October 29, 2019

#4: Ethan Agarwal, founder & CEO of Aaptiv

In this conversation, Joe Vennare spoke with Ethan Agarwal, founder and CEO of Aaptiv about the role personalization will play in the future of fitness, building an executive team as a solo founder, and how Aaptiv creates community among its users.

Check out an overview of the conversation below or listen to the entire episode for more.

What is the core idea behind Aaptiv? 

EA: Audio is a better way to consume workout content than video because you’re not tethered to a piece of hardware while you’re trying to work out.

That was the crux of the idea, but there was still a lot of work to be done early on. We had to think about the kind of trainers, classes, difficulty, and duration level. How do you use music? And should the content be live or on-demand?

What makes Aaptiv stand out? 

EA: I think whoever provides the most personalized product is going to win [in fitness].

No one is leveraging the power of software or data or technology to create personalized experiences. We think personalization is the key to all of this and the first company to really crack it is the one that’s going to win.

No one is building anything like that in the fitness space except for us.

Spotify didn’t win because they had music. Lots of companies have music, Spotify won because of discovery. Because they recommend new music to you that’s specifically relevant to you, which is different than music relevant to me.

How big can this get? 

EA: Today we’re only 1% of where I think this company can go. In the US, there are 40M people that run in the US. and 54M people that have a gym membership. That number is at least 5x bigger outside the US.

I’m proud of what our team has done, but we’re really scratching the surface from a product development perspective and personalization from a member perspective.

How do you continue to innovate? 

EA: Retention is critical to any subscription business. And I think it’s one thing we’ve done well — our monthly churn has become significantly better since we started the company. And it’s all because of product development.

We recently launched a product called Coach. This product provides you with a daily plan of how to work out, how to recover, and what nutrition to consume. But the most important part of this product is that it’s totally agnostic as to whether you consume Aaptiv content or not in achieving your goal.

Equinox, Peloton, us, or whoever, none of us will have 100% of a user’s wallet share. People are doing all different things at different times. We said, instead of lying to ourselves about being the only provider, why not actually help the consumers where they need to be helped? And when I talk about personalization, that’s where the coaching product solves that problem.

Do you plan to go public or sell? 

EA: We’re very happy being private right now. We’re focused on running the company. But there’s also another option — distributing cash back to investors.

It’s something no one thinks startups do but was actually the original intent of buying equity in a company… to receive dividend payments when that company generated positive cash flow. No one talks about it anymore, but we’ve done a lot of work on ensuring we have a sustainable business model. Again it’s very contrary to a lot of the folks in our space and our investors are very happy about the way we’ve structured the business.

How do you build community? 

EA: I think we’re better at building community [than gyms and studios].

In our case, because the programs we have are weeks or months long, the relationship and the sense of accountability you develop with people are way stronger [than a studio] because you’re working with those same people for weeks and months on end.

Versus if you’re in a studio class, you see this person for maybe 45 minutes. And then that’s the end of your relationship. What we’re doing digitally is actually forming longer-lasting relationships.

And because of the scale of our business—we’re in all 50 States and 19 countries—we make finding someone like you a lot easier. On average, there are 25 people in a fitness class. On the scale of our numbers alone, you’re likely to find someone like you, who can help you through it. So the quality of the relationship is much higher.

**Note: Ethan’s answers have been edited for brevity and cohesion.

About Ethan Agarwal:

Aaptiv Founder and CEO Ethan Agarwal first thought of Aaptiv while working as a business consultant – tired, traveling, and 30 pounds overweight. During this time, he realized there was no product on the market that removed all of the barriers he and so many others were up against when trying to make fitness a priority.

He set out to transform the way everyone works out and founded Aaptiv in 2016. Three years later, the company – backed by leading venture capital firms and top companies including the Amazon Alexa Fund and Disney – is a leader in the digital health space with over 230,000 paying members who have taken more than 30 million Aaptiv classes.

Prior to launching Aaptiv, Ethan spent three years at McKinsey & Co, advising clients in the technology, media, and financial industries. He was previously an investor at LionEye Capital, a $2.5B AUM hedge fund, focused on a merger arbitrage strategy across energy, tech, and healthcare. Ethan began his career as an investment banker at Lehman Brothers, focused on healthcare M&A.

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