LIFTS Episode 97 - How Gyms Can Stop Chasing Gadgets and Start Healing People with Dr. Sean Pastuch

0:00Recovery rooms are a lazy man's way to signal virtue in terms of innovation in the fitness space. It's not innovative. It's not cutting edge. It's not people first. It's if I can throw enough money at bells and whistles, you'll be excited to come and see my gym. And it's the same race to the bottom, unfortunately for gym owners, as all of the other things that have come and gone in the past.

0:32Matthew Januszek:Welcome to this week's episode of LIPS. I'm Matthew Januzek and I'm here with my co-host Mohamed Iqbal. How are you doing today, Mo? I'm a little bit jet lagged, Matthew. For a change. For a change. I mean, I had a last week was an intense travel week, I think even by like our standards, and we're all known to travel very aggressively, but went off on Monday to Chicago to the Fitness Technology Summit, which was so nicely done because we kicked off that Monday night with a tribute service that our friend Al Noshavani put together for Rick Carroll, who passed away, who's an industry legend and just so beautifully done.

1:11His wife was there. It's funny because in that room, the joke was, like everyone says they're a great friend of Rick Carroll. So I was a good friend of Rick Carroll. And he spoke to everyone on that Friday. But what a wonderful person, such a big contributor to our industry over so many decades. And I was in a meeting early today just kind of talking about lifespan and healthspan, and we're going to get into the topic here. And I actually brought up Rick Carroll in that because he passed away on a Saturday with his wife. But on the Friday, he was at the U.S. Open having a great time and doing business and talking about the industry.

1:54and just living life to the fullest. And even that week after, he was set to travel somewhere else. He was in fact going to celebrate his birthday at the Fitness Technology Summit. Here's a guy who not only did so much for industry, worked out every day, continued to be active, continued to be an inspiration. And when you think about how you want to live your life, it's really living life to the fullest, which I know our guest today is going to completely agree to, living it fullest all the way till the end and going knowing that you've done incredible things. And then after that, I went to Sydney where I had a great panel discussion at South by Southwest.

2:30We actually got that in recording. So we're going to try to get that on a future episode of Lyft. On the way to Sydney, my flight got diverted. I had a pit stop in Brisbane. I used the time to go to this incredible gym, which we'll come back to call Total Fusion. But anyways, came back on Saturday, still feeling the whatever, 19-hour, it is, time difference, but excited to do this podcast. So we're going to be talking about what is a really popular topic on our podcast. We've gotten incredible feedback around it, and that's been the subject of recovery. And hopefully people aren't tired of it hearing more recovery, but we're always bringing a different perspective.

3:09So everywhere you look, you see co-plungers, you see red light pods, Norma Tech boots, cry chambers, IV drips. The recovery movement has exploded. And it's easy to see why. I've got some data here. Global wellness is now a$5.6 trillion industry growing twice as fast as a global GDP. So everyone wants to cash in. Within that particular segment, recovery and longevity services are among the fastest growing segments projected to top$275 billion by 2028. That's only two years away, guys. But here's the paradox. While gyms are spending millions to help people feel better, are they actually helping them get better?

3:54You're adding all the services. Are people actually getting better? Our guest today is someone who's never been afraid to challenge the status quo. He's been outspoken. I've known Sean for a couple of years. So Dr. Sean is the founder of Active Life, which is a movement that is kind of redefining how fitness and healthcare intersect. We'll get more into that here in a minute. He's a chiropractor. He's a coach. He's an educator. Always with the tightest haircut and fade every time I've seen him. I've seen him a lot and believes the future of fitness is not just an AI or a gadget. He really is an advocate for people.

4:31As long as I've known him, he's been an advocate for people. Sean's career is fascinating. And actually, just in preparation for this pod, I learned that he turned down a pretty lucrative offer to work for his family in Hong Kong, where he was told he'd be a millionaire by 30. Pretty attractive for someone in their 20s. but instead he chose to open his first gym and clinic instead. And that decision speaks volumes for Sean and who he is as a person. And it's really focused on not only how we make an impact that matters a lot, but it matters a lot more than how much we make. So Sean, welcome to Lyft.

5:09It's really great to have you here. Thank you, Mohamed. I appreciate you guys having me on.

5:13Matthew Januszek:I was going to ask the first question about like, have you now decided that it was a bad idea to turn down being a millionaire by 30? But I'll let you answer that one in a minute, but maybe we'll just start first. I think it's not okay.

5:31Matthew Januszek:The conversation that sort of got us talking is we were very much discussing a lot of the rooms that many fitness clubs are investing in. And you and I have known each other through some mutual friends for some time now. And you kind of gave a very different perspective on the trend to invest in recovery rooms that got me thinking slightly different about it. So for my first question, really, is when you see many of these gyms that you're working with and we're working with as well, investing tens or even hundreds of thousands of dollars in these recovery rooms, what does it immediately tell you about where the industry's priorities are at the moment?

6:15May I answer that by giving some people a little bit more background about me so that they can know where I'm coming from when I answer the question? Yeah, you can kind of like defend yourself before you're upset.

6:25Matthew Januszek:Okay. That's okay. So my name is Dr. Sean Pestuj. For people who don't know anything about me, I'm best known for being the founder of my company called Active Life. I've written a book for fitness professionals on ethical sales, and I do a fair bit of public speaking. And my perspectives come from helping hundreds of people overcome their chronic pain in my clinic and in my gym. And I found myself mentoring fitness professionals from around the world to do the same for their patients and their clients. The problem that we face that I think this whole recovery system is aimed to solve for, but I think is going to fail, is that over 50 million Americans struggle with chronic pain every single day.

7:03It costs the American economy alone more than heart disease, diabetes, and cancer combined. So when we look at the financial opportunity to solve for this problem, it makes sense that people would be going after it. It's just that I'm not sure recovery is the way to go, and we'll talk about that in a second. My aim is to develop trainers to become the people who can solve this problem. And in a world where we do that, I believe that we actually make chronic pain a thing of the past, and we can start to think of fitness as healthcare. I think that that's a much more exciting way to go than just putting recovery beds in gyms.

7:38Now, my opinion on what it means about the marketplace as we go in that direction, Matthew, is people are not keen on investing in people. They'd much rather invest on a passive asset that they believe they can leverage than take a chance on a person who could burn them or who could fail or who could make mistakes or whatever the case might be. And I think that's extremely problematic and opportunistic for the people who want to zig while everyone else is zagging. Do you think recovery rooms have become a form of retail therapy for operators? So it's an easy way to show innovation without actually improving outcomes?

8:18Because if we framed recovery not as a room, but as a practice, which you and I have spoken about for years, but proper sleep, nutrition, stress modulation, active rest, the design of a gym might look very different than how it is today. Today, you've got, in a lot of cases, HVLP and premium recovery rooms are kind of cornered out. They're kind of this premium thing. You may have to get additional access to it, to your point. Not an investment in people, right? They're typically not educating the staff on the efficacies of the therapies. But one of the first exciting things people show you on a gym tour, and I go on many of those, is look at what we have in recovery.

8:59Recovery rooms, the way I see them, recovery rooms are a lazy man's way to signal virtue in terms of innovation in the fitness space. It's not innovative. It's not cutting edge. It's not people first. It's if I can throw enough money at bells and whistles, you'll be excited to come and see my gym. And it's the same race to the bottom, unfortunately for gym owners, as all of the other things that have come and gone in the past. I'll explain. If I put a recovery room into my gym, I have to be able to sell you on why the things I chose to get are the best. Why there's no better things than the ones that I bought for my gym.

9:42Well, what's going to happen next month when the companies I bought from come out with their new model and the gym down the block goes and buys that one? I now have an obsolete red light bed. What good is that? I have the model that's below the new model. So I'm in a constant chase for people think it's a passive asset that they buy once, they set it, they forget it, and the cash flows because it drives membership. They think they can advertise it. It improves retention. Nobody's actually measuring it, but they'll swear up and down that it does. But what happens is you actually have to keep buying the new version to stay up with the Joneses.

10:20And the companies who make this stuff are smart enough to know that. What they're going to be able to do is innovate just like the iPhone. We all know the iPhone 762 is ready now, but they're going to give us the iPhone 18 next, right? And so we have to keep buying the new feature. These companies will, if they're smart, they'll have buyback plans. They'll take the parts apart. They'll put them into new ones. They'll send them back out. And they'll make money hand over fist while gym owners compete on having the most expensive equipment for the lowest price to access. And that's not how we're going to move forward.

10:52To speak a little bit to the multi-trillion dollar wellness industry that you talked about before, it is a huge industry. And it's important for people to know what's included in that industry. because oftentimes I think that the thought of wellness as a category gets both the optimism and the trash, depending on who's talking about it. If we're going to actually calculate what's a wellness product, organic produce is a wellness product. Toothpaste is a wellness product. Shampoo is a wellness product. And so there are basic hygiene things that we all buy all the time that fall into the wellness category.

11:33The reason why it's important that I say that is not to poo-poo the value of wellness. It's because what you'll hear from the, quote, science-based community is that the wellness industry is just a fast cash grab. And what they're trying to do is take people who don't adhere to strict scientific study because they understand how scientific study is funded, and they'll make them seem lesser, as if they're in a cash grab for$256 billion. But the reality is that most of the money in the industry is going towards hygiene and produce, not wellness coaching. And I just want to comment on that really quick here.

12:16So the average gym spends, this is industry-wide, spends between 5 % to 8 % of the annual revenue on new equipment or amenities. And a lot of times when they make the decision for adding that new red light treatment in the recovery room, they're not getting a new rack. Like that's typically the, because they're not going to spend more overall typically. Yet personal trainer turnover still sits at about 70 % within the first year, which is something, Sean, I know you know a lot about. And here's the thing that was glaring to me over the last couple of years. Despite all the investment in recovery, member retention has not improved.

12:53And I'll be curious to get your thoughts on that. The global average for member retention is around 60 % year over year. So we're adding these new rooms to your point. We're not investing in personal training, which we know has a real-world impact on member retention. If you're tied to personal trainer, you have a better chance of retaining. We have data around this. But yet in recovery rooms, it's not really moved the needle on retention. Well, if we look at the retention figures, we should also calculate what percent of the 60 % who retain on the year came in. I would argue that there's probably good data that would suggest people who come into the gym are more likely to cancel than people who don't.

13:36Because they're the ones who realize, I'm paying for this. This is convenient or it's inconvenient. This is working or it's not working. The place is clean or it's not clean. the equipment works or it doesn't work, all of the things that come with it. And so they're the ones who are more likely to make an economic decision about whether they want to be there or not. And so not only would the recovery room not help to retain that person, but if that person looks at a room like that and gets decision fatigue over how do I use it or feels a certain way about having to spend more money for access to it, which is an economic debate and a business model debate, then they're more likely to cancel than the person who doesn't even come in who the gym owner is happy to keep collecting on.

14:20So the retention thing is fickle because I don't believe that that's where it's going to be had. And I understand the reason why gym owners don't want to invest in their personal training department. I should say that too. What happens is you go to invest in your personal trainers. Your personal trainers get really busy. They start to be successful. And then they become disgruntled because they feel like they're overworked and underpaid, but you've put thousands of people in the building for them to be able to talk to, mingle with, grow trust from. And in most cases, you've even paid them to be on the floor to have those conversations.

14:57And then they leave and those clients leave with them. And it feels like they've stolen clients out of your business who they consider to be their clients when in reality, they're your clients, the gym owner. What I would urge gym owners to think about is why that consistently happens. Why is that the status quo for what happens with the training department? Why does your training department feel more like a liability than an asset? And I think that the number one reason for that is because the entire incentive structure for personal training departments is generally, there are exceptions to the rule, but if you think that you're the exception, it's probable that you're not.

15:37The incentive structure is set up in such a way where the most likely outcome is what I just described. Trainers leaving, resentment felt on both sides, everyone feeling used, and a training department that feels like a liability, not an asset. With low incomes, I don't know what data you have, but the data that I have, that I have access to rather, the average trainer makes just$48 ,000 a year. Yeah, well, and they're going to turn at a faster rate than anybody except for hospitality workers. Here's the thing about that. If you work with a financial planner right now, they're going to tell you that you need to live in a place that costs less than 30 % of your take-home income.

16:18Your financial planner is not going to want you spending 40, 50, 60 % of your income on where you live. But personal trainers are asked to do that all the time. they can't make enough money in the appropriate amount of time to be great to be able to pay for where they live. So they need a second job. They need someone else in their family contributing. And it's incentivized by doing more and more and more sessions. The more sessions that you do, the more we can pay you. We can even bonus you. The session costs$100 to the client. The trainer gets paid 36, 35, 40 bucks if they hit their bonuses, right?

16:56But then they're fried. The trainer starts to look at that and says, wait a minute, there's a$60 delta on a$100 session between what I'm paid and what the gym is paid. They don't understand what goes into the gym actually acquiring that client for them because the gym's net net is going to be like 24%. It's not going to be 60. It's going to be like$24. But the trainer doesn't realize that. So for$70, make almost double. It's a no-brainer for the client. It's a no-brainer for me. I'm going to leave and do that. That happens all the time. Every gym owner struggles with this. When you ask the gym owner to charge enough money to pay the trainer enough money that in fewer than 30 sessions per week, they're making enough to pay for their housing with less than 30 % of their income, they'll say nobody would pay that around here.

17:49If nobody would pay that around here, you are not in a market that can support personal training. Or they will, and you're wrong.

17:57Matthew Januszek:Just to close off the recovery question, I'd like to get your thoughts, Sean, on clearly there has been or there is something that's driving this move towards more recovery. My guess is you've got people in the space now, big consumer brands like Whoop, Hyperice and others that have done a great job at creating awareness around the importance of not sort of this kind of work hard, play hard mentality where it's just on the go all the time, which is probably what the fitness industry was known for, particularly coming out of some of the days of CrossFit, where it was a very, you know, you're on all the time kind of concept where now people, whether they're business people or people going to the gym are recognizing the importance of sleep, the importance to take care of your body, whether that's before or post-workout.

18:57Matthew Januszek:There's this move towards this. And it seems as though people have decided to deliver upon that void or to capitalize on that. they're going down a particular method so that maybe we don't totally get confused about where you stand on this point maybe maybe uh tell us your views on where that part of an exercise program or part of your week or month or year when it comes to you know working in or working out or however you define that tell us your view on that um just just so that maybe the listeners don't necessarily get confused that you're not necessarily saying you're anti recovery or rejuvenation of some type.

19:44Yeah, no, the stuff all works. I have a friend who had back surgery about a year and a half ago, and we trained together on Saturday mornings. He has a cold plunge in his backyard and he has a sauna in his backyard. And he credits the cold plunge and the sauna to him having less inflammation. He has Crohn's that's been less active. And he credits the recovery stuff with it. Recovery stuff works. The question isn't whether it works or not. It's a question of who needs it. Is it the asset to your business that you think that it is? Is it where you should be investing your money if you're a big box gym owner who's looking to create better retention and better customer acquisition?

20:27The recovery stuff comes out of the cutting edge of things like pro sports and everybody wants to be like the pro athlete, even though we're not the pro athlete. If you're working out really hard, you're eating a really good diet, whole food, omnivorous diet, or if someone has a different diet, they want to run at me. That's fine. I'm not a nutrition expert. If you're eating a clean, healthy diet, you're working out really hard. your relationships are good, you're able to reduce your stress when it comes on, you're sleeping well, and you're looking for that extra edge, the recovery stuff is great.

21:09I think of it like a supplement that you would take to improve your response to exercise. And too often people, I believe, are thinking of it like the meal. It's not the meal, it's the supplement to the meal. So for me, we don't need to talk about the recovery stuff until after you've demonstrated that all of these other things in your life are working. And if we look at the people who are in the gym, how many of the people are all of those things working for? And if we all agree that it's not many, then we have to look at, okay, well, then what's the function of the gym? Is our goal as the gym owner to optimize monetization of every person who walks through the door at any cost?

21:56And by the way, if it is, that's fine. That's a business model. And then you put the recovery room in and you make a financial case for it. Is your idea to make as much money as you can helping people live healthier lives? Is that what your marketing says? Is that what you say in the private rooms? Is that what you say in the public rooms. If that's the case, then I think that we have to look at the question of, are we doing the best job that we can for the people who are already coming to us to make sure that they can live healthy, long lives? And if we're not, is the recovery room the thing that we should be focusing on financially and energetically, or should it be something else?

22:40And that's where my bifurcation of ideas comes from. So, Sean, you've been one of the loudest voices, and you just touched on this a little bit, saying that fitness must evolve into healthcare. I'm a big believer of it. Matthew's a big proponent of that as well. That's a really powerful statement and one that is already showing up in data. According to Deloitte, 70 % of consumers now see fitness and healthcare as part of the same ecosystem. And nearly half of primary care doctors say that they would prescribe exercise programs if reimbursement models existed. So when you say fitness is healthcare, what does it actually look like in practice?

23:26I don't think we want our doctors prescribing exercise programs for reimbursement. What we do want our doctors doing is finding fitness providers who they can trust to provide the fitness program. The same way that a doctor wouldn't want a trainer interpreting somebody's blood work without extensive practice and then saying, you might have cancer, when in reality, they have a cold and their white blood cells are high, right? We don't want trainers to play doctor and we don't want doctors to play trainer. So I think that's an important thing to start with. When I describe fitness as healthcare, I think that we can look at it in two different buckets.

24:10There's preventative healthcare, which is what I would say most of fitness already is. And then there's responsive healthcare, which is something has already happened to me, but I'm not set for the medical system, how can I use the fitness industry to resolve the problem that I've just run into? So fitness as preventative healthcare would be things like your group fitness classes, your person who just walks into the commercial gym and does a workout because they like being healthy. It's a person who is aiming for maybe an aesthetic goal, maybe a sports performance goal, maybe a social goal, but they use fitness as a conduit to that.

24:51All of those things are undeniably preventative healthcare. Responsive healthcare is somebody is dealing with, for example, chronic aches and pains, which is where we come in. And they say, the reason I can't go to the gym, the reason I'm less active, the reason I've gained weight is I've had back pain for the last 10 years. The physical therapist told me this is the best that it's going to get. I went to the gym and the trainer told me we can work around this, no problem. But I really don't want to work around this anymore. I want to resolve it. It's obviously not a medical problem. The physical therapist has already told them this is the best it's going to get.