July 14, 2020

#39: Nate Forster, CEO of NEOU

Nate is the CEO of NEOU, a platform for streaming and on-demand fitness.

In this episode, we talked about how NEOU plans to become the Amazon of fitness, including its digital platform, a 20,000 square-foot production hub in New York City, and content partnerships with a growing number of fitness instructors and brands.

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

What is NEOU?

NF: The name NEOU comes from “the new you”. The easiest way to think about what we’re building is the Amazon of fitness. I know that sounds like a big statement, but if you think about what Amazon is in terms of the marketplace, robust content library, and the community they’re creating, that’s what NEOU is.

We’re building a community, thousands of different workout classes, nutrition, motivation, everything you can think of in one place. We have over 100 brands or content creators in the marketplace and we’re connecting them to the 50,000 consumers we have. We’re creating this ethos where you can find everything for your wellness needs.

What is NEOU’s business model?

NF: We started with building the physical facility first. We have 20,000 square feet on Fifth Avenue in New York as a hub that represents the digital product. It’s open for people to take classes and is where we film them on demand and live. So, we run the brick and mortar and then have a subscription business on the digital side where we have monthly and annual plans.

We also have a small piece of NEOU which is the B2B side where we do content deals with big players like Life Fitness. We’ve created all the content for their machines for the last year—if you did a class on one of their machines, it was shot at NEOU. Then also we have partnerships with people like Gympass and other wellness companies we work with. 

What makes NEOU stand out? 

NF: Because we’re a content company and we’re a marketplace, we’re easily scalable. When you looked at digital fitness, it was owned by hardware players like Peloton, Mirror, and Tonal where you had to spend thousands of dollars on a piece of equipment, and then $30 to $40 a month to use that equipment. 

Plus, the amount of money it takes to get one of those startups going with logistics and manufacturing is expensive, so a lot of overhead. But having a true content marketplace company is very scalable. Once you get to a certain point with your operations, it’s really just scale which is one of the benefits of NEOU and allows us to create an affordable product for everyone. 

We also know that most fitness brands initially do great, then end up in the fitness graveyard. No fitness brand exists forever and never dies out with the new thing that comes to replace them. But when you’re just a platform in a marketplace, the marketplace is constantly evolving and we’ll be able to evolve with the new things in fitness.  That’s what makes NEOU so great — we’re so functional.

How does NEOU produce content?

NF: We’re shooting all the content at our hub in New York. Our core competency is as a content company. I think that’s why you would see, and most people would say, our content may be the best out there, because we’re so focused on quality and the user experience.

Peloton, Mirror, and Tonal are definitely content companies as well, a piece of them, but if you were to ask the leaders of those companies, they would say they’re a hardware company, because they drive off of the hardware. 

Our content team decides what we shoot and put on the platform. Our chief content officer has been a leader in this space for over 30 years in terms of talent and production and really making things a great experience for the consumer. 

How important is the content to your success?

NF: One thing I can tell you, that Peloton proved: if you don’t shoot high quality content, and  create a great user experience, the longevity of your company is going to be very difficult to enforce. 

Early on with COVID, everyone was stuck at home and didn’t have a lot of options to get to your favorite trainer or class, so you take what you can get. Coming out of that, I think people will realize there’s a lot better content out there and the low quality content is going to fizzle off.

My advice is to shoot content really well. It doesn’t mean you have to spend millions of dollars like we did. We’re making a bet that high quality content shot like a movie is what will work long term. That’s how we’ll keep our engagement up and our churn low, because the biggest problem companies have with trying to get into this space is churn. They lose engagement, and the best way to keep it is through quality content and a good user experience. There’s really no way to cut those corners. 

How does NEOU work with instructors? 

NF: The talent, or content creators are anyone from influencers, individual trainers, and gym owners, to someone with a whole brand and we work with them in a few different ways.

The first way is revenue share. We also do flat fees for different brands. For example, if we want a certain amount of content from a brand, we’ll do a deal where we get x hours of content every month for a flat fee. 

The other way you can work with us is on an hourly rate. We pay you to come in and shoot, and we do a really inflated hourly rate because we know we’re creating content and using it for other things. We also incentivize it, if you’re getting paid per hour, you can trigger into the rev share as you get more people to watch your content. The rev share is typically for the brands that have the most consumption, and we look at it on minutes viewed. 

The last thing we do across the board for anybody in any of those categories is referral fees. So, if you bring us payers to the platform, we’ll give you a rip of every single fee we get. It’s how we make the whole ecosystem work.

How do you keep users engaged?

NF: Besides the content, we look at it through the experience you get on the app. One thing we know about wellness and fitness is the consumer creates this relationship with the instructor, or brand, or personality. If you ask people about Peloton, they’re not going to say, “Oh, I love Peloton.” They’re going to say, “I love Robin.” On NEOU, we’re creating these relationships on the platform with the consumer. The next evolution of our product will now have two-way communication where you can have conversations with the brands you follow, which creates more stickiness. 

It’s added with the high quality content, and then layer in the last piece, which is accountability and gamification. On our new version of NEOU, we challenge you to work out more and accomplish your goals with a system where you earn points, badges, and rewards for working out and I think that’s how you really keep the engagement at a high level.

What impact have you seen from COVID?

NF: We reported the same numbers basically as Peloton did of a 500% increase in engagement acquisition across the board. It was tremendous for our business in terms of user acquisition and revenue. I think that was the case for any company in the space. 

The brick and mortar side is a mess. I try to be a pretty positive person, and things always work out when people are smart and work hard, but a lot of these businesses are going to get hit really bad. I think the boutiques are in the worst shape, because it’s pay to play. They don’t have recurring revenue and a monthly membership. Someone has to show up and take the class. 

I think they’ll solve some of these hurdles with digital, and it’ll be the ones that play the waiting game and outlast this thing. The bigger brick and mortar players positioned at lower price points will do better since people won’t be so fast to cancel a $20 or a $30 gym membership.

And as we’ve seen, I don’t think COVID is over. I think the second wave’s coming now, and I think the third wave is going to come during flu season again. We just don’t know what’s going to happen. You’re going to have to be creative and smart about it and just wait it out. Some companies aren’t going to be able to do it.

How did NEOU get into kid & family content?

NF: NEOU Kids is something that I wanted to do for a while now. When putting together NEOU, I put in tranches of what I thought would eventually be the content we’d have on our platform. Obviously it started with fitness, but right behind fitness I had kids and nutrition, and so on.

We had tremendous feedback and engagement when we launched Kids. One of the toughest things that isn’t being talked about today is that all the parents are expected to work their full-time job from home with kids at home are no longer in school. So, the kids’ content has been a plus. We’ve got them doing some fitness and it’s a bonding thing they can do with their parents. 

I take some pride in being really the first ones to market with the focused kid content. I think you’re seeing it more from some other companies, but we love that we’re kind of the ones leading the charge. Kids’ content’s really important, and we’re going to continue to do it. It works really well.

What’s next for NEOU?

NF: It takes money to grow something and become a global brand, so we’re starting to get to that inflection point of needing to do a larger round, so we’re actually just going out to start what we’re calling our Series D which I’m excited about.

We’re looking for a really big venture growth partner here to help lead this charge, and it’ll be the first time we really go for an outside round of a large amount. And that’s a whole other job on its own. For all the entrepreneurs out there, raising money is a full-time job. The hardest part is you have to be able to take 500 nos before you get one or two yeses. It takes time to build anything, and everyone’s always going to be skeptical.

We’ve built it from day one to be global and we’re in 65 countries today which shows our scalability. And we’re solving problems. That was the plan, so we’re excited about it. That’s something I will lead the charge on with our team, and we’ll look to get it going in the next 14 days.

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

About Nate Forster: 

Nate Forster is a former professional tennis player turned entrepreneur. Nate started his career in hospitality and transitioned into the health and wellness industry in 2010. At the start of his entrepreneurial career, he was an operating partner at dek23 and b.e.d. nightclubs in Miami, in which he brokered the sale of both businesses.

In 2010, he became the owner and operator of the first Reebok-partnered CrossFit gym and by 2014, he was the largest CrossFit affiliate owner globally with 15 locations. Nate is now the co-founder and CEO of NEOU, a digital fitness platform that helps fitness influencer and workout brands scale to a larger audience. The mission of NEOU is to bring consumers the best of all types of fitness, health + wellness concepts and trainers to anyone in the world at any time.

Fitt Insider Weekly Letter

Every Tuesday, we’ll send you an email filled with curated insights on the industry’s most important news.