A Product Market Fit Show | Startup Podcast for Founders
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.
00:44:47 · Pablo Srugo, Lee Silverstone
[00:44:47] S0: Yeah, I think there was a few steps. First of all, let's talk about the spectrum of great customer discovery from Zero, which is GymTrack V1 to 10, which is we never did it. We were like, we moved to three or four, right? There's a few steps towards it. First of all, what we looked at, and I remember this distinctly, actually Lee would remember maybe this, too. Ken MacAskill, our CFO, who had been in software for a long time as we're thinking through this change that we're going to have to make, these cuts, he's like, who do you want to leave on the team? What do you want to go do? We're like, well, our edge is a hardware, so let's stick with the hardware team. Ken was like, are you sure? You guys don't want to just do software? [00:45:27] S1: Yeah, he was like, why don't you guys just go and build an app? We were like, no, that's stupid. [00:45:31] S0: That's silly, right? [00:45:32] S1: In that conversation too, I don't know if you remember this, but there was one time where I came to the office and I was like, Ken, Pablo, I need to talk to you. I know what the pivot is. I was like, we're going to do GymTrack, but for people's homes. My idea was we were going to build Peloton but for weightlifting and whatever. There was all these ideas around it. You guys looked at me like, what the… [00:45:55] S0: Yeah, I shut that down quick. [00:45:56] S1: I don't even think anyone said anything. You guys just looked at me for a while and I was like, thoughts? Just there was silence. I was like, okay, I guess that we're not doing that.
00:45:56 · Lee Silverstone, Pablo Srugo
[00:45:56] S1: I don't even think anyone said anything. You guys just looked at me for a while and I was like, thoughts? Just there was silence. I was like, okay, I guess that we're not doing that. [00:46:07] S0: Point made, but this is the thing. My first point is the missed opportunity was we still started from, okay, what do we have? What can we do? Versus, okay, we actually met with all these gyms. We could just do real research. We skipped that. By the time Rob came on, we already had this hardware type team. It was clearly we needed some hardware device. We wanted it to be simpler. That's why we did what we did. The other thing that happened is that original conference where you met a bunch of different gym owners, we thought it was really smart to pre-sign for a year ahead because we got a 20% discount. Now comes that time where we're trying to cut costs desperately and it's a $25,000 bill. We're, hey, we're not going to go this year. We're not going to pay. They're like, you're paying. [00:46:49] S1: We agreed to go, but we signed a contract but didn't pay. They were like, you're coming.