Invest Like the Best with Patrick O'Shaughnessy
· Greg Stewart
But I don't want to have coaches and reading chats all day and interacting one-to-one with users. I want it to feel that way and use tools to expand the capabilities of our coach. We have teams with 60,000 people that are in it. And now the chats are big and cumbersome and complex. And the coach's message isn't the only reason they're there, but it matters. And the magic moment for a coach is saying the right thing at the right moment that makes the most people satisfied with what they're saying. What isn't a great use of time, which was happening, is scrolling the chat for an hour to go figure out what's happening here. So we built a product called Ladder Pulse that automatically comes in, reads every single chat that's come in, tells you, here are the three most burning questions. Here's the content you should create. Here's the member you should respond to because they've never been responded to by a coach. Send. Done. So now we've removed all the cognitive overload of what to say. And it's all powered by this tool that we built purposely for the business. We're building software now to go support a better experience that's built on AI. Nutrition is a great example. We have never gone into Nutrition if there was no AI. MyFitnessPal had to build a database over time by hand that became the value of MyFitnessPal. That's not the hard part anymore. The hard part is the consumer experience and knowing what to do with the data. So it opened up the capability that wouldn't have taken the business sideways for five years to go solve that problem. And then we're inventing products from scratch. I'll give you two examples. One, we have, I told you, north of 300,000 paying members. We have one person that touches support. It's not even a full-time job. We have tickets coming in every single day. And we spent time trying to understand, who's coming in? What are they asking? What are the buckets here? And we built a product. That person's name is Maeve. We built Maive AI, M-A-I-V-E. And we built a customer support tool from scratch. It's purpose-built for our company that manages now 90% of the flow coming in. And the experience is as good or better. And it's faster than it was before. And we made it ourselves in our team. That would not have been possible five years ago. That solved the huge problem.
· Greg Stewart, Patrick O'Shaughnessy
Now we don't have to expand that team and we can deliver a better experience through that. And we have a person on our team who only works in AI. That's the job. And he's been doing that for a long time. [00:00:00] S0: How do you think about saying no to potentially juicy revenue opportunities that aren't core to the subscription, complete a workout, acquire customers? I can imagine a Ladder dating service. I can imagine Ladder being an origination platform for GLP-1, or Ladder coach tools. [00:00:00] S1: Which is absolutely a business. [00:00:00] S0: The Ben Thompson sense of aggregation theory. You're maybe a consumer aggregator. You've aggregated a lot of demand in this specific space. Historically, those companies have figured out how to monetize in lots of different ways. How do you think about the siren song of hire our poo and new sources of revenue?
· Tom Digan
[00:00:00] S2: But a lot of those businesses have died too because of doing too much at the same time. We've had a multi-phase vision from the beginning of what this thing can become. And our goal is to be the de facto product in this category. And we have stepping stones that we anchor to and they get moved around. But we have a vision for how to go do that. I think about new ventures, new business, push versus pull. Are we being dragged into this area by our members? Is it so freaking clear that this is going to be really exciting and solve a really important problem for people that are relevant to us? Like nutrition. Nutrition was on the board as an investor deck that you have from five years ago. But it didn't make sense to build it until last year. When we had critical mass, it was very, very clear from our members that that was going to move the needle. And now we'll build products on top of that. So we're ruthless in prioritizing. You have to make a clear, clear case of what this does to the business. We have no Android app. People think that's insane. But building an Android app requires basically pausing development on iOS, splitting the team's focus in time, playing this game of catch-up for a user that has much lower revenue potential and could absolutely take the business sideways for a year. Will we have an Android app? Yes. We won't have it this year. It's these levels. In my mind, we have to go earn the next level. And if we earn the next level, what should that be? Let's figure it out and then start the work on that. So I think all of these things that everyone talks about later, we'll go do all of them. But I'm playing like a long game here. This is not go sell the business. Let's go build the generational business in consumer that solves the most problems for the most amount of people.
· Patrick O'Shaughnessy
[00:00:00] S0: In that big, long-term vision, fitness, working out, and nutrition are two obvious major food groups of the vision. What else is on that? Understandably flexible. But what are the other big stepping stones that you think about?
· Tom Digan
[00:00:00] S2: It's the system of record for health and fitness. I guess what Greg's talking about and how we've talked about it for a while. There's a category winner in every category. Transportation, it's Uber. In short-term housing, it's Airbnb. And, Spotify in Music. There's no clear winner in the health and fitness category. It clearly needs to be a mobile-first company. It needs to be a product that has engagement that looks like social that we have. Nutrition was the next obvious step, and it increases the surface area for us to really think about these other product extensions and line item extensions. Some of what we talk about is there's so much commerce already happening in the app. We see it every day. We see, hey, coach, what's that creatine you're having? Should I be having whey or vegan protein? And love those new shoes. Where do they come from? People are sharing links all day. There's different chats based on supplements or on food or on apparel, for that matter. We're watching. We're learning. There's an opportunity for us to reduce friction there and start to think about, is that a marketplace? Does it look more like an Amazon experience at first while we're learning, and then we're building our own branded products? Our members want to tell us that they got a DEXA scan, and they would like this to be their system of record for their biomarkers. There's a lot of people building companies in the biomarker space that think that would be a really cool maybe partnership to start, or it could be a feature of our business. So we get excited about if we build a compelling product and brand where people are opening this app 10, 15, 20 times a day, there's a lot of opportunity for us to insert other products and experiences into it. So there's a long list that have been on the whiteboard since the beginning.
· Greg Stewart
[00:00:00] S1: What I think about is product expansion and user expansion. And product expansion, there's no, like, oh, man, that's brilliant. It becomes obvious when you look at it, but we lost nutrition. Now we have inputs and we have outputs. Our members want us to tell them, what supplement do I need to go take to make me whole? They want to buy that from us. Those will become businesses for Ladder when there's critical mass and it becomes very clear that this is a real problem that we can solve uniquely for the business. So all of those things start to open up. I think there's user expansion, too. We have a very specific user. It's a very big market, but it's not everybody in fitness right now. So we think about Ladder. It's how do I get 100 million people to be working on Ladder every day? It might be a different problem set than the current product right now. We spend time thinking about how do we get the people earlier in their fitness journey into Ladder? Because if you think about our product, it's progressive programming. So they need to know that programming is valuable. They've got to be in a strength training. Okay, that's its own bucket. They need to be able to pay for that. Use a phone during a workout. All these things are big market, but they're inhibitors to broader fitness. And we've got this content library that is not valuable to our members. Our members are paying us not to think. They don't want any choice. They want to know on Monday, what exactly should I do? And we asked this question in a survey. We said, what would you pay for the whole library? And it was like a dollar because it's not valuable to them. I already have my Monday workout. I don't need 10,000 workouts, which is every other fitness product. So I think it's going to be a path. It's not this year. It's not next year where we give the individual content away, where we give away every other product, which is just the library. Because the library isn't valuable and isn't what our members are paying for. But it starts to map to how consumers in the outer rings of fitness are consuming content. What we learn, investors come in and say, who's your biggest competitor? Is it Peloton? It's like, no, it's YouTube, by far. It's not even close. It's people going to YouTube and typing, 45 minute upper body dumbbell, give me a workout.