https://www.youtube.com/watch?v=8_qL5oB3BR4&ab_channel=EscapeFitness

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i deal with people who don't have a
million dollars of net worth
who are not you know necessarily super
operators they're actually struggling
they don't have capital that they can
immediately inject into marketing
they don't have the you know the the
desire to do the guerrilla marketing i
have to work with a hotdog stand to make
them into a mcdonald's
without the capital
[Music]
how to bring more clients into your
business keep them longer whilst
improving your profitability is a
subject we have discussed in many of our
interviews
but my guest today has turned this art
into a science
in this episode we discuss a number of
tried and tested methods to grow your
business
including how to make money from team
training and why most gym owners get
their pricing wrong
why workout based group training
concepts are affecting your retention
and what is the secret formula to make
virtual training work
and it's not streaming classes with a
client base of over 2000
thriving businesses i'm very impressed
with this guy's results so please check
out this week's podcast
with the founder and ceo of gym launch

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00:01:00.000 --> 00:02:00.000
mr alex
hormozy
so alex thank you so much for inviting
me into your house today and what a
beautiful house it is thank you for
inviting me on your podcast
beautiful podcast as well well one of
the things i was going to ask you is i
i actually first came across you on on
your ads your facebook ads and i
i think there's two things that stuck
into my mind and kevin's is that
is the tash and the biceps
and i had to ask you i i you know i've
not got big guns but
where do you buy your shirts from to fit
those arms in well i go so the key is to
get
youth extra large right because if you
get youth xl
then everything looks bigger you know
because it's really just a shirt for a
child
um no i'm kidding i just i get our stuff
but lululemon that's where i get the
majority of my my gear
very good yeah very good so what so what
what's your
like you you're obviously in great shape
are you your background bodybuilding or
anything like that he's a power lifter
right yeah so i was a power lifter i
competed for five years
and then um one day i realized that no

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one cared how strong i was
and so and my i remember i was pulling
my my leg out of the car because my hips
were in so much pain from the volume i
was doing that i was like wait i don't
i'm like at the time i think i was 25 or
26 and i was like what am i doing
and so um i was like you know what i'm
gonna just switch how i train so i
started training with more volume
um kind of switching more to just more
bodybuilding style
i've never competed in bodybuilding i
don't have the desire to get
stage lane but i just have done that for
probably six more years now and that
works for me
and so you just saw the saw the home
home set up
i just kind of like to do my thing and
train every day and train hard and do
more
for those of you that are on audio and
we'll see if we can get some video this
but like
i've never seen a home gym like this
it's got so much equipment
it's very impressive are you a bit of a
collector of equipment
um yeah i think everybody's got like i'm
i'm actually not like a car guy or
anything like that like i
the only thing i think i really splurge

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00:03:00.000 --> 00:04:00.000
on or will find myself like late at
night scrolling is like new equipment
and so like whatever our next home is
it'll probably be twice that size
i just i just love having all the pieces
uh
just because for you know when you're
training it's just nice to have the
variety and so
i like having the variety yeah so what
what got you into the gym business
because i guess there are
i guess there's the the sort of one
percenters that do extremely well and
then the rest of the people in the
business
sort of you know kind of uh struggle to
to get going i know you've you've had
your own gyms you know why
why did you sort of set this up as a
career um i was a management consultant
for two years
after um i graduated college
and uh i did pretty well now that was
space cyber intelligence we focused
on strategic initiatives for the
military for cyber and space
and um that was a totally different life
and i knew that i didn't enjoy that and
so um i just made the
total 180 decision that i was like you
know what life's short i'm gonna do

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00:04:00.000 --> 00:05:00.000
something that i love
even if i don't make any money i'll just
at least be doing something that i love
every day
and then um i think i told you the short
story but i moved across the country
i talked to some gym owners they were
willing to help me out in the very
beginning to just kind of learn the
ropes
i knew nothing but i think that ended up
being an advantage because i didn't have
any preconceived notions about how
i was supposed to do it and so with that
i think we did things a little bit
differently and by doing that
we're able to have some success and
continue to grow from there i use the
consultative message that i learned as a
management consultant to kind of
acquire and iterate on information so
the whole council date methods typically
you find experts you ask them what
they're doing what their opinions on how
things should work are then you ask
those experts for five people that they
think are smart
and you talk to those five people you
ask for them then overall over time you
end up getting basically the same people
and once you have that you kind of have
the the mind map of all the information
that exists from the people who've
already sifted through
the vast majority of it so they're
giving you kind of the top one percent
of the information
and then from there we would categorize

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00:05:00.000 --> 00:06:00.000
the information um into buckets
and then basically consolidate what we
think the the crystallized actions or
strategies should be and so that was
kind of the consultative method that we
use for like military strategy
but it was it was pretty much the same
thing that we applied we
i applied to running the gym and so
every weekend i didn't know anybody in
california which is where i moved to
which was an advantage to a certain
because i had no friends i had no
girlfriend i know nothing
and so every weekend i would drive up
and or i'd have long phone calls with
gym owners and i would just take pages
and pages and pages of notes and i would
try and implement some of the things and
some of them worked some of them didn't
but piece by piece
things ended up working and so
fundamentally i think most gyms
struggle from one they don't know how to
require customers profitably
two um if they uh finally do end up
filling their gym the gym isn't
profitable so their model's broken
and then three if they do have a
customer that finally does come
they don't know how to keep them and so
kind of those are the three big problems
that most fitness you know most fitness
facilities especially independent
operators struggle from
and so it's kind of solving each of

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those three pieces and once you do
then you have a way to acquire customers
profitably to put them in a model that
is profitable
and then a way to extend the lifetime
value with multiple services and revenue
streams and whatnot so that overall the
facility can continue to grow
and did you find that those problems
were the same across
whether it's an independent gym owner
with one location up to
people who they've got you know sort of
big franchises that we were talking
about off camera
is are they sort of universal problems
that you found
yeah i think they are i mean
it's yeah it's acquisition um the model
itself and then the retention
right that's that's it and then you know
what you sprinkle on top of that is just
what what training and culture needs to
needs to be in place because it's a
service-based business at least the
business the gyms that i worked with
or work with currently are all service
based businesses so they're not uh
facility licensed type businesses so
um the 10 a month massive facility um
that's a different model than what we
talk about so like if i were to work
with a crunch for example
i would be working specifically about
how they're going to do their group

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training and you know their boutique
services side
because that's the side where i think
that's where i work um
not to say there's anything wrong with
outside it's just that's what that's
what we kind of specialize in
and why do you think that is such a
common
issue like i'm you know we go to a lot
of the seminars and you hear the
webinars and
it just seems for years i've been in the
business for about 20 years and it seems
for years
we always talk about the same things you
know why do you think
that nobody's really been able to
successfully
figure that out and scale that i think
it's because it requires skill
and so that's the hardest thing is to is
to
in the fitness business most people who
are coming in as employees are typically
really low skilled employees
and so you have to take someone who's
not being paid very well because you
know if i were in a yogurt shop
i'm sure i could have like you have to
figure out a job that somebody who's
going to be paid at that level
which is what is required by the
business model what can someone who's
paid at that level
do well and the difference between a
yogurt shop and a gym is that at the
yogurt chop i'm getting my value from
the yogurt and the machine

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whereas at the fitness studio you're
getting the value from this 15
hour employee and so ultimately we're
selling people at a at a discount
and that's where making our margin is on
selling selling the services that we've
provided and so
the level of culture and management that
it takes to run a good facility
to be very candid with you the people
who are really phenomenal operators
if you can operate 10 facilities at once
as a
as an owner operator or operator overall
usually if you were to take that same
level of skill set and apply it to a
different opportunity vehicle you'll
probably make more money
and so it's kind of one of those things
where i feel like fitness is just like
the breeding ground for acquiring
the skills of business but typically
once you achieve a certain level of
mastery
there are superior vehicles for making
money if you have the same level of
skill set
right and when you say superior vehicles
do you mean like other industries
outside of totally
yeah i mean we're going into like the
equipment side or going to it's just
service
on its own is incredibly difficult
especially in what most would consider
what like a commoditized marketplace

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and so what we work with you know with
facilities to try to decommoditize them
from the from their competitors so that
they can charge a premium because
pricing is i mean i could go into all
the issues but pricing especially for
for services is typically way off
um most people will price it pretty much
at breakeven
because they think oh well you know i'm
going to take i'll open up this new
class time because one person said that
they were going to be able to do it
so it's at least another 100 a month so
it'll make sense but it doesn't actually
work that way
and so um there's just i think there's a
fundamental
misunderstanding especially on
independent operators because they're
usually more passion driven
and so like just like i was when i
started i just want to start a gym but i
also had my own insecurities and
ambitions so i wanted to do it well
and i think a lot of people were really
content still being on the floor and i
didn't have that desire i knew when i
started my first gym i wanted to have
multiple
and so i kind of always had that end in
mind of like figuring out what the right
model was going to be
do you think that um that that the
pricing
is is part of the issue where you know
you've you that this sort of
the fitness product is being sold as a
commodity
which means that you're not able to pay

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00:10:00.000 --> 00:11:00.000
for good quality people to work in there
whether it's in marketing or
or in fitness and and that is is
part of the crux of the issue totally we
call it the virtuous or vicious cycle of
price
and so you lower your price and then the
thing is is
the incremental decreases in price with
a fixed cost
um have massive impacts on the bottom
line so the average
independently operated gym runs on
twelve and a half percent margins and
my source on that is i have a cpa firm
that only does gems and so they know
what people actually make
um and so 12 and a half percent margin
is what they're making so that means if
you're making 300 000
a year you know guys are making 35 40
000 that's not a lot
right and so from there if you think
about that
if you reverse that to their membership
right um depending on where you look
like zimplander
uh wodify they came out with some
some reports about what the average cost
per member was
and so it's about 90 a month for a group
training member and so
most of the bootcamps are running like
99 a month for the membership which
means they're making
10 on that membership and so that's

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where the pricing is really important
because if they go from
even even 100 to 110 they double their
profit
right so there's incremental those small
tweaks in pricing can make massive
differences
in the business model you know for
example we get all of our independent
operators to switch from
you know monthly billing to every four
weeks or every two week billing
and the reason for that is we do you
know 28 day cycles you get 13 28 day
cycles in a year compared to 12. now
that doesn't seem like much but
you know it's eight percent more per
year but if you're running on twelve and
a half percent margins you just took it
from twelve to twenty
and so all of a sudden you almost double
the profit simply by changing the way
you bill and that's not going to
that you're not going to get any
pushback from a from a prospect on
saying hey we just built every 28 weeks
instead of building monthly no one's
gonna no one's gonna balk at that
and so there's like there's a lot of
small things that you can do to
incrementally improve the
the profit profitability of the business
that's just on the pricing side but
there's
the same thing can be done on how we're
how you're picking the exercise
selection so that you can maximize the
square footage to the facility
so you can do instead of having you know
10 people uh in a crossfit i mean i
remember there was this
crossfit that we flew out to this is

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back when i was doing turnarounds in
person
um rather than kind of the cons
consulting that we do now but we'd fly
out
and um this guy i remember was like
yesterday
they maxed out at i think 13 people and
this place was 3 000 square feet
13 people and it was it was a crossfit
facility and
i was like what do you mean you can only
run 13 but like this doesn't like look
at the math like you're
you will at full capacity you're under
profitability right like
and he was he was living on his personal
training so i was like you realize your
entire business is a non-profit and then
you're just making money on your
personal training hours you might as
well just be a personal trainer and
forget about this stuff
and so finally after like digging
literally this was a four-hour
conversation
it came down to the fact that they do
double unders which is jump ropes right
and so when they do double unders it
takes up this enormous amount of space
and so
if for some reason the class does choose
to do that
then they had to limit it at 13 and
because they didn't know what the
workouts were going to be
they always had to prepare for the you
know the lowest common denominator of
space
and so i remember i grabbed the jump
rope and i was like this is strangling

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00:13:00.000 --> 00:14:00.000
your business this 10
jump rope is the reason that you can't
go from 13 to 25 people in your sessions
is because you're choosing to have jump
ropes you say what do i do and i was
like stop having them
i was like because 90 of your clients
are never going to compete nor do they
care and it was this wasn't like a
competitor facility so
these were you know soccer moms just
trying to not gain weight during
thanksgiving
and so it's understanding the customer
avatar which most people just want to
look okay they don't actually care about
competing they don't care about their
macros they don't even care about the
programming
they just want to work out and feel good
about themselves and so there's a lot of
ways you can you know accomplish that
same degree with like the olympic lifts
we get most of our facilities to not do
the olympic list for their large group
you can save those for summer private
and small group
but a you have injury risk but b there's
just a huge space demand
and also the coach to client ratio has
to massively decrease so your
profitability for the session goes down
but the objective of that which is how
most people are using it
is for conditioning but if the
objective's conditioning then there's a
million ways you can condition someone
that doesn't require
10 by 10 square foot around them for the
bounce radius on a bar
and so it's like small things that's
just like exercise selection so one was
pricing what's exercise selection

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00:14:00.000 --> 00:15:00.000
you know how you're structuring the
sessions are you doing hour-long
sessions are you doing 45-minute
sessions are you putting a 15-minute
buffer in between like all these little
things can massively increase the
the efficiency of the facility um so
that ideally we can you know operate for
a few hours of the day so we can
decrease the payroll on
on the actual fulfillment side and then
um you know again you can structure from
a lot of places to unlimited and you
know i have a somewhat controversial
view about it i
i think that it's better in my opinion
to structure things as
as sessions that are scheduled right
people take them more seriously i think
they're more likely to
attend and they're also they're also
valued higher so it's not workout
sessions right so you're against
unlimited ni
i would say it's i would say it limited
if done properly is done by an advanced
business owner
who actually knows all the measures of
the business which 99 of them do not
and so um most of them if we can get
them to three times a week then just by
doing that we double the capacity of the
facility again
right and so and people will actually
pay the same amount for three times a
week as they will for unlimited
sometimes more which actually doubles
again how much you're making per

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00:15:00.000 --> 00:16:00.000
you don't say like these little things
when stacked together at the end of the
year
uh you know for us the the average gym
that's worked with us for a year adds
239 000 to the top line revenue they
take their take home from 29.40 a month
to uh 89.50
take home and profit uh that's per month
that they're able to take as a result of
what we do
they take their average price from 129 a
month that's what they're what our
incoming surveys say that's the average
that we get
to 167 a month and again that like that
37 dollars
uh when you're looking like that's you
know double sometimes triple
the profit that they were making before
and so it's all these tiny things
that we you know we add in supplement
sales so they have retail revenue that
start coming in that doesn't take any
operational drag it's just simply there
and just provides one two three thousand
dollars a month which for many of them
just covers the rent
and so it's it's these small things that
add up um over time and a lot of them
just don't do all of them
um and so i think the difficulty in the
fitness industry is that you
you have a lot of people have a lot of
passion who also have really poor views
around money
they sell from their own wallet they're
like well no one would pay for that and

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that's because they already understand
what they're trying to sell
like if i go to a mechanic shop and two
mechanics are talking like who would pay
for that all you gotta do is turn this
and turn that knob i'm like i don't know
and so as long as you're not being
unethical and you're just providing
value a lot of times people will value
things more than than you think
what do you say because you've how many
how many clients do you have currently
so we've worked with uh over 3 500
facilities
um at any given time we probably have
active probably 700 right now
so i mean there's definitely a clear
path that we have for our gyms to get to
you know seven figures
um the average gym on the last survey we
had is doing 594
000 in revenue um that we work with so
that's what they're doing using our
systems and some of them once they've
implemented the systems
graduate and that's fine you know i mean
that's the way that the work you know i
love to keep everyone forever but like
that's just the reality and that's okay
our goal i mean it was a turnaround
business so once the systems are
implemented
the only thing so if you think about a
business in terms of inputs and assets
assets would be the actual business
structure the the selling processes the

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00:17:00.000 --> 00:18:00.000
bundles the packages the price points
the meal plans all the things that are
one-time assets right
and then after that the only inputs are
going to be demand generation and sales
right like that's it like that's that's
it and so the only things that have to
be done on a continuous basis is
whatever the
whatever the acquisition method is so
whether that's organic with outreach and
cold messaging
or cold emailing or it's uh demand gen
with
uh you know facebook ads and instagram
ads and all that stuff like that's the
input but the machine once the machine's
built
you don't need to rebuild it you just
need to add more demand and that's it
have you found that and i'm probably
going to have to reference pre-covered
because you know it's a bit of a crazy
time but
prior to that did you find that there
was a certain type of
gym model that just you know worked
better than others and
when i say that i mean probably like a
pure group x
sort of boutique studio or a traditional
gym with group x or
group xpt was any of those that you
found were nicer better to work with
from a profit perspective yes the ones
with the best operators
just being really real that that 100 is
what it is um i mean we have our model

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00:18:00.000 --> 00:19:00.000
so obviously we espouse that model
um and we specifically work with
you know group training facilities um
you know group training semi private
independently operating facility like
that is our bread and butter who
specialize in
transformation weight loss before and
after picture that kind of style
i don't work as much with the what i
would consider workout-based facilities
so like
with a unique mechanism like spin bar
yoga like not that the model doesn't
work for them it's just that
we tend to not i tend to rub those
owners the wrong way
um why is that uh because
i think that i want to sell around the
result because weight loss will never go
out of fashion
but bar might no offense to anybody any
bar
owners or les mills or whatever you know
whatever the thing is
um usually and not to again not to knock
franchise orders
but a lot of times people will have
their you know ten years ago
they were the brand new thing and they
exploded in growth they used those
metrics as their their base metrics to
sell their concept
they were probably also really good

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00:19:00.000 --> 00:20:00.000
promoters and good operators
and then they sell the the mousetrap
that was based on something that was new
and then the thing is is that the
novelty declines over time and then all
of a sudden it's not that new
and the people who are taking over are
not that good operators they're not
promotional oriented and so this kind of
stacks all the chips against those
people
whereas in my opinion weight loss and
transformation will never go out of
style
and so i think it's a more timeless
model to focus on what people value the
most like a woman will pay five thousand
dollars
to get plastic surgery to look a certain
way because beauty and weight loss
will never go out of style but they are
not paying five thousand dollars for
yoga they're not paying 5000 per bar but
we can sell a five thousand dollar
you know 28 week program uh for one on
four semi-private all day long
and that's incredibly profitable and so
that's that's kind of why
why i prefer the transformation based
studios because i think that there's
way more ability to get a higher ticket
there is ability to put retail products
in that like yoga
you don't see a lot of them selling like
big supplement bundles you know what i
mean but those are those are huge profit
centers for a business
and so i just try i lean more towards

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that type of business simply because
there's more opportunities to make money
a lot of the workout only facilities
are struggling a lot because they're
commoditized price-wise
from every other one that does the exact
same workout whereas at least with
transformation
you have a little bit more wiggle of
your unique method and all that kind of
stuff but if it's like
this is what we do then it's very
difficult to
to differentiate yeah exactly to
de-commoditize yourself and so there's
all these chips that are stacked against
and so usually if i say that
uh it you know someone who's let's say a
yoga person would be like
that can't be true i was like i mean i
don't really have an opi
it's i don't want to say it's not
opinion i guess it is an opinion but
i think it's it's a pretty data-backed
opinion
you talk about good operators that are
key to success what
what makes a good operator then uh
good interpersonal understanding good
emotional intelligence
being able to stay organized and run a
team um

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a lot of people a lot of business owners
have massive emotional issues
a lot of them are not organized at all a
lot of them don't even hold weekly
meetings they don't hold one-on-ones to
their team they don't give them
improvement plans they don't give them
they have no goals set week to week the
employees have no transparency in how
the business is doing
they don't even know what key metrics
they're looking for they're really just
operating blind
and so a good operator should know what
the key metrics of the business what are
the things that they're going to drive
what are each of the you know what are
each of the roles doing on a regular
basis what the utilization level of the
employees are
and so if they have all those things
then they can have a really good grasp
on the cost of the business
and what are the you know handful of key
drivers for growth that they need to be
focused on and then direct the team
towards
but most operators don't don't do any of
that
so yeah is there a thing that you
you know out of order thousands of
people businesses you've dealt with is
there one thing out of all of them that
that trips people up more often than
anything else the two biggest things

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00:22:00.000 --> 00:23:00.000
that i'll say too
um biggest mistakes that i see are
around pricing
and around and i don't know if the other
one's just
it's sales ability right so if someone
is priced properly and can sell they'll
probably make money in the fitness
industry like if they can just do those
two things they'll do it
one of the hardest things is if you have
an owner operator who's not very sales
oriented
it becomes really challenging because
they're also usually aren't very good at
recruiting sales people because they're
not like them
right and so they can't find the right
people and then if
they do they can't train them and if
someone's not doing a good job they
don't know how to correct them because
they can't sell either
and so it's kind of like it's this base
thing especially in fitness where
you don't all that in my opinion a lot
of the chips are stacked against you in
a fitness sale
because you're telling someone they have
to change everything about their lives
they can't eat the food they love they
have to wake up super early they have to
be sore
and they may in 12 months look better
than they do now
but they still probably won't be at

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their goal right so like you have
everything stacked against you and then
the only thing you have is just the
conviction that they want to work with
you
to achieve that goal right and so it
takes sales ability it takes
interpersonal ability
and typically when you have someone
who's an absolute savage closer in that
space
if they apply that skill set to selling
real estate
or cd i mean like once they develop that
skill set usually that skill set can be
taken into a different opportunity
um but that's why i think it's a great
breeding ground for entrepreneurs
because a lot of entrepreneurs
themselves
wanted to take control of the first
thing they could which is themselves and
so they get to control their food and
their body and then they want to
do what all entrepreneurs do and share
that with the world and so
a lot of newer entrepreneurs start in
fitness because that's why mlms for
for supplements is a great huge breeding
ground for people who are starting their
kind of careers in entrepreneurship
because they
it's it start it starts with fitness for
many people it's the first discipline
that they're able to learn is how to
control their own body
what do you think about a lot a lot of
the models where they don't have any
sales whatsoever i know some of the

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studios uh you know it's very much like
you come in or it's
it's done online are you of the opinion
that you you need some sort of like
real human being in that sales process
or can you automate it
i think you can automate it but i think
the guys who have been able to monitor
automated are world-class marketers
they're phenomenal marketers you look at
you know like rumble boxing or
you know barry's boot camp they've built
just amazing brands
that they've built allure around the
brands they get celebrities to come like
they've done so much good pr work like
that's the type of thing
that most independent operators wouldn't
even dream of or think about
and so they're able to generate so much
uh
buzz that this is just my two cents is
that
they develop so much demand and so much
word of mouth and so much awareness
that they have this huge of a funnel of
impressions
that they can have a less efficient
conversion process which would be like
online sales or whatever
but even with a less efficient
conversion process they're still able to
make a very profitable facility

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because of the level of awareness that
exists for their brand you know
soul cycle is another example but they
also have a phenomenal product
um and many you know many brands have
tried to copy you know what they did but
again they were first to market and so
but they're they're i would say those
guys are far more the exception if you
look at the total number of facilities
that exist out there
you look at the you know the 100 or so
soul cycles and it might be
200 now i don't know but uh and then you
look at the barriers boot camp which
they don't have a ton
you look at that compared to the total
number of fitness facilities you're
talking about a fraction of a fraction
and how many
others have tried to mimic them and then
just fail miserably after spending
millions in pr
and then nothing happens so i think
i always try and i typically will try
and go towards the optimal conversion
mechanism which i do think for many is
going to be a phone sale and in-person
sale
um with a you know a fitness
professional that can sell to goal
which is what i usually prefer to do
with our gyms is we try and get them to
just
because when you sell to a goal then
people understand what they're trying to
buy right whereas trying to explain the
unique mechanisms of

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how our workout is special and different
i think also brings a lot of
workout hoppers who will say i'm going
to try this for a few months and then
the lifetime value massively plummets
we try not to sell the workout and
actually just sell the goal and say
don't worry about how we're going to get
there
like you're going to sweat you're going
to probably be sore and it's going to be
okay
it's interesting yeah so we should have
a different approach so do you think
then that those
those sort of workout based concepts of
which there's probably a lot
springing up at the moment it's
difficult to to sell or to keep people
coming back in the long term then yeah
yeah totally right i mean the thing
that's going to keep people in the very
long so there's
there's five five things that that you
have to do to retain members
right um one is if someone is supposed
to show up and hasn't showed up they
need to call the next day
multiple times to get them back in the
facility you can actually track
user metrics and watch someone go you
know three times a week three times a
week two times a week
two times a week one time a week cancel
you can just watch it right but if you
have the right
you know retention systems in place it
can be three three two three three three

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three so you actually can save them
and what's nice about that is it's good
for the business but it's also good for
the person because most people
i've never really encountered anyone who
cancels the gym membership that they're
using
don't get me wrong people do it but like
most people if they actually used
the entirety of their gym membership
would happily pay it and so that's where
so the goal of all retention systems is
consumption it's how can get them to
consume the service
right and so you know checking in on
them to make sure that they
attend if they don't attend uh checking
in twice a month just as a human being
to develop the relationship
making sure that you have exit
interviews so that you can save someone
or potentially spot issues that you
didn't know
maybe one of your trainers was drunk or
who you know god knows i've heard
everything
right trainer's sleeping with one of the
you know whatever right we've all dealt
with that kind of stuff
um and uh so there's three you know
just three of the of the five you know
retention tactics we do handwritten
cards you have events
uh those are two of the other ones that
you can use that typically what they'll
do is they'll
it's much easier to quit uh a gym than
it is to quit a relationship or a
community and so the goal is to have a a

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choreographed process of getting the the
client to go from a prospect or new
client to part of the community
and so you know we look at four
milestones throughout that process in
the beginning we need activation which
is
you know i know orange theory presented
i think at i can't remember what
conference
it was but you know if someone worked
out five times in the first 30 days they
were typically gonna stay much longer
um you know we have activation metrics
for gym launch most businesses do a lot
of gyms don't look for activation they
just look at their churn which is a
lagging metric
which can be difficult because even if
you start implementing some of these
retention systems you won't see it for
typically 12 weeks
especially if you start reaching out to
all your customers on a regular basis
because most gyms are like don't talk to
them let's just hope they don't cancel
but usually when you start getting
proactive with it you'll see a big spike
in churn which will usually mean you'll
get that month and the next month churn
all at once
but then i mean i've seen this happen so
many times uh gym will be at let's say
eight percent month over month churn
they'll start the communication cycles
that we have them do for retention
they'll go from eight to twelve percent
turn and then like oh my god what's
happening
but then it'll go from 12 to six and

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then six to three but that takes
you know it takes 12 weeks 16 weeks for
that to happen um
and and so the the the activation points
that we try and catch earlier on is
making sure that they attend those first
sessions that's what the
making sure that if they attend you call
them the next day that's it pushes
activation
right checking every two weeks pushes
activation because at least in the first
month they've already had three
personalized reach outs one in the
beginning and then two more
plus anything that they missed so you're
really covering those people in the
beginning
but that's like part of it the other
half is how we're selling them up front
um i haven't been the biggest proponent
of trials in general there are some
contexts where it works but
um i i prefer to sell defined front end
program so like
six weeks 12 weeks 28 day that type of
program
at a much higher price point and we do
that one because it liquidates the cost
of acquisition that's the whole like
getting your customers profitably
but second because if you have a more
invested customer they're more invested
and so uh the conversion rate on a you
know a higher ticket front end like you
know
300 to a thousand dollar front end
ticket uh will typically be you know 50

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to 75
percent depending on the skill of the
operator and this and the
the goodness of the facility for like
better term
compared to a trial which the industry
averages 35 percent
and so you're converting twice as many
of them on the back end which consumes
less resources on the front
and you're also getting paid you know
compared to a low barrier offer front
end of like
21 for 21 days or you know free month or
whatever uh you're able to make
significantly more
on those clients i mean a lot of times
20 30 times more and so you can actually
be profitable in the acquisition so
you're making money getting new
customers rather than spending money and
then hoping to recruit the cost over
time
have you seen any of the sort of studios
for example doing this well like you
mentioned orange theory have you
you know is that a system that you think
they've got right or
i think they're i think i mean i think
they're
a they're one of the few really
really well-run franchises i think that
they're
you know this is just me speaking
candidly um
i think churn around work out these
facilities

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is always you know is always going to be
an issue um from what i understand their
churn is continuing to go up right now
um this is right before kovet and i know
kova that hit them
relatively hard from my understanding
but
i think they do a really good job of i
think
if i'm being really honest i think
they're just so good at business
that they're they have such a good way
of of signing up customers they
they hit so they get the right
franchisees in they make sure that
the the requirements of your franchisee
are higher for them than virtually any
other brand
they have high liquidity they spend more
on the openings than anyone else does
and because of that the gyms that they
open are already profitable
um and are already really well-run
businesses they won't even allow you to
open if you're not at a certain level
and so the launch is such an important
part of the business set
like 95 of the time is the most
overlooked part but starting out strong
is huge
um and they've really perfected that
model and then beyond that
they have such a strong culture of
execution just within the entire brand

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that they they make sure that every
single person is kind of mayor of the
town so
all the small businesses know you're
there they've got flyers they do all the
guerrilla marketing stuff on top of
all of the you know digital marketing
and social media stuff so
brand i guess which they bring now right
and they and they're also really good at
the branding so i mean
they've they've really put together a
really good machine um
and i i don't want to say it's just i
think the workout they have is very good
but
they do a lot of variety and they and if
you'll notice
around how they how they sell it is how
the workouts are not the same
and so it's really not about the work
they're not saying
we're just going to use bar or we're
just going to use rowers or we're just
going to you know xyz
and so as much they have a workout based
facility but it is based on the variety
so it makes it a little bit different
whereas if you just have one modality
it can get stale um but still i think
they do have some some turned things
that
but they're so good at bringing him in
um that if you were to take
in my opinion that level of execution
that level of operator and then apply it
to like say like our model with

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transformation
you would probably see equal success or
higher
i deal with people who don't have a
million dollars of net worth
who are not you know necessarily super
operators they're actually struggling
they don't have capital that they can
immediately inject into marketing
they don't have the you know the the
desire to do the guerrilla marketing and
so i have to work with
i have to work with a hot dog stand and
make them into a mcdonald's without
the capital and so that's kind of why
like
our solutions are based on who we're
dealing with
does that make sense so if i if i just
start from scratch i probably do things
differently than what i typically will
have to do to kind of turn a facility
around
so i know you're quite big into
metrics and i i guess you know
a lot of the people i speak to is when
particularly when it comes to marketing
a lot of it's unmeasured and it flies
and print
and a bunch of other stuff you it seems
as though you've got a very
sort of measurable predictable system if
someone's not got a huge amount of money

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and i guess there's probably a lot of
people in that position now because
they've been closed down
what are some of the effective marketing
strategies that
you would always put in first and just
just talk a little bit around that
so if i were if i were a struggling gym
owner right now first thing i would do
is i would get a cash flow injection and
so what i would do is probably pre-sell
five to ten people for a year
forward because then i could get
probably you know five to ten thousand
dollars of cash up front
all right with that money um i would
probably go straight to paid ads but if
i didn't do that then i would start with
organic outreach
and so what you can do there is you can
join your local groups of you know local
be cave moms and you know fitness fit
moms or whatever right
um and you can friend request those
people message them
bring them to a phone call and then see
if you can get them into the facility
that's 100 free it just takes effort
um and so in terms of like knowing the
measures behind that typically
you know if on social media if you let's
say a friend request 1500 people that's
50 people a day which is usually the
limit for
most of the platforms otherwise they'll
think you're spamming if you get 50 a

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00:35:00.000 --> 00:36:00.000
day you'll get about 700 of those people
to accept your request which is
essentially just like them opting in
right they've opted into communications
with you
so you don't go to their outbox it goes
to their inbox um from there if you were
to message all of them hey
you know i'm a gym owner in xyz area
right across the street from you
you know do you or do you know anyone
who might be interested
in you know getting in shape or running
some crazy promotions right now right so
i'm not asking you i'm asking if you
know anybody so all of a sudden i'm not
really spamming you i'm just asking for
help which is a little bit different
right so you ask them the first message
after that you'll probably have 25
percent
of people who respond uh to that first
message so if you're at 700 let's say
you're at 140 those people so 20
uh respond to that first message i'm
going conservative and then from that
140 who respond
you say um okay uh
we get 30 of those people on the phone
so you get you know 42 people
on the phone from the 140. and of the 42
you say you close one out of three
right and so you close whatever that is
15 people right
uh or 14. and so from there
that that kind of funnel would take a

37
00:36:00.000 --> 00:37:00.000
full month right that's a full month of
work
probably about one to two hours a day of
just responding to messages and whatnot
um now if your price point's right and
you're selling 2500
packages that's a lot of money right and
so
then you can take that money again plus
the paid and full stuff and then do a
real marketing campaign
and do paid ads that being said doing
the organic outbound method is something
that you can always do
um but it's a four-letter word which is
work a lot of people don't want to do
that
and so the easy button is always paid
ads and easy button i'm saying that like
somewhat toning cheek because it is easy
if you know what you're doing
um but most people don't and so they're
like well i ran a boost i tried the
facebook and the facebook didn't work
it's like saying i tried marketing and
marketing it doesn't work of course it
does you're not good at it and so
um you know we want to have some sort of
promotion that we're going to run we
want to be attractive we typically run
almost exclusively free offers
uh and we do that because we split test
free versus non-free so something that
doesn't have a free in the headline or
anywhere on the copy or the page versus
something that is free we'll typically
give about four times as many leads for

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a free offer compared to an
free offer and the close rate's the same
we've run this test four times
so with like 20 plus locations so i feel
fairly confident in saying
free versus non-free you get the same
types of prospects
right did you mention earlier about
trying not to do free trials when
right so there's 11 different ways that
you can make money off a free okay
so you can do you can do free with
commitment you can do free
free and then you're monetizing through
supplements you can do free
uh and free could be like you're putting
a deposit down uh and if you had a goal
you get your money back
you can do free where you say hey the
free thing that you signed up for is you
know one times a week but you really
should do three times a week
and this is also gonna come with a
guarantee and we'll do this extra group
and we'll meet up with you and we're
stacking the value
and then it's like okay well i'll do
that option which is paid so there's a
lot of different ways that you can kind
of structure the offer so that you can
monetize the front end
um you can do free like pick your price
which is like you can do free but
if you do 99 we'll we'll do this extra
if you do 2.99 we'll do this in this
extra if you do
4.99 but it's still pick your price so

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00:38:00.000 --> 00:39:00.000
from a compliance standpoint someone can
pick frey
but that's where salesmanship comes into
it where you can add guarantees you can
add additional services to get them to
upsell into something else and so that's
also one of the things that we have to
typically break beliefs about with
you know a a small business owner
is understanding how to advertise right
and so
if we're saying you know if you go to if
a lot of people have like a lot of
limiting beliefs but like if you go to
uh if you go to get dinner and they ask
you if you want dessert
it's not like i mean it's an upsell
right if you
if you go to you go to rent a car
they're going to ask you if you want to
fill the tank up they're going to ask
you if you want to upgrade your package
they're going to ask you if you want the
minimum
insurance package which by the way you
don't need it's called minimum because
everyone just says yes
um so they're all upsells uh so it's
it's
this process that a lot of them don't
have a choreographed sales process so
that you can take a prospect
and know through a three-step sale that
we're gonna make x amount on the first
transaction for service we're gonna sell
them supplements on the second day they
come in for
for a nutritional orientation of some
sort and then usually at day 14 we'll

40
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try and pre-sell some sort of larger
package
and one out of five uh will pre-pay that
package which will usually be a 20 you
know two to three thousand dollar sale
and so if i can get you know one out of
five people to buy three thousand
dollars then i add six hundred dollars
to every one of the values of each of
the other for you know five sales
and so that's where like the metrics of
understanding like the entire
acquisition process end and works
but most guys will just boost a post
with something that says hey you should
sign up at a gym
and then it goes to not even a landing
page and says text us at this number so
a lot of them don't have like okay well
how do i how do i make ads how do i make
headlines how do i make pages that are
going to load
quickly and just conversion optimization
that kind of stuff um
i won't get into that but but yeah so
if i were it's at ground zero i would
run a paid in full play number one
number two i would do organic outreach
and then sell high ticket packages
selling to goal
and then number three i would take that
money and then i would run a big
promotion
where i would have a really sexy offer
that people would want to sign up for
that is what i would do for an unbranded
undifferentiated independent operator

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00:40:00.000 --> 00:41:00.000
who's in fitness and we lost
and you obviously we talked about the
brands like soul cycle and orange theory
that have got a brand and
if you're an independent you don't have
how do you
and then relating that to the price
point that you said you know
most people don't charge enough so i
guess if you are
an independent and you're pricing
yourself correctly which is probably
going to be more than
everybody else in the area how do you
get that value where
where because it's kind of like i guess
it's a cold advert that comes in front
of you with a high
ticket is there things that you would do
before that so the price wouldn't be on
the page
the prices only brought up on the sale
so they wouldn't know about that so most
times you're selling in a vacuum most of
the time
right so people aren't shopping it's an
interruption-based ad and so they're
clicking and they're not really
comparing to anyone else they saw the
offer and they thought it was
interesting and they opted out
and so you're not really going to be
compared to anyone else that being said
what we do to try and get our gyms to
make more money is that we try and sell
or bundle in
high value or high profit margin
services in addition to
the workouts right and so for us the
biggest one is going to be
accountability

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00:41:00.000 --> 00:42:00.000
and so if you think about why people why
people are willing to pay more to go to
the gym is because they actually want to
use the gym and so if you say hey
you know what we'll do is for 49 a week
we'll also we'll text you every morning
of your workouts to make sure you show
up we'll measure your weight we'll make
sure you're making progress and then
once a month we'll check in on about
your food or whatever
and so by doing that we start stacking
the value
of the membership and then no longer are
we just a workout facility we're
actually more of a transformation
facility
and by doing that you provide more value
you have way more communication
and relation and affinity with the
client and so because of that they're
going to be
stickier they're going to get more value
and they'll be far more willing to pay
the added premium but the thing is is
that the extra effort
that it takes to text someone can be
automated um
yeah all that stuff we have software
that automates all that so really all
the all the trainers or the operator has
to do is just respond when someone has a
question
based on those responses so there's a
lot of this 80 90 of this can be
automated
by selling that added degree of value
going from 129 to 200 or 220 a month
all of that almost all of that's margin

43
00:42:00.000 --> 00:43:00.000
and that's where you can really drive
the profitability of the facility
i was going to ask you that then so i
was going to say you know is this
something that the trainers will do in
terms of those follow-up calls and those
texts
um or have you got like a system that
that's got all that set up yeah so for
the first three years
um we had good old-fashioned excelsior
systems and checking with this person at
this day and that's how we did it
but now we we've got software that we've
already programmed all that stuff into
and so all the clients come into that
automatically they get set up
with the programming that they need over
the next however many weeks
and it's going to have all the reach
outs all the all the milestones built
into it so for your first workout your
third workout your fifth workout
how was it hey congratulations your
third workouts you have milestones set
in place all that stuff now is
is automated and it just makes it you
know we white label it so it's
branded to the gym and it just keeps
everything in one place and that way
they can look at their trainers they can
see how their coaches are doing you can
assign it out so that
each coach let's say has 40 clients you
got five coaches you have 200 clients
and you can monitor how the coaches are
responding you can see which of the
coaches are retaining the best

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all that kind of stuff so i guess a lot
of those systems work really well
you know january february this year how
is your business
changed and and is is you know what what
are a lot of these clubs doing
that are not able to open or open on a
very
compromised way is there a light at the
end of the tunnel for those
yeah so there's right now the industry
is really fragmented um i think we were
talking before this about at least from
us
about 80 of our gyms are open to a
degree uh 20
actually shifted 100 online and are
staying online and so
uh that's because they so a year ago
i blasted the internet with something
called hybrid which was going to be a
hybrid gym model where you have
in-person clients and remote clients
and the reason behind that was because i
thought that i believed that there was
going to be a recession event that was
going to come
so i feel kind of good about that i
guess i thought there was going to be
some sort of
event that was coming um and i thought
that we would need to have some sort of
remote services so they could extend
beyond the radius and also because
remote services are higher margin

45
00:44:00.000 --> 00:45:00.000
right if you're just paying a coach
let's say you know
10 a week to sustain a client that's 200
a month your your
total cost is 40 bucks you're making you
know 80
gross margins on the service which is
better than most group training
facilities do
which by the way is a benchmark for
anyone who's listening is you want to be
at 80 gross margin for your services
um i can tell them how to calculate that
in a second if you want but uh
anyways so since the industry's really
fragmented
uh the guys who already had implemented
the hybrid system already had 30 40 50
you know clients online at this point
plus their in-person clients and they
already had all the systems built out to
do that and they just very seamlessly
transition them to their
existing protocols right the people who
are reopened right now
uh if you were in a state that you can
only see x amount of clients then you
really have to switch
to semi-private because you can't do
group training prices with semi-private
fulfillment
right you can't you can't have five
people in a class and charge them five
dollars a session because that's pretty
much what it is
and so you can't do that a lot of people
are doing stuff for free as well i guess

46
00:45:00.000 --> 00:46:00.000
oh yeah good luck um
and so so if they're
if they're going to reopen and they have
a cap then our recommendation is
do somewhere privates and have have an
online or remote component for the
people who want to come back
if you are able to open up 100 then run
the run the gym launch model
and so we have a two-tier model which is
large group
uh and then you can either this is an
either or
either have accountability nutrition as
your second layer which you add on from
their 200
a month or you can have semi-private on
top which is one on four training
right and so you can have either of
those things the price point's almost
the same
it's easier to do accountability and
nutrition as your second layer because
you don't have to deal with square
footage
uh scheduling issues and all that and
people will pay pretty much the same for
it
and the way that we position it is that
this is one-on-one coaching
for an extra 200 a month and so even
though you're training in a group you're
getting the one-on-one attention
and so that you have the same
accountability as a personal trainer
would give you just you're not trading
time for
time for dollars and so with that that
was the key to the entire gym launch

47
00:46:00.000 --> 00:47:00.000
model
of why we're able to get more profitable
because we can get 30 40 of people
at 400 a month and the only added cost
is 40 bucks to the coach
and so that's where it gets really
that's where the juice is really there
but uh back to what you were saying uh
if someone's 100 closed and they have to
learn how to
to sell online now the program that we
that we
the software that we use to do the
retention for in person also works
online
so uh we it doesn't really matter
whether a facility is 100 online 100 in
person or 50 50
the outreach and communication is the
same so it actually simplifies a lot of
stuff
and you would still assign clients or
members to coaches the same way you
would
assign them to coaches if you had a
purely online business so it actually
works the same way
so with with this online model then are
you
how is that being delivered have you got
a trainer with a with like
zoom and he's doing the same thing but
in a camera or what no we don't um
we don't do any zoom stuff we had we
started zoom stuff
right off the back because i wanted to
just like put out fires

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um but all the guys that use you know
our software now
it's there's you know 1500 different
exercises that are built into it
that are not them but they just program
out what exercise they need to do
okay and so they can do that on their
own schedule which for many people is
good because it's about the convenience
and the value that they're paying for is
the accountability they're paying for
someone to pay attention right because
at the end of the day like
you can go if you want amazing live
workouts then you can
beachbody online is going to beat you
for nine dollars a month right you're
not gonna they've been doing it for 20
years
they have the bandwidth they have the
models and they have more types of
sessions and
times of day than you ever have and so
you're not going to beat them
right and you're really not going to be
peloton right like they're already
they're already way ahead of you
right yesterday you're not going you're
not gonna you're not gonna beat them
right and so you have to beat them in a
different way and so the way that you
can beat them
is having the one accountability and
service and so that's why i always
believe that there will always be room
in any market for an exceptional
operator or people who actually care
about their customers
and so what we're trying to do is put
the systems in place to at least make it
look like the owners that we have care
so so just to spend a moment on that

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experience in so if i
if i've signed up to you i've got a
virtual this virtual sort of um
work you know transformation so what
will i get something on my phone my ipad
and will i
will i just sort of stick it in front of
me and i'll work out with some
kettlebells or what does that look like
the experience it'd be more similar to
it's not it's not like a follow along
it's not like tybo
okay uh it's more like all right we're
doing five sets of
lunges okay right and then after in each
set you put your things in and then it
marks it as complete and then you move
the next exercise
so most of the stuff is i mean you can
build rounds you can build supersets
there's a million things you can do but
they're built in there so that they can
do the thing mark it do the thing market
so so the trainer then from their side
they'll just kind of almost like
have a library of exercises and they'll
create the workouts and they'll say to
the hundred people that are signed up
right you'll get the same workout and
then tomorrow i'm going to create you a
new one well the way we do it is we
actually have
you know 24 different programs based on
someone's goal and so we're going to
have
guys who want to get jacked girls who

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want to lose weight whatever uh that
they'll actually have different workouts
which is one of the added benefits
because then it's personal at the
workout's personalized and so is the
accountability
right um if you have the one-to-many
that's where the tybo and follow along
that's what like you might as well do
that for way cheaper
so this is going to be more personalized
and i mean big picture
we're talking again susie susie suzy
soccer mom
is just trying to feel good about
herself and so
it's more important that there's variety
in the exercises than
then really anything else that she just
doesn't get bored you don't need to
worry about like am i doing daily
undulating periodization am i doing
density training are we doing back to
you know like
she doesn't care she just wants it to be
fun and feel like she feels good about
herself
so so and there's there's literally
hundreds of apps
i guess that are doing similar stuff so
are you saying then the bit that
differentiates or makes this successful
is the fact that
the coach is going to be connecting with
you have you done it how are you getting
on that sort of stuff
it's the accountability really it's
everything right okay it's the
relationship

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and how is that you've obviously had a
while to do this then
from a revenue perspective which is a
big number you know are people making
money from doing that
yeah totally i mean what was interesting
is that we had a lot of our seven-figure
gyms abandoned their in-person models
all together to go online because they
were able to get leads for cheaper from
a larger radius and sell them at the
same price
as soon as they realize that they're
like why do i have my gym i don't need
to do workouts i don't need to pay this
rent
they just flipped 100 yep online um
i would say this is that when you're
going online there's a wider disparity
between
the halves and the have-nots what do you
mean by that so when you're selling in
person especially the two the two traits
that it takes to be successful or
pricing
if if i had to just choose two there's a
million but if i just had to choose two
you'd be having the right pricing model
and then having sales ability in person
so there's three fundamental things you
have to convince someone when they that
someone's gonna have to be convinced of
in order to buy right they have to trust
you
the salesman they have to trust the
company and they have to trust that the
product is going to solve their
their problem right when you're selling
in person

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they already inherently on some level
trust you because you're literally in
front of them
right they already to a certain degree
trust that the company is legit because
they're inside of your building
right and so you really just need to
convince them that the service is going
to provide the goal and this personality
drove their asses there
so they have a certain degree of like
buy-in and you just have to not mess it
up
a lot of you know gym owners don't even
realize how much the chips are stacked
in their favor until they actually
start selling in an anonymous
environment online now
online you have to convince them all
three of those in the same period of
time and so it just takes more skill
uh and so that's that's the that's where
the difference between the have nots the
guys who can sell
as soon as they figured out that they
could sell online we'll never go back
because the profit is i mean the margin
is phenomenally higher
the legion cost is phenomenally lower
it's just all the metrics are in their
favor but
you have to be good at sales and so
that's where we focus so much time and
attention on making really creative
offers making really compelling things
trying to reverse risk to the you know
highest degree possible
um but again it's you know trying to
have free offers that have multiple

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upsells immediately so we can we can we
can liquidate the cost of acquisition
you know selling supplements selling
add-ons all that kind of stuff in the
beginning so that even somebody who's
not as good at sales
can still succeed um but there are
definitely many people who do suck at
sales and they suck at sales even in
person and even horrible online and so
that's why i mean as an industry
at least based on our rough estimates
about 35 percent of independent
operators permanently closed during this
during this time period
which is huge and that's i think that
that's a
shrinking of both demand and supply so i
think that there will be you know
less demand for in person because some
people will never want to come back and
they found
beachbody online for 10 a month and said
you know what this is great i can do it
from home and i love it
um and there's a certain amount of gym
owners that went out of business because
those people left
right and so i think that it'll be
interesting to see what happens
afterwards but i think that there is a
both sides of the equation just the
entire market will shrink um it may i
mean i think it will grow but i don't
know if it'll ever go back to what it
was pre-coveted to be really candid with
you
do you think though like i suppose with

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00:53:00.000 --> 00:54:00.000
everything that's going on
you know i certainly hear about it um a
lot
in in different markets but there seems
to be a general greater awareness of the
importance of
health and fitness for people who
probably wouldn't go to a gym
do you think that those people who
probably wouldn't go to a gym
but may be happy to do it in their
apartment
do you think that's a new market that's
probably likely to grow and provides
more opportunity for this model
for online only yeah yeah not for in
person
right no i don't yeah if not for in
person i don't think so i also don't
think it's going to be a huge piece
because i think
i think in person it's going to have a
lot of i think there there's going to be
a lot of
the gym industry is going to have an
uphill battle for the next
you know year or two years and then
we'll see where it stabilizes but i
think
uh online definitely we'll have a lot of
opportunities that exist
but there still will be plenty to take
because on the on the flip side the
people who do want to go to the gym
really want to go to the gym and so this
is actually one of those opportunities
where having an even higher price at
this point where you have lower lower

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00:54:00.000 --> 00:55:00.000
capacity
actually makes sense because you have a
higher that you might have lower
total number of demand but the extent of
the demand is higher
so make sense so like i might only have
20 people who really want to come to the
gym
but the elasticity of their price of
what they're willing to pay is now
significantly higher
because they'll do anything to get out
of their house and so i think that
there's
that'll be an interesting like seeing
how that shakes out
but yeah i think that online's only
going to grow online to the future i
think vr is going to
really change a lot of stuff when
virtual reality comes out and you can
feel like you can get
a group experience in the comfort of
your home i think that'll change a lot
of things so
you know the industry is new and
exciting but i think there's still at
least in the
five-year horizon there will be room for
gyms to to come back
but i think the bottom 35 percent of
operators got knocked out
and the people that when they come back
will probably be able to go back to
where they were before but it'll just
take some time
and with with people working at home
what are your clients doing in terms of
equipment are they
are they doing keeping them sort of
equipment free you know body weight

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00:55:00.000 --> 00:56:00.000
it depends on what the client has so if
the client is comfortable going to the
gym then we have
workouts that have built in with you
know barbells and dumbbells and machines
if they have access to like you know
24-hour gym uh if they don't have access
one of those then we have programs that
already built out that have body weight
and stuff they can just do at home
so it really depends on the client yeah
and i guess i guess
you could if you've got a facility
people could be working out at another
facility then and you could still be
offering that service could you yeah if
they went into like a say a low cost
totally yeah i mean i mean yes
absolutely
because i mean the the i call it like
facility leasing or facility usage like
that's
that's now you ha it's like kind of
getting a ticket to being able to get in
shape like most people have no idea they
have no accountability they have no idea
about nutrition
they don't even know what they're doing
while they're there and so the fact that
they're paying 29
a month is really irrelevant to what
their results are so you absolutely can
have
i mean most i mean most online trainers
tell their clients to go to a gym so
it's
it's not combative at all or you know
cannibalizing
and do you think that opportunity now

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00:56:00.000 --> 00:57:00.000
exists outside of what's going on with
kovid do you think but do you think that
opportunity exists
for people to do this purely because a
lot of the current businesses have just
done a
poor job at helping people to get the
results and keep them accountable
um can you read the question so so
do you think so it sounds like there's
this opportunity for this kind of hybrid
model of personal coaching and workouts
um outside of what kovid's
you know prevented you from going for a
gym but do you think that opportunity is
really
um there now because the majority of
gyms have not done a good job at getting
you results and holding you accountable
i think
the opportunity exists a lot because
kovid pushed everyone
10 years into the future and so you know
my mom downloaded zoom and figured out
how to do a video call
and there's all these i mean these are
tiny simple things but
you know if you look at the bell curve
of technology adoption you know you've
got
the innovators uh i can't remember the

58
00:57:00.000 --> 00:58:00.000
next one then early adopters late
uh late majority and then laggards right
and so it really took almost everyone
besides the laggards and just pushed
them all the way through
doing video calls and zoom calls like it
was normal and the idea of online
training wasn't even
i don't believe that general population
mass market even knew it existed
like that because we're in the industry
but like i mean i remember
five five years ago that people didn't
still really didn't know
if i went to talk to my mom like what's
crossfit she'd have no idea
and like it's been around for like 10 15
years you know
but still like it takes a long time for
information to go all the way down from
the top of the market all the way down
to the bottom and so
yes i do think that there's going to be
a huge opportunity i don't think it's
because jim did a bad job i just think
it's because
now all of these clients are now aware
of a solution set that they didn't know
existed
and it's now more convenient for them
and for many of them it's lower cost
so as a as a business owner you've been
and we've not covered this but you've
you have owned your own facilities
you've

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00:58:00.000 --> 00:59:00.000
helped businesses to to make money and
now you're moving in into the online
space you know
what what's your thoughts if you were
coming into this again
and you know post covid and you had
you know you had sort of all your
savings and and you're going to put it
on the line you know where would you
what what space would you what would you
do tomorrow
so it depends on who i am and what my
skill set is
just being so i would i mean the
opportunity that i would be getting into
would depend
widely on that um and this is assuming
that i wanted to be in fitness correct
yeah yeah so you know if i had what i
would consider the average skill set
um it's a hard call
because it's a really hard call
i think there's yeah it's a very it's a
really hard call
uh how much money do i have
okay good never know let's say let's say
let's say you've got
let's say you've got 50 grand 50 grand
um be really difficult to open a

60
00:59:00.000 --> 01:00:00.000
facility
and market it with that kind of money so
i probably would try and learn online if
that's
all i had
running a facility can be extremely
profitable
if you're selling high ticket and so
that's where semi privates is usually
where the vast majority of the profits
being made or adding in kind of that
hybrid accountability like that's where
the margin is
and so in some ways group training can
be considered like i don't want to say
freemium but you're basically
for many people they're almost breaking
even on the service
you know give or take right and so it's
making sure that they have these
additional
value ladders in place so that they can
maximize profit if i were somebody who
had the passion of wanting to work with
people
then i would have the brick and mortar
facility that would be
focused on sending people up to
semi-private and or
like the one-on-one accountability and
coaching it also the nice thing that
opens up is it allows you to actually do
more
um interesting programming right because
a lot of us don't just want to make

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01:00:00.000 --> 01:01:00.000
group workouts like a lot of us train in
different ways and would love to share
that with people
and giving having that one-on-one
accountability and coaching allows you
to kind of
flex those muscles that don't normally
get flexed which most of us enjoy
um if i really didn't have a ton of
capital then starting online is probably
the only place that would make sense
because
you just don't like there's lower
barrier to entry that being said there's
more competition
and so you have to be willing to either
have a superior skill set which would be
understanding the marketing side
of paid acquisition which takes time and
money to understand
um or having the work ethic to
do outbound for you know two to four
hours a day every day to build up my
business
those are i mean you either have to pay
for you have to either pay in time we
have to pay in money but you have to pay
to acquire customers and it's just one
or the other and you just pick you know
i always joke that you can um
you can't be broken busy so it's either
you have time and no money or you have
money in no time but you can always
trade one for the other
and so it's just making sure that the
opportunity vehicle that they choose
aligns with what they actually want to
do in their life a lot of people a lot
of our gym owners for example really

62
01:01:00.000 --> 01:02:00.000
love their gyms
and so obviously we have a very tested
gym model that's very profitable and so
they want to run that i ran into a lot
of
you know difficulty and pushback when i
was like guys we have to go online for
this period of time
um and many of them did it basically
just to get by
and then as soon as they could open back
up did and they did fine
but uh it really depends on the
personality individuals some guys are
like i don't want anything to do with my
gym anymore i'm out i'm gonna
travel the world and some guys really
love it so it really depends on the
person yeah
and i guess there's a lot of trainers
that probably work for facilities even
like these and they're like okay well
what do i do and i i suppose this sort
of virtual model
if they can as you say if i can get the
marketing right
um they could potentially you know deal
with a lot of clients that maybe they
couldn't do face to face and
and start from there i suppose if you
have the skill set
being online in general will make you
more money
the big if is if you have the skill set
and is that from a marketing perspective
when you say
marketing and sales yeah yep

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01:02:00.000 --> 01:03:00.000
marketing and sales um obviously you
have to have a good strong
back end um but a lot of that will even
still be dictated on like the extent to
which the person's convinced that you're
gonna be able to help them and the
investment that they make if you get
someone to pay five thousand dollars
or three thousand dollars for a weight
loss program they're far more likely to
actually adhere
than someone who pays 19. right and so
it's my belief that in order to be a
truly good and transformational coach
you have to develop the skill of
helping people make decisions to help
themselves and that's sales
right and so i think the first step in
coaching is being able to get people to
prioritize that
thing so that you can actually help them
if you can't get them
to believe you or to believe that they
are worth it then you're not going to be
a good coach and so i think it's the
first step
so a couple more questions before we
wrap up first one
you know fairly new news but apple
coming into the fitness space offering
streaming service for ten
to about ten dollars a month what's your
thoughts on that i didn't even hear
about it so you said it just
um i mean i'm sure they'll do amazingly
well i mean fitness is a growing space

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01:03:00.000 --> 01:04:00.000
they probably saw the opportunity that a
lot of people are which is
probably saw beachbody's growth during
this period of time i've got friends of
mine who have um
uh you know like online fitness apps and
most of them doubled or tripled just
during covit
to know to know i don't see fault of
their own no no extra work of their own
it was just circumstantial because all
of those cancellations went somewhere
um and that's where they flowed and so
apple probably saw the opportunity
and went for it um i think that they
have a really good tech
you know stack so the wearables all
syncing together and all that stuff
for the whole what do you call it like
digitize me or quantify itself
i think that there's interest there but
even if everyone in america gets on the
10 a month out for apple most of them
won't use it anyways and i think there's
always going to be room for somebody to
actually provide high-level service and
accountability
yeah it sounds like from what yours i've
picked up from the conversation it's
that it's that service accountability
and
and you know just keeping people to
achieve a goal
and and i i guess you know when you
think about fitness that's probably the

65
01:04:00.000 --> 01:05:00.000
one thing that all of us
struggle the most with it's not it's not
the kettlebell program or whatever it's
you know it's right it's sticking with
it and it's if you think
i don't know if you had this experience
but most people that i know who are
serious in fitness at one point
had someone who invested a lot of time
in them and it's either a mentor a
friend
a brother or they paid for it
but almost all of us had somebody who
kind of showed us the ropes in the
beginning i mean i certainly did for a
year i had a teacher stayed up with me
after school
and worked out with me for two hours a
day for the first year of my high school
career
and so from that that's what sparked the
you know my my own interest my own
internal motivation to go learn and all
that kind of stuff
and so i don't i don't know a lot of
people who are 100 self-taught most
people have
other people on some to some degree that
help them and i think it's a necessary
requisite for somebody who's going to
make an actual true transformation in
the long term
and so i think there's always going to
be an opportunity for people who do care
in our good operators which is kind of
like
the very first question you asked the
beginning is like why is there a
difference between
different facilities and it really comes
down to
how good you are at operating the

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01:05:00.000 --> 01:06:00.000
business and caring and you know
we have a joke that you know the best
way to uh look like you give a shit
about your customers is to actually just
give a shit about your customers
i never thought about that but i i
started when i was 15
and i used to like weight training and
bodybuilding and probably for the first
five years
like in gyms you used to have personal
trainers not where i lived but you
always had a training partner
yeah and you'd always meet three times
monday wednesday friday and that partner
would be there and you kind of
evolved to another but you'd always have
someone with you and it wasn't until i
got older that you know they started to
drift away that
i then struggled to make that leap from
doing it myself
to having somebody there um and i you
know i thought
i was committed but when you said that
it's like well actually i had a lot of
hand-holding for many many years you're
the personal connection that got you to
the gym
because you wanted to hang out with your
friends and work out you didn't want to
work out and hang out with your friends
so it's like
it's it's the dual uh motivation that
gets people there and a lot of people
just don't have that in their community
and or they're in their in their mind
so far not fit you know when you're 15

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01:06:00.000 --> 01:07:00.000
years old as a guy you probably weren't
like incredibly overweight or you didn't
have you just wanted to look better
right
but if you're you know 60 pounds
overweight and you're after your third
kid
you don't want anyone to see you and so
sometimes you do have to kind of pay for
that person to
to be there and hold your hand during
that process and i think it's if you
really want to help people it's
the it's the single best way to do it
and if you do it in the context of a
group training environment
uh or online uh the one-on-one touch is
what allows you to get more margin
extend the lifetime value and also
actually deliver the product that you're
saying you're going to
yeah so what do you see in next 24
months what were they what would their
sort of traditional fitness space look
like do you think
um i think the entire market will shrink
from a brick-and-mortar standpoint
i think that the operators who are left
are probably
by definition the top two-thirds
marketers either they had the capital
the
non-marketers of gym owners uh they had
the capital to bear it or they had the
skills to bear but either way that's how
they got through it
um i think that it will slowly come back
not to pre-covered numbers i don't know

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01:07:00.000 --> 01:08:00.000
if it'll ever get back to what it was
before covet it was also the best
economic time of
of all times um and we're going to get
back to probably some sort of
slower recession inflation all that kind
of stuff that's going to happen as an
after effect and so you're going to have
some economic pressures you also have
all of these new businesses that are
going to be siphoning away demand from
the marketplace
so the overall marketplace for in-person
i think will shrink
i think that online will continue to
grow i think the pace of the growth
will not be as explosive it was during
covid because it'll kind of even out a
little bit
but i think that what it did was it
pushed the awareness of the entire
population that there was an online
solution
and i think that in the next maybe three
to five years uh
that's where i think virtual reality
will become really interesting
uh where people will be able to like
work out in classes except not even have
it and that's
we'll cross that bridge when we get
there but for the gym owner i think that
you
they'll be able to come back uh after
this and the people who do want to come
back to the gym will be
even more dedicated than they ever have
so final question then
escape your limits is about escaping

69
01:08:00.000 --> 01:09:00.000
what you've believed is
impossible and gone on to make it
possible what would be an example of
where you've escaped your own personal
limits
i think gym launch in it of itself the
company
has you know escaped the limits that i
thought
was possible you know i had life goals
when i was younger to make x amount or
save x amount and you know we surpassed
that and then i put a new goal and then
we surpassed that and then put a new
goal and we surpassed that and
um you know when i had my first gym and
i was sleeping on the floor i
i don't think i i don't think i would
have imagined that
you know what i was learning at that
point was going to become something that
was going to impact
thousands and thousands of gyms and
their employees and their families and
the
hundreds of thousands of people who've
gone through the facilities that we've
helped
um so that's that's that's very cool for
me so i think from from
escaping the limit standpoint that's
probably the biggest one for me
fantastic
well thanks for your time i'm gonna
we'll put all the details of your
company if anybody's looking to

70
01:09:00.000 --> 01:10:00.000
take their business or struggling at the
moment it's uh you've got some great
stuff out there there's a lot of free
content as well which i'd recommend
checking out your podcast um but we'll
put the links in and
you know if anyone else wants to get in
touch with you then uh we'll make sure
they can find out where you are
so alex thank you so much it's been a
very interesting conversation and
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