Invest Like the Best with Patrick O'Shaughnessy
· 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.
· Greg Stewart
And then consuming it in YouTube. YouTube's not built for fitness, but the content lives there. We need an on-ramp to Ladder that mirrors that consumption pattern. There's amazing content. The best content. You're getting it on YouTube. It all lives here. It's free. There's motivational mechanics that are important. It amplifies the importance of social and the power there. So I think there will be a premium component that it will be the right moment to hit on it. But we've been talking about it and thinking about it for a long time on how do we get to the wider rings? And then over time, you move those people, just like we do on TikTok, into this concept of a plan. Hey, now you've done 40 workouts. They're in seven different teams, but you're not really happy that your results aren't there. I got a different way. We can tell you exactly what it should be. The analogy I give to folks outside the business is you're working on a puzzle. Puzzle, you got the picture on the box. You got all the pieces. You got 10,000 pieces. And the picture is what you want to go build. Well, our members have the vision of themselves. That's the box that they're solving for. And we give them each piece in order, one by one, to construct the puzzle that they're trying to solve. No thinking at all. Well, most products in fitness is just a bunch of random pieces. And it's like, pick up a piece that you feel like doing today. That's not a great strategy to getting to results.
· Patrick O'Shaughnessy, Greg Stewart
[00:00:00] S0: One more question is what it's like talking to investors now versus early on. This thing has changed quite a bit. Your sources of capital have gotten – [00:00:00] S1: We talk about push versus pull. [00:00:00] S0: Increasingly sophisticated over time. I was the least sophisticated at the start. You've gotten to much smarter, more institutional investors ever since the beginning. Say a little bit about that journey.