Garrett Marshall - Xponential & Meta Partner for Virtual REALity

Hey everyone, welcome to the Future of Fitness, a top-rated fitness industry podcast for over four years and running. I'm your host, Eric Malzone, and I have the absolute pleasure of talking to entrepreneurs, executives, thought leaders, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. Please stop by futurofitness.co to subscribe and get our interviews with summaries delivered straight to your inbox. Thanks for listening and on to the show. Hey friends, I couldn't be more proud and excited to announce that today's episode is powered by Workout, the ultimate tool for modern fitness professionals just like you. There is one thing that fires me up. It's elevating the personal training and coaching industry. For that, the Workout app is an absolute game changer. No more promoting top brands without compensation or dealing with confusing social media links. In just a few clicks, Workout's user-friendly app lets top trainers and coaches curate and share the world's most sought-after fitness brands like HyperIce, Vega, and more. Product lines covering everything from fitness equipment to supplements and apparel. Save time and boost your earnings with generous commissions and bonuses every time your client purchases the product you already endorse. Do not wait. Maximize your income and streamline your business with store by workout. Discover more at workout.com. That's w-r-k-o-ut.com. Just one-o. W-R-K-O-U-T. Go get it. All right, we are live. Garrett Marshall. Welcome back to the future of fitness, my friend.

Thank you. Thank you for having me.

Always a pleasure. Uh the best lexicon in fitness, as I always say. Um I'm gonna I really want to make that stick, Garrett. I don't know, maybe you can like change your Instagram handle to like fitness lexicon or something like that for me. I think it's good. I think it's really good branding for you personally.

It is. It's well, it's the bet, it's probably the best compliment I've had all year, and it is great branding. But can you trademark something like that?

I would imagine so. I mean you can trademark. I don't know. I tried trademarking this podcast and we're getting off topic already, but um it's uh it turns out future fitness is a tough one. And uh so I don't know. Fitness lexicon seems a little bit more specific, but uh yeah, anyway, I I I digress, man. I and just a keynote, uh everybody, I just learned what unit level economics means um from Garrett about five minutes ago. So uh you're probably gonna learn a lot more than that on this podcast today. Um yeah, so let's let's get into it, Garrett. There's always plenty, and I don't want to waste any time when I get you uh on the show. I mean, we're gonna talk about digital, um what that means for the fitness industry, the greater landscape, the progressions, what you see coming down the pipe. Um what's really exciting too is you know, uh by the time this airs, there'll be a big announcement about um what you're doing with Meta, uh also known as Facebook, Instagram, um, in the VR space, which that's a big deal. So we're gonna circle back to that. But maybe um just to kick us off, Garrett, like, you know, give us a little update, like what's been going on in the last like year or so of your life and your role at Exponential as had a digital, and uh, you know, where what are your insights on on the current scape landscape of digital fitness?

Yeah, of course. Um there has been a lot going on. In fact, we just had our first um annual investor day last week on Thursday, so that was cool. We went back out to the New York Stock Exchange, hosted some demo classes right there. Uh Anthony rang the closing bell on the Wednesday night before, and then we got to spend a half day with uh a room full of analysts just getting, you know, to go a level deeper in about our business and the future of our business, more so than what is um uh standard or what is covered typically in like a 10 Q or an earnings call. So lots of that kind of stuff. And you know, in terms of digital, I would say, yeah, it's a good question. Um, you know, like any business, it's a my life as I uh reflect on it over the last year has probably been a balance between trying to innovate what we're doing digitally and then just running the play for all, you know, we launched our uh D2C streaming platform called Exponential Plus last May. So that thing's that's been very successful for us. It's been in the wild for about a year and a half now. So there's been plenty of bandwidth uh devoted to just getting that off the ground and and um operating it.

So um awesome, man. I think any public company in the fitness brick and mortar space is just becoming under a lot of scrutiny. I mean, I I guess just in the fitness space in general, because I'll throw a Peloton in there and a couple other ones, right? It's just been an interesting year. And um, you know, your specialty specific to like digital and innovation and technology, um, as you're I and I were discussing, like the industry seems to have this, you know, dichotomy of like it's gotta be good or it's gotta be bad, right? It's either like digital or in real life. You can't have a combination, they can't complement each other. That's where a lot of people in the industry seem to come from. So what say you, Garrett? Like when you look at the benefits of digital and where we are maybe in the growth curve of of that uh technology, like where do you think we are and and what what what makes you optimistic?

Well, I I guess maybe to start with the end of that question, what makes me optimistic is I think we can look to most other retail industries to get a sense of how um digital and in real life come together. Um I think it's it fairly immature to try to uh cohort customers on in real life versus uh digital, because that's not the way consumers behave or make decisions. And we don't have to waste time on it here, but if you think through yourself as a consumer in any other industry that you that you uh transact, you make, you know, make make purchases, you'll recognize pretty quickly that um decisions aren't made that way. So I think you know, we're going through a phase of maturation um with digital fitness right now. You know, look, I to really be uh to the point, like so digital fitness, it's growing. I think it's growing um and it's a lot more pervasive than a lot of the legacy industry is aware. If you look at U.S. online fitness, which by the way excludes uh a lot of ancillary um categories like wearables and apparel and supplementation and others that actually have a connection to what you know that broad term of digital fitness. But if you exclude that, U.S. online fitness has a forecasted Kagger that's 4x the size of U.S. fitness health clubs. And so if that actually plays out over the next few years, you're gonna see an inflection point in the next probably two to three years where U.S. online fitness, and that is really U.S. online fitness, that is really the delivery of streaming workouts and and let's say coaching and training plans, just that, will actually uh eclipse the market revenue for US fitness clubs and studios. Um that's one piece not to ignore. Uh underneath that, I think, uh and as probably as a byproduct of that, the landscape in digital fitness has become a lot more competitive. It's a lot harder to do. And one of the reasons for that, you you brought up uh unit level economics, we were chit-chatting before the podcast, um, is the is the unit level economics. So if you you know you can look to some of the more mainstream players out there, you mentioned Peloton, they disclose a lot of data. I've never seen them actually disclose their um customer acquisition cost or CAC for their digital-only customer. But as you probably know, because you're very much a steward of the industry and have your finger on the pulse on everything, um, Barry McCarthy, their CEO, you know, that that is what they proclaim as the future of their business as they try to kind of untether themselves from the the hardware side of the business. But if you do back-of-the-envelope math with the data that is available, I would estimate that their CAC on a digital-only subscriber is probably, in the very, very best case, $150. Okay. So there is a lot of publicly available data for just uh consumer SFOD in general, which would include things like Hulu and Netflix and you know, every streaming video on-demand service. So uh pretty much um consistently over the last two or three years, monthly churn for um broad consumer SFOD ranges between 7.5% and 10% monthly. And most fit most streaming fitness businesses um parallel that pretty pretty closely. So if you look at somebody like Peloton, who's selling a $12.99 subscription, you do the math on that really quickly in the lifespan of those subscriptions, you what you get is a very, very thin return on ad spend. And such a thin return on ad spends, we're talking like less than 20%, less than 15% probably, you'd have to be doing business at an extremely high gross profit margin or net operating margin to even make money off of that. So if you take if you were to pull a report today of the um mainstream players in the um digital fitness space, and I'm talking about direct-to-consumer apps, really, excuse me, what you'll notice is that most of the ones who have sustained and continue to grow, the streaming part of their business is just one revenue line of a mix of different revenue channels in their business. So they they can do a couple of things. One is they can spread the customer acquisition cost across other areas of the business, and they can also use that streaming as a loss leader to promote other revenue lines, whether that be to sell hardware, um, as is the obvious case with connected fitness or wearable devices, Internet of Things, nutrition. Um, you know, Gymshark does this to a certain extent for apparel. And then there are other examples that use streaming to um supplement or augment completely different business models. You know, like fit-on's acquisition as an example of PureFit is really a great example, and I think highly uh great, great, very um uh strategic, strategic move. So, you know, um again, it's become very, very, uh, very much more competitive. But I think I think if you were to come back to the surface, I do think that um D2C digital fitness is still winning the uh battle for that first party relationship with a consumer. Um and that's pretty well evidenced in the data. We know that over 70% of consumers use at least one digital fitness app. Um, and that's an old statistic, it's probably higher than that. So, you know, like for easy math, call that 250 million Americans are engaging with digital fitness. You've got about 60 million in total who belong to any gym or any studio. Um so I think that's a silver lining and a big bit of good news to the legacy industry that there's this large um audience out there who uh who are engaging to a certain extent that haven't fallen in, fallen within the classic definition of a fitness consumer, right? And so I think that that you know um provides a lot of runway or a lot of uh opportunity for the businesses that that you know are in operation today.

Yeah, really insightful, Garrett. I mean, that was uh you straddle off a lot of really interesting data points and insights through that. The one of the things that kind of sting out, I mean, Peloton, I I haven't even looked. I mean, $12.99, that seems a little low, right? Like what when you look at D to C digital fitness, like what's the range? Is there an average subscription rate? I mean, that that just blows my mind to be so low for such a high quality brand.

Yeah, I think it's um eight bucks seven to eight dollars on the low end and then twenty dollars on the high end. That's the um pricing range that that you're seeing. It also parallels exactly with consumer SFOD. So again, if you look at Netflix, Peacock, Paramount Plus, HBO Max, um, and go down the line, their price, their price uh range is almost identical. They have an entry product. Now, what's different in consumer S Vod, not Fitness S Vod, is most of the $8 and $7 to $8, $9 products in Consumer S Vod are ad supported. So they're not actually S VOD, they're AVOD. And that that um price point, if you look at 2022 um acquisition, is the faster growing area in consumer uh video on demand. It's it's the ad supported. So that that part of the business is that part of the industry is really growing. Then they sell kind of their more premium, uh greater access to programming, no ads. That that gets up closer to the $20 range. So interestingly enough, the larger fitness um platforms are kind of within that same range, but normally the separation is just on what you can access in terms of content. I haven't uh I'm personally not aware of um any that are running a uh like a uh traditional AVOD model that would include ads. Not any that are at scale.

And just for clarification on those acronyms, uh AVOD, FOD, like you just uh outline what those are to the audience.

Yeah, sorry. So uh SVOD is streaming video on demand and AVOD is um advertising video on demand.

Got it. Okay, great, thank you. Um you know, it's it's a really good kind of current state and where we're at, and it's interesting to look at, you know, even the evolution since you and I began talking on this podcast over the last like three, four years. Um but where do you see the uh the evolution happening? Where do you see the innovation happening in digital fitness now?

Well, it's it's it's such a broad term, isn't it? Digital fitness. Like I think that, um, kind of paradoxically to that comment, I think that um within the conventional and legacy industry, I think that um digital fitness is going to take on a broader definition or a broader use case. So if you think about the, you know, I'm at Exponential, we are in the gym and studio um the fitness clubs and studio uh industry. And um most of the development around digital fitness um almost, and it makes a lot of sense why, started from the bottom up rather than the top down. Um and that makes sense because of the fact that in COVID, it was a means to an end. So the role that digital fitness plays, and when we say digital fitness, really we're talking about probably streaming workouts and you know, uh PT coaching or training plans. And so that was a means to an end that was necessary during COVID. And the role that it played, I think of it in the context of like a user journey, the role that it played in the user journey was actually delivery of service, right? But um now that COVID has passed, right, and a lot of operators failed to build digital with a from a top-down, like actually looking at the entire user journey and how digital fitness could fit in the business model or val bring value to the consumer that would enhance the business model, um, it's been harder to sustain. So I think for the operators that are successful in the near future, they're gonna use a broader definition of digital fitness, incorporate it in other areas and expand on it more creatively. So if you go back to the previous statistic, we're saying, okay, there's 250 million Americans, um, you know, give or take, who are engaging with at least one digital fitness app, but there's only 60 million who belong to Gyms and Studios, right? Like, what are they? What is it that they're doing? It's not entirely um a workout, right? You're if you look again, if you look at the top 10, top 20 largest, most popular mainstream uh D2C fitness apps, you see things like All Trails, Strava, Fitbit, uh, MyFitnessPal, everything from nutrition utilities to calorie counters to social communities, all of these things, right? And then of course there are also your Pelotons and the others that are that are the workout. Um But largely I think the industry's missed that, right? One of the good, one of the silver linings, a bit of good news is if you are a business that's creating uh content today, uh, or I should say, if you're if you're if you're uh if you're doing digital fitness within the context of uh streaming workouts, training plans, or coaching, that is all content. That can be sliced and diced and used in other areas of the unit uh user journey, um, most notably search and discovery, creating awareness. Once you chop all that stuff up and you get it across social media, you get it into the online ether, right? It gives you the ability, has a zero marginal cost of distribution. So once you've capitalized the cost of content, you get it out there, and it can go work for you, and it never costs you a dime more. Gives you the ability to monetize people that are outside of your uh traditional business radius, right? So on and so forth. So that's like farther up in the funnel. It's a big part of how we use and leverage digital at exponential, both at the corporate level and then through our local channels. Um then as you move through the user journey, um I think you're gonna see more brands embrace things like testing, whether that's biomechanical or even genomic or DNA, et cetera. Those are gonna give brands the opportunity to uh create real interaction with consumers before those consumers ever pick up the phone or walk into a physical location or a brick and mortar. Um so uh that's what I mean by, I guess, broader, broader use case or broader definition. It's digital fitness to me is much more than just um creating workouts that people can use when they're not in the studio. Of course, that's one part of it.

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Uh I think the question, the bigger challenge is more one of um operating model, because to be successful with digital fitness requires core competencies that probably don't exist if you're if you're a brick and mortar business. Um and that that requires kind of a different skill set, um, potentially different people. Um but the creation of content itself, the beauty of that is it doesn't have to be expensive. In fact, there's data out there to suggest that um millennials and in particular Gen Z have an affinity for content that's less highly produced and more genuine and raw, which is uh clearly what we see on uh uh with engagement on things like social media. So I think less of the concern is probably the creation of content itself. I think more of the concern is building in the right core competencies so that um digital can be successful for you over time. It's really easy to overinvest without the underlying um I say ideation, um, testing, measurement, that whole you know, lean um uh lean product management loop, um, and then just go, oh, it doesn't work. We're not seeing the return, and then kind of pull out of it completely. Um but I I do believe that, you know, it's like the cliche you hear people say today is like every business is a technology business, right? Or every business is a software business. Sorry, I'm just getting over a little bit of a cough. Uh every business is uh is a technology business. I do believe that's um in some ways true. I think you know the the competencies of being able to um have someone, at least from a product management, a technical product management point of view, who may not be the one that's building, as you pointed out, applications, but has the acumen to um manage. uh an outsourced provider. Um so that strategically uh you can you can ensure that you're not at the mercy of the uh the the desires of your your product development partner right you you need to have that you you can't outsource this that strategic layer or management layer um and so I I do think businesses um of almost all sizes should be looking at how they incorporate those core competencies in the in the near future right on I appreciate that let's um let's discuss the the big deal that you that you you've got going right now I mean um you and I had talked a little bit uh uh about it at idea it wasn't you know it's very hush hush but now we can talk about it openly because you know by the time this this goes out but you got to deal with meta man we're we're going into to virtual and augmented reality like tell me about it I it yes I'm dying to hear. Well it's actually a great segue off of the last point of kind of like how digital fitness is evolving and we were talking about this large audience of Americans who are engaging with digital fitness but may not be coming into gyms and studios so how how do you reach those people I I think another trend you're gonna see over the next few years or maybe you're already seeing is just success the successful operators are going to find these differentiated distribution channels to reach consumers who maybe aren't part of that core customer set who you know belong to a gym or studio. And I pointed out the fit-on peer fit acquisition I think that's a highly creative and clever way to uh reach a new uh customer audience and there are many examples of that one for us is this relationship that started about 18 months ago it's a three-way relationship with an app developer and um meta to develop Exponential plus VR which will launch on uh launch in the Quest Marketplace November 2nd and it it's interesting this is on your podcast uh the first time that I've shared this with anyone publicly because we have a marketing embargo we're actually not allowed to announce this until 11 a.m on September 27th which will be shortly after the keynote um delivery at their connect event on that same same day and so we have an NDA which allows us obviously to to talk about this now knowing that it's going to air just a few days later so by this time the information should be should be out um we have worked well let me let me take one step back so the the the preface to this is that when you look at these big technologies AR MR XR VR um you you if you're listening to this podcast in September you know that there are many large companies who are jumping into this space quickly. Apple's recently announced their Vision Pro. Meta has a truly remarkable device that they'll be officially debuting at Connect which will be a few days before this airs called the Quest 3 Sony, HTC, all these companies jumping in uh to this space the reason is is that they realize although we are early this is this is going to be mainstream technology and it's really just a matter of time. So right now you have a first mover advantage race towards these technologies. And so we partnered with um with Meta in order to bring a level of realism to augmented reality fitness that's just never existed before. If you look in the Quest marketplace uh and I shouldn't say Quest but all VR marketplaces today you'll notice that every fitness experience within those is kind of a what I fake I call it a whiz bang experience where you're you know swinging from tree to tree and jumping over volcanoes and this and this sort of a thing. The you know if you've paid attention to the rebranding of Facebook to to Meta, they are placing the company's future on the metaverse and um you know Mark Zuckerberg recognizes that there's a stigma around VR today of this kind of whizbang type of gamer bro um uh community and it's been largely embraced by the gaming community which is what's you know sort of led to the initial um uh adoption but um part of the race to to to to being successful in VR is removing that stigma and making it you know making everyone comfortable not just to embrace these technologies but take fitness as an example you've got to wear it you're sweating in it you're getting a great workout and so the this uh Quest 3 device that they've been working on for several years is one of the manifestations that makes this possible so it's 40% slimmer than the Quest 2 and Quest Pro devices so a lot easier lighter on your head uh to to wear and so you think about the impact of that or the implication of that with fitness you know there are if you're doing downward dog you've got your head upside down or you're doing a neck stretch and stretch lab big big and bulky isn't great right so that's one effort to make it more mainstream and more applicable to the experiences that for which consumers uh want to use it. The Quest 3 has incredible mixed reality and full color pass-through with accurate depth perception another tech new technology that's highly relevant to fitness experiences so we have 10 brands um most of our brands um obviously we have the connected uh connected uh excuse me the the fitness dependent or cardio brands that require like stride requires a treadmill cycle bar requires a bike row house a row or so and so forth right and those modalities are will also be in VR and we can talk a little bit about that too which is really really cool but even the others at minimum require some small peripheral um if you if it's yoga six an example maybe a yoga mat pure bar you use light dumbbells uh club pilates you use double tube as an example and so the fact that you can now have mixed reality previously this was a limitation that made most fitness modalities uh cumbersome or difficult in the VR and possibly see some people might even argue unsafe because if you're in a full VR environment you know you don't want to throw a punch and hit your wall or run into a table etc right so um mixed reality gives you the ability to to bring an instructor one of our celebrity ex pros into your living room and you're seeing that virtual instructor but he or she is standing with you in full color three-dimensional right in your living room and so if you're doing a set or an interval where you need to bend down and grab it could be floor work you need to bend down and grab light dumbbells this new technology allows you to do that with complete depth perception and accuracy and what becomes really cool and I'll cut it short in case you want to drill down on any particular aspects of that is the ability in that mixed reality environment to take gameplay elements and actually blend them blend them with your physical environment. I'll give you one example and we've got a really cool commercial that's launching in conjunction with Meta which I can share with you if you're interested in linking to that that shows a couple of these features. But as an example in Purebar, one of our modalities if you're an at-home user typically you're using something like a chair or maybe the edge of a of your island or a countertop in place of where you would use a bar in a studio environment. So in that VR V MR experience at the beginning of that class you will calibrate a surface in your physical environment to be used at in place of that bar. But it actually looks like a bar. It's a virtual bar. And once you calibrate and lock it so let's say I have a chair to the right side of me here at the beginning of class I will calibrate it I will see a virtual bar in and behind that virtual bar is everything in my physical reality. Once I calibrate the bar to that service it locks in place spatially and it stays there. So for the rest of my environment I may I might see Eric my instructor in front of me I see my couch but off to the right here spatially I have a what looks like a virtual bar which may actually be the be calibrated to an edge of a chair.

So it creates these hybrid experiences that are obviously very immersive and engaging but um bring that to to to life in a way that's that's safe and compatible with the physical environment that you're actually in wow that's uh gosh man it like it just blows my mind here you talk I'm like really I'm in both really excited I'm in awe I can't believe that like this is part of my lifetime that I'm I'm seeing all of this right like the technology is incredible. I you know I read you know Ready Player One like 10 years ago and thought like ah you know that's gonna be like when I'm like 70, right? But it's just happening so fast. It's it's really interesting. I mean and and you guys have such a great advantage or I guess tools to make this successful right you have all 10 brands you have various experiences you already have um you know loyal um consumers uh maybe walk me through I mean you have a little bit but like let's let's pick one um let's pick one with the hardware row house right like walk me through that consumer experience a little bit more just so we can understand like how the hardware plays in you know and the differences I think a lot of people are just getting to know the difference between AR, MR, and VR. Sounds like you guys are kind of shying away from complete VR, right? It's mostly A uh AR and augmented and mixed reality. And you can clarify that um for me if you want. But yeah well well let's let's take the Row House experience and and go from there.

Yeah you um yeah it's a well let me make one comment too to take a step back and I'll walk you through um what what's going to be interesting about this is the existing audience which is large there are about 30 million people who have a Quest headset today we're launching in collaboration with the hardware launch of Quest 3 and we will be one of the showcase apps to to promote that technology because the way we've built the app in concert with Meta was designed to leverage the latest and greatest feature sets of that of that hardware but it is backward compatible as well. There's about 30 million headsets in the US but that demographic is very much in contrast to the demographic that we serve in our brick and brick and mortar locations. So in in what way Garrett every demographic way aside from gender because um the split the split in the in uh the the Quest marketplace I think is 6040 slightly slightly skews male maybe yeah I think it's about 6040 don't quote me on that we're very dominantly female like 9010 across our brand portfolio um but then across every other demographic maybe with the slight exception of age um the the demographics are opposite so you know so it's gonna be very it's intriguing though and this goes back to that idea of differentiated distribution channels you know for us it represents truly an incremental opportunity to go beyond our existing customer base. Will some of our customer base purchase a headset and use VR of course um but probably not the majority so our strategic rationale in this is to really reach new new customers and what we're betting on is that there are customers out there who will recognize the who will recognize our brands they are aware of the proof of concept and the the effectiveness and the entertainment value that each of our brands deliver and they want the realism that we've leaned into in our application of this technology as opposed to the other I'm not going to say gamified because our our experience of Exponential plus VR is gamified as well. But the core of the experience is has been designed to mirror the experience that you get in a studio. And then we lever VR AR and MR to enhance that so moving on to like the to a brand experience when you open this app you're dropped into an outdoor mall environment that looks very akin to the type of you know let's say Westfield in Century City or Spectrum and Irvine here. I don't know if you've been to either of those but the type of places that you'd find typically find our studios. So you drop into this environment one of the things we've done in the app is um we match your virtual atmosphere to your local atmosphere. So like if you're in Montana or I'm in Irvine, it could be nighttime could be daytime could be sunny could be overcast when you drop into the mall you get the same outdoor environment. And we did that because of this this idea that we want to lean into realism where others have leaned in more to the you know whisbing sort of aspects of fitness. So drop in this mall in front of you you see storefronts some some storefronts that are not our brands but a storefront for every one of the brands that we own. When we launch on November 2nd there'll be three brands usable um Purebar, Club Pilates and Stretch Lab. And then the others will roll out sequentially basically every 45 days from that point that point forward. So you pick a store you walk into it you land in the lobby the lobby is the virtual environment and the studio are built identically to the store build CAD plans that we use when building a physical store right down to the equipment the location of the equipment the peripheral equipment that's in the studios etc you pick a class you go into the studio now at this point you have an option so this is about your question as a, you know, are we using primarily VR, MR, AR? You have the choice as a user. So if you want to train in a fully virtual environment um you can do that. So you could be in a Pilates studio as an example or stretch lab and it you are in a virtual environment that is identical to one of our actual studios there is a an option in the gameplay to then change that to mixed reality. Mixed reality gives you the best way to think of it is almost like a gradient. So you can see the top of the studio environment and then underneath it you see your own environment but it blends together. And so depth perception the way the content is filmed the reason you do that is if you've got to do lateral movement or if you've got to pick up like we said peripherals and things like that, there's a value in being able to see a part of your physical environment but you still get the immersion of the mixed reality. And then you have full color pass through which is you know it's more like AR or extended reality where it's just you and one of our celebrity instructors right there in your physical environment without any of the kind of the studio immersion surrounding it. So you know just just to touch on some of those quickly I think some of the area that we're most excited about and and it maybe gives a real life example to how these technologies are going to change the way we've viewed fitness experiences. So you you you pointed out rowing as an example and you and I probably talked about this and if we haven't you're certainly aware of this given you know where you focus your attention and that is there's been a lot of focus or there's been a lot of discussion over the last five to seven years with businesses trying to figure out how to cross integrate data, get performance data off of equipment and there's been approaches where some companies have gone direct there have been others who have looked at themselves as a middleman to aggregate that data and then share it out with other platforms and there's been a lot of invest, you know I would say a lot of investment or some consequential amount of investment there. One of the really cool things about these headsets and they're just going to continue to get smaller and smaller and smaller and smaller is that the camera technology and the computing capability within it is so significant that when we uh take rowing as an example for our the release of Rowhouse, that device can actually capture your strokes um it can critique form it can count repetitions it can count your stroke rate all of the performance metrics that are relevant to that experience the device can do without any physical integration to it just by looking because the camera technology can see what your body's doing right and has a variety of other sensors in it. So it completely absolves the necessity for that physical connection or software layer to get data.

It works and it it's cross cross platform or cross equipment in the sense that you could be on any rower right and it and the experience is still as a the user experience is still the same in the sense that it can make use of that information then direct the gameplay accordingly Garrett who do you think I'm sure you've researched this and you thought a lot about it and you probably just don't know yet but who's gonna be the early adopters of this you know specifically like your app through Meta? Like who who who's gonna grab on early?

I think we're if if if uh you know if we're correct in our customer research I think it will be um a cohort of the existing um uh quest population who want the real life tried and true and proven fitness experiences in comparison to what what's there today. So our approach, we've said look, we'd rather be a dominant fish in a big pond for a small group of people rather than you know trying to create something that's designed to kind of get people off the couch who have never exercised before. So just the mass of that user base there'll be a you know we're banking on the fact that there's a percentage of those people like other Americans and consumers in our in our customer audience who have the technology and want the real tried and true tested proven fitness experiences.

And how long have you been working on this? I can't imagine that this just happens overnight like you have to have very special dev team you have to have I mean you mentioned like CAD design like all that like that that takes time like how long have you been working on this project?

It uh since last spring spring of 2022 and at that it was very challenging. So we had to submit our final app build um to Meta in June uh for a release of November 2nd and prior to that there were two there was an alpha and a beta submittal um before that so it was a rush to get it done um we work with a fantastic partner who's been just just incredible in the in the development and um yeah there's been a lot of learning too along the way.

Yeah yeah I bet uh you know I I think a lot of people from the industry who listen to this this may freak them out a little bit right uh just a little bit like this is a significant entry point for the industry that could you know make a huge impact on the next 10 to 20 years you know if not um be one of the main sources that consumers take in fitness content and fitness experiences. So when you look at the the grand landscape and we'll just put um an even 10 year vision on this like where do you think this is going to be in the greater you know health and fitness landscape 10 years is hard.

I think even five five years in some ways is hard to predict with the rate of change that that we're experiencing. But you know I think at uh at maybe at the very macro level um the technologies with uh within what's been what's come to be described as web three I think are going to really supercharge engineered well-being so I like one of the topics I've tried to pay attention to as a beacon and try to make the parallels to fitness is precision medicine. And so I've been using the term precision fitness um and I think that you you think about what makes what composes web three you're gonna I you're really gonna see uh acceleration and improvements in in precision fitness an individual's ability to really precisely drive towards the outcomes that they want in a and I I think you'll have uh businesses and innovators who make that extremely simple the user doesn't want all the complexities that come along with that engineered well-being they it needs to be made intuitive and extremely simple and when it's there that's when you're gonna really see um these like technologies embraced so like if you think about it over like the last 10 years we've seen a lot of improvements on the input side of engineered well-being um particularly with like wearable devices so we've you know you've seen a lot of advancements in the ability to collect and capture data pretty seamlessly but I think in the next 10 years you're gonna see much greater improvements on the output side of engineered well-being particularly in thanks to uh like AI right AI will have an unprecedented ability to actually make use of all this data that we've been collecting to provide direction and guidance far better than and I hate to sound draconian this but it's just the truth far more effectively than a human being would ever even come close and do it really fast. Right? So that That's going to be a big, big game changer. Obviously, people have talked about like decentralized data and the ability for a consumer or an individual to own their data and then actually make use of that across the various facets of their life, whether that's you know with their doctor or with you know the their fitness uh professional, if you will, and so on so on and so forth. Um so you've got AI, you've got AR. AR will be able to take, in some cases, take that um enhanced guidance and recommendation. Uh oops, enhanced guidance and recommendation and actually um serve it up to you um in an entertaining way and connect you and so on and so forth. So um, you know, I think as operators, it's easy to get lost in the buzzwords of the day, the buzzwords of the industry. I think what's important is you know come try to come back to um what is fundamental to consumer demand and the things that won't change, like you know, affordability, convenience, personalization, and above and beyond all is effectiveness. Effectiveness and effectiveness and outcomes and fitness. Those are gonna be the things that regardless of uh the fads and technology, and I wouldn't say fads, but the changing technologies, uh, those those fundamental drivers are gonna stay the same.

Yeah. It's I glad I'm glad you brought that up because in my mind's eye, I was thinking like all the buzzwords I've heard over the last three years in the industry, right? Like over the pandemic, Web3, um, you know, even a lot about VR AR. And then it kind of went quiet, right? The buzzwords changed. Um, you know, this year it seems to be personalization. I don't know, these are just the ones I've been using a lot, democratization, right? Consolidation, a lot of things end with T I O N. But um, you know, when you like, I'm so glad you brought it back to kind of the fundamentals, like, you know, forget the buzzwords, right? For a minute. Just follow the long-term trajectories based on what we know to be true, which is all those things that you just mentioned. So um, you know, AI and VR AR, Web3, all these things, they're tools to be used, right? To get to where we want to go. Um, and I I since you brought up AI, it's I it's like my favorite dinner topic now. Um, you know what, and we don't have a ton more time, so I'll kind of get your high-level thoughts, but you know, where do you see um where are the most significant shifts that you think AI will have on the fitness and health industry um at a high level? I know it's a hard question to answer in a few minutes, but give us what you got.

Yeah, I think um, you know, to to uh to book in the point that you made, I I think you, you know the hype cycle of these new technologies cause can oftentimes cause overdevelopment and a lot of confusion. I um I think that um the augmented reality type of technologies, uh and I think the play the large players who are trying to change this would also admit those have not the you know, those have not crossed the chasm into the mainstream world yet. Um AI, on the other hand, I feel is at the is on the second hump of the S-curve or the hype cycle. So 10 to 7 years ago was the front of the S-curve or the hype cycle for AI. And now I think we're in a place where um you're gonna see implementation over the next few years that has a really meaningful impact. It's not going to be just just talk. And I mean, you're kind of already seeing that with uh Chat GPT and Dolly and Midjourney and and the way that that's displaced some you know traditional work. I I to answer your question with fitness, um look, I um fit fit at the end of the day, being well and being fit in all senses of that is a quantitative endeavor, right? Um it's it's it's a science. And um uh AI is perfectly uh suited to improve um improve recommendations and guidance for consumers in a way that that the human being can't. And so I think the initial uh applications uh where AI will be used will be to do that in a personal, in a personalized, to use that word again, but in a personalized way, um uh that previously wasn't possible. That's a scale challenge, right? A scale challenge that AI can fix. So like in precision medicine, right now, there are, you know, historically, um, if you go to the doctor for a condition like uh, let's say it's a GI issue, there's a series of treatment medications, it's kind of trial and error that they'll put you through until they find the either the right um medication or the right combinations of therapy for you. There's a lot of time, money, and sometimes negative consequence that impact the patient having to go through that trial and error process, right? So there's focus in medicine right now to um quantitatively measure more effectively to personalize medicine, right? And AI can run those simulations by the millions to try to, you know, to produce new uh drug compounds, to analyze DNA, all of these things, right? And um, I think to a smaller, you know, in the near future, at a smaller scale, you'll see some of those um improvements in in fitness as well. And I think you know, some of the you'll see some lower touch services become more automated and more digitized. Um and then of course much bigger, more impactful changes um over a longer time span.

It's an interesting time to be alive, Garrett. Very you know, and I look at like uh you know where AI comes in, I think things things with high-level complexity, scalability, these are the buzzwords that I think about AI. You know, is how do we take um incredibly complex things that would take a lot of human time, a lot of research, and then how do we make that more accessible to more people? Um and I think the precision medicine, the precision health, um all those things are are probably the most promising. I mean, we you know, I've had people on the the show who um you know are really into health and longevity experts, experts, experts, like super smart people, and you know, people who come to their clinic. Um, Dr. Florence Komite is one of the ones that comes to mind, like come into her clinic in New York and spend $100,000 a year, right? Sure for longevity and optimal health. And now, you know, through technology and they're launching the app, but we they can get that cost down to 10%, right, of what it would cost to be in clinic. And that's just the start, right? And that's a huge jump, right? That's a 90% reduction in cost, you know. It maybe not the full service that you would get in in person, but it's a huge step forward to get to a lot of people who um, you know, just before, like when we talk about the other 80% who don't engage in fitness and health, um, you know, uh structured fitness and health, like that's that's where we can get them. And that's some of the most promising things and that I see in, you know, when you sit on like the the scale of like um utopia to sky net of of AI, which is what I call it. Like, you know, I'm somewhere in the middle and I fluctuate day to day, but um it sounds like you're probably more on the utopia side.

Yeah, I you know, I'm not um a futurist or a technologist by uh personality. Um I like technology to solve real world problems. Um I always joke to people, I don't sleep outside of the uh the Apple store before the next iPhone comes out. Uh but you know, I really enjoy finding uh using making use of technology for to solve real world, very impactful problems.

Yeah, awesome, man. Well, Garrett, I want to respect your time. I know you got a lot going on, uh especially with this uh upcoming launch. I mean, it's it must be a very exciting time for you. I imagine you're sleeping uh enough, but maybe not as much as you'd like. Um but if people want to get a hold of you, they want to discuss this, or if there's any particular place you want them to go to learn more, um, where where would you like to send them?

Yeah, you just email me, Garrett at uh exponential.com. That's easy. Right on.

Yeah. Well, Garrett, thank you so much um for joining me and giving the update on this. It's it's really exciting. I can't wait to get this out and um, you know, tell people all about it. And uh great job. You know, keep keep up the innovation. Every time I talk to you, it's like you got something huge coming down the pipe. So it's uh it's a lot of fun connecting.

There's never a dull moment. Hey, thank you so much for the opportunity to announce this on the show, and the timing worked out um uh perfectly. So I hope there's some good nuggets in the conversation and it's always a pleasure.

Yeah, my pleasure. Ladies and gentlemen, Garrett Marshall. Thank you. Hey, wait, don't leave yet. This is 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, Castbox, 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. We 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 futureoffitness.co. You can subscribe to our newsletter there, or you can simply get in touch with me as I love to hear from our listeners. So thank you so much. This is Eric Malzone, and this is the future of fitness. Have a great day.