LIFTS Episode 80 - Edward Hertzman: Disrupting the Fitness Industry from the Outside In

0:00I have a lot of buddies that are in their early 40s that, you know, their lats are popping out, their shoulders are popping out. All of a sudden, they're all on TRT for supposedly low testosterone. But I think a little bit of vanity is definitely, you know, a reason. Now, everything's a wellness company. Like, everyone just changed their marketing. Every beauty company's wellness. Every fitness company's wellness. Everything's wellness, right? Disruption almost always happens outside the industry. We'll learn more from other sectors than from the sectors like our talking to ourselves.

0:33Welcome to this week's episode of Lifts. I'm Matthew Janicek. I'm joined by my co-host, Mo Iqbal. Mo, how are you doing today? I'm doing well. I was actually at the White House this morning with a guest that Edward had. At the White House this morning. You just decided. With Callie Means, someone who we're going to be talking about, who kicked off the session last week. I mean, I live in DC. I'm six miles, just 6.2 miles away to be exact by Uber. Had breakfast there. And then we had a session with the Connected Health and Fitness Summit on GLP1. So I spoke to a couple of our friends on that webinar.

1:19And now I'm here. So it's been a day. It's been a morning. But I'm excited because we had a week last week. I'm still getting text messages from people just still excited, still buzzing from the first Athleteck Innovation Summit. And people always kind of rub me saying, well, it's not Eddie's first event. I'm like, for me, it's Eddie's first event because first, it's Eddie's first event that I was actually there. Second, I don't consider the other one's event. So and to bring it all together, we're joined by Edward Hertzman, the founder of Athleteck News. if you haven't heard of atlatech news um i would highly suggest that you subscribe go check them out but most of you listening are probably already subscribers and ed you've kind of really blown up uh blown in rather into the fitness industry you've only started this a couple years ago we are so happy for you and you have so many supporters around you you've assembled some incredible people and brightest voices and really kind of curated, not just for your event, but I think just around you in general.

2:23You've built a community, which I really appreciate because that's so hard to do in our industry. Even though we think we're a community, you've really done that together. So one, welcome to the show. It's been, it was a crazy week last week. I'm sure you're kind of recovering back from what that was. As I mentioned, you kind of pull together some of the biggest and brightest voices and we just can't wait till next year so thanks for the event and um thank you for hopping on that's great to be here again guys and um it was um i i i think i'm still in a little bit of awe from last week i you know i would i would respectfully disagree with you i've been doing events for for 15 years um done a few for Athlete Tech, but I'll say despite all the events I've ever done, this really has exceeded my expectations.

3:17There was just an intangible feeling and energy around it that I can't even really describe, but it feels really good. And obviously, no time to rest. We hit the office the next day, right back to the grind and already thinking about how to do it better and improve next year. One of the things I enjoyed about the event is you had a lot of free stuff going on. And on last week's episode, I was talking about the guys that were doing these true Niagen or NAD plus infusions. And I actually mentioned, I said, look, I think this stuff's quite expensive. I sat there for 45 minutes. I didn't really feel anything from it.

3:55And so a little bit disappointed. But I messaged Mo over the weekend because maybe there was one or two days delay. But I felt absolutely phenomenal when I got back on Friday. I had a good night's sleep and had a couple of workouts, which was based on my typical workouts, was probably about 30 % or 40 % better. Just had a lot of energy. Libido was through the roof. And so I'm kind of considering maybe this is going to be part of my regular routine. So I don't know whether you have since tried that, Mo, or whether it's going to be something you're going to jump into this weekend. I have not, but I will add, I did go, and I think I mentioned this to you, my first wellness check, I guess some people call it an annual physical.

4:44Well, I haven't had one. I'm ashamed to admit this, but in about 25 years. So it's been a long time, but I turned 45 on Sunday. So you got to go through all the things. and you know i asked just curious questions right because i'm like kind of new to the doctor and said well should i try trt like because exactly what you said matthew you know it's um low energy kind of all the things right um and yeah they were like no we shouldn't be doing trt um i did not ask about nad but but i think we all kind of feel this feeling as we hit 40 um i know you know edward you're kind of in that in that bucket matthew's a few years ahead of us but something about hitting 40, and it's funny, I kind of laugh when I hear people in their 30s talk about being exhausted and all the things, but 40, the kids, everything else, there's a big decline in energy and recovery and really everything just around how you feel.

5:44So looking for that extra boost. So anyways, I'm looking for when you try to optimize things. and after hearing your feedback on NAD, I'm excited and curious to try. So I'm just curious, Matthew, on the NAD, do you do that like once a week? How often do you get that drip? Well, I don't know. I've done it before. I've done the regular NAD once a month. And I tried this version of NAD, which they had there, which was called True Niogen. And apparently it was a precursor of NAD from what I was told. I'm not an expert on this. And as I said, I just felt pretty tight when I had it in my shoulders, but that was it.

6:26I didn't feel anything at the event or the following day. Maybe it was because I had a lot going on. I weren't sleeping a lot anyway. So when I got home, I had a good night's sleep and then it just seemed to kick in and I really felt a noticeable difference. So I'm not sure whether it's once a month or how often, but I'm going to try it for a few weeks. I'm definitely not into the trt i've i've been told that unless you have a real issue with your testosterone levels then it's it's not recommended and once you're on it you're probably going to have to stay on it for yeah almost like the rest of your life and i don't really want to go there so i i i'm exploring this nad thing which seems a little bit less um you know less less less physically different yeah it doesn't doesn't seem to change uh your your body chemicals like um testosterone.

7:13I don't know, were you going to say something, Eddie? Because I know you did some of that. It's interesting that, Mo, you brought that up, because that was a question that I asked Dr. Lippman on stage, because I don't want to call out any names, but I have a lot of buddies that are in their early 40s that, you know, their lats are popping out, their shoulders are popping out, all of a sudden, they're all on TRT for supposedly low testosterone. But I think a little bit of vanity is definitely, you know, a reason. And there's a lot of these, you know, needle shops that are popping up that are allowing anyone to walk in and pretty much self-diagnose themselves as low, you know, testosterone.

7:49And, you know, Dr. Whitman's like, are you crazy? I said, okay, what about if we take peptides that are precursors to? Absolutely not. He's like, this is going to shrink, but more importantly, you're going to become infertile and you still don't have children. And there's like, he's like the side effects make no sense. There's absolutely no medical reason for you to take this. And people are, I think, abusing it a little bit in their late 30s and early 40s. Obviously, there's going to be outliers that have low testosterone in there. Medically, they should take it. But I think this is something we got to watch out for, because a lot of people I think that we know are taking it as a little boost.

8:28But there's side effects to that. I mean, it's steroids at the end of the day. You got to be careful with anything whenever you take hormones like that. I mean, I just came out of a meeting right before this podcast, talking about the growth, and I think maybe the door's shut, but on GLP-1 microdosing. So to your point, you've got these needle clinics, as you call them, popping up. Everyone's looking for a bit of an edge. Everyone's looking maybe for an easier pathway towards it. But speaking of all these topics, Eddie, I think one of the things that I came out of last week is a bit of confusion, and here's why.

9:01I think our industry has an identity crisis. I mean, number one, you, in your own opening kickoff, which I thought was so articulate and so nicely done, what do we even call this industry? Right. You and I have spoken about this the last couple of years. Is it fitness? Is it wellness? Is it healthcare? I think it's something bigger than that because we all, a lot of us come, not you, but a lot of us come from the fitness industry and then we're having all these conversations. And just even in the last couple of minutes, we were talking about GLP, TRT, NAD. So just, I guess, a question for you is, do you think we have an identity crisis in our industry?

9:38Because that would kind of reshape how we think about our businesses. Absolutely. I mean, I think I posed more of a question than an actual solution in those opening remarks. And I said, you know, when I look out into the audience, we had, to your point, we had doctors, we had hotels, we had wellness destinations, probably one of the largest gatherings of the investment community. But again, not just people that are investing in fitness, wellness, sports, entertainment, you know, you're seeing consumer products. So you're seeing money that typically went to other categories start to come into this space.

10:11But what is this, this quote unquote space? You know, you have consultants, advertising firms, mainstream media, spas, you know, med spas, wellness debt. So you start to think to yourself, this is not just dumbbells and treadmills and four walls. And obviously then you had a ton of connected products and wearables there. So I think we do need to reframe this industry. And you look at whether it's an Equinox or a Lifetime or Expo, a lot of these companies are dropping fitness for whatever reason. And like you said, I don't necessarily come from the space, but I felt early on there There's a stigma and they kind of want to separate themselves from the Venice Beach gym bro vibe, right?

10:57Wellness is interesting because that also has a little bit of a stigma. Everyone's a wellness company now. There's wellness washing happening. And I don't know if people are using that term a lot, but I saw green washing. Now everything's a wellness company. Everyone just changed their marketing. Every beauty company is wellness. Every fitness company is wellness. Everything's wellness, right? But again, what is actually scientifically backed and what's legitimate, I guess you would say? Then you got this longevity space. Where does that kind of fit in? You have functional medicine. Where does that fit in?

11:33Preventative care. Where does that fit in? I think there needs to be a new term that kind of describes it. I don't know if we're going to solve that today, but I think that the audience for this sector is much bigger than I think it was initially thought it could be. The cross-sections and the collaboration between different industries is quite vast, or the potential is quite vast. That was one of the things on the podcast last week we spoke about, is there's, in some respects, we can talk about it as one industry. I think what you did as an event last week was an example of where things are headed because you did bring a number of different people.

12:20I had a chat to someone earlier today and they asked me to explain it. And I found it in some ways difficult to explain in relation to what people would be familiar with. And I think that's a good thing because I think the summary that you've just given explains that it's quite complex. If you think about the way that we traditionally define success in our sector, it's about the percentage of the population that are going to the gym. And you have to ask yourself a question, well, is that really a good barometer for us to be using now? And if you look at a lot of fashion brands, I was looking at something just a couple of days, aloe and how obviously they sell leggings and and crop tops uh they're a fashion brand but but what they position themselves is is a lifestyle brand they spill over from just what happens in their stores where they have events and experiences and and and workouts and things so it's almost First, I think it's trying to reimagine what we can be beyond the traditional metric that gets used a lot, which is, well, what percentage of the population are working out?

13:34And is that good or bad? Yeah, I mean, think about it. If you walk, you take long walks through your neighborhood, play pickleball two days a week, go to the sauna, I don't know, own a Therabody and an Eight Sleep and an Oral. Like you could have your share of wallet could be quite significant and you'll never show up on that stat of 20 or 25%. You know, maybe you have an at-home product. You'll never show up on that stat. You know, what does it mean to be healthy? I think that's another thing that we're wrestling with, right? And I think that's a lot about, you know, Mo, you said you just came out of the White House.

14:13I was there a few weeks ago. And look, I'll tell you, something that came out of the event that I knew going in was going to be a hot topic is, whenever you bring up anything political, it's a little polarizing. It's a little controversial. Now, I think that would be true for any administration. I'm sure if I brought Abe Lincoln to the event back in the day, some people would like it and some people wouldn't. But obviously, this administration is extremely controversial. And some people appreciated the conversation around what Maha represents, and some people didn't like it. And I don't necessarily think that's a good or bad thing.

14:48I think people are talking about it. I think people are trying to figure out what it means for their businesses, what does it mean for society as a whole. You know, being in that White House when Kennedy and the whole group released the report, again, to me, I didn't, a lot of people were like celebrating and like claiming victory, but all it really did is acknowledge that children today are more sick and living shorter lives than maybe previous generations. You know, allergies are up. Childhood oncology cases are up. You know, autism is up. The amount of children on prescription drugs are up, et cetera, et cetera.

15:26And I think in a bipartisan way, everyone could agree, well, those are not good stats. Can we do something about it? And then people say, well, yes, let's use gold star science to try to validate that. But that's really it. Like who's funding it? Who's doing the research? What comes out of it? I think the win or the win that we, you know, if you look at some of the social media, you know, and I'm not even saying mainstream media because I'll just butcher the whole way this has been covered is it's being acknowledged that maybe there are things outside of traditional medicine that we need to pay attention to.

15:56There's environmental, you know, is fitness medicine a little bit and what's preventative. And I don't think this has ever really been part of the conversation, especially coming from the White House. So I think if you look at it, that's a positive. Now, what do we do with that conversation? is the question. It's really weird thinking about, you know, back to the top of this podcast, what is fitness and how to define it? We're going from a world and I'm just deep on the data and gym side of the business. And we still measure things. Literally, I get a report every day on gym check-ins or membership churn.

16:30I mean, that's like last month when the FTC kind of enacted, I don't know, they expanded it, extended the date a little bit for this new regulation in the U.S. called Click to Cancel. And for those of the audience that's international, essentially it allows you to cancel relatively seamlessly your gym membership, which I don't think is actually a bad thing. I think that's a good thing. And there was this increased churn. So churn went up by about 25 % in the month of May, which is the highest we've seen in many years. But when you look at what we're tracking, a lot of the metrics that we use to run our businesses, at least in the gym side, is based on new member signups, how many members checked in, how many members churned.

17:12I haven't seen a single report that actually tracks health outcomes or member well-being. And I think that is the myth. We are sitting, and one of the takeaways I had, Eddie, I don't know if that was your intention or not, coming out of what you stated, is that we're in this solid world. We were looking at everything in these silos and everyone's a kind of a competitor. But if we really come together, There's enough space for all of us to be successful by sharing information, which is what we're trying to do. But really understand that whole consumer journey. What if we track success for us is a metric, and this is controversial, but how much healthier did our member base get in the last quarter?

17:52I would like to know. Are they sleeping better? Is their HRV up? Is their stress level down? When are we going to start as an industry, be looking at health metrics? because the healthcare industry has got a long way to go. They've got more legacy and lobbying and other interests in there than we do. We are more invested. We should be more invested in health outcomes. I would love to see that. Imagine we get a report coming out from HFA or any other kind of source that talks about in the last 12 months, that 20 to 25 % of the population got healthier by 0.2%. Collectively, your HRV improved by 10%.

18:32because we enacted these things. So strategically, we think about how we reach the members and engage with the members. And I truly believe that if we're able to show that, we will get the rest of the people who aren't in our community to maybe at least take a look at us. This won't be a popular comment in reply to this. The industry won't come together to do that. This industry does not come together really at all. And I don't know why when the auto industry has a problem, The CEOs of the big five are out there. When Wall Street has a problem, Jamie Dimon gets on a plane and he goes to DC and he's there.

19:10He's there with other bankers. Yeah, together. Right. I'm saying other bankers, the top CEOs of Goldman and JP Morgan.

19:20I've been to fly-ins. I've been to, I don't know why the big five or big 10 CEOs are not showing up in a more meaningful way and say, hey, we have an issue. Now, you know, the lobbyist groups and the amount of money going into pharma, sugar, all these other things exceeds our revenue as a, as a collective industry. But I think that where you're going is actually the spirit of what you're saying is actually very powerful because I think if I'm a gym owner, I should be getting reports on check-ins, new signups. I mean, those are key metrics, right? Like it would be me not looking at traffic or ticket sales or whatever, But, and this is what, you know, Max and Catterton, I think, talked a lot about is, at some point, what is your point of differentiation?

20:06Like the barrier to entry, all three of us could sign up, take a lease. And the equipment has been commoditized to a certain point. I mean, you know, you talk about the HVLP space, the value proposition that these guys are offering at the price point, it's unmatched. I mean, it's a really, really, but how do they compete against one another? Like, how do they keep elevating? And so your point, and this is why I said maybe the partner that's sitting next to you, maybe the person sitting next to you is your partner, but it's not the person you normally think because there are wearables and there are companies out there that are tracking all the things you're talking about, Mo, but they're not owned by, quote, unquote, the gym.

20:48So how now do you start having these companies work together in a collaborative way so you can see those results? There's body scanners. There's ways I could go on the eVolt every six months, and I could see my progress if I'm working with a trainer or the facility I go to has that equipment. I could see if my sleep's getting better or worse. I have an eight sleep. All those things are out there, but who's putting it all together? Is it the consumer's responsibility? Is it the gym responsibility? Is it the quote-unquote industry's responsibility? I think this is where successful entrepreneurs are just going to win at the end of the day.

21:20The people that can figure out how to have the most integrated and newest model and built community and engagement tends to win. So I don't think it's going to be like a standard report like the fitness industry got healthier by 0.5. How do you define healthy? I think it's a very difficult metric to say what is healthy, quote unquote. Well, I think, I mean, we are getting closer to some of those standards. You look at wearables today, which you covered pretty extensively last week through several sessions, but there are markers out there. And I think in some cases that metric, that number is going to be derived from what the gym believes.

22:02So what Lifetime defines as healthy for their cohort will be different than what Planet Fitness defines as healthy for their cohort. But I think it's more a matter of executive function, I think. And as you're thinking about business strategy, we talk about gyms using retail terms like stores, right? Most franchises of these talk about stores, number of stores that are open. They're talking about their members as customers coming into the store. I feel like we need to have a shift in thinking and even a shift in terminology to really focus on outcomes. And when you look at earnings calls, Ed, either it's Lifetime or Expo or Beachbody or Peloton, nobody talks about collectively, we talk about engagement, but nobody's talking about health outcomes.

22:46The data is there. And I can tell you that the things that I'm working on, ABC or Sweatworks, in the next six months, we're working with companies like Aura, Polar, Whoop, and others to bring that data in so that in 26, operators will be able to actually track the things that I'm talking about. because I do think that you've got to start paying attention to it. If we don't have the data, we have no way to guide our membership base, right? We have no way to say, what should we have in our retail store for supplements? What should our personal trainers be getting certifications on? We don't really know because we don't know the health of our member cohort.

23:27Wouldn't this be a great strategy, though, for an operator to kind of embrace? If you think about it, one of the reasons these things don't pop up on earning calls is because the stock's not going to move on that metric. All the market wants to hear is money up, money down, or whatever. But to your point, if you could say, you know, XYZ group, the people that are members there sleep better, cholesterol is lower, live longer life. Whoa, by being a member of this, that could be a really great marketing. I'm going to challenge you on the market appreciation around it because I think the minute Lifetime or Planet gets on an earnings call or Peloton and starts talking about improved health and improved sleep, they're going to be valued like UnitedHealthcare or Aetna, not like a fitness company.

24:17That's going to drive more people to become members because again, that's a point of differentiation. If I go to this, should I go to lifetime over Equinox because lifetime, the average lifespan of the customer is three years longer. Now you're starting to talk about that you're creating value creation. That was part of the opening remarks. ROI needs to be redefined a little bit. Not everything is, quote, unquote, dollar in, dollar out at the start. Do you think with some of the capabilities of AI now, this is probably to you, Mo, and the ability to report on different trends, that does allow us to do that.

24:55So if you look at things, the capabilities in, if you do advertising on social media, if you do trend research, there's a lot of these micro communities that you can start seeing, a lot of changes in behavior that you can start seeing. And they don't necessarily have to be health related. In some ways, they could just be lifestyle trends moving away from, if you look at some of the younger demographic now, they're not drinking. They don't go to bars. They don't go to nightclubs. they go to coffee shops and DJs. There's a lot of these micro trends that are happening, people going to different events and communities together.

25:33And I know you mentioned Lifetime, and I saw in one of your emails this week, Eddie, about how Lifetime are almost like creating a challenger brand to high rocks. And so what they're definitely doing by that is they're looking at these places where people spend their time. These are almost like experiences. And you could argue that people need to get fit and check all their vitals in order to do that. But also, this is another form of experiential entertainment. And I definitely saw this coming up at your event. But I'm just wondering whether there could be a lot more of these opportunities out there with the ability that we've got now by using big data to be able to drill down in some of these micro communities that might be influencing huge changes within businesses.

26:24I think the answer is yes, but we're still trying to figure that out. One of the interesting points that I've observed over the last six months, the first half of this year, is that the adoption of AI with consumers, I'm speaking both as members of gyms, but also as employees of large companies and as managers of large companies, that individuals, both in consumers, in a personal life and professional life, are leveraging AI better than operators or technology platforms like Barna. In fact, even at Stratworks and ABC Fitness, I can very truly and openly say that, that as companies and organizations, we are now falling behind because we've really struggled to put together a strategy, even though we're trying in multiple different things.

27:12However, our employees are using AI every day. I mean, we use AI probably every 10 minutes in some form or fashion. So we have been getting a lot more comfortable. We are adapting. And I want to go back to something else you said in your opening remarks that I thought was just brilliant, that the competitor is not the person next to you. It's someone who isn't even in the room. And you brought up examples, and I can correct me if I'm wrong, but we talked about Uber and Airbnb. be, I mean, I would probably throw in the iPhone because they disrupted the industry. And I think you brought up Netflix to Blockbuster, or sorry, Amazon to Barnes & Noble, rather.