LIFTS Episode 135 – Inside SWTHZ: Building the Starbucks of Contrast Therapy | Nico Varano

0:00Like you mentioned I was training for a charity boxing match. I had never fought it you know never even killed a fly. So I was getting my head kicked in you know sparring three three nights a week you know training seven seven days a week. And I saw Jamie Weeks talk about Sweathouse. Now at the time there were nine corporate studios around the country. From my private equity background I love the business model. I mean it made a lot of sense. but just from getting my head kicked in I said I need to go there I need to get ready for this fight coming up um so I went I signed up for an intro session walked in now at the time this was Sweathouse V1 it was nine sauna suites and one cold plunge and it was all still private suites but it was nine sauna suites and you had to walk across the hall to the cold plunge first time I ever done a cold plunge uh really first time I had done an infrared sauna I did I did 45 minutes in the sauna, rinsed off in the vitamin C shower, walked across the hall, put on some Rocky music, and got in the cold plunge.

1:05And I left that day not only feeling great, my body, especially from getting, like I mentioned, getting my head kicked in, but just felt great mentally too. I'm not a great sleeper. It was the best I ever slept.

1:23Matthew Januszek:Welcome to this week's episode of Lifts. I'm Matthew Januzek and today's topic is recovery, one of the fastest growing and most misunderstood categories in health and wellness. On a personal reflection, I love to say that I was ahead of the curve but probably wasn't. But as a teenager, I used to look forward to going into this tiny little gym in the middle of nowhere and they had this thing called a sauna. And I remember I must have been sort of like 14 or 15 and went in there and it was just a very different experience than I'd had because you know the extreme heat but it was something that used to go in there after the gym and look forward to so and I also used to look forward to jumping into rivers when I was a kid and just swimming in extreme cold but but it's not really you know even me doing it back then which was probably 40 years ago it's it isn't really new it's an old tradition that's been reimagined and what seems as though it's a fast growing commercial category we've got significant investment, there's new business models, and there seems to be recently a lot more innovation, technologies, and protocols.

2:25Matthew Januszek:So today, from my perspective, I'm curious, you know, is this just another fad? We've seen many in the industry, as I've been in it for the last sort of two or three decades, or is this recovery category something that could really reshape the health and wellness industry as we know it? So I'll hand this over to my co-host, Mohamed Iqbal, to introduce today's guest. I love what you just said, Matthew, and how you kind of framed that. It's interesting because I think you and I have even talked about saunas and you talked about in Europe. There's really a sauna culture. We talk about the Finns. In fact, Finnish sauna is actually a term which is more heat-based saunas.

3:04Then Russians have something called, I think, banias. The Japanese have their own version of it. And this is something that's been in their cultures for hundreds, maybe even thousands of years. And somewhere in the last few years, what has really been a cultural or ritual or community thing has become something that is really converted to being mainstream. In fact, I think we talked about this in the last episode, Matthew, but I'm shopping. I don't know if this is on air or off air, but I want to put a sauna in my house because I enjoy the experience so much. And the numbers actually tell the story.

3:34The global cold plunge market hit$354 million last year. The sauna sector is closing in on a billion. Nordic-inspired wellness experience grew 62.5 % globally from 2024 to 2025. And here's my favorite stat. 26 % of Gen Z and millennials say that they are actively looking at recovery experiences built around heat, cold, and shared discomfort, which I want to unpack here in a minute. But think about that shared discomfort. Young people are choosing to suffer together. 10, 15 years ago, we were talking about people doing that, running a Spartan race. Today, they want to experience that in contrast to therapy.

4:20And the other big difference here is that they want to do it sober. And this has really kind of replaced a lot of the nightlife and bar experiences. Our industry has responded by turning up the volume. You look at brands like other ships, which we were just talking about off air, raised eight and a half million dollars. And they're backed by the Winklevosses, Kerry Washington, the founders of SoulCycle, to build sauna experiences that feel like nightclubs. And I'm at you and I have done that in the Flatiron location in New York, which are based on having sauna guides, breath work, kind of this rave experience.

4:54And I think we see other brands like Bathhouse that are expanding as well. But then there's one brand that looked at all of that and kind of went the other direction. They focus more on private suites. You won't find a DJ. You won't find a coach. You're not going to be in a sauna with strangers. You get an hour. It's an infrared sauna. It's cold plunge and in silence. And I have to say that's something that I've really enjoyed. And to me, that whole philosophy is something that is becoming a habit. At least that's what they're trying to do is to make it into habitual thing that you do frequently, not just into an event.

5:30And that little bet is really winning loud. This brand today has over 100 studios across 25 states, 20 ,000 plus members, and 1.9 million private recovery sessions that they have delivered last year alone. They have more than 500 franchise licenses already awarded. And this fall, they walk into the most crowded and competitive wellness market on the planet, New York. And I'm really looking forward to that. So today, I want to introduce our special guest. And I don't think that was his plan to end up here as being CEO of this company. He grew up in the restaurant business. His father built one of the city's most iconic restaurant groups.

6:14So he understands hospitality. And then in 2023, three and a half days, or three days before an amateur boxing match, rather, he walked into a sweat house for the first time and looked for an edge in his recovery. One hour later, he walked out and told the founder he wanted to franchise all of New England. So I can't wait to hear a bit more about that. He became the brand's first ever franchisee, built five studios in Boston that he still owns and operates today, joined the board. And this past January, he became CEO of the entire company. First franchisee in history to do it. And now he leaves more than 100 studios with four to seven new ones opening every single month.

6:56So with that, I'll introduce Nico. Nico, welcome to Lifts. I want to kind of kick this off with a question for you. Take us back to the day in 2023 before Boxing Mesh. Tell us more about what was going through your head, what led you to Sweat House and this big transformation. Yeah, well, first, I want to say thank you to both of you for having me on to share the story of Sweathouse and talk just about contrast therapy. I think everybody in this world can benefit from a little contrast therapy, and I look forward to chatting about that. But to kick off with my own journey, like you mentioned, I was training for a charity boxing match.

7:34I had never fought it, you know, never even killed a fly. So I was getting my head kicked in, you know, sparring three nights a week, you know, training seven days a week. And I saw Jamie Weeks talk about Sweathouse. Now, at the time, there were nine corporate studios around the country. From my private equity background, I love the business model. I mean, it made a lot of sense. But just from getting my head kicked in, I said, I need to go there. I need to get ready for this fight coming up. Um, so I went, I signed, I signed up for an intro session, walked in. Now at the time, this was Sweathouse V1.

8:12It were nine sauna suites and one cold plunge. And it was still private suites, but it was nine sauna suites. And you had to walk across the hall to the cold plunge. First time I'd ever done a cold plunge, uh, really first time I had done an infrared sauna. I did 60, I did 45 minutes in the sauna, rinsed off in the vitamin C shower, walked across the hall, put on some Rocky music and got in the cold plunge. And I left that day, not only feeling great, my body, especially from getting, you know, like I mentioned, getting my head kicked in, but just felt great mentally too. I'm not a great sleeper.

8:48It was the best I ever slept. I think it was a big reason I ended up winning that charity boxing match, which was awesome. Third round knockout, no big deal. But the biggest win of it all was I called Jamie and said, I want to be your first franchisee. I believe in what you're building. I see the vision. And I want to own Boston. I want to own all of it and then grow into New England. So a few months later, I acquired one of their corporate studios that they had opened, the one that I actually went to visit in Assembly Row in Somerville, Massachusetts. And then from there, I started building my own studios.

9:18We went from one to five in Boston. At the end of this, it'll be close to eight. Hopefully we can squeeze that eighth in, which I'm really excited about. And for me now in this new role, it's been amazing because I don't ask any franchisee in our system to do anything I wouldn't do myself. And a lot of their problems they deal with, guess what? I deal with them too. And it allows me to operate here at a level that I think will help us drive the success of this brand for the next five to seven years and then beyond that.

9:49Matthew Januszek:Well, Nico, I've been in the industry for quite some time. I've seen a wave after wave of these new concepts arriving from spinning, functional training, boutique fitness, and eventually many of these ideas have found their ways into the major health clubs. Like even now on a podcast just a few weeks ago, we were talking about how people like EOS are incorporating boutique spinning studios and recovery suites. And looking at Sweat House today, someone could easy to say, well, this is just another boutique concept and what's the difference? But looking into some of your background and reading about Sweathouse, you talk about technology protocols and it seems as though your goal is to build something much bigger than just another boutique studio business.

10:36Matthew Januszek:So just for myself and the listeners today, give us an idea about what business you're actually building and what category do you think you're helping to define that others possibly haven't recognized yet? Yeah, I think I'll start simple, right? When Sweat House was launched in 2019, it was to fill a real gap that existed today. At that time, I think people were training harder than ever before. In premium recovery options, we either put one in your house or go to a big box gym. You're gonna share a sauna with somebody. You know, they may have a cold plunge, they may not, right? There was nothing really in between that gave the everyday person, the opportunity to come in and have a private suite with the sauna, with the cold plunge, with the shower.

11:23What I believe Sweathouse created and what we still create today is its own category. It's a private suite that you can come in and spend 60 minutes in. You can take this, the phone, put it down for an hour. There's no dinging, no noise. It's a real escape, right? Now we can talk about the science, right? We can talk about how contrast therapy reduces of inflammation. We can talk about how it prevents diseases. It improves sleep. But at the end of the day, it also lowers stress. And in today's world, I think there's more stress than anything else. So when we talk about protocols and where we're going next and what we're trying to create, look, our model, our model is built.

12:01It's contrast therapy, private suites. We're not going to alter that. We're not going to change that. Will we dabble with red light therapy? Absolutely. We'll probably add a red light suite in each studio eventually. But we're not chasing something that doesn't already exist that we built. Where we're taking it next is how do people tie that in to their wellness routine, to how do they track their overall wellness? You know, we talked offline earlier about, you know, blood tests. And, you know, everybody's wearing a wearable nowadays. and tracking data is amazing. Our next three months, it's how do we tie that data in.

12:39It's also how do we tie in that data for somebody that maybe doesn't want to wear wearable and somebody that doesn't want to look at a screen and track the performance, but how do we give them a score or a metric that they can follow that measures their resilience to things like stress, anxiety, as well as the physical recovery benefits. So when I think about our place in contrast therapy, when people think sauna and plunge, I want them to think about sweat house. When they think about I'm feeling stressed and I need to escape, I want them to think about sweat house. When they need a break from work or if they need to take a meeting that's somewhere not the office and they want to put their AirPods in and sit in a sauna and cold plunge, they come to sweat house.

13:18But then on the other end, when two friends want to go out and do something that, you know, isn't dinner or isn't going clubbing or, you know, isn't going to the beach because maybe it's the middle of winter in Boston, they think about coming to Sweathouse because where else can two friends connect with no distractions? Same thing for couples, right? You know, if a couple gets one night a week, they get to go out to date night. Sweathouse is a perfect place. There's no distraction. There's no waiter or waitress coming and interrupting your conversation, you know, or mid-bite. Sweathouse is the perfect place for people to come in to spend 60 minutes, whether solo, whether with someone.

13:57And we just look forward to opening up more studios across the country because our model is figured out. So, Nico, I've got a few questions just around the unit economics of Sweat House itself, and then we could kind of back into the more technical parts of the experience. So just speak a bit about how many of these pods you have, how many people you could potentially see at any given time and also pricing, because it's about, I think, when I came, but$60 to$70 a session or so. But how does that work if you bring someone versus going solo and so on? All right. Well, first off, Mo, we've got to get you a membership at a very good price.

14:34We've got to – we'll make sure your membership isn't paying$60 to$70 because our memberships are much more price advantageous than that. But I'll talk about the studio first with the suites, and then we can get into pricing a little bit too because we're really changing our revenue architecture over the next three months to have an option that works for everybody. And I can go into that a little bit later on. But when you come into a sweat house studio, you're going to have anywhere from six to nine suites. Now, each suite is going to have the infrared sauna, a cold plunge, and a vitamin C shower.

15:09In that suite, you shut the door, your timer starts, you have a TV where you can play music, catch up on Netflix if you want to do a little Netflix and sweat, even chill with the cold plunge. You have a full entertainment center. But for the next 60 minutes, that's your suite. Nobody's interrupting you. In addition to the suites, we also have a beauty bar. We'll have the Dyson Airwrap, the Dyson Air Straight, where you can refresh after your session. But that's pretty much it. That's our box. You talk about how many people we can see in a given day, most of our studios open up around 6 a.m. or 7 a.m., and then they close around 7 p.m., anywhere from 7 p.m.

15:51to 9 p.m. You're seeing people all day. We stagger our sessions. So, you know, you'll have two suites start at 6 a.m., the next two start at 6.15, the next two start 6.30, and so on. And then the sessions are one hour long, and then there's 15 minutes in between for us to reflip the suite, deep clean the suite, and get it ready for that next client. So it's constantly all day that we're seeing clients.

16:15Matthew Januszek:I want to talk about the competitive position, and I'm sure you guys have looked at this. And as you're speaking, and it relates a little bit to my previous question about, are you looking for a new demographic for Sweathouse? Because if you think about recovery following the same path as boutique fitness, it is only a matter of time before an equinox, a lifetime, a planet, a David Lloyd, whoever can probably look at a lot of the technology. They've got probably underutilized space that they've already got. They've got people that are already doing what you did on your, you know, preparing for your boxing in the same club.

16:53Matthew Januszek:And it's like, look, let me do this. So what are your thoughts about the future when the gyms come in and check it out about them building this in? Or, you know, going back to my original comment, are you actually looking for a totally new demographic, which is people that may not even be thinking about going to a gym where they can go here instead of the restaurant? Well, that is why I love your question because our net is so wide. When I came on to Sweat House as a franchisee, one of my earliest conversations with Jamie and the team here was around, unlike fitness, anybody can come to Sweat House.

17:29Anybody can benefit from 60 minutes, sitting in a sauna for 45, rinsing off in the vitamin C shower, and then hitting a cold plunge. Everybody can benefit. Everybody from the age of 18. And believe it or not, I have 75-year-old clients that come in and just put their arms in the cold plunge because they have arthritis, right? It's crazy to think about, but that is true. Yes. Do we have a core client that's 25 to 40 years old? Absolutely. But our range is much bigger than fitness. We have people that come into Sweathouse who have never seen the inside of a gym. We have some people that come to Sweathouse that just finished a high rocks race that are probably the most fit people in the world.

18:05If you can do a high rocks race, all the kudos in the world to you because those things look very intense. But I say that because we don't have a type. And when you don't have a type, it allows your business to have much more white space and ultimately a bigger tan, right? Everybody talks about total addressable market. I think Sweathouse has one of the biggest tams in all of wellness because we don't have a specific type. So when I think about, yeah, could Equinox do this? Yeah, maybe. I don't see them building private suites. And if they do, hopefully they'd want to partner with us because our brand is so strong.

18:38Same thing with Lifetime. I just don't see anybody taking the time to build private suites. If you look at even some of our competitors, a lot of them don't build the private suites because who wants to build eight showers? Who wants to do framing on eight. We found a secret sauce that makes it work. But I think the goal is how do we get so far ahead of everybody else? And I think that's where we are today, right at 101 Studios. And now it's how do we build the brand so sticky that when you come to Sweathouse and you see our beautiful suites and you download our app and it keeps you in the system and it keeps that stickiness, you never want to leave.

19:16And that's really where we're taking the brand over our next chapter. It's increasing that stickiness, lowering attrition, and making sure that Sweathouse is here for you, not just for one session, not just for one month. We're here for as long as you need us. When we talked about competitors and other forces in the market coming in, before we hit record, we talked about a good friend, Dr. Jonathan Leary, who we've actually had on the podcast with Remedy Place. Again, I've been there many times to get different types of therapies, but they also have a suite. I've used their suite before. I've gotten an IV drip, kind of spent, you know, a few hours there before a long trip.

19:56And it's been great. That's one example. But I would say that's really on the premium side of things. Then you've got other ship and bath houses. And I think your studio that you're opening up in New York is also going to have this larger room, I believe. I'd love to understand that. But how would you compare? So you talk about the benefits of having private, you know, really well-appointed suites for one to two people compared to what other ship is doing, which is really community-led, you know, even instructor-led. How do you view the difference? Is it a different consumer? Is it a different experience?

20:32Is the outcome different? And what, from your opinion, do you think is more sustainable? Yeah, I think the biggest thing that I want to start off with is what Dr. Leary is doing, what Robbie is doing with other ship. It is incredible. Like it is fully incredible. The Remedy Place in Boston, and I grew up in the restaurant business and I've seen a lot of beautiful places built out. The Remedy Place in Boston may be the most gorgeous build out I've ever seen. It's phenomenal. But it is a different experience, right? Nowadays, everybody's searching for that third space, that fourth space. And I think when you go to Othership or you go to Bathhouse or you go to Remedy, you're likely going, and I'll talk about Bathhouse and Othership first, you're probably going with a friend or you're going to meet people and establish that community.

21:20Community is huge. People need that engagement now more than ever. When you go to Remedy, you have a full list of offerings, right? You could do the hyperbaric chamber. You could do the IVs. You can do contrast therapy. You could do the escape massage bed, the robotic AI massage, which looks pretty awesome, right? The way we address it is twofold. When you look at other shipping, you look at bathhouse in these communal places, we're actually searching for solitude, right? Solitude is really the bet we made. You know, well, all these other concepts and there's, you know, others out there. There's one in Denver, the name's escaping me right now.

21:58But, you know, everybody's adding DJs, coaches, is, they're working you through breath work. We stayed true to two things, a single modality, which is contrast therapy, and we stayed true to solitude. Now, if you want to bring a friend to your private suite, absolutely. In Boston, a quarter of our sessions across five studios come with the guest. They bring a friend, they bring their partner, but again, it's still their private suite. They're not engaging with others. Where else can you get that type of experience that type of privacy while also getting the recovery benefits. In New York, similar to Boston, we are adding a penthouse suite.

22:38So penthouse by sweat house, it's a great play on words. The penthouse suite in Boston, and I believe New York will look exactly the same, has two larger infrared saunas. So you can fit up to six to eight people, three in each or four in each, has two cold plunges and two showers. Now, you're still picking your group to go. So we've had, you know, work groups come in, bachelorette parties. We've had obviously groups come in midweek that are in a book club, which is always interesting, right? But we also have run clubs. I mean, run clubs are amazing. And again, we wanted to create a space where you could bring your community rather than having the need to, you know, be sweating and plunging around others.

23:23So you still have that level of privacy, that level of comfort. So again, just to circle back, our bet was made on two things, remaining true to who we are, which is just contrast therapy and not confusing that for a second. And then the second one is betting on solitude.

23:36Matthew Januszek:Today's episode of the lifts podcast is sponsored by eGym. eGym delivers smart strength solutions that help gyms and health clubs attract, engage and retain members while improving health outcomes at scale from intelligent equipment to AI powered training programming and corporate wellness by WellPass. eGym is leading the way in smart fitness. Visit eGym.com to learn more.

24:01Matthew Januszek:so so i want to stay on that point then um because from what i understand or what i've read you're investing in wearables and some sort of personalized protocols and data um we had uh the guys on from escape uh the massage machine a few weeks ago as well and he was talking about how they're taking massage to another level where you can actually get a score about tissue how your tissues are doing and how you're improving from that perspective. So it seems like there's two directions that recovery is going, which hasn't been there previously. Because if you go into a cold plunge or a sauna, you don't really know what it's doing.

24:39Matthew Januszek:You can kind of look at your aura ring and see if you sleep a little bit better. But it's not that great at telling me how well the protocol I'm doing is working for me. So where do you see things going? Because it sounds like you're creating this really interesting experience like you're talking about the penthouse and I can imagine it almost becomes this almost like entertainment thing where you go there and you you know you could have quite a lot of fun in a sauna together I'm guessing but you've also got the data thing which which you did mention before where you leave your phones outside but you're talking about the the biometrics which which again almost like turns my brain back on again and I'm thinking about well am I am I actually having a great time or or am I coming out and improve my data score.