The Online Fitness Revolution: Investing in Moxie
The current crisis has opened the door to a new and emerging way to do fitness - and it looks like it is here to stay
Things had been looking up for the fitness industry at the start of this year. The number of fitness clubs and studios had doubled around the world since 2005, and global spending largely followed the same trajectory, climbing to $94B in 2018 according to IHRSA.
Fast forward to today and the industry has been steamrolled. Mass closures have already taken their toll - legacy gyms such as 24-Hour Fitness & Gold’s Gym have filed for bankruptcy, while many smaller studios and individual coaches are reeling from the almost overnight loss of business and now find themselves scrambling to migrate what they can to the online world.
The problems don’t end there. What does the experience look like when gyms reopen? With social distancing likely to be enforced for the long-term, a packed sub-1000 square ft. studio is likely the last place customers will want to return to. On the other side of the table, gym owners walk back into an environment where already thin margins and high fixed costs are compounded by attendee limits and high frequency equipment cleaning.
In yet another hammer blow, some indications point to consumer sentiment shifting for the long term. In a survey done by RunRepeat between April 24th - May 1st of this year, 46.67% of respondents said they will not return to their gyms upon re-opening. The survey included 10,824 gym members from 116 countries. In another survey done by OnePoll on behalf of LIFEAID Beverage Co. 25% of all respondents, all of whom were in the US, said they won’t ever go back to the gym. While it may not end up being as extreme as some of the initial data is showing, if even a fraction do not plan to return, the long term implications are significant.
Unfortunately, the early migration to platforms like Instagram Live & Zoom are not a silver bullet either. Neither of these platforms are properly optimised to account for the entire workflow of an individual trainer or studio. Here are some factors to consider:
Scheduling - IG Live and Zoom are ok for the occasional spontaneous class, but how do Instructors publish their entire schedule? How do their clients plan ahead and reserve classes?
Integrated payments - Who paid? What about subscriptions, bundles, and packages? How do you initiate refunds?
CRM - Who attended? How do I notify my clients about upcoming classes, provide them with important information about a class, or help them outside the class with their continued progress?
Music and Tempo Control - IG Live is 1-directional video and music is not allowed due to copyright laws.
The creative solutions hacked together across many of these platforms may provide initial reprieve, but they are not long term solutions.
I’m jumping ahead, but here is a high level competitive look at the current space (with further context in the next section):
Introducing Moxie
Moxie is an all-in-one studio designed in partnership with hundreds of instructors during COVID-19. They’ve developed a vertical zoom competitor (built on AWS), optimized for online group and private classes and integrated with home-grown scheduling, attendee management, and a payments SaaS platform.
Even before the current pandemic, a new -- more convenient -- way to do cardio and other types of exercise outside of a traditional brick and mortar gym was already emerging. The inflection point arguably came last year when Peloton (NASDAQ:PTON) debuted on the public markets with a valuation of $8B. Another recent tailwind for the space was Mirror’s acquisition by Lululemon (NASDAQ:LULU) for $500M in June of this year.
But the average gym-goer is probably not your average Peloton or Mirror customer, and so while companies had planted flags in the connected fitness space, there still wasn’t any platform serving the mass market. And, no one in the online market before Moxie was effectively serving Live Group Fitness Classes -- one of the fastest growing segments in the fitness industry.
In all fairness, it’s hard to imagine anyone anticipating virtually the entire fitness market moving online, and being matched with mainstream demand so fast. COVID was the black swan event that caused a seismic shift in the market overnight and which is defining a new normal.
What became clear to the Moxie team was that it is not just about getting online fitness to a respectable level that matched (as best it could) the offline experience, it was looking for ways that it could elevate it. Check out how they are integrating music.
I was recently asked how this industry can continue to survive and thrive when the world eventually normalizes, and one point in particular stood out. Offline, instructors are used to giving away 50-80% of their class revenue to studios. On Moxie, instructors keep most (right now 92-88%) of their class revenues - flipping the economics pretty much backwards is a strong proposition and I believe it provides long term staying power. Instructors aren’t limited by class sizes anymore either, and can increase the scale and reach of their businesses and brand significantly.
We’re excited to support Jason and his team as they look to build the best user experience for online fitness on both sides of the marketplace. When we asked Jason how much of the online fitness market he aspires to capture with Moxie, he responded “all of it” -- we love that ambition and we love Jason’s vision and ambition towards becoming the Airbnb of online fitness.
*The team is hiring, so please take a look at openings and ping me (roni@vectr.co) or apply directly!