Garrett Marshall - Confidence In Digital Fitness

Hey everybody, welcome to the Future of Fitness, a top-rated fitness industry podcast for over three years and running. I am your host, Eric Malzone, and I have the absolute pleasure of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. Please stop by futurefitness.co to subscribe and learn more. One of the most important and undeniable trends in our industry is the ever-growing consumer demand for personalization. That personalization is driven by health data. If you are a consumer-focused health and wellness company, you know that acquiring and making use of that health data is traditionally expensive, complicated, and full of friction for the consumer, but not anymore. Thanks to the good people at Sprint, a camera-enabled digital biomarker platform that connects any app to the human body. Formerly known as Elite HRV, the additive technology behind the Spread platform leverages a decade of research into physiology, behavior, and health insights, including collaboration with 117 universities, analysis of more than 4 billion biomarkers across 20 million users session. Using the smartphone as a sensor, Sprint's evidence-based machine learning algorithms deliver actionable biomarker insights such as body composition, HRV, stress, recovery, progress tracking, and more, all through an easy-to-integrate SDK and API. Health and wellness companies are integrating Sprint to better understand their users' holistic health, make their apps more personalized and adaptive, demonstrate measurable progress, and empower their members to understand their bodies and make well-informed decisions for their well-being. Go to Sprin.com and learn more. That is Spren.com. Hey friends, if you follow this show, you may have picked up on my passion for heart rate variability when it comes to recovery, performance, and longevity. I track it religiously, and I'm always looking for ways to improve. Over the past few months, I've been taking this new supplement called HRV Plus by mode and method. Over that time, I've experienced significant improvement in sleep quality, faster recovery, and an objective uptick in my average HRV. About two to three points on average. That's a big deal. HRV Plus is the world's first expert-curated, carefully sourced blend of all natural micronutrients to optimize recovery, increase performance, and boost heart rate variability. Formulated by some of the world's leading experts, HRV Plus combines their proprietary hemp extract with omega-3 oil, magnesium, and curcumin extract to target inflammation, improve sleep, and supercharge our endocannabinoid system. I encourage you to give it a shot. Go to modemethod.com and enter discount code Eric15. That's modemodemethod.com and enter code Eric15 for 15% off. Go get it. All right, we are live. Gary Marshall, welcome back to the future of fitness. Thanks for having me, Eric.

It's great to be with you.

It's always an extreme pleasure. And as I've stated numerous times, I do believe that you have the best lexicon in the fitness industry. I always learn some new words, uh, sharpen up my own uh use of the vocabulary. So it's it's a lot of fun, man. And and you have great insights, you do a lot of great work, and you you work very hard within the industry. So always stuff to glean from you. And that being said, I I think uh, you know, first and foremost, before we get into some of the topics that you and I isolated to discuss, uh, we have the Connected Health and Fitness Summit coming up. I think it's uh you know, February 8th and 9th, which will probably be a couple weeks out from this recording. And you uh you've been in and around that that event for a while. I would love to hear your feedback on what you like about it and why you keep coming back.

Yeah, it's uh the first time I went, I believe, was in 2019. And if I'm not mistaken, I could be wrong on that. Um I believe that was the first year that they held this event in the US. And the show continues uh to improve every year. Um I in fact, this year, I'm bringing some other people from our company out. They're gonna dedicate um time for the show, which I think says a lot because you know things have been very, very busy here. But it's uh there's great foresight uh on behalf of the team that organized that event. Um, because I would say among all the trade shows and different things going on in the industry, it is a very unique mix of um technology, uh you know, more brick and mortar operators, and then people who kind of hover in the middle. So you you you get a very nice, very nice group of people from the networking side of things, but also the content since it does cover those different audiences, you get some really interesting content as well. So looking forward to that show um next year for sure.

Right on. So if people want to get more information, they just go to connected health and fitness.com. Is that correct? Yep. Connected health and fitness.com. Uh if you want a discount code, uh it's on us. So it's FOF10. So if you want to register for it, it's 10% off and uh encourage you to go check it out. So um what let's do this, Garrett. And maybe for people who need an update, what what do you currently do within the fitness industry? I know you you know, obviously you work at exponential fitness. I know personally, because you and I chat often uh that you you handle the digital side, but what what's what's been keeping you busy over 2022? Let's start with that.

Man, it's uh hard to recount the entire year. I feel like it's hard to remember what I did last week. Um, but yeah, I mean, um I I've been with Exponential for almost four years now. I've been in the industry for 20. Um, and here I am the president of Exponential Uh Plus, which is our digital uh platform, and it was our first direct-to-consumer uh product. So um I I have a bad habit of involving myself in things that uh that uh in new initiatives, which tend to cause me um less sleep than I probably should have to optimize my my health. But yeah, so um when I joined Exponential, the business was purely um a franchise business. So we built a digital platform that was uh sold and service direct to consumer. And so there was a lot of strategic work in the beginning required um to uh architect not just building that product um but building the infrastructure necessary to even sell and service direct to consumer.

So yeah. And you've had some, you know, let us recap for 2022, because I know within that role that you've had at Expo, the uh you've had some interesting partnerships lined up. Some really, you know, I saw something with the cruise line, I saw something with Mikelo. I've kind of watched, you know, you from afar and what you're up to. What have been some of the highlights for for 2022 and in your role there?

Yeah, partnerships for sure. I mean, you know, our focus uh within 2022 has been largely on accessibility, so trying to reach the consumer where they are and with the right um product offering at the right time. So uh partnerships have played a big role in that. Um I would say that's probably one of the one of our three uh core initiatives. Um so I think you the crews you're referring to is Princess Cruise. So we uh formed a relation with Princess Cruise to be uh their exclusive um health and wellness partner on the sea. Um so uh we're in the you know the the throes in the depths of that um right now, no pun intended. Uh we we also uh formed a relationship with Lulu Lemon. Um on their uh product, which is now called Lululemon Studio, formerly Mir, which they acquired. Um uh several of our brands and my team of celebrity instructors are helping build content, a significant amount of content uh for that product offering. And Lulu, in fact, has rolled out a digital uh a digital subscription product at the Lulu level that that even reaches further than the than the physical device and the platform that they acquired via Mir. So uh that's a relationship we we love them a lot and are very invested in. Recently announced a relationship with Active Solutions. Uh so Active is a is and has been a you know leading designer and also supplier to uh for fitness to the vertical markets, and so uh if effectively in that relationship, we've combined our technology and digital content offering with uh their hardware solution, an incredible customer base to bring um branded fitness experiences into the vertical market for the first time ever. So, you know, we talk about that relationship just like having a Starbucks and a Target. Um, right now, if you look across all the vertical markets, obviously health awareness is at an all-time high. And so many of these corporate campuses, apartment buildings, hotels are out there trying to build the best coffee shop uh that they possibly can. Um and sometimes that can be challenging when it's not a core competency. And so we've partnered together to help bring those targets, if you will, a Starbucks, uh, a brand of fitness experience that has high consumer awareness. So that's one. Um we did a really cool event this year with Mikelov Ultra, uh, which is Anheiser Bush's um leading uh uh logger, I guess you would you would call it, um, where we did a large uh event called Movement Live that we live streamed. We provided again celebrity instructors to um host those workouts. I think there were roughly a thousand people in uh attendance and it was um live streamed nationwide. So really cool event. But you know, the partners are a big category for us because those drive millions of impressions to new consumers who ultimately uh may have never heard of our brands before and and go on to engage with us across the you know diversity of products that we offer. Um so as a result of that, you know, digital has been a big focus, expanding there and and really, really investing to have uh uh you know for mid formidable offering um with the biggest and the best in the digital industry. And then just you know, sticking to the fundamentals in our business, it has required a lot of time and energy this year. Um, you know, our pace just for building out our physical footprint. We're opening um two or more studios every business day of the year. So uh naturally there's a lot of attention and resource that gets gets put on that. So it's it's been a busy year. That's incredible.

Uh, you know, on the digital side, obviously you guys have a lot of brand power, right? A lot of resources to put behind you know this amazing platform. I've seen it, it's it's it's robust, it's looks great, it it works great. Who do you consider in that space to be some of your big biggest competition?

You know, I it's hard to uh and of course we we probably have a slightly biased view on this. It it's it's hard to find a direct competitor. And I think that's one of the things that's led to our success, is our product offering is differentiated in the sense that we have uh, you know, we have a um very competitive and I would say leading edge uh digital offering and uh a a very large physical footprint. So there are competitors in those isolated product categories, but it's hard to find anybody at our scale that that um does both.

Yeah. And you know, when you look at obviously the pandemic created a uh a surge in demand for digital products, right? Uh where do you kind of see that that force curve going? Like it spiked, is it held? Like what from your perspective, like where do you think digital sits on the grand spectrum of things now?

Yeah, I so I'll give you the short answer and then we can unpack if you want to get a little bit more detailed and specific on that. But I think largely the result of COVID, and this would apply to many industries, not just fitness, I think that the net net is that there is a much greater awareness to what's available to consumers, digitally speaking, than the awareness that existed before COVID. Um I think what's really interesting to kind of maybe get at the root of your question is that um providers who are pure digital or pure physical, there's been struggle in both product categories. Um even though that you know in consumer engagement and awareness with fitness is only increasing, and that's really indisputable uh if you look at the data. So yeah, I think more people are doing digital than ever before. But the one of the big misconceptions and I think issues that the our industry has to face is we continue to talk about those channels as separate customer experiences. And I think if you look at the data, and if you just think about it anecdotally and think of any other industry beyond fitness, uh it's the the consumers just don't behave that way. They are not exclusive customer experiences, but rather one. Um but we're very fragmented. So consumers are, you know, the consumer doesn't think of it that way. Um there's a lot of research that suggests that, you know, m uh in particular Gen Z, they don't even see, you know, traditional channel boundaries in different markets. And so um could it while while the industry is very fragmented, um, you know, you see consumers eating off of a lot of plates, right? And they just use different different solutions that are available to them to meet their own needs and convenience.

Yeah, interesting. And for the digital side, who who is consuming digital content for the most part? Is it Gen Z? Is it younger generations older? Like what is the research showing you?

I think there's waiting. Um, you know, generally speaking, I think that if um there's waiting as you go younger, but really, you know, again, I'll just step outside of uh fitness. You know, the adoption of digital it has really, you know, kind of transcended all age brackets. Um but I think for the younger generations, technology is is so intrinsic and inherent just to the to the way of life. Um, so you know to their way of life and what they've grown up with. But you know, for so I I live in this world and tend to kind of huff my own exhaust. I think everybody does digital, everybody should do digital, etc. Um, but I was even shocked last year. Forbes put out a statistic that caught my attention. And uh what Forbes said is that 72% of uh consumers use at least one digital fitness app. So you're talking in in the US about 250 million people. Um and if you compare that to the brick and mortar gym industry, there are you know 55 to 60 million, 55 to 65 million um members of all studios and gyms in the US. So, you know, that statistic I think really speaks to how large the addressable market is for digital fitness.

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Yeah, yeah, I do. Um I think it's that those things, those l these large macro trends take time, but I think ultimately um that will that will definitely be the case. One of the challenges for a lot of the mainstream um providers is they get so they're so embedded, they're so entrenched in their business model that despite what insights may suggest strategically, it's hard for them, it's hard for providers to get away from their core business model and how they make money. Uh, and so that's an influence that that that that's a reality that will slow down the speed at which the the opening of those ecosystems will occur. But I think I think definitely, and again, if you look to other industries, you can see examples of that in in other cat in other industries that are further ahead um in terms of technology adoption and fitness.

Yeah. Yeah. So I I'd like to take maybe a a larger step back here, Garrett, and kind of discuss uh exponential as a as a company total. I mean, you know, last unfortunately this year, you know, in 2022 is what I'm talking about. We we've seen some, you know, um uncomfortable headlines. A lot of companies, huge downsizing, right? Um, a lot of uh, I guess, management blunders, and you know, we we look back with hindsight now and everything's so clear, right? Uh, over such a confusing period of time. But I I've I've seen those lack of headlines for Exponential, which only can make me believe that um, you know, as a company, it's it's you guys have fared pretty well over the past few years. And if that's true, I'm curious, like why do you think that is? Why why is Exponential such a strong company and brand in this market, even over such tough times for the industry?

You know, so um it it would be hard to probably distill that down to only two or three things, but um I so I try to give you the you know a couple more general answers to make it concise. I uh so I think fundamentally, um I think fundamentally with consumers, the fact that we provide um effective workouts that are also entertaining, provide a sense of community, you know, that that's really the value that we um that we provide, and that's at the core of what we do, and I think all the core of our uh success. But you know, surrounding that, and this is maybe a little bit more abstract of an idea or a little bit more uh maybe ambiguous, I think um our strategic thesis and the uh resulting strategic plan uh have proven mostly accurate, you know. And I mentioned this earlier, we have a very we're very di we have a competitive advantage in the sense that we have a very diverse product offering. And you know, we were working on that. That's that's why I joined the company because Anthony had that vision back in 2018. Um so we were one of the fortunate organizations to be out in front of that before COVID happened. And granted, not we you know, we were far we've been far from perfect in that, and you know, things just never happen, um never happen as quickly and all always the way that you want. But you know, we uh we were fortunate that we were working down sort of this on omnichannel delivery uh well before COVID happened, and I think that's really how to you know really helped sort of provide um some tailwinds that have supported us over the last few years.

Yeah, can you unpack that a little bit? You mentioned like a strategic thesis, like what specifically is that? I mean, uh omnichannel, I'm sure, is is a huge part of that, but you know, give us a little bit more detail and I'm very curious about it.

Yeah. Um, you know, uh I I think like so a couple of things. So, you know, our our goal is to be the most accessible boutique um fitness provider uh on the planet, right? And so everything that we do has been focused on accessibility and affordability. Um you know, it if you go if you date back five to ten years, it's been pretty clear that um there's um you know proof of concept and consumer the consumer demand for boutique fitness. So when we uh you know at the beginning, Anthony has said, you know, if you think back to boutique fitness even five years ago, I largely like our our the brands that we own, we have 10 in our portfolio now have had a big impact on this, uh, just in their physical footprint, but boutique was constrained in a few different ways. Um very coastal business because of the fact that in, you know, in order to drive the price points that are required to deliver boutique, you know, um most providers were constrained geographically to coastal areas with large DMAs, large DSAs, so urban areas, less suburban, um, and certainly not much beyond that. Uh so that that's been a constraint for um our product category. Um it there as a result of that, there's also been um socioeconomic and financial constraints historically on boutique fitness. So um, you know, boutique was as a result, if you're in Soho or you're you know you have a studio in Manhattan as a result of the real estate and all the things that go into that business model, you have to charge more. Um so it's historically been a very expensive um product offering. Uh and also probably the biggest one is the nature of boutique fitness itself, is it's a class-based offering which is delivered on a schedule. So for many consumers, uh, even if they if the first two boxes aren't constraints for that individual consumer, they live close, they can afford it, um, it may not work for their schedule. So convenience um has also been a constraint on boutique fitness historically. So um collectively, we've focused on trying to solve those challenges so that more consumers can access boutique, right? And we've uh we do that in a couple of ways. Um, you know, we're expanding the physical footprint significantly. And, you know, we built a model that allows um our great franchise partners to bring those studios into markets who that previously haven't had the op, you know, haven't been able to support a boutique fittest offering. Uh, we're doing that through digital, right? Because digital allows us to deliver uh the boutique experience the best we can. Of course, it doesn't replace the ambience and the the value that we can provide in the live studio setting, but we can reach much wider than our physical footprint with digital and consumers who have never experienced our brands before and at a lower price. So digital gives us the opportunity to kind of um address those three constraints for boutique fitness. Um, you know, I I'll probably stop there. I mean that that's it in a nutshell.

Yeah, that's that's a really good summary. The uh are you specifically in the brick and mortar side? Is Expo going after like B and C markets typically now? I mean, I know it's franchise driven, you know, so it's where the owners want to go. But what is is there any specific focus or strategy to get into different markets?

You know, um, there is. I I'm not as involved on that side of the business, but um I I I think more so it's it's an inside out look at the model and making sure that the that uh for if a franchise partner has an interest in a specific market, and we assist we assist with that as well, right? So if you come in as a franchise partner, you don't have to have a particular neighborhood or location pinned down. Oftentimes they do, uh, but we we have a team that assists with that. Um but it's more of an inside out um look, I think, making sure that that particular market um has the fundamentals that support you know um uh a thriving franchise location.

Yeah. Yeah, interesting. So I I'm I'm very excited, Kenny. 20 years you've been in this industry, and you know, you've seen some things, right? You've seen some trends come and go. And you know, over the last three years, uh we've seen, you know, some words being thrown out, of course, a lot, you know, connected, hybrid, omnichannel, uh, a lot of things that, you know, have become now just ubiquitous in the industry, it's just part of our language. Uh, when you look at trends going into 2023 and beyond, you know, I I know you're always looking at this stuff. What what are you seeing? What are you focusing on? What are you, you know, placing your bets on? What's what's interesting to you within the industry right now?

Um, I think it's it's really kind of a continuation of what we've discussed so far. I I think that um there's a lot of fragmentation in our industry um that that and that fragmentation creates an area of opportunity for those out there that can make kind of the omnichannel customer experience more more seamless. Um I know for us, and this kind of goes back to what we were just talking about in our kind of strategic, strategic model or strategic thesis, you know, we talk to our franchise partners and our business internally amongst our executive team all the time about operating as a service provider, not as a location-based business, um, which kind of changes the mindset of how we provide service and how we speak to prospects all the way to members in our messaging. And, you know, that's a result of, you know, one of the things that I'm looking at and concerned with is I think that in the brick and mortar fitness industry, which for the last 20 to 30 years has been the most powerful influence on consumers' health and wellness, uh, what I see happening right now is that the brick and mortar fitness industry is losing that first party relationship, or some people might call it like a last mile relationship with the consumer to many digital disruptors. And that that doesn't mean that people are going, that consumers are going to stop going to brick and mortar gyms and studios, although some some certainly will. Um what it ultimately amounts to, and that that's because like, you know, people, some people just don't have $200,000 of plateloaded equipment or high-end cardio, you know, can afford to put that in their house, or they don't have the space because they live in a 700-foot apartment. But the reality is, is like that uh puts gyms uh in a position where they lose that influence and lose that authority um because now you have an app in your pocket, right, that's highly personalized, that knows a lot about you because we all have a mini computer on our wrist or in our pocket. And what that ultimately translates to is a very indefensible and low margin uh business model for the brick and mortar industry.

Yeah, and the God, who was it? I think it was Simon from Paris Sports. He had a really good analogy about the expectations of the younger consumers, too. Is you know, I think he, I think it was the you know the red box where you can rent DVDs for the night. You remember those machines? I don't know if they're around anymore. But uh he said he brought his daughter to one and and she started touching the screen and trying to swipe and do things and it didn't work that way. It was like an old-fashioned push button, right? And his point was like the expectations consumers are very different. It's like you have to have a you know certain level of technological advancement for them to even consider using you, or they may just like not be familiar with the platform anymore and and just walk away from it, right? And I'm you know, that's that's something definitely to keep in mind because you know, a lot of what we've been used to is, you know, I'm 46 now, and you know, I've been going to gyms my whole life and probably been doing mostly the same routines my entire time. So I'm used to walking into a gym and knowing where to go, but you know, a lot of the expectations of of consumers now is like, well, why isn't anything guiding me here, right? Why isn't this smart? You know, a lot of a lot of that. Is that some of the things that you're kind of playing into your strategies as well?

Totally. Yeah, yeah. And, you know, smart and simple too, right? Because they it's like they say, simple is expensive. And so I I think the consumers' expectations are even beyond that. It has to be smart, but it should also be intuitive and it should also be simple. You shouldn't, you know, that's uh been a challenge for a lot of the industry who's gone inside out to try to innovate and to try to create technology. It's just complicated, too many clicks, too many taps, right? It and it misses on really the drivers of value from a consumer's um point of view. I I think you know, where the the conventional brick and mortar industries really struggle today is in search and discovery, because you talk about the red box, it's really interesting. That's that's how Netflix started as well, right? And they quickly pivoted from that and were uh one of the first to be completely digital. But that's that's assuming that you walk in a physical location to begin with, right? Um and right now the the the convey yeah, the the brick and mortar industry, I think where the where the a lot of the pain today and a lot of the threat is really in that search and discovery process because I mean think for a second, if 250 million people have already engaged with digital fitness and there's research out there to show that there's even you know a there's broader engagement with consumers in in general uh doing fitness, the major the vast majority of those people are not members of Gyms and Studios. Um, you know, there's another interesting um uh research survey that's done on a weekly basis by um I'm at a loss for which which company does this. I think it's anyways, it'll come to me. But they do they conduct, it's one of the large um consulting and and consumer research uh firms in the US. They they issue a survey, and I might have brought this up on your podcast last time, but it uh if I didn't, I'll repeat it. They do a survey every week to 10,000 Americans, and it's a one-question survey basically. It says in the last seven days, how many times have you worked out? Anyone who responds three or more for 30 minutes, they consider a frequent exerciser, and they use that kind of as a proxy to determine what percentage of Americans are frequent exercisers. And so that that number has continued to increase. Uh, I think it's right now, probably at about around 60% of the US are frequent exercisers. But, you know, it would stand a reason that the percentage of Americans are actually doing some fitness, maybe twice a week, is even greater than that. So it's it's pretty clear that the number of people who are engaged in fitness that don't belong to gyms and studios is probably four or five times the size of those that are. Um so there's this massive opportunity. They're finding solutions and they're finding prescriptions for this fitness. So the point of embarkment is really in that search and discovery process online. And if you go online and you do a search and you put yourself in the shoes of a consumer for a specific fitness outcome, you want to lose weight as an example. And it's really the digital disruptors who are the experts in that lead nurturing, um, you know, great web presence, they understand um marketing automation, they understand lead funnels. Uh, and that that experience, if you just go through it yourself, very, very seamless. But if you compare that to our industry, there's you know, there's a black and white difference in the level of uh quality and and value that's provided um in the search and discovery process on online. So I think we're at a place where uh as an industry we've got to address that that part first before we even have the have to consider. I mean, obviously you don't it's not do one and then the other as if they're sequential, you do things in parallel, but um that search and discovery process is a real challenge, right, for for our industry at the moment.

Yeah, interesting. You know, when you look at your digital portfolio too, I mean, is there any uh particular brands or types of workouts that you're finding that consumers are really latching on to in the digital space versus maybe not so much, you know, uh for other other types of workouts?

Uh our data there is. I mean, there are trends definitely with among um our base, but it also is a by it's skewed in our case um because it's a byproduct of the oftentimes the consumer awareness that exists for the brands that we own. So that our bigger brands, we see most of the engagement. If you look at um engagement and streams, they tend to follow the general consumer awareness of the brands that we own. So, you know, Club Pilates is an example, Purebar, these are brands that are highly dominant in their own product categories. I think like Club Pilates is an example, which is you know 700 to 800 physical locations, they're three or four times the second largest Pilates uh provider in the US. So they're they're a very dominant brand in terms of their market share. Those those um realities uh tend to skew. Like we see parallels, proportionate parallels in the engagement on our platform um in relationship to that.

Yeah, you know, and and when you look at the placement of digital, I had uh Lauren uh Fundus on on the show earlier in 2022, and obviously she's a big proponent of digital as well with with what they offer. And you know, I I think what has come out of our conversation so far is that you know it's very much it's not either or when it comes to digital, it's it's digital and in-person and you know, multiple to or and outdoor activities and recreational leagues, and that's kind of where the consumer's at now. How do you with your portfolio? And this is where you guys also have some unique advantages, how is the digital supporting the brick and mortar? Like, is it offering you know lead generation? Is it preparing people to be more comfortable once they get into an in-person experience? Like, how are you supporting that side of the house?

Um, it is lead generation. Um, lead generation, I mean that it the digital platform, and there are other products which we're offering now, uh direct-to-consumer, like our XPass, which is uh primarily a digital user experience that uh it's one membership that you can buy that gives you access to all of our brands and all of our studios, but the marketing service, everything is done digitally through an app. Um, though those those direct-to-consumer products uh provide a significant um number of impressions, and we we can see from that data um that the majority of those impressions are net new consumers who have never um engaged with our brands before. And then, of course, we also track and we work proactively to drive those people into physical locations. This is where this is a great question because I I think um this is really where the rubber meets the road. And it's a lot more difficult, it's a lot easier said than done. And so for the last few years, we've really had to focus on like, okay, we have all these product offerings, right? We have uh we have the 10 brands within those brands. They have separate pricing schemes and product offerings across the country, or in some cases across the world, depending on the scale of the brand. We have um our direct-to-consumer live and on-demand digital, which is happening at the uh here uh at the corporate office with my team, uh, which is offered globally. Um some of the brands historically have done uh local live streaming at the studio level. We sell four packs, eight packs, and limited memberships, et cetera. So we have this you know um matrix of of product offerings. And the question is like we, you know, earlier I had said, we we have tried, we have we talked about our business, and our our focus has been to shift from just being a location provider to more of a service provider mentality where the consumer is at the center. And then we think of all of these products as sort of a ring that surrounds the consumer, but the consumer has the power, right? And with today's hyper competitive environment, it's easy for and obviously the internet has influenced this and technological innovation. It's easy for consumers to move fluidly between all these product experiences to you know to move uh in and out of different providers as well, right? So, you know, gone are the days, you'd you'd remember Eric when like a one-year, two-year membership was the norm in the studio and gym space. That's that's all gone away. We have so the rise of social media. So there are all these touch points that consumers can move out of to experience your product or service very, very fluidly. Um, and so figuring out how those can work cohesively and especially at the scale of our business, that's really where the concept becomes like that's really where the work is. That's that's where the work is. And so we have a graphic that we use internally and it looks like an upside down, it looks like a funnel. So like an upside-down triangle. And if you can picture this upside-down triangle triangle, we layer in our product offerings or our product offering categories across that funnel. Down at the bottom, we that is the student in in studio in-person experience, and we know that that's the absolute best experience that we can provide to a consumer because we control all the ambient, right? We control the sensory uh experience there. So you have a great uh instructor, best in class, a live instructor there in the flesh. You're surrounded by a community that can push you, you know, to drive for results and inspire you. We control the music, what you see, what you smell, what you hear, all those things, right? And so as a byproduct of that value, we can also monetize it more, right? So we charge more for that experience than we would for digital. So collectively as a company, our goal is to drive consumers down the funnel into that live experience. That's kind of the holy, holy grail, both financially, but also in terms of the value we provide the consumer. As you go further to the top of the funnel, which is wider, that's where digital uh plays a role. We can we earlier we had talked about the historical constraints on the boutique industry. Digital addresses those things. So we can, it doesn't matter where you live, right? We have a lot of consumers on the digital platform who maybe were a fan of one of our brands, but that don't live close to a location anymore. Obviously, that that's changing pretty significantly right now. 63% of America lives within 10 miles of one of our uh physical locations. Uh so that that's dwindling, but um as I said, time is a major constraint. So digital, we see digital as living at the top of that funnel where we can reach further, we can deliver an experience. Again, not a replacement or at quite as valuable as what you'd get in a physical location, but we can do it at a much lower cost and we can provide it to you anytime of the day, anywhere. Um, and then there are some product categories that we offer that layer into kind of the middle of the funnel, but that's a great visual because it shows how those products all work together uh cohesively to drive uh customer value, but also to drive financial value for exponential.

Yeah, it makes a ton of sense. I mean, as the last three years have unfolded, that strategy just seems, you know, now as we sit here and talk about it, it's like obvious, right? But it wasn't that obvious a couple of years ago.

And it's it's not obvious. And I think that's that that's the blessing and the curse is that there are some fundamentals there, but how those uh offerings stack up is also unique to each and each individual business. Um, and I think that we're as an industry, we're feeling some of the pain coming out of COVID uh from the fact that the what that a playbook that might work for us isn't going to always work for every individual business as you need to business. There are so many places, as you know, because this is the focus of your podcast and these these trends and insights, there's so many ways that uh we can invest in new technology that if you don't um as an operator take a step back and figure out the you know, address the underlying drivers of value, it's really easy to overinvest or misinvest in technology or innovation that doesn't actually uh create value. And in some cases, it can destroy value or you know, uh, in a lot of uh lot of examples, not not really uh provide a boost in value that merits that investment. And uh so that again, in terms of rubber hitting the road, I think that's where um operators who are looking to innovate and looking to digitize have to do the uh legwork in the beginning to make sure that the uh they're making investments and things that actually provide that increase in value, or you can be stuck in a situation where you overinvest. We're seeing that right now. I think with a lot of um live and on-demand streaming, operators who had to do it as a means to an end when COVID happened, and you know, the the um leading indicators, or not not the leading indicators, but the lagging indicators were really strong because it was a means to an end during COVID, and that was the only option people have. But now that things have reopened, um, they're recognizing the challenge the challenges in actually uh building, executing, and sustaining that business model because it's completely different from uh from on-site fitness. So and the same is true in digital. I mean, obviously, everybody's seen the headlines around uh Peloton and some of the others um where you know the things have changed quite significantly since the pandemic.

Yeah, they have. They really have. And you know, one of the things that uh I've talked about this year on this podcast too is consolidation going into 2023 and beyond how um, you know, a lot of these companies, I mean, Peloton is just the example that everyone talks about, but you know, now uh with valuations going down and a lot of investor dollars that came in really kind of in an uneducated way. I'll just say that. Um, you know, very uh it was capital is thrown around loosely in many parts of our industry over the last few years. You know, when when you look into the next one or two years, do you do you see a lot of consolidation across the market? What would you what would you be betting on right now?

Yeah, I I think so. I think there's I think there'll be forced consolidation, um, unfortunately, just because certain um, you know, there'll be a lot of bodies floating down the the river. Um hopefully in in other cases, you know, there's less consolidation and more pivoting. Uh Peloton's a great example of that where you know they were uh that business has been so um uh concentrated on the hardware side of their business and and we're you know starting to see speculation of that, of that changing in the in the in the near future. Um so the optimistic view would be that you know uh that there'll be learnings coming out of the pandemic and and many companies will have the opportunity or the foresight to reorient their business model to better align with um consumer needs and consumer behavior. But I absolutely I think there'll be um I think there'll be a fair amount of call can Those that can't do that or don't have the time to do that, which will result in that consolidation that you mentioned.

Yeah. And we we kind of uh talked a little bit about technology, but I guess you gear it as a consumer of fitness, right? Um I know you are because you and I worked out uh in the morning once in Miami, right before uh that's right.

You were working out a lot harder than me too, and and your workout was was also longer. So I'll give you credit for that.

Yeah, well you're much you're probably much busier than me. Um what uh what technology excites you right now? You know, when you look across the industry at you know, overall, and we can open it up to health technologies and not just you know technically fitness technologies, but what what gets you excited?

Um I uh and we've had some side conversation about this, so this won't come in come as a surprise to you. I I'm very interested in the um prescription and personalization of fitness. I think that conventional personal training, as we would call it in the industry, is probably the the service category in um all of fitness that's the most ripe for disruption. Um the the model of trading your time for money as a fitness professional is just as many who have tried training as a career and then moved on, know it's it's not sustainable and it certainly doesn't align with uh with the way you know can consumers want to um digest or consume, that's the word I was looking for, cons consume that service. So um I'm watching that. Um there, you know, that's not a new idea. Many people have tried that, but I think that there's been a lot of um innovation that's been uh cloaked by the can like the conventional ways that we think about uh personal training. So there's a lot of matchmaking services out there and stuff, which use technology, they add they layer on technology to a to what's already a very linear business, which is trading your time for money. And and I I I failed to see those really um see any of those that have scaled well. Um but I'm pretty interested in in the training and prescription, and there's so much more data available today that um you there are ways, you know. I think I know that there will be ways that allow that to happen at scale. And as I touched on earlier, I think the the those that scale will figure out the simplicity. The average consumer is not looking for more data, just like we've seen in other industries with data. It's not about big data anymore, it's really about small data. If you can't, there's so much data already today and Internet of Things and all this stuff. It's like if you can't use it in an intuitive or practical way to provide value, then the data doesn't matter. There's it's almost the excess of data is almost a curse as much as it is a blessing. Um, so I think those that scale in that space are going from the user experience point of view, will make this so simple that you don't almost don't even have to think about it as a consumer. And you'll be given the prescription to get you to whatever optim, you know, in the most optimal way for whatever your desired healthcome, the health outcome is without having to spend a lot of time and energy to uh um to uh let's say architect that.

Yeah, I I I'm a big fan of of all that. I in fact, I'll I'll just make a a bold statement. I I think 2023 and maybe 24 as well, depending on how fast they move. It's gonna be the the year of the now what, which would I consider the now what is what you're talking about here is like consumers get all this information and data coming through, and they're like, okay, now what? Like what does that mean? Like, what do I actually do with it? How does it value how and you know, just for example, Gary, right now I'm sitting testing out some stuff. I got a Garmin, I have a Whoop 4.0, I'm all still, you know, still working with the Morpheus platform and that as they continue to evolve. And I'm I'm getting all these data inputs, right? And still to this day, there's very little about like, okay, well, now that I have all this data, I know about my sleep, I know about my resting heart rate and my stress levels, and I'm starting to get all these, you know, things. But what? Well, so what? Like what happens? What what do I do with it? And that's I think where the uh you know, where the the golden opportunity is for the industry from a technology standpoint is really getting clear on it. I don't know if that means it goes through a human. It's like, does all that data get fed through a coach who's qualified and has the you know emotional capacity to work with someone and understand them as a human being? Or are we just gonna be feeding, you know, um, you know, very processed suggestions the consumer through technology. I'm not really sure, but I'm curious to get your thoughts on that. Like, where do you think that now what issue is gonna go?

Yeah, yeah. No, I uh I uh not to be redundant, I I think um you're exactly right. Like that needs to like that prescription has to be distilled down to the most simple and convenient uh format possible. And that's the white light moment. So um so yeah, I think I think with consumers, like your average consumer, um the an overwhelming amount of data isn't that attractive to your average consumer. There are those of us, I'm like you, I've I've got um the Apple Watch on right now that geek out on the data um and ha have an interest in that. But I think for the average consumer, it's really not. It's really like, okay, HRV, sleep scores, these sort of things. What does that mean? What should I do? Right. And in order to do that, you need to know, you know, what that consumer's desired outcome or goal is, and then provide that prescription in the most simple format possible, right? Because it's all about, at the end of the day, it's all about convenience. I think the biggest threat to the fitness industry is not all of our competitors. I think it's just the consumer's time. And we're so you know, there's so many demands in our time today. How do I the job is to help people get healthy, right? Help help people be move more and be more healthy. How do you how do we provide them with the right prescription in the most convenient and easy way possible?

Yeah, very eloquently said. You just said something I stumbled on uh way, way way more smoothly. Um so I I believe you are uh you are speaking, right, at the Connected Health and Fitness Summit in February, is that right? I saw your name as you being on stage there. Uh give us give us something to look forward to. What uh what are you gonna be talking about, or do you know yet?

I I do, yeah. We have a general framework um in mind, and it it it's probably a deeper elaboration of many of the things that we've talked about today. Um I, you know, if uh I hope that we can get into greater detail about omni-channel, right? A lot of these words are um used so ambiguously and generically that um I think oftentimes it overshadows like some of the smaller, more nuanced um decision making and critical thinking, strategic thinking that has to go into uh really being an omnichannel uh provider. So we're gonna hopefully unpack some of that. Uh this year I'm bringing um Sean Grove, who's the president of uh our one of our second newest brand, Rumble. Um Sean has worked with Anthony, our CEO, for many years, and he's been on uh he was formerly the president of Club Pilates, so he's experienced at you know at a very large, well-scaled out multinational um multinational operator. And with Rumble, when we bought that brand, I they had I think 13 locations open, and that was uh last April. Things have changed dramatically in in uh since that time. But he's had perspective on both the small and the large side, the large operator side. So he'll be able to speak to a lot of that. And then also um uh Lou, who's the president of our newest brand, which is BFT, uh, will also uh be part of the conversation conversation. Uh he'll have an interesting perspective in the sense that uh BFT is a brand we bought um roughly a year ago, um, and it's Australian-based, so they have a strong presence in Asia Pacific, over 200 locations there. Um, and we're just now bringing it to the US and into a market that uh is you know well saturated and very competitive. So I I I brought both of them intentionally because I think that they bring um, you know, and they'll bring interesting perspectives in addition to mine on uh what omnichannel actually means and be able to answer questions, you know, uh for the audience who may be in one of those categories, either in a large-scale model or in a new and uh uh new and emerging uh business.

So awesome. Awesome. Well I'm I'm so bummed I can be missing it. I uh I'm gonna be Oh, you are? Yeah, I'm gonna be in Brazil for a family baptism. So that's kind of a big deal down there. So fortunately I couldn't make it work. But you know, hopefully I'll be getting a tan, which I desperately need as I was telling you the weather here is uh Montana is pretty pretty brutal right now. Um last question for you, Garrett. Uh, you know, in in the spirit of always you know collaboration and uh across the industry, what what do you need right now? What's uh what's important to you if people want to reach out and chat with you, what would you like to hear about?

Yeah, um, you know, many of many of the subjects we've talked about today. Um uh I always you know enjoy uh connecting with peers in the industry who are focused on um trying to solve the same issues. Um so omni-channel digitization, um, those are the areas that I'm focused on. And um, you know, uh also uh consumer experience. Um so you can find me on LinkedIn. That's probably the best um place to reach out, or uh, Garrettmarshall.com.

Right on. Garrett, always a pleasure, my friend. Uh I always learn a lot, always enjoy our conversations. And uh I'm sorry, once again, I'm gonna be missing you speak uh on the big stage in in February in Los Angeles at the Connected Health and Fitness. But uh always great to catch up, and I'm sure I'll be having you on the podcast again soon.

I hope so. Thank you uh for the opportunity, Eric. Yeah, ladies and gentlemen, Garrett Marshall. Thank you.

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