Issue No. 100: Arming the Rebels

Up For Grabs

In March, when lockdowns went into effect, home fitness became a substitute for hitting the gym. Months on, it’s feeling more and more like a replacement.

To be sure, community and human connection set the in-person experience apart. And whether it’s a personal preference, price, or purely a matter of square footage, working out at home isn’t for everyone. Still, there’s no denying that a shift is underway.

COVID is upending industries, accelerating trends, and cementing new habits. The change sweeping across the fitness industry is indicative of far-reaching disruption.

NYU professor Scott Galloway believes a sizeable portion of the billion dollars spent on exercise at gyms and studios is now up for grabs, commenting:

The biggest migrations, probably in consumer history, are about to take place. The first is 18% of GDP is up for grabs, because healthcare is being blown up. The $700B higher education cartel is being blown up. And also the sweat industrial complex… we are not going back into a dark, damp SoulCycle or Barry’s Bootcamp in the next 18 months.

A New Home

Eyeing an opportunity, entrepreneurs, investors, and incumbents have gone all-in on at-home.

In theory, home exercise represents an alternative to gyms and studios. But, in execution, the growing number of at-home options hoping to seize this moment are simply replicating the gym or studio experience.

Taking a step back, last year, the US fitness industry had surged to $35B in value. Globally, that number exceeded $100B. More than big-box gyms, boutique fitness fueled growth across the industry. On the back of this trend, studios like F45 Training and Orangetheory Fitness opened more than 1,000 locations.

A piece of the trillion-dollar wellness industry, fitness became a gold mine. More than that, it became a status symbol and a luxury good. It wasn’t enough that instructors were fit — they had to be flawless. And we’d spend anything, even $40/class or thousands of dollars a month, to be like them.

The fact that this form of fitness fails to serve the vast majority of people is one we return to time and time again. Lucrative as it may be, it’s unlikely to impact societal health on par with the challenges we need to confront, from inactivity to obesity and other chronic diseases. Maybe it’s unfair to expect that it might. But we can’t pretend as if it will.

The problem then is that the flurry of at-home fitness options hitting the scene are implementing a flawed approach from the start. More specifically, the majority of entrants to this market have two models in mind: cardio equipment and group fitness.

As the thinking goes, bringing spin class or bootcamp into the home democratizes fitness by increasing access. But that presupposes that everyone enjoys spin or bootcamp. Further, it suggests these options are a suitable or effective form of exercise for most people.

Of course, that’s not the case. Mainly because it’s not the point. As it stands, the success or failure of home fitness hinges on the business model where a piece of hardware is tethered to a content subscription. Everything else is an afterthought.

Constructed in the likeness of the traditional fitness industry, home fitness isn’t all that disruptive.

Head-to-Head

As it stands, the future of fitness is being characterized as a competition between at-home options like Peloton, who are poised to overtake gyms and studios.

Hyperbolic as that sentiment may be, it’s also myopic, failing to consider hundreds of millions of people who don’t view exercise through the lens of the fitness industry. Further, it doesn’t account for the millions of fitness, nutrition, or sports coaches who’ve devoted their lives to helping people transform their habits.

An alternative to connected fitness and boutique-style classes, empowering fitness professionals to build a remote, digital business represents an untapped segment of the booming exercise economy.

A topic we covered in Issue No. 81, the rise of the fitness creator will redefine fitness — but they need some help to get there.

In the immediate aftermath of COVID-related closures, fitness moved online. Everyone, from trainers to clients, made do. But as weeks turned into months, the collective patience with janky Zoom calls, wonky payment links, and makeshift software stacks wore thin.

Fortunately, a number of startups spotted this pain-point and sprung into action to help trainers improve the digital experience. But many of them run the risk of pursuing the wrong path.

Like the majority of at-home fitness options, the companies hoping to serve trainers are building solutions based on their perception of the fitness industry, not the role of the fitness professional. As a result, exercisers and, more importantly, non-exercisers who don’t resonate with instructor-led, boutique-style classes, will remain unserved.

Looking Ahead

Instead of operating within the framework of the fitness industry, it could be helpful to seek inspiration elsewhere. In this case, Shopify’s approach stands out.

When asked what separates his company from Amazon in the eCommerce space, Shopify CEO Tobi Lutke said:

“Amazon is trying to build an empire… Shopify is trying to arm the rebels.” 

With a singular focus on empowering merchants to start and scale a digital business, Shopify has built the infrastructure for online retail. Now, more than 1M merchants, from mom-and-pops to billion-dollar brands like Allbirds and Gymshark run on the platform.

From video and messaging to billing, scheduling, marketing, custom programming, and so much more, building the infrastructure for Fitness Creators is the next opportunity up for grabs.

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🚳 Rough Ride

Proving that no brand is immune, the pandemic put the brakes on SoulCycle. Worse, there’s a power struggle playing out behind the scenes.

A new report from Business Insider depicts SoulCycle as being in crisis mode.

Quick read: Citing conversations with “two dozen current and former SoulCycle employees”, the article describes a culture war between Soul and parent company Equinox. In addition to HR issues and internal politics, there’s a growing cause for concern.

• 11 executives and a number of star instructors have left the company.
• The indoor cycling brand is said to be mulling bankruptcy, a claim a SoulCycle spokesperson denies.

Tug of war: Culture and cash position aside, the battle for control over SoulCycle’s at-home bike is, well… wild.

The boutique studio’s so-called Peloton killer, SoulCycle assembled a team to build its connected fitness offering.

On the day Soul announced its home bike, news broke that Stephen Ross, chairman of the holding company that owns Equinox and SoulCycle, was hosting a fundraiser for President Donald Trump at his Hamptons estate — a development that was met with backlash and boycotts.

Then, in an effort to bolster Equinox’s digital offerings, the parent company took over SoulCycle’s at-home product, forcing an IP sale for $10M.

Last week, more than a year after it was announced, Soul’s at-home bike began shipping nationwide. According to one staffer quoted by Business Insider, the bike was “cursed from the beginning.”

🎉 Here's to 100 

This week’s newsletter represents a milestone of sorts; we’ve entered the three-digit club. And ICYMI, we recently eclipsed 50 podcast episodes as well.

Far from the summit, we’re just getting started. In the weeks ahead, we’ll lay out a game plan for the future of Fitt Insider. But in the meantime, head over to the newsletter and podcast archives to catch up on anything you may have missed.

While you’re at it, if you have any feedback or just want to connect, please drop us a note.

Thanks for following along.

📰 News & Notes

• A VR treadmill?
• Layoffs loom large over Nike. 
• GymShark has come a long way. 
• ClassPass adds on-demand beauty services. 
• Zwift explained. [Reread: The Metaverse of Fitness]
• Digital fitness companies have raised $1B+ in recent months.

💰 Money Moves

• Hyperice, makers of recovery technology, raised $47.8M at a $700M valuation in a funding round led by Main Street Advisors and SC.Holdings, with participation from the NBA and numerous athlete-investors.
  More from Fitt Insider: Our interview with Hyperice CEO Jim Huether
• German intermittent fasting app Fastic secured €4.3 million ($5M) in a seed round.
• Healthtech company Exer Labs raised $2M to launch Studio, AI-driven software created for virtual fitness classes and personal training.
• JAXJOX, makers of connected fitness technology, landed $10M in a Series A.
  More from Fitt Insider: The Connected Fitness Wars
• Digital training startup Caliber raised $2.2M in seed funding to launch its one-on-one personal coaching platform.
• Global HIIT franchise F45 Training has mutually terminated its agreement with SPAC Crescent Acquisition Corp, ending its aspirations to go public this year.
• DTC healthcare startup Everlywell Inc., creators of an at-home COVID-19 test, is expected to reach a $1B valuation after receiving new funding.
• Personal training certifying board ISSA acquired the National Council of Certified Personal Trainers (NCCPT) for an undisclosed sum.
  More from Fitt Insider: The Future of Personal Training
• French startup Ÿnsect added $224M in equity and debt from Upfront Ventures and Footprint Coalition to construct the world’s largest insect farm for edible protein production.
• Kama, a sexual wellness app for education and support, landed $3M in seed funding.
  More from Fitt Insider: Erasing Stigmas
• Cerebral, a digital mental health subscription service, closed a $35M Series A round led by Oak HC/FT.
• Endurance sports media company Pocket Outdoor Media acquired Big Stone Publishing, publisher of the Trail Runner, Rock and Ice, and Ascent digital and print magazines.
• Wellness Natural, Inc., a Toronto-based natural foods company, launched after acquiring protein snack brand SimplyProtein.
• OXIGEN, makers of a pH-balanced and oxygen-boosted bottled water, secured $15M in Series B funding from a long list of celebrity and athlete investors.
  More from Fitt Insider: The Athlete VC
• Cold-pressed juice company Caribé Juice acquired Wtrmln Wtr, makers of a watermelon juice beverage, for an undisclosed sum.
• Plant-based energy drink company GURU Beverage Inc. closed a $34M private funding round ahead of going public.