level to do well at any moment, wherever this looks like. Would you agree or disagree with that thought?

Um, I agree with some of the tenets of it, but I I kind of go back to it depends what you are as a business. So let's go to the local gym owner who's not franchised, um, because I suspect most of the franchisees will have some of these solutions built out for them, or or the franchisor will, you know, they might build a big integration and partnership with something like IntelliVideo, right? So these gym owners aren't going to have to build it. If I'm a local gym owner who doesn't have that kind of capacity or network to build out that type of service, I think it's going to be extremely difficult to build a sustainable business on that. Because if you're trying to say that you do in person and online, particularly live and on demand, that is an unbelievable amount of work. And it's also fairly confusing to your audience about what they're signing up for. Now, do you need to do something like that right now? Sure. And if you had a way that was, again, sustainable or not. So much work that you know you basically had to hire multiple additional people to do it well, then okay, that could be interesting. But I think that the second you go online, like if you're leading with, we're going to give you this amazing experience online, I give you the new Apple Health, or I give you Peloton, or I give you Tonal, or I give you those big players where they're winning that category. You as a local gym are going to have to win locally. You can't win nationally, internationally. You'll get slaughtered by those companies that are spending millions and millions of dollars on marketing to win one very particular category in the market. So I'm not opposed to going with video. I think it's important, but you can't expect that you're going to extend your reach past your local market because that's now highly confusing, right? Because if you think about if I'm in person plus video, I still have a very small target market that I can go after, at least in terms of geographically, and I'm now spending more to deliver my service. So am I making more or am I just spending less, meaning I don't have to buy equipment? But if I'm in person, I've already bought that equipment and now I'm spending more to create, in theory, the same experience. I hope I'm saying that in a way that people are, you know, that people are understanding what I mean. It's not that you can't do it, it's that you're adding cost to the service that you used to not make amazing margin off of in the first place.

Yeah, well, I'm gonna ask those questions again later in this interview in a different way. And I think that'll provide even more clarity because we'll we'll kind of dive into the meat of it. You know, it's been really interesting this year as we look at when you were talking about the maturity of the fitness industry and the health industry. A lot of investment money coming in this year, right? A lot. Uh, do you have any rough estimates on how much investor money came into, let's say, the fitness tech market?

Oh gosh. I I don't have a number. It's clearly in the billions, though. But I don't I do not know what the exact number is. Um, I mean, just in the last couple of weeks, Whoop just got another hundred million dollars. Um, I bel I believe I believe Strava just got a big investment, didn't they? Anyways, a lot of money is being pushed around. Tonal's growing very quickly, you know, mirror just sold to Lululemon. Um, there are people that are looking to get investors, and many of them are actually having success if they have an online component.

How do you see the fitness industry in 2020 working more effectively with the health industry? Where have you seen that merger get stronger?

So it's still very preliminary, but I am hearing and seeing more companies getting spun up uh in a couple of main areas. Number one is gyms that connect to insurance. So obviously, gyms are not in a very good place right now, but the concept of connecting to insurance, I think, is only a matter of time away. Where either through corporate wellness or through some sort of partnerships, gym memberships are going to get less expensive for the end consumer because there's going to be a connection to insurance where the provider can get paid through insurance or they can get paid through partners. That's coming. And so I think people need to expect that that is coming. Also, wearable devices are getting bigger and bigger and bigger. And again, that is that is a category, in my opinion, that is wild, wild west, because people are trying to find the niche category that they can dominate. So, like the gym management software conversation a few minutes ago, wearables, I think, I don't think there's going to be one wearable that owns all of the wearable device industry. I think there's going to be a number of wearables, but there's going to be go-tos for certain things. So, for example, like you see Woop as an example. They're clearly going to the end consumer, and they're utilizing PGA golfers and other athletes as their means to get to the end consumer. A lot of coaches use them, but the platform is not really being pushed to coaches. It's being pushed to end consumers because that is where huge scale is. So there is room for other people to come into the market to either serve coaches or to serve potentially gyms, which clearly there are certain wearables that are trying to do similar things to that. You're also seeing data collection at a bigger and bigger scale. So certainly a lot of data collection is connected to wearables, but you're seeing program delivery companies. You know, we go back to a true coach, a team builder, a trained heroic, all these, you know, all these program delivery mechanisms. They are figuring out how to capture data and learn from the data, which is not an easy thing to do because of how complex fitness programs can be, and how complex the way that the program is written and the way that the client posts their results can be, right? So it's not as simple as click a button and that's how you write the program, and click a button and that's how you tell the coach your results. It's it's much more complex than that to get usable data, but it's coming, right? So if you put those three things together, insurance plus wearables plus data, you now are going to have a very, very clean picture. And keep in mind there's a lot of bad data even in the wearables, but you're now gonna have a much cleaner picture of what's happening under the hood in humans. And so that is going to connect into the medical industry, that's going to connect into the physical therapy industry, certainly it's connecting already into the fitness industry, and that will allow for other services. But I'll go back to my point earlier: if it's not simple and if it doesn't add direct value for what the USP or unique selling proposition was to the consumer in the first place, it's not going to be the one who becomes dominant.

Man, there's so many factors at play here. Here's a big, the big question. I'm going to break it down into three parts. So as we wrap a bow on this thing called 2020 and we send it on its way and we get started into 2021, and we're starting, you know, if people are looking at it now, they are hopefully kind of planning their strategy for 2021, they're figuring out what they're going to do. So I want to ask this question based on three different avatars. Uh, one, the fitness professional. Uh, the second avatar being the gym owner or maybe multi-location health club owner, and the third one being an investor. So, what do you think each one of those needs to be considering looking at 2021 to be successful? And let's start with the fitness professional.

Fitness professionals have to be online. Now, to your question on video, et cetera, you have to promote yourself as being able to help people online. So I think it is important to have a LinkedIn profile, an Instagram profile, and be more active on those. Now, clearly there are ways to do it where you don't have to be an influencer, so I'm not saying that. But you have to be able to show people what you're doing because fitness has always been visual. It's always been, oh, I see that, that looks interesting. And if you go online and you don't have good examples to show potential clients, they don't necessarily know or trust you, which I mean you know better than anybody, Eric. Those are two massive parts in buying something. So you have to be able to show people what experience they're going to get. You also have to think about how long we're going to be in the perception of COVID age. And I'll just say I think the perception of COVID is going to be all throughout 2021. I don't think that it's going to go anywhere. I do think that a vaccine will probably come out. I do think that a lot of people will take that vaccine throughout the year. Um, and I do think that it will be less chaotic, but I do think that people are going to have it on their minds. And if I'm a fitness coach, I need to keep that in the front of my mind because there's going to be a level of stress around that. So, for example, you know, my sister works for a large organization. They know already they're not going back until at least the middle of the summer. At least, so we're talking that's another seven to nine months that they know for sure they're going to stay at home. Well, if you've got kids, if you don't know exactly what your schedule looks like, if your work is a little bit unsure, that's stressful. So if I'm a coach, I need to help people manage that stress. And so I think that coaches should get paid for that. So don't undervalue your service, but you should make sure that your online component of your experience, which by the way, even if you have in-person, there needs to be some version of the online experience and communication. You have to factor in that stress is still high. You know, I read an article this morning talking about how certain consumers in the United States have a lot more household in not income, but savings than they did at the start of the pandemic. Now, that very clearly gets tribal, right? Because certain facets of the United States population has that and others don't. So a lot of people are feeling a lot of stress in this right now economically. So I'm not saying coaches have to become economists, but they need to at least have an understanding of what's happening in the health market, in the broad economy, because that's what their customers are going to think about. So get online, make sure that you are effectively helping people on the stress side and the fitness side. I love the idea of connecting into data type platforms, whether that's the programming platform or some version of wearable so that you can add value to your clients. So I think that there's a big industry that is going to emerge with coaches tracking people's data and doing it efficiently, right? Like one of the hardest things right now for coaches is that this data tracking adds work and they're not getting paid for the extra work. So you need to make sure that the model that you're working in and the technology that you're using saves you time or allows people to pay you more so that your dollars per hour move north with a better service. Um, those are probably the big things that I would think about for coaches.

And Jim, when you look at what type of technology that coaches can be leveraging right now, when you talk about stress, data tracking, interacting with their clients in an online, what what tech or what tools are you seeing that are leading the pack that you would suggest people look at?

So I'm I'm I'm biased here because I've been working with a company called Morpheus. Um and and they are about to release a very, very interesting coaching app that really connects people to their wearable data. So, you know, you can use a number of different devices to get data into Morpheus, and then the coach is able to have what's called a coaching grid, and they can look at all their clients, communicate with their clients. They have alerts that are automatically set up for if people go in and out of certain ranges. There's going to be programming tools to help you know programs improve and progress. That is a very interesting thing if I'm a coach, because that's going to save me time while also adding value. That's utopia as a coach. Because I know like I know coaching better than most at this point in terms of the business aspects of coaching. It all comes down to making more money and spending less time doing it. It always comes down to that. Always. You know, always. Always. So so any technology that's going to a coach must do those things. And again, I go back to TrueCoach. TrueCoach put that in their value proposition, and they did it. It was faster to work on TrueCoach than it was in email or in Google Sheets or Excel or whatever. And it looked much more higher end, and they got a lot more data, so it was a higher value to clients. It's that works, right? Like, no, TrueCoach didn't have machine learning to upgrade programs. No, they didn't have billing forever, and it's still not very good right now. But it's like, but they hit what coaches needed who were writing programs, and that's why they sold. Um, so coaches need to get onto things that save them time and add value.

Awesome. And for those listening, just a few episodes ago, you can hear about what Joel Jameson is doing at Morpheus. We talked about it and what the grid is and um you know how long he's been doing this type of work uh since Bioforce, really back in the day, which both of you and I played with, I think, you know, around circa 2011, 2012. Um, so fitness professional, let's focus on the gym owner. And just to give you more clarity, because I know you enjoy clarity, um, maybe you know, the uh the solo gym owner or somebody owns maybe one or two. Um what what is what is their focus to be successful in 2021?

Well, you're let's just be fair. You're certainly hoping for a vaccine. You're and I know that that that is not a business plan at all, but you're certainly hoping that a vaccine comes out because it's not so much that you might be at 70% capacity of what you were before. It's that you don't know if you're gonna be open or closed tomorrow. And that is extremely, extremely difficult. So you're certainly hoping for a vaccine. That being said, on the business side of it, and I'm gonna add a little bit of further context, when you say, you know, a smaller gym owner, I'm going to assume that to mean more boutique, you know, so personal training or something like an F-45 or a CrossFit gym or or whatever, not I own one like big Gold's gym type setup. Um if I own a boutique, I have to have an online component that can help me deliver my program to people, one to many. And it can also help me communicate with my people through the online, let's call it an app, so that people feel connected to. Because what I was selling before COVID was community in some capacity, right? I was selling fun, community, and sweat for the most part, right? Like that's fitness. So I need to make sure that I am tracking outcomes that relate to fun, community, and sweat. So I want to make sure if I'm doing anything on video, I'm I'm tracking are you sweating, are you enjoying the other people in uh in the classes online? I need to have tangible mechanisms that prove that to me because if you don't have those things, your value proposition has been broken. So I'm saying that I think that your end consumer, your clients will give you the benefit of the doubt if they can see that you are attempting to fulfill your value proposition that I signed up for as a client. If you do something completely different and you don't look at those things that you sold to them, that's when I think that your retention will disintegrate. So people want to give you the benefit of the doubt, but they will not pay you. You know, let's say the going rate for a boutique is anywhere from 150 to 300 a month at this point. They will not continue to pay you on average 225 a month if you're not aggressively attempting to communicate with them, make it fun, make sure that the program works for them, make sure that they are interacting with each other. Like you have to create that environment. And yes, there are apps and ways to do that, but that's the principle in my mind.

Do you have any examples of people who are doing that really well? Anybody who comes just right off the top of your mind?

Oh boy, I I mean, I I won't name names just to not name names, but I know a number of individual gyms that are doing very well with this. And let me try to break down what they're doing well. They communicate with their clients daily through, I mean, I don't love the idea of specifically a Facebook group. You know, so some people do it through Facebook, some people do it through Slack, some people do it just through other, but an easy place to communicate with their clients where their clients can engage at the group level. Um, so they're doing that. They also have video where a couple of things in my mind are very important here. Every time there's a live class, there's one coach leading the class, and there's another coach paying close attention to what the clients in the class are doing and communicating with the clients at the one-to-one and the one-to-many level. That to me is critical because otherwise you may as well just watch an on-demand class. You know what I mean? So you need to do that really well. Now, going back to wearables, there is technology, and again, going back to Morpheus, this is one of the big things that you know Morpheus is trying to do. But if you had direct access to people's workout data online and you had it in a very organized way, which, yes, that's technology. The end coach can't do that on their own. That now adds a very good layer of the sweat factor. So I can understand if my people are having fun, if they're feeling like they're in a community, and if they're sweating, let's call it effectively. That is a very good experience through COVID. Now, is it going to be the one that wins three years from now? Absolutely not. There's going to be one or two platforms that that uh you know create the best value proposition for gyms to go online. I just don't think that it's there yet, because I think that that specific types of technology are doing specific things very well. But you're going to get, you know, I'm going to call it a conglomerate. That's not the most accurate word, but you're going to have a couple of companies come together either through partnership or purchase acquisition or merger that will create the online gym platform. And I think that that will be very interesting. But like gym management software, there will not be one because there will be one that's the best for yoga, there will be one that's the best for functional fitness, there'll be one that's the best for strength and conditioning gyms, et cetera.

Awesome. So the last avatar. So we talked about the fitness professional, the coach, we've talked about the facility owner, the boutique more specifically. Now, kind of going over to the other side of the rainbow here, what about the investor? What should the investor be looking at in 2021?

So my conversations when, and by the way, the moment that you put investor on your LinkedIn profile, be prepared for a myriad of stuff to come through. Now, don't get me wrong, some of it has been super interesting, but a lot of it it's just like, whoa, you know, I'm not going to take a stab at that one. Um, but my conversations with friends of mine is very, very consistent. They are looking to invest in early but not launch products that have shown traction and that can scale. What is that not? It's not gym concepts. It's not things that are in highly, highly competitive markets unless the product has shown that it has better traction in a significantly large market. So if you're looking on the technology side, that's clearly where most investors' minds are going immediately. You have to differentiate and you have to be simpler and more valuable. I'm just going to broken record on that, than other either applications, web-based software, et cetera. If you are brick and mortar in terms of gyms, investors are only looking at you if the price is depressed and if they think that they can get a return based on that. So there's a lot of action with investors looking to buy franchise concepts, corporately owned concepts out of bankruptcy right now, because the price could potentially be right. But they are not paying a premium for that. So if you're on the investor side, obviously technology is scale. Just look at the broad NASDAQ versus SP versus DAO type stuff. It's, it's, that's where people are going. But I do think that there are opportunities for the investor to get into companies that just got obliterated by COVID but still have good assets on the books. So you just got to kind of know what you want. You've got to know what your return profile looks like. And I think investors, you know, if they aren't direct experts in the industry, they need to have conversations about what real value and real barriers are. Because a lot of people that pitch me products, you know, they say, well, we want to take this to a coaching market. And I look at the product, I go, coaches will never use that. You know, and I can see that in five minutes because I coached for so long and I worked with coach, I still work with coaches now. You know, so you need expertise on the ground because you have to dominate the category. You're not going to dominate fitness, it's just not going to happen. So, you know, investors need to look for expertise and understanding of the target market and ask themselves can this product or service or whatever dominate the specific category? And does the owner of that product or service understand that that's the game? Because if they think they're going to own all of fitness, it's not going to work.

It's in and for people who are listening and you're like, well, I'm not an investor. It's it always pays to spend some time thinking as if you are. Uh it just gives you a grand scale of what's going on. And, you know, I always talk about this in my business coaching and mentoring practice. Uh, I look at each client that I take on as would I invest in them? And that mindset takes me into all different kinds of areas, right? Oh, yeah. You know, just having that, would I invest in this person, in this company, in this relationship? So it always pays, and that's why I like this question, because it always it always pays to occasionally look at things, or if not all the time, as if you're an investor, because it just gives you the right mindset of okay, is this a long-term opportunity, relationship, effort that I feel is is worthy of my time? And uh it's it's a great place to be. So final question, Jim. What makes you hopeful about 2021?

Oh man, I I think people want health and wellness. And I don't think I'm saying that from a purely just um mindless hope standpoint. Uh, you know, a lot of conversations that I have with people who, you know, either have been extremely inconsistent with fitness over their lives or people who just never have really gotten into it because of technology and because of not having the freedom to do some of this in-person fitness, they're looking at some of these apps and some of this technology and some of these behavioral and habitual platforms, and they're they're trying them. And I think that the smarter that we get on the data and the logic side, the more that we're gonna understand it's like, okay, well, for 40% of the population, these 12 to 20 behavioral components will help them start living more healthily. And I think that people are very open to trying those things. Again, simple and valuable, right? Like it doesn't need to be super complex. Also, I think that a lot of people, particularly when we come out of the winter, I know we're going into it now and call it whatever you want, but I think people have continued to gain interest in doing stuff outside. Um, and I think that doing anything activity-based inside or outside leads to wanting to do more things in the health and fitness arena. And so I look at a lot of different things. Like I've got one of those pedigos, you know, electric bicycle places right by my house, and I understand that it's not necessarily you're doing the most work, but hey, if you can get somebody on a bike as a starting point and they can move the pedals a little bit, that creates progress. Um, and so I think that the more people that get a touch of fitness, either through technology or through experiences, they're they're gonna get on the bandwagon. And I think that fitness is gonna have a great emergence coming out of COVID because we don't want to be as prone to deep harm that people who are unhealthy face when they get COVID. Um, so I'm I'm extremely hopeful that people are waking up to that idea of immunity. I do think there's a lot of garbage on the market, but that will always be the case. Um But I think that people are wanting to be legitimately healthier and more fit because they see it as a safety precaution and they see it as a fun component in their life. Awesome.

Awesome. Well, Jim, that's uh I think that's a pretty solid review. And I I love that everything is ending on an optimistic note because I agree. I think if you look at the fitness and health industry for a long time, it has been fairly dominated by a certain type or certain models of business. And this year has shaken everything up. People who had a death grip on status quo, it's it's not there anymore. So it presents a ton of opportunity for people and consumer needs, hey, when consumer needs shift dramatically like they have this year, there's opportunity everywhere. And uh, I think it's a really exciting time, you know. Full confession, about a year ago, if I was sitting here, I was thinking, you know, I think I'm about done with the fitness industry. I think we're gonna start moving on and looking at other industries to do biz dev and and consult in. But this brought me back in. I think it's a really, really opportune time to be in this industry and it's really exciting. So thanks for coming on and sharing all of your thoughts. It's been a wild, wild year, man. And it's not over. Uh, it's gonna get a little bit crazier. And uh where where can people find you now, Jim, if they want to chat with you?

Well, really quickly, one last thought on this that just came to my mind. Um, and I haven't actually thought about this until now, so I might get crushed for it, you know, later. But I was part of the trading industry as it was sort of going through a metamorphosis where, you know, mid-late 90s, a lot of the trading markets, and we're talking like actual physical exchanges where people were trading in the pits, a lot of those folks were, you know, like they might pluck a hot dog salesperson, you know, off the street and put them in the pit because of how aggressive they were, and et cetera. But as technology came into that, you started seeing Ivy Leaguers get into that game. And what are you starting to see in health and wellness right now? Technology emerging, and Ivy leaguers are starting to get into technology that relates to fitness and health. Now, I'm not saying it's good or bad. People can make their own assessment of that. I'm just saying that that is clearly part of the evolution and the maturity of this market, is when you start seeing people coming out of Harvard and Yale and wherever else, you know, coming into this industry. I think that that will continue as the scale of these products continues to get big. And just go look at some of the big companies like Peloton, right? Like look at their C-level office. They are big time uh on the academic side. So I think that's big. So people can find me. I'm just Jim Kroll, C-R O W E L L on LinkedIn. That's my biggest platform, you know, and I'm happy to answer any questions there. If you want to, you know, hit me up for something on the advisory side, just Jim at JWCadvisory.com. And otherwise, you know, I'll see you uh probably on the technology side, everybody.

Yeah, right on. Thanks, Jim. It's always a pleasure, man. Ladies and gentlemen, Jim Krull. Hey, it's your host, Eric Malzone. Thank you so much for listening to another episode of Future of Fitness. If you enjoyed it, please do me a huge favor by going to the website and signing up for our newsletter. The website is futurofitness.co. Again, that's futurofitness.co. We've got some big, big announcements coming down the pipe, and we want you to make sure that you are on top of it. Thank you again. Signing off