Juliet Starrett, Alex Alimanestianu, & Special Guest Philipp Roesch-Schlanderer - Quarterly Report

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[00:00:42] Thanks for listening and on to the show.

[00:00:46] All right, we are live and I am excited. It is our quarterly deep dive report and I'm joined as always with Alex and Juliette and we have a very special guest today.

[00:00:56] This is the first time we've done this.

[00:00:58] We have Philip Roesch-Schlanderer from EGM, the CEO, the man himself. He's had a very big year so far.

[00:01:04] And we're really excited to have you, Philip.

[00:01:06] And to get you up to date with how we roll on these things is we always start off with a little bit of update of what's going on in everyone's lives over the last three months.

[00:01:14] And then we'll get into some of the big burning questions we have around your $200 million Series G funding round.

[00:01:21] So those are big numbers, a lot of zeros there.

[00:01:24] So yeah, let's go ahead and jump into it.

[00:01:27] Juliette, how's it been the last three months? What's new?

[00:01:31] I like a bit of a whirlwind. I've been doing quite a bit of traveling and podcasting and lucky enough to have some cool dinners with some people in the fitness space over the last few months.

[00:01:43] And I'm sort of looking forward to not traveling for the next six weeks and just kind of getting some work done as we head into 2025.

[00:01:52] So I'm hoping to just, you know, be home and working and getting ready for the new year.

[00:01:57] So maybe sit in my sauna a little bit more.

[00:02:00] Any, any highlights of special dinners or people that were memorable over the last, especially memorable over the last quarter?

[00:02:06] Well, I was mentioning to you guys on the email thread, but I was invited to one of those John Levy influencer dinners.

[00:02:15] I don't know if you guys have heard about him, but he's been running these influencer dinners since like 2014.

[00:02:19] And it's a really curated dinner where you go and you, for the first sort of happy hour part of the dinner, you're specifically not allowed to say what you do for a living.

[00:02:29] So you're, you have to have other types of conversation and then you sit at dinner and the entire dinner is you guessing what everybody else does.

[00:02:37] And then they take their turn guessing what you do.

[00:02:40] And that's where a bunch of, I mean, somehow maybe my physical appearance made it obvious that I'm in fitness.

[00:02:47] So a lot of people guess fitness, but I, you know, a couple people thought I was in the C-suite at Peloton, which I thought was funny given that we're just about to have this conversation.

[00:02:57] So that was fun though.

[00:02:58] It was a cool experience.

[00:03:00] Yeah.

[00:03:00] Yeah.

[00:03:01] Alex and I were joking.

[00:03:01] If you were in the C-suite, we would be buying Peloton stock.

[00:03:04] Yeah.

[00:03:04] I appreciate it.

[00:03:05] I was honored that you guys said that.

[00:03:07] Thank you.

[00:03:09] Alex, how about you, man?

[00:03:11] What's, what's new?

[00:03:12] Well, we, uh, we're in full blown winter here in the Tetons.

[00:03:17] So, uh, snow on the ground temperatures and the negatives and single digits and, and, uh, yeah, we're getting ready for ski season and, and fat tire bike season.

[00:03:31] And like, I've, I've been out a couple of times on the fat tire bike with, with, uh, my son's dog.

[00:03:36] So I have a biking buddy and, uh, yeah, I'm staying, staying active and healthy.

[00:03:43] Yeah.

[00:03:44] Fantastic.

[00:03:45] And, uh, yeah, my, not, not too dissimilar from you guys is the travel season's over.

[00:03:49] I'm excited to be here for a while.

[00:03:51] Had some really good trips this year, uh, both personally and professionally through, you know, a lot of great conferences, uh, within our industry.

[00:03:58] Got to go to central Asia for the first time in my life on vacation with my wife.

[00:04:02] And we're just looking forward to ski season here in whitefish, Montana.

[00:04:05] We're at 130% of snowpack for this time of year.

[00:04:08] Uh, the, the mountain opens in two weeks.

[00:04:11] Uh, just got my new skis mounted.

[00:04:13] So everything's looking good.

[00:04:14] I had my first ski dream last night.

[00:04:17] Uh, and that, that's a good sign.

[00:04:19] So yeah, I'm really fired up.

[00:04:21] So, uh, Philip, our, our guest of the, of the hour, uh, what's new with you other than a $200 million series.

[00:04:28] Do you funding led by El Catherton and Meritech capital valuation greater than $1 billion.

[00:04:33] What's new?

[00:04:34] Yeah, well, so yeah, I'm, I'm super busy right now.

[00:04:37] I don't have so much time for outdoors, even though I love the outdoors.

[00:04:40] I live in the South of Munich.

[00:04:42] So I'm very close to the mountains.

[00:04:44] Our North American headquarters is in Denver.

[00:04:46] These are also my two typical places where I spend most time.

[00:04:50] Uh, so I'm always close to the mountains, but just right now quite don't have the time

[00:04:53] to actually go out, uh, to the mountains.

[00:04:56] But in my free time, uh, I'm, uh, getting to know my now 10 months old, uh, first child,

[00:05:03] uh, Carl, which is also really, really exciting.

[00:05:07] Oh, congratulations.

[00:05:09] Yeah.

[00:05:09] Thank you.

[00:05:10] Well, we all have questions for you, Philip.

[00:05:12] Uh, you guys have, uh, I guess officially, I don't know how these things are marked,

[00:05:17] but reached unicorn status within the industry.

[00:05:19] I mean, we're going to talk about what we call the day before today of, you know, the public

[00:05:22] companies within our industry, but I would say there's a big five, there's a fifth.

[00:05:26] And I think it's, it's Egypt as a very emerging leader.

[00:05:30] Uh, so yeah, we all have some questions, I guess, Alex, you want to kick it off?

[00:05:33] I know you had some, some specific ones.

[00:05:35] Yeah, sure.

[00:05:36] Sure.

[00:05:37] So, so Philip, I, yeah, I was in the club business, the gym business for 20 years.

[00:05:43] We bought hundreds of millions of dollars worth of equipment.

[00:05:47] And, uh, you know, I started in, in the mid eighties.

[00:05:53] So the strength category has evolved.

[00:05:59] Although what you're doing is, uh, at a completely different level.

[00:06:06] Uh, and, uh, I think, uh, I guess my question is, is the customer, uh, the member ready for,

[00:06:19] uh, what e-gym is selling.

[00:06:21] And, and when I talk about the customer, you know, I'm thinking beyond, uh, the YMCAs, uh,

[00:06:31] uh, beyond maybe some progressive, you know, individual, uh, type, uh, gyms, you know, the

[00:06:40] lifetime fitnesses, the planet fitnesses, the, uh, uh, equinoxes, are they, are they ready

[00:06:51] for what you're selling?

[00:06:52] And, uh, and then the other part of my question is, uh, I saw that you were partnering with

[00:07:00] Fred fitness in, uh, in Santa Monica.

[00:07:04] Uh, and that's a really interesting vertical integration, uh, move, I think.

[00:07:13] And is that a precursor to e-gym facilities?

[00:07:20] Yeah.

[00:07:21] Great question, Alex.

[00:07:23] And let me start like maybe like giving you a few facts about e-gym.

[00:07:27] I founded the company 14 years ago, the 14 years ago, I started selling to the first gyms.

[00:07:34] And in the meantime, in our market where I started selling in Germany, roughly 25% of

[00:07:39] gyms have our equipment and our software.

[00:07:42] And from all the gyms that ever bought for me, my connected hardware, uh, over 14 years,

[00:07:48] only 3% are not a customer anymore.

[00:07:51] And so I would say also in Germany, maybe interesting for you to know 50% of my new

[00:07:56] sales every year come from my existing customers because they buy more and more from, from me.

[00:08:02] And so I would say we made them really successful and really happy.

[00:08:05] We also have, we've constantly measured that like, uh, top notch NPS scores with our operators.

[00:08:12] The way we, we sell our connected solutions, I would say, you know, it also comes with e-gym cloud,

[00:08:18] which is like the world's largest API platform for gyms.

[00:08:22] Companies like ABC, Dexco, Life Fitness, Matrix, Precore, Core, and the likes, they're all integrated

[00:08:29] in one platform.

[00:08:30] So you can really create a digital experience, a consistent experience.

[00:08:35] You can create member journeys and so on.

[00:08:38] The way we sell to operators is there's basically three different areas for how we sell.

[00:08:43] One is specifically for, as in a circuit solution, which is most known because that's where we started

[00:08:51] as an onboarding tool, an automated onboarding tool for new joiners, because we realized there's

[00:08:59] a huge need for like an kind of automated way of how you onboard members, because like there's

[00:09:05] lots of studies from, uh, Paul Bedford and others.

[00:09:08] If you onboard members, they stay longer.

[00:09:10] It's kind of also intuitive.

[00:09:11] But the problem is you have so many members in intake and in Q1, and you don't have the

[00:09:16] staff in Q1 to do all these orientation sessions.

[00:09:19] So we do this completely automated and have a specific programming around the first six

[00:09:24] months to make sure that those people adopt like fitness habits, low intimidation, short,

[00:09:31] structured, you know, no excuse.

[00:09:34] You can't do anything wrong.

[00:09:35] It's not too long, all these things.

[00:09:36] And it's of course, then it's much cheaper than like buying from us is much cheaper than hiring

[00:09:40] people to do these very, uh, how to manage orientation sessions.

[00:09:45] Because with us, you configure it.

[00:09:47] How do I want my members to be onboarded?

[00:09:49] And then basically you can deliver it to millions of members with zero variants.

[00:09:54] If you hire people at, you know, I always like to say the great thing about our industry

[00:09:58] is everyone has passion for the product.

[00:10:00] But the risk also when you run, like you did a big organization is, do I pay for people that

[00:10:07] all will do it in a different way?

[00:10:10] So I can't really manage the, like the quality and the consistency and so on.

[00:10:15] So that was the first part.

[00:10:17] And then the second part is we developed our solution further to intermediate and expert users

[00:10:23] without like less guidance and more motivational features, more about high intensity, strength

[00:10:28] training and the likes.

[00:10:30] And then when we look into categories, we typically think about segment solutions.

[00:10:36] So for example, HVLP, high volume, low price.

[00:10:39] We have developed a thesis around the last 10 years in HVLP was all about land grabbing.

[00:10:46] Like it was just wonderful.

[00:10:48] You looked for a new town where there was not an HVLP yet.

[00:10:51] You opened it and you could basically predictably have your 20% EBITDA business.

[00:10:56] Nice.

[00:10:56] Now, when you start growing, you realize like, oh man, like in every town, there's already

[00:11:01] two or three of these HVLP places.

[00:11:05] And so we believe the next 10 years, it's all about yield management.

[00:11:09] You want to build your HVLP in a great location because that warrants the prospects in combination

[00:11:16] with you want to sell for like you want to advertise for low sticker price.

[00:11:21] But then in order to kind of be able to afford the location, you need to be able to basically

[00:11:29] monetize your members better than competition.

[00:11:31] And we have proven with a lot of examples that when you look at fitness like HVLP chains that

[00:11:39] have started working with us and we are now part of their blueprint, the reason why they

[00:11:43] would do that is because we have proven to them that inclusion of EGIM into their premium

[00:11:49] package had a massive impact on their conversion to premium members.

[00:11:53] And that then, you know, led to actually be EGIM not anymore an expensive piece of equipment.

[00:12:01] It's actually the cheapest possible because it returns money.

[00:12:04] And we can do this because of the full experience that we can build, including all the integrations

[00:12:09] we have.

[00:12:10] We build with the operators a beautiful journey.

[00:12:12] And then the third part is high-end and mid-market gyms.

[00:12:16] Here, we believe as a segment solution, it's all about, you know, justifying the value of

[00:12:23] the membership, having specific offers for specific target groups that we can address with different

[00:12:28] software versions.

[00:12:29] And that really show a significant improvement of two things.

[00:12:35] One, retention, which is always a long game to measure, but people have done it super professionally

[00:12:41] with us.

[00:12:43] And then two, improve PT upsell.

[00:12:46] So think about it like, let's say 20%, 30% of your members work out on EGIM.

[00:12:51] We track all the muscle imbalances and we give your PTs a constant additional bite in the

[00:12:58] apple because we tell them, hey, there's right now, you know, Alex on the workout floor and

[00:13:02] he's got some muscle imbalances.

[00:13:04] This is how you could now pitch to him.

[00:13:06] And so when I think about our retention with operators, our utilization within the members

[00:13:14] and the ability in HVLP to very successfully upsell it and in mid-market and up-market to

[00:13:22] use it as a PT farm, if you will, and proven retention, I would say it's absolutely ready

[00:13:29] for the market.

[00:13:31] Users love it.

[00:13:32] Operators are very financially successful with it.

[00:13:35] But you're still asking the right question because if I'm not bullshitting you with all

[00:13:40] the things I just said, like, why is it still in so few gyms?

[00:13:43] Right?

[00:13:43] And I do think the answer to that is that we've done tons and tons of studies is that

[00:13:49] we have not done a good job yet to explain how, like, we would only deploy our equipment

[00:13:57] in your clubs if we both agree to a very tangible ROI metric because we know this is the only way

[00:14:04] how we can basically justify our existence.

[00:14:08] And so whenever we work with new operators, we basically agree with them pre-shipment.

[00:14:15] This is what we want to achieve and it needs to be measurable.

[00:14:18] And this is also then, like, the good news is we're growing so fast that we don't really

[00:14:24] are, you know, in need for making this additional sale all the time.

[00:14:29] For me, the most important thing is that my 3% of all the customers that ever bought from

[00:14:34] me are not anymore my customer.

[00:14:35] That this 3% doesn't grow because that has been always a success for us to make our

[00:14:41] existing partners extremely successful and grow from there.

[00:14:44] And so I think a lot of operators, because digitalization didn't really happen on the workout floor

[00:14:49] for such a long time.

[00:14:50] And I have also been a reason why I believe this never happened.

[00:14:55] People are just not used to think in the digital world where everything can be tracked.

[00:15:00] And there's, I should think about like two CapEx cycles.

[00:15:05] One is I just need to have it.

[00:15:07] Otherwise, people don't accept me to be called Jim.

[00:15:11] And then there are other things that I would always consider as an ROI item.

[00:15:15] This needs to kind of make ROI.

[00:15:18] And if yet, if that does it, then awesome.

[00:15:21] I can have it on top of my fixed cost base and just generate more return.

[00:15:26] Awesome.

[00:15:27] Yeah.

[00:15:27] The, the, uh, you know, it's interesting as a buyer of equipment, we, we looked at life

[00:15:35] circuit back in the nineties and we, and we actually put it into our wall street club and

[00:15:42] we just, we couldn't get the, the system, the overall system, right.

[00:15:48] The process, uh, the buy-in, uh, the member buy-in, the employee buy-in.

[00:15:55] It was, there was a lot of friction there, a lot of resistance.

[00:15:59] And, and I have a view on this, you know, my, my, sorry to interrupt, but my, my, I think

[00:16:03] it was incredible that they did that at a time.

[00:16:06] And there were a few things that basically were in my mind missing one clearly you, you

[00:16:12] mentioned it already, like if it doesn't integrate in the entire system and it kind

[00:16:15] of creates this digital silo, then it's much harder to integrate into your journey.

[00:16:20] But I do also think that basically the circuit at the time was more like an organizational

[00:16:26] tool.

[00:16:27] It's like, Hey, you don't know what you're doing.

[00:16:29] So just follow the circuit.

[00:16:31] That's already great.

[00:16:32] But because you didn't have like touchscreen technology, color screen and so on, you couldn't

[00:16:38] make it engaging.

[00:16:39] But the users specifically for this kind of solution, they need to be attracted with

[00:16:46] engaging, uh, features and graphics and feedback to really kind of make it work for them.

[00:16:54] I'll chime in.

[00:16:55] I'll chime in here if I can, cause I'm excited to ask you about this, but you will, after your

[00:17:00] $200 million series, G, which congratulations again on that.

[00:17:03] You guys were designated as a unicorn in 2024.

[00:17:06] And I'm not sure everybody listening to this even knows what that is.

[00:17:10] So if you could explain what, what it is to be a unicorn and what does that mean for

[00:17:16] e-gym and the industry at large?

[00:17:18] And then my second question just to tee you up is how did you convince investors, uh, that,

[00:17:24] that your model was worth investing $200 million?

[00:17:28] Yeah.

[00:17:29] I mean, uh, you know, uh, I would say we've always been a better product company than a

[00:17:36] marketing company.

[00:17:38] And so oftentimes also in the past when we did financing rounds, people would say like,

[00:17:42] this must be crazy.

[00:17:44] Like I can't imagine that they're like just that they're justifying this or their financials.

[00:17:49] But I would say, for example, at this financing round, we raised the money on a lower valuation

[00:17:55] metric that what the banks would think we can achieve.

[00:17:58] But I didn't go out and speak to everyone.

[00:18:02] I actually spoke only to two funds and two funds only because I really wanted those two

[00:18:08] funds.

[00:18:09] Uh, it was like a, such a beautiful thing for me as a founder because the past I indeed needed

[00:18:14] to raise money to survive.

[00:18:15] But this time I absolutely didn't need the money.

[00:18:18] The money that we raised is still now in the bank account because we really don't didn't

[00:18:22] need it.

[00:18:22] And I'm now thinking about ways how we can deploy it.

[00:18:25] A unicorn is actually just, uh, you know, evaluation, an awesome of a billion dollars.

[00:18:32] It doesn't mean for us anything.

[00:18:34] I was actually even thinking to not announce it, but then my, uh, your VP of marketing said

[00:18:42] like, you're crazy.

[00:18:43] This will improve our conversions across the board.

[00:18:46] And I would say, and then, and that's why we did it.

[00:18:49] And I would say probably, you know, we from Egypt, because we also integrate all these

[00:18:54] great people that do something, some part of the gym so well and want to support our

[00:19:01] passionate gym operators that do such a great, great job.

[00:19:05] Servicing the members.

[00:19:06] We want to be the tide that lifts all boats because we help.

[00:19:10] You know, I mentioned before, I have one belief why digitalization never happened on the workout

[00:19:15] floor.

[00:19:16] And my belief is because everyone built their own Sino solutions.

[00:19:19] And so therefore you couldn't have a consistent digital experience.

[00:19:23] And it's maybe then also later leading us to each of genius, our AI, but, but basically I

[00:19:28] believe everything needs to be integrated so that people take that kind of personalization

[00:19:34] seriously.

[00:19:35] And then basically we can take it from there.

[00:19:37] And, and so as we want to lift all boats, for example, with our API platform for which

[00:19:42] we don't charge, we, we also believe that indeed, you know, a growth technology company from

[00:19:50] our sector being all of a sudden discussed also in, you know, the general public, because

[00:19:56] there are not so many new unicorns after the crazy hype cycle in the zero interest period.

[00:20:03] I do think that kind of, it opens more the eyes again from investors and have them look

[00:20:10] into the fitness industry because it seems like something is going on there.

[00:20:13] And I hope that our, you know, funding will also support many other fitness technology companies

[00:20:19] to have more access again to capital because unfortunately, and I've gone through this over

[00:20:25] the last 14 years, you know, pre Peloton tech investors would say like, ah, the fitness industry

[00:20:32] kind of like, that's not a tech industry.

[00:20:35] They're like, nothing was going on with tech.

[00:20:37] And then like from overnight, basically they had like this totally insane view of a spinning

[00:20:45] bike replacing every single gym in the world.

[00:20:48] And, and, and got gone, have gone crazy also, of course, investing into tons and tons of similar

[00:20:54] models.

[00:20:55] And then after Peloton kind of crashed from 50 billion market cap down to 1 billion, there

[00:21:02] was again, the same talk from pre Peloton kind of, ah, now the fitness industry is not

[00:21:06] really a tech industry.

[00:21:08] It's not really adopting to tech, blah, blah, blah.

[00:21:09] And, and I hope that we can be like, you know, that, that one soundbite that will convince

[00:21:19] people to take a look into the fitness industry because we are an exciting industry.

[00:21:25] We are a mass market industry.

[00:21:27] The gym industry has outperformed GDP growth in every single year since 2000, with the exception

[00:21:33] of 2020, because people locked us down.

[00:21:36] And so, so that's kind of like, I believe what the, the, like the impact of our announcement

[00:21:44] may be for the broader sector.

[00:21:47] Yeah.

[00:21:47] Awesome.

[00:21:48] And I think everybody, uh, as you know, Alex, Julia and I were very excited about that.

[00:21:52] I mean, we've been talking about having really good, you know, I guess spokes companies

[00:21:56] for industry out there showing that, you know, we're, we're a very serious contender and

[00:22:01] that we, we deserve a lot of attention here.

[00:22:03] So, you know, at the last few minutes we got with you, and this is a very big question,

[00:22:06] but, uh, maybe you can give us the highlights here.

[00:22:08] Philip is, you know, AI is in every conversation that I have on this podcast, without a doubt,

[00:22:12] almost every dinner party, uh, everywhere.

[00:22:14] Right.

[00:22:15] It's, it's, I think 2025 is going to be the year where we're actually talking about, well,

[00:22:18] what actual applications do we have for AI besides just this buzzword?

[00:22:23] Uh, you guys are actually in the thick of it.

[00:22:25] You created genius AI with a very different version.

[00:22:28] So, or a very different vision of how you can kind of unite the industry with hundreds

[00:22:32] of partners, having an open ecosystem.

[00:22:34] Maybe just give us the high level, like how is your approach to AI different than most

[00:22:39] within our industry?

[00:22:40] Uh, yeah.

[00:22:41] Let us know.

[00:22:42] Yeah.

[00:22:42] So, I mean, AI is also, again, one of these things that, you know, you can add a lot of

[00:22:48] value, but you need to be careful to not be one of the gazillions of bullshitters.

[00:22:55] That's just now all of a sudden everyone is an AI company, right?

[00:22:58] So, and we have been collecting over 14 years, you know, in, in, in our 16, now 16,000 gyms

[00:23:05] with all our partners, our own equipment trainers using our personal trainer app members using

[00:23:11] our member app and so on, a lot of data.

[00:23:13] And we were training in AI specifically for workout builder.

[00:23:17] And so basically each of them genius is you would be asking, you would be asking you what's

[00:23:22] your training goal and then your trade-off decisions, how many times per week, how many

[00:23:26] minutes to work out.

[00:23:28] And then basically you, when you walk into a fitness facility, the gym operator has the

[00:23:33] ability to upload all their inventory.

[00:23:35] Of course, also all the analog equipment from our partners that kind of gave us all the dimensions

[00:23:41] of their equipment so we could train the model.

[00:23:43] And then, you know, you could also integrate your wearables.

[00:23:48] So for example, if you told us you only want to work out twice a week and you have been

[00:23:52] running yesterday, we will not prescribe you any cardio today inside the gym.

[00:23:57] If you chose to jog to the gym, we will not even then when you're inside the gym, prescribe

[00:24:02] you any warmup.

[00:24:03] And then we would prescribe, our AI would just prescribe you from all the equipment that is

[00:24:09] there.

[00:24:10] And let's say you gave me 45 minutes.

[00:24:12] It's how could we now maximize your impact and our AI will learn over time what equipment

[00:24:20] works for you, what is the right resistance.

[00:24:23] And it would know, of course, for every single machine, what is the right setup.

[00:24:27] You know, the seat position and the weights on a live fitness leg press will be different

[00:24:33] for you than on a matrix leg press.

[00:24:34] And all of them kind of known.

[00:24:36] And of course, what we realized is we have a very important data point that basically no

[00:24:41] one else has that allows us to prescribe that.

[00:24:45] And that is our own smart strength machine can do strength tests.

[00:24:50] Because if you would feed back to an AI chest your lean mass, it wouldn't know if the pull-up

[00:24:56] works for you.

[00:24:57] You need to do like a chest stress strength test.

[00:25:00] And then we know exactly how did the workouts impact your chest muscle and feed that back

[00:25:07] to the AI and then prescribe you ropes or whatever you feel like doing inside the gym.

[00:25:12] And so we now also consider our equipment, not just a workout tool, but basically a data

[00:25:18] generator for really everyone on the training floor, whatever modality you like.

[00:25:22] And that makes it, of course, even more open to a broader user base, I would say.

[00:25:28] So that's eGym Genius.

[00:25:29] And Alex, looking at you, I realized I forgot to answer your second question about Fred Fitness.

[00:25:34] Super exciting concept.

[00:25:36] I will be going there in January for sure also to have a great workout.

[00:25:41] EGym will never open up our own gyms.

[00:25:43] Just to be absolutely clear, never compete with your customers.

[00:25:46] What we do is basically in every country, we have like one to three showrooms that we operate

[00:25:55] because when we show the market, people are willing to pay for that.

[00:25:59] And so on.

[00:26:00] But we would never test with local users that we would never ever kind of, you know, build

[00:26:05] our own fitness chain.

[00:26:07] It's all our vision is to lift all boats, be in like the best partner possible for gym operators

[00:26:14] because we have such a great vision for the industry.

[00:26:16] Such a big vision that we can't afford to kind of fight with our customers.

[00:26:21] We need to really support our operators.

[00:26:24] We need to support all the vendors integrated in our eGym cloud to basically attach the fitness industry.

[00:26:31] That's really what we really want to the healthcare market, which is the largest market in the world.

[00:26:36] Just, you know, please let's never forget US MSK, muscle skeletal diseases, is $1.5 trillion a year.

[00:26:44] We need to support our customers, spend on opioids, physical therapy, and oftentimes unnecessary surgery.

[00:26:50] But we as an industry, we could completely fix it.

[00:26:54] And we're like so tiny compared to these $1.5 trillion spent on opioids and stuff, right?

[00:26:59] So that's what we want to do for the industry.

[00:27:01] And for that, we need to not have like these little fights against each other, but rather think big together.

[00:27:08] Oh, I love it.

[00:27:09] Is just on Fred Fitness, is the only equipment in the facility or 80, 90% eGym?

[00:27:17] I mean, eGym AI prescribes every single workout, but there's also equipment from different providers.

[00:27:23] Like there is, for example, cardio machines with our, you know, software on it, Matrix cardio machines.

[00:27:31] There's also a functional training tower from Matrix with an integration with Function, the FitTech startup.

[00:27:40] And so basically this tower would receive from eGym AI also workouts for functional.

[00:27:45] You log into one of these towers and then you can basically have on the station with all the tools available on this tower.

[00:27:52] You can basically be guided through a functional workout too.

[00:27:55] It's like different vendors coming together, but every single workout is from functional to selectorized and cardio and stability.

[00:28:04] Everything is basically prescribed AI based and also can be tracked and fed back to AI.

[00:28:11] So nothing is random in this gym.

[00:28:12] Yeah, I love the vertical integration of that approach.

[00:28:17] I got kicked off for one second, but I just want to say that I've, you know, it's so fun to hear you.

[00:28:23] And I also appreciate, I've heard you on some other podcasts just talking about how you are trying to just sort of create this parallel model to our healthcare system and that the gym is the place to do that.

[00:28:34] And I just want to say, I totally agree and we're here for it.

[00:28:38] Congratulations.

[00:28:39] Thank you so much.

[00:28:40] Yeah.

[00:28:41] Philip, thank you for joining us.

[00:28:42] It's been a real treat and I know it's in the evening for you.

[00:28:46] So why don't you go hang out with your 10 month old?

[00:28:49] Yeah.

[00:28:50] Thank you so much all.

[00:28:52] And hope to see you all soon.

[00:28:54] Yeah.

[00:28:54] Thank you, Philip.

[00:28:55] Bye.

[00:28:56] All right.

[00:28:57] On we go.

[00:28:58] Part two here.

[00:28:59] We have the earnings reports.

[00:29:01] So Professor Alex has provided the homework Julia and I have studied.

[00:29:06] We have, of course, Peloton, Lifetime.

[00:29:11] Who else we got here?

[00:29:12] Exponential, Planet.

[00:29:14] And then we're going to talk a little bit about Blue Zones, which I thought was a really interesting topic.

[00:29:18] I know, Juliette, that's something that you've researched.

[00:29:21] You've interviewed, I think, Dan Buettner, right?

[00:29:23] Previously on the Writing State podcast.

[00:29:25] So you have some direct insights into that.

[00:29:27] So we'll get to that.

[00:29:28] But let's start off with Peloton because I think the big news, the top of the line is they have a new CEO.

[00:29:33] So who'd like to start on that?

[00:29:36] Pete Stern.

[00:29:37] He's a former Ford, Apple, Time Order, Cable.

[00:29:40] He co-founded Apple Fitness Plus amongst a couple other things.

[00:29:43] So he seems to have a strong background on digital subscriptions.

[00:29:46] So how are we feeling about that new appointment?

[00:29:49] Julia, you want to kick it on?

[00:29:50] I mean, you know, I just, you know, this has all been, you know, university class for me in trying to learn about how Wall Street thinks about companies.

[00:30:01] And my biggest takeaway was, you know, even if you're losing money, if you beat expectations, Wall Street is excited.

[00:30:11] So for me, I was like, oh, okay, they're still hand over fist losing money, but they beat their expectations.

[00:30:17] So, you know, their stock price went up.

[00:30:20] I thought that for me, that was the most interesting thing.

[00:30:22] I don't know if part of that was excitement over the new CEO.

[00:30:24] I would love to hear your thoughts on that, Alex.

[00:30:26] But for me, that was like the big thing that popped out is just the beating expectations thing.

[00:30:32] Yeah, I don't think the stock price went up because of the CEO appointment.

[00:30:38] I think it's too early.

[00:30:40] And he doesn't have a track record of, you know, having, at least in the fitness world.

[00:30:47] And he hasn't been a CEO before.

[00:30:49] And we don't know what his strategy is.

[00:30:53] So I think it's, he may be a great, you know, a great CEO and turn everything around.

[00:31:00] But it's way too early to say that.

[00:31:03] So I think what's happening with the stock price is that the company in the quarter produced a lot of EBITDA.

[00:31:17] So that's a profitability metric that's not gap-based.

[00:31:21] It's not net income.

[00:31:23] But it's cash flow before depreciation taxes and interest.

[00:31:32] And Wall Street loves to see, you know, some profitability, even if it is, you know, a non-gap measure.

[00:31:44] And, you know, some people dismiss EBITDA, like Warren Buffett would not take it, doesn't take it seriously because depreciation is a real thing, for example.

[00:31:54] But anyway, their EBITDA went up by 1,171%.

[00:32:03] So they produced $115 million of EBITDA from $9 million a year ago.

[00:32:13] So that, yeah, Wall Street loves that.

[00:32:16] Yeah.

[00:32:17] Yeah, seriously.

[00:32:19] Yeah, yeah.

[00:32:20] I mean, that shows you how much bloat there was in that company because basically their revenue didn't go up.

[00:32:31] Their expenses came down.

[00:32:34] They cut 50% of their marketing expense.

[00:32:38] They cut tens of millions out of R&D, tens of millions out of payroll.

[00:32:45] And so, you know, the challenge is for the new CEO, how do you grow the business?

[00:32:52] Like, where's the growth, right?

[00:32:54] Because they're flatlined in terms of revenue, flatlined in terms of members.

[00:32:59] You know, they can raise their monthly rate at some point, which they have done in the past, you know, like Netflix does and others do continually.

[00:33:09] So that's, you know, that's a possibility.

[00:33:12] But at some point, you got to have membership growth and you got to have new sort of growth vectors, which they haven't been able to do with hardware.

[00:33:26] They didn't mention any hardware growth.

[00:33:29] In fact, the sale of bikes went down.

[00:33:33] And they talked about software innovation.

[00:33:36] They talked about content innovation.

[00:33:40] And they seem to be doing interesting things in both of those areas.

[00:33:45] But does that just hold on to existing members or does that expand the membership pool?

[00:33:54] So far, they're just, you know, they're just pretty much flat for the last quarters on revenue and membership.

[00:34:04] What takeaways do you have, Juliette?

[00:34:07] I mean, man, I'm still rooting for Peloton.

[00:34:11] I mean, I guess that's my feeling is I want them to succeed.

[00:34:16] And I still am of the mind that their, you know, their program and software are the way to go.

[00:34:24] I mean, I do know a lot of people personally who subscribe and love it and take it with them when they travel and use it to program workouts at home.

[00:34:33] So they do have a lot of fans and people who love using their product.

[00:34:38] But, you know, how they can go from being flat there, you know, I don't know.

[00:34:42] I mean, I guess the question for me is, have they, is everybody who's ever going to subscribe to that app already done so?

[00:34:49] Or is there more space?

[00:34:51] I don't know.

[00:34:52] I don't know.

[00:34:53] What do you think, Eric?

[00:34:55] I'm on the same page as I ultimately I'm cheering for Peloton.

[00:34:57] So maybe when I look at this stuff, I look at through, you know, rose colored lenses of what's possible.

[00:35:03] But, you know, there's stuff I saw on there, language that I like, like product development efforts are grounded.

[00:35:08] I like that word grounded in features that we believe support long-term subscriber growth.

[00:35:12] So just that using that word to me for them seems just made me very comfortable because it didn't seem like they've been grounded in anything.

[00:35:19] In many of the reports we've been talking about over the past few years, it was just throwing, you know, shit against the wall and hoping that maybe something will stick.

[00:35:26] And, you know, from the partnership side, I thought there was some interesting.

[00:35:30] They'll be in Costco by the holidays, right?

[00:35:32] Peloton bikes will be in Costco.

[00:35:33] So that's, you know, maybe a good way to sell some hardware, I would imagine.

[00:35:37] Love myself some Costco time over the holidays.

[00:35:39] And then the TruMed partnership, so access to HSA and FSA dollars.

[00:35:44] I don't know how big of an impact that'll make, but I think as far as like a fundamental premise for our industry, that's really big is getting consistently showing consumers they can access their HSA, FSA dollars for fitness and wellness offerings, I think is really cool.

[00:36:01] So, yeah, we'll see.

[00:36:03] I mean, the new CEO seems to be spot on as far as his background.

[00:36:07] I mean, digital subscriptions, you know, they're not, they're kind of understanding the game that they're in.

[00:36:11] They're in a digital subscription game and fitness, which makes it a little bit difficult because, you know, it's not like selling French fries.

[00:36:18] You can't just throw the smell out there and people will buy it.

[00:36:20] Fitness people have to show up and do some work.

[00:36:22] So we'll see where that goes.

[00:36:23] But I think overall, I like it.

[00:36:27] Yeah, and I would just like to shout out to TruMed as well because the ReadyState is also a customer of TruMed.

[00:36:33] We were really early on to join them.

[00:36:35] And, you know, there's a lot of talk in our industry right now about how to change health policy on a, you know, nationwide scale.

[00:36:42] And, man, to me, that is like one of the easiest boxes to check from a policy standpoint is to make it so that everybody's gym and all this, you know, stuff that we're spending our own money on can be used, you know, can be purchased with an HSA account.

[00:36:58] I mean, to me, that is like one of the simplest policy changes.

[00:37:01] We should be able to make it just shouldn't have to be this difficult that you have to get a letter confirming that, you know, whatever it is actually qualifies.

[00:37:09] Like it just, you know, anything in this health and fitness space should automatically be able to be purchased with your HSA account, in my opinion.

[00:37:17] And also seems to be one of the easiest ways we could actually begin to make some policy change.

[00:37:23] So just shout out there.

[00:37:25] Thank you.

[00:37:25] Had to shout that out.

[00:37:26] It reminds me of the very early days of getting one's medical marijuana card, which I'm speaking for a friend.

[00:37:32] I don't know.

[00:37:33] But it was, you know, back in the day, you had to call a doctor and get a letter.

[00:37:38] Right.

[00:37:38] And then show up and you got your card.

[00:37:41] So anyway, Lifetime.

[00:37:43] How about that?

[00:37:44] I mean, it seems like everything's going in the right direction.

[00:37:47] Once again, I was on another podcast a while ago and someone was asking me about, you know, who exemplifies what we can be as an industry.

[00:37:55] And the first thing that came to mind was Lifetime because they're the only ones we can really see the numbers and the numbers seem to be steadily growing.

[00:38:01] And they seem to have a really good management on it.

[00:38:03] I had a question, actually, Alex, for you on this one, because I'm not exactly sure on this stuff.

[00:38:07] But sales leaseback proceeds and equity offering.

[00:38:11] Like, what does that educate us a little bit?

[00:38:14] What does that mean exactly?

[00:38:15] All right.

[00:38:16] So traditionally, Lifetime would buy real estate and own it and build the club on it and operate the club.

[00:38:28] Buying the real estate for them required a lot of capital.

[00:38:33] They have a big footprint.

[00:38:36] And so over the years, they've suffered a bit because of the huge amount of capital that they have to use to grow their business.

[00:38:52] So they're trying to go migrate to a more asset light type of company.

[00:39:01] And one of the ways to be asset light is to not have a lot of money tied up in real estate.

[00:39:09] So what they're doing is going forward, they're trying to do clubs without owning the real estate.

[00:39:19] So there'd be a tenant for the land rather than an owner.

[00:39:27] But for all the, you know, they have 175 locations.

[00:39:31] I don't know how many they still own, but, you know, a lot.

[00:39:36] What they can do is they can take that real estate that has an operating club on it and has a, you know, successful business.

[00:39:46] And they can go to investors and say, do you want to buy the real estate?

[00:39:50] So you own the real estate.

[00:39:52] You give us money.

[00:39:53] You know, you give us however many millions of dollars.

[00:39:56] We'll pay you rent going forward.

[00:40:00] So, so they're out of the real estate and they have a, you know, a bunch of cash that they can use to open new clubs, to pay down debt.

[00:40:11] And, uh, and it's, uh, you know, it's a financial transaction.

[00:40:16] It doesn't make any difference to the business really.

[00:40:19] You know, they're paying rent going forward.

[00:40:22] So it increases the amount of, of operating expense that they have.

[00:40:27] It lowers their margins a little bit.

[00:40:29] Uh, but it, it frees up capital that they don't have to borrow from a bank or sell stock to, to raise, to, to get.

[00:40:39] And then, uh, they did, they also sold some stock and I don't think it was a huge amount,

[00:40:46] but that's just another way for them to strengthen their balance sheet, pay down debt.

[00:40:55] And, you know, going forward, uh, they're very keen to improve their credit rating.

[00:41:03] So they want to be, uh, I think a double B, you know, at some point, I'm sure they want to be an A,

[00:41:11] an A quality, uh, credit, but what that does is that lowers the interest rate that investors require when you borrow money.

[00:41:20] So, so if you're, if you're, if, if Moody's or S and P give you a double B instead of a C or, or a B minus the,

[00:41:29] the interest rate that you pay on your debt goes down.

[00:41:35] So, you know, that's, that's a way of improving their, their capital, you know, reducing their cost of capital.

[00:41:42] And it's, uh, you know, it's financial engineering, but, but it's smart.

[00:41:47] And, uh, you know, traditionally they've been highly levered and, uh, going forward, they want to have less leverage,

[00:41:54] uh, and be a high, have a higher credit rating.

[00:41:57] Um, so they're doing, you know, they're doing everything to, to, I think have more, uh, financial security and stability and lower costs of capital.

[00:42:09] And, and, uh, you know, I think that's part of the maturation process of that business.

[00:42:15] And it, you know, it makes, it makes a lot of sense.

[00:42:17] Yeah.

[00:42:18] Super interesting.

[00:42:19] Yeah.

[00:42:20] Um, Julia, did you have any big takeaways from the report?

[00:42:23] I mean, I think the thing that stood out to me, um, as a former gym owner, and I wonder if you noticed this as well, Eric,

[00:42:32] was that the average monthly dues that customers are paying is almost $200.

[00:42:37] And, uh, you know, I remember back in the CrossFit days when we were beginning to tip, uh, into $200 a month and higher,

[00:42:45] it was just shocking to people because the model up till then had been, you know, definitely well south of a hundred dollars a month.

[00:42:53] So seeing that there are consumers and at the scale of lifetime that are sort of now willing to invest that much money on a monthly basis,

[00:43:04] I thought was, uh, was really cool and really exciting for the industry overall, because I think, you know, if these companies are going to be profitable and having run a gym myself,

[00:43:14] you know, you can't run a good gym business, uh, for, you know, when people are paying $40 or, I mean, plan of fitness is a whole separate deal,

[00:43:24] but a more high touch gym business for, for low cost.

[00:43:29] It just, the model doesn't make sense.

[00:43:30] So I was really excited to see that.

[00:43:32] I mean, I don't know how many members they have, but I mean, at $200 a month, that's a lot of people that have decided they're willing to spend $200 a month.

[00:43:39] Yeah.

[00:43:40] They, you know, they're about, I'd say 900,000 members and, and, and, uh, they haven't like their membership isn't growing that much.

[00:43:50] It grew 5% in the last year, but their revenue grew about 20%.

[00:43:57] So that's coming from price.

[00:44:01] You know, they're, they're increasing their, their dues.

[00:44:05] So they have pricing power, which shows the strength of the business, I think.

[00:44:10] And they also are increasing personal training revenue.

[00:44:14] They're increasing, uh, ancillary revenue, spa revenue, food and beverage.

[00:44:19] And, uh, so, so the average member is, is spending a lot more money at lifetime than they were, you know, two or three years ago.

[00:44:29] But the, the, the overall market in terms of number of members, uh, isn't, uh, isn't growing as quickly as you might think.

[00:44:41] Interesting.

[00:44:42] Yeah.

[00:44:43] What do you think, Eric?

[00:44:44] Yeah.

[00:44:44] I mean, it's, uh, that, that number 200 to me just seems very reasonable for membership.

[00:44:50] And I think, you know, they, they seem to inch long, but I had, uh, I want to bring this because I had Jeff Swifo.

[00:44:55] He's the head of the Miura program and, uh, CEO.

[00:44:58] I've been with, with, uh, Lifetime for a long time.

[00:45:00] And I was, you know, we, we talked about it and I'm guilty of it.

[00:45:03] I always thought Miura was going to be a super expensive $40,000 a year program.

[00:45:06] It's not like he was giving me the pricing of, you know, for the initial blood work, I think it's either 500 or 800, depending on the extensive panel, extensivity of the panel that you want.

[00:45:16] And then either another 150 to 250 on top of your membership.

[00:45:20] So it's not even close, you know, to have a preventative health, uh, you know, offering like that, that's just, just getting started, right?

[00:45:28] Like it's going to get less expensive.

[00:45:29] It's probably going to get integrated eventually into the main offering.

[00:45:32] But I thought that was pretty, um, exciting that we can have that level of service.

[00:45:37] Uh, and I'm sure there's a lot of add-ons to that, right?

[00:45:39] If you want to get peptides, if you want to do all these different things, I'm sure it starts to add up.

[00:45:43] But as a base service, I thought that was actually very reasonable for where we're at because I mean, we've heard a lot of, you know, a hundred thousand dollar plus more programs, right?

[00:45:52] Of, of longevity and health.

[00:45:54] So I think it's really cool that that model can now be starting to work within a health club that we truly can be, you know, this,

[00:46:02] the, the preventative health model was, was really exciting.

[00:46:05] So that was, that was something I want to share with you guys.

[00:46:07] There's this sort of price discovery happening around how, what are consumers willing to pay for longevity programs?

[00:46:14] Is it 200 a month?

[00:46:16] Is it 2000 a month?

[00:46:19] And, uh, yeah, they're definitely, uh, uh, trying to make it affordable.

[00:46:25] I mean, it's still, it's still 200 a month on top of your 200 a month of, of, uh, of membership, but arguably a good investment.

[00:46:36] You know, it's interesting.

[00:46:37] They talked a lot about supplements, about the supplement business on the call.

[00:46:43] And, uh, brah McCradi, who's the CEO was joking that he takes about 80 supplements a day.

[00:46:51] Um, I, I think he might've been joking about that, but, but they want to make that business, you know, 500 million to a billion dollars over the next five, 10 years.

[00:47:02] And, uh, so that's, you know, it's interesting just where's the growth going to come from?

[00:47:06] You know, they'll build new clubs, but they'll also add on these other things.

[00:47:10] You know, your, uh, supplements pickleball.

[00:47:14] Yeah.

[00:47:15] It's, yeah, it's, it's, it's an ambitious, uh, uh, company for sure.

[00:47:20] Well, I always said, if I was really just focused on making money, uh, in our industry, I would start a supplement line because that seems to be where the, uh, the dollars really.

[00:47:28] Isn't it amazing though?

[00:47:29] I mean, I'm always shocked that there can be as many supplement companies as there are and new ones rolling out each day.

[00:47:38] And yet it's still seems to be a good way to make money.

[00:47:41] It's amazing to me.

[00:47:42] I'm always like, are we saturated yet?

[00:47:44] Like there's a lot.

[00:47:46] It's nice not to be regulated.

[00:47:47] I think that's a big thing.

[00:47:48] Um, like, you know, don't just focus on the new ones that are coming in, focus on the ones that are closing shop.

[00:47:56] Yeah, that's true.

[00:47:57] Yeah.

[00:47:57] Right.

[00:47:57] Cause they come and go like, like Tom Brady had one and that that's gone.

[00:48:03] Yeah.

[00:48:03] Yeah.

[00:48:04] Good point.

[00:48:05] So it's, it's a revolving door.

[00:48:07] I think.

[00:48:07] Let's see.

[00:48:08] Uh, what's next here?

[00:48:09] Exponential fitness.

[00:48:12] So the trauma always continues at expo, but I mean, things seem pretty good.

[00:48:16] Alex, did you go on that conference call?

[00:48:18] I was wondering about that one.

[00:48:19] Yeah.

[00:48:20] Yeah.

[00:48:21] Yeah.

[00:48:21] So expo has a new, uh, new CEO.

[00:48:25] Uh, seems like a really solid.

[00:48:29] Uh, executive, you know, it's, this is his third rodeo.

[00:48:33] I would say, cause he was at Adidas and then, and then at, uh, Taco Bell.

[00:48:39] And he's definitely not doing this for the money.

[00:48:42] I think he's, he might, he might make a lot of money, but you know, he's, he's done really

[00:48:47] well at his other, his other, uh, companies.

[00:48:50] And I think what, you know, the stock has been, it's up a little bit over the past three months

[00:48:58] and, and up, you know, pretty nicely over the year.

[00:49:02] But I, I think it's, it's not, it's, it's a little, uh, you know, not very exciting right

[00:49:11] now.

[00:49:11] We'll see, you know, we'll see what's happening.

[00:49:14] He, so he, he spent a lot of time talking about his strategic initiatives.

[00:49:18] A big one is culture change and expo was a sales machine, like a franchise sales machine.

[00:49:30] Just that's, that's what I think the former CEO was focused on sell, sell, sell, you know,

[00:49:37] that is, uh, a terrific, you know, and critical part of, of a franchise operation, but the

[00:49:47] franchisees need to succeed.

[00:49:49] You need to sell franchise, the right franchise to the right people and they need to succeed.

[00:49:54] The, the challenge is that I think they have a lot of struggling franchisees.

[00:49:58] I mean, a lot, and they, they, they closed, I want to say 5% of the, you know, 3,000 in

[00:50:09] the last, uh, over the last quarter, or maybe that's for the year, but, uh, you know, they

[00:50:15] have a lot of unhappy franchisees who aren't making money.

[00:50:18] Uh, uh, club Pilates is really the, the, uh, you know, the, the, the shining star, but

[00:50:25] I think, and then maybe, maybe the stretch, you know, stretch lap, but I think, you know,

[00:50:31] that's only two of, of eight or nine.

[00:50:34] So the others are, you know, they, they probably have a mixed bag, but they seem to have a lot

[00:50:41] of, anyway, a lot of struggling franchisees.

[00:50:43] So the emphasis that the CEO is, is, uh, is, is putting on the company is we gotta, you

[00:50:51] know, we gotta focus on the franchisees and make them successful.

[00:50:54] It's not about, we don't need to sell a huge number of, uh, new franchises at this point.

[00:51:01] I'm sure they're still selling, but they pretty much, I think, you know, decimated their sales

[00:51:08] force.

[00:51:08] My, that's my sense pretty much, you know, turned it over.

[00:51:13] Um, there, uh, uh, yeah.

[00:51:16] So, so I think that's the right focus.

[00:51:18] And then the question is going to be, you know, how long does Club Pilates just, you know,

[00:51:25] uh, continue to generate growth and profitability for the overall chain, for the overall portfolio.

[00:51:32] And when it flatlines who, which brand takes over.

[00:51:37] Yeah.

[00:51:38] I mean, I'll, I'll chime in.

[00:51:39] I think my re my only, uh, beyond what Alex said about this sort of shift from sales to

[00:51:46] marketing and operation culture, which I thought was really interesting.

[00:51:49] You know, I sort of feel like this is a hurry up and wait to see what happens in 2025 for

[00:51:54] us.

[00:51:54] Like, I think this guy, I, you know, I think he just had his first hundred days.

[00:51:58] I think we don't know.

[00:51:59] So I think it's going to be super interesting in the, in the coming quarters to see what they

[00:52:03] do.

[00:52:04] That's so I thought there was a lot of like, let's hurry up and wait to see what happens

[00:52:08] here.

[00:52:09] Yeah.

[00:52:10] Yeah.

[00:52:10] I would agree.

[00:52:11] I mean, it's, uh, when you shift to, you know, success of the franchisees, it's really hard

[00:52:16] to be transparent at this level of what exactly is going on.

[00:52:19] Right.

[00:52:19] So we see some numbers.

[00:52:21] They were, you know, they're, the reporting is even from good to bad numbers, but everyone's

[00:52:24] going to report the numbers they want to report.

[00:52:26] Right.

[00:52:26] So it's, it's really hard.

[00:52:27] I mean, the only addition, additional thought on this is, you know, having talked to the

[00:52:31] president of Lindora and they look to have like, they're going to have a good amount

[00:52:34] of openings coming next year.

[00:52:36] Um, and that one just as a model and the timing of GLP ones and all that seems to be like

[00:52:42] something that could really, you know, uh, bolster their, their growth.

[00:52:46] Uh, as well.

[00:52:47] So we'll see where that, that goes, but yeah, I agree.

[00:52:50] Expos kind of is what it is right now.

[00:52:52] And we'll, we'll just see how they handle the, at the franchise level.

[00:52:55] But doesn't, does, didn't Lindora when, when, when you hear about all the moving parts in

[00:53:02] that business, doesn't it strike you as, as sort of an outlier in their portfolio where

[00:53:09] totally, you know, club Pilates is pretty simple cycle bar, pretty simple stretch lab, pretty

[00:53:15] simple.

[00:53:16] Lindora's got like a medical component and all these different, you know, treatments

[00:53:21] and the huge menu of offerings.

[00:53:24] I wonder, and, and more CapEx up front.

[00:53:27] Yeah.

[00:53:28] I wonder how that fits into the, into the portfolio overall and what the growth profile

[00:53:34] really looks like.

[00:53:35] And more regulation.

[00:53:36] I mean, they have to state by state.

[00:53:38] There's going to be a lot more regulation on what they do.

[00:53:40] They can't just, you know, uh, no, it is, it's definitely more complex.

[00:53:43] And I know Lou, the president there, DeFrancisco, you know, he's certainly sounds like he's up

[00:53:47] for the challenge and he's learning along the way of what they need to do.

[00:53:50] But I think just as a model, I mean that, that, I think we're going to see a lot of similar

[00:53:54] stuff to that evolve around GLP ones.

[00:53:56] You're sure.

[00:53:56] Right.

[00:53:57] You're just going to see that model evolve and continue to grow in different ways.

[00:54:01] But yeah, it's, it's definitely early, but demand's there.

[00:54:05] Like that's the basic line.

[00:54:06] It's like the demand is there.

[00:54:07] You know, the, the flip side of that coin is, uh, if it is more complicated, it's harder

[00:54:13] for others to compete with.

[00:54:16] It's just a harder business to set up and run.

[00:54:18] So once you get it going, you know, it's a hell of a lot easier to, to keep your, your

[00:54:25] competitive advantage than it is if you open a Pilates studio.

[00:54:28] Planet Fitness.

[00:54:30] Uh, so one of the quotes I think from, uh, calling Keating, we delivered solid results

[00:54:34] in the quarter, including more than 5% revenue growth, approximately 3% net income growth,

[00:54:40] approximately 10% adjusted EBITDA.

[00:54:42] You know, raising our outlook for certain key financial targets.

[00:54:47] What does all that mean?

[00:54:48] Exactly.

[00:54:48] I, you know, I think their financial results were fine.

[00:54:52] You know, she's, she, uh, they haven't had a CEO for a while and, uh, uh, the growth,

[00:55:00] I, I think it's a healthy, it's a health, you know, it's a healthy quarter.

[00:55:04] Uh, but you know, more, uh, kind of interesting to me was her strategic initiatives.

[00:55:13] And, uh, one that I, I'd be curious what you guys think about is, uh, sort of redefining

[00:55:22] the brand.

[00:55:23] So, uh, I'm going to quote here.

[00:55:26] She says, we are doubling down on our efforts to establish Planet Fitness as the club that

[00:55:33] welcomes all fitness levels from beginners to more advanced, whether they're starting

[00:55:39] a fitness journey or running another marathon.

[00:55:42] Uh, you know, traditionally they've been the gym for beginners, I would say, and people,

[00:55:49] you know, getting people off the couch.

[00:55:50] That's what the former CEO used to say.

[00:55:53] That's, that's what we're, we're trying to do.

[00:55:55] Get, get America off the couch.

[00:55:57] And now she's saying, well, that's maybe a little limited.

[00:56:02] We want to broaden the brand appeal.

[00:56:05] Um, is, do you think that's doable at a material level?

[00:56:11] I mean, I guess I would say I'm skeptical.

[00:56:15] I, uh, I'm skeptical that the folks who were serious athletes.

[00:56:20] Training for a thing would choose planet, you know, planet as a, as the gym to, you know,

[00:56:26] get, get faster and, and stronger and sort of, you know, go from A to A plus.

[00:56:32] I think I'm skeptical about that.

[00:56:34] Um, and I, I still think, you know, there's still a huge market of beginners to get off the

[00:56:41] couch.

[00:56:42] So I don't know.

[00:56:43] I don't understand the, what they're, what they're thinking there.

[00:56:47] And I'm skeptical.

[00:56:48] I don't know.

[00:56:48] What do you think, Eric?

[00:56:49] Eric.

[00:56:49] Yeah, I agree.

[00:56:51] I mean, um, I don't know what camp or what category I would fall into personally, but

[00:56:56] I've felt that in their campaigns in the past, in my mind, in their branding, they don't

[00:57:01] want me there.

[00:57:01] Like I grunt when I lift weights.

[00:57:04] Uh, I occasionally drop a barbell, right.

[00:57:07] If I lose my grip on it, you know, I'm, I'm, I'm not their guy.

[00:57:11] And so, you know, for, uh, that will permanently be emblazoned in my memory that I'm not who

[00:57:17] they want.

[00:57:18] So, you know, I'm going to go to a sports performance center.

[00:57:20] I'm going to go to a CrossFit gym.

[00:57:21] I'm going to go to, uh, you know, health club that's more, you know, open to people who are,

[00:57:26] they're intermediate to advanced trainees and that's it.

[00:57:29] So I, it's going to, it would be a big, big lift, pun intended for them to, to do that.

[00:57:37] I think so.

[00:57:37] But you never know.

[00:57:39] I mean, people in this, in this world, they forget really fast.

[00:57:41] Right.

[00:57:42] So we'll, uh, we'll see what happened.

[00:57:44] I mean, I thought it was interesting that they marked their first increase in over 25 years

[00:57:48] for their, their classic card membership.

[00:57:51] Yeah.

[00:57:51] 25 years.

[00:57:52] That's wild.

[00:57:54] Right.

[00:57:54] From a business standpoint, like aren't you raising rates just a little bit?

[00:57:58] That's like Costco's hot dog, right?

[00:58:00] Yeah.

[00:58:01] They, they, they've never raised the price of their hot dog.

[00:58:04] You know, the, the interesting thing or one interesting thing on the price increase is

[00:58:08] that they only applied it to new members.

[00:58:11] So they're keeping the $10.

[00:58:13] It's not like when, you know, Netflix raises their prices, everybody gets hit.

[00:58:18] Uh, so, so that, that was interesting to me.

[00:58:21] I think Lifetime raised their price when they raised their prices.

[00:58:25] Uh, they raised the rack rate and they also raise, uh, existing members to some degree.

[00:58:31] They don't go all the way to the rack rate, but you know, they, they, they still bump up

[00:58:36] the, the existing, uh, membership base.

[00:58:40] So, you know, planet could have, I don't know, you know, they could have raised the rack

[00:58:45] rate to 15 and the existing members by a buck and it, and it would have been, you know,

[00:58:52] $20 million a month.

[00:58:54] That's why, yeah, I don't know.

[00:58:56] I don't know why they were stubborn on that.

[00:58:58] I guess, you know, it's, it's a loyalty thing and, but probably more, uh, it's not really

[00:59:06] about loyalty.

[00:59:07] It's about the concern that even a buck will lead to a lot of, of attrition.

[00:59:14] If you notify, you know, millions of members who really don't go that, that their, their,

[00:59:21] uh, their membership is going up, you know, a dollar, they're going to be like, oh, I haven't

[00:59:26] been in like six months, nine months.

[00:59:29] What, what, what am I holding on to this membership?

[00:59:32] That's all I need.

[00:59:33] I even had a membership.

[00:59:35] Yeah.

[00:59:36] You know, that happened to me back in the day I held on to, I got an eight 99 a month,

[00:59:41] 24 hour fitness membership that I held on to for years because like once in a blue moon,

[00:59:48] I could pop in there when I was traveling or I could just use it to take a shower.

[00:59:52] And then that exact thing happened.

[00:59:54] They, I finally, after years, I mean, I think I had that membership for like 10 years, got an

[00:59:58] email that, you know, they were upping my rate to like 49 or something.

[01:00:03] And that's when I was finally like cancel.

[01:00:06] So, uh, yeah, I think that's probably a real concern.

[01:00:10] We used to call that the sleeping, let sleeping dogs lie in the business.

[01:00:16] Don't wake them up.

[01:00:18] Yeah.

[01:00:18] So, yeah, I mean, you know, yeah.

[01:00:21] Well, well, I think that's, uh, I think that's the big ones, right?

[01:00:26] Uh, I'm, I'm, I'm kind of eager to get onto, to blue zones.

[01:00:30] Cause I think this is going to be a really fun conversation.

[01:00:32] And, uh, so yeah, I mean, unless you guys have any other closing thoughts on earnings

[01:00:35] reports, anything that you wanted to throw in there before we get to our final topic here?

[01:00:40] I mean, the only other thing on planet that I thought was interesting was the data around

[01:00:46] the number of pieces of cardio typically was a hundred it's down to 70, you know, and they're

[01:00:54] increasing open fitness space and strengths.

[01:00:57] Um, so I just think that confirmed our, what we already know about the direction that things

[01:01:02] are going on in the gyms.

[01:01:04] Yeah.

[01:01:05] I love it.

[01:01:06] And I mean, for me, I'm just, I think, you know, 50% of the companies we talk about have

[01:01:10] a new CEO.

[01:01:11] So I think it'll be really, you know, 2025 as the dust settles a little bit on those

[01:01:15] companies will be really interesting to see what happens.

[01:01:18] Yeah.

[01:01:19] All said.

[01:01:20] All said.

[01:01:20] Okay.

[01:01:21] So, uh, blue zones now, uh, there's what five blue zones technically for people who are

[01:01:29] unfamiliar.

[01:01:29] There's a Sardinia, Italy, uh, Acario, Greece, uh, the seventh day Adventist community of

[01:01:35] Loma Linda, California, which I believe is not too far from you.

[01:01:38] Right.

[01:01:38] Juliet.

[01:01:39] Yeah.

[01:01:39] Made it wrong.

[01:01:40] Oh, so.

[01:01:41] Okay.

[01:01:41] Okay.

[01:01:42] Uh, Nicoya, Costa Rica, Pinsa and Okinawa, Japan.

[01:01:46] The, uh, typical, I guess what they call the power nine, right?

[01:01:49] Is, uh, the qualities that they've identified here for those regions where people tend to

[01:01:55] live longer and better that they move naturally.

[01:01:57] Uh, they have purpose, uh, downshifts.

[01:02:00] So essentially stress deregulation or regulation, uh, the 80% rule, which is, uh, watching what

[01:02:06] you eat, the amount that you eat for the most part, or just the 80% rule in general.

[01:02:10] Uh, they tend to slant towards plant-based foods, uh, wine at five.

[01:02:15] So they don't mind a couple, one or two, uh, alcoholic drinks to, to, to, to relax.

[01:02:21] Big fan of that.

[01:02:22] Uh, they have the right tribe.

[01:02:24] They're surrounded by the right people with the right interests and the right activities.

[01:02:27] Uh, lovely ones first.

[01:02:28] They have a strong, you know, I guess, uh, unifying tribal factor to, to, to what they

[01:02:33] do.

[01:02:33] And then, uh, belonging, uh, sense of belonging.

[01:02:36] And you sent over Alex, uh, a, uh, article from Peter Atiyah who addressed, uh, one specific

[01:02:43] point of view, Juliet, you've interviewed Dan Buehner has, who's kind of written, literally

[01:02:48] written the book on blue zone.

[01:02:50] So I think we have a really interesting kind of conversation brewing here of like, your

[01:02:53] tea was not shy, right?

[01:02:55] Almost antagonistic.

[01:02:56] You know, I can't remember where you used exactly Alex, but he, he was, uh, yeah, he

[01:03:01] wasn't kind to it.

[01:03:03] So where do we stand?

[01:03:04] You know, what's, what's the thoughts on blue zone?

[01:03:06] Good, bad, indifferent.

[01:03:08] Uh, I don't know.

[01:03:09] Well, Juliet, why don't you kick it off since you've, you've talked to Dan Buehner.

[01:03:12] Oh, that's really good.

[01:03:12] Yeah.

[01:03:13] Alex, go ahead.

[01:03:13] Well, I thought it was pretty hilarious that the, in, in Italy, apparently there were

[01:03:22] a lot of centenarians who were dead, uh, but still collecting their pensions.

[01:03:31] Uh, that's my people.

[01:03:33] I was like, yeah, who thought of that?

[01:03:35] But somebody's cashing those checks, but, uh, yeah, I mean, there's sort of a, you know,

[01:03:44] a, uh, you know, a T is staking out the science side, the data side, the, the really mathematical

[01:03:54] analytical side of, of, um, the longevity spectrum.

[01:04:00] And I think Buehner is a little bit maybe light on the, on the science and the analytics

[01:04:08] and, and maybe, you know, uh, more on the common sense side and just the approachability

[01:04:17] and accessibility and, uh, uh, the, you know, the challenge with, with the side that Buehner's

[01:04:26] on is he may overstate the importance of certain things without really having data to support it.

[01:04:34] You know, it's, it's, it's the, the, the correlation versus causation discussion.

[01:04:41] Like, okay, you know, people in, in these places, you know, walk up a big hill to get to church.

[01:04:50] And so they have physical activity built into their every day.

[01:04:54] Is that correlation?

[01:04:56] Is that causality?

[01:04:57] I mean, common sense would say, well, there, yeah, that's, that's probably a pretty good,

[01:05:02] you know, physical activity to raise your heart rate on a, you know, on a daily basis.

[01:05:11] But, you know, as a scientist that he is going to say, well, you don't really have the data to

[01:05:16] say that, that, you know, you're walking a quarter mile up a hill.

[01:05:21] Is that gonna, you know, translate to longevity or?

[01:05:25] So I guess, I mean, I think, I think the fitness world generally is moving, uh,

[01:05:32] you know, more towards science and, and analytical data and, you know, wearables and,

[01:05:39] and tracking and AI.

[01:05:42] And so, so the, uh, that's a direction we're going in.

[01:05:47] And I, but, you know, there's a lot of room for common sense and conventional sort of wisdom

[01:05:53] and, and, you know, understanding what a food label says versus looking at an

[01:06:02] alphabet soup of, of chemical, you know, added to that's common sense.

[01:06:08] And, and so I think there's room for both, but the, the direction we're heading in is,

[01:06:13] is, is the Peter Attia direction.

[01:06:15] Yeah.

[01:06:16] Right.

[01:06:16] But see what, what, the way I react to that though, is if they had, they'd probably live

[01:06:23] to 120.

[01:06:24] Yeah.

[01:06:25] Yeah.

[01:06:27] So yeah, they're genetically blessed and, and they have a lot going on, but the, I,

[01:06:33] I, I, yeah.

[01:06:34] Yeah.

[01:06:35] It's the, uh, is it because of there's or despite of, right.

[01:06:39] That, that we see these things.

[01:06:40] And, uh, you know, I, I just thought, right.

[01:06:43] It's just these two different dichotomies, right.

[01:06:45] You get, you get, you get Atiyah who's very data driven.

[01:06:47] Like, honestly, I, I look, I've read, you know, his book and looked at his, his regiment

[01:06:52] and it's not fun.

[01:06:54] There's nothing enjoyable about, you know, VO two max intervals.

[01:06:58] And, you know, he, he's very disciplined.

[01:07:00] It's all comes down to discipline and science.

[01:07:03] Right.

[01:07:03] And then you look at Peter, it's the opposite.

[01:07:05] It's like, well, you know, it's, it's lifestyle.

[01:07:06] It's like, you know, Hey, have a glass of wine, which I'm like, you know, don't take that

[01:07:10] away from me.

[01:07:11] Like, let me just have a glass of wine.

[01:07:13] Right.

[01:07:14] Like at the end of the day and the fact that, you know, diet, he, he says that,

[01:07:17] Dan Buehner says he quoted him diet and exercise do not work and exercise and fitness have us

[01:07:22] trying to solve the right problem, but in the wrong way.

[01:07:25] Like, well, okay.

[01:07:26] And, and to me, this all boils down to something I've seen in this industry for, for a very long

[01:07:30] time is like, it became when like, well, what's better?

[01:07:33] Is it paleo or is it vegan?

[01:07:35] Like we're talking about the last 5% to go here.

[01:07:39] Like if you're getting rid of processed foods, you're doing more movement in your life.

[01:07:43] You're sleeping better.

[01:07:45] You're drinking more water.

[01:07:46] You're doing all these fun.

[01:07:47] You have better relationships.

[01:07:48] You're less stressed out.

[01:07:49] Like this is fundamental, but majority of people out there are not even close.

[01:07:55] And we tend to argue about these, these little things at the top, right.

[01:07:59] Of, of what makes it optimal.

[01:08:01] And I think that's what I, I see again is like, oh, this is the age old conversation.

[01:08:06] A lot of it is just clickbait, right.

[01:08:08] Trying to get more eyes on an article or trying to get more books sold, or there's always other

[01:08:13] motivations that aren't as pure as we would want them to be, but that's just the way things are.

[01:08:17] So to me, that's what I saw.

[01:08:19] That was the first thing in my thought.

[01:08:20] I'm like, oh, here we go again.

[01:08:21] We're, we're arguing about optimal and we're forgetting about the majority of the people out there.

[01:08:24] Yeah.

[01:08:25] Yeah.

[01:08:26] The, the, I mean, I think studying centenarians is, is being done and there's a lot of research

[01:08:33] that's, that's underway.

[01:08:36] And I think that's incredibly important and interesting and it's going to be valuable.

[01:08:43] So maybe we, we need to think more about centenarians just generally, and not so much about blue

[01:08:50] zones.

[01:08:50] I mean, the one thing I noticed about, go ahead, Julian.

[01:08:53] And you know, when I look at this stuff on a map, I always thought there was more of

[01:08:56] a latitude kind of thing, like geographically, like the latitude seemed to be in, in the,

[01:09:01] you know, actual temperate nature of the environment played as something, but that wasn't really

[01:09:07] mentioned too much in here.

[01:09:08] And I think the big thing is the likelihood of faulty data, you know, kind of come back

[01:09:12] to that as like, maybe this data that's being collected on blue zones can't quite be trusted.

[01:09:16] And I mean, if that's true, then fundamentally this whole thing's off.

[01:09:20] Right.

[01:09:21] You know, and I think you're right, Alex, what I took away too, is like, maybe we should

[01:09:25] just be studying centenarians at large, no matter where they live.

[01:09:29] Right.

[01:09:29] I know I am inspired to bring full circle to ski season again.

[01:09:34] It's like, I am inspired so much by people that I know, where I see that are skiing in

[01:09:40] their nineties here, right?

[01:09:42] Still Monday through Friday, they go up until essentially one guy's I see one of those guys

[01:09:47] goes until his, his hand warmers stopped warming his hands and then he's done for the day.

[01:09:52] Right.

[01:09:53] I'm like, that's awesome.

[01:09:54] And that's what I aspire to be.

[01:09:56] And like, is anybody studying that guy?

[01:09:58] I mean, he's incredible.

[01:09:59] Right.

[01:09:59] So why does it have to be in just these zones?

[01:10:01] You know, I think that's, that's the bigger conversation is how do we open it up a little

[01:10:05] bit more, start looking at other areas.

[01:10:06] And yeah, kind of my, my thoughts.

[01:10:09] So as we wrap it up, you guys, any, yeah.

[01:10:12] Sure.

[01:10:13] Yeah.

[01:10:13] Yeah.

[01:10:13] Well, you guys, as we wrap it up, any final thoughts on, I guess, 2024?

[01:10:19] Really?

[01:10:20] What do you got?

[01:10:21] Yeah.

[01:10:22] And, and, and I'm grateful that we didn't talk about politics and that I don't have to,

[01:10:30] we don't have to get bombarded, you know, for a while with crazy advertisements about

[01:10:39] what's going on in, in the, in the political world.

[01:10:43] And yeah, I'm looking forward to, if I pay attention to politics, it'll be at a local

[01:10:48] level and, and, and hopefully the, you know, the, yeah, there'll be less mind share around

[01:10:56] that subject matter for a little while.

[01:10:59] Yeah.

[01:10:59] Yeah.

[01:11:00] I agree.

[01:11:00] I mean, yeah, I went to get my mail yesterday and all I was in there was a newspaper and

[01:11:09] a couple articles of real mail, like, you know, some bills and invoices and stuff like

[01:11:13] that versus like the conflagration of just, just paper of, I mean, we were in that heated

[01:11:19] Senate race here in Montana.

[01:11:21] Right.

[01:11:21] I don't know how much money got spent on that, but I would go up in my mailbox and it was just

[01:11:24] flyers after flyers and I was like, this is, so I agree.

[01:11:28] And I think, you know, my thoughts on, on this year is overall, it's been a good, uh,

[01:11:31] kind of a transition year, I think for the industry.

[01:11:34] And I hope, uh, 2025, I think there's a lot of things in place where we could see a lot of

[01:11:40] progress in our industry.

[01:11:41] And you see the EGMS, you see this advancement of preventative health and that conversation

[01:11:45] and whatever this, this, uh, subconscious rebrand we're going through right now from fitness

[01:11:50] to the health and wellness, I think is really cool.

[01:11:53] So yeah, I'm excited for it.

[01:11:55] I'm grateful for you guys.

[01:11:56] It's been a great, uh, four part series this year.

[01:11:58] I'm looking forward to what we do with this next year.

[01:12:00] And, uh, yeah, I guess that's, that's a wrap.

[01:12:03] Yeah.

[01:12:04] Yeah.

[01:12:05] It's, it's been great.

[01:12:06] And hopefully, yeah, we continue and, uh, keep having great guests.

[01:12:11] Let's, let's, uh, you know, bring, bring on some others and, uh, yeah, maybe there's

[01:12:17] some other, uh, ideas we could talk about offline.

[01:12:20] Yeah.

[01:12:21] And listeners, if you have ideas for us on what you'd like to hear us cover and topics

[01:12:24] or guests or anything that you think we could do to improve this segment and make it more

[01:12:28] valuable, just let us know.

[01:12:29] But in the meantime, everybody enjoy the holidays.

[01:12:33] Enjoy that sauna.

[01:12:33] Enjoy that skiing, Alex.

[01:12:35] And, uh, we'll, we'll be talking to you guys soon.

[01:12:36] Thank you very much.

[01:12:37] Thank you.

[01:12:40] Thank you.

[01:12:40] Hey, wait, don't leave yet.

[01:12:42] This is your host, Eric Malzone.

[01:12:44] And I hope you enjoyed this episode of future of fitness.

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