A Product Market Fit Show | Startup Podcast for Founders
00:35:41 · Pablo Srugo, Lee Silverstone
[00:35:41] S0: Let's go through, let's dive in because – so Anytime Fitness, just a background story even because it was a big deal. [00:35:49] S1: Yeah, huge. Man, this is another one of those, I don't know, just being overly confident for no reason working in our favor sometimes. We had gone to this – we were in 500 startups. We had gone to this conference where basically it was speed dating. You would meet these – you would basically sit at a table and then the VP of innovation or whatever from all these different big gym companies around the world come sit with you and you'd pitch them on your idea. We pitched Anytime Fitness and they were like, this is super cool. We're going to run it up to the CEO. Just so happened, I don't know why, again, another serendipitous thing. The CEO and CTO of Anytime Fitness, which is the largest gym chain in the world. I actually was just looking the other day, they're double the number of locations that we were doing. [00:36:38] S0: Thousands, it’s 5,000 now. [00:36:39] S1: Yeah, 5,000 or 6,000 locations. They're a massive company. They met us, whatever, we're excited. We sent them a deck, we sent them some materials, some of this promo video we had done that was amazing that everyone loved. [00:36:56] S0: It was a great video. [00:36:56] S1: Yeah, it was a great video. It was cool. It's the power of storytelling. [00:36:56] S0: That might actually be the best product that we made.
00:36:56 · Pablo Srugo, Lee Silverstone
[00:36:56] S0: That might actually be the best product that we made. [00:36:58] S1: Someone one time made this joke to me, it might've been my brother, and he was like, dude, you guys should have just made a video production company instead of this Gym Track. You guys were great at it. Just this other serendipitous thing, we were at 500 startups working out of their office. It was the CEO and CTO of Anytime Fitness were coming to San Francisco for this technology tour. They were going to meet – I think it was the Fitbit people or whatever or some other startups that were there. They came to the office and they were blown away by this 500 startups office, thought it was the coolest thing. Literally in that meeting, the CEO was like, let's do a pilot, let's go. We were like, cool, I'll send you the paperwork. That was it. [00:37:36] S0: Where was their product at the time? [00:37:38] S1: I think it was still a 3D printed pen in my pocket. I think I was do – I think I still had the pen? I don't think there was much more than that honestly. He was like, cool, this is the future. I totally get it. Let's run a pilot. We're like, okay, cool. We got to go do that now. The problem was the pilot, to go do the pilot, was going to cost us hundreds of thousands of dollars. We didn't even properly think about what a pilot to run with it was going to cost. We had to produce all this hardware at super small scale. It was incredibly expensive. We had to move an install team down there. We had to…. [00:38:12] S0: To Minnesota.
00:38:12 · Pablo Srugo, Lee Silverstone
[00:38:12] S0: To Minnesota. [00:38:12] S1: To Minnesota, sorry, to Minnesota, to Minnesota where they had their innovation center. We had to spend months there updating and firmware physically. It was the worst idea. It was so stupid. We hadn't even done a real pilot in Ottawa where our whole team was and we could actually learn how people use the product. We were like, no, we're going to go from a 3D printed pieces of plastic to the literally the biggest customer in the entire industry without doing anything in between. It was destined to fall flat. [00:38:49] S0: To our credit, and I remember we negotiated, we had a year to deliver on this pilot. That was obviously a big clause that we gave ourselves, but yeah, the challenge I think was, if you actually think about a gym, it's the worst place for tech. All it is is metal being moved around and things we hadn't even thought about. For us it was, okay, the hard thing is AI. It's machine learning tracking reps. The hard thing is putting a thing that actually doesn't fall off a barbell. That was the mechanical engineering of it. With this pilot, I remember we were totally not ready. We pushed it three more months and at one point it was just almost embarrassing. I think you were like, dude, we have to do it. I just can't push it anymore.
00:38:49 · Pablo Srugo, Lee Silverstone
[00:38:49] S0: To our credit, and I remember we negotiated, we had a year to deliver on this pilot. That was obviously a big clause that we gave ourselves, but yeah, the challenge I think was, if you actually think about a gym, it's the worst place for tech. All it is is metal being moved around and things we hadn't even thought about. For us it was, okay, the hard thing is AI. It's machine learning tracking reps. The hard thing is putting a thing that actually doesn't fall off a barbell. That was the mechanical engineering of it. With this pilot, I remember we were totally not ready. We pushed it three more months and at one point it was just almost embarrassing. I think you were like, dude, we have to do it. I just can't push it anymore. [00:39:29] S1: We were also burning so much money a month that it was like, we have to – because if you think back, the plan was raise this seed round, okay, use the money from the seed round to go launch to Anytime fitness pilot, sign a bunch more pilots and get Anytime Fitness to convert from a pilot to full paid customer and then start to roll it to the rest of the gyms. Raise a series A to go fund that growth. It was, again, this all or nothing, either this converts to a full customer or just your SOL. Back to how we got on this tangent was that was around the time we had to raise additional money because we were like, the pilot's taking longer than we wanted to and whatever. We kind of went back to…
00:39:29 · Lee Silverstone, Pablo Srugo, Rob Woodbridge
[00:39:29] S1: We were also burning so much money a month that it was like, we have to – because if you think back, the plan was raise this seed round, okay, use the money from the seed round to go launch to Anytime fitness pilot, sign a bunch more pilots and get Anytime Fitness to convert from a pilot to full paid customer and then start to roll it to the rest of the gyms. Raise a series A to go fund that growth. It was, again, this all or nothing, either this converts to a full customer or just your SOL. Back to how we got on this tangent was that was around the time we had to raise additional money because we were like, the pilot's taking longer than we wanted to and whatever. We kind of went back to… [00:40:08] S0: Obviously, the pilot ends up not, let's say, fully working out. All this stuff happens with the acquisition. Rob, you come on. Then how do you – can you remind me how you came up with effectively GymTrack V2, the second idea? [00:40:21] S2: I mean, I came on – finishing that Minnesota story, the challenges of doing that,it was still operating when I came in the first time. I remember having to send teams down to go charge the devices. Do you remember that? They couldn't figure out how to charge it. We had to fly somebody to Minnesota to go and plug shit in and swap them out when the batteries died. Do you remember that? [00:40:45] S0: That's crazy. [00:40:45] S1: I think when they say do things that don't scale, they don't mean that. That's way too far. [00:40:52] S0: That's crazy.
00:40:52 · Pablo Srugo, Rob Woodbridge, Lee Silverstone
[00:40:52] S0: That's crazy. [00:40:52] S2: You had to send somebody down there to go and plug stuff in to charge them, right? Anyway… [00:40:58] S0: Hardware, by the way, hardware is actually hard. If somebody said that to me maybe six months into GymTrack and I was like, you have no idea what you're talking about. Obviously, there's got to be some advantage to doing hardware. There is no advantage. There is zero advantage for a startup to do hardware. It's just harder, period, and you get nothing for it, nothing. [00:41:15] S1: I mean, you do, you do get a moat. You do get a moat because it's hard, but yeah, I would say it’s, if anyone asked me today, do you want to go do a hardware startup? I would fall on the ground laughing and just walk away. [00:41:30] S0: The trade-off is not worth it. It only gets easier and easier to replicate and cheat. Whatever RND costs you went through and all the shit you went through, everybody gets that for free. It's like… [00:41:40] S1: Yeah, and I think there's tons of examples now. Even if you just choose fitness of hardware companies being terrible, Peloton, Mirror, all of these ones that are you need the hardware to build the future. It's like, actually no, you don't. You just need an iPad with software on it. It's the same thing. I think there's tons of examples of why building hardware isn't… [00:42:02] S2: They all started with wouldn't it be cool? [00:42:04] S1: Yeah, exactly.