October 25, 2022

#158: Fritz Lanman, CEO of Mindbody

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Today, I’m joined by Fritz Lanman, CEO of Mindbody, maker of booking and club management software for fitness & wellness studios, beauty salons, and more.

A SaaS business serving fitness providers and their customers, Mindbody equips studios with tools for cloud-based scheduling, marketing, media, and more. Operating for over 20 years, the company helped fuel the boom of the boutique wellness boom and, after acquiring fitness subscription service ClassPass in 2021, is responsible for powering a substantial portion of the industry.

In this episode, Fritz talks about his time leading ClassPass, the acquisition by Mindbody, and his transition to the joint company’s chief executive role. Plus, we cover wellness trends, the fitness industry’s recovery, and more.

In this episode, you’ll learn:

  • The pricing model that ClassPass studio partners hated and hurt the company’s bottom line
  • How Fritz encouraged studios, spas, and salons to integrate ClassPass and convinced outside investors of its potential
  • Why in-person fitness experience is making a comeback and how Mindbody is capitalizing on its resurgence

Links & Resources

Fritz’ Links

Episode Transcript

This is a machine-generated transcript. Please excuse any errors.

[00:00:00] Fritz:
What we’ve seen with digital is people use it to supplement, and they’re not excited to pay for it. They dramatically prefer in person; the majority of consumers want that in person experience. They want the instructor feedback, the equipment, the sense of community, the motivation, the co-opetition, the sounds, the sound system.

People do this instead of going to get a beer, and I think that macro trend is coming back and we’re gonna see it continue for the next 20 years.

[00:00:34] Joe:
Welcome back to the Fitt Insider podcast. I’m your host, Joe Vennare.

Today I’m joined by Fritz Lanman, CEO of Mindbody.

In this episode Fritz talks about his experience running ClassPass, why the company was acquired by Mindbody, and his transition to the Chief Executive role. Plus, we cover wellness trends, the fitness industry’s recovery, and more.

Let’s get into it.

Hi, Fritz, welcome back to Fitt Insider. Glad to have you on again, and excited to catch up.

[00:00:58] Fritz:
So excited to be here. Good to see you, Joe.

[00:01:00] Joe:
Yeah, a lot to chat about. I think the last time we probably had you on the show was around the time the Pandemic and COVID was hitting. We were wondering what’s going on, what does this mean for group fitness, and brick and mortar fitness in general.

Fast forward almost two years, a lot of those things are kind of still looming, but changes in terms of moving from ClassPass to Mindbody and now the CEO of Mindbody.

For those who aren’t familiar, please give us the quick introduction about yourself, and then what’s the update at Mindbody now being in this CEO role? Still fairly new—a few months, I think—at this point.

[00:01:37] Fritz:
Yeah, I think it’s been about 18 or 19 days since the formal transition, but it was announced in early August.

My background? I’m not really somebody from the fitness industry. I’m more of somebody from the technology industry who stumbled upon—fortuitously—wellness tech as a category and as a career path that I didn’t know existed.

So, I spent the first 10 years or so, the first decade of my career, at Microsoft. I started as a product manager, and then I did corporate strategy. I was working in the B2B business, originally, and then in corporate strategy, working 18 different businesses, over a billion in revenue. It was a super fascinating place to cut my teeth.

Then the second half of my career has been as a struggling entrepreneur and a lucky angel investor. While at Microsoft I started investing. My first bet was Square, third was Pinterest, and fifth was an IPO company called Wish.

I’m like, “This isn’t very hard. I don’t know what my VC friends are talking about their jobs being difficult.” Now I’m reverting to the mean after about a hundred subsequent bets, but those will fund a lot of stupid ones I’ve done.

And honestly, angel investing just made me want to become a builder and see, you know, rather than just kinda prognosticating from the ivory tower. If I could roll my sleeves and. And build, and it’s made me a lot more empathetic investor and, certainly a better operator. The lot of mistakes along the way.

But the theme of my career as an entrepreneur has been bringing machine learning to industries that aren’t technical by nature. So really kind of great fit. Have done a bionic hearing company, publishing business, and, A recommendations app and one was a great outcome, one was okay, and one was an epic failure.

So, you know, classic track record. And I got involved with ClassPass, met the founders. It was a different business called Class and decided to fund the pivot in the ClassPass. It was, you know, they had kind of, I believe there had to be an aggregator in the space and I thought the subscription model.

Was a healthier model for the industry than like Expedia would open discounts, you know, h hide the discounts behind a subscription wall. Filter users who are comfortable not having access to all inventories. You could protect your pricing power. Went in there and, and, and started as an investor, led the A round and became the chairman and kind adopted the business and was coaching the founders.

And then Kyle, who started it, didn’t enjoy the CEO job as it scaled, and we gotten ourselves into a bit of a, a pickle with our business model evolution and said, Hey, I need you to step in and run it. And we switched jobs. So I’ve been running the company. It was kind of a one year deal starting in December of 2015 and I think we formalized it late 16.

So been running ClassPass all the way up until Mindbody acquired the business. We merged them together last October. Had been on the Board of Mindbody for last year, running ClassPass as kind of an autonomous business unit, and then, taken on the Mindbody consumer app market. and then, you know, a month and a half ago decided to, the board and Josh, my, my previous who recruited success in, decided to, and so here we.

[00:04:37] Joe:
Yeah, it’s been, it’s been quite the evolution and even on the show, I’ve talked to Rick Steyer, who was the co-founder and ceo. Then talked to Josh, had you on as well. Now, kind of all converging, I think, in this conversation and thinking about, you know, Potentially a lot to get into, but in general, to some extent, all along the way it was like ClassPass and Mindbody were partners.

And then there was some level of like, are we competing or indirectly competing as we’re thinking about like utilizing the full capacity of the classes and deals and obviously ClassPass running on Mindbody’s api. So in terms of this kind of coming to fruition, in terms of like the acquisition, how much of that was.Talked about maybe over the years and like, Hey, does this make sense? Is this the right time? And I know last time we talked ClassPass being on the path to, Hey, we want to ipo, we want to continue to run this company into the future. So how did those things kind of play out?

[00:05:34] Fritz:
That’s a great question and a lot of fun history there and probably, you know, we could do that over beers sometime with all the different permutations of the partnerships. So Yes, so Kyle and I met, Kyle, went and met Rick when he was just thinking about building an API strategy, right? Rick had sort of invented the wellness tech industry and brought a lot of fitness studios online for the first time, and bless him for figuring out how to build the software because he was, you know, he wasn’t a software guy, right.

Found a way, just a hard charging entrepreneur who was super committed to this mission and just, just, just kind of sheer will powered his way into building a huge successful company and kinda inventing the category. He then had this vision of building, you know, thousand flowers Bloom type platform with different apps would build on top the Microsoft like Windows operating strategy, which resonated with me as a Microsoft guy, right.

So we talked to ‘em and class paths could not have existed if Mindbody hadn’t made it so much easier to quickly start to work with studios because it, you know, we had visibility in how much excess capacity studios wouldn’t want to give ClassPass spots at a discounted rate to clear if they could fill them at full price direct.

So, Class paths could never have existed without Mindbody, but the relationship would oscillate between, you know, great, we’re grateful to, okay, now you’re gonna pay us an API fee. And you know, that’s a public thing that Mindbody had. And then they became a public company and they earnings to adhere. It was an interesting kind of co-opetition thing with deep mutual respect.

You know, we were the biggest platform partner at ClassPass for Mindbody and an important part of the earning story there on the platform. and, and kind of this couldn’t exist without each other, but they also were trying to figure out what to make of ClassPass because, like I think the industry was right for a long time.

When I first invested in ClassPass, it was 10 classes a month for a hundred dollars in just New York. We then moved to an unlimited workout model, which was supposed to just be a couple months promotion. VCs started funding clones of ClassPass cuz it was working and the founders moved to a permanent unlimited model, which just didn’t make any sense.

It, it both didn’t make sense for ClassPass cuz you had people working out so much we were losing money. Movie Pass copied the ClassPass model and learned the hard way that that model doesn’t work. And at the same time we studios hated ClassPass cause we were devaluing the. So, So that’s when I came in and moved us back to 10 classes, but then came up with this credit system idea.

So now we can variably price inventory, we make money on money we send to studios. If we can surge price, we will, we make more money. ClassPass does by sending more money to studios and once Mindbody saw that, pivot in that evolution, they started to have more confidence in. Is this good or bad for our customers?

And ultimately, you know, Josh had been there, he’d come in through an acquisition, became Rick’s successor. You know, he’s a sales Corp dev, biz dev partner oriented ceo. Right. And I think he was really impressed with what we had asked team to go do analysis on. The Impact ClassPass was having on my body customers, right?

We, we would hear anecdotally at ClassPass that we finally were working for, for studios. And we had private equity investors invest in us who owned Studio brands, and they would look at ClassPasses Impact and tell us, okay, ClassPass is clearing, liquidity, or excess extra capacity. Without harming the direct business.

So we thought it was true, but we couldn’t see our impact on are all the ClassPass users, actually people who used to go direct and now are paying less. Right.

[00:08:48] Joe:
Mm.

[00:08:48] Fritz:
And the best thing that led to the acquisition was the conclusion of the analysis was that ClassPass was genuinely working. And we, you know, for every hundred, visitors that a studio has direct ClassPass brings 29, the studio does lose two to ClassPass, but they gain four net new.

And that was, I think, a big, huge. And so they decided, Hey, this is actually a force for good. We need to help our studios coming outta the pandemic. Make sure they’re taking advantage of this tool. And when studios are still hesitant and now spas and salons, cause ClassPass serves them. What we’re now rolling out is the Mindbody guarantee.

So if a studio or a spa or a gym try ClassPass and after three months they’ve actually seen so much cannibalization or price deflation, that it’s harmful. Mindbody will write them a check for double what they’ve lost. And so it’s kind of a moment of the studios and the spas and the industry is still recovering from covid need to find every source of revenue that they can to stay in business and then to grow and expand.

Hopefully this is a tool that has been misunderstood and I, as a CEO of Class Ps, could have done a better job. I think transforming those opinions. But still, no matter what you say, you know there was still gonna be hesitancy, but when you’re willing to put money behind it, that changes the tenor of the conversation.

And so that, that’s what led ultimately was they saw the impact and said, We can take this from a portion of our studios and spas using it to a lot more. And that’s where the synergy and the deal is sort of derived. So we’ll still keep them ClassPasses. One of many tools, Mindbody will offer to help grow and improve your.

But really that was the culmination. It had been many flirtations is, again, I think Rick, and then I think Josh, were just trying to figure out if ClassPass was good or not for MINDBODY customers. And so once we fixed it, and then more importantly, once it was proven by the data scientists and the financial analysts, our, our board felt good enough about that claim that they’re willing to put Mindbody’s balance sheet behind it and say, we g.

[00:10:39] Joe:
Yeah, I appreciate you walking us through that. And I think it was very succinct and like you kind of even alluded to like when phrasing it this way and getting the behind the scenes of it, it’s like, To no brainer in the sense where, to some extent, maybe Mindbody had fought it at one point in time or didn’t understand it as you phrased it, and maybe the studios were kind of like, is this a good thing or is it kind of race to the bottom in terms of pricing when you marry the two?

Yeah, I mean, it checks a lot of the boxes in terms of we not only, you know, vouch for this, but back it up. When it comes to that integration, is it now being able to go to the studios who are already on Mindbody and saying like, Hey, we have this tool for you. Go ahead and use it now and we can just turn it on within this other suite of kind of services that, Mindbody’s offering and or are you going to ClassPass partner studios who don’t use mind, body, and.

We need, you need to, or we kind of expect you to, or there’s more incentive to move over now to Mindbody. So how is that kind of playing out in terms of that relationship to life?

[00:11:43] Fritz:
No, No, The emphasis is much more on the former than the latter. And and that’s because ClassPass realized that Mindbody has to provide other platform partners, right? Any other service that’s out there that can provide revenue to the studios. And the spas is accreted for the industry. It’ll help more players be in business, you know, after having lost a lot, especially in America during the pandemic.

And that’s actually good for ClassPass long term. So conversely, ClassPass has to work with non Mindbody software systems. Because it’s dependent on scale and density, right? Just doesn’t have a variety value prop if it’s only Mindbody studios on it. And especially now that ClassPasses like half Spa and Salon.

Nothing has changed at all. And in fact, there’s a bit of a, of a kind of a Chinese wall between the businesses because, you know, we want the customers to not feel any pressure. It’s only positive pressure. Only carrots like mind, body can actually financially guarantee class. Other ClassPass integrators can’t.

And in general, people don’t choose their business management software based on. What aggregators it works with. They choose it based on who’s got the best product, who’s got features that are gonna help me spend less time and have more levers and have more, you know, sources of leads than anybody else.

And, and so, you know, we’re trying to win on that front, but the, certainly there are like more seamless integrations we can do. So the best experience you can have on class. Is going to be, if you mind, body, because Mindbody can guarantee it. You don’t have to log into ClassPass to see your performance.

It’ll just be in our dashboards. And so we are rolling that out. But the synergy is mostly in going to get those Mindbody customers who have well founded skepticism of ClassPass and saying, Team, we know we had hesitations too. It’s now an unequivocal force for good unless you’re statistical anomaly. And here we’re willing a check our money behind.

That’s marketing expenses.

[00:13:34] Joe:
Yeah, it makes a lot of sense. And obviously part of this is, you kind of framed it up, was the impact of Covid. This was. You know, kind of devastating the, the fitness industry, at least at the onset of the pandemic and had gyms and studios shuttered, a number of them, you know, remain closed. But now kind of midway through summer.

And I think certainly at this point, a lot of the reports kind of saying the gym visits are rebounding, memberships are back up above pre covid levels in some areas and for some studios. what has. if we can even say at this point, like turning the corner, been like that experience now starting to get people back into gyms and the impact on mind, body, and ClassPass.

[00:14:14] Fritz:
Yeah, good question. So, The impact is not to be understated, right? Especially in America. We lost about 20 to 25% of studios, in America. And the government response and support for the industry just didn’t compare to how good it was in, especially in Europe, uk and then even in Southeast Asia and Australia.

And, you know, we have that global presence and we can see it. So the biggest issue is not actually the consumers have shifted to digital or something like that. The biggest issue is just a lot of people couldn’t survive. There’s just less presence of wellness, merchants now than there were before. So the industry shrank a bit.

Now, someone would argue maybe that was gonna happen anyways. you know, maybe it had over expanded or, you know, there was operators who weren’t making that much money and this was just the straw that broke the camels back. and I think you are seeing that a bit in terms of the tier one kind, national or global brands are who self franchisees.

I mean, you can just go look at their earnings. A lot of them are big Mindbody customers. They’re reporting lots and lots of sales. So I think it’s a matter of perspective, right? If you zoom into the industry for the last two and a half years, The picture’s pretty bad. We have not made it all the way back to pre pandemic levels.

If you look at the last six months, you see a, you see an up and to the right curve. The picture looks pretty good, but if you zoom out and look at it from 15 or 20 years, The picture is just one big hockey stick with like a little blip, right? It’s kind like looking at the US stock market over a hundred year period’s.

Like, oh yeah, there was the crash, and then the com thing. It’s the same for wellness as industry and the consumer spend on it. So, I think we’re just super, super optimistic and the signals we have are things like the franchise sales. Like there’s a lot of people, entrepreneurs who are coming into this industry who want to serve wellness as their profession, you know, as their livelihood.

The consumer is telling us, you know, ClassPass. Once we get ‘em to go back one time, they go back 10% more. Consumers are more focused on wellness than they’ve ever been. because of the pandemic. And I think people are tired of being cobbled up. We were worried a little bit, that virtual would be this massive displacement.

What we’ve seen with digital is that people use it to supplement and they’re not excited to pay for it, and they dramatically prefer in person. Now, there is a customer who loves digital and bless Peloton and the other connected fitness people. That’s their customer tends to be older, more suburban and higher income.

The majority of consumers though, want that in person experience. They want the instructor feedback, the equipment, sense of community, the motivation, the cooperation, the sounds, the sound system. It’s almost, you know, people do this as instead of going to get a beer now.

Right. And, and I think that macro trend is, is coming back and, and we’re gonna see that continue for the next 20 years.

[00:16:49] Joe:
Yeah, it’s, we’re seeing that as well in, in terms of the operators we’re talking to, and like you said, especially a lot of these companies. Who are public now, it’s like, yeah, it’s, it’s obviously playing out not for everybody, across the board, but, in general. But there was the, the period of time, and I’d be curious to hear like how you kind of remained optimistic in seeing the kind of light at the end of the tunnel.

Right. Because there, there were a lot of things that seemed to make sense. It’s like, well, people are forced now. To be at home. There are, don’t have another option if they’re gonna work out. Either they go outside or they use digital or some type of connected or at home equipment. And the this thing, so many, digital connected fitness operators would say was like, Covid just accelerated the trend.

Like, this was inevitable. Gyms were gonna go away. People don’t wanna work out in person, They want to be in their homes. It’s more convenient. it’s more cost effective in some cases. And then all along the way, the Operators in the brick and mortar side or in the software side supporting it.

We’re kind of saying like, No, it’s inevitable. This is coming back because community and the human experience and instructor and all the things that that brings to the table, in the thick of it, like what led you to, to kind of hold onto that belief and be like, Hey, we have to get through this. It will, when we zoom out, look like the stock market and now kind of here we.

[00:18:08] Fritz:
It’s an amazing question, Joe. We were just blindly believers in, in, in what we did and the experiences that our partners at ClassPass and our customers of my body provide, and as consumers of those services ourselves. And for me, I lost 80 pounds because of studio Fitness. you just weren’t gonna convince me that it wasn’t gonna come back for me.

It’s the most fun. Way to work out. I, I work out more frequently. I work out harder and better, you know, and I, I book it in advance and I stick to it. I’m an investor in connected fitness companies. I love, I love, there’s great experiences. Those entrepreneurs are doing amazing things, but we’re not there yet in terms of replicating that in person experience.

You know, and, it was honestly using some of those products that, that I just said, you know, for me, I just, and I did gain a lot of weight in the pandemic and, and my cholesterol has gone back up and I need to get back and now back in with reckless abandon into these real world experiences and benefiting from that.

Next time you see me, hopefully I’ll be looking a little bit, a little bit healthier, and my cholesterol, I’ll be down again, but, you know what it’s like as an entrepreneur. You have, you have to have conviction in the mission and the experience and that you’re trying to deliver and. I just, you know, from my own personal bias in polling consumers, they told us they can’t wait to go back.

I think we had a bit of a mental health crisis in this, in this country and others because of the lockdowns, Right? So we, we were hearing about those and those were confirming. And then, you know, maybe the most amazing thing was that our, our video products flopped, like ClassPass launched we charged no commission to our studios.

So it couldn’t have been cheaper for people studios to just move to at home and our customer said, We’ll do it. We’re kind of putting up with it, right? Like the concentric circle of those who are interested in digital is much bigger than I thought, but those who are willing to pay a lot of money for it is a very small percentage.

So there’s a group of people who just really want to go and will pay as much as their budget allows. For in person. There’s a group of people who really want that at home, especially for the convenience and you know, it’s a good experience and, and it’s good enough and it’s just you don’t the want to and supplement with great digital experiences.

But Mindbody launched a vwp product that would allow the studios to launch digital. And a lot of studios used it, but the engagement sort of went down in direct proportion to when the shutdowns, and we just signals that’s going to.

Flip the card, you know, make the bet and see, And luckily we, we, we decided to stop betting on our digital products after multiple on class, multiple failures on mind, body, a lot of adoption, but not enough money going to the studios. we got lucky I guess, and again, it’s still a bit of an open question, but what we’re seeing if you zoom in the last six months is, is a, is a strong recovery and consumers are saying all the right things about want to get back in person.

[00:20:54] Joe:
Like people get back. It’s exciting to see the industry in many ways starting to rebound. But I, it’s also like the, the kind of narrative shift in a positive way. Not, Hey, this is a competition. Gyms are dead. and people are gonna work out at home. But hopefully continuing to move things in the direction of, listen, different people want different things.

So the more options that we can give them, the better we will be. And hopefully we can just help people get healthier. And that pie. Is big enough for multiple different takes on that, kind of across fitness and now certainly the, this evolving definition of wellness and holistic wellbeing and all the things that, as you mentioned, like half of the partners, right?

And or bookings. you can correct me on the stat from the ClassPass perspective is, is, is beauty, wellness, spas, et cetera. So that’s evolving and the industry is hopefully on the back end of it, like getting bigger than it was before.

[00:21:48] Fritz:
The stats I can give you from what consumers. On us is, you know, 75% are saying that wellness is more important than ever and 89% on the ClassPass side of members. You know, that’s where we have a really good direct relationship with the consumer are saying they plan to go as much or more frequently back to classes.

Once they get back, the biggest thing holding people back is actually just motivation. You know, usually this industry sees a huge, boost in the new year, right? We have our annual new year hockey stick up, and then it kind of linearly grows and then hockey up stick up and we get a little bump usually in back to school.

Well, we’re having the biggest back to school in proportion to a new year in history of, of ClassPass. So there’s, there’s a, and, and when we ask them, like 30%. Fallen off the wagon. They haven’t gotten motivated yet to get back out. They’re no longer afraid of. So, you know, they’re, they’re telling us, and I’m.

[00:22:41] Joe:
It’s exciting to see. Well, hopefully when we get on the back half of that, I’m excited to take a look at those stats. one thing I wanted to ask you as well now, kind of, Changing hats. Right. And shifting into the, the CEO role at Mindbody, which is this kind of expansive platform in business management and payments.

You’re, you’re in this place now where it. Crowded, it’s competitive. There’s lots of different, What seems to be the trajectory is like, and this is true of Mindbody too, when it went private, again, like PE backed roll up to some extent, a lot of different service providers or applications, features in this particular industry.

And then, continue to grow in some cases globally, in some cases specialize in like boutique or fitness or spas along whatever. but really, Trying to capture as much market share. How do you think about now being in the, the CEO role at my body and saying like, what is our goal placed in the industry?

How do we think about competitors? Are you even thinking about competitors to that extent? and just kind of perspective now going forward.

[00:23:44] Fritz:
Great question. I, I couldn’t be more excited about taking this role. It’s, it’s really the privilege of my career. Again, I didn’t think I could build a career in wellness, and I’m most, mostly a techie coming into this industry. Right? It built a lot of B2B software, lot of consumer experiences, and really what it did at ClassPass was make it work for studios and spas, right?

And we built, some amazing distributed systems and search recommendations and algorithms to help people discover stuff. And then we built automated revenue management using machine. Right. So when I come and look at Mindbody, you know, and the reason that Josh asked me to step up is he said, Fred, we’re entering this next period.

We’ve got through, we’re coming out. We need to make our product amazing, and we need a very technical focus CEO to deliver on that vision. Right? And I have a vision for it, which is we we’re in the middle of a three year transformation where we migrated from cell host@p.net. The, the, the challenge of success in the tech industry is that as you get to big and then you’re scaling, You’re no longer using modern technologies.

Right? And our customers have felt a lot of that pain in those arcane technologies and the migration to the cloud. And and we’re still working on that. We gotta run through the finish line. We’ve made a ton of progress, but we gotta just nail the core in terms of the most responsive, super reliable, and super secure system we have really a huge amount.

We have more r and d going into that problem than any other company in the space. Buy a long shot. So as we go through and deliver that, well, we also need to modernize our ui. So we’re in the middle of that project. We started rolling out what we call the new Mindbody, which is, you know, we’re taking kind of a room by room remodel approach, a more modern iterative development approach where we launch new features, new UI components, and then we scale it up to customers.

We get the response and we iterate. So it’s a lot more agile of an approach, and that will continue over the next six to 12 months. So in six to 12 months, you’re gonna have the fastest, most secure, most reliable. And hopefully the most beautiful and modern, cuz even the competitors have been around now for six or seven or eight or nine years.

And so it’s like, okay, let’s see. You know, if we can come back and, and push the envelope further. But what is Mindbody’s unique advantage? It’s the scale that Mindbody has and what can you do with scale? You can deliver insights. And you can do machine training that nobody who subscale can can achieve.

So Mindbody through its consumer marketplace first, no one else is as many consumers in one app as Mindbody does. So if you’re looking to get direct customers through your front doors, you should be a Mindbody customers. You can take advantage of that traffic, fire, hose of mind, body, consumers, and that app is pretty damn good.

We’ve invested a lot into it. So first, take advantage of that scale Advantage, right? Mindbody is the only place with millions of consumers waiting for you. Then Mindbody with ClassPass is the only place that can guarantee ClassPass is gonna work, right? And if it doesn’t, we’ll write you a check. So then you’ve got Mindbody capital.

We have a capital partner who will, because of our data and scale, we can say to an underwriter, this person is worthy of. We’ve given out 10 millions, of loans. We want to give out hundreds of millions of loans to help this industry recover. That’s actually one of the biggest things holding back like franchisees who bought a franchise license.

They can’t get financing. Like come, come beyond Mindbody. We’ll get you into business faster than anybody else. Then you layer the insights, then you layer the machine learning features. Hey, this person’s falling off the fitness wagon. You should reach out. Give them a phone call. Give them an inducement to come back.

Right? Oh, you’re about to send out a marketing email. Guess what? We’ve seen a hundred million marketing email. And can tell you what the best headline is to, to get you optimized open rates and conversion rates. We gotta earn the right to ship those features. We’ll see, You’ll start to see that machine learning stuff coming in.

We have it with Messenger ai, which is, you know, a product that consumers can interact with. Front desk robot, right. And get booking Right your spa or, but there’s so much more to come down the pipe. Joe, I just, you know, I don’t wanna get too far ahead of myself, but this is where me as a machine learning geek, you start opening this can of worms and we could be on here for an hour.

[00:27:29] Joe:
No, I was, as you were talking about it, one of the things I was gonna ask you was, you know, what should we look out for? And you pretty much just checked off the, the roadmap over the next, at least six to 12 months. but no, I think that’s, you know, important and I think as people think about now, you know, because in general across the industry, when it comes to the business management and payment software, it’s like everybody runs into that phase.

They’ve been there the 5, 8, 10 years, they start acquiring a bunch of disjointed businesses. They don’t necessarily all fit together quite, so fluidly. And so a lot of the things you’re talking about is like, yeah, we’re gonna improve all of that. We’re gonna improve the design, the functionality, and, and then all the kind of supporting and ancillary things around that to, to help businesses get in business, stay in business, I think is is important.

I’m glad we got to, to touch on it.

[00:28:18] Fritz:
We just rolled out new values. You know, I’m imprinting my, my own CEO ethos onto the company now. And, and we’re also trying to really differentiate ourselves as a wellness focused employer. So launching tons of great benefits around reproductive rights, global mobility policies, flexible time, people work out during the day, exec sponsored challenges, all this stuff.

One of the new values is, be so good they can’t ignore you. And Steve Martin said to a comedian who was aspiring, How did you break through? And that was his advice. You know, I can get up here and talk about what we’re gonna do, but the best thing for me, When we just start shipping these things and customers just start feeling it and experiencing the upgrades.

So, you know, I think it’s, I think it’s a new dawn for us from a product standpoint, and I think appointing a very technical CEO is our communication to the world. That this is the phase Mindbody heading into it. We’re spending more money than anyone on r and d. So if I screw it up, you don’t believe me.

Just look at my track record and if I screw it up, shame on me. We, you know, we, we, we need to improve how we serve customers.

[00:29:14] Joe:
Yeah, for sure. And then I guess maybe one more question before we get you outta here. at ClassPass you were talking about it, Hey, we want to go public, we want to continue to run this company. And now obviously at Mindbody, there’s kind of been reports, rumors that the company will look to get back on the public market here at some point. to the extent that you can talk about it, what does that trajectory look like? And obviously with the acquisition came. I think it was 500 million in funding, so no problem from like the capitalization standpoint, but just in terms of the, the path going forward.

[00:29:45] Fritz:
Yeah, that’s, you know, Joe, the, the luxury that Mindbody has is it has a profitable legacy business that we’re using to help fund class paths and emerging rapidly growing business. And a very well capitalized balance sheet and very long term patient investors. You know, Vista Equity, is the majority controlling, shareholder, but all the ClassPass investors rolled, right?

I rolled my interest into Mind, body, all the investors, nobody sold out. We all believe in the synergy and the future here, you know, Mindbody reemerging as the best product in the industry, the category leader and the category growth that we’re gonna have for 10 or 20 years. So, U I P O for two reasons, right to capital.

Or to get shareholder liquidity and you can get shareholder liquidity through secondaries and other things. I think right now we’re all looking around at the public stock market. I’m like, personally, like, what else can I buy at these PE ratios, you know? and, and the market’s pretty depressed, so it’s not a great time to go.

Public for liquidity reasons, and we don’t need to do it for balance sheet reasons. So we got the luxury of just be so good they can’t ignore you. Make something amazing, trust that the numbers will follow and then get liquidity when it’s right, when you need it, when shareholders decide. but you know, we’re taking a long term view.

We’re not in any rush.

[00:31:00] Joe:
Yeah, we’ll certainly be keeping an eye out, and when things continue to roll out we’ll share that with the audience, and I’m excited for what’s continuing to come down the pipe.

I’m pretty sure most listeners are familiar with Mindbody.com and ClassPass.com, but is there anything else you’d like to point out or share before we get outta here?

[00:31:21] Fritz:
Nope. If you’re a Mindbody customer, take advantage of that ClassPass guarantee and Mindbody Capital. If you’re not a Mindbody customer, consider it for those reasons and all the other reasons we talked about. We look forward to getting the industry back on its feet.

[00:31:33] Joe:
Yeah, likewise.

I appreciate you taking some time to chat with us today.

[00:31:36] Fritz:
Thanks, Joe. Great to see you.

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