Natalia Karbasova & Stefan Tilk - FitTech Summit 2021 Preview

Hey everybody, welcome to the Future of Fitness, a top-rated fitness industry podcast for over two years and running. It is 2021, and I am your host, Eric Malzone. I have the absolute pleasure of talking to entrepreneurs, innovators, and cutting-edge technology experts within the fast-paced industries of fitness, wellness, and health sciences. Stop by futurofitness.co to subscribe and learn more. Hey listeners, this episode of the Future of Fitness is brought to you by our good friends at InsightTracker. Do you want to add more years to your life and more life to your years? Of course you do. Which means you need to make a change. And that is what Insight Tracker is all about. Founded by leading scientists in aging, genetics, and biometric data from MIT Tufts and Harvard, Insight Tracker is a personalized health and wellness platform like no other. So what's their secret? First, Insight Tracker uses its patented algorithm to analyze your body's data and offer you a clearer picture than you've ever had before of what's actually going on inside you. Then Insight Tracker provides you with a concrete, science-backed action plan for living a longer, healthier life. And it tracks your progress every day, every step of the way. For a very limited time, Insight Tracker is offering future fitness podcast listeners 25% off store wide. Visit InsightTracker.com slash future to get your offer code and try it Insight Tracker today. Insight Tracker, because change is an inside job. This episode is also brought to you by Morpheus, the world's first and only fitness intelligence platform built by coaches for coaches. Look, there is a ton of fitness and health data being collected on you and your clients, but are you leveraging it? And perhaps more importantly, are you saving yourself time and making more money because of it? Well, I'll answer that question for you. You're not, because you can't until now. Morpheus arms coaches with accessible, intelligent, communicable client insights to save coaches time and ultimately increase your value and earn more money. By collecting lifestyle data from 90% of the current wearable market and combining that data with cutting-edge proprietary technology, Morpheus provides an accurate and reliable recovery score for all of your clients served up on a simple and elegant dashboard. No more guessing, just the real, honest data alongside the insights from Morpheus into what to actually do with it. But wait, it doesn't stop there. The Morpheus platform also provides live heart rate training for your clients that can be tracked and shown anywhere, in the gym, in a home, outdoors, with personalized heart rate zones for each individual client. Combined with custom alerts, in-app messaging, and other amazing features, this is the ultimate coaching machine. Go to trainwithmorpheus.com to learn more. That's trainwithmorpheusmo r-e-us.com. Please go check out our wonderful sponsors. And if you get value out of this show, I ask you to do three things. Please go subscribe, give us a favorable rating, and share this episode on social media or wherever you like to go chat with friends. I am your host, Eric Malzone, and once again, welcome to the Future of Fitness. This episode of the Future of Fitness is presented to you by the Fit Tech Club, a business network run by the creators of the Fit Tech Summit, Europe's leading conference devoted to fitness and health technology. Look, friends, the fitness industry is changing faster than ever. The intersection of technology with fitness and health is growing bigger and more dynamic by the minute. Gyms are exploding figuratively, and their constituent parts are ending up at home, outdoors, on your wrist, or in entirely new places with brilliantly new concepts. Investors are pumping astronomical amounts of money into the market like we've never seen before. The FitTech Club believes that collaboration is the advantage to these times of change. That's why the club aims to bring thought leaders together to inspire them by making the right contacts at the right time and giving insights to the industry's most relevant and current trends. Here's what Melanie Lauer, CEO of Kettler and TriSports, says about the FitTech Club.

We have joined the FitTech Club because it gives us access to the most recent innovations in the industry. It gives us access to a unique network and to potential business partners that help us developing our business further.

If you're interested in the fitness technology game and looking to accelerate your growth, I highly suggest you check out fittechsummit.com forward slash club to learn more. You can join the highly valuable newsletter, apply for the FitTech Club itself, or simply learn more or connect with people like me. That's fittechsummit.com forward slash club. This episode of the Future of Fitness is brought to you by our good friends at the Brand X Method. Kids deserve our best. Period. Full stop. Brand X has dedicated themselves to doing what is best for kids for over two decades. Here's the facts. All major pediatric organizations agree that youth strength and conditioning and fitness programs must be specifically designed for children and coached by those specifically educated in working with children. This seems like a no-brainer. Successful programs come from educated coaches who have all the tools to best serve the youth. Brand X offers unequaled ongoing support through ever-growing relative content delivered monthly, plus the mountains of information leveraging their 20 plus years of experience. As the developers of the original Kids Functional Fitness Program and certification with over 100 state and national record holders and recognize the world's leaders in youth fitness, Brand X not only offers the fully digital, take it-your-own pace, professional youth coaches certification, but has recently added to their suite of custom education products to best serve educators and parents as well. Because kids deserve our best. So whether you are a gym owner, coach, educator, parent, or simply anyone who cares for the future of our children, Brand X is offering a 20% discount on all digital education products for a limited time. Go visit the BrandXMethod.com forward slash future to get your code today. Again, that is the brandxmethod.com forward slash future and claim your code. All right, we are live. This is going to be a lot of fun. I have the great and powerful Natalia Karbasova, which people know from two previous interviews. And now today we are joined with another colleague out of Europe's, Stefan Tilk. Welcome, you guys. Thank you.

Hello.

So I'm already giggling a little bit because I know you two are very close. You guys will kind of get into your background, how you guys met each other, and especially very interested in learn more about you, Stefan. But uh you guys are a great team over at the FitTech Company in the FitTech Summit. And so far, proud to say that I'm working with you guys now uh on the North American efforts and I'm enjoying my time. You guys are a great combo. You're very fun to work with. Uh, you're very, uh, as we were talking about this, you're very open and blunt in your communications, which I appreciate quite a bit. And uh I think we're gonna have a great chat and we're gonna talk about a lot of really cool stuff, especially what I think Natalia, I'm not sure who coined it, but uh the great disruption of what's happening within the fitness and health industry now and um how we view that. And of course, you guys have your upcoming uh FitTech summit that is coming up in just a few weeks, so we'll talk about that as well. But uh let's, I guess a good place to start, but maybe Shiffon, uh, give us your background, man. How did you uh how did you get into this crazy fitness industry?

Eric, this uh it very much depends now on how much time you dedicate to my introduction. Uh so let me say it's gonna take us about two hours. And I start with my school. Now I'm not gonna do this because I'm an old fart. So I'm I'm 58 years old already. So um uh I just I have done several Stefan.

I didn't I didn't know that uh people live that long. What happened to you?

Well, I think that in the future people are probably gonna live until they are hundred, which I don't want to. You know, some people want to be more than yeah, but but well, that is a different discussion. We maybe we come to that later. So 58 years old, and I started my career actually in banking. I started with Deutsche Bank and a company called La Zafre, which is an MA company uh all over the world. But I thought that uh uh managing other people's money is not my passion, so I left. Then I worked for a large travel company, I worked for a large transport company, I worked for a large media company, and then in 2008-9, I have been approached by a headhunting company. Um, and they were looking for a guy who has been doing sea level jobs in transitioning companies, restructuring companies, turning around companies. And that was uh uh that was my let me say that was my uh passion. So we got along with it, and the company was called Fitness First. And at that time, Fitness First was one of the largest uh fitness club chains around the globe. Um, it was a very powerful brand where that is still something to be discussed. And I stayed with Fitness First for about nine years, so I left in 2017. The company was owned twice uh by private equity funds, one was BC Partners and the other one was Oak Tree Capital, which is no secret. Um, and I have gone through a very, very intense phase with the company and with the business. So I have actually uh experienced already the big changes that were coming up. At this stage, if you think back 2009, the changes were not who is disrupting the business uh uh from a Fit Tech point of view, not that much at that stage. It was more about the discount operators, the price points in the business, the way companies, fitness companies are structured, big places, smaller places, boutique concepts, you know, all these kind of different trends. But FitTech as such has not been an issue at that time. And uh later on in the process, then around 14, 15, 16, 17, so the last couple of years, then we suddenly saw online business uh picking up. So then there were classical online-only uh companies that were offering videos, la la la. So all what you know, and that of course has dramatically changed over the last year. So I left in 2017, and because I like the business very much, I invested in another business. Um, I acquired with a partner of mine the franchise rights for Germany, Austria, and Switzerland of a brand called Anytime Fitness. So Anytime Fitness is a yeah, I would say the largest franchise club uh uh operator in the world with more than five thousand entities, five thousand clubs, and uh so we acquired the rights, and uh because we are such excellent business people, we had such a great feeling for timing. We opened just two weeks before Corona hit. And that was, of course, the biggest fuck-up from a business perspective. The business is still there, so uh uh we are still hanging in and trying to overcome uh this very difficult period, but it's of course delayed and it's not what we actually expected uh to be. So, in this phase, I ran into um Natalia. Um, and I would say she's not a colleague of mine, she's a friend of mine. Um and uh I was very impressed. We were just meeting, we were just meeting in a little coffee corner uh at one of the Europe Active uh conferences, and she was actually on uh she was actually a speaker before I was on a panel. And we were sitting in this coffee place and we were looking at we were actually staring at each other. We say, Who the hell is this? What is this person doing there? I mean, I looked at her and said, She's by far too young, she is by far too ambitious, she's by far too innovative for this industry.

And then I was thinking, what the fuck does the sugar edit do do here? You know, like another another old forest.

Yeah, another old bugger uh is stealing my time, uh inhaling my oxygen. So um, but that's that exactly, but Eric, that's the way it started. Yeah, that's the way it started. That's really true. It's that's the way it started, and then at the end of 20 minutes, uh, I think that we both said, okay, let's exchange business cards. Oh, let's exchange information. And then we met and we we had uh meetings with the others of the team, and then we said, okay, I think there is a great uh synergy. Natalia and the team, very, very innovative, very disruptive, very tech oriented, and me rather being uh, let me say, the representative of the old world, but being able to take up the challenge of converting. Yeah, and I think that this is what I want to do, and that is why I'm very open-minded, because I think we all need to change. We change was part of our life, and it's very, very interesting, and it's great to be with this team and learn and learn every day, but still, let me say, stick to your tradition and stick to what you know best. And I think the world will change, but it never changes dramatically over a week or a month or a year. I think it is a it's a it's a reform. It's a reform. I say that it's a reform process, it's not a revolutionary process.

Stefan, and I think this is a great point because uh I was thinking about this joke with the frog who is, you know, who is being boiled down in a way, but if you kind of increase the temperature gradually, it will never notice that. So I think that's that's what's been happening in the in the fitness industry for the last 10 years. Because if we think of that, Peloton has been around for nine years, right? And uh all the unicorns, they don't just you know get born uh overnight, right? This is a process that takes up between five and ten years, but just nobody was noticing because you know people were thinking, hey, this is not gonna happen to my business. And uh suddenly with the pandemic, um we noticed, well, there is uh real, real, real disruption in the space, but that wasn't something that happened overnight, it was something that was being prepared for for a decade around around that.

But do you know what? Do you know what? I I the what I learned in my when I when I was in business, the biggest threat to successful businesses is success. True. Innovators to do it. If you are successful, you never have a reason to change. Because you just say, Why should I change anything? The business model is okay. I'm making money. If I want to change, I need to put investment in, I have to take risks. Why should I do this? I I let the others do it and I follow. And that is why in especially also in the bricks and mortar business, I think that it will come, but for a longer period of time, because they were so successful, they just didn't change. Yeah.

You know, Stefan, there's great stats in in uh regarding the uh United States uh fitness industry in from Ursa, uh where they said that at the end of 2020 the industry had lost over 20 billion dollars in revenue and around uh or over 6,000 clubs, which is 17% of the market, closed permanently. So I think if this is not a sign, nothing will help. Um but badly enough or likely enough, we'll see um the uh the disruptions here and the technologies here to stay, definitely.

I couldn't agree more, but I tell you what, the I tell you what, Eric, do you wanna do you do you wanna moderate or do you want to No, you guys keep going.

This is good. I'll I'll jump in. Don't worry about me.

Okay, but just interrupt because if we go, we go. You can't, it's very okay.

Well, I can I can pause I can I can easily mute you guys so I have that control, yeah.

Good, good, good, good. We always interrupt, right? So uh but uh to this point, Natalia. I think that uh a lot of people in the industry would definitely tell you, yeah, that's true, and the corona was bad, but we were expecting some sort of consolidation anyway. So we had too many clubs in the industry anyway. So that kind of consolidation was coming. Is that tech-driven or not? Well, I don't know really. Uh so but I agree with you. I think that the the technology changes all over the place, whether it's the wearables, whether it's the home fitness, uh it's it's gonna remain. It's definitely gonna remain, and it's gonna be nibbling away uh here and there from the classical bricks and mortar business. Absolutely.

Yeah, so let's get into it. I mean, you you coined, I think it was the telly, you coined the great disruption, right? And we've we've alluded, we've danced around it, you know, for the past five minutes. But what define that for us? What is the great disruption? And then we can go over the qualities of it. And real quick, too, before we get into that, I know we have the FitTech Summit, we'll talk about a couple times, but what is the date of the FitTech Summit upcoming and then what's the website, and then we'll get into uh all the other goodies.

Sure, let's start with the last one. So the date is November 8th and 9th. So, guys, mark up the date in your calendars. Uh and uh we this is this is purely digital, right? Because we want to have the international scope as as usual. And uh and we're gonna be talking about all different things and trends that are kind of shaping the industry right now. Um and Alex anyway defines like four uh major tracks where we think things are changing real fast. The one of them is like big tech attacks, so what's happening on the side of Microsoft, IBM, other companies in the space, right? Um another track is me, myself, and AI. And here we'll be speaking about how artificial intelligence is kind of changing the relationship we have to to our bodies, but also to our society. We'll also be speaking about the, we call that the interface racism, right? You know, we'll love poetic names um and we'll love names that rhyme. So so here it's about smart murals, it's about the new wave of home fitness, what's happening in the homes of consumers and what's the next kind of destination point for the home fitness companies. And last but not least is for future spaces, and that means from VR, where we believe we'll spend lots of time in the future, to kind of, you know, for future thinking spaces, which means our strive for immortality, which is also kind of connected to the physicality, which cannot be, you know, physicality still cannot be kind of thought out of this of this equation that might have happened at a later point, as some uh future futurologists uh like Ray Courtwell are saying, uh, when we will be kind of uploading the brains and the the this the conscious the consciousness into the cloud, but uh we'll see where it takes us. So here we'll be talking about the impact of uh gene editing, of AI, um, of uh different kind of kinds of technologies on this drive to live longer and idea to become mortal.

Wow. Just that, huh? That's all you guys are covering at at that summit. That's uh that's that's a lot of material. I mean, I'm so glad you brought up recurse while too.

That's what I'm thinking too, you know. Probably to just cut it down. Stefan, would you like to move with a couple of panels and then talk all today?

Yeah, I mean, but uh uh Eric, to your point, I I think that the the fascinating thing, and that is what what what what uh motivated me so much uh hooking up with Fitzek Company and Attire and the others is that of course you could argue, well, but this is so far away, uh virtual reality and gene manipulation and and that I mean this is in about 100 years. Um and uh but but that's the wrong approach, you know, because if you are a leader in a business, you are supp and you are calling yourself a CEO, a chief executive officer, you're supposed to think the future. You're supposed to make everything possible that the company survives in five, ten, fifteen years' time. And we know by now how quickly technical uh changes can happen. Yeah, and uh there was a long time, I don't know whether people even remember this. Do you know that Netflix started with selling out videos and CDs and sending them around by post?

Yeah.

And suddenly streaming technology came in, and today they're a streaming company. So and and that is exactly what I mean. And that's exactly, and that's gonna happen. That's gonna happen in the fitness industry as well. So you better listen to those people, whether you listen to FitTech Company or not. I see because I mean making advertisement for yourself is always a little shitty. Yeah. But uh at the end of the day, if you are interested in trying to make sure that your business is going to survive over a longer period of time, you need to start thinking now about what's gonna happen in 15 years and not in five or ten years, because that is too late. And then you can complicate, yeah, but you are not the mover. You're not the first mover. And I think that that's a very important point. And I learned this from those summits. Yeah.

Yeah, I agree. And sorry, something just popped on my desk, and I have no idea what happened. So if people heard that, was that the user calling? Yeah. Yeah, it was like a little gunshot here. Um so let's talk about the great disruption, Natalia. I mean, you mentioned so many different things, Aries. I mean, we could talk about the Fit Tech Summit and those categories you have, because I think you've obviously very thoughtfully laid them out of where the opportunities are. And if I'm a fitness professional, a gym owner, um, maybe a CEO of a tech company in the industry, whatever it may be, I'm trying to think about okay, well, there are so many different options in technology that could change the game completely, right? A couple of them are gonna be winners, a lot of them are gonna be losers. That's just the nature of things. And I think Matalya asked you last year before the summit, you know, what if you were gonna if you had a million dollars to invest, who would you invest in right now? I don't think you ever gave me a straight answer because you didn't want to maybe, you know, show your cards. Uh, but you know, when you look at this as a you know, from the fitness professional side of things, what what do we need to know? Like how can we start educating ourselves? Where do we, you know, learn um or where do we try to figure out what we should be adopting in our own practice or in our own businesses?

You know, Eric, this is such a huge, huge question. So I think it has kind of two two two sides to it. The one side is uh, what are the overall trends that are happening in the future right now, right? And here we're speaking mostly about technological trends that are coming to the fitness space. And another question is like, what kind of uh gym segmentation would we see in the future? And how would we define gym actually at all? Because I don't think gym is a place you go to. Gym is something that you do, right? And uh this is this is exactly what we need to understand in the fitness industry. And I see Stefan starts thinking and um his eyes are rolling, and he is kind of starting to um ask himself the question and this is bullshit, what I just said, or not. So, Stefan, you have time to think about that. And uh what what let's let's probably start with um with the the um major trends that, in my opinion, are kind of influencing the industry right now. Um and I see four of those. So what we definitely see is, and you know, this is funny because we are, you know, we are we are running lots of interviews with speakers uh who are mostly um either uh high-profile executives or founders of very interesting startups, right? And uh almost every one of them is using the term gamification in when when they're speaking about the future of fitness, right? So, and of course, gamification is kind of nothing new. It's been around for 10, 20 years, probably more. Um what's different is that the new generation of fitness users is growing up. And they're growing up using Twitch and uh playing games and doing all sorts of different things. And for them, fitness is also a game. And I think this is also something that we really need to understand more and more, because fitness as such, for most of the people who don't really get the kick out of the physical pea that you sometimes sometimes receive when you're doing way too much sports, right? Um fitness is as such, is kind of boring for the majority of the world population, right? Um and if we think about the yes, a North American market, um, I guess that over 70% of the American population is overweight. So, what kind of kicker we're speaking here? We need to make sure that at least some fun is kind of here for them to get some motivation, some primary uh primary incentive to get moving, right? So this point of gamification and gamified mechanics will definitely come to the fitness space. Um and it will do that through different kinds of technologies, including uh including blockchain, right? Including NFTs, non-fungible tokens, right? Um and uh and we'll probably, and this is actually already the second point, we'll probably see the uh blending of the physical fitness and of digital fitness uh in a way of in in in something like a metaverse. We'll call that fitness metaverse, you know. Mark Zunckerberg has announced that he wants to build um metaverse out of Facebook. And I think this is also the same trend that's gonna be happening in the fitness space. Like imagine we're running on the street, we're using an app, for example, District, which is a Singapore-based app, which is relaunching uh from the running community to the active uh lifestyle community, right? And they'll be uh they're gonna be announcing the relaunch of the FitTech Summit. And here, just imagine the situation that you're running on streets or doing some physical activity, your own tokens that you in turn can can can kind of uh convert into physical assets, right? This could be an editor's running through, that could be something different, which brings with it lots lots of questions in terms of the whole hardware, software, tech ecosystem around that. Just you know, just think of that. If you have some kind of a token you want, you probably would like to see it, right? Or kind of some kind of a digital art or kind of a digital digital collectible, let's let's let's call it this way. Um, you'll need a device to have to be able to see that. So the market for AR devices will be exploding the more the um NFT and blockchain are are growing, right? This is one thing. Then sometimes you would like to bring the digital assets from the digital world into the physical world. So here we're speaking about like 3D printing, on-demand, and all those things which on the first side, you know, they have nothing to do with fitness. And this is exactly the funny thing because everything has to do with fitness. And everything has to do with health. And it it doesn't matter which kind of technology you have, you can be sure that it'll it'll find its way into fitness and health in the years to come, right? And um this brings us to the kind of the of the third uh major trend that I see, which I call uh ecosystemization, right? I I I love this Asian trends because it sounds so smart. Um but but what I what I want to say is uh we'll definitely see some open ecosystem approaches in the fitness space on the one hand, and we'll also see closed ecosystem approaches where the company like um let's say basic fit, you know, is is um a major um gym chain in Europe, is developing kind of their own solutions for everything.

So for them, this is close and technogym would be also another good example.

Yeah, I I think so. Yeah, technogyym is kind of defining itself as app for fitness, and they want to keep users in the ecosystem exactly, whereas the players like eGym are, on the other hand, trying to cooperate as much as possible with others, right? So these are different approaches. This is you can also compare that to the to um uh iOS uh versus Android approach, and we'll see what kind of approach um wins in in the long term, right? Or probably they will just coexist, we don't know yet. But we definitely see uh what's happening right now is that different ecosystems are coming together even closer. I mean, if we look at the classical chips, Equinox is also already partnering with Whoop, you know, where they are offering personalized class recommendations uh based on the recovery score for their users. And this is just one of the examples. And uh, Whoop is also understanding itself more and more as an ecosystem. Or just look at Clamour, you know, the um the uh connected home fitness company, which is um enjoying a great momentum in the United States right now, right? So they are also defining themselves as a company which is looking for new partnerships and uh which does not want to do everything on their own, right? So this is what I mean when I'm saying ecosystemization. Stefan, what's your take on that?

Uh Natalia, I utterly agree. Uh, this is a good thing. Yeah, I didn't think you were going that well. No, no, I utterly disagree. Um, but uh do you know what I think is very important, Eric, Natalia? I think that from what I learned in the time I was in the industry, uh, and then we can also, let me say, open our spectrum thinking about how does fitness and health connect because that is an angle that we haven't discussed yet. What is the but what is the primary target of what we are doing? The primary target is, for my opinion, to extend the proportion of people in the population that are active.

Yes.

That I mean, everybody's saying it. Everybody's saying it, oh, the poor guys. So in Germany, the ratio of people who are, let me say, in fitness clubs, members in fitness clubs, let me say it's now it's by 12%, maybe it's 14%, but it's definitely not 25%. So, and the question is, why is that? And that is exactly to Natalia's point. I think we we we should be able to talk not just about the technological changes that are only applicable to people who are already very physical, and the next generation of a wearable which is also measuring this and that, then you can connect. That's one bit, that's one piece of our business. But the other piece where I have been always very passionate about getting more people into activity, and that is to Natalia's point about gamification. You need to motivate the people. The people, if they would be motivated going to the fucking fitness club or buying a Peloton bike, they would have done it already. But they haven't done it. So why haven't they done it? Sometimes, of course, it's money. Yeah, let's not be let's also be frank. I mean, uh a Peloton bike for two and a half thousand dollars. I mean, not everybody can afford that.

They they reduce the price already, yeah, but definitely this is uh still a bit more expensive than buying a gym.

And don't forget, uh Natalia, they they that the business model of those guys with most of the others is connecting the sale of an equipment with a monthly fee.

That's what's exactly what OR is doing now as well. You know, so this the revenue model based on recurring revenue is definitely the best one. So we'll see more companies swimming to this membership space, whereas gyms actually is.

Exactly. So what I'm saying is let's open let's open our minds and say, listen, if our target is to extend the proportion of people that are not active at the moment in the in the in the world, and I'm not talking about India and I'm not talking about Pakistan or whatever, I'm talking about Europe, I'm talking about America. And and if I tell you that I just read a couple of months ago that the the the the the obesity of children in Germany has never been higher than at this age. And that had nothing to do with corona. Corona made it even worse. Yeah. So where is that coming from? Everybody's talking about fitness and health and la la la, but the the reality is a different one. And that is where a lot of those new technologies kick in gamification, reward systems, making it peep for people easier to get into movement. Yes, that's the trigger.

Yeah, and Stephon, if I can put if I can add on that from a North American side of things too, is that we with the same thing, right? Is that you know the the numbers or the exact percentages differ depending on who you ask. 15%, 20%, whatever it'd be definitely not 25% though. And it's those people who are actively engaged in some sort of fitness program, right? Whether it be at home or with a personal trainer or um even just running for a race or doing something active on a on a normal basis. And you don't even have to know that number, you just have to walk around in the United States and you see it. And I think there's something that's a hard truth that the fitness industry has to swallow is that we really haven't done a great job. If that's the problem, right, is that we need want to get our communities to better fitness and health. Like I think we all like to think that, hey, we're saving the world and we're doing so much good for people's lives. And maybe you are it in a small fraction, but when you look at the masses, we haven't been effective. Nothing's changed. It's only gotten worse over the last 30 years here. So to your point, I think that's ultimately the goal is how do we take technology, leverage it, and harness it in a way where we can get to that other 80%. And Philip from EGM had a great, he breaks it down so beautifully. And I'm sure you guys have heard him do it about like there's five percent which are like fitness experts, 15% that are like enthusiasts, and then there's everybody else. And we're not touching everybody else.

Absolutely, absolutely agree. Couldn't agree more. And the interesting thing is what you said, Eric, and I'm not blaming my colleagues. I mean, I have been in this industry myself, and I I could blame myself saying I I haven't changed much. Uh, but if you look at it from an outside perspective, and that's also what Natalia said, is where where do the new talents come from in the fitness industry? Do they come from the fitness industry themselves? Most of them come from the digital world. They they do not they do not they are not connected from a product point of view that much than the old guys, yeah, who came from the fitness industry, they used to be trainers, they used to be physiotherapists, and they opened their first club and then they opened 10 others. Yeah, so that's pretty much the career that that people had 25 years ago. I mean, Rainer Schalla is a good example with Rainer Schalla group, an excellent businessman, a very successful business person, but that's how he started. And he did very well, yeah. So, but today, if you look at the young people coming into the industry, looking at the fitness market, they come from digital companies. They don't have a clue on what's going on from a physiotherapist's point of view. They just look at the industry and say, how can we change people's life and how can we connect uh the motivational issue with the outcome issue? Because you're more motivated if you see outcome. Yeah, and who is gonna take uh uh uh who is gonna take uh uh responsibility for this? And a lot of those young people, and I had a very interesting interview yesterday, and Natalia, I didn't talk to you about it yet. The guy said to me, Shepan, I mean you might be a little bit uh overenthusiastic when it comes to bricks and mortar, but what did this guy do over the last 30 years? That was just an equipment lease company, they were equipment leases. They gave And Space Records. And Space Rank Company, that's what they did. Did they change people's life? Did they follow up on their successes on an individual basis? Did they do a good job there? No, that's what he said. I mean, I I do not agree 100%, but there is a fair point. There is a fair point. So, why didn't uh bricks and mortar companies picked up a lot of the technology base? Why didn't bricks and mortar companies it hired top uh digital guys from other companies in order to develop those tools? Why didn't that happen? Why did it have to come from the outside world to us?

You know, Stefan, I think this is a very valid point. And uh ultimately it's about how you define your business, right? If you define your business as space rental business, uh then you start thinking differently. Uh, I mean, we also run kind of events, right? But we do not define ourselves as an event company. We define ourselves as the network for global thinkers in this space, right? And uh that makes, I tell you guys, that makes all the difference because that makes all the difference how you approach people, how you treat your business, and what ultimately makes sense for you and what what really is valuable for you.

Yes, I absolutely agree. And there is a fair point, Natalia, to say if there is a company wherever it is in the world that clearly says, listen, we are in the bricks and mortar business, we are in the real estate business. Uh, because don't forget, fitness club, running a fitness club, the second biggest cost position is your rent. And the biggest one is your is your stuff cost. So you are as much an investor, as much a real estate broker or real estate company as you are a fitness company. So don't forget that. Yeah? So, and if people are saying, well, that's what we don't do, we want to optimize our business, um, uh, we want to be over there, we won't be out there with with offline uh uh fitness clubs, this is, and the rest we leave to somebody else, that's fine. That's that's absolutely fine. And there are a lot of companies doing very well. If you have another approach, if you want to go one step further, you need to open up for those digital uh improvements that are out there in the market.

And I Stefan, and I think this is a great uh this is a great transition into what I consider the fourth trend apart from you know replication, tokenization, ecosystemization. I think the fourth trend that is coming up, which is quite clear already, is hybridization. So, you know, here you really cannot cannot be wrong. Um, we see that GMs are trying to uh are making new authors for for the home fitness space. Just look at stats. They launched their own mural. Why did they do that in cooperation with another company which has already produced in murals? Well, they wanted to have the experience, the user experience, the product experience, all in their hands, right? And they'll also be presenting at the FitTech Summit their thoughts and the strategy. Um, but on the other hand, you know, Stefan, I think we'll also see um some very well-financed home fitness companies that are just buying into this brick and mortar space. I mean, it doesn't, it's not really it doesn't really hurt them if they're financed with several hundred million um dollars or euros, or probably dollars in that case. Um it doesn't hurt them to buy some some middle-sized chain and uh to to use that as their own showroom. Uh, you know, the way Peloton works with their own showrooms and experiential spaces. I mean, this is just another touch point to reach the consumers.

What do you think? I absolutely agree. But I would like to say one thing. Yeah, from uh from an investment point of view, uh of course, at the moment, uh a lot of the hype that you see with the unicorns is because their investment, their capital investment is comparably low to a bricks and mortar business. Yeah, there is no, you can't ignore that. So that is why a lot of private equity funds, venture capital funds, they are very much looking into what is in for us on the digital side of the health and fitness market, because investments are still relatively low, K-Pax is relatively low compared to the old bricks and mortar business, where you actually dedicate yourself for 10 years in a real estate in a in a in a lease contract. Yeah, so that is a certain dynamic. But I agree with you that uh the the the uh let me say the the takeover policy doesn't go only from bricks and mortar business into digital companies, it also goes into the other direction. It very much depends on the capital uh uh allocation. So, where do the people raise their monies? At the moment, I think that still the majority of the digital companies are still, let me say, underinvested, underfinanced. Uh only the unicorns, and there are about five out there, are very, very, very, very rich, a very well-sayed cash rich. But uh the majority of those companies are still, let me say, in a very, let me say, underfinanced uh position in order to be able to buy a big uh big BRICS.

They are, but uh Stephen, think about that. Five years ago, there wasn't no single unicorn out there. Or was Belgium rated unicorn five years ago?

And look at Peloton. Peloton, for example, took over PreCorps uh for 500 million. I mean, who was who was thinking about that kind of move ten years ago? Nobody. And that could easily happen, also you're absolutely right. That could even easily happen with Whoop is gonna buy somebody else, and uh and there are some top brands out there. But there's one thing I would like to mention, and that is very important from my perspective. I think at the end of the day, you can only be successful if people do something for people, if human beings are doing something for human beings. I think that the interaction between people is still a very, very important part of our DNA. We are not machines, we are not robots. We need interaction, we are social beings. And I think that this is where the the legitimization of clubs still is there. I still I still believe people want to get together, they want to have an experience together. So that the big the big chance is that that big bricks and mortar brands embrace this, embrace the technology, let it in in order to make their own brand stronger, even stronger, but keeping their their core competency, community, making the people feel good, having classes where people get together and have fun, don't give that up. I'm a strong believer in this.

Um Stefan, I hope that you're right, but you know, uh uh I I I think that community is definitely something most gyms are not strong at.

Yes.

Because if you just think of standard gyms, like what else, right? No one to name any drop any names here. We just go in, do something, get out. So where's the community?

I agree.

Communities, yeah, community is something that is that that is very strong on the boutique fitness side, right? Just think about ramble boxing or similar concepts. This is where you kind of need this, hey, we are together moment, and you know, just let's test two together, you're in it together. But I mean, most gyms in the market are not boutique gyms, and communities last thing that's like.

I agree with you, Natalia. But that is, I'm sorry, Eric, but this is just for my but I absolutely agree with you. But this is what where where I where where the bricks and mortar uh uh businesses are losing out because they have it in front of them. They have the they have the people there. The people are there, the people are begging and saying, listen, we come to your fucking club, we take the car 20 minutes, looking for a parking space, get into the fucking thing, get clothes, and then we are sitting there on a fucking bike, uh on our own. And nobody knows what you want to do. Then I can stay at home and buy a Peloton bike. Thank you very much.

Exactly, because at least there's there's someone who's talking to me from the screen.

Yeah, well that that brings up my that brings up my question. For you guys, is how successful do you think virtual communities can be? Um, you know, you look at Peloton, and you know, they're they seem to have making some headway in that space. I look at um companies like street parking within the CrossFit community that has 40,000 subscribers and they have this amazing online community. So it is um uh Dark Horse Rowing has a great virtual online community. How how can the online communities match up against the in-person experience?

Can I give Natalia before you speak? Can I give you I just give you a very emotional uh feedback? Would I love to hug you right now? Yes, I would would I like to hug uh Natalia even more so? But do I need to live with it if it's not gonna happen? Can I live? Yeah, can I live with the situation we are facing at the moment? Yeah. Yes, I can. And people will change. People will change. And only seeing somebody else live on stage, online, is also a kind of community. So I think that people will change in a world in a way. So I think it is not, it's definitely gonna compete. If they're doing it nice, if they're doing it in a very good, let me say, technical way, it's definitely gonna be a threat to the offline community. Definitely. Sorry, Natalia.

You know what guys? Sometimes, sometimes it helps to clarify what we mean by a special term before we discuss that. So I just quickly uh kind of googled up the the term community, and the simple English Wikipedia is telling I don't know why it's simple English. Is my English so bad? Not sure. Anyways, um the simple English Wikipedia is kind of telling us that this is the group of people that are sharing the same beliefs and needs and interests, right? And in that case, uh Whoop community is way more a community than a bunch of people who are just going to a gym on a regular basis because one some of those have uh some back pains, others uh don't want to stick at home because they're bored, and uh third ones just want to have some some big muscle to you know to have better sex. So this is this is not a community. Excuse me. And even looking at what Whoop is doing, uh where they you know they're kind of uh hosting Q ⁇ A's, they're hosting the podcast, you can ask any question you want to. And people, when Whoop was introducing this trap, uh the fourth trap, right, recently, uh there are questions from the community if they can invest in the company if they do the IPO. So for me, this is a community.

Yeah, yes, that is the uh that's the let me say, in a way, that's the unfortunate truth. I still uh stick to my principle. That's probably because I'm 50 years old. Always stick to your principle. Because if we lose, if we completely lose our, let me say, our ambition, our passion to have offline experiences, we are losing out on our humanity. I am absolutely convinced, but I definitely take your point, Natalia. Yeah, definitely take your point. Um, there is a strong aspect to community if you share the same interests. Uh, and that nobody tells you whether that's online or offline. Yeah, if you have a community that shares the same views on things, the same interests, that can also be online. I think it would be nicer if it is offline, but there is one interesting point. Natalia, I don't know even whether you knew this. And I I think I think that we have a guest uh in in uh on our uh Fintex Summit, uh the guy from uh free lattice.

Yeah, I just talked to him to Daniel.

They started as an online platform for workouts, la la la. Do you know what the biggest driver of their business by now is? I think I mean that's what was about four, fear, or four or five years ago. The happenings, the happenings that they are organizing, that members are organizing themselves in the cities. They get together offline. I mean, they did before Corona, they get together and they are organizing themselves, and then they do Freelatics trainings and workouts offline. Yeah.

Exactly, exactly, Stefan. You are so right. And I mean, Philetics is one of the companies that started as the like this is like you know, one of the first fit tech startups out there. And uh and they started as a simple PDF with a training plat, right? Uh, in the times when there were no apps or almost no apps out there. And I think this is also the very strong part of what they're doing. But this is, you know, funny enough, this is exactly the question I asked Daniel, the CEO today in the interview, uh, where like I wanted to know what's the major ingredient for successful philetics was. And this is not just community, this is also they help people really reach their goals, you know, this kind of accountability which you do not have in a gym. Because what happens in a gym, or what happened in the gym so far, I hope this will change, was you sign up in January, you never show up starting much, right? And no one cares what you do as long as you pay your membership fees. And uh this is definitely gonna change. Yep.

This this leads me to a big question for you guys. And um, just because I also want to respect everyone's time, I want to cover this. You know, when you look at the constantly changing, very dynamic um, you know, environment that we're in in the fitness industry. We've we've all been in the fitness industry for a while, I've been in it for 14 years. I've never seen anything like this, right? I've said it a million times on this podcast. It's like new players are coming at you really fast, new technologies are taking huge leaps forwards and seemingly overnight. And what do you think is the key to staying on top of this? Um and I know you guys are working on solutions for you know operators or entrepreneurs in in the industry. Um, you know, I believe it's it's having that um collaboration, right, is really key, is being part of small groups like the Fit Tech Club, where people can connect, talk about these things, you know, match up with investors, match up with partnerships. I mean, all that seems to be where where this is heading, which is exciting because that's the type of work I like to do, is partnerships and collaboration.

So tell me about the impulse of the can I can I start again? Go for it. I think that because you are by far better in in just really describing it, I've I'm more on the let me say, on the um impulse uh emotional side. You see, first of all, in all different kinds of industries, you lit you learn about this, what they call the information overflow. And I think that the same applies to our industry. At the moment, there is so much going on that at the end of the day you can easily get completely lost. Yeah. I mean, if you read everything, you listen to every podcast, I mean, you would need 25 hours a day in order to be updated. So it it's impossible. So, first of all, I think know very well where you are and what you want to do and what you want to achieve. I think that that is very important. Know your turf. Know where you are, what kind of market you are in, who are your competitors, who are your clients, what is what are their needs. That's the focus. You know why why I'm so keen on this, uh Natalia and Eric? Because there is one thing that we are very strongly pushing uh in this context of the FitTech Club. We take extremely uh extreme an extremely high amount of time at the in the onboarding process in order to understand what people actually want. Because it's not everybody can do everything, it's about specify your needs, tell us what you want, and then we will bring you together with the people that you really need. And that can change your perspective on things that are relevant for you. And therefore, I think know exactly what you want. If you know what you want, come to us and then we connect you within the club with the people that you need, uh, and not let me say just uh heading out lists and lists and lists of email addresses, and then you find your way and and see how you can can get some. I think so.

Now, I think this is a very valid point, and uh you know, we have really, really a deep belief that good people attract good people and that you can only do good business with good people, right? So in the club, which you can imagine as a kind of an inner circle of uh of our activities, kind of the business club platform, right? We are only let in people where we first of all see the product fit, meaning this should be a company which is already employed technology heavily, right? Or is technology first company, or a company which is really eager and keen on entering this space as fast as possible.

With a very open-minded way.

And uh the second Exactly, exactly. And the second thing is we have a no asshole policy. And uh people usually laugh when I'm saying that, but I mean that totally makes sense because you just don't want to, you will not have fun with people you don't like, right? And this is why this is super important for us that we uh also have set up the net location process and where we really screen the potential club members to understand if there's a fit on both sides. And Stefan, adding to your uh to your points, it's not just us, you know, helping companies grow, it's also the members themselves. Um, because we think, you know, we are the networking platform. You know, we do have a strong network, but obviously we want to have people in the club, and we do have people at the club who bring in their own networks. And this is kind of the exchange we want to facilitate. This is the exchange where kind of a medical company, which has so far nothing to do with uh with technology or fitness technology, is coming into the conversation with uh a big fitness, uh fitness events platform with over 120 um events in Germany alone, right? And then starting to think of different kinds of uh cooperations and collaborations that they can create together. And this is for us the educational process. We want to educate the market, we want to help the market and the influences, the business influences in this market to move as fast as possible. Because to be honest, you know, sometimes I myself feel really overwhelmed by the whole bunch of developments that are happening in this market. And you know, Stefan and myself, we are really talking to lots of people. So obviously, we do try to kind of reduce the information gap that everyone has, right? But if you just think about normal companies that have to kind of save their assets, you know, if they're still in kind of the analog business, you know, who are taking care of the product. For them, that is probably even more difficult just to stay um up to date, to keep in touch with the market, to understand what the major drivers uh of this market are thinking and doing to you know to bring in the future.

But uh Natalia, to add to this, I think that this is uh Eric, one of the reasons why we said within this club community, we only want to have C-level managers. Because, you know, if you are in a normal, let me say, management position, in a senior management position, but not C level, then you tend to focus very much on your operational, tactical, daily stuff. That's your job. I mean, you have to make the business run. Yeah, and at the end of the day, at the end of the year, the numbers have to match. If you're on a C level, and that comes back to what I said at the beginning of our podcast, you need to visionary, you need to think in advance, you need to anticipate trends. And that is why we want to have those kind of people in the community because they need to have that open mind. They need to have that open mind. They should not be only, let me say, drowning into operational daily work. They need to put their heads out and look in advance, um, and that is also what we try to do. And last point um, besides connecting and besides helping the members and the companies, we also have that inspirational elements. So sometimes we bring in people uh that are not necessarily from the industry, that sometimes are from completely different fields, and we would but they have something in their minds and they have an opinion on something which might be very inspirational for data for uh for the so-called fitness and health industry. Yeah, so that's also inspirational, I think it's also important.

Yeah, awesome, you guys. Well, let's um let's give the audience some places to go uh as we kind of wrap things up. So, yeah, like please plug again, Natalia. You got the FitTech Summit coming up in you know just a few days by the time this is released. Um, where do people go for that? And then where do people find out more about the FitTech Club and you know the expansion in North America? Give us some uh give us some good details here.

Yeah, this is Eric, this is actually quite simple. Guys, just go to fittechsummit.com and uh you will you will see the um uh the registration page there as well. And Eric, I think we should provide your listeners with some special code for as a sign of appreciation, right? Um and second, just click on the club in the uh in the menu and you will see more information of what we're doing. And generally, just feel free to connect to Stefan and myself on LinkedIn because this is the place where we live. Like I spent most of my time there.

That's true. I see that.

Well, uh you guys, thank you so much. I listen, Eric, I'm still in the old world. I write an email or send a WhatsApp. Yeah, you're sending letters, you're writing out letters and putting them in the mail. By horse. Well, you guys, this has been really insightful and fun, of course. Uh, you know, I'm really excited to be working with you guys on this, uh, you know, being at the forefront of everything that's happening in the industry. I think it's really important. I do 100% agree with you that collaboration is key. It's it's the it's what's gonna differentiate who's successful moving into the future. So great job pulling it all together. I'm really excited to be um sitting and listening to the summit. And uh, Natalia, you got one more thing.

Yeah, you know, just a just a small kind of uh recommendation for for the listeners. Um, if you guys also think that human connection goes first, I would totally recommend one book that is kind of my personal Bible, and that is called Never Eat Alone.

Oh yeah.

Check it out. It has nothing to do with fitness. This is purely about how to build, how to and Stefan is writing it down too. Great Stefan, I know what kind of Christmas present you'll get for. Never eat alone.

Never walk. I thought there is a building human alone. There's a never walk alone. That's uh that's a yeah. You know what's funny? That's from a football club.

But in that case, it's really never never eaten. Check it out. I love it, and I can really recommend that one. And I think this will also change your attitude towards kind of uh doing business because doing business is always a people's uh people's uh business, right?

Well said, well said, you know what's funny, Natalia is my dad gifted me that book about 20 years ago. And uh yeah, it's great. And there's another one for people in the industry too, which is great. You know, it's uh he actually gifted that one to me as well. It's a short, you know, 50-page parable called Who Moved My Cheese? And it's about change, how to deal with change, um, and how it's just a constant in our lives. And I think that's something that the fitness industry is realization, realizing at a massive scale right now. So um, yeah, you guys, Stefan, Italia.

Can I have one last uh segment?

Yeah, please.

Stephen, you are really hard to do. I know. No, I but I'm not recommending a book, I'm not recommending a song, I'm not recommending a movie. But I want to wanna what what I wanted to say is, Eric, that because we know that a lot of the trends and a lot of the stuff that is coming into our market is coming from the United States. Yeah, we are as happy as you are to have you, uh to have uh uh Emma Barry and to have Sheck on Zilna in our team because we need a strong footprint over there in the United States. It is still far away from Europe, even though everything is digital, but there is a lot of mental mentality, different mentalities, and so on. So I think for us it is great to have you guys on board. Uh, and that's gonna be very, very, very important for us also to link up with all the communities over there in the United States.

Awesome, awesome, you guys.

Good people attract good people. So let's write it.

Yeah, let's do it. I'm fired up. But you guys, thank you so much for joining us. And uh yeah, people go check out more at fittechsummit.com and uh we'll all be in touch real soon. Sifon, Natalia, thank you guys.

Thanks very much, Eric. Thanks for having us.

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