Paul Byrne - The Cyclical Nature of The Fitness Industry

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

Happy to be here, Eric.

I'm Giddy. I'm excited to have you. There's there's so many things, as we were just talking, you know, before recording, there's so many things I can get into with you. I mean, you have a a wealth of experience. You've done some really great things in the industry. And I, you know, overarching, as I was telling you, I think one of the if I could put like a major theme on this, is that um, you know, in relation to stoic philosophy that you and I talked about as well, which makes me really happy. Uh, everyone thinks that the problems they have now are new and unique and they've never been around before, right? But that's it couldn't be more wrong. Like every challenge we have in the fitness industry or health industry or everything we challenge we've we have personally, it's it's happened before. We're not unique. And you know, with your perspective of, you know, I'll let you give your history and people will understand why. Um, you know, I think you can teach us a few things. So uh let's start with that. Paul, if you don't mind, just you know, give us uh you know, a best summary you can of your uh extinguished career within the fitness industry.

Yeah, I'll try to do it, I'll try to do it quickly because it spans um decades, literally. Uh I'll start by saying one of my one of my coworkers once said to me I was there at opening day on the fitness industry, which is pretty close to the pretty close to the truth. Uh I got into the business in the mid in the mid-70s. Um it was really just an emerging industry at the time. And and and I was on a career path to go to to vet school, if you if you can believe it. And uh kind of at the last minute, changed my mind. I had I had done an internship with a vet in upstate New York and decided working with cows and horses and you know, spaying small dogs wasn't uh wasn't a future for me. And uh during that time of investigating different schools, one of them was the University of California at Davis, which had a great school. And one of the programs actually had in the in the syllabus there for graduate school was this thing called exercise physiology. And this is like 75, 1975. Uh I was a bio and chem major. And I thought, you know, that's me. That's me. I was an athlete, I love fitness, and just on the spot, uh changed my mind and went to got a master's in exercise physiology. And I remember my mom saying to me, you know, I always told you to follow your heart, but I didn't quite have this one in mind, you know. Uh, because she said, What are you gonna do with that? And I said, I don't know, I don't know what I'm gonna do, but it's it's it's gonna work out. And while in graduate school, uh I met I met a friend who was who was also in the same program, and we started reaching out to companies to test their products and and give them reports on efficacy in terms of strength gains and these kinds of things. And one of those was Total Gym, uh, another was Paramount Health and Fitness. And I started getting the rights to sell these things on the side while I was at school to help pay my expenses, and and that led to discussions with guys I'd gone to undergrad with, and we decided, hey, there's an opportunity in the distribution side of this business because there's there's no real distribution for fitness equipment. And we started the first chain of exercise equipment stores in the in the country in Florida in 1982, Concept 90, um, and actually franchised it owned a bunch of stores. I ended up owning a pretty small percentage of that. I wasn't very happy. We gave away way too much in terms of equity. In fact, it's kind of like raising money now. You think it's bad now. We were going around asking people to give us money. There were 22% interest rates, number one. Uh number two, these investors would look at you and say, Let me get this straight. You want to open up nothing but exercise equipment, stores that sell exercise equipment to people for their homes. Yeah, yeah, that's right. And we're showing you the demographics, this is gonna this really gonna happen. Uh, it was a really hard time raising money. Just like now, when people utter the words connected fitness, the investors uh head for the exits, but that's a that's another discussion. Um, so anyway, we did that. And while I was there, Pre-Corps started as a company. We started selling Pre-Corps. I got to know David Smith, the founder, and he called me one day out of the blue and said, Uh, I want you to come and join me. And it was a young company, they were doing about 18 million at the time. And I said, Well, I do have some ownership here. And he said, Well, I just sold my company to the craft, and I'll give you options in craft, equivalent basically, to what you have. And we worked out a deal, and that was 1985. Moved there. We basically are a one-product company, a rowing machine, a really, really cool rowing machine. We thought we had the world by the you know what's crazy. And then one day the sales started to drop, and first year they dropped 25%, then they dropped 40%. I mean, just like what's happened here recently with the with connected fitness. And we were scrambled, we had to reinvent ourselves quickly. We came out with six new products, turned that around. Um, then we licensed the elliptical patent, and for us that was a game changer, right? So we we launched that the first product ever for pre-core to launch in the commercial space. And what I was thinking there is we got to establish a brand, and the way to do it is be in front of people. So it was the first commercial product we did. We didn't know how it'd be accepted. We'd done some focus groups and they were sort of so-so, and we got it out there, and obviously it was like a just a total, a total home run and a and a game changer for us. So, you know, we grew from when I took over as president, we were about 150, and within four years we were over 400. Um, and that was that was elliptical, that was a couple of kind of key acquisitions, that was being part of Amor Sports. A lot of things came together. Uh, and and one thread that runs through all this is is luck, too. I was a lot of lucky things happen to meet the right people, and uh so so that that wonderful career, almost 30 years, and retired, uh, got to know my wife again. You know, I was traveling all the time, I was never home. Took about five years off, and then Bill Harrison reached out to me, who Bill is the investment banker that owns Harrison Co. that I'm currently working with, and Bill reached out and said, Hey, I'm starting my own firm. Do you want to join me? And I was really looking for something else to do. And I said, Yeah, sure, sure, let's go. Let's go. And it's been great for me because all these years you know you don't realize how much you've learned. And for me to work with young companies, which is pretty typical in my role as an investment bank, they're young in their 30s, um, either smart, you know, they have they have a good idea, but they haven't burned their hands on the stove yet, and or not very much, you know, and and I have. I've I've made every mistake in the book. So I think I can bring this sort of mentoring role to our clients. I I can also, from an operations point of view, help them improve their businesses. Most investment bankers don't know, they've never owned a business in their lives, right? They they know they know finance, they can put they can put deals together. Uh, you know, what we can do is, you know, I bring the sort of the business side and we have the investment banking side. So that kind of brings us up to you know today where I where I am. I obviously still involved in the industry, love technology, love new products, uh, love the spirit of these entrepreneurs that I deal with day in and day out. So uh I you know I don't look the same as I did uh 30 years ago, but I I feel the same.

Yeah, sorry, Paul, I lost you there for a second. But uh, you know, I have one of the things that Harrison Company, give us some insights if you can, into like who who's on your roster, what kind of companies, what qualities do you look for uh when you're partnering with with businesses? What what's uh yeah, what what makes them special to you?

Yeah, so it it's more what's our sector focus. So we have about 20, I think 26, 26 employees, we have eight, eight bankers, what we call healthy living space, but we we span a pretty broad range. Uh we have ag, we have ag tech, uh, we have food, food and beverage, and then we have the more precisely defined healthy living where I and my partner Mac Wilkie play. And that's more the traditional fitness, wellness space. Um and so what we look we what we look for are companies that hit hit our sweet spot. Uh we try to work with either family-owned or founder led businesses. Uh they tend to be an ignored sector, they have they have they have special needs, and normally there's there's you know they're what there are brothers involved, these kinds of things. So we know how to work with those people. Um and and typically they are overlooked by some of the larger, larger investment banking firms. Uh probably the more important thing we do though is we're super data driven. So we get into a company, and if they want to work with us, let's say they want to do a capital raise or they they want to sell their their business. Normally, what would happen, they'll talk to a number of investment bankers, and and many will look at it almost like a real estate transaction. It's okay, send me your last three-year PL, send me a couple product pictures, tell me a little bit more about your market, uh, okay, the valuations or whatever, you know. Um boom, you know, we'll send out a sim. And that's what happens. Um, what we do is get in, and it's more like, hey, we're gonna we're gonna build a strategic plan for you. We want to know everything about the industry, we want to know every single problem. We're an 80-20 the products you sell, want to look at the margin on every product, we look at the butt the buckets you're selling to, and what are the opportunities to grow that? You know, what are the ones where you say underrepresented? Uh, and how would we get there? Would it take additional resources? What whatever? Um, and so then we can build a model that shows a potential buyer, whether it's a PE company or even a strategic, is here's a path to growth. You're gonna buy these guys, whatever, 100 million this year, here's a Claire path over the next five years to get it to 200 or whatever. Um and we do that well. We do that really well, and it's and it's different. And the buyers really appreciate it, but but the owners appreciate it because if they had gotten four and a half times a let's say they another guy would have sold it for 100 million, we can demonstrate with the companies we worked, we would sold that same business for 10 or 20 percent more. I mean, I'll give you an example. We worked with uh Inspire Fitness on their uh on their merger with center. And when we first started working with Inspire, we you know we looked at their their EBITA and the growth potential. We said, look, let's number one, we're gonna back up, we're gonna sort of clean this thing up. We're gonna it took almost a year, right? And and focus on the right customer segments we want, the right products we want to deliver. Um, and then we'll go back out to market. And we didn't go out just to the normal sort of strategics, just those, but we went out to other companies that were more you know, more broad-minded. And one was high post capital that Bill had a relationship with, and they were working with Center, and we started talking, hey, what if what about if we put these two together? We've got a great app with Center, we have a great brand in Chris Hemsworth, obviously, and we have great products with Inspire. And how about putting those two things together? They they end up selling that company for probably 25 million more than we would have the year before. Wow. So that's a that's that's an example.

Yeah, yeah. Uh that's that's impressive. And I had no idea some of the numbers behind that deal. But you know, uh I uh oh and and I I I need a shout out to Jim Kroll from the Sage House as well for for getting us connected originally and Paul, because all of our conversations. Good man. Yeah. Yeah, all of our conversations have been really valuable and interesting to me. Um, you know, so I I want to because it's kind of come up, you know, the connected market. And I think this is probably the prime example of what I was alluding to first on as like, hey, you know, maybe there's some historical precedence to what we're seeing now and experiencing now. Maybe we're not going through something so uh extraordinary. Um and and you just came back from the Connected Health and Fitness Summit, which, you know, as a partner in this podcast, I know they they run a great event. Um, but maybe give us in that context, give us some takeaways. What what did you think about it? And then, you know, next part of that question is what's been going on the last three years from your perspective, and and where do you think this whole thing is going to land?

Well, when you say this whole thing, I I I think you discuss we're talking about connected fitness and sort of the at-home the at-home connected space. We keep it at the at-home space. Um, historical perspective, the the at-home market has been boom and bust since I've been in it. Um, I mean, early on, there it's all there was really was the home market, right? So in 85, that's where we were playing. And then clubs, more and more clubs started to be built. You know, uh Augie came along with the life cycle, and some more cardio was going into clubs. But clubs started to grow just as rapidly as the fitness industry itself. Because you look at it, it's it was all demographics, right? It was it was the baby boomers driving all the growth in the at home and and the and the club space as well. But the the at home, for whatever reason, would boom and bust. So you had you had it happen in the kind of mid to late 80s, and then the club space is the one that really grew. And then home space started to come back again and was really strong until 07, 08, when when that crash occurred. And that was the one where we people money was money was cheap, people were buying, buying against inflating housing values and putting in beautiful gyms. And so the the market for our our equipment just grew exponentially. Bam, it just crashed just as bad actually as the connected space. In fact, those years, give you an give you an example, we were doing a hundred million dollars a year within one year, that was down to 40 million dollars because of the crash. We lost four of our top ten dealers to bankruptcy, and in the in the that at-home space never really came back until the you know the connected rip uh boom. And as you and I were talking off camera, I I think it's really unfortunate what happened with COVID in in a lot of ways, but I think it really, really impacted both the at-home and the club space disproportionately to other industries. Because I think the at-home connected, if that had been left alone, if COVID had never happened, it would have grown at a normal rate, normal investments would have would have been made. All of that business would not have been pulled forward, they wouldn't have made these insane investments like for instance, like buying pre-core. Uh but it, I mean, it really forced decisions that would not have been made, right? Um, whether it's how you brought in inventory, who you hired. Uh and so it was it was a situation that's never really occurred before. And I and I think it was it, I don't know how well they're gonna recover. I think I think a lot of companies are gonna go out. I think uh there's gonna be bankruptcies for sure, there's gonna be consolidation. There's sort of has to be. And and I and I think that the same thing in the clubs, you know, that the the clubs were hurt by the lockdowns, obviously. But not just that, not just the lack of business, but a lot of personal trainers had to look elsewhere for business. Um customers got more in tune with online trainers, that their phone became their trainer just by by necessity. So now instead of going back to the club and having a personal trainer, I'm walking in with my phone. So what happens there? Well, the ancillary revenue for the club goes away, right? So it's I I think it's really, you know, changed the business. It's it's it it's you know, this is probably too strong a metaphor, but you know, it's like the the asteroid that went into Mexico and wiped out the dinosaurs, right? So it's like, yeah, well, you know, we'll be back, but this is I think it's gonna take, I think it's gonna take a while. I really do. I think that's like I said earlier, I think there's more consolidation. I think they're gonna be more bankruptcy. It's not a healthy industry right now. I mean, there aren't a lot of companies making money. That's a fact. Um, you know, in the club space, you know, planet for sure, you know, they got a nice, nice model. I think others are you know struggling. I don't think I I don't think uh necessarily that we're gonna have any major bankruptcy. I think we'll have continued consolidation there. And I think the at-home space is still playing out, but everybody knows that the the big connected players took a major hit and something's gotta give here. But good news is I eventually it's gonna come back. I mean, I'm a big believ, big believer in the role of demographics in our industry and every other industry. But you look at it now, okay. So you've got baby boomers, they're off to the off to the sunset, sort of, but you've got you've got millennials sort of in that prime purchasing area for for at home and for club. And they'll be back, they'll be buying. You know, just there was a three or four-year pull forward, I think, of demand, but that that'll be back. And and they are, by the way, the biggest cohort ever. It's bigger in the baby boom space. And then you've got, you know, you've got Gen Z uh coming in, and then they're all they've all been predisposed to fitness. So like the foundation is there. People know fitness is important, you know, they're they're they're sold on that. It's just a matter of how are they going to consume it, really. Um, so that's that's great to be in an industry like that. That's super positive. It's just, you know, how do we how do we go about you know attacking it going forward?

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Well, I mean, certainly the the experience has been taken to another level, right? I mean, you look at Peloton, you can say what you say want about them, but they they deliver an amazing uh that so that's I think been the big change is that the the at-home experience is so engaging as to you know to be competitive with a health club experience, I think, right? So that's that's great. Uh, you know, I think the certainly the the feedback offered by wearables and other things, I I think that's that that's a game changer. It keeps people keeps people on track, right? It's there's the whole accountability factor. Um, and I think that is gonna eventually morph into you know healthcare and other things. We can we we can get into that later. But yeah, to be a little more succinct, yeah, I think it's just a much, much better experience at the at-home space than it had been before. It's gonna continue, obviously. And and I think it's gonna set up in the future for this, whatever you want to call it, you know, hybrid experience. But people will consume fitness in multiple places. You know, we wrote in our in our paper when the when the uh pandemic hit that you know the health cup would no longer be the center of the fitness of the universe. And and I think that's true. You know, I think people will work, are and will work out at home. People are out, you know, buying bikes, they're hiking, you know, the outdoors is a huge boom from COVID. I think that's those things are all gonna stick. Uh and and they're all they're all positive things. It's just that you as a business person, you know, you you have to decide how do I engage with that customer and how how do you know how do I get profitable? You know, it's pretty simple, really.

Just you know you uh you had mentioned the topic of hyper segmentation, right? As well, which uh you know, actually, I don't think I've I've covered that particular word on this. I just made it up. Did you awesome? I like it. I like it. Yeah, I'm gonna use it at a dinner party tonight. Um what uh what exactly do you mean by that? And maybe expand on on uh why that's an important topic to you right now.

Well, I think I think it's important as we you know discussed uh off-air before we started, it it's important because it it it dilutes the pool, right? I I you you the the old model was you know big box, maybe we had you know high end, low end, but but you you wanted you got everything you needed at a big box gym, basically, right? Then somebody comes along and says, hey, um, yeah, they have those classes, but spinning's really cool. And if we have another studio and a neat needed experience and jack up the music and turn it into a religion, uh we'll we'll get a lot of these people. And and so boom, that happens. And then so you have the whole boutique thing, which which is great. I mean, it's very targeted, that's what people like, whether it's Pilates or spinning or whatever, and it's it's among their tribe, if you will. So all that worked, right? But that's you know, you're segmenting in ever smaller segments. So if I'm if I'm a big box guy, like how do I compete with that? Like my model doesn't work anymore. Like, what do I do? Right? So that's that's what I mean. I'm looking in the view of kind of how it was, and everybody was fat and happy in the you know, in the 80s and you know, early to mid-90s. Uh, and then along comes you know, boutiques and you know, CrossFit and all these other things, right? So that's that's what I mean. And it's a natural evolution in any market, right? As a map market matures, you you segment your customers and I mean go into, you know, go to the grocery store. I mean, how many kinds of frickin' Cheerios can you buy? You know, it's like it's it's insane, right? So it's it's it's the same in any any market.

And like in the case of Cheerios, I think it's a really good example. Like um, I feel like Cheerios in all of its variety of flavors is kind of what health clubs are doing, trying to bring in boutique experiences under their roof. Right. I mean, have you seen that be successful? And you know, can health clubs do that, or does it have to be like the nitty-gritty, you know, independent feel of a boutique, right? What where do you where do you stand on that?

I think I think that's a great question. And I think we're just starting to answer it. You know, I think uh LA Fitness, I haven't been down to see what they're doing in uh in LA yet. I want to I want to look at that, but I've heard good things about it, and I've and I've actually kicked that concept around with uh with Alex and I don't know if Jim was involved in that discussion, but but kind of a you know a food court of boutiques, right? Kind kind of makes sense. So I I my answer is I don't know, but it's it it seems to make some sense because there are people that you know they they buy uh like class paths, right? My my daughter's one of them, right? She uses that to do Pilates and then she'll go to spin and then she'll go to whatever.

So on the surface, it seems like it's worthy of a test, at least and when we uh you know, circling back to something we chatted about before, and I completely agree. I've brought this up in numerous things. I've read about it, and the Venares have covered it very well. It's like, you know, essentially what happened in the pandemic was that the uh the gym and health club is no longer the center of the wheel, right? Right. It's just a spoke. Right. The center is the consumer with all these different uh options, right? And the outdoors is huge, and at home and in the health club, and you know, pickleball and all these different things that people are doing now. Uh, you know, do you see any major players looking to somehow harness how that person is the center of it and facilitating all those experiences and and uh and fitness health options in a in a meaningful way, way that you could actually capitalize on?

I have not. Um I've certainly heard discussion, and that's kind of the topic out there. How do you bring bring some of these disparate things together? Uh but no, I don't, and and I don't know if there will, I don't know if there will be. Like if if I'm the center of it, I'm I'm deciding what I consume, right? And do I want to consume it all from one? Do I want everything from Apple? I don't know. You know, I don't know. I think it's it's so easy to create uh in this world of of technology now, right? All I need is I can sign up with this uh what's this Riverside Studios that we're on, right? I I'm in the podcast business, right? So I can reach as many people as as I don't as I can as I can possibly reach, right? So boom, I'm in business. And uh same thing with with with product, with you know, streaming product. It's it the the barriers to entry aren't that high, right? So I don't know. I mean, like I said, it's it it seems to make sense, but I don't I I don't know how you'd put it together. I I think there is an opportunity though to bring some of these smaller uh companies together doing interesting things in like the um the I call it the assessment space. So it's guys like um Aaron, you know, at at Mover and Jason at Sprint, and right. So though these are cool little kind of widgets, right? But so how do you bring all those together? Because if it you know, if I'm a consumer, now that's pretty cool. If I can one space, I can do my assessment, check out check my HRV pretty regularly, and oh by the way, you know, check my bot body fat body fat one body fat once a month to make sure I'm making progress. Put all those things together, yes. Yeah, I think I think that's very interesting. And by the way, I mean that's kind of what we're thinking at center, right? So it's I'm on the board at center, and you know, that's what center kind of stands for, that we are will be the center of wellness, right? It's we'll try to encompass all of those things and deliver a complete a complete product, a complete experience.

Yeah, I love that. And and I haven't taken a look at center, but I I I've also have a good feeling about like the move to earn segment because I think ultimately, you know, motivation, community, those types of things are really what drive people to do things. I mean, we we ultimately we're in the game of behavior change for for our end consumers, right? We want them to get into a healthier lifestyle. I mean, when when you look at the the move to earn segment, you know, what does anything there particularly excite you, or is that a part of center? Like what do you see there?

You know, uh, who was I talking to? I think I was talking to Jason at Sprend just the other day. And we were talking about this, and he brought up the example, something he had signed up for, which was a a credit card of sorts, and you get points for act activity. And he so he's out there, you know, getting getting his points. He's almost then he gets he's just about ready, he's got enough to redeem, and he gets a letter. Well, they're out of business. They close the doors. Now, of course, you know, that's a that's an N of one, and it doesn't mean that it's not a good idea. I just haven't seen it take off. There's been a a few that have tried this, but it just doesn't seem to have gained traction in a major way.

Yeah. Well, uh, you know, out of all these things that that you've seen come and go, and I've seen in my career, you know, advancements in technologies and um Helkla, all the stuff that we're talking about here. Ultimately, and this is uncomfortable for people to hear sometimes, is like, are we really moving the needle here? I mean, you look around, you don't even have to look at the statistics. I could sit in the airport and watch people walk by and say, no, no, people are not healthier, right? I see um, you know, obviously the childhood obesity epidemic is not getting better. And, you know, I I think sometimes we just kind of like to, I don't know, talk to amongst ourselves within the vertical and then pat ourselves on the back for maybe some profit and revenues. But ultimately, you know, the passion for actually changing someone's behavior and making people fitter and healthier may not be as strong as it once was. And, you know, I know my viewpoint might be a little negative at times, but I just want to kind of bring people back to Earth. So I know this is a big passion point for you as well. So when we talk about, you know, moving the needle where the rubber meets the road, all those great, you know, ways to phrase it. What what do you see as far as the fitness and health industry doing good?

Well well, you know, again, we talked about this off-air a little bit. And it's it's a question of what's the mission, right? I uh I think most people who got into this industry got into it because they were passionate about helping others be healthy, right? Um, but they learn pretty quickly that even though you can recruit people in on in January on a New Year's resolution, the the percentage to stay is very, very low. And if you're a business person, you you gotta you have to look at that and say, well, geez, and what's it cost to acquire all these guys and I'm doing all this and and they're leaving? Why don't I just focus on the ones I know are gonna work out? And and and that's it. I'm gonna I'm I'm gonna do that. So that's what's happened. Most guys have kind of thrown in the towel, if it, if you, if you will. I don't know if it's up to necessarily our industry, the clubs or whomever to change it uh within their four walls, but but I think it w it does make sense, you know, there's a lot of us in this, that we we could have a voice in this, you know, and and and no and and you don't hear anybody since Michelle Obama really talk about this. And we we talk about you know existential threats and the existential threat of climate change. And you can be anywhere you want on on that. That we're not gonna talk about climate change on this podcast. But my point is obesity is an existential threat, and especially youth obesity. If you look at the numbers, I mean, just in the last 20 years, it's like doubled the percentage, right? And and once once these kids are obese, the likelihood of their you know uh reversing that is is close to close to zero. I mean, you're even seeing now, like the some of the pediatricians are saying, well, let's have early intervention in the form of you know surgery and drugs. Like, are you kidding me? Are you are are you serious? Um so yeah, I am passionate about it. I I don't know how to I don't know how to fix it. I just know how to pontificate about it. But again, I think there's something we can do in the industry. You know, we have we we have URSA, we have a bit, we have a big body there, and collectively we have a group that's very passionate. I mean, aren't there ways we can use some of this technology to you know to create a kind of one voice towards this? Because it, you know, it's something you can't even talk about anymore. Like you see you say, well, you know, somebody's you mean, aren't you a little fat? You know, it's like you're you're fat shaming, and you know, fat's good, and there's nothing wrong with it. And yeah, and and by the way, and there's a doctor uh on C on uh CBS a couple of weeks ago from Harvard, right? She said, Oh, it's genetic. It's you know, that there's really nothing you can do about it. It's genetic. Well, yeah, if you're if your parents are obese, you're the likelihood of your being obese is pretty high, and there is a genetic component. But if it were genetic, how come if we go back 20 years or 40 years, the percentage of obese was so much lower? If it were truly genetic, it would be roughly the same, maybe a little less. So I don't buy it. So it's a big, I think it's a big societal problem. It needs a needs a leader uh and a group to carry the flag, and it just seems like our industry is the right group to carry the flag.

Yeah, and and we we certainly have the tools. And something I've noticed with people who like to bring this topic to light uh is that generally it's people and I'm thinking people have seen some level of success within the industry already, right? Where you're kind of above the line of like, okay, I just gotta make my budget next month, right? I just gotta keep the lights on, right? And then once you get past that point, like yourself is talking about it, Kelly Starrett, we talked about it on a previous recording, you know, then it feels like, okay, now I'm free, you know, to essentially work on the big problems, right? I don't have to get that. And I think that's really, you know, something that people can strive for. I mean, I know um, and I I know companies out there who start without any money and haven't reached that level of success, and they're trying to solve the problem, and it's just brutal, you know, because there's just where where does the cash flow come in unless they get financed, right, at some point. So it's it's a tough thing to get to because you want to work on it, but it's like, gosh, you gotta kind of well, you gotta take care of it, you know, plug your own holes in your own boat first, right?

Yeah, and it's the the thing is, Eric, it's so multifaceted, right? So it's not just you know, one thing, hey, you know, get out and exercise a little more. You know, it's it's it's very socioeconomic specific, right? If you grew up in a family with dough, you're you're not likely to be obese. You know, you probably played sports, your parents had money, you took ski vacations, you know, all that stuff. If you did, you know, you're you're not likely to you're likely to be obese, right? And it's it's you know, the crappy food is cheaper. You know, we've we've eliminated PE almost in all the schools. Uh you know, sports, if you want to be on a sports team, you you you've got to be on the select team, and the select team you've got to pay the coach $3,000 a year. Well, not everybody can can do that. And so it's you know, it is multifaceted and probably and it needs, I mean, it does need somebody like uh Michelle Obama or somebody at a high level, I think. I mean, we certainly our industry can be there sort of pushing, but it's got to be somebody with a bigger microphone, I think.

Yeah, yeah. And you know, I from a personal standpoint, I mean, I I kind of dodged a bullet when I was young. I was a I was on I was pretty chubby, man. And uh, you know, the the thing that saved me was my mom. Uh I guess luckily I had asthma. And the reason I say luckily is because that made my mom put me into swimming, right? And then I hated swimming, but then I found water pole, and then I found something I could do with joy for many, many years. And then that just kind of built this habit of being active and and all that. So I mean, I yeah, I came from middle class family, and you know, we had you know some opportunities for sure. But uh, you know, that sports and athletics really kind of saved my my life. So who knows where I'd be, you know, if I if I wasn't wasn't there. And I think you you bring up a really important point is so much of the stuff that we we argue about nowadays is socioeconomic related. I mean, you know, even I know this isn't a climate change podcast, but if if we elevated more people above the poverty line, we'd have more people concerned about things that affect our environment, right? It's really hard to worry about these things when you're just worried about putting food on the table that night, right? Or keeping electricity on. And, you know, I think one thing that I took away from my interview with with KSTAR was that, you know, I was asking him, kind of all excited about technology. I'm like, hey, what technology are you using? He just kind of shut me down. He's like, I don't really care about technologies. What I care about stuff is that is universally and very inexpensively scalable so that we can get to more kids, right? He's like, I'm more, I'm more fascinated with the potential of a weighted sandbag that we can get you know into more schools and and more things like that. And I I think that's kind of a you that's a significant mindset shift, too, is like, how do we make this democratizable for everybody? And how do we get this messaging out that activity is so critical to people's futures? And um anyway, I'm going on a little bit of rail, so I'll kind of stop let you chime in.

Let me jump in. I think just two comments there, one on the the tech, the technology side. I think that you know, there's gonna be a big breakthrough here soon with with Apple and you know the trans uh picking up um uh glucose transdermally, right? Uh they're they're they're getting really, really close. That that's gonna be a game changer, I think, because you'll you'll be able to get out in front of the the really bad effects of diabetes and and obesity. And so I I think that's gonna impact a lot of lives uh really, really positively. Uh you know, as far as the as far as the kids go, you said that you you you had this joy, would you call it your the joy of uh swimming or what I use the word joy? And it's it's a theory I've had as well. I call it the joy of movement. And I think there's this window you have with youth. And I don't know exactly what it is, but I would say it's in the 7 to 11 years old kind of a range that if you get that, if somebody for whatever reason mom makes you go swimming, or you had a you know, a great uh coach that that just made you love working out, and and you so you had that the rest of your life, uh, then you got it. You don't need anybody else. You have it. You you and I both had probably everybody in the industry experience that, but the percentage of people experiencing that hasn't it's not it's not growing fast enough. So how do we you know how do we get there? And uh you know, I think simple things like just putting PE back in schools could be could be super helpful.

When did that stop? Like why why why why did that stop? I don't understand. Was it a cost thing or yeah, I think I think it was.

You know, school budgets were under stress, and so they cut PE and they cut um music. There, there you go. That makes that makes a lot of sense. But now, you know, off on a little bit of a tangent. I don't think we're gonna we're we're we're gonna solve it. Um but like I did say, I think I think technology on the obesity side is is this is gonna be a game changer. And from what I've read, Apple's close. Apple's really close to this you know less invasive form of monitoring glucose. Then the other thing, you know, again, we talked about this off-air, but I think to getting kids involved in movement, I think VR has the potential to be a game changer there. It's it's early, you know, the sets are heavy, you know. I I've had one for three years. It's they're really fun, but you know, your your neck is sore after a half an hour with a heavy thing on on top of your head. But it's gonna get to the point where it's you know, who knows if it'll be glasses, but it'll be certainly a lot lighter. But you know, the environment is so immersive. And for you know, for kids, I can I can see it really getting kids involved earlier. I mean, they're predisposed. Look what they do with video video games now. So um I'm super hopeful that that that's gonna be a big breakthrough.

Yeah, yeah, it could be. And I, you know, give some shout outs too. Of uh, I think we we mentioned Jeff over at Lightboxer and Sam at FitXR and Ryan to Luca at Blackbox. I think they're all they're all working on it. And when I talk to them, they very much see it that way as like you know, this is an opportunity to engage the unengaged, right? Exactly. In a way that's fun and uh um you know cool, right? It's kind of cool amongst their peers to be doing this kind of stuff. So um I'm I'm I'm excited for that potential as well. Maybe on some, you know, I want to respect your time, Paul, of course, but the uh when you look at what's going on in the world of private equity right now, as you know, it's tough out there, uh tough to raise money. You know, what what do you think? Um if I'm a founder out there looking to raise, what what advice do you have for me at this point being Q1 2023?

Let's take just to take a step back and and just make sure we're on the same page with definition. So so so private equity is a little bit different than what we do or it is different, not a little bit different. It is different. So you know investment banking is is more I'm gonna work with your company and uh I'm gonna help you find ways either to raise you know raise raise money um sell sell your company buy another company so so look at your company in a holistic way and offer you strategic alternatives to where you are now and and how do we get there. And certainly that's going to involve money. Whereas private equity, you know what they do is they go out they raise money right so they go to wealthy people and raise a fund of some size. And then they go out and look for companies that look interesting and maybe are undervalued or you know with a little of their expertise they can grow it and you know in five years flip it and and and make money and and they've been very successful. You know I mean North Castle right is in the bid they do a great job. So a little little bit different there. We both have the same issues like when it comes to raising money if we're going through the same places for the for the most part. So yeah right now it's just not it's it's it's just not a good time right I I think that you're not going to change an investor's mind uh with you know a little bit better presentation. I mean the fact is if you're trying to raise money in connected fitness right now for instance tough tough but you know there are things that you know are kind of you know what you know I think potential white spaces right and uh you know one of them is is VR I think the you know the the problem there has had has been more the headset than the than the environment right that's it's headsets too expensive. So that's just I think that's just a matter a matter of time. And you know with Meta involved and they just they just bought um uh supernatural I think I think that deal went through so that's that should gain some traction um otherwise in in investment banking or in private equity you know you these are times maybe to do kind of roll ups and you can find some good companies at pretty low prices and you know especially if it's somebody that did a raise let's say in the connected fitness space and there it's a solid business but you know the the it's not going public tomorrow. But maybe there's a couple of those you can put together because we discussed earlier the business is going to come back. I mean it's home fitness is not going away I mean connective fitness is not going away so it is is there a way to grab some of these great brands and you know you know who they are as well as as I do and put them put them together in more of a sort of family of a package of great products or whatever I I think that could be an opportunity because a lot of these funds you know they can get to a point where they have to do something either have to they they have to they have to sell they're not going to put any more money in uh so what do you do then you know you chapter 11 what you know what do you do so there are there as I said could be opportunities for roll-ups right now I think both in the club space and and in the connective fitness space.

Yeah yeah interesting and I I appreciate the clarification too I I know I'm probably not the only one uh who gets a little confused sometimes in in the investment world about the different types of entities out there I you know it's it's really I feel like the industry's still kind of uh I mean all this you know institutional investment and you know private money all this stuff coming over the last like four or five years I I'd never really experienced it in any any form of my career so it's it's still relatively uh new I think to the fitness industry um Paul as I as we kind of wrap things up you know I'm curious like what what do you need right now if if people are listening like what what do you need help with who who do you want to talk to what what's what's going on that we can help you out with I don't really need anything I think uh I've been one of the most blessed people on the planet so so in terms of things I really need i i'll I'll sit with a pad hand god is smile on me give me great family and great friends and so I know that's not your question but uh no what we need you look from what we do at Harrison Co.

uh that's where I'm spending most of my time I am on you know the board of center and I'm the board of pro on of Proteus as well which is another great company I think you had Sam Miller on but uh I've worked with Sam since 2000. But you know I I I'm passionate about what we do because as I stated earlier you know we we get in and we we do for free basically um an A plus strategic plan for anybody that works with that's what we start with and we and we only get paid if we raise the money or sell the company we don't say hey give us 100,000 up front we'll do this and yeah you know maybe we'll sell it maybe we won't you know we we're we're we're we're totally successful success oriented um so yeah I need we need guys that you know want to want to grow uh want to work with a smart team or the we I call them the kids you know we have about um 16 you know super smart analysts that do most of the work frankly but they're they're fantastic kids um and you know get work with companies like that that want to grow it and not necessarily want to sell their the their company tomorrow.

I mean we're working with a company now that you probably would know um and we're taking the long road here after doing the strategic analysis to you know get them a little a little higher level of profitability a little more clarity around the growth strategy and then when we're ready boom we'll then we'll go to market um that's that's what we need we need companies like like that awesome and uh all people want to get a hold of you where uh where do you send them uh they can find me on LinkedIn uh they can find me at uh Harrisonco pburn at Harrisonco.com those would be the two two easiest places yeah right on well uh this has been really informative and I I wish I could just sit here and ask you questions all day but uh hopefully maybe you know if we can get you up to the Flathead Valley uh this summer we can do some fly fishing and uh we could talk more extensively at that point when we're gonna that's uh that's an easy way to get me to the Flathead Valley that's for sure well there's plenty of forks here and uh lots of holes so uh well Paul it's it's been an absolute pleasure like I said I I really appreciate it and uh I look forward to you know uh coercing you back onto the show in about a year or so we can get a little update on everything enjoyed it Eric it was great yeah ladies and gentlemen Paul Burn hey wait don't leave yet this is your host Eric Malzone and I hope you enjoyed this episode of Future of Minute if you did I'm gonna ask you to do three simple things it takes under five minutes and it goes such a long way we really appreciate it. Number one, please subscribe to our show wherever you listen to it iTunes Spotify Castbox whatever it may be number two please leave us a favorable review. Number three share put it on social media talk about it to your friends send it in a text message whatever it may be please share this episode because we put a lot of work into it and we want to make sure that as many people are getting value out of it as possible. Lastly if you'd like to learn more get in touch with me simply go to the futurofitness.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