Fritz Lanman (Playlist) and Philipp Roesch-Schlanderer (EGYM) on Their $7.5B Merger

Rule number one is don't fuck up the other person's business. So we've been very, very cautious about integration for the sake of integration and have spent a lot of energy thinking about okay, how do we make sure we work really well together? Then how do our management teams start to work really well together? We've been really careful to not do the typical corporate thing of integrate for the sake of integration and combine job laddering and titling and you know, all of that kind of thing. Probably invites a lot of drama. All right, well, let's get started.

Fritz, Philip, thank you guys. This is an absolute pleasure. Pleasure for us too. Thank you. Yeah. Well, we're here in uh beautiful Boulder. I've never been here before uh with the Play with Some May. 2026, uh, it's gorgeous, by the way. I've never been doing my way, just walk around today. But I want to get back to where we actually sat together last time, which was uh January of this year, 2026, right? We were in Munich. We were sitting on stage, it was the EGM kickoff. For what I recall the day before you guys made a tremendous announcement, right? And we got to talk about it a little bit, but there's still so much you couldn't talk about. Um but I was really enjoying the dynamic between the two and show us we'll get into, talk about the fly fishing win, all that stuff. It's really it's great storytelling. But I guess since that point, and now we're what, seven months down the road? Walk us through that gap in time, like what's been going on for you guys the last eight months since that announcement was made. Um one of the biggest announcements this industry has ever seen. Right? You guys are now formally together and you can correct me if we're probably the biggest company our industry has ever seen. Um so that's pretty cool. So yeah, walk me through what's what's the last eight months been like for you two.

This event playlist summit was sort of the event that my side of the company would host every year. Uh and where we were able to do the announcement of our merger was at the eGem summit, which is you know, in Unique every year. And so it's it's fun for us to bring each other into each other's worlds more, which has been the theme since since the announcement. Uh but you know what's funny is we did that announcement, but we we we did not yet have all the regulatory approvals approving the merger. And so while we were able, we'd become great friends and explored how to partner for a long time before leading up to the deal, which is actually what kind of led to the bigger deal. Uh we we weren't really able to like get in a room and do real deep strategic planning until we were approved at the end of March. So um it's been fast and furious uh since the deal closed. I think uh you know it's only been a few months, but it's already done a lifetime. Um part of that's because we had gotten to know each other so well before. Uh, but getting to know each other's teams super well and seeing them gel and integrate has been has been really cool.

From my perspective, I would say the the greatest uh upgrade is that I now have a another partner with Fritz and yeah, we we speak on the phone every single day. Uh I have now uh for the first time another person in my life. I also really worry for their sleep. So far to mine. Um whenever he texts me and I'm like uh two years ahead of him, like it was like, how come you're already awake? Um and um and and we just bounce ideas, like we openly ask for each other's help in each of others' business, and uh it's just like a really enjoyable partnership. Um and I would say that's kind of like a real surprise. Um I mean, we thought it would be this way, otherwise we would have not done it, because this really started uh on a personal level. I'd still even like within my friends, some said, like, I can't imagine that you both will still be around in a year or so, like two alphas um joining like forces. But I would say it's just getting better every day. There's also sometimes like bad things happening, but of course, what I see is that we're just using those as an opportunity to grow together. And so it's just like for me, like a really wonderful thing to have another partner now. And um yeah, I I think it's um from a personal to like, of course, like factually and logically the merger made a lot of sense, but also on a personal level it was really enriching.

Yeah, and we didn't plan these outfits, by the way. He's one of the playlists in Marington.

I'm glad you brought that up. Yeah. Which is yeah, that's adorable. Um well, I believe like I was fly fishing with you. Thank you again for for taking me just a few weeks back. And uh you were you picked us up. He was on the phone with you. You guys are having I don't know what you guys are talking about, but you guys are having a great conversation, apparently. And he's like, ah man, he's on vacation.

You need to break from the vacation and get the stimulus going again sometimes. Yeah.

Well, walk us through like so internally, um, and we're gonna get into your relationship, I think, throughout this. We'll touch on that because it's still critical to make this work, right? Um a lot of the industry wants to know like, so what has been happening behind the curtains? What can you tell us? Because you mentioned, you know, went from January to March, then you got the approval, right? What was that process like? And then from here on now, even mostly focusing on integrating the teams, figuring out how this whole all the machines are gonna work together. I mean, there's a lot going on between the two companies. So yeah, walk us through some of that, extend on it.

Yeah, I mean, like the the two uh logical areas are like how can we get um to leverage the largest European fitness network, Wellpass, and now also add value through ClassPass. And then also how can we double down on the existing uh corporate network that ClassPass was building here in the United States now with full focus? Um and I would say on on both sides we're making great progress. Um we have uh basically now reorganized our uh US corporate sales teams. We have a clear roadmap how we bring all the value add uh that Velpa has developed over the uh years towards US employers uh and employees. And then also just basically started um to uh really open doors in Europe for ClassPass. And um, like, for example, just last month, like two of the most, let's say, five important uh like well-pass partners in Germany signed up for ClassPass. Um, as they like saw the value that really like is being developed by a D2C model, specifically like filling up empty capacity. Um and so uh yeah, I would say like we're on a really good path here. We have like all the building blocks to really have positive impact to our industry.

Absolutely. I I've been really uh pleasantly surprised at how fast the teams have mobilized to start helping each other. So, for example, Philip Kave example is on the ground in Europe, our class pass corporate team, which was a really scrappy and really proud of one with almost no executive attention or support. It was like kind of the third business that we were building because consumers would say, I likely company to pay for my class pass. And they really built a nice little business there, but now they're part of an army, you know, at EGM, which is very well resourced, very well funded, and has a tremendous amount of experimentation, know-how, you know, over a decade of experience building their playbook. And and so that's been super fun to just see how do we get our European teams to partner together to push ClassPass B2C into these markets more aggressively, and then how do we uh how do we leverage the you know enormous ClassPass network combined? I think we have about 135,000 businesses uh in our two networks and really launched this go-to-market uh motion for the corporate uh channel. But you know, on top of that, even before we came together, we had two rapidly growing businesses um that were both profitable. And so, like, rule number one is don't fuck up the other person's business. And so we've been very, very cautious about integration for the sake of integration and have spent a lot of energy thinking about okay, how do we make sure we work really well together? Then how do our management teams start to work really well together? How do the teams who are working on these two kind of big synergy opportunities really execute? And then I think, you know, we have a lot of work to do, just just keeping our existing uh engines going in the direction that they were going, really, really fast growers with lots of their own opportunity taking on the synergies. And we get to start talking about kind of longer-term things, but that's not at all the priority relative to just keep doing more of what we'd been doing for successfully for over each or 15 years. And then how do we help kind of accelerate those existing efforts? So we've been really careful to not not do the typical corporate thing of integrate for the sake of integration and combine uh laddering and titling and all of that kind of thing. Yeah, that probably invites a lot of drama, I would imagine. It's just yeah, it's like it really has to be we really have to believe in the ROI of doing something anything that gets in the way of people just being being focused on getting their day-to-day execution done. Uh you know, we both have this, you know, since we've both been entrepreneurs for so long. It's like we've really learned the lesson about just like one foot in front of the other and compounding momentum and how you have to just be so focused to be able to do. Yeah, now you zoom out and it looks like, oh, we were pretty quickly big businesses. It's like, no, these were long, arduous journeys for both of us. Uh to think mine was really hard, you know, going through a kind of a business model turnaround class class, a pandemic, and then you know, kind of merging with mind body and having to transform mind body. His is probably the only one I know of that's even worse. Like being a I can't think of any more hard mode than being hardware entrepreneur in the fitness space in Germany. 16 years out. Red on it.

Yeah, and we're both like first principle thinkers and like just we would never have the teams do something because, but there always needs to be a real reason why why we spend our energy on it. And so there's like never like this typical corporate kind of it can make no sense, but we just need to do it. Like we we we really try not to have that. Probably sometimes we have it, or maybe it's not a good communication, but overall we just want to spend our energy on things that we really believe make a difference for our customers.

Awesome. Awesome. Um, we're gonna talk more in depth about the vision too, like you know, on a specific timeline. I think a big question, so people listening, at least in my audience, you know, are operators, executives, all within the industry. And this sounds great for you guys, right? And I'm sure you know many people are talking this as like an obvious IPO opportunity. You guys don't have to comment on that. That's like the talk of the street, right? Um so I guess the question on behalf of my audience is like, why should the industry care about this? Like, why should we be paying attention? Why should they um you know see this as a benefit overall for what we do as an industry?

In my view, is um, since I'm in this industry, so for 16 years, we were always, for example, dreaming about like combining fitness and health. Um and like when I look back, what was the gym penetration or fitness penetration like 16 years ago and what is now? We made improvements, but so we're we're outgrowing GDP growth every year, but like by you know a couple of points. Um like a very slow movement to bring fitness into the masses. Um and at the same time, I believed that otherwise I wouldn't have founded my company, that uh technology can make a real difference in combining those worlds and really have much larger penetration in the uh into the society in our um like um economy and so on and so on. But for that, you need someone who has the ability to make massive investments. Look at the US economy, like remove the magnificent seven, what is left. Like it's kind of like mediocre. Um but the specialty is that the magnificent seven and then also the money that comes from that reinvestment into other software industries and so on, that really is the the like unique situation. And um and and what what that tells you is that the tech sector has basically become an economy's a scale business. You just need to have massive scale to be able to build like the best possible products. Um and our industry never brought like a massive technology um business um to market, and therefore also the tech sector was always ignoring our industry, right? Like, and and and now we basically hope to contribute in multiple ways by one making now the being able to make massive investments into tech to really accelerate the development of our industry, but at the same time also then becoming such a large business that you know like people that follow Nasdaq actually follow start following our industry, um, and therefore then also create another level of awareness, um, which then will then drive, for example, also like more private equity money even investing into the brick and mortar businesses, because now they realize that's a real legit industry. I mean, like I would say from the it has improved significantly, but I'm still like in every investor presentation, I first need to explain why the fitness industry is investable. Like for most investors, it's just like this small industry, like they have like this pattern in their head, like, oh, like this industry lives off selling memberships and no one going. And so we want to basically on those two fronts help our industry. One, due to our scale, realizing for have drive for everyone the realization this is a legit industry, and then two, because we've become so big, we have the ability to make massive investments, which are in today's world of tech really needed to then drive these differences and and and drive this like migration and diffusion into our uh society so that we finally get like 50, 60, 70, 80% of people actually working out because that's what they should be doing.

Hell yeah. Fritz.

I think that was really well put. I think in addition to sort of free investor validation and interest, I think just yeah, like societal rev relevance and the pure capex and RD investments that we're gonna be able to make is just not something that this industry has has quite seen before. And so, yeah, first to have bona fide investors, you know, also the variety of investors that came into our most recent round, which is from about 800 million, you know, from leading consumer private equity firm L. Catterton. They had some historic interest in the space, but kind of reinvesting into it. Uh, and then Affinity Partners and Tomosic and Vista Equity, the best B2B software investor in technology, 100 million fund. Like that's that's real credibility, as Phillips said, but gonna lead to real RD deployment into the category. And uh, you know, I think our competitors um will just be forced to to up their game and and to try, you know, to hang. I think that will really benefit the industry. I think the other thing is the other felt way that the industry should care about this is really through our aggregators. Like we are investing so much money in bringing more people into the category to work out. In the case of our corporate wellness business, that 50% employer subsidies. Like that's just found money for our industry. So everybody should be cheering for us to be going and getting more HR benefits managers to be subsidizing their employees' workouts because that will just keep them active longer. And um, and then on the class fast side, it's the same thing. We're spending more money than this industry's ever seen in terms of marketing budgets, trying to introduce all these varieties of workouts and say, hey, look, come find your thing. If your thing ends up being just one membership at a traditional gym or just one membership at a traditional studio, cool. We helped you discover that our model is good enough that we can afford to make these introductions and spend marketing dollars and hand a lot of those leads off to the industry and bring them off the couch and out of running in the park. Because we really believe that these different modalities are the best ways to work out and then you're gonna drive more consumer stickiness and attach, not just by bringing employee employer dollars in, but by helping consumers figure out what is their habituating variety routine that's gonna give them the best results. So, you know, look, we're not here to try to take money. We we see our businesses as one, giving tools to these business, these operators to help them run their businesses more efficiently with greater intelligence and and and tooling, and two, to help them grow. And so like that's our stated mission. We we want to take a percentage of take rate of the growth that we help generate. We think it's a super fair business model. There's different nuances to how we actually do that, but you know, now we have the ability to deploy this massive RD, grow the consumer audiences, build better tools. Um, and it's super fun to have not just hardware or software, but hardware that talks to software that talks to AI, you know, across, you know, from the moment of trying to inspire a workout all the way to the machine itself.

Yeah.

I mean, one of my biggest topics that I I discuss on this is what you're talking about is this convergence of fitness, health, wellness. And I think there's a lot of factors that need to happen. And I guess this is where we get into the vision for this, right? Um you know, in order for that to happen, if we're ever gonna have an integration into the healthcare system or become the forefront of of preventative health, which I think, you know, fitness industry is extremely well positioned for. We just have to grab it, right? Um, so talking about that, like what's the overall vision? Maybe we'll put a, you know, we're in 2026. Let's say by 2035, like where do you guys hope to be? And maybe we can start with that. Like, how do we get to the forefront of health? How do we integrate into you know preventative health? And then with all these assets that you guys have, like how are these all intertwine together to make that actually happen?

Yeah, absolutely. First by 2035, he's either probably living in Montana or more likely the Peter Terror in in New York City.

I I hope I don't have to wait until 2035 for that, but uh I'm nudging him every day. Yeah. Um, the like we have like a very clear clear view on how we connect fitness and health um and health care, right? Like it's not about people that go already to the gym or to fitness boutique uh facilities. Yes, we can improve the quality of the workouts with technology, we can also uh improve the discoverability with technology and so on. But the main thing is for that mission specifically, how do we get people into our facilities that are not going today? Right. Um and for example, one of the things we've learned with our corporate aggregator is that um there are a lot of people that have a very little willingness to pay and also only that little willingness to pay if they have access to very high-end facilities. So how would that work? Well, the first of all, why are they like so um incredibly like difficult customers, you could say? So you want really quality facilities and you only have a very small willingness to pay. Like, well, that's the reason why they don't go right now, but if the employer pays for it, all of a sudden we get them to go. And I was thinking, how come there are these unreasonable customers? Like, why why would they want to have that? And and the and the the real answer to that is the reason why they are not going is not only because they have this weird willingness to pay, but really it's the workouts are exhausting. So we make people pay and it costs time, and it's exhausting. Right. So like so so basically to hope that without technology and without other payable people paying for it, you would get, you know, 70-80% now, all of a sudden realizing, yes, you know, I just need to do this, that's not gonna happen. So the way you do this is you give them a super attractive deal. Now obviously, our fitness operators still need to be compensated for their work. And so the only way to make that work is someone else is paying for it. But then that's not enough, right? Like these people, uh, so now somebody else is paying for that. Now finally they have product market fit, they're going. But then still they don't know how to work out. So then we still need technology to have them work out successfully and have the confidence that they will be successful. Um, and then how can we give them confidence and how can we give third-party payers confidence that they should be paying and those people should be going? Well, you need to really become scientific, highly personalized, but also scientific. And so, for example, now um I teased it on our last podcast together, but now it's fully running. We are funding this year like a three million three million dollars come from us, and then another five million dollars is uh research grants we secured. We're doing uh in a fully blown clinical study on GLP won't workouts. So, like basically, people on GLP1 doing specific workouts on our equipment that should help them to keep their muscle and only shed the fat as they are on GLP1. Because an average GLP1 user roughly loses 40% of the weight in muscle. And the single biggest cost item in healthcare is muscle skeletal diseases. And as you can all imagine, not good for MSK if you lose all your like muscles, right? Also, you can't get off the drug again. I just heard this interview the other day where the CEO of Bank of America mentioned that Bank of America is spending just in um 2026 only on um set bound on Monjaro, three billion dollars. So only bo BOFA, one single employer, spends roughly 10% of the entire US fitness industry only on Monjaro. Right? Right. So but that but but now imagine the problem now for him is all his on app his average um set-bound user will lose 40% of the weight and muscle, and so therefore they can never get off the drug. Because if they get hungry again, they will and now they have much lower calorie consumption, they will regain everything in fat and then have made everything worse on a $3 billion spending per year journey. Um and so the best they now have is okay, we accept there will be some MSK issues, but we keep now everyone on the drug. So that's now for the existing cohort 3 billion, and I guess every year there's some nuke joining. Um and so this will be like a massive cost. And the only way out is there needs to be someone who can tell them, I have clinically proven a workout specifically targeting GLP1 users. They quickly run out of energy, um, they need to lift heavy, and so they need to lift heavy, they don't know how to work out, and it needs to be a very short workout. So but but then also they don't want a clinical study which is not repeatable. Basically, like people walk on the trading floor and don't do exactly what has been proven, but something else. So then you will not get Bank of America to maybe give us a half a billion trial. But if you can prove it, then the facilities on our smart strength will be in a position to say, like, it's proven. It's from what we know, like it has to learn more about clinical studies. And when you do a clinical study, you have to always register it before you do it so that you don't first do the clinical study, and then afterwards either, like, oh, that's what I wanted to prove. Um and so what I saw basically is we are right now the only clinical study running in the world trying to prove that people on GLP1 can keep their muscles.

That's wild.

Crazy. But um, but the operators working with us then will be able to show, like, no, it's proven, and we can deliver it with zero variance. Like, as long as people just touch this equipment, it's gonna be exactly what was proven. Um, and I think that's another element of it. So you need somebody else pay. Um, but you need to have the technology to prove it. Um and and that all together then will help us. And GLP1 is just the first one, right? We'll do for all sorts of indications now these full solutions. Um, there's also products we develop right now. Um how can we get just people going with their workout, which which have never worked out in their life? They're not on GLP1 or anything, but it just never worked out. Um and we're running right now a really successful pilot with our products here at uh CEO Boulder. Um where now the third department wanted to also um roll it out to the employees because I think we have something like 15% of the workforce who say they have never worked out before. Um and they don't do anything other than this. But now they do five minutes a week of strength training now for I think seven consecutive months. So they're like that's great. So we we're basically having all these different building blocks to like get closer to my life mission, which is when an employer decides to work with us, we want 100% of the workforce to do at least five minutes of strength training per week.

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I think the most interesting part of the anecdote too is why is B of A willing to spend $3 billion on Gym. Yeah, they're not done. And it's because of, in my view, two reasons. One is in a competitive labor marketplace where you want to have elite talent, you better give your employees great benefits. Right. And we're seeing that certainly with especially in tech, a lot of them um, you know, subsidizing fitness for their employees important part is viewed as a very important benefit. Um so you've had corporate benefits around like transportation and food and stuff like that for a long time. But this fitness benefit thing is kind of new, uh, but taking the world by storm because I think employers are realizing that's a great investment in your employees' happiness and in your differentiation as an employer. Employees working out, they're going to be happier, they're going to be fulfilled, they're going to be more. And that really goes to the second reason, which is, especially in America, is the premiums that employers pay. Uh, you know, and it it's it tends to be a small percentage of your employee population is a huge percentage of the cost. And so anything we can do to help an employer reduce those premiums, reduce that liability is the dollars or you know, health US health insurance market. I don't just think about what we do is just getting them to subsidize the spend or giving them a great workout when they get to the gym. It's it's every step of the journey, right? When they open ClassPass or they open Well Pass, or they open the Mind Body app or an app that eGym is powering for a gym or an app that we're powering for one of our fitness studios on the mind body side. It's how do we put the right experiences in front of the right user at the right price at the right time and eliminate all the friction between that moment of inspiration to do something and getting your butt into a facility for a sweat.

Well, that's that's the trick with the fitness industry, right? We're not selling french fries and tacos. We can't just waft the smell over a crown, they're gonna be like, ooh, I want that, right? Like we we're selling work. And but it has to have a it has to have a clear benefit. And um, I mean, the vision is beautiful. I want to ask some more questions on GOP1 there because I figure you have some answers. But when you look at everything you guys have, right? So uh mind body, class pass and well pass, booker, um obviously e Jam, and there's one other I'm forgetting. Height our multi-brand franchise. Yes, thank you. Um how tactically, how do all these fit together as you roll it out to meet a vision like that?

Something that big and and fundamentally shifting for population. I think we're not there yet in terms of like having every specific plan laid out for every specific sequence. I think the visions are very clear, right? Philip brought this healthcare inspired vision. Mine is actually going in a little bit over a different angle. We had employer subsidization as an important part of our business plan. Uh saw that others could execute really, really well and scale. And so we decided to prioritize that at the cost and expense of going into some of the other what we call IRL local experiences, markets, you know, in real life experiences. We really see ourselves as the anti-tech tech company. We hope to have a big impact on healthcare, but we also just hope to get our users doing the same friction elimination for fitness in adjacent wellness categories, right? Even getting into healthy food and stuff like that. Cool. And so um, you know, I think we have sequencing uh uh that we need to sort out and that we deb you know, kind of we've been very focused on continuing our existing execution and then very focused now on harvest these immediate synergies of bringing each other's networks to each other's geographies. Over the coming years, you know, to your 2035 question, it is an interesting open question as to how many of my IRL adjacencies have we pushed into wake consumer aggregation, software and AI, uh, or even potentially hardware, given we now have great hardware teams uh at our disposal, versus that kind of how far do we actually push into actual insurance. Like we're not here to announce that we're launching an insurer and you we don't know exactly what the right way to play is. We're just right now trying to earn the right to go for some of those 10, 20 year type uh you know, multi-trillion dollar opportunities by executing our brains out on on these more near-term community things.

Yeah. The the way I would uh answer your question is like on the on everything but aggregators, it's pretty simple. Like kind MindBody Booker is basically the back office software of fitness facilities. And eGrim technology, including our connected equipment, is bringing software on the training floor to personalize. So now we have basically software for everything that matters in fitness facilities. And then the aggregators basically bring in like the widening the TAM for our industry. ClassPass brings in new audiences that otherwise wouldn't have consumed. And then ClassPass corporate and well pass through employer money brings in money. Now, ClassPass is adding tens of thousands of spasal loans as well. We now realize that when you want to sell a GLP1 solution to an employer, they actually want to have that embedded into an overall corporate fitness um uh benefit, which now like lots of people raise their hand and say, actually, I would also like to have spar salons and FMB, like healthy food included. And so now I'm in a really good position to say like, oh, like, like, yes, my life mission is the GLP1 thing and and all the other healthcare stuff, but I need to get the foot into the into the door through the corporate fitness offering. But the corporate fitness offering, the corporate benefit, actually now demands us also to not only include the indication-specific workouts, but the general fitness benefit. And they want to include spasal longs, and they want to include F and B and Glass Plus, now it brings this to the table. And so now this all of a sudden all makes sense, right? It all comes together because like it looks like a lot of different things, but when you go through the lens of the buyer, then it becomes much more clear, right? Like there's this benefit manager that now has the CEO saying, Hey, you're spending more and more on benefits, where is my value? And hey, you're spending in the BOFA case, just three billion on one medicine that we haven't spent before. Um, like, how does this all make sense for me, to me? And then she's like, Well, you know, I have now this package where we will continue to spend corporate fitness, people will still be able to consume fitness, spasal and and healthy food, but also um they have now included a program which will help us reduce to three billion so that all of a sudden the hundred million we spend on the corporate benefit doesn't really matter anymore, right? Like because it helps us drive down to three billion. And and so we help this corporate benefit manager solve that equation. Um, and so from the customer's perspective, then like at least like I'm representing selling to employers, this makes a ton of sense. And then of course, because we have software for the front end, which gives us the ability for GLP1 solutions and others, but also tie into the back office due to Mind Buddy, Booker, and Kite, we can provide the best possible experience, right? So that's how I would explain it. And that's also how we automatically transition more and more into Fritz's vision to bring more and more things on our platform to have people have less screen time and more like in-person time, because like this will be more and more demanded, and then I have no problem in winning someone over with like a corporate benefit for healthy food and spa and beauty, convincing them then maybe, well, now you have the opportunity, maybe you do one workout a month. That's right, maybe two, maybe three. Well, I have no problem to use all these different tools to get people into ultra disindustry. Yeah.

Even if it's just a five-minute quick e-gym.

Better than nothing, yeah, obviously, which is what a lot of people do. I I've asked this question to a lot of well-informed, smart people in the industry. I haven't got um, not because they don't know, it's because we just don't know yet. But do you have any indications? Are GLP Mullen users more likely to go into the gym than they were prior to using GLP ones?

There are studies saying yes, their opinions that are no. Um, I think it's just so early. Probably have to look into different cohorts. And like at least it's kind of for me easy to imagine that if someone was so obese that they didn't even dare to go outside their house to then go even consider going to the gym. So basically, if we first have them melt 40 pounds and now they have more confidence, I can see that. I can see that we give people another chance. I know um, like within my friend's one example, his mother-in-law was exact exactly such such case. Um and like uh overall, like I can imagine it. Um I was actually really at the beginning a little bit concerned where there was a lot of people that just wanted to be skinny and so they like just used it and didn't do the workouts. But then like God gave us this um TikTok meme, Ozempic face, and and all of a sudden, and all of a sudden everyone wanted to work out and be on Ozempic. So fine, I took it. I think it's three things, right?

It's it's the studies have unequivocally proven you lose muscle and so you should work out. So you have your doctor telling you to work out, and you have your employer increasingly subsidizing your workouts, try to lower premiums and risks associated with the health conditions. And then we know from all of our consumer research that gin gym timidation is a massive inhibitor. It was especially uh for more my side, having been more boot cheek fitness, like a lot of the really intense, you know, the branding of various boot camp, it's a great brand, but their branding is not uh that is not something that somebody who needs GLP one is gonna, you know, immediately physically identify with the imagery of those users or or an equinox. Or so I, you know, it's it's hard. The data is noisy. Um, we have a session here uh where we're gonna be revealing a lot of our proprietary data, which we look at to try to derive trends and insights. Uh, you'll be able to ask some of our investors. I mean, our investors just put 800 million to the company because word rate, sure. But more, I think a lot of that is the secular tailwinds that they see of having more people participating in the fitness and wellness. And I think the GLP1 thing is certainly considered a tailwind.

And by the way, just to be clear, like it's not the GLP one that melts the muscles. It's just you are on a calorie deficit. Yeah. Right. So it's like completely normal. And so the way you need to combat it is you need to stimulate your muscles and you need to prioritize protein intake.

It's it's I mean, anecdotally, I've seen it swing both ways, right? Yeah. I mean, I I was at a barbecue not too long ago in you know, where I live in Montana, and like I was shocked at how many people were openly talking about GLP1 use. I mean, these are people who they need play. Totally. And some of them, you know, some of them were very active people who did a lot of working out because they want to keep the weight off while they're on GLP1. I don't need to do that anymore. Right. I mean, I'll also see the swing side, which is what we're hoping for, which is like, okay, I've lost 30, 40 pounds. What can I do now? What couldn't I have done a year ago or six months ago that I can now do? I can do that hike, I can do that, whatever it may be, right? So it's it's gonna be interesting to see how that starts to shake out, but it's it's it seems to swing both ways at this play lane.

Yeah, the where where I would say we had we haven't seen any like, you know, now with the the double digit or higher double digit percentage of Americans doing them, like we haven't seen that in our consumer, like less participation. We have seen some genre shifts, but again, it's noisy, it's hard to say. Uh and and the genre shifts have been prioritizing strength. Like one diesis is one of the reasons that Pilates has been uh so on fire the last couple of years. Uh is because it's perceived as a strength workout. Uh strength is there's all sorts of studies, even if you ignore GLP1s, the high-intensity herbal training and and moving weight around. You know, you look at the rise of HIROC, people are I think the consumer is increasingly wanting to make sure that they're not just getting a zone two thing, which those are evidence important for, too. But also you know getting a really intense stimulation. So um yeah. The data is noisy, but and I think we're we're off, but we don't think the macro industry trend of people spending more on their health, wellness, and fitness is going away. We think it's, if anything, accelerating. We think people are spending more money on things, on experiences than on things.

And then you have this GLP one thing, which I think will be a tailwind, but I personally believe that like most of the population one day will be on interest on a s really small dose. Because the amazing thing about it is you basically have like your your glucose curve is like you have no more spikes. It's kind of crazy, but that drives all the inflammation, like and and and people that are on GLP and they just don't have it anymore. Um so it's really for our sector so crucial to figure out how can we like really offer awesome solutions. Of course, these people will not be calorie deprived because they go really low dose. But still, like to start experimenting with it, doing more stuff there makes a ton of sense. Yeah. And as like all these other peptides coming.

Keep getting better and better. I think yeah, the value prop has moved beyond just weight loss and uh some of their health benefits and cancer risk reduction things that are kind of coming out. Some of those might be related to weight loss, some of them might not. And it's looking like there's very little downside, you know, if you can afford it.

Yeah. Still, I find it totally crazy that an average person loses 40% of their weight and muscle, and don't worry. We just scale it now.

Yep. And well, we're in a really interesting people are so willing to experiment on their own bodies now. Yeah. Right? But they'll we'll start it now, we'll wait for the research to come later. Yeah. It's like talk about, you know, especially our industry. Yeah, welcome to the Venice. Yeah, very much. Um, because it's true, like people are willing to now just order things uh from compounding pharmacies, order some needles off of Amazon, and just get out for it. Yeah. Right. And that's it's shocking. And it's kind of not because people will do anything to look good. Yeah. To feel good. Yeah. So yeah, it's a fascinating time. Um I I have to get, you know, to artificial intelligence just because I got you guys here, right? So we don't have to talk about everything that you're baking in and you know, how AI is kind of like multi-layer in everything. It's just an ingredient now. But I guess the question is, you know, what do you guys, and whatever you can talk about, of course, like what are you guys doing in the world of artificial intelligence? It's not really table stakes for our industry at this point.

To me, like if you just zoom out, AI is just like another technology like software itself, which is it's just a tool that can give an operator leverage or value, right? Vertical SaaS and vertical AI are just blended together as that's just saying like vertical technology. Um and so I think it is becoming table stakes, but I think you're gonna see differences in the quality of implementation based because this is still like there was you know, distributed systems were invented by basically AWS 25 years ago, distributed computing and Google. And it took the diffusion window to like get every other tech company onto modern architectures and distributed architectures and horizontal scaling principles, took over a decade at least. It's still actually happening, you're still finding business, including one that I happen to own that took a long time to get to that state. There is Big diffusion window with these technologies. Um, I I can't really speak to others in the space. I mean, I'm seeing some announcements and stuff, but you know, until you get in and get to play with it, use the variance in terms of implementation quality is tremendous. Uh and is it usable? And how good is the reinforcement learning and the training against you know, when something goes wrong or breaks, how do you how do you uh and uh and then I mean for better or worse, like having more data, more proprietary, like is a big advantage for us. And so being a big player with so many different touch points and so much data visibility from what consumers are searching for to what they're actually doing at the gym. Uh, you know, we just think like, gosh, it's it's it's almost not just an opportunity, it's an obligation for us to deploy that and to tool and to continue to eliminate the friction between more people and their workouts. So uh, you know, we have some exciting stuff today. We announced our new kind of analytics so you can chat to get more we we gave people amazing t tables and kind of modern uh data visualization tool tooling over the last few years. But it was almost overwhelming for a lot of people to even pour through it and derive the insights and the value. Having an assistant that's intelligent that can kind of go through that and and parse it and you can speak natural language so you often have a data science degree. Or um we're trying to give everyone a plain English-speaking data scientist at their fingertips with this product. I think we achieve that. So we're just gonna keep isolating those use cases. Uh we have EGym Genius, which gives you personalized workout recommendations on e-gym machines, or if they don't have those, then on other connected machines or other machines that we know are they in the gym. We're doing it to personalize the places we recommend that you visit. We're thinking about even how do we recommend who you go with. We see that if you go with friends to work out, your retention rate is much better. We're using it to figure out how to price optimize. Um, you know, uh, so we're just applying it pretty much, you know, we're using it even in places where we're just developing our software, we're getting dramatically faster. Um and we don't see this slowing down. Like we're we believe we're on the exponential and it's just gonna keep getting better. The models are starting to, even for reasons that the frontier labs don't sometimes understand, demonstrate generalized knowledge, which is not what LLMs were designed for. So it's kind of a surprise. It's exciting, a little scary. Um, but you know, we think in the wherever you are, if you're AI maximalist doomsday, what your P0 is, mine's happens to be quite low, but some, you know, as high as 10%, still 90% chance that things use awesomer uh in the next decade or two. And uh it's gonna be really interesting to see who does the best job at harnessing these technologies, making them safe, making them reliable, making them super usable, uh, and then improving them very quickly.

I would say like add like two things to it. Obviously, like as a tech company, we are now spending a lot um on AI to improve our products, and 70% of the tokens we buy this year goes into RD. And we're we're spending this year like uh a two-digit million amount. But 30% also is going to be spent or is being spent on all our neck non-technical stuff. So really like everyone will be able to be improved and more effective and more productive. I said on our summer um event, like hey, we are still like in full recruiting mode mode, but like so don't worry, but embrace it because we like we will transform everyone into Iron Man with with AI. Um but um so the so like that that is uh really interesting, and then the other thing is um what I find fascinating is uh and then it speaks again to our scale. AI enables everyone to very quickly develop a little bit of software. So basically, like you could argue, like I mentioned earlier that I believe there's huge economies of scale. Um, and so you could argue, hey, with very little money now you can very quickly like vibe code some software. But and and for a while I thought this would be true, but now I've basically really reverted my view, and and I believe this will even more drive economies of scale. Because do you really want to vibe code some piece of software then will be attacked by like an absolute like uh professional hacker who has access to the latest AI models? They register um or like will all of a sudden like I like last year I was on an um an event with an another fitness operator, one of the largest operators in the world, and their entire team had to basically fly home because um somebody broke into their own software that they have developed themselves and stole all member data and now basically uh asked for some bitcoins um in exchange to not publish all the member data. Um and so like there is the way I look at it for us is we have to be really careful to think in what software category do we want to go, because whenever we go there, it's an insane commitment. Because now you will have these super hackers all equipped with the best possible AI just to harm you every day. And if you one time do an update that has some vulnerability, it will be found within 60 minutes, right? Like, think about it this way. And so therefore, I think it's crazy like how um AI actually again, like it will massively I mean the amount of software we now produce is like unlimited, like unbelievable. Like I've been living 16 years in this world where we always had so much more ideas than we could develop. Um I think that that will now over time like reverse, and we just have to much more decide where do we want to go because it's a huge commitment. And and so like that's just the world we live in where like software already, as it was, clearly like growth economies of scale, as you can see with the Magnificant 7. But I think AI will accelerate it. And that's why also you see all of those really big companies spending on AI like Mad Men because they know scale has the right to win.

Yeah, it's funny you said that about the proliferation of software. I just read a report to the app stores have just been flooded with new vibe-coded apps. Right. But users aren't using any more cops. Yeah. Uh and so, you know, I slop Canon type behavior. I mean, even myself, I've read 300,000 lines of code for home agent use, and I'm desperate for muse and instinct and those things good enough that I can stop using my homegrown stuff. Because it makes no sense for me to like have to do bug fixes and maintain stuff, and it's probably a massive security uh exposure for us as a company, which uh which uh my CTO has uh has been all over. He doesn't like me doing these things.

But um, I definitely like that he built his house uh a year before I did mine. So like he was able to give me already for the home IT the right uh advice is too much.

What's uh you know, I think a big thing for AI implementation, we we'll just talk about like health club operators, right, gym operators, is there's all these great AI initiatives that they want to get, but implementing it top down has been challenging, like getting the staff on board, right? Getting the training right. And then, you know, it's it's a lot more things like, hey, we're doing this to okay, here's what we're doing, and everyone's on board, we're all rolling the same way. So, what advice do you guys have for operators and executives in the industry? I'm like, hey, and this is how it actually roll these things out effectively. Like, do you do it quickly? Do you do it slowly? Do you have to like what does the training look like?

In Phillips organization and mine, we have some different, like, you know, do we have to try different approaches and methods to drive adoption? I think like what I have found to be the most effective, or our teams have found, is find the guy champions, let them go set an example for what is possible, do some amazing stuff. And kind of our one of our rallies is like be so good they can't ignore you, the Steve Martin. It's like that is what I've found most effective when you come back from a weekend and say, Hey, I wrote this app or this did this thing or implemented this project, or I shipped this project that was supposed to take six weeks and four days, uh, or I generated this report, or here's a new insight about um, you know, how consumers are using FlaskPass that Philip and his guys came up with without asking me, or whatever. It's like, wow, how are you doing that? And you start to show these iron men, these people who became iron iron men in the company, and we find that everyone else kind of is it's excited and somewhat like forced to go get to the bleeding edge.

We have like on my side, like uh two different approaches based on technical and non-technical stuff. And maybe one disclaimer first, like during our last employee survey, um, one of the criticisms was that my staff thought that we go too fast on AI, so take it with a grain of salt. But like what we do is you basically tell everyone if you don't if you think your job will not AI impact it, then just go somewhere else because we will not be an amazing place for you. We believe every single job will be AI impacted. Um now on the technical side, we basically assemble a group of engineers and product managers that want to really go AI native in development. And they're basically developing off Blueprint. And we're very clear with everyone right now. We have these two like ways of developing, but like at some point the old way will be a tanker that we will sink. Um, so at some point everyone will have to go to this side. Um, on the non-technical stuff, like um basically the way we phrased it to everyone is hey, like if you are um a team lead and you have high conviction your uh work will be embedded by AI, then you're definitely the right person for us on that matter. But um it's totally fine that you just don't know how you can actually do it. You just know there should be a way how I get my team much more productive. Um and for that reason we have um established like a a department led by our uh AI AI czar Raul, who basically is like leading like a small group of um AI engineers. And whenever like an apart department head doesn't really know how to implement AI into their everyday routines, they can then go to Raul and he will help them to implement. So basically, we need from you the right mindset, but it's totally fine if you're running accounting that you don't know much about AI, or if you're like running support or something, right? And for that reason, we give you the ability then to do something. Just if you don't have the personal commitment, then you're not the right person for us.

I think Yeah, we have an AI as art too. That's a good that is a good point. It's hard to kind of mandate it or encourage it if you're not providing support simultaneously or tokens, access to good models. Um, we also have incredible investors who have portfolio companies. So Vista, for example, has hundreds of examples of people who are doing it well and not so well, and taking those best practices and sharing them around. And then I think the last advice I would give an operator is uh is to lead from the front on this and go figure out how to use these tools themselves. And maybe not vibe coding 300,000 lines of code, but certainly like Muse and Instinct and Claude and Codex and um try-coding some stuff up, but just like get your your data at work to use it personally, and then data at work into a table that makes it legible to AI and start start hacking away at it. Because I find it when I was young in my tech career, I found nothing more demotivating than a leader hearing about a trend saying, you have to go get on this and having no idea what it actually does is true data play is. And so I find it really credibility-enhancing. We're in a design review, and Philip can say, well, my assistant has this UI paradigm, and I'm like, well, mine uh has this UI paradigm, and we can kind of pushy and nudge, and then the designers and team who are actually implementing are like, aren't just like shotgun armchair quarterbacking, like we're actually using the tools uh and getting inspiration from them.

So if people are listening and viewing, haven't figured this out, you guys have a pretty good friendship. Like seems you work really well. Um but as we discussed earlier, like as you guys implement how all these pieces fit together, how the initiatives follow behind the vision, all that, I'm sure there's gonna be times when you guys are not gonna agree. I'm sure there's been times you already have them agree, right? So how do you guys manage that? Like, how do you do it internally? Have you set guardrails for each other? Or do you are you do you have settings where you're like, okay, we can hash it out, you know, really, really get after it, and then we can still, you know, go out and do some fly fishing afterwards and everything's cool. Like, how how do you guys manage that relationship? Because it's critical, right, to the success of this whole thing. I'm sure you guys are naive to that, right? Like, how do you how do you guys work on that?

To be clear, he's not fully all in on fly fishing quite yet. He did catch a fish for fly fishing. Three. No, no, but you caught your first fish faster than anybody I've ever seen on a fly robot.

My first cast off is very responsible. And then it was a little bit drier the rest of the day, a little slower. But uh I asked him, like, oh my gosh, I'm gonna like catch 500 fish today. Where do we put all of them? Yeah.

Yeah, we um, but certainly like I think look, we're we're figuring out how to how to best do the intense debate. Well, keeping like we both just naturally are people who like to hash it out, like to intellectually spar. I came from Microsoft culture, who he's German, uh, and the entrepreneur, you know, we're entrepreneurs. Um, I think we do we even still kind of have our cadences are a little different with our management teams and stuff. And uh and so we we work through it, but it's pretty cool you get into a room with our management teams, and it's hard to tell you know who came from the e-jump side of playlist side and whatnot. Um honestly, I think our disagreements, I mean, I think a lot of it's just good strategy stuff. Okay, do we think this is a a more higher priority or that? Do we think this this customer makes more sense to everyone than that? Do we think we should spend money here or there? I think the biggest tension that we will have over the next five or ten years or for the rest of the partnership will be uh that we have we are swimming in opportunity and we we have a lot of resources, but not unlimited resources quite. And uh and so we have to be judicious about what those bets are. Uh and and like I'm just so passionate about all the I mean, we're both so interested in what we're doing, and it's like that's great to the extent that there's resourcing trade-offs between Philip Furries and mine, I see that being you know where the tension all exists. Luckily, both businesses were already kind of set up coming into the deal, investing to to go big and to win. So uh but I I think that would be the only also some philosophical differences about you know working from the office and working remote. I'm in the office, but uh we have more we're sort of structurally more flexible because class basket was distributed, mind body was distributed. You brought this together and got hyper distributed, but each of them is just different. And uh I think we work hard to say, okay, here's a different perspective. I can see the other perspective. We're in like this decision.

Yeah, I think the like I would say we are both quite emotionally connected to you know the status quo. And so like we discuss because we've built it, me, the e-jym side, he the like class was my body side. And so like we discussed these things, but in worst case, we just go back and like I have like the final say on my side and he has the final say on his side, and so like there there is no like real need for the conflict. Of course, the new stuff and resource allocations they will for sure be different opinions. Um but the nice thing also is in new stuff you're like much less emotionally connected to it, I can imagine. And and so far I've also seen us basically uh always prioritizing like we want to win, above like, hey, what what what do I really like? The only thing where basically this decision-making framework doesn't work is because like on the the one decision where Fritz should be living, because that's quite impactful to this family as well. And so far that was one we couldn't like just go back home each side and and stay as things are because I would like us to to live in the same city, but unfortunately I need to be East Coast because of the European time zone.

We got to kind of figure out quickly in the relationship before we merged, before we even had our first conversation we could have differences of opinion uh and that's okay. But actually sparring like is for us is not personal. It's like I mean, sometimes it might be sporty, um, but uh it's truth seeking. And I think we're both like Jeff Bezos, you know, we like a lot of his management philosophies and principles, and we have kind of disagree and commit like hey, there's time for great debate, and then there's time to get the in the boat and and kind of row. Um he was just calling for kind of hedging on some some of my bets. And it's like, hey, we need to I call it wrong and strong, like like as entrepreneurs, like you can't afford to hedge. You gotta just this is the way we would think the world's gonna go if you just put it on my, for example. We're sort of past the debate phase on is this gonna be enormously you know revolutionary to our businesses. So like we're all in on that until until new nude proves us wrong.

And it's amazing for a company, that's kind of one of my learnings that I wanted to bring here to the conversation, is when you just run as an entire company only one scenario, and not each department considers like multiple scenarios, it's incredible how fast you can run. To clarify.

Last question for you guys. And I always ask this. Um What do you guys need help with? Talking to the industry now, right? Um, what's the challenge you're facing? Do you want to hear from people after this interview? What was what are some of the things that you would like to hear from people about?

The world is changing rapidly. The consumer behaviors are changing rapidly, the tools we're using. For example, I would have never imagined that ever again Gmail inbox will not be my main user interface every day when I work on the desk. But now it's not anymore Gmail, now it's clawed. And so basically, like everything is changing. And you may not always like everything we do, and it's totally fine, but you do yourself and the industry a favor of being very open-minded about new things. Um because like everything is changing, consumer behavior is changing so rapidly, the world is changing, and so to be basically open-minded about change and also throw overboard like old experiences and reconsider it now based on this new world, um, will will make us as an industry uh stronger, and then also have, of course, the best technology vendors where we try to apply with um prospects and customers to be that like vendor of choice, but others want to be that as well. But I think overall, when you zoom out, like if people are like very much open-minded about how everything is changing, then we will be a stronger industry.

We really try to pride ourselves on listening to customers and we now my side of the business is is the problem has flipped. When I took over my mode, it was you know, we're kind of legacy and had some challenges in software which we modernized to the floor early and kind of finished the job on. And we went from having the problem of not shipping fast enough to now shipping faster than sort of customers can keep up with and how do we communicate that better. And so we're gonna make mistakes. I mean, ultimately I see these companies like ours not we have these economic engines to finance tons of experiments about how to add value to the industry. And coming from and you know, help get class pass off the ground and go through a number of turns and twists on that business model and how even now we're still listening to the industry when they don't like something about how it works. And we have to balance what the consumer is asking for and what the operator's asking for. We made a ton of changes in the last year on that and kind of have now proven that it works really well and are happy to do audits to prove it more. And um, and so uh I think keeping that dialogue going uh will really help us figure out how to continue to evolve uh our outer readers to better serve the industry and our products that are serving you know operators and help them run better. Um right now, for example, lots of different uh ways that we can implement and package productize AI. Uh and so you know, some of our customers I've talked to are reticent to even try it. Like it's just scary. It feels risky, and that's understandable. Okay. And we were working hard to make sure that those perceived or real risks are reduced. But I think hopefully it'll be an exciting moment to have a really well-funded innovative company with lots of different experiment canvases asking for dialogue and feedback and input and help shape where we take the company.

Over the next three years, what's gonna have a greater impact on our industry, GLP1s or AI?

GLP one, because it's just such a direct impact.

In three years it's GLP1.

I think in five to ten years it's AI. Great. Thank you so much. This has been an absolute pleasure. It's an honor to be here. Thank you for having me. Thanks for coming. Yeah, it's always great seeing you guys and uh awesome interview, very informative, and really appreciate the honesty and openness to be here. Ladies and gentlemen, Fitz Laman. Bobro Schlender. Thanks. Thanks, folks. Thanks.

Thanks, Matt. Good to see you.