LIFTS Episode 87 - From F45 to Strong Pilates Going Global | Michael Ramsey's Journey

0:00Fusing the three together with Pilates, Strength and Cardio just seem to be like the ultimate combo for our consumers. The franchisees are really sort of buying into what we're doing. They're making money. The same consumer that goes to a boutique concept generally does not go to a big club. So there's so many intangible success factors. You know, you've got your community connection, customer experience, customer validation, progression. I think specialization is a really, really big one. The innovation button needs to be on all the time. We are the black sheep of the players in the street.

0:39Matthew Januszek:Welcome to this week's episode of Lifts. Mo, my co-host, how are you doing today? I'm good. I'm technically on vacation this week, even though I feel like I've been holed up in this bedroom for the last couple of days. but I am in an island called Kiwa, South Carolina. A hurricane is apparently on the way, from what I understand. It's making its way, I think, through the Bahamas right now. But it's awesome. If you haven't been here, Matthew, I know you're on the West Coast. Michael, I know you're our guest here is new to the States, but it's gorgeous here. It's just a beautiful area of South Carolina.

1:19It's about 30 minutes away from Charleston. Great golfing, great running, great biking, great for kids. So, yeah, we're having a really good time.

1:27Matthew Januszek:Well, we've got a very special guest who's also a non-American living here. Now I feel I've got someone who I can bond with almost. So, yeah, maybe you can introduce us to our guest today, Mo. Yeah, I'm excited for what we're going to be talking about today. We're going to be spotlighting one of the fastest growing movements in fitness right now, which is Pilates. We've been talking a lot about Pilates, Matthew, for seems like over a year on this podcast. And what started as a niche studio experience has really exploded into an international trend. There's new formats, there's fresh concepts, and it's reaching members in every market.

2:11At the center of this wave is our guest for this episode, Michael Ramsey, who's the co-founder of Strong Pilates. Strong has reimagined Pilates by fusing it with performance-based training, building a model that is both scalable and sticky, which we're going to get into. They've recently hit the 100th studio milestone. I was excited to be a part of that. That was last weekend, expanded into multiple countries, and they're now making a major push and entrance into the US market, so much so that both Michael and his co-founder, Mark, have actually made the big move to the States. With Michael today, we're going to explore the rise of Pilates, how consumer preferences are shifting, and the role that platforms like ClassPass are playing in helping fuel that growth.

2:59I know that that is a controversial topic. Michael, I know we've been trying to get you on for a while. Welcome to Lyfts. Thanks for having me, guys. Great timing. We were able to train together last week at the 100 studio launch in New Jersey, Moe. So that was fantastic. And yeah, the US has been a very interesting and fast moving market for us so far. So I'm really looking forward to sort of talking about it and really what sort of the next two, three years holds because yeah, the growth is looking substantial and really, really exciting.

3:34Matthew Januszek:I thought a good place to start, Michael, is to give us a big zoom out, big picture of what's going on in the space. As Mo said, it's something that we talk about a lot. It's probably an area that I'm not as involved in as what I should do. And I'm hoping at the end of this podcast that you'll convince me why I don't need to get a call. We've got to get you to a class. We have to get you to a class. There is one in Manhattan Beach. Michael, next time we're in the West Coast, Matthew has to go to a strong class. I have done Politis once in my life, but it's been a number of years and I'm sure things have changed then.

4:08Matthew Januszek:So give us a bit of an overview of the market. I understand that looking online, that it's already a huge industry. If the numbers I've got here are correct, I reckon it's projected to hit 59 billion by 2030. So this certainly seems a long way to go. But give us your perspective. How did you get into Politis? What attracted you to that sector? And how would you best describe it at the moment? We were very lucky. We sort of came in on the precipice of the Pilates boom, I would say. It's been around forever now. But it's held the number one spot for bookings globally for the last few years, as per ClassPass data.

4:53So there is a Pilates boom happening. um the way we got into it and and how we started strong initially myself and my business partner mark we were in the f45 space and um you know we're a franchisee we own six franchises we actually had the number one f45 globally in terms of revenue so we won that award and um and sort of towards the end of 2019 um we sold out we we saw some definite opportunity in more of a low impact setting and more of a low impact space um ironically i'd broken my ankle at that time and was rehabbing on a reformer and fell in love with it um and you know all the sort of little issues i had in my body whether it was you know sore knees sore lower back um the ankle injury everything dissipated within a matter of weeks and so you know i felt like this was the place i wanted to look into um mark was very much of the same mindset but the problem was whenever whenever i do a reformer workout always felt like i need to go for a run or do a heavy weight session or i felt like i needed that little bit more um made ironically at the time and i think this is out your way uh there was a studio in newport beach in california that had a row former um myself and mark saw that jumped on a plane checked it out tried the workout and it was the most brilliant excruciating endorphin rush that we'd ever had we both loved it and it was a rower attached to a reformer so it fused the conditioning component with the players component and myself and Mark thought wow like we need to get this back to Australia we need to turn this into a franchise model we had a lot of key learnings from F45 things that you know that we learned it was incredible things we felt we could do better and and so we packaged it up uh negotiated the exclusive rights globally and then rolled out our first sort of strong plays franchise and sort of the end of 2019 so yeah that's sort of how it all started and um you know it did start as that sort of little bit more than pilates it was cardio with reformer you can imagine you're doing a hard rower set your heart rate stays elevated through the workout and then you're going into say like a playing court or a hold under resistance so your heart rate is elevated for the entire workout but what we discovered was um this real need for strength training as well and so we chose to focus on not only a conditioning and a plays element but a strength element and fusing the the three together with pilates strength and cardio just seemed to be like the ultimate combo for for our consumers it's what our consumers wanted needed um and yeah as we've sort of developed this it really feels like that's the niche in which people want today it's um it's more than than a pilates class um i always think that when someone is paying let's say 70 a week or 75 a week for an unlimited membership they will need more than just a pilates workout they do need conditioning for heart health.

8:09They need the strength training for longevity to build lean muscle, all those things. So the combination has really seemed to hit. And yeah, today we're in 14 countries, 101 studios as of next week, and a huge expansion on the way. That's incredible. I think timing, we are all entrepreneurs on this call. And I think both of you have been entrepreneurs longer than I have. But so much of being an entrepreneur is timing, having the right product for the right time. And I've even had people with my own company with Swat Rock say, hey, if I started something today, could you achieve the scale? I don't think so.

8:47I just think for me, it was time in 2012, the meeting digital with fitness and all of that. And you started in 2019. And that, I would say, was the infancy of the longevity boom. And you just hit on it right now. When you look at some of the key pillars of longevity, it's mobility, it's VO2 max, it's strength. And with strong Pilates, you're really hitting on three of the four or five, depending on who you're talking to, pillars of longevity. At the same time, you hit on another boom, which is Pilates. Pilates in 2019 certainly was on the rise, but was not and is not what it is today. I mean, today, Pilates is just on a rocket ship.

9:31So I think you formed this in 2019 and you were able to do that. The other thing I would add, which is really interesting is your true scale came after the pandemic. So where you had a lot of brands, think about some brands which we'll talk about today, like Orange Theory Fitness or Exponential, or even Large Gyms, both corporate and franchise-owned, who've already scaled before the pandemic. Now the pandemic hits and they've really had to support the whole ecosystem through this kind of like dark and really uncertain phase. Well, you didn't really have 100 studios then, right? So you weren't out there supporting all this.

10:06So you've kind of really timed so much from a modality perspective, your growth perspective. When I look back, and I've gotten to know you over the last couple of years, but you've kind of timed this, and some of this is just pure luck, right? Others of it might've been timing, and you've had the force to say, look, we're former F45 franchisees. We were on the other side. We know what works and doesn't work so now we're going to build something the right way because we were where our franchisees are today how much of your experience that you've had in the past by owning your own f45 studios with your co-founder mark has played into what you're building today yeah hugely important it's um i i think there's there's certainly things that f45 did exceptionally well um early days you know they from a brand and social media perspective and i'm a marketer by trade so i love i love studying sort of this side of the business but from a brand perspective they really blew up they got their social media strategy right we we were number 10 in the world so you can imagine i think there's what 1400 f45 now so we were number 10 so the call it the operational um onboarding and systems required to run a franchise at scale weren't really in place then So we had to figure a lot of this stuff out ourselves.

11:30So now they're a very different enterprise to what they were back then. So, you know, we've taken the good and the bad and the in-between and really learned from a franchisee perspective what's important. and that's anything from having a good community of franchisees around you to the support that's required to you know working on a very successful business model from day one and getting the business model right and and just sort of overcompensating from a support perspective but yeah I would say it's hugely important to sort of where we've we've come to today and And the cool thing is, you know, over 50 % of our franchisees are now multi-site owners.

12:16That number was around 80 % because we keep opening so many. That sort of comes down over time. But yeah, the franchisees are really sort of buying into what we're doing. They're making money. And yeah, it's just been a super important part of our sort of growth and sort of how we got here today.

12:35Matthew Januszek:What are your thoughts on the differences between what you're doing, which is boutique studios? And we've definitely been reading a lot about how that market is changing. There's a number of large brands in the boutique sector that have certainly been through a pretty tough time over the last sort of couple of years. And you have gone in with, from what I understand, is a standalone studio model. So what are you seeing that are some of the differences between the brands like, let's say, Snap, for example, that are now incorporating Pilates into their concept and the standalone studios? and what's given you the confidence and what's coming through in the numbers to show that that model still has legs based on, again, what's happening in the boutique market as a whole and how challenging that can be for some people and the competition for some of the typical big box brands to be incorporating Pilates as part of a broader offering?

13:41Yeah, I think a like-for-like product doesn't mean it's going to have the same impact. I'll give you an example. And I was actually thinking about this the other day. Let's say you've got a steakhouse and a McDonald's starts serving steak. They're not going to be concerned by the fact that McDonald's is serving steak because it's still McDonald's. People go to a steakhouse for the experience. They go for the service. They go for the community, maybe the social validation of it. I think it's very similar with boutique. You kind of need to dive into why the consumer goes to boutique. And the same consumer that goes to a boutique concert generally does not go to a big club.

14:27So there's so many intangible success factors. You know, you've got your community connection, customer experience, customer validation, progression. I think specialization is a really, really big one. And also one thing that I like about the boutique space is we innovate very, very quickly. I don't know how effective and I'm sort of yet to see a meaningful amount of consumers within our business head from us through to a big box gym that's opened a reformer concept. It just hasn't happened yet. So it's a very interesting one. I still think there's so many differences and so many advantages to boutique.

15:14But look, it's going to be a bit of a wait and see to see what sort of impact it has on the market as a whole.

15:21Matthew Januszek:What do you think that you've been one of the most successful F45? So clearly you've, you know, it's not your first time in running a boutique studio and running a successful one. So what do you see, again, on a very high level are some of the things that really make a successful boutique different from many of the others that are attempting to do it, but just can't put it off and can't get it to make money. I think when we spoke to Julian before, the amount of profit that some of these studios generate is extremely small. And so, you know, how do you turn it from being a hobby to be a genuine business opportunity?

16:06Yeah, I mean, it certainly comes down to it's a lot of the standard stuff, the onboarding procedures, the studio manager training, the instructor training and the guidance from the franchisor. I think the business model matters and coaching the business model is very very important like you look at a brand like Club Pilates that has a fantastic business model can go into you know a very small footprint can have high utilization and that business model is coached very very well I think it's about getting that right first I think product certainly matters and I'll give you an example there so yeah there's a huge Pilates boom today Strong only has five locations in the US so our brand equity is is not is not up there like like we are in Australia we're almost a household name in Australia but product matters so you know what we're seeing now we have two studios launching in West Hollywood and in Dallas and from a marketing perspective we're achieving two dollar leads and nine dollar cost per acquisition so it's only costing us nine dollars to sign a member in pre-sale and i attribute that it can't be to brand because we are still quite a small brand i attribute that to the product and the unique product in a space that's booming outside of that i mean it's i i think it's really important to focus on really three key metrics.

17:37One would be marketing, so that's your leads. Two is sales, and that's conversion. And three is customer experience. And that's really the metric we look at there is the attrition rate. So focusing on those three things and figuring out and diagnosing what's actually going on within the studio is super important. And I think that methodology can be looked at across every type of boutique fitness offering out there. But again, I think we overlook product sometimes and we just sort of diagnose and say well how can this product get better well maybe the product itself needs to innovate and and the interesting thing like and I read this you know when when Expo offloaded Rumble recently one of the first things Rumble did was bring in a strength only class and we know the rise of strength training now so I think franchisors can really help franchisees by maybe diving into the consumer what the consumer wants because the consumer is very intelligent now the consumer has access to so much information and it's super important and i would add orange theory also launched a strength only class last year when you look at those two brands you look at orange theory which is now purpose brands with along with Anytime Fitness, and you look at Exponential, as you've mentioned, by and large, a lot of those, and there's exceptions certainly, but I think as a network, they've struggled post pandemic.

19:05They've really struggled for a couple of reasons. One is, as Matthew mentioned, you've seen big box gyms like Lifetime on the premium segment, but even HVLPs certainly snap on the mid-market, but even HVLPs like EOS has come up. And I'm sure, Michael, you saw the same in Australia as well, but starting to incorporate boutique in it. What's unique about Pilates is that it's unlike cycling or running on a treadmill, it's actually a pretty hard modality to just take someone off the floor and say, you are now going to be a Pilates instructor. There's a lot of training and skill and precision involved.

19:37I think that one is going to be a challenge. I think the other interesting thing about what your product offers, and you talked a bit about this, is there's one area that is familiar. So what I noticed about your classes, there'll be a lot of new people taking a strong, taking strong classes now in three countries. And the rowing component or the bike component, that is a piece that is familiar to someone. So when someone goes into another Pilates, like a club Pilates or a solid core, they've never done Pilates before, the whole thing feels unfamiliar. But with strong, at least there's one component that is familiar.

20:12But just kind of going back to the franchisor versus the franchisee, looking at how some of these other franchisees have struggled where do you think they potentially fell short look i i want to bring this back to to product like i think the fitness industry moves so quickly and like for us and you know this mo we work together you know um professionally it's yeah the innovation button needs to be on all the time. And that doesn't mean like innovating in tech or innovating in machinery. That can be innovation in programming. That can be innovation in brand and marketing. And that's where I think the real issue lies is probably not enough consumer research, discovering what your client wants, needs, values, and then being innovative enough and being progressive enough to be able to move with the market.

21:10that that's what I feel is probably the big one you know we're thinking five years ahead already with with with the tech developments with incorporating the strength training you know doing progressive overload blocks stop rest start again lift heavier let's build lean muscle let's follow the science here I don't think it's good enough to just sort of set and forget with a lot of things and yeah I think it's really important that the industry follows the science because as the consumer does.

21:40Matthew Januszek:I was recently listening to the Alex or Mosey. He just did a big launch last weekend, which is pretty impressive. If you don't follow him, I definitely recommend you check him out. But one of the things that he talked about is similar to what you've said here is about product. Obviously you can put a huge amount of money behind your marketing to generate leads, but if your product's not great, then that's not going to work. And you've touched on it a few times and I just wanted to go in a little bit deeper because I think this is a really important subject to discuss, but your brand's known in Australia, as you mentioned, it isn't really known at all in the United States.

22:17Matthew Januszek:It's a huge market. So when you put it out there on social media or anything like that, they're not going to have any recollection of who you are and whether this is a trusted brand and all of the things that you need to provide confidence in people coming in your studio. So I was really just curious from a marketing perspective, number one is what have you done to be able to get people through the doors that's been successful. And then second to that, how have you positioned the product particularly? Because there are so many, like if you put Pilates in Google, there's just so many people that are offering it.

22:58Matthew Januszek:So what is it? Is it about the offer or the promise that you're making to people to get them in? Because clearly something that you're doing in a new market has been working. But I'd just be curious to sort of understand, you know, those key parts, you know, one, from a marketing perspective, what's gotten through the doors? And then two, what's helped to increase the conversion rate based on the fact that you've got a ton of competition in a very sort of well-established marketplace? Yeah, and I'll bring this back to Hermosi. And this is one of actually his quotes. It's create undeniable evidence, right?

23:33And, you know, we do a lot of member surveying and I think our most recent survey, we had an 8.8 out of 10 rating for programming. So there's a lot of these things that we do and then we hero them from a marketing perspective. I think the, you know, the novelty of having a rower or a bike with a reformer and strength training fused is enough to keep people interested and keep them engaged and really want them to at least come in and try it. Um, but yeah, it's, it's just a, um, it, it, it's been more about creating the evidence within the consumer and then amplifying, um, the results based off the consumer sentiment.

24:17Um, yeah, the, the marketing promotion is a big one, but I still, and, and another Homozi one brand surpasses everything, you know, his, his little quote that he does, I still think product heroes, everything. and I think just talking about the concept and getting it out there has been very helpful from a pre-sale perspective. Now next year we'll open, I think there's about 110 LOIs in the US, we'll open about 40 locations in the US next year alone. There's about 150 sites sold now as well the US and the strategy for us is not about becoming a national brand from day one it's about becoming a trusted and exciting brand within a suburb and then within a city and then within a state and growing from there it is and boutique is the biggest intangible success factor is is community and I think referral is is highly undervalued so just focusing on on sort of local markets is really key for us.

25:26And yeah, it's going to be a really exciting year. But so far, Matthew, like every studio that's launched in the US for us is open with three to 500 people on packs or memberships. And I really do think the unique style of the workout is really the hero here. Well, something that's been the news, especially the last couple of weeks, is this topic of class pass. I think we're going to come back and do a more deep dive episode on just the history of ClassPass and where it stands today. And Michael, I know you and I were just sharing texts over the weekend about this topic and this movement in New York.

26:04I think it was led by a creative director of Tonehouse who wanted to have almost like a ClassPass free month for the month of August. And there's this hesitation and this push against ClassPass. Personally, we're going to be announcing at ABC Fitness a new partnership with ClassPass coming up hopefully in the next couple of months. I've gotten a chance to know the team. I think going back to when ClassPass first came out, I was always a little bit at arm's length with how to integrate them. Is this a pro? Is it a con? Is it going to condition the consumer to expect something at a certain value when really the perceived value is much higher and you couldn't help the comparisons to things like Groupon which was around even before that and I know you've also had a similar journey Michael as it relates to ClassFest where I think initially at least from what we were chatting you were hesitant maybe didn't have a positive experience towards it but to me like any other tool it really comes down to how disciplined you are and using any tool candidly.

27:12You could either abuse a tool or you could use it as an acquisition method if used smartly. And then you've got to build the mechanics to convert someone from being a ClassPass member to becoming a full member. We've seen clubs successfully do that. So we'd love to just get your take on ClassPass, this movement in New York, and really this, there's a lot of boutique studios that are almost violently against ClassPass, but I'm looking at this saying it also brought a lot of people to you now the fact that you couldn't convert them to becoming a more premium member is that more on class pass or is that more on you or is it more on your product i guess the problem is it's you know for the for the studio or the boutique offering or the gym or or or the massage therapist or whatever it is it class pass is a it's an exceptional offering for the consumer um you know we we like it we of of of our 32 million dollars in network revenue last year i think less than two million was class plus so let's call it less than five percent so for us we use it as as as fillers you know we we utilize this sliding scale where if the class is busy um and and someone from class plus comes in they're going to pay a premium for that spot but on the other hand if it's empty they're probably only going to get eight nine ten eleven dollars in the studio will only get that in revenue for the class so i think you know there's pros and cons it's um we like it but i can see why almost low performing studios may have an issue with it and i can also see and i think class pass um they know this intimately that if they get too big it can become a problem and i know in markets like singapore where there are a lot of class pass users the studio owner or the brand needs to really negotiate with class pass to ensure that their bottom so let's say that the cheapest value for their class isn't too low where where it's going to ruin their business model so um look i can see pros and cons to both again i agree with you like if it's utilized the right way it's a great tool we've converted quite a few class pass goers but there are a whole lot more that we haven't so yeah the jury's not out put it that

29:35Matthew Januszek:way do you think that some of it has got to do with what you've mentioned earlier whereas people that you know maybe people are using class pass relatively successfully maybe the the ClassPass represents a large percentage of their income. And maybe they're one of many businesses that are offering a very, very similar service. And so look, you know, probably what it sounds like, and I've not really gone into it, but, but, you know, looking at ClassPass as being the problem may be a misunderstanding of probably what's going on in, in, in the business. Whereas, you know, really all they're doing is providing leads, but you're, you're essentially not able to convert those leads yourself.

30:20Matthew Januszek:So it comes back to what you said earlier, which is your product probably isn't strong enough on its own to really do what it's supposed to do. So you're sort of indirectly relying too much on a bit of a crutch that you've got to solve in another way rather than just boycotting Glass Pass. I'm just sort of wondering whether the solution, the problem is a little bit deeper than maybe what it sounds like on the surface? There's probably a little bit of that, but I think there's also a huge amount of ClassPass users that will never come across to a gym because they get too much value and too many options and they get it at such a good price.

31:00So, you know, I think there's a bit of both. Again, I think the ClassPass needs to work with your business model and you need to work with them to ensure that it's priced accordingly and it works. Otherwise, if it doesn't, don't use them. But there's an old saying, people bring people. And if you have quiet classes and you just need to fill those classes with bums on seats and literally have people there, you have much higher opportunity at converting members. Like there is nothing worse than going to a boutique class with two or three people. If you go to a session with 15, 18, 20 people in there, the energy is high.

31:40and generally it's much easier to convert members because people follow people they really do and and people like doing what's cool and and and they like the energy in the community and and all the things associated with what make boutique fitness great um class pass can support that so yeah interesting topic well we're almost at a time and uh just typically michael we wrap up our episodes with the final thoughts. I'd love to start with you in terms of, do you have a key takeaway from this episode or what are you looking at? I mean, there's so much happening in your life, you know, moving here, the growth of Strong.

32:18Any key takeaways that the audience should look forward to in 25? I think that a bit of a theme with today's chat has been product and focusing on the consumer. I think, you know, the biggest question I actually get is, should I start a franchise? from like one, two studio owners that want to grow the business. And my answer is always, it's always the same. It's open and then go into hyperdrive of identifying what your consumer wants, needs and values and innovate like crazy until you get there. So I think the key thing is like in this industry and where we've been successful is just diving into what the consumer wants and making the product work for them.

33:03And really, that's really been the key driver to our success. I have you focus on product and really meeting the consumer where they are. Matthew, any key takeaways for you?