LIFTS Episode 137 – The Future of Fitness Won't Be Built Around Equipment | Andy Peat

0:00The generational changes in terms of who's coming through and buying gym memberships is something that people can't ignore because, you know, five, ten years passes very quickly. So you're right on there and you need to look at kind of the Gen Z and what do they do in the gym? Well, in my experience and from what we can see, they certainly spend a lot longer in the gym than what we used to do back in the day. So gyms are having to fit out more floor space for sort of that communal, you know, you know, the third space they call it. type area. I would say one of the biggest changes in the industry that it does get talked about a little bit, but maybe not as much as it should, is just the rise in strength training with females.

0:46Matthew Januszek:Welcome to this week's episode of Lifes. I'm Matthew Januzek, and every week we sit down with some of the brightest minds in the fitness and health industry to explore ideas, innovations, and trends that are shaping the space. The fitness industry is changing rapidly and our guest today has a unique perspective across all those areas. To introduce him properly, I'll hand over to my co-host, Mohamed Iqbal. Mo, how are you doing today? I'm doing good. I feel like the last few episodes I've been recording the podcast from various places, hotels, the office, different countries. So it's really good to be back in my home little podcast studio here.

1:24Well, I'm a

1:25Matthew Januszek:I must say your audio is a lot better anyway. So that's a positive. I know. That's always a pet peeve. You always complain about the audio. I finally get it right and I'm on the road. Unfortunately, for the next few that we're recording, I am going to be on the road. But one, I'm really excited and I'll introduce our guest here in a couple of minutes who's a good friend, who's a colleague and someone I've gotten to be pretty close with over the last couple of years. But I want to set this up with a real simple observation. When you walk into any gym today in the world and increasingly many studios, depending on HVLP or premium, it doesn't matter.

1:58But what do you see on the walls, right? You see screens. You see TVs above the cardio deck. You see screens on treadmills, TVs in group fitness areas, really all over the place. And most of the time, you're not sure what's on them. It could be the news. In fact, some clubs actually pulled the news out because that's controversial. So they put ESPN or some music videos or typically the screens in the Group X class aren't used that much. And the honest answer is that they do go unused. It's an asset that's out there that is not being really leveraged. If you zoom out, one of the biggest changes in COVID that happened five, six years ago is this huge reset in fitness content.

2:42So during COVID, digital content was truly the hero product of industry. And it's what kept operators alive. In fact, I remember at Sweatworks, we would be talking to operators for years trying to get them to go digital to engage their members better. And all of a sudden, they came back to us in that March and said, hey, in 90 days, can you quickly pivot and provide us a digital product? So it really was an engine that kept engagement and community going. Connected Fitness at the time peaked at over 41 million members in the U.S. in 2021. And then the world reopened and gravity took over and everything came back falling down.

3:23Peloton, the poster child of the content boom, has now seen its quarterly revenue fall roughly 40%, almost 50%, 50 % actually, from its December 2021 peak. Their connected fitness subscriptions dropped another 7.6 % this past year to about 2.66 million. App subscriptions are down to 522 ,000. This is with Peloton. And analysts are projecting a fifth consecutive year of revenue decline. And that is, by the way, the best funded content player in the space. The virtual class space providers kind of felt that same come to earth feeling. Content went from a must have to a nice to have almost overnight.

4:03And every content company in fitness has spent the last few years asking the same question, and that is, well, what do we do next with content? And then we got a huge signal about where the answer is heading. In April, let's go back to Peloton, and now it's a global partnership with Spotify. And this is something we actually did not cover in the podcast, but it's a really important signal. So Spotify puts, in Spotify, Peloton puts more than 1 ,400 of its classes inside of Spotify's new fitness hub for premium subscribers. So think about what that says. The most famous content brand in fitness just decided that owning the content isn't enough.

4:43Distribution, that's the game now. And if you make content, you don't control the screen it plays on if you're essentially renting it for your future. So that's exactly the thesis of what I want to talk about today. And there's one more force that we talk about a lot here that's shaping all of this, and that's AI. And I'll share some numbers from our own research at ABC Fitness as an example. 49 % of consumers now use some form of AI-driven fitness software. 64 % of trainers are already using AI regularly. The global AI in fitness and wellness market was valued at about$10 billion in 2025, and it's projected to reach nearly$58 billion in 2035.

5:29So there is growth happening in this massive area of AI. Now, the flip side of that is while home content shrank, clubs boomed, members came back, and when they came back, they typically stayed a while and brought their own content with them. And I think that's the big gap here. So clubs right now trying to figure out, we know that content is important. These strictly standalone content players are struggling, but we know that partnership is working. So I'm excited to introduce our guest today, who saw this earlier than almost anyone and has a really unique vantage point because he sits on both sides of the table.

6:08On one hand, he runs a global content and technology platform. And on the other hand, he helps lead a global gym brand with more than 950 locations. And he spent the last two years pivoting that content platform into something much bigger. It's a TV operating system for gyms. It's content. It's engagement. It's advertising. It's connected wearables. Delivered all through screens that clubs already own. So our guest today is Andy Peet. Andy is the Chief Brand and Product Officer at Snap Fitness and the CEO of Fitness On Demand. He helps lead two global fitness businesses, Snap at more than 950 locations, serving close to 1 million members worldwide, and Fitness On Demand, which serves over 2 ,000 customers.

6:55Andy has more than a half-decade experience of C-suite leadership and has played a leading role in repositioning both brands, including Snap's For the Feeling Evolution. So Andy, I'm really excited to welcome you to Lyft. I feel like we are connected in so many ways. We even shared a good meal together recently in Minneapolis. Yeah, excited to have you on. One, what have you been working on most recently? Wow, firstly, what an intro. It's like sitting here saying, man, I could just be a listener of this and not actually be a guest because everything you said was right in my world and I don't think I could have put it as eloquently as what you just did.

7:42So thank you. We did share a great meal together. So good to see you guys. And Matthew, it's always a pleasure to see you and knowing you and your brother for a long time. And you guys are such great ambassadors for the industry and bringing to life, you know, the personalities and ideas of the industry is great. I'm a listener, so happy to be a guest at the same time. So, yeah, what am I working on? Well, as you mentioned, really two jobs really across two brands keeps me busy as well as normally just normal life outside of it as well. But ultimately, so I'm one of the executives at Lift Brands.

8:20Lift Brands is the parent company for three businesses in the industry. So Snap Fitness being the largest, as you mentioned, 950 24-7 franchise gyms around the world, Fitness on Demand, which is probably going to be really the strong topic of the day, which is the content company that we have, over 2 ,000 customers around the world. But just to point it out, we don't actually own any content. We are not a content creator. We are an aggregator. We pay royalties out to content providers. And our job is that distribution. So kind of that Spotify example that you used earlier was perfect. So really, as an executive of Lift Brands, I run two different lanes in those businesses.

9:07On the Snap Fitness front, I'm in charge of all of the products. So what does the gyms actually look like, feel like, the member experience within those gyms and the supply chains, all the equipment that's coming in and how it's being used. And then on Fitness On Demand as the CEO, it's full control over the entire business and its performance ultimately, which, as you mentioned, since COVID, has looked to see what its identity is going to be for the next decade because it had a really strong rise. It's been around for about 12 years now. Rose well with the boom in 24-hour low-staffed gyms who were looking to offer group fitness products without the labour.

9:47And then boomed hugely in multifamily housing, so apartment complex gyms. So pretty much gyms that didn't have a lot of staff that were looking for sort of ticking a box and giving something to the users to guide them in their workouts. It worked really, really well. And then during COVID, like everyone, the digital boom went up and then it went down. And then since then, that business has really had to look at what does the future look like? So I joined the company just over two years ago as a CEO. And yeah, ultimately our decision in the direction we take is simple. We look at gyms and we think, what does every single gym around the world have?

10:29They have treadmills, they have weights, and then they have an assortment of different equipment in there. But they all have TVs. They all have TVs. Whether it be a hotel gym at the Hilton that has one TV, which is often off black, black screen, through to your lifetime fitness, which will have up to 100, sometimes even more in their floor space. It's just TVs in this big square. And what was interesting is we actually had quite a good variety of products that are used on the group fitness screen that we were traditionally in that I thought we can separate these and these can be standalone. own.

11:11And to put it simply, there's not really a strong player as a TV operating system in the fitness industry. So we saw that gap and we decided, you know what, we're going to be that operator. And it just reduces platform fatigue for companies. And it reduces cost because essentially if you have our full suite of products across the five or six different vendors that you can get it from you'll be spending about$1 ,100 a month and we can offer you all of them on one platform for under$170 a month. So you save quite a bit of money and that's the proposition and the value point that we offer.

11:49Matthew Januszek:So Andy, just to start, we've known each other for a long time, we've worked together and prior to your current role you were very active in the Snap business which has gone through, certainly since I've known you, a huge transformation. Like the club's totally different to what they were before. Also, not just in the US, but internationally, there's a lot of interesting, exciting things that have happened. And as I've got to know you and other people within Snap, I've started to understand how this other business, which is the Fitness on Demand, has really kind of integrated into what some of their unique propositions and kind of provide a lot better value to the people that are coming through the doors.

12:33Matthew Januszek:But also, I'm aware that you you do have a good understanding of all parts of the industry and many, many different markets. So what I wanted to start with, just to frame it and to be able to tap into some of your knowledge, is if you look at some of the reports out there, if you look at what HFA say, it reports that there's about 81 Americans now belong to a health club. And out of those 81 million, Gen Z has a huge penetration of that adult generation. And obviously, Gen Z, certainly from what we all understand, each one of those generations has a very different relationship to fitness. I think I'm a Gen X.

13:13Matthew Januszek:So our connection to things like technology is a little bit different to the younger generation. So the type of training that probably we do to some of the younger people has changed as well. So I was just curious, if you bundle together your experience and journey with Snap Fitness, let's say over the last decade, probably since the pandemic, your experience with technology and some of the people that are coming through the doors now, maybe differently to previously, and some of the other channels that you mentioned, multifamily, which probably some of our international listeners may not be quite as familiar of how dominant as a sector that would be.

13:53Matthew Januszek:tell us from where you set what what would you say is is probably some of the biggest transformations that we may not be talking about on podcasts or at some of these industry events that you're you know you've certainly seen within your business that would be relevant to share to people listening the generational changes in terms of who's coming through and buying gym memberships is something that people can't ignore because uh you know five ten years passes very quickly so you're right on there and you need to look at kind of the gen z and what do they do in the gym well in my experience and from what we can see they certainly spend a lot longer in the gym than what we used to do back in the day um so gyms are having to fit out more floor space for sort of that communal you know you know the third space they call it um type area um i would say one of the biggest changes in the industry that it does get talked about a little bit but um maybe not as much as it should is just the rise in strength training with females.

14:51And we look at, from a Snap Fitness standpoint, you know, five years ago, maybe, yeah, pre-COVID, we were probably getting away with just like having one power rack in the gym. And this is just an example of how it changes your decision making with equipment purchasing. You probably have one. Now we say you need one per 300 members or something like that because people nowadays instead of just going into a rack and doing three sets of 15 squats and then leaving they're going in and they're doing a warm-up and that warm-up is becoming really crucial they're doing stretching to assist with their compound lifting and then they're doing four or five exercises in that rack and then they're leaving and that's an hour so people are spending like an hour and one piece of equipment so every gym needs more, more and more.

15:41So they're having to buy four or five different racks. And with that, you've got to go, what am I going to take out? Because you're not always being able to increase space. So that's a big shift that I've seen. I mean, the recovery kind of boom that we're in post-COVID, I think really fits into that holistic mindset change of I want to feel better versus just looking better. And the recovery side of it, I think people have really leapt into with plunges and saunas and whatnot and I'd say one of the biggest stats that probably doesn't get spoken about is from what I've read and sometimes with news and reports they conflict each other every day so who knows but I read recently that there's actually more people who try a cold plunge once and never come back than there is who are doing it on a more repetitive basis so you know we don't have cold plunges and snap fitness and that's not because we don't believe in it I personally am a fan I like it it has helped my body particularly just with general movement I'm not the most mobile human in the world but we don't want to deal with water so that's more of an operational like rule that we put in place food and water is something that we don't really touch we want to you know focus on on everything else so I'd say women's strength recovery and what's really going to be interesting going forward is what is the what is the common ground between the average gym, the independent gym, and the use of sort of this medicine for fitness, wellness, and where that space is getting to.

17:13I feel like that gets talked about quite a bit. But how does it play for like the non-lifetimes who have their own clinics and teams? I'm talking like even the Snap Fitness franchisee who's a mum and dad operator, they own one gym. Do they get into that world do they i don't know we'll see so that would be that would be some of the the biggest ones um ai can't cannot talk about it um i think a lot of people are rushing towards building you know ai workout builders and ai this and that and and and stuff and i think the difference now with ai is every person has the ability to like build a website so they feel they have the ability to build full software stacks.

17:57And I mean, you guys, Mo in particular, you'll attest it's a lot harder than just getting chat GVT to throw something up. But with that said, everyone's sort of jumping into the workout builder side of things with AI. And at Snap, we've had plenty of businesses pitch us on one, but what they're charging is pretty hard to justify at scale. And what our studies show with our members is that most of them who want an AI workout builder, they're using their own one anyway. So what we have found is like where we're getting good efficiencies in using AI for our business is certainly in software development.

18:36That is the number one. We're seeing 40 % efficiencies in our development using Cursor in particular. So we're actually, and we're not a big team, so we're actually able to pump out a lot more of our roadmap. but how we're analyzing data as well is really, really crucial and AI has been able to do that. So those are sort of the biggest changes in the industry that I'm seeing and I think that on the AI front, gym operators, you really, really leverage it for the back end and operating your business more efficiently than focusing on just a workout builder for your clubs because it's really only going to be the 15 % of the people that come to the gym every day that try it out And honestly, 50 % of them are probably already paying for a different one that maybe need you to do it.

19:23It was a spiel, but that's kind of a brain dump. Yeah. Yes, I think there's three things that I took away from that, which, I mean, you know, obviously spend a lot on talking about these things. But one is you've got to have operational excellence. And whether you are a gym or a studio, the fundamentals matter. Clean facilities, the right equipment mix, a space for recovery, all of those things matter. You've got to have and you've got to be able to operate that in a way that's easy for a member to access, equipment that is always available and the right mix. Then on the second side, I think you mentioned two areas that are rooted in AI.

19:59The first is back-end operational efficiencies. Right. And I think what you said, you believe that that is something that AI could play a big role in and you're investing in, such as Cursor and some other tools. And then on the front end, member AI side, what I heard is maybe don't invest so much in that because members are going to come in with their own technology. So if we were to double click on that second pillar around operational use cases on AI, when you think about being an operator, is it personalization? Is it more agentic AI on customer service? Is it more the back end tools to help your developers be more efficient and productive?

20:43Kind of talk us through how you're viewing that technology evolve from an operator perspective, right? So in other words, if members are coming in with their own tools from an AI workup builder standpoint, you said that operators should invest in things where members would touch them, such as maybe it's on a website. Maybe it is on helping your tools in development. Maybe it is around your reporting and analysis. i mean where do you think ai could be used from an operator perspective customer service definitely um i think with to matthew's point earlier the rise of gen z what comes with them is really really high expectations and they're all little keyboard warriors that will give you the worst review ever if you just have a dirty floor once so you know the standards of your gyms have to be up now i mean they should have always been up at least we've all been into some terrible gyms There's really no excuse now to have a poor gym in terms of the looks.

21:44So the standards need to be up. So investing in AI for customer service, whether it be on your website to generate leads and help you convert into sales. Now, that is probably where the best what I consider front end opportunity is in terms of member facing AI. Because if, hey, sales solves any problem that you have, right? And if you can get something that sells more memberships, then you can do, you know, and they can, it can do it while you're sleeping. Then that's, that's a win. I would, my suggestion there for operators, and we do this ourselves at Snap Fitness, and we're a fairly large chain is, you know, leverage your vendors to build it.

22:21Because the amount of times I see gyms build their own software stacks, because they think that there's someone out there who, there's no company that can solve that problem for them. and they spend their entire time focused on that instead of just selling gym memberships and running their club. I see that happen all the time. Leverage your vendors. So we use ABC, Glowfox and any use of Agendic AI for lead generation in converting it into sales is going to be hugely valuable for our franchisees because we're a low staffed model. We don't have 30 people in a gym calling booking appointments like the big boxes used to do so we're going to rely on ai to help us with our digital marketing help source new leads and help convert those leads into sales now then once they're in the door how do you onboard them correctly you can use ai for that i believe in the future and it's not just really about like building workout plans and stuff it's more kind of the check-in side of things but also just hands down customer service if people have a question it can answer it and it can personalize that answer to them at the drop of the hat and it might even be a utility-based question like tell me about my membership how do I freeze it or how do what class is right for me or you know I'm thinking about doing Pilates reformer sorry that's the other one that I missed on the the big rises of of the fitness industry so there's plenty of things you could do on the front end so my comment earlier about um keep it back end i kind of was probably specifically referring more to like workout builders i don't think gyms need to worry as much about that but lead management sales customer service that needs to be um that there's there's advantages to ai and then on the back end it's um optimizing your digital marketing optimizing using it to give you advice on your website around am i searchable am i findable not what not just with seo so google but also about um also about aeo so is ai which is now about 38 of um recommendations through through search traffic is through ai is ai recommending you um as much as what seo is and a lot of that comes down to efficiencies of your website but also the amenities in your gym and that's actually where fitness on demand takes a lot of boxes because straight away with our products, you can tick.

24:47I have heart rate. I have challenges. I have an app. I have a recovery zone. I have all these things. And that actually makes you more searchable, which means you get more leads.

24:56Matthew Januszek:This episode is brought to you by our partners at eGym. eGym believes the future of health starts on the gym floor with strength training at the center. That's why they're building an ecosystem of connected equipment, AI-driven software, and wellness solutions to empower operators and improve lives. Their mission to transform healthcare from repair to prevention and make fitness accessible, personalized and measurable for exercises of all shapes and sizes. See how this all fits together at egym.com. So talking about AI, I saw Mo, you posted something the other day and I'm just curious, like in relation to what Andy spoke about, are you guys ABC ahead of the curve or did you miss the mark in terms of the recent acquisition that apparently you made?

25:44That's a really good question. I'd be careful because on one hand, I'm also speaking to a pretty important strategic ABC customer here with Andy. Yeah. No. So look, we did announce an acquisition of a company called Replify to the things on Monday. We consummated that transaction on Thursday. It's a partner. These actually used to be called Hey Libby. So I don't know Andy if you recall them or not, but they used to be called Hey Libby. and I met them at a conference over a year ago. So I figured it might've been Athletic, it could have been a Beyond Active Conference and just went to the booth and was really kind of impressed with what they did.

26:21And I said, we should be working with you. So at ABC, we looked at, I think acquisitions in really two areas. Number one, does it help pull forward our roadmaps or were the things that we have on our roadmap that we could pull forward? And second, is the team gonna be accretive to the skillset that we have. And Replify checked both of those boxes out. So just kind of going back to what Andy's saying is - So what do they do then? What is it like? Is it a workout builder or is it like the backend support then? It's actually the front end. So it's what Andy talked about. It does the voice agents.

26:52If you were to call in, and I don't think Snap Fitness is on Replify yet. I don't think so. But it is integrated with Glowfox and what Snap Fitness has. But essentially what that is, is that it does inbound and outbound calling with an AI agent that is trained on your own data. And here's the interesting thing. When you, I would say consumers a couple of years ago were kind of annoyed by an AI agent and then they would want to speak to a real person. Today, they're actually more comfortable with an AI agent. I mean, I fly United all the time and I do a lot of changes just on the app, talking to United's AI agent and it has been incredible.

27:28And that's the experience that we had with Replify. So we felt like this is such a good product of them we had places like ufc gem goals gem and a few others that were already using it and had a lot of success so we actually acquired them and now we're deploying it um across a platform but it's something that we are pretty excited about some of those i'd be curious to like get andy's

27:49Matthew Januszek:view on that like i have used these ai agents i don't know you know i'm not don't run a gym so i can't comment but some of them some of them it's almost like i i always say i want to speak to an agent and maybe that's my the fact that I'm a gen gen x um because it's almost like look I kind of got a question that isn't it's not just like when are you open and do you you know do you have strength training and all that kind of stuff it's kind of sometimes I find if I'm getting in touch with a company and I'm thinking of phone companies as an example or internet companies and that sort of stuff or banks you're calling them because you want to know something that maybe you've not been able to find on the website.

28:28Matthew Januszek:So from your perspective, Andy, because I think this is an interesting discussion, like where, you know, are AI agents really good for essential stuff? And if you're in the gym business, is most of the questions you get pretty basic stuff which an AI agent can ask? Or do you find that it's demographic? So, you know, the Gen Zs are great. And if you plug that in, you're dealing with a big chunk of your members, but you're not going to get someone like myself or my age group doing that because they get frustrated for it. Like where do you see some of these AI tools in terms of people wanting to get answers?