LIFTS Episode 123 – Fitness Technology Is No Longer Software. It's Infrastructure | with Al Noshirvani

0:00You know, one of the things that, you know, we advise a lot of clients on technology strategy, digital strategy, etc. And we always sort of advise that you should make technology decisions that check off, you know, at least one of the of the tenants of technology that we sort of we sort of communicate to our to our clients, our customers. And those tenants are technology should enhance the member experience, technology should increase staff productivity, and technology should be able to contribute to the bottom line. And I think in theory, whether you're deciding on a new agentic feature, a new AI agent that you want to deploy, or even evaluating a new feature in your software, if it doesn't do at least two and ideally three of those things, it's probably not something that you should be spending a lot of time thinking about.

0:53We're going to touch on AI, which is another important topic that Al is heavily involved in. And while every vendor says they have AI, the real question for operators is not whether AI shows up in a demo, but it's really about how AI can have measurable impact in their operations.

1:15Matthew Januszek:So we are now live. Welcome to this week's episode of Lifts. I'm Matthew Januzek. I'm here with my co-host, Mohamed Iqbal. And we're here with a great guest today. And it got me thinking back to the last time we'd spoken on the podcast. So it was another episode that happened before you, Mo. But it was a really interesting time. I was connected through Paul Bedford. And he said, you really need to speak to this guy called Al. He said he's really got his pulse on this situation. and um and the situation was actually we it was i think it was the one or two days when the uh it was the pandemic was announced and literally all the gyms were closed and and you agreed to jump on a podcast on it it was a i think it's like a sunday afternoon and um and we we talked about what what to do uh you know who who what what you should do to your customers how you should deal with billing and it was a really successful episode because people just didn't know what to do.

2:18Matthew Januszek:It was a totally new situation. The world had closed down. Gyms were concerned whether they were going to actually stay in business. So here we're in a much more positive time and I'll hand it over to you, Mo, to do a reintroduction of our guest today. Yeah. And actually, that's really interesting because I think even from then we'll get to a formal intro of Al here in a few seconds, but Al, you also created this gym group, right? And you still continue to meet monthly. So I think so much of what you've done coming out of the pandemic, and of course, we'll talk about what you've done before that, still carries on to today.

2:56So again, we all kind of appreciate you. And Matthew, I just feel like I literally just saw you, because I did see you. You did.

3:06Matthew Januszek:The opposite side of the country just a few hours ago. We were together in South Florida and hosted dinner. And then, yeah, I literally saw yesterday, here we are. And I'm still on the East Coast, but you're back on the West Coast. But I'm excited to have our guest on. So this is Al's technically first time on Lyfts, but second time with you, Matthew, on the podcast. Al Moshavani, who ironically is actually in the D.C. area with me. We are not together, but he is very probably four to six miles away from me right now. is the executive chairman of Alta DX. And I've always called him one of the most connected technology leaders in the fitness and wellness industry.

3:45And that's because for decades, Al has had a front row seat to the evolution of the fitness market, touching everything from club management software. He's the founder of a platform called MotionSoft, which was acquired by DAXCO. He has led digital transformation at the absolute highest levels. He's worked in payments. He's worked on data, now even AI. And he's really had a pulse on how operators need to kind of shape their strategies, how they can grow, how they can retain members and deliver better experiences. In addition to that, he's hosted one of the most coveted tickets in the industry.

4:22In fact, we'll get into this later, but one that I was not initially invited to and had to apply for a couple of years. But it's an event called the Fitness Technology Summit, which is back in D.C. this year. And it's really become one of the key gathering events of technology leaders in fitness from around the world. And that's really the perfect setup for what we're going to be talking about today. Today, we'll be digging into how fitness technology is not just a software decision, but it's really become an infrastructure decision. And platforms and operators need to choose very carefully on almost how every part of the business is impacted by technology.

4:59retention, acquisition, revenues, split payments, member experience, and on and on. Payments are a great example. And we'll be talking a bit about that today. For so long, payments are part of a back office function, necessary, but not really strategic. But it's really become a strategic lever in terms of how payments are collected, how they're split, various forms of payments, and so on. So we'll be talking about that. We're going to touch on AI, which is another important topic that Al is heavily involved in. And while every vendor says they have AI, the real question for operators is not whether AI shows up in a demo, but it's really about how AI can have measurable impact in their operations.

5:41And then finally, it's a question for operators around platforms. And I mentioned the word platform, I think, five times already in this introduction. But operators are being asked to simplify their technology stacks. At the same time, they're being asked to be more connected, more personalized, deliver better experiences. This is not an easy task. And because consumers are wanting more and more every day, how do operators meet them where they're being expected? So the bar overall is rising. So today we're going to unpack three big themes with Al. First, how payments are changing. Second, where AI is actually working.

6:25And third, what operators should do and what they should demand from their platforms and technology partners. So, Al, welcome to Lyfts, and I'm really excited to have you. I'm excited to be here. Thanks for having me back, Matthew. And it's a pleasure to be with you, Mo, on this episode.

6:41Matthew Januszek:Well, what I thought I'd do just to frame the discussion, we had an interesting conversation just last week with J.J. Cregan, And he was really talking about some of the challenges of growing businesses and how when founders set out, they don't always have a clear vision or understanding about where the businesses are likely to go. Certainly, there's a desire and a willingness to grow a large brand. But we were referring to two brands, which was Orange Theory and Planet Fitness. And I don't think the founders in those cases would really have imagined that their businesses could be where they were today.

7:25Matthew Januszek:But in many cases, there are some key decisions that need to be made. There's certainly a North Star that needs to be focused on. And there's some key things, particularly when it comes to software, which are really important to understand as a bit of a foundation for your business so that some of those key investments and decisions are going to be relevant as your business grows and expands. Now, when we last spoke, we were entering the pandemic. And I certainly feel that since that time, the world has been in a very different place where it used to be much more predictable in terms of what was going on in the world.

8:06Matthew Januszek:And you could almost set a course for your business. And in most cases, years were relatively predictable. Since the pandemic, there's so many things that are changing in the world. There's so many things that are changing with the consumers that people are focusing on. So just running a business and figuring out where to be is difficult in itself. Although I do feel that we're starting to get a bit of an understanding of what this fitness space is that we're, or fitness and wellness space that we're involved in. But the other thing that I feel as someone who's not really into technology is AI is a relatively new thing in terms of what we need to figure out as business owners.

8:50Matthew Januszek:And what I'm seeing when it comes to AI is software that used to, again, be relatively predictable. I think that the last innovation I was aware of was where things started to be stored up in the cloud, but you were still kind of getting the same type of service. And then you were having people that would would customize some of the existing software for your specific businesses. It seems as though that's turned on its head now where you almost like software is building itself. You can personalize it to a level that wasn't possible before. So a long introduction to a question, but what are some of the things that business owners need to focus on, which gives us an element of solid ground to stand on when it comes to technology?

9:37Matthew Januszek:Because if you invest in any of these systems, they're not things that you can add in and take out really, really quickly. It's a major upheaval, as we're finding out now in our own business. So what advice or things would you suggest that we should look at when it comes to aligning your investments in technology and AI with where your business is today and where it potentially wants to go in future? I think it's an important question. And one of the things that we advise a lot of clients on technology strategy, digital strategy, et cetera, and we always sort of advise that you should make technology decisions that check off at least one of the tenants of technology that we sort of communicate to our clients, our customers.

10:28And those tenants are technology should enhance the member experience, technology should increase staff productivity, and technology should be able to contribute to the bottom line. And I think in theory, whether you're deciding on a new agentic feature, a new AI agent that you want to deploy, or even evaluating a new feature in your software, if it doesn't do at least two and ideally three of those things, it's probably not something that you should be spending a lot of time thinking about. You know, these and then very specifically around the around the topic of agentic features. What's really interesting to me with agents is that inevitably when you start speaking to people about them, they immediately start thinking about the member facing components of agents.

11:16Right. How do I make it easier for people to purchase from me? How do I make make it easier for people to cancel their membership, you know, to address the click to cancel legislation? And we certainly have built at AltaDX, we have built tools to do that, as have companies like Replify and others that do really great work. But at the end of the day, for me, there's a lot of low-hanging fruit that's behind the front desk as opposed to in front of it. And the low-hanging fruit there includes things like agents that manage chargeback disputes. It's a grind for someone on your staff to go do that.

11:54You have to go in, you have to pull data, you have to bundle that data, you have to send it, you have to reply to the messages that are going back and forth. That's something that can be entirely automated using agents. Collections is another area where agents can be used, certainly in that what we call phase one collections or the soft collections process that sort of start out as reminders and then get progressively stronger up until you collect the debt or send it off to a collections agency that and some people do that. Learning and development agents that help you onboard your staff much more quickly and much more efficiently.

12:29You know, this industry isn't necessarily known for certainly the front desk is not necessarily known as a place where someone wants to go and find a career. And so we tend to have a lot of transiency at the front desk. You know, I have a I have a chain of clubs here in the mid-Atlantic in the D.C. market called Method Gyms. And at Method, our attrition rate within our front desk staff is like 85 % annualized. So spending a lot of time training those people while necessary is not necessarily a good use of anybody's time. And so learning and development agents can significantly shorten that. So those are some – I like to think about it across those three tenets.

13:15We used to have a tagline at MotionSoft, and it was get them, know them, keep them. And when we talked about features internally, if it didn't check off, well, we would go through this sort of Six Sigma process and, you know, evaluate all the features that our customers were asking. And anything that checked off all three boxes would immediately rise to the top. I love that. That simply also translated to acquisition, engagement, and retention. But I really love the get them, know them, keep them. So much of what I've learned in the last decade has come from people like you, yourself directly, but also from this event that you put on.

13:56Just speak a bit about the history of the Fitness Technology Summit. It truly is a must-have or must-be-at, but it's invite-only. So you can't just buy a ticket and go. What was behind the creation of that? And how has it evolved over the last few years? Yeah, so it started out in, this is our 15th year doing it. We initially kicked it off when I was the CEO of MotionSoft. And we, at the time, it was called the MotionSoft Technology Summit. And really, it was intended. Now, we obviously got the benefits of it. And back in those days, the only club management software company that would be in the room was MotionSoft.

14:38Today, that's changed. But the idea was to get a bunch of organizations, whether they be our customers or prospects or interested attendees, quite frankly, to sit around the table and share technology ideas. If you go rewind the clock back, and I've been in this industry now for 25 years, if you rewind the clock back to the HFA shows of 25 years ago, technology wasn't even a blip on the floor. There was a bunch of club management software companies. And I'd argue that back then they weren't even software companies. They were collections companies that had software or revenue cycle management companies that had software.

15:15And so at the time, it occurred to me that we needed to find some sort of a venue where technology leaders in the space who tend to be much more collaborative. Right. You get the CEO of Equinox and Lifetime in a room. They're probably not going to share a lot of ideas. But if you get their CIOs in the room, it's interesting how much idea sharing happens. And so we got lucky. I happened to that first year we did it 15 years ago through LinkedIn. I sent Jay Blahnik a message, never imagining that he would show up. But Jay accepted the message. He showed up with the first Apple Watch on his wrist.

15:54He wouldn't take it off so none of us could touch it. But he walked it around the room on his wrist and showed us all the Apple Watch. And then he spoke about where he thought wearables were going to go. I wish I had recorded it. I remember a lot of what he said. And I'd say about 80 % of what he predicted would happen in the wearable world has happened. And it's come true. So anyway, the event started out and it was at the Marriott Marquis in New York City, Times Square. I would never do an event there again. But not because it's not because it's the Marriott Marquis, but because it's Times Square in New York City.

16:31But we had about, I don't know, 30 or 40 executives in the room. We asked a few vendors. MyZone was there. Matrix was there. Techno was there. We asked them to be in the room with us. And then fast forward to 2020 when I sold MotionSoft. We ended up keeping the summit and the assets of the summit rebranded as the Fitness Technology Summit. We're now doing it for five years. And we've got two events this year, one of them in London in about two weeks, May 19th and 20th. Tickets still available if you want. Yes, definitely connect with me on LinkedIn. And the other one in October in Washington, D.C.

17:10And the last thing I'll say about it, the event tends to be very thematic. And we spend a lot of time thinking about what we're going to do. So four years ago, we we did a panel on GLP once and now everyone's doing panels on GLP ones. And three years ago, we talked about AI and what was happening down that path. And of course, it's so we try to stay ahead of the curve. This year at our European event, the theme is Mind the Gap, where human performance meets intelligent systems. And we're really going to talk about how AI is changing and transforming businesses and turning data into action. And in our US event, it's location, location, location from physical places to digital spaces.

17:52And this is really, you know, you wonder, is this operations? Is it technology? Well, I think we're straddling both here, right? I think we're going to be talking about using intelligent data platforms to decide where your next location is going to be. Solutions like Buxton, et cetera, that are out there. We're going to be talking about how to use wearable devices and things like beacon technologies inside the four walls of the club to identify concentrations of members where you might put a new piece of equipment. So really, it's not just about selecting a location. It's about leveraging technology to help you make decisions.

18:27Matthew Januszek:I like the way you explain the answer to the first question and then also how you built on that to answer what Mo was talking about with your event. because I think the challenge with a lot of these technology events or people that are into technology, they come from that world and they use that language. And it's almost like, what are you talking about? You know, even the AI, there's so many sessions on AI and you can end up getting very confused with AI instead of what AI is doing. And I think you really sort of boil it down to some real simple things, which is, you know, from your previous company, how do we get to know them?

19:04Matthew Januszek:um how was it get get to know them know them better and keep them or something along those lines and i think that's very much uh the helpful when it comes to even things like ai because these are the fitness industry is a people people to people business and a lot of times i think if we're not careful we could we can lose really what we're actually trying to achieve and end up building something that may just be relevant and innovative and something that gets people to want to even fund as opposed to having something that's going to make a meaningful difference to your business that probably supports where you're going over the long term and it brings me brings me to a point um a question that um we wanted to talk about which you referred to earlier which is the the click to cancel and uh the ftc as sort of recently i think last year uh went after a few operators like the sporter city sports clubs and a few others around this, you know, the challenge of making these cancellation policies quite difficult.

20:08Matthew Januszek:And I just wonder, from your perspective, you know, what are you seeing in this space? And because it seems as though payments and being able to cancel things like memberships are now a lot more than probably what they were previously. You know, these seem to be really important touch points that have the opportunity to build trust, enhance a member experience. And so maybe if you can just touch on this from your perspective and, you know, one, explain where you think we are with some of these new laws that are coming in. And what should we be thinking about as business owners as it relates to using those as opportunities to develop a stronger relationship with many of your clients?

20:55You know, it's interesting. I'll go back to the conversation we had, Matthew, five years ago coming out of COVID. And I remember discussing the fact that it was really important for operators to communicate to their members. And I'm going to come to the whole click to cancel. So bear with me for a moment. I think that operators that subscribe to the sleeping dogs theory that if you poke the sleeping dog, it's going to wake up and it's going to leave. Those are the folks that didn't make it out of COVID. And a lot of people, 25 % of this industry in North America shut down during COVID, whether it was locations or entire businesses.

21:30And I think that it was a testament to the fact that those operators that took a proactive approach and communicating to their members, telling members what was happening, succeeded. I'll give you my own story. You know, at our gyms, we went to our members and we said, you want to cancel, you want to freeze? No problem. We'll honor that. but we need your help to get through this. And in essence, what we did is we put together a program and we said, pay us during COVID. We will turn around and issue you an equivalent credit amortized over a 24 month period once we open back up. So it did two things.

22:08They knew that they weren't wasting money because they were gonna get it back. And by the way, once we opened and they started coming back and they saw those credits, our attrition rate during that period of time was actually lower than it had ever been because people now thought that if they left, they were gonna leave all those credits that they had helped us out with on the table. So it was like a win-win for everybody. So members need to be communicated with. Now, fast forward to FTC. Unfortunately, I'm sure you've talked about this on the podcast before, we sort of, as an industry, got lumped in with the app stores, right?

22:40The Google store and the Apple app store where the business process is sign up for a seven-day free trial and hey, we're gonna make this really easy if you're, you don't even have to come back here, we're just going to start billing you. And it created a lot of angst amongst consumers and consumers started to push back. And that's where state AGs came to the table and basically said, we want to create click to cancel legislation. So if you join online, you must be able to cancel online. That basically what it boiled down to. The good operators have been doing this for a lot of years. They're not doing it because it's a mandate or it might become a mandate.

23:19They're doing it because it's good customer service. And quite honestly, this industry, when it comes to some of the tactics that have been employed for years and years around sales, around cancellations, doesn't have a great reputation. And the reality is we pay for that. We pay for it in the rates that we are charged by credit card companies. We pay for it in the reputation that we have as an industry. I've heard people in the past equate the process of buying a gym membership to buying a used car. You get locked inside the glass-enclosed room and someone beats you up until you agree to buy.

24:01And so those types of things just need to change. And consumers aren't going to deal with organizations that don't make it easy to do business with them. So click to cancel, by the way, is an example of an organization of a I'm sorry, of a function or a feature that enhances the member experience. Clearly, it makes it easier for the consumer to do business with us. It certainly reduces staff productivity, because what's happening right now is people are calling the front desk is trying to do a save. Inevitably, people lie and say, you know what, I'm moving, which is the number one reason that people cancel.

24:35They're not moving, by the way. That's the easiest answer because the contract allows that to happen without fees oftentimes when you're on a contract. And then they're done. With these types of technologies, and we build an agentic click to cancel function, it's not just about clicking to cancel. If you go to Netflix today and want to cancel your membership, Netflix will say, well, we'd like you to stay. How about if you pause your membership? Or how about if we give you a month for free or 50 % off the next three months? These solutions that are out there enable that too. Again, enhancing the member experience and changing what many would view as a tech tax, right?

25:19Something that costs us money in the form of this. Now I got to go build something else to address this new regulation. Take that, throw it, throw it on its head and make it a revenue generating thing. Always view technology as revenue generating function as opposed to just the cost. There's certainly cost elements around security, et cetera. But at the end of the day, something like click to cancel can be viewed as a revenue generating item.

25:45Matthew Januszek:This week's episode of the Lyfts podcast is brought to you by eGym. eGym is building the future of smart fitness. Their connected ecosystem combines intelligent equipment, AI-powered software, and the WellPass corporate wellness platform to help operators grow their business and deliver measurable health outcomes to exercises of all shapes and sizes. From powering gym floors to supporting employee wellness, eGym is redefining the workout one rep at a time. Learn more at eGym.com. And I've always said that, look, if you don't regulate yourself as industry, that is going to happen to you by people who do not know it.