A Product Market Fit Show | Startup Podcast for Founders
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.
00:42:04 · Lee Silverstone, Rob Woodbridge, Pablo Srugo
[00:42:04] S1: Yeah, exactly. [00:42:08] S2: We were trying to figure out what the next iteration of this was. When I came on, I said, okay, we're going to look at – we're going to really assess this platform and its viability over the next 90 days. I went down to Minnesota and I met with them. I remember them saying, please take this out of our gym. That's what they said. [00:42:33] S1: Oh, God. [00:42:34] S0: [Inaudible] zero, right? [00:42:34] S1: Just negative 10, right? [00:42:41] S2: I think people are leaving the gym because of this. Could you please, could you please take it out? It was a shock to me clearly. I was like, okay. Then I brought that back. We were trying to figure out, okay, what's the next model? Then Lee, you and I went to one of those resorts and we went off to – I think it was… [00:43:05] S1: To CYDEC. We went to one of those speed dating things to talk to customers, yeah.
00:43:05 · Lee Silverstone, Rob Woodbridge
[00:43:05] S1: To CYDEC. We went to one of those speed dating things to talk to customers, yeah. [00:43:08] S2: We talked to them and we're saying like, okay, so we were pitching ideas and the idea was this last thing – and it was [inaudible] who was like, sensor, sensor, sensor, simplicity, simplicity, simplicity, right? It was our lead scientist, I don't know, who was building all this. We went with that idea in mind and then we started pitching some of these gyms and they, again, differently. We weren't saying, wouldn't it be cool if. We would ask them what their challenges are with equipment and equipment breaking. We had really structured questions. We were a little bit smarter, but we also heard what we wanted to hear and ignored what we didn't want to hear. Then we took that back. We pivoted to this idea. We went through the 90 days and we didn't kill GymTrack 1, but we just put it aside. We thought, okay, what's the easiest way to get into the gyms something low lift, low barrier, low cost, easy to install, they could do it themselves. We created this thing and it ended up being that sensor that tracked gym equipment activity, not the person's activity, because nobody – we realized there's nobody going to pay for that. We said, okay, now what about understanding your utilization of your equipment? That seemed to resonate enough with the gyms. We knew who the customer would end up being, which was the gyms. That's really what went down there and then the production cost of those devices were so low that we could manufacture.