LIFTS Episode 130 – The CEOs Rebuilding Fitness | Leadership Lessons from the Industry's Biggest Transformations

0:00I believe there's an opportunity to unify the world because everyone's different, every human's different. Our healthcare system is broken. We need a different system that's not healthcare. And that's where this longevity, human optimization, and human performance opportunity exists for everybody. And I see it as the biggest global change for human beings that's existed. besides the invention of modern medicine. Importantly, from a perspective of the future, we collect one-of-a-kind data anatomically at the tissue level, and we will soon be able to produce effectively a recovery score. So it will be the first FICO score for the human body.

0:43And it's odd in all of the data we have in HRV scores and all the other tools that many of us use, VEXCOM 7, there is no body score. No one can identify explicitly evidence-based what your stiffness and flexibility is, And you certainly can't do it pre-post if you go get a treatment. So our thesis is that recovery is the next generation of health and wellness, that you need evidence-based approaches that can measure anatomically to N of one at very advanced frontier level robotics and AI. And we have that.

1:17Welcome, everyone. Thank you to Connected and thank you to Lyfts. I've got a little Connected story, but first I want to introduce myself. My name is Muhammad Iqbal. I'm the Chief Strategy Officer of ABC Fitness. I'm also the founder and chairman of Swetworks and co-host of this podcast, which started as a little side project three years ago with my co-host, Matthew. I'm Matthew Januzek. I'm the president and co-founder of Escape Fitness and also co-host of the Lyfts podcast. Enjoying or looking forward to our conversation this evening. And these events are meaningful. So I've got a great connected health and fitness story to tell you.

1:54Four years ago, I was at an event in LA and I met a young entrepreneur developing a Pilates product and it was a connected Pilates product. And four years later, Peloton acquired that company called Scope. So congratulations. And they're actually in the room here. And Dion didn't even know that that was the first kind of phase that we worked on. So these dinners, these events are incredibly important. Today, we're doing something special. We have a podcast that's a weekly 30 minute podcast that we've been doing for three years. We started taking the event on the road. We started having these networking dinners where we brought thought leaders and industry executives together.

2:29And we thought, why not have our podcast live? So I am excited to have three incredible leaders today. Our theme is leading through transformation. So we're going to have a 30-minute or so recorded session. We're then going to close the recording. If you want to ask Q &A, you're welcome to do that. But I'm going to do quick intros of each one, and I can also pose the first question to you. But we've got Philip, who is the founder and CEO of EGEM, and also chairman of Playlist, and we'll come into that here shortly. We have Frank Britt, who is the CEO of Escape, and Brandon, the CEO of 10x Health.

3:04Philip, I'm going to start with you first. Your merger with Playlist and EGEM was recently completed and I know that that was an exciting journey. You and I were frequently talking about that. I'm excited for you. Congrats on that. Walk us through that process. What was that process like? What led up to it and how has that been? Yeah, first of all, thanks for having me here. I'm an avid listener to the Lyft podcast and excited to be here. Yeah, so I've built the biggest fitness network in Europe and Fritz built the biggest fitness network in the US and Asia and we basically do B2B aggregation with Egym Wellpass and then connected hardware and software for the front office of gyms for the customer experience and he was doing B2C aggregation with Glasspass and back office software for fitness studios with MindBody and basically the idea first was couldn't we make like a commercial deal where we basically have the two leading fitness networks join forces and then offer all these different products to these fitness networks.

4:06And that conversation became more and more complicated. And at some point, we just thought about, why don't we just merge the companies? Because we also started to really like each other a lot. And then, yeah, we just had to convince all the investors that this is a good idea, especially with my special governance needs. But yeah, then actually, I think one from starting on the deal to to getting it signed it was probably something like eight months so not too bad Okay, great. We're just pretty quick. Yeah Um, so I like like to ask a question Brandon I get to see you quite a lot online You do a great job on YouTube and a lot of experience in business and your founder of 10x health I'd like you to give us a bit of an overview of 10x health and then a question really to you personally rather than about the business.

4:55But what leadership habit has made the biggest difference in scaling your company and companies that you've been involved with? Thank you for asking. It's great to be here with everybody. That's what I am, is a growth and scaling expert. I'm on my fifth business. I sold my last business in 2016 in specialty retail healthcare, a business I started using a different format. I created for 77 times EBITDA to a billion dollar company, integrated in eight countries and groomed to four and a half billion in 36 months before launching this business in partnership with Grant Cardone and my wife, Natalie.

5:30And in six years, we went from startup, no invest capital, no debt. We did a quarter of a billion dollars last year in revenue with about 60 million of EBITDA. So that's my specialty. And I do that. I bring 1.5 billion a month of businesses through our Cardone Mentors Training Academy, where I teach them how to do the things that I've been able to do and studied and created research and science around. four years ago when COVID hit, I needed to keep my team healthy. And so I found a service provider in both Miami and Scottsdale while we were still running our events and our trainings to get IVs and things.

6:03And I started talking to those entrepreneurs about their 2 ,000, 2 ,200 square foot locations, three and a half million in revenue, 33 % margins. And I was like, sounds like a great business. And, and so we launched, I bought a$1.5 million dollar IV business that was owned by Sage Workinger and Gary Brecka. And I gave him$250 ,000 and in three years took it to$125 million using our social network that my partner Grant Cardone has 28 million social media followers between he, my wife, and I. We get billions of views a month. And then we showed Gary how to do that and built the brand up. 10X Health, though, needed to evolve because I saw the demand and because I came out of retail and because I had a public company, My first company, I raised capital and took it public at 29 years old here in New York.

6:50And I want to build things that are legal, moral, ethical, compliant, and they have to make money. Those are my five rules for building a business. And we were selling a lot of things at 10X Health, but I didn't feel good about it. And so that created friction in the relationship. And so I was willing to sacrifice some of the revenue for actually legal, moral, ethical, compliant revenue. And that meant I had to retool the business to match the market opportunity. And so in the last two years, I've spent$50 million off my balance sheet and acquired assets all over the world. And we're now operational in 47 countries.

7:22We've passed the equivalent of the FDA for human optimization and performance. And we're the only company in the world that has precision nutrition that's mapped the human genome around the world to 110 symptoms, diseases, and disorders based on micronutrient requirements to optimize the human body. And now we're adding peptides and radicillator therapies. We signed an announcement or we made an announcement in November after two years of due diligence that we are the exclusive partner in Abu Dhabi with their human genome population, Emirati, 1.1 million people. And we're making our big announcement in October.

8:00And so who is Tenex Health? What do we do? We could look like any other company that's in the longevity space right now. But what we're deploying is the power for human being in their hand to be able to understand all the way from decision making in real time, all the way through enhancements, what they need and in which order they need to optimize themselves as human beings through nutrition, peptide, cellular therapies and other behavioral changes. changes. And so I believe there's an opportunity to unify the world because everyone's different. Every human's different. Our healthcare system is broken.

8:38We needed a different system that's not healthcare. And that's where this longevity, human optimization, and human performance opportunity exists for everybody. And I see it as the biggest global change for human beings that's existed. So besides the invention of modern medicine, when there was no medicine. So I'm very excited about this and excited about some of the announcements we're going to be making around the world. But that's who 10x health, people perceive us as being a company that does genetics, supplements, and peptides. But what they didn't see is the 50 million in the three years of global consolidation under a different brand that's called now 10X Revive.

9:21And we're releasing our global brand in October at the Abu Dhabi Health Show and empowered by the Department of Health, Mubadala, a trillion-dollar family office, their sovereign wealth fund, and M42. Thank you. Frank, on to you next. You've got an interesting journey and story. It's easy to talk about when so when you are scaled companies. It's very easy to do it, not that it's easy to scale a company, nor is it easy to lead through transformation. However, you came in to escape at a point where they had declared insolvency and you had to navigate and you're continuing to navigate escape through that.

9:58But you've got an interesting story. So if you could speak a bit about your background and what kind of led you through this transformation. Yeah, thanks for having me. My background is a multi-time CEO. I worked in private equity at Valor and Bing Capital. I was the global head of strategy and transformation for Starbucks. I worked very closely with Howard when he came back for his third stint. And then the story that is always a little difficult to communicate was that in the, I guess it was September 23rd or 24, the phone rang. And it was one of those seven in the morning anonymous calls. Sometimes you pick up just because your instincts are to pick up.

10:36And the hematologist said you have leukemia. So I fought through leukemia in the fall of 24. with just modern medicine, radiation, chemo, and immunotherapy. But unfortunately, they said, well, you've eradicated the cancer, it's going to come back, and it's not going to be a good outcome. So in the early part of 25, approximately 510 days ago, I went through all the prep work and eradicated my immune system and white blood count. You have 8 ,000 to 10 ,000 white blood cells. I had zero on purpose and got a bone marrow transplant. And so on the 23rd of January 25, which was 510 days ago, I got a bone marrow transplant.

11:17And we kind of said, let's hope it works out. So I've been battling that since, fully eradicated in terms of cancer. I've gained back 40 pounds. My cognition is plus 90%. My wife debates that, but it's in that zone. And you wouldn't know much of the difference. But of course, I'm a very different person as a result of that. The importance of that story is that when I was recovering, I'd lost 50 pounds. When you're in a hospital room for 40 days in a room that no one else is allowed to access and all the air blows out, you atrophy like you're a 90-year-old man. So I was a 90-year-old man in a 58-year-old body, and I had to kind of rebuild myself.

11:57And I found this product, which I'm now the CEO of the company, as it turns out, which believes that several things are true. One, that performance innovation and health requires recovery. And recovery needs as much energy and innovation as the actual performance itself. And I think we have lots of innovation around how to do different fitness, but we don't have very much innovation around how to recover. And recovery is the alpha of the fitness. So this product that we have is, I think it's fair to say, the most advanced physical AI and robotics platform in the world for effectively percussion on the body.

12:34So this is the only robot that is designed to collide with humans, not avoid humans. And what it does is it empowers you with agency to precisely identify what part of your body you want care and feeding for with a duration that you set in a quiet setting. And in so doing, you get to set the pressure. So you finish that experience revitalized in whatever dimensions are important to you, whether it's your lower back or calves. Importantly, from a perspective of the future, we collect one-of-a-kind data anatomically at the tissue level, and we will soon be able to produce effectively a recovery score.

13:11So it will be the first FICO score for the human body. And it's odd in all of the data we have in HRV scores and all the other tools that many of us use, Dexcom 7, there is no body score. No one can identify explicitly evidence-based what your stiffness and flexibility is. And you certainly can't do it pre-post if you go get a treatment. So our thesis is that recovery is the next generation of health and wellness, that you need evidence-based approaches that can measure anatomically to N of one at very advanced frontier level robotics and AI. And we have that. And so we are in the process of scaling.

13:45Now, when you build a business like this that is frontier tech, it's very expensive. The company had raised over$100 million. And one of the insights that many of you I'm sure know is that while SaaS makes sense, robotics as a service, as a concept, is not the right way to build an early stage robotics company because your cost of capital is as high as it can be and your customer's cost of capital is quite low. And unless you want to become a bank, which I don't want to be a bank, you should not finance durable assets on behalf of customers who have lower cost of capital than you. That was fundamentally why Escape ran out of money.

14:19That's why we decided to not, the company itself is fine. The balance sheet was broken. So I came in, I have a lot of experience in doing turnarounds, and we basically put the company through what's known for those who are wonky like me and Article 9, UCC Article 9 foreclosure process, which eventually means you can eradicate any prior obligations, take all the assets you want, and off you go. And so we continued to run the business through January and February. We ran an auction process, and we sold the business to private equity firms and recapped the business. So we are off and running. Most importantly, we changed the go-to-market model where we moved from the robots approach as a service to you sell equipment.

14:57And that has massively disrupted the business. Our sales have compounded twice every month. And basically what we're selling is ROI. If you look at a plan of fitness, their profit per square foot might be$30 to$40. If you put an escape product in a nine by 12 room, you'll probably have$400 to$500 per square foot. So we're in 50 Equinoxes, Four Seasons, St. Regis, Lifetime Fitness, you name it. And we're growing every month, both in terms of deployments to the largest commercial deployment of physical AI robotics in the world for percussion-based interaction. And most importantly, the consumer continues to use the product.

15:32So we're seeing a compounding of usage month to month, and we feel like we're in the bottom of the second inning of really a next generation concept around the idea of recovery and performance as alpha in the human body with recovery score that each of you will have an N of 1 to your unique anatomical profiles. I'd like to move on to the next subject, which is challenges. for most people in this room I'm sure that you know running a business or being involved in businesses there seems to be more things or more challenges to overcome than there is success looking at the three of you it seems like three huge success stories but I'm sure there's other parts behind that that you know not openly promoted and so I'd like to ask this first question to you Philip what would you say is a major setback that potentially became a catalyst for some of your greatest ideas or growth?

16:30And what were some of the steps that you took personally to, I suppose, get out or get through some of those challenges to get back on the path of being successful again? Well, I would say for me definitely, the way I always described my company's success was, well, the first 10 years were super tough, followed by two years of lockdown. And then things got really great. But my personality also is just everything is always cup is half full. And for example, one moment I had was like during 2020, when I wasn't sure whether I would lose everything after basically spending all hours available for a decade on this, I would end up having absolutely nothing.

17:19and I asked myself whether I would now basically then regret what I'd done. And I came to this beautiful realization that I really enjoy so much what I'm doing that I would have done the exact same thing again even if I lost everything. And so then basically in the toughest moment of our company's history, I actually refound my love for it and I'm now much more appreciative of what I have and I just even more enjoy every day going to work. and so like even in the worst times sometimes it's just um like a good moment for reflection and and sometimes good conclusions and that's something that i think as as entrepreneurs which we all are we've gone through sometimes the hardest times the darkest moments is really where the where the light comes through and brandon i just want to move to you for a minute and on 10x help there are so many challenges and options you could see on one hand you've got the biggest ham in the world, which is every single human being who could leverage better consumer-focused healthcare.

18:21On the other hand, you've got the healthcare industry that you are up against. How do you navigate national compliance or regulations when you're up against a big industry like that? Well, that was the first four years of my life. I had a partner that would just open mic everything on social channels, and then I'd be having lawyers call me every day about about FTC, FDA, false claims. And so it's very difficult because you want to promote this new market. And if you guys remember, the government, because of COVID, opened up doctors could do things across lines. And then all of a sudden they changed that, had to go by state.

19:04And then some states changed it where something was different. And then they said, no, we're just kidding, had fake, you can go back. And so I think I became McDermott's highest valued client for three years, auditing every single thing we did, trying to check that with my partner and try to bring some uniformity to the madness. But now we put it on steroids because now we've passed the equivalent of the FDA in 47 countries. And it really prepared us. you asked me about leadership and thinking. That experience, despite everything else I had done, I guess gave me that leadership position of everything's broke.

19:45Everything's going to be broken. Everyone's going to have a different opinion. You just need to do the best job you can as fast as you can and become a compliant as fast as you can and try to communicate with your team as fast as you can and you can't stop it because the world's going to evolve and change super fast and everybody's going to change everything around you. And if you can just embrace the madness for a moment, then it becomes, okay, so what now it's, what are we going to do about it? And, and how do we best measure it? And how do we get in front of it? And that set the tone for the global expansion because now we roll in and say, okay, here's what we're scoping against.

20:21And we find the gray areas, the black areas, the red areas, and we start chipping away at them. so it's it's the resilience i believe and and being okay with testing yourself and everyone around you and i think if you if you can do that and embrace it because i think i mean this guy i'm like listening to the things i've done i'm like shit i didn't almost die and i have to heal myself and think to myself am i going to make it like that stress and that pressure when you actually think and then the resilience to just battle that back and then go build a business on it because it's like I'm also going to do something bigger.

20:56Can I come out of that? Yes. You know, I think resilience is actually the wrong notion. I think that if you look at the Egyptian pyramids, their resiliency is incredible, but they don't grow. And I think the most important thing for the leader is to establish what the mindset is that you want to personally embrace and then want others to embrace. And that language for me is what I call proentropic. A proentropic system is one that actually gets stronger because of the adversity and the uncertainty. And so I love uncertainty. I think that's the opportunity. And so I try to approach my life since obviously nothing can happen to me that could be any worse than what's happened.

21:33So for me, every day is upside. Like I don't have any bad days. I just have bad hours. And I've great many more great hours. But I think the idea of leadership to me is the CEO is the chief storyteller. You have to tell a story of your company that allows the market to see who you are and where you're going and let each one of the individuals who works your company see their own narrative in the context of the larger narrative. And for us, the sort of the arrow that we point is the proentropic. Uncertainty is the opportunity and it's alpha. So resiliency is an element, but resiliency is a static notion.

22:02We don't want to be static. We want to be compounded and advantaged by the uncertainty. So the whole story of Escape, particularly some of the media in the last 60, 90 days, is so misguided and so not on point because in fact, it's the entrepreneurial journey. This gentleman's story is he grinded for 10 years and then world changed and then now the days ahead are even better. So I don't view us as being set back. I just think it's the next phase of the entrepreneurial journey. What defines the success of most of you in this room, I assume, is you are pro-entropic. You have turbulence constantly.

22:33You've managed uncertainty consistently. You've overcome it. You're stronger and better for it. And you lead organizations with that same first principle. So that's why I believe pro and tropic leadership is the future, not resilient leadership. Yeah. And I, and so where I was going to is there's two things you need to build a business and he just framed it better than I would have. You need context and contrast. If you get bogged down because, and that resilient piece, if you get bogged down in what's wrong, you're just going to find more of what's wrong. If you take his perspective and say, so what, what's next and create that culture, then you embrace that because you actually wake up and realize the rate limiting differentiator and strategic advantage is the ability to bust through and get to the top instead of giving up or being pulled down because you're distracted by the problems.

23:22And I think once you embrace that, you're like, so what? What's next? And then you move to, I don't even know what word you use. Pro traffic. Pro. See, this is a Bain guy. I'm a 2.4 GPA, barely got out of high school. But this is what I love about entrepreneurialism is I get to sit next to super smart people and learn from them and grind with them. And I think that's what I love about what you guys are doing is putting people in the room so other people and all of you have your stories, which is beautiful. And look, as leaders, we've all been to those dark places. We have built that muscle. We've got hopefully mentors.

23:58I mean, Philip, I call you at random hours talking about things. But then how we communicate that to our employees, to our teams, even to the market. But I want to come back to the employees and teams for a minute. let's start with you when you are going through that period of uncertainty it's one thing for you as the founder to understand the vision and you've got faith in your capabilities and you could see the light but it's another thing to communicate that to your team and I think all of you can relate to that so would love to start from you in those days in 2020 what was it like how did you motivate the team yeah I mean uh like in my view one of the most important things uh as a leader is to be authentic.

24:38And every time I like everyone joining our company, they'll have like an introduction meeting with me and I'll talk about our habits. This is everyone. Yeah. Even now. Yeah. Like in groups. And basically I'll give them always an instruction to how to operate in an environment with me. And basically the way I operate is I always say what I think and I always do what I say I do. but I'm not always right. But basically you never have to second guess. Like if I tell you we're going to make it, I actually think we're going to make it. If I tell you that I don't know how we make it, then I really don't know how we make it.

25:21And what I've found is basically this is really trust building. And at times it's also painful to be with me in one room because sometimes my opinion is tough to deal with or so, but what I've found is actually it's incredibly powerful. if nobody ever feels like I have to second guess. And that really got us through that difficult time, I would say, basically. We just knew, like, hey, we have to now, like, take tough decisions and we have, like, a clear strategy. Our strategy, for example, was we did, like, immediately March 30th, like, when the first lockdown was announced, we took, like, a 20 % FTE riff and 25 % OPEX cut.

26:05but then also said like we tried to not furloughing because we felt like it's just like not great for people to sit at home and don't know what to do and what we decided to do is basically hey like we we tried to add still value during those times for operators HR leaders and and employers to find out ways like how we can be supportive we waived our roadmap and with the remaining 80 percent we just kept developing stuff that may be helpful and and and then what we actually did was like the magic happened and we were able to keep our revenues in 2020 and 2021 on the same level as 2019 um despite basically our industry being locked down because but we always found ways to to support everyone but but basically then also the team was monitoring really closely our revenues because they knew like this is like no fun right now um and and if we don't hit our revenues well we don't have to follow um and so like everyone knew it we did a weekly uh all hands um with like people were able to ask any question and we discussed it and um yeah so that that's how we do it yes i would say communication is is is critical and key and transparency as well frank just moving on to you next um you've i can't imagine the conversation you had on day one yeah i i think every company has a superpower and i think you should really reflect on what that is.