Invest Like the Best with Patrick O'Shaughnessy
· Greg Stewart
[00:00:00] S1: It is, but it's small controlled bets. Big on scale, but limited on bets that we're making. So if it's a celebrity partner, we need to know exactly who that audience is. Is this someone that resonates with our user? Are they going to amplify the right message that represents Ladder? To date, we had no leeway to spend money that didn't turn into results. It was like, here's the money in the bank, turn into users, keep doing it again. And this is a little bit different. What we've realized very quickly is we do have an awareness problem. People haven't heard of Ladder. We're getting big. We're the number one grossing fitness app in the app store. We're top 100 in the U.S. of all U.S. apps. It's big. So we need to go invest in really concentrated bets that speak very specifically to our user that leverages the creative horsepower in our team. We have really special people in our team that can create stuff that no one in the world can promote from a brand perspective. So it's not as perfect of a science. And I kind of bucket it in two different paths. But my thesis over time, it's going to make the short-form engine a lot more efficient. If people are not aware of Ladder, we have like one video we're trying to convert you. You're learning about Ladder in that video. If you've seen and build trust with someone who's endorsing it or you have consciousness a nugget, yeah, there's a higher likelihood that that person is going to take the first step. So I think the two play together. And you asked like, what was the super charge over the last couple of years? We did a deal with General Catalyst that changed the game for us and their customer value fund. And essentially, what we realized is the capital markets aren't funding CAC in consumer companies. We can't just go raise a bunch of money just to put it into TikTok. The appetite's not there, no matter how good the product is. And General Catalyst has solved that where they're financing our investment and growth every month. So the payback happens over time. It's not as much of a cash hit. But it lets me think about half the house is very performance, very controlled. You can underwrite it, which General Catalyst did. And now we're going to go invest in some squishy stuff that should be proven downstream that it has an impact and makes things more efficient.
· Greg Stewart, Patrick O'Shaughnessy
But it'll be iteration. Nothing else. It'll be a game of figuring out what works, what doesn't. [00:00:00] S0: If you think about the experience of, you said you'd built some enterprise companies before this versus consumer. It seems like in the last five years, for a long time, no one invested in consumer because actually really up until, I guess, very recently, AI is, of course, unlocking things in interesting ways. If you were to pitch a young entrepreneur, a teenager, or a young college student on building a consumer business rather than the much more traditional B2B thing that's dominated the startup world for a long time, what would your pitch be? Why is it fun and different to build this kind of business?
· Greg Stewart
[00:00:00] S1: The fun part is you get to see it every day and it's impacting people. That's real. We're providing real value. We're changing lives. I read these stories every day coming in to our team of like what happened to this person because of Ladder. What else could inspire you more than that? We're not selling their attention to advertisers. We're helping their lives. That's really fun. And the feedback loop is fast. You make something, you know exactly what happened. That's exhilarating. And you have a report card that's your users. And no one user is the right answer, but collectively they are. I'd say what people don't realize in consumer is how freaking hard it is. And there is no quick fixes. There is no growth hacks are not a real thing. You have to be black belt at building products for the consumer and growth. You have to have both those things within your own team to survive and then be able to raise money to go fund that, which is its own mission. So in my mind, if you want to get a consumer, you've got to love talking to people. You've got to love extracting information from human beings to go create solutions for them. It's not like, I think it should be. That's how consumer companies die, because they just freaking guess. And it doesn't match what the consumer is looking for. So it's really hard and you have to be excellent at both sides of the house. Half our team worked on workout completion. Half of them works on trials off TikTok. That's the business. Very simple. But we are equal weight in black belt on both of those skills. And without either one of them, there would be no Ladder at this stage. Great product, no growth. Doesn't work, doesn't get funded. Great growth engine, no product. Leaky bucket, doesn't become a big company. Both those things have to be true to be able to build a company that's durable and last. And just be ready for 10 years. It's not going to be six months or a year. It's going to be a slog and constantly problem solving along the way. So it's splashy. It's fun. But it's really fucking hard to do. I'd probably say don't do it. There's probably easier things to get funded to do.
· Tom Digan, Greg Stewart, Patrick O'Shaughnessy
[00:00:00] S2: But listening to the stories, as Greg said, when you hear from one of your members about how Ladder has changed their life in some way. And it's easy to, when you're looking at the charts and everything, that gets lost on you sometimes, but you're constantly pulled back by these stories. And I think our creative team does a great job of telling those member stories. And that's something we'll continue to do. Our customers, as Greg said, they literally tell us what to do. I mean, we sent our annual survey out this year. We had 5,000 responses that take an hour on average is what people are spending. We already have 5,000 responses in the last two days. And they're answering 230 of our most burning questions about what to build from here, what companies to partner with. Would you be interested in supplements coming from Ladder? Everything as it relates to all the different surface area that we could explore. So that's really exciting to us is just continue to listen to them. They're huge advocates for us. So we're going to continue to do that. [00:00:00] S1: If you want to be by yourself with headphones on working on a consumer, it's a losing strategy. [00:00:00] S2: I see that all the time where it's like, you're just building shit. You got to be talking deeply to the user. [00:00:00] S0: If I think about the two big world things happening that probably most impact your business, they're out of your control, it's AI and GLP-1s. And I'm really curious how you think about both of those things as creators of opportunity, as potentially risks.
· Patrick O'Shaughnessy, Greg Stewart
[00:00:00] S0: If I think about the two big world things happening that probably most impact your business, they're out of your control, it's AI and GLP-1s. And I'm really curious how you think about both of those things as creators of opportunity, as potentially risks. [00:00:00] S1: I'll mention GLP-1 fast. And then AI is like a much bigger conversation. On GLP-1, it's interesting because all the science would support that you need a strength training plan alongside your GLP-1. You're at risk of so much muscle loss. So we think that's actually a macro tailwind and something that will help us. It's not something that we've investigated to date, but can totally see us working with some of the bigger GLP-1 providers at some point. The science backs that relationship. So that's not something that scares us. In fact, it's a question we asked in our survey, which we've never asked before. [00:00:00] S0: Are you on it or are you thinking about it?
· Greg Stewart
[00:00:00] S1: Yeah, people who are fitness enthusiasts doesn't mean that they're not on GLP-1s. And so we're going to continue to learn more there. On the AI, I think what gets exciting for us is that it feels like we can have our cake and eat it too now in that in the beginning, we felt like we need to focus on a venture scale business here and solving a problem that's solvable for a customer with software, which felt like one-to-many programming. Now with what's available to us in AI, we're able to deliver that personalization as well, which four years ago, we couldn't have. Two years ago, we couldn't have launched Nutrition with our same team, you know, six months span like we did. Beyond that, what I get excited about is that in an age of a lot less differentiation in tech and commoditization of certain features, because it's become so easy to people think you can just use ChatGPT to build an app, I would challenge someone to try to build the experience that we've built using AI. And I think we're going to continue to lean into things that AI can't touch, which is we've built a compelling brand. We have a tremendous amount of trust from our members, which is really exciting. We deliver a human experience at scale because of it. We've been thinking about it for four years. We've been using it as a tool for three years. It is chapters for us. In the beginning, it was a non-coding tool. It was how do I synthesize information? Well, it was amazing. I could take 5,000 responses and really understand what's happening. And so then it was everywhere. I can take it to think about how do I create compelling TikTok hooks based on all of this survey data or user data. That's a tool. It saves time. But it happened at the exact right moment where our entire team is 50 people, and that includes 20 full-time coaches, so 30 people excluding coaches. We started scaling at the right moment where AI started to become a use case that made us not have to go hire or expand the team just to solve a problem that we were looking to solve. The team would have been a lot bigger if this were four years ago, if we didn't have AI in every element of our business. The second chapter for us is using and incorporating the product, not replacing the human. We believe in humans as motivation. It's really important to feel like having a relationship with the coach.