Jon Canarick, North Castle Partners, on Curves, Equinox, and GLP-1s in Fitness

I do believe that the the future of data collection might be through cameras and beacons and sensors that are installed throughout the gym that can see what we're doing for those of us that opt in. It might be a privacy concern for those that don't want to opt in, but that will know you, Eric, who you are. You checked in, they know you're there. They could actually see what weight you picked up in a dumbbell, how much you pushed on a on a on a on a leg press, how many times you did it. And so what I see is this using the next layer of technology, which is a little freaky, right? The idea that eyes in the sky, but I I'm like blown away sometimes with what cameras could do. Cameras could like, you know, if your cameras like it could read your heart rate like by looking at your face, right? Like obviously we've all seen how crazy, scary facial recognition technology, you know, is now.

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Thanks so much. Great to be here after all these years and uh thrilled to be with you.

Yeah, it's uh gosh, man, I like I've you've literally been on my short list of people to have on this podcast for five years or more. And you know, we finally made it happen. There's so much to talk to with you, man. I mean, the the really the big macro topic that I'm so excited that you're interested in talking about is like this integration of the fitness industry, health and wellness, uh, even the medical industry, it's all kind of converging, I hope, into one thing. And it's something I've been talking about for so, so long. It's something I've been trying to do even as a gym operator back in the day, it was like work with medical professionals. Like it's it's so once you're in it for a while, you realize, okay, there's so many things we can do here, right, in just our little fitness world, but we need to open it up because there's so much more to it. So that's going to be a big part of our conversation, plus so much more. And you know, you're the managing partner of North Castle Partners, one of the most respected private equity firms, exclusively focused on healthy, active, and sustainable living businesses. Uh, you've been there since 2001. So you have a quarter century now of purview where you've seen this industry code, you know, trends, you know, hype cycles, you know the long-term meta uh parts of our industry. So current board seats include Therabody, Five Iron Golf, CR Fitness, uh SALT, so SLT wellness-based uh brands who I just interviewed, Paul Lunter. That was great. He said nice things about you, so kudos. Yoga joint, so much more. You also, you know, I could keep going on and on, but I won't. But you also are are working with Augie's Quest to cure ALS, which I think is a notable venture as well. So yeah, let's start with this, man. So it's been 25 years you've been doing this. 2001 is when you started versus today. What's fundamentally changed and what's kind of stubbornly stayed the same?

First of all, thank thank you for the introduction. And uh it's a lot of fun to talk to you here. Boy, going back to 2001, obviously the industry was was in a very, very different place. And you know, I was fortunate to get involved at a young age, uh, the year before I joined Earthcastle, partnered with another private equity firm and became the the shareholders behind Equinox's you know early growth and it was a small company. And so we we started in our in this industry at the at the highest end, right? At the at the very premium side. And uh, you know, Equinox is sort of blazing a new trail back then of price, you know, price point and and uh and and quality or premiumism, which was of course went very well, right? And the brand is is a special brand and has a very big, you know, big business today. We sold that business in 2005, so it's uh uh 20, you know, 21 years ago, right? It feels it feels like a you know uh even more probably. And I think that the the the biggest difference, uh, while franchising has always been a part of the industry, it was a small part of the industry. It was a largely uh mom and pop regional regional industry. There were you know a handful of health clubs, uh, their one brand in central New Jersey or central this or north that and uh franchising, I think, you know, fundamentally changed the the industry. Again, it was there before. Um, you know, 24 Hour Fitness was a corporate store build, and that was your sort of one of your first, you know, big, big chains in terms of store count and LA Fitness, uh kind of growing up at a similar time, both corporate store models. And so I'd say that the biggest difference over 25 years has got to be that. And and and the franchise world not only gave birth to different different brands and different models, it it gave it it sort of gave birth to the boutique fitness industry. And I say sort of because boutique has been around before franchising, but you know, one of the brands we were involved in, sorry, this is a long introduction, was Curves. And Curves is kind of the original boutique fitness brand, and that was a franchise, uh, you know, with with with 10,000 locations at one point, right? Just a staggering number. Yeah, that's right, that's right. Staggering number, right? So that that that's probably the biggest difference. And with franchising came came sort of more unique business models. So are you there? Yep, you're good. Okay, good, good, good. So, yeah, so uh, you know, I I I if you think about the evolution within that, you know, Planet is probably the biggest game changer as far as the industry has ever seen, inventing a new pricing model. And that pricing model worked obviously, you know, phenomenally well. And and not only did it did it work for for them and and and their many, many, many franchise partners, it worked for consumers. It brought consumers a far more affordable fitness club option. And really, I think Planet Fitness is to be given a lot of credit for the expansion of the percentage of consumers in America being a member of a fitness club at any one time. So anyway, I I I could probably go on and on about the differences between then and now, but those are the the big themes I would say.

Yeah, no, that's great. It it's really interesting. And you know, I forget about curves. I think we do quite often like that. Are they even what it what what happened to them? Are they around? I mean, I think they're still open, right?

There are, there's, there's still a small number of curves. Uh curves fail to innovate. Uh, I'll tell you when you know, you said at the beginning we're going to talk about the the overlay between fitness and healthcare and and and wellness and you know, beyond fitness. Our theory with curves when we came in, so we did come in in a turnaround capacity, and curves actually was on a massive decline in North America when we when we got involved, but a significant rise in Asia still. It's very global business and turned out to be a perfectly good investment for us because of the success in Asia. We thought we could bring diet and exercise under one roof and really transform curves who had a unique audience, very unique, very older, over 50, more deconditioned or a bigger weight loss goal than your typical gym member, of course, 100% women, uh, and so this super comfortable environment for a customer who was who was there, not always as part of her weight loss journey by any stretch of the imagination, but a higher percentage. Uh and so, you know, the holy grail before we started talking about healthcare and and all the longevity markers was just weight, right? And and and and the holy grail was can I bring nutrition and fitness under one roof? And we've tried, we had a partnership with the Cleveland Clinic, and we had a medically endorsed nutrition program by you know one of the most respected hospital systems in the country, maybe even the world. And we brought in a phenomenal management team to execute that vision. Uh, we ended up buying Jenny Craig uh as part of that. And so we actually sort of brought in this we created this combined center trying to bring fitness and diet together under one roof. I'm I'm I'm not embarrassed to tell you it did not work. Um not for lack of effort on our part or lack of investment on our part, again, in the uh medical quality of the nutrition programming, um of the quality of our execution team, management team, but it was a real struggle to do that well under under one roof. But yes, so curves, very often forgotten, never given credit as really being the original boutique fitness concept. But you know, my opinion, it kind of it kind of is. And then on the other end of the spectrum, you know, we we invested in Barry's in 2015. Barry's started in 1998. Uh, I think oftentimes uh SoulCycle, which was a phenomenal brand and and uh is a phenomenal brand, but obviously had a phenomenal run that's not quite the same as it as it was back then, um, is sort of more credited with being like the original breakout premium boutique fitness brand. But Barry's actually was uh was there well beforehand and providing this phenomenal experience for people uh all the way to the late 90s, back in the late 90s. So incredible.

Yeah. It's God, there's so many. I mean, I wish this was actually a three-hour interview because there's so many things I would love to talk to you about. But you know, before we get, I mean this will segue right into it. But when you look now, knowing what we know, being a few years removed from the COVID pandemic, do you think it it was a net positive for our industry? I mean, painful to go through, right? But do you think at the back end now, do you think it was net positive or net negative for us?

Um yeah, so painful uh for for so many people and me, very much included, managing, help, helping to manage and and oversee a whole bunch of indoor indoor concepts, not just fitness. I was involved in other things too that were greatly impacted by by the shutdowns and and and consumer behaviors that uh that follow. You know, look, it it certainly brought an efficiency to the industry. Um I think it did give birth to some new habits. And and it is it is hard to say. I think a lot of people look at today's more dedicated average consumer to fitness and credit COVID. And I have no reason to disagree with that. I have no data that says otherwise. I think there was a general generational shift going on anyway. I think the you know, my generation, you know, Gen X uh exercised a lot more than my parents, the baby boomer generation. I think the millennials exercise more than Gen X and the disease gener, you know, exercise more than the millennials. How much COVID added to that fire, added to that acceleration, it's hard to say. But certainly if if the people who who who believe that are right, then yes, it's a huge net positive. Because boy, we are working out in big numbers right now. Fitness club memberships are at a very exciting place. You know, I read a study recently from LEK, 30% of big box fitness club members also spend money in boutique fitness.

Really?

Yep. And and and I think it's a it's a coincidence. It happens to be that 30% of boutique fitness regulars have a gym membership. And so, you know, we're we're we're we're deeply engaged in fitness. Obviously, the pandemic brought us an amazing acceleration in in at-home workouts, uh, which people think have crashing on to nothing because people stopped buying so many Peloton bikes. But a lot of people still are using their their bikes, right? So the number of workouts happening at home every day, every week, every month is far in excess of what it was. And yet the number of visits to gyms and boutique fitness studios is far in excess of what it was. And so you put that all together, and when whether whether COVID gave that behavior a shot in the arm or not, the industry is in as healthy of a place as it has ever been. It's really exciting as an investor.

That's great. Well, you know, Peloton's interesting to me. I'm pulling together like a lot of information over the years I've covered on Peloton to put together a nice little intelligence piece on it. Peloton gets a lot of shit. And really what they were was like the best in category at what they did during a period where connected fitness just artificially boomed, right? I mean, it was just this crazy thing. They couldn't control everybody in that category, it was just booming. And then, you know, everyone looks on a look at the rise and the fall of Peloton and this disastrous collapse. I'm like, well, you know, they've actually done a pretty good job over the new leadership of making this thing really profitable, right? Is it ever going to be a high growth company anymore? Um, but yeah, Peloton, like, man, I don't know why people love to tear them down. I think it's just this American thing. We love to build them up and tear them down.

I I I so first of all, I agree with you. I think that I think that Peloton without COVID is an incredible, just consistent 20% a year growth company, or whatever percentage it would have been, but consistent, strong growth company. And and of course, we all know uh that you know demand surged, you know, hundreds of percent, and uh they did everything they could to keep up with that. And and obviously the the hindsight is that was all brought forward from the next five years, and and so the business you know suffered from that. And I had a home fitness business uh still still uh lightly involved in it called echelon fitness. Same thing. We we we grew uh from 30 to 105 to 200 million of revenue in in uh you know two years. It's impossible to manage that kind of kind of growth. And Peloton does a phenomenal job. Their content's great, uh, they have superstars, and there is still a tremendous amount of Peloton usage, just the number of bikes bought every year naturally had to come back to Earth from where it was. But it doesn't mean the number of workouts came back to Earth, right? The number of workouts, I don't know the exact data, but it's still very, very strong. And and so it's an incredible uh company for sure. You look a part of me, Eric says the reason people love to tear it down, love to hate is boy, they were a little obnoxious to the industry, let's say, right, when they were on that rise and made big bold statements that the in-club industry was dead forever. A little bit like some people said your city was dead forever, right? Like and uh turns out that none of that was true, nothing was dead forever. People love being together in person, obviously. Um, and so I think a little bit of that is is uh backlash to to some of the statements made during that that period of time. Um, but I also agree you said that they're you know well run today. Um it's a tremendously profitable company, and yes, they do need to find new avenues of growth, and you know, I would certainly bet that they will.

I want to get I I want to get your name because we've been talking about the other 80% for decades, right? Like, you know, we have this penetration rate of 20%, it seems stagnant. Now, I've heard a lot of statistics over the last few years where it's drastically improved, but I've heard a varied amount of statistics on that. I don't know what to believe. So when you look at it from the information you have access to, like, where are we at? How has it improved or changed over the last two years?

So I it is it has it has grown um even even a little bit further. Now it's never gonna uh that that that that percentage isn't just spike, right? People behave a certain way. I I I think this is one of those like very misleading statistics. People look at it, you call it the other 20 other 80%, maybe it's 22, 23% right now, so maybe it's the other 77, 78%. It's very misleading. That does not mean that 78% or 77% of people are not working out. It means that that 78% of people are not working out in a fitness plan. There are an enormous growth in home fitness, like we just talked about. There's enormous growth in condo uh gym community fitness that do not get counted in that stat, right? Because they are a member of their local gym as part of the uh, you know, the home association dues that they pay or condo association dues that they pay, not as a specific member of the gym. So the growth of those outlets reduces the number of people in commercial fitness. And yet the the percentage and number of people in commercial fitness continues to grow despite that. And so, you know, that data misses people who go for walks, people who just go for runs, people who do push-ups in their living room, people who do home fitness and own weights. And then, like I said, the other the other forms of workout. So it's a, in my opinion, it's an extremely misleading statistic. It is also based on 100% of the population. It is not based on over 18 and under 80. And I don't mean that people over 80, you know, don't belong to fitness clubs, but obviously the percentage drops off, right? So it's a it's it it's the workout percentages are in a reasonably healthy place on a behavioral level. Does it mean that we shouldn't be healthier? Does it mean we shouldn't be doing more? Doesn't mean we shouldn't, doesn't mean we don't have a problem as a society with lack of movement. We we certainly still do have those problems. We are fighting against psychology, right? You're fighting against people's desire to sit on the couch and to read and to watch TV. And and this is the you know, the challenge with with all of food-related disease. And these are powerful, powerful forces. And so I think the industry's actually really broken through. Um, as I said at the outset, I get Planet Witness the first and most credit for that with their pricing model, uh, bringing that to the to the economy and to the to the consumer. So I think that I don't know. I think it's healthier than yeah.

Okay, that's great. And it's uh just like everything, it's it's a nuanced, you know, uh discussion and and number that's you know, there's a lot of context around it that you gotta really take into factor. So okay, let's get let's get in the media. So, you know, young, naive Eric as the gym owner always had this dream that maybe someday a doctor would write a prescription to uh one of his patients, say, Hey, go to a gym. Yeah. Right? Yep. And maybe insurance would pay for it. That was kind of like this this thing. I'm like, oh, what if that happens someday? What a dream that would be. Right. And, you know, as this thing plays out, I don't think it's gonna look like that. Maybe, but it seems to be happening in a way, you know, this integration of healthcare and fitness or fitness into healthcare, which is it's still happening and it's coming in different ways and there's different signals now, right? I mean, GLP ones alone. Yeah, like that's been a merging factor that once again, I was originally I'm like, this is stupid, it's never gonna work. People don't like now. I'm completely changed my tune again. I'm like, you know, I it's pretty good, right? It's it's it's it's here. Um, but then also you start to see these kind of mixed models of like, you know, I always use uh Dr. Ryan Green at Monarch Athletic Club. It's like this one-stop shopper for putting out health, right? And then you see Miora and what they're doing at lifetime, and then you see, you know, all kinds of different, really cool creative models and longevity as a category, is is moving people into a different mindset of what fitness is. This is like a lifelong journey. So I don't know, there's just a lot going on, but from your perspective, like, is this real? Is this happening? Am I am I imagining it? Or and in what ways are you seeing it happening and where do you think it's all going? That's a huge question. Let's just dive in.

Yeah, it's a huge question. And I love the topic. It's a and and I you're not alone in that 10, 20 year ago, like banging your head against the wall, like, why can't we get the doctor to essentially write a fitness, you know, prescription? And you know, part of the challenge on the payer side, and you said and reimbursed, right, is incentive. So one of the things I learned the hard way, again, going back to my curves, Jenny Craig combination experience, is that I had I I had uh the help of one of the great uh healthcare benefits uh uh sales companies uh who who got me a number of really interesting meetings with major payers and and uh in in in trying to sell curves, which was national and therefore available, and you know, in theory, one of those places that could have partnered with Aetna or United and uh you know in a big way. We try. And one of my learnings from that was that the significant majority of employees don't stay anywhere long enough to for the insurance companies to justify an investment because we paying for your good behavior today when you're 35, 45 years old, to prevent that heart attack when you're 65 or 70 doesn't actually pay them back because you're no longer a member of their insurance plan at that age. Now, that's an incredibly cynical and lousy thing to say, but it was one of my so the whole thing you have to understand incentive structures to understand where the healthcare world from a payer standpoint can get involved. Now, that does not mean that doctors shouldn't do a better job of recommending good behavior to their patients, but the doctor model is unfortunately many of them, and to no fault of their own, are on a clock and they have to do X, Y, and Z. And there is only so much time they have to have that conversation with their parents, with their students, with their with their patients. I believe the intentions are all there, right? I mean, everybody knows movement is part of an overall lifestyle, but nutrition is first, right? Nutrition is first. And so, as far as like a doctor's got five minutes to talk to you, like they probably should spend more of that time talking about what you eat and how you better improve that. And movement is second. And they're both critically important. But you just think about like why it hasn't happened. There's a lot of reasons. Unfortunately, they're kind of good reasons, right, at the end of the day, relative to the incentive structure that we all live in. Now, let's take that forward to just where we are and where it may go. Because GLP wands is a total game changer. I mean, it's just it is it is a total game changer. It's an incredible thing that it's doing. And, you know, I'm sure you know people and I know people that are, you know, that don't seem to quote unquote need it, but are now microdosing on it and shocking how many people and you hear, well, I'm told I could microdose. It has no. Known side effects. And instead of getting that eight o'clock, nine o'clock itch for the sweets, for the sugar, for the salty snacks, I don't get that anymore. And like that's incredible, right? And and that is a path to a longer, healthier life. And some of the longevity gurus have been talking about this for a long time. It's called metformin, and now it's a GLP1, but it's, you know, it's kind of the same thing as far as I understand. I'm not a doctor at that at that sort of smaller dose level. I mean, I believe where it's happening the most. Now we're going from diet to healthcare, right? That Eric vision that you had, you know, going back a long time. It is happening increasingly, as far as I can see, at the premium end. It is expensive to deliver it. So you mentioned Monarch. Does a great job. I love what Monarch is doing. Monarch is an LA brand with an expensive price point, encouraging and offering personal training, nutrition planning, blood to understand, and therefore for supplement recommendations. I don't know exactly what they what they do. And so I don't want to misquote, but generally speaking, as we're talking about. Miura, similar idea, right? Sort of give you the holistic surround you. But these are both Uber premium products. And that's awesome for a very small percentage of people who either live where those facilities can afford to exist and can afford and prioritize that level of spend. The bigger question, in my opinion, is always well, what can the mass do, right? What can the the planet fitnesses, the crunch fitnesses, the EOS fitnesses, you know, do to really integrate? And it's very difficult, right? Because you exist, and I'm a crunch franchisee. So let me state that for people who don't wouldn't know otherwise know. You exist to offer an incredible fitness experience at a very affordable price. That's our business model. It's not simple, right? We run 70 to 80 group fitness classes a week. We run a personal training business. The idea that we could then also be your longevity healthcare guide on top of that would take incredible technology more than human overlay. Or we have to charge a lot more money. And that's not our business model. So will there be an expansion of services going down the affordability ladder? I do believe there will be over time. But Eric, you know this, and it's one of the one of the real major things that have happened in the fitness industry over the last decade is the middle's been hollowed out. So you really only have the premium guys who could afford to do it and offer it, and the less, much less expensive guys who can't do it unless you really change your business model holistically. Apps will help bridge that gap, right? More of us will subscribe to apps that help bridge that gap. The wearable phenomenon is unbelievable, right? The number of people wearing a Whoopedora, a Fitbit, an Apple Watch, a Garmin, sort of big five, right? Collecting, you know, all sorts of data. Those data sets are still limited. They're still limited. They may know what you're eating if you really do a great job of logging it and telling it what you're eating. They're, I think, evolving to more advice giving as they as they use AI. I'm an eight sleep customer. They just recently put on an AI overlay in the app. And so I wake up in the morning and I get a paragraph instead of just some numbers and they're making some suggestions or at night saying, you know, it's time for you to go to bed, it's time for you to wind down. Um I don't think that's gonna change my life. But these are these are things that are inching, inching towards a more holistic health experience, if that makes sense.

Yeah, it makes total sense. And I think there's um there's another factor too, and it's uh it's it's the LLMs, it's the Chat GPTs, right? Like the um the stat I've I've brought up so many times on this podcast is when ChatGPT was announced their ChatGPT health. They put in a statistic in the the press release saying that 230 million people users per week make a health-related inquiry in in ChatGPT. 230 million per week in Russia. Yeah, right. So you get that, right? And what's happening is like you're getting this very empowered consumer. So it's almost it's happening from the ground up. And I think uh, you know, I I'll have uh Dr. Glory winners on the show, and it'll this it'll release before this one does. But what I I love what she's doing at the YAMCA, like and she has this great, you know, vision. I mean, who's better positioned than YMCA to do something like this? Totally, right? And uh, you know, she's she talked about building this new healthcare system and and the foundation of the house is digital health. So she's she's doing it. She showed me. I can't say what it is, but it's cool. And I I see this digital health layer that kind of sits at the base that's almost free for everybody who comes into the into the ecosystem. And that's starting to like, okay, now we can do a lot of different things once we start to get the data flowing and opening it up. Like, because one of the biggest frustrations in healthcare is that, okay, I go see my primary and then I get sent off to a specialist for my ankle or whatever it may be. Like in it, everyone's information is obscure and different. Like they have to do the same thing over and over again. Like, I have to go through the same paperwork and have to do the same thing. Like it's not shared in any useful place. But I think what the promise of AI is like that can just clean up that mess in a very uniform way. So I don't know. I mean, it it who else do you think is like YMCA? Well, we're talking about why do you think YMCA is well positioned for something like this?

Well, they're first of all, they've just they've been around very, very long time. They do have a ability to have a higher price point in some of their locations, depending on the demographics, as far as I understand. They don't have a uniform pricing model, I believe. Anyway, I'm not a YMCA expert. There's a couple thousand of them, I believe, still. And so they have the scale, they have that that that ability, that control. I think they have that community trust feeling, which is different than a planet fitness or a crunch fitness necessarily might have. And so it it it it does put them in an interesting place because I think their mission perhaps is a little different as far as versus just uh the the fitness delivery, you know. Our our our job at Crunch, in my opinion, is to offer an incredible fitness experience at an amazing value. And I think we do that as well, if not better, than anybody. But our mission doesn't go doesn't go beyond that. If we want to help people live a healthier and better life, of course, of course we do, right? Of course we do. But that's not the time that people dedicate with us, that's not the money people dedicate with us. And so I think the YMCA bigger facility, you know, maybe different locations within their within some of their facilities. I I do believe there's a fair amount of inconsistency in their in their footprints. And so I imagine what they're doing probably is not necessarily everywhere all at once. Um, I don't know enough about their business though. Um but I do think that's an interesting place for for for that effort to to take place. And you know, you mentioned the the chat GPT inquiries and the AI and and certainly very exciting where all that can go. I I listened to a phenomenal uh podcast about a company called Epic Systems. Um Epic is by far and away the largest electric medical record company. You probably are probably you probably use it through your hospital system. They have, I I forget it was 80 or 90 percent market share at this point, something just tremendous. So like more and more likely that when you go to that specialist here and there, it actually is all an Epic, even though there's a different login and a different overlay. But behind the scenes, they have all that data. Um I think it'd be fascinating to watch what they do over time. And I may be a little out of school here. Again, not a doctor and certainly not a data scientist and a technologist, but it's uh it's it's actually a phenomenally interesting business uh that has massive, massive percentage of the overall medical data in the country.

It's it's so I mean, I know you're not a technologist, but I feel like within our industry, you know, the technologies. I mean, I look at uh eGym, right? And what they're doing with genius and the and the open ecosystem they want to create there. Sport Alliance, also, you know, Carl Foster is their head of AI and he has a really cool vision for how this can all work at the gym level. I mean, when you look at the technological layer within our our uh our vertical here in fitness, I mean, who do you think is moving in this direction? Who do you think is doing really good work?

So I I have tremendous respect for eGym and the and what they're and what they're doing. I want to make that very, very clear. Uh I'm gonna give you a big butt.

Yeah. I felt it. I felt it coming, yeah.

I I and and I hope I don't you know get yelled at by my friends because I do I really respect very much the eGym equipment and the and the circuit that you can that you can do and the technology that they have that you can put in the rest of the gym. I think it's a very, very, very long way and a long odds to them having meaningful enough penetration for that data collection to really drive a significant percentage of people. It's very expensive. It's not something that we're considering doing at Crunch. At least I can't speak for our competitors or even other members of the Crunch system, perhaps they are. But it's a very expensive, difficult path. I do think, though, someone uh have you ever seen just some of the incredible technology that comes from cameras and sensors and and all of this stuff? So I I do and you gave me a heads up earlier in your notes that you might ask me for a bold prediction. So I'll I'm gonna I'm gonna go there early, I guess. I I do believe that the the future of data collection might be through cameras and beacons and sensors that are installed throughout the gym that can see what we're doing for those of us that opt in. It might be a privacy concern for those that don't want to opt in, but that will know you, Eric, who you are. You checked in, they know you're there. They could actually see what weight you picked up in a dumbbell, how much you pushed on a on a on a on a leg press, how many times you did it. And I I I don't believe that the data collection can come at the equipment level. I just think it's too clunky and too difficult. And I I I could be totally wrong. Perhaps we will put sensors on every pair of dumbbells we have and every free weight we have. And that's possible. It is possible. I don't see it. And so what I see is this using the next layer of technology, which is a little freaky, right? Um the idea that eyes in the sky, but I I'm like blown away sometimes with what cameras could do. Cameras could like, you know, if your cameras like it could read your heart rate, like by looking at your face, right? Like obviously, we've all seen how crazy, scary facial recognition technology, you know, is now. And and um, so that's where I see the future of that level of data collection coming. More so that doesn't mean there's not a great role for genius in certain environments and eGim and genius in certain environments. I want to be really careful. I I I do think it's a great product and great technology. I just don't see it being in 3,000 planet fitnesses and 700 crunches, and I just don't see that personally.

The uh the camera thing is a little unsettling, but I get it. Right. And I'm gonna give a nice little shout out to Alanthius Thompson at Grow Solutions, so G-R-O-E. Right. He's been in the industry for a little while. Yeah, happened to make an intro. Uh, but he's doing that. Like they are figuring out how to take all this fragmented data within health clubs and gyms, including this this opportunity he sees through the cameras of of collecting data through there, not only just on like the the members, but also like the the training staff and how are they moving around, what equipment's getting used, like all this stuff that's super useful. And uh it it it freaked me out, but I'm like, well, you know, it's like one of those things, like this is just the way it's heading anyway. So like, are you gonna fight it or are you just gonna I don't know? I I agree. It's super interesting.

It is super interesting, and I I think that they'll figure out the privacy side. I think those that don't want to get that data, I think that look there needs to be a a trade, right? Which is hey, if if I opt in and you could I I let you kind of track me, then you owe me the information, right? So maybe there's a fee because it may be very valuable information, but like so if if the data is only for the club, that might be a little freaky. If you could opt out of getting the personal tracking, great. But I do think it's where it's going. I mean, people are walking around with glasses now that they're taking video and phone. I mean, I privacy is super important. I don't want to downplay it, but there is a certain direction that this tech technology is going that you kind of have to accept in some ways. Yeah.

I mean, it's it we're we're it's a constant black mirror episode, right? Like every time I I don't know, the one that came out like I think it was like four years ago where everyone had a little chip that recorded everything and they could get instant video replay. So if your memories were not quite accurate, it would be like, no, this is actually what you said. And I'm like, oh my god, my wife would die to have that planted in my eyes, right? So she could go back every time and say, no, you actually said that shit, and and now you gotta do it. But yeah, go ahead.

No, that's but that's super real, right? I mean, there's AI devices. Like I I get advertisements in my Linux all the time. I you want to buy this AI recording pen because it's on all day. And where I'm in the vet industry as well, and and we we record the the sessions and the the the note-taking time for the the practitioners has declined dramatically. The accuracy's gone up. It's an they they love it, it's an amazing tool. Now, that's not anyone's privacy, right? Nobody cares what you know what what what uh issue the poodle was in for, uh so that's a little easier to break through in that in that world.

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But you don't know and I don't know how many people we're meeting with that are that are using an AI device. How many zooms that I'm in are now just recorded automatically and uh there's a record forever. And and and so it's just just is. Yeah. Yeah.

Well, you know, back on back on track here, because we can we can talk about that scary stuff all day. Like where how far do you think we can go with this this health care thing? Like, I mean, in your world, let's I don't know, we're in 2030, 2026. Let's say 2035. Like what's what's a realistic expectation? Like, you know, are we gonna have doctors in the health clubs? Like, are people going to yeah, like how how how concrete can we get and where how can we manage expectations here?

Okay, so I'm gonna exclude the top two, three percent, four, four, five percent, whatever my answer, right? That that that okay, but the willingness to pay is one at a top.

Yeah, wealthcare.

So on that wealthcare, I'm gonna say I'm gonna exclude the $500 and up monthly, you know, services. I think we'll get more healthcare advice via AI overlays and technology, but I think I I do not believe there's gonna be a true integration. I do not believe there's gonna be a doctor inside every crunch location. I do not believe we're gonna draw blood at Crunch. We may have a partnership with a function health or a function health type of um, you know, company. Uh, and perhaps the closest we get, and I could see this happening, is that the customers that opt in and want to pay for you know quarterly or annual blood draws through a function or a function-like company may have more partnerships and integrations with crunches and and other and other uh you know gym chains, and such that there's a greater integration there. But I do not believe that will be a truly in-house function for the mass market fitness industry, uh, which does not mean that we're not gonna have more opportunities to learn more and have better behavior modification or knowledge, right? And and all strive for uh longevity services or longevity style workouts and longevity style outcomes. But I I still think it's gonna be largely incumbent upon the member, the individual, to piece some of these things together.

That's fair. And I think that's that's the beauty of everything that's happening now. It's ground up, right? So it's not we're not pushing it from the top down through, you know, providers and payers. Um, you know, I think you're right. Because it's not like there's some nefarious group smoking cigars, you know, at the top of the insurance company being like, we're just gonna keep everybody sick because that's how the money rolls in, right? I just that don't think that that it's just the incentives, right? You show me the incentives, I'll show you the outcomes. And I think the incentives have been misaligned for a long time. And it's just, you know, I don't know how to restructure. That's a hot mess. Maybe that's you know, RFK Junior's job, but I don't I I have no idea. But what's great about it is like the just the and I think this is one of the things coming out of the pandemic, is like base knowledge of consumers about their own health and wellness has increased dramatically, right? The amount of information they have at their fingertips at an instant has increased dramatically. Like people know what to do, versus maybe like 10 years ago, people weren't really sure, right? They really weren't like people didn't know that Doritos were really bad for them, right? Like that was still kind of a mystery, like oils and all the different things. So there's just a lot more information. I think that's gonna be the thing, is like you you start to just follow what consumers want, create you know what meets the demand and kind of incrementally go from there. But that's that's a thing. If you if you're gonna suggest to just like a HBLB operator in a regional, you know, uh group, like what do you what are some of the things that we would recommend to them today to start integrating more health-based programs versus just straight up fitness?

I mean, the number one opportunity that some people are, I guess, lightly touching is a sort of uh GLP1 fitness education. And and and so that's the the lowest hanging fruit, if you will, because there are you know more and more people on them. I think you and I and the people listening to this podcast all know strength training with GLP ones, right? We all know that now, right? It's been but but that doesn't mean everybody knows it, right? To be very, very clear. Does not mean every member of Crunch who's who's doing that knows that. It's not that's not true. So that education, which is also a revenue opportunity for the gyms to sell personal training services or or or up cell memberships to get them into strength training classes, you know, that's number number one. I I don't believe it goes to nutrition advice. Um you know, could we could we go there? Could we have an office and and and bring a full-time nutritionist in and see if people want to pay for nutritionist services? You know, we can, but you know, people can find those same services out there, elsewhere, through apps, through individuals, right? So again, I think people somewhat have to take a lot of responsibility for that. But the personal trainers, I think, have better information, right? And we we hopefully are doing a great job of training them to share that information. I talked about the GLP one sort of specific stuff, I think is the lowest hanging fruit, uh, like I said. Beyond that, just training people that work for us to be as knowledgeable as possible to answer people's questions, but with a very clear, I don't know, is it perfectly okay answer, right? You do not want people dispensing medical advice. And so that's a very difficult line, Matt. Like it's just a really, really difficult line that you don't want to cross. It's it could be very unethical. People are a lot, especially when you get your information on social media, right? Like I can't control necessarily where a lot of our employees get their quote-unquote information from and what they believe may not be backed by, you know, the FDA or the whatever you want to say. So again, I hate to be so skeptical about this mass overlay, but there are a lot of barriers to making it truly effective.

Yeah. Well said. You know, um I want to touch on something real quick. Like two years ago at the Connected Health and Fitness Summit, I well, I sat on a panel as you, Jeff Sweefle, and Dr. Bob Gebet. And you guys were talking about the GLP ones. And that was the stat that's I slapped me in the face. Like one in eight Americans that use a GLP one. That was two years ago, over two years ago, right? Yeah. Or maybe no, whatever. It was a while ago. Yeah, yeah. Yeah. And and then I I actually posed the question to you guys. I'm like, well, do we know if GLP1 users are more inclined to actually go into the gym? Like, is this driving people into the gym or are they just happy with taking a shot and being skinny? Right. And I don't know, like, so what now that a year and a half has gone by with those two factors, like what are the total amount of users that you know of in the States? Like, how has that changed? And then do we have any actual indicators of whether or not this is driving people to so I was, I'll be very honest with you.

I was surprised and disappointed to read the headline in AthleteTech um or Athlete Tech News just a week or so ago that that that published a study that said it is not increasing uh you know gym usage. It is it may be pulling from them, if anything. However, that contradicts with every data I have, which is my memberships are growing very comfortably year over year. And so I'm talking gyms that are two, three, four, five, six, seven years old. I am still adding members every quarter. So nothing I see suggests that there's downward pressure on people being members of gyms. And given the upward take of GLP ones, I can't contradict that study because I don't have any empirical data to do so. But anecdotally, I will tell you that I and I talked to a lot of gym owners and operators. Everyone I think feels pretty good right now. I mean, some obviously are getting hurt by competition. More than others, and obviously planets had some less than stellar headlines, but the total number of people at gyms is still very healthy. So I have to believe that means people on GLP ones are going to the gym who wouldn't otherwise have gone. Like I I don't see any other answer, but I must call out for your audience that I did read an article that said otherwise.

Yeah. Yeah. It's it's it's just like no one's self-reporting on that. So it's it's really it's it's a difficult one to nail down.

But well, nor can we just we can't survey it, right? It's uh yeah, it's not a it's a HIPAA, right? It's it's someone's they can't ask them what prescriptions they're on. I mean, my personal trainers can find out, like, you know, but then we don't aggregate that data. We don't we don't keep that data. That's not no.

Yeah, and I think there's just fundamentally two types of people. There's people who will get lose some weight and be like, I can't wait. And now I feel like I can go into the gym confidently and do all this things I want. And there's other people who are like, no, I'm good. I look the way I want to look, and that's it, right? And uh I'll just keep taking this when I need it, and that's that's and that's whatever. You know, that's that's just the way it is. Okay, so we got a few more minutes here, John. I got a couple like rapid fire ones for you. Sure. So so your personal routine, right? You spend your career investing in health and wellness businesses. What does your own routine actually look like day to day?

I am 50-50 weightlifting cardio. I I I'm largely a free weight uh weightlifting person. I follow a class. I I need that sort of motivation and routine when I when I do it sort of totally on my own. I definitely find myself spaced out sometimes. And so I am a I am a class uh user for weightlifting. I'm a uh a high-intensity interval training style runner. I learned that at Barries, I go to Barries all the time. I still do that, and then once a week I added in maybe nine or twelve months ago now, the Norwegian. I've been familiar with the Norwegian cardio training style. No, it's for it's for VO2 Max optimized uh training. Um's health things you read about, and you're like, oh, you know, VO2 Max is one of the core markers of longevity, of healthy aging. Uh, and so the the Norwegian is something I've added in once a week, which is a five-minute warm-up and a four minutes of really intense cardio, three-minute cooldown. Uh follow you do you do the four intense minutes four times. So there's 16 very intense minutes where you're trying to get your heart rate sort of north of 90 to 95% of its max. And that's been a game changer for me. I've actually seen my GLP one number, I'm not GLP one number, actually, my VO2 max number. Uh according to my Garmin anyway, I have never had it officially tested with the mask. Yeah. But that's something I'm having fun with right now. Yeah.

Well, no, okay. Over the last decade, one thing that shocked you and genuinely surprised you about our industry?

The shock, I guess the number one shock is the massive growth in franchise boutique fitness into markets that I thought would be a big struggle. And look, I I still think that's the case. I think there's a lot of unprofitable or or very, very low-returning boutique fitness stores in this country. And my shock is is is just how many there are and how fast they grew. That's one of the things I got wrong. I I did not believe that there would be so many uh boutique fitness locations. But I will also admit to you and to your audience that the other thing I got wrong, but maybe it's more like 15 years ago now, is I missed the first planet movement. I missed the HVLP 1.0. I did not think there was gonna be so many successful planets. Now, fortunately, I corrected that, got in on crunch early, and and and have been really enjoying HVLP 2.0. But I was shocked to see how successful that low price point model was uh the early days. Yeah.

Well, John, I know you gotta go. This has been super insightful, really fun. I'm so glad we did this. People want to get in touch with you. I mean, you're active on LinkedIn. Anywhere else you want them to go?

Yeah, yeah. People can find me on LinkedIn, I'll I'll I'll respond. It may not be that same day or or so, but I I'll I I check on LinkedIn every every uh uh you know, certainly every week, if not if not more frequently. They could find my North Castle website uh as well and and look up what we do and and find me there. So I really appreciate you having me on and enjoy the conversation. My pleasure.

Yeah, ladies and gentlemen, John Cannerite.