Rethinking Health #4 - Why None of These Companies are Going to Become the 'Peloton of Weightlifting'
Welcome back to Rethinking Health. My name is Ben Williamson and I’m a venture capitalist, recovering corporate attorney, co-founder of a health and fitness facility, an eternal knowledge seeker with a growth mindset, and a connoisseur (nerd) of all-things health. Rethinking Health is my mission to discuss health, venture capital, innovation, and start-ups within the context of redefining and pursuing preventative population health. If you want to catch up on past posts, you can do that here: intro, #1, #2, and #3.
I own a micro-gym[1]. Interestingly enough, that only makes me an expert on two things:
how freaking hard it is to run any kind of gym; and
how freaking hard it is to provide a product that keeps people engaged, committed AND also gets them really fit.
Turns out, #1 has been even harder in 2020. As we've discussed before, we have a huge health problem in this country and a specific contributing factor is too many people don't workout enough or at all. Thanks to COVID, it's also obvious that we're currently going through a fitness (r)evolution, though perhaps not in the way some people think. It is intuitive that at-home fitness has blown up due to gyms being forced to close, but (like many other sectors) COVID isn't actually disrupting the direction of fitness, it's merely accelerating the direction it was already going. As Joe Vennare of FittInsider (give him a follow) has astutely pointed out:
Since '14, studios grew faster than gyms
In '19, 85% of gym-goers exercised at home too
Since '16, Peloton grew revenue ~100% YoY, $60M to $1.8B in 2020 (and is projecting around $3.6B in FY 2021).
Additionally, since 2010, literally tens of thousands of micro-gyms (CrossFit, Barry's Bootcamp, F45, Orange Theory, Corepower Yoga, Pure Barre, Soul Cycle, etc.) have been started as the exodus from the traditional "globo-gym" model has accelerated.
As Peloton sets it's sights on a $40B market cap, the aggregate online fitness market is expected to reach $44.7 billion globally by 2026. The question some are asking is: what company will become “the next Peloton” of their respective category (Peloton's primary category is biking or maybe even cardio, for example)? Peloton's smashing success has lead the way for an insane-crazy-record-breaking flurry of fundraising and M&A into the connected/digital home fitness space. Though we need to remember that successfully raising VC does not mean a company is successful, check out this list of notable fundraising or M&A just from 2020:
Mirror (Acq'd by Lululemon): $500M
Zwift: $450M
ICON: $200M
Tonal: $110M
Whoop: $100M
Keep: $80M
Fiture: $65M
Tempo: $60M
Hydrow: $25M
Future: $24M
JAXJOX: $17M
Watt Bike: $14.8M
Ergata: $5M
Vitruvian: $2.5M
CLMBR: (undisclosed Nov 2020)
The Lululemon Athletica Inc. acquisition of arguable Peloton-rival Mirror for $500 million was especially notable as the pricey-yoga-pants-co is seeking ways to bring the most expensive mirror on earth (don’t fact check me on that) together with Lululemon’s loyal community, who flock to the brand for its athleisure attire as well as its virtual and physical fitness classes and events. But there is one "sector" of VC-backed connected/digital home fitness companies that have particularly grabbed my attention: a category I'm calling, "companies who want to become the Peloton of weightlifting". This cohort of companies includes the likes of Tonal, Tempo, JAXJOX and several others.
This begs an interesting question though: is it even possible for *one* hardware product to achieve this goal in the weightlifting space? To be sure, certain workout types/disciplines/segments lend themselves nicely to providing a comprehensive fitness offering with one product, and thus capturing meaningful market share. For example, Biking/Spinning (Peloton), Boxing (Fight Camp), HIIT, Running (Peloton), Yoga, and Rowing (Hydrow) all fit very easily in this box. You only need one product to give you a full workout in the respective category. The counter example is something that can only really exist as an accessory or piece of a larger strategy or suite of products. This is also where, in my opinion, the aspiring "Peloton of weightlifting" companies run into their first fatal flaw.
My theory is there are two fundamental factors that have caused Peloton to win (and thus, factors that are likely a necessary precondition for companies trying to become "the Peloton of Weightlifting" to achieve such a title):
The product/hardware must be able provide a comprehensive workout in the desired space. In other words, if someone's desired workouts are cardio-based spinning, Peloton is 100% self-sufficient, and the user doesn't need additional tools. Other narrow"disciplines" can do this same thing, as mentioned above.
The product must inspire religious consistency. Maybe the tech buzz word, stickiness, is apt to use here. Again, Peloton has this in spades. In my highly unprofessional opinion, there are six factors underlying this umbrella:
Awesome/fun content
Instructors/trainers
Community
Accountability
Results
Personalized coaching
Tonal, or any other company trying to build one piece of hardware to capture the home weightlifting (or maybe resistance training is more appropriate?) category, seems to fail prong #1 above. Said another way, none of them seem to provide a comprehensive weight training workout 4+ days a week. They can't do this for the same reason the original Bowflex couldn't - even though the technology allows for you to do a plethora of resistance training lifts/exercises, it is focused primarily on isometric lifts and doesn't allow weight trainers to do even close to everything they would want to consider the tool comprehensive (i.e. standalone). Here's why: there are five classes of people who primarily do weight-training.
Weightlifting - Olympic weightlifting, often simply referred to as weightlifting, is a sport in which the athlete attempts a maximum-weight single lift of a barbell loaded with weight plates. The two competition lifts in order are the snatch and the clean and jerk.
Powerlifting - Powerlifting is a strength sport that consists of three attempts at maximal weight on three lifts: squat, bench press, and dead lift.
Functional Fitness, CrossFit, Strongman/Strongwoman Training - A bit of a "catch-all" category that utilizes compound exercises that work multiple muscle groups at the same time and also generally include constantly varied, high-intensity, functional movements.
Bodybuilding - Bodybuilding is the use of progressive resistance exercise to control and develop one's musculature for aesthetic purposes.
Other - This group includes people that do not do weight/resistance training as their primary exercise, but might use it as a supplement or as part of a more broad strategy.
So far, Bodybuilding is the only category that could arguably use one VERY versatile implement to get a comprehensive workout. The first three categories are immediately ruled out as they require specific equipment and the third category also requires complex high-intensity movements that can't be properly accomplished with a static machine with cables - dumbbells get us closer. The "Other" category may certainly be interested in a machine like the Tonal, but by definition, such use would be as an accessory which dramatically lowers adoption (especially at a high price point), decreases the market size, and also reduces the likelihood such users will use it consistently. So what about the second factor above? It seems to me that these companies chasing Peloton are also (so far) failing in achieving the sub-factors likely to result in a religious consistency. Each of these companies is making a common startup mistake: focusing on building a shiny, innovative, and cool product. For example, several in the market seems to be focused on using artificial intelligence to help users with form and to provide real time adaptation, progression, and coaching.
While these AI-driven tools provide a sort of gamification by helping you beat your previous lifts, I can assure you, that is not enough to inspire consistency. People don't want a computer or artificial intelligence telling them about their form - they crave real human contact or a community. So let’s pick on Tonal, since they seem to have been anointed the heir apparent to the Peloton of Weightlifting throne by the VC world. By my calculation, Tonal completely fails factor #1 and likely fails three or four of the sub-requirements in factor #2. To be fair, Peloton doesn’t go six for six on the components of consistency, but they get damn close and they do the best I’ve seen of any connected fitness company to inspire consistency. Let’s take a quick look:
Awesome/fun content - aside from an in-person CrossFit or spinning class with a great atmosphere, Peloton crushes this. The musician/DJ collabs, theme rides, and other tools Peloton uses really can make you feel like you’re there.
Instructors/trainers - again, Peloton has done a great job here. They have instructors for every type of person (ie cares about metrics v. just likes good music), but invariably (to my knowledge), they’re all great.
Community - Peloton does this well but not great. The community within each class is solid but I don’t know that they’ve mastered the community outside of them.
Accountability - again, Peloton does well here but it seems to be mostly driven by network effects. In other words, because Peloton now has critical mass of market share, I likely have friends (or new online friends) that will encourage me to ride every day. They also inspire accountability with their milestones (ie Century Ride) and their campaigns (ie “try to get 30 rides in the next 30 days!”).
Results - this may draw ire from fitness purists, but results are basically tied directly to consistency. In other words, I don’t care whether you do CrossFit five days a week or Peloton five days a week over the long run, you’re going to get fitter and see results either way. So if we agree Peloton inspires consistency, then we agree it generally produces results.
Personalized coaching - to my knowledge, Peloton doesn’t offer this yet, but they CAN and likely will. As they’ve grown Peloton online, they’ve unlocked the ability to either copy or acquire someone like Future (above) or Ladder to add 1:1 trainers. If I’m them, I acquire immediately and gain all of their established trainers to up-sell Peloton’s existing customer base.
So, take notes Peloton chasers - until you solve for (most of) these six factors, it will be tough to unlock Peloton-like growth. Before we go, let’s get another thing straight, I think Tonal is a super freaking cool piece of equipment and I can totally see myself getting one some day - but for me, it would be just that: a piece of equipment that I add to the rest of my home gym. Outside of weightlifting (or resistance training), I think a boxing company like FightCamp or a rowing-based company like Hydro have a real shot at becoming big companies with Peloton-like followings, but they each require added user-technicality (as a gym owner I can tell you, almost no one just jumps on a rower and does it correctly, contrary to a stationary bike) and they might be too niche training disciplines. Teaser: keep an eye out for companies building “connected fitness” companies without equipment (think Strava) - there are several on the move and they could solve the weightlifting problem by skipping the “comprehensive equipment” piece above.
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Other things to check out in the health and fitness space:
SACRED COW FILM - this has been unlocked to watch until Sunday Dec 6th at 11:59pm est. This film is a supplement to the Sacred Cow book I wrote about in Rethinking Health #2. For anyone interested in nutrition and the sustainability, ethical, and environmental impacts on Ag and the food system, this is a MUST WATCH.
Animal source foods in ethical, sustainable & healthy diets - This is similar to the Sacred Cow project, but contains more science.
Newsletters to read: Justin Mares The Next Brand, Joe Vennare Fitt Insider, Joe Pompliano Huddle Up.
Hydration product I love: LMNT. Here’s a limited time offer where you get a sample pack of 8 and only pay shipping ($5).
New supplements I’m trying: Ancestral Supplements. Though I do regularly consume beef liver power and have a freezer full of venison liver from a deer I harvested this fall (my first archery deer!), I don’t get nearly enough organ meat. I’d wager most people get virtually no organ meat, which contain fantastic micronutrients. Ancestral Supplements are derived from 100% grass-fed grass-finished cows from New Zealand.
[1] A micro-gym is a limited membership boutique or studio-based gym that generally employs a personal training first or small group training first business model. Globo-gyms try to get as many members as possible, charge a low enough fee that people forget about it on their bank statement, and HOPE that none of them show up. Micro-gyms take the opposite approach of trying to acquire only enough members to ensure all classes/times are full each day, and then charge a lot to encourage accountability and because they attempt to provide commensurate value. Spoiler: both models are tough to make a lot of money with.