LIFTS Episode 98 - Strava vs Garmin, Basic‑Fit Expansion & AI's Rise with Leon Rudge

0:00If you've got one that you like a strategic partner like you know Garmin Strava then I think there's a lot more round the table conversations that should be had and a bit of an expectation of who's you know who's going to do what.

0:13Matthew Januszek:Where do you think we can potentially see something happening in the next few years as it as it relates to strength? I've been seeing strength solutions for probably you know 12 to 15 years and none of them have seemed to crack it.

0:33Matthew Januszek:Welcome to this week's episode of LIFTS. I'm Matthew Januszek. I'm here at my end of my two-day retreat. I'm in Yucca Valley. You can see the yucca trees behind me. I'm here with my co-host, Mohamed Iqmal. How are you doing this week? Well, I'm really jealous because I'm not at the Yucca Valley. I am in Arlington, Virginia. It is a beautiful fall evening. We are recording this a little bit late. We've got our guests coming in from Kuala Lumpur, which we'll get to here in a minute. But tell me more about this retreat, Matthew. I'm really intrigued. You never told me about it. You tend to do way cooler things than me.

1:11Matthew Januszek:Well, I think it's probably a podcast on itself. You know, when you go away and you have one of these, what do they call it? Like immersive environment. So I've been immersing myself in this for two days. And yeah, I've got a lot to say, but I'm kind of in the final stages of integrating a lot of the things that I've learned. So maybe it's best that I don't go off track too much because maybe it kind of like needs a little bit of warming up before we get to that sort of stuff. But definitely worth having a conversation. And if you want to check out, I'm with a gentleman called Paul Lubix. He's the wellbeing manager.

1:47Matthew Januszek:He's done work with some amazing individuals and businesses and has a very interesting concept around health and wellness and longevity that we should probably talk about at some point. Well, I really love that you are loving the retreat. I need one really bad. I've been putting in, I don't know, 80, 100-hour work weeks the last few weeks, traveling everywhere in all the time zones. But no, it sounds phenomenal. We should do a podcast about it. Look, I'm really excited for our episode today. We are diving into three big stories shaping our industry. One, which I was kind of surprised to see, kind of heard some rumors about it coming, which is the largest gym merger in Europe.

2:30Another one is a legal showdown between Strava and Garmin. And I've got tons of opinions there. And finally, a digital app called Ladder and the push into nutrition tracking. We'll also close with something a little bit broader. I have a special final thought for today on AI, which seems like a lot of people are really interested in AI and recovery. So I've got a couple of thoughts there. Joining us today, we've got a special guest to help us unpack it all. And he is someone who's been behind the digital transformation of some of the world's biggest fitness brands, Leon Rudge. Leon has spent more than 25 years in fitness technology, leading digital strategy, product development, and innovation at companies like Life Fitness and MyZone, where he started as global head of product, but finished his career there as chief digital officer.

3:24He now advises operators, suppliers, and investors on how to use technology to grow smarter, not just bigger. Leon, welcome to Lyfts. Thanks for having me. And Leon, where are you calling in from today? I'm currently in Kuala Lumpur. I've spent the last four months in Southeast Asia just following the digital nomad scenes to try and learn a little bit more about what some of these young tech entrepreneurs are doing. So now I've got two people I'm jealous of, and I will live vicariously through both of you. So I'm curious. So you were in the UK, and now I was actually going to ask you about this even offline.

4:00We could do it on the air. What made you go to Southeast Asia? Is it just to explore the scene? Because I know a lot of people, not just you, who are actually there doing the same thing. Yeah, it was exactly that. I mean, the amount of digital nomads in places like Bali is just incredible. The co-working spaces are second to none. You know, there's a bunch of digital entrepreneurs, a bunch of digital nomads, a bunch of remote workers. And they're here in their droves. And one of the big drivers that I didn't really realize until I got out here was that actually most of these people love to help.

4:40So if you ask a question, you'll spend 15 minutes just, you know, they'll spend 20, 30 minutes just talking to you about whether it's crypto, whatever they're doing, they'll talk to you about it. So, yeah, so I've been moving around a little bit, but there's some really good digital nomad hubs. And that was the big driver, really. there's a you know as I'm sure we'll get into there's a whole new revolution going on and I

5:01Matthew Januszek:wanted to just uh put my ears into it basically I've been fortunate like yourself to to get to travel quite a bit and um it certainly helps to broaden your perspective it helps you to look at things differently and in most cases you you you get inspired by new ideas that that are relevant to the areas that you're in and conversations that are happening. It sounds like you've really immersed yourself into this world, and I'm sure you've met lots of really interesting people. But when it comes to technology, and if you contrast this from where you came from, which was very traditional corporate culture, life fitness, my zone, what would you say is something that is resonating with you, this sort of this new version of Leon now that you've traveled and you're you're in the hub of what seems to be happening in Southeast Asia I think that's exactly it there's a big difference between traditional and you know advanced I mean it's actually overwhelming what what uh you know some of the stuff I'm learning or hearing or listening to um but these guys act in a completely different way think in a completely different way they're absolutely obsessed with technology you know they talk about AI and nodes and you know compute power it's just it's completely different and the best way I can describe it is like you know I kind of you know I was a programmer in the late 90s and been around for a while and just found myself in spreadsheets and you know having conversations about saving money on the speed of internet lines whereas I hear it's you You know, they're actually, you know, talking about how much pressure, you know, AI agents are putting over tokens and things like that.

6:49So it's a completely different conversation. And I'm learning a lot. But there are some traditional, you know, remote workers out here. There's email marketers, designers, right the way through to, you know, YouTubers who are putting together, you know, some of these AI walkthroughs. So it's overwhelming, to be honest, but it is a completely different world. Well, let's go ahead to our first story, which is going to pick up in Europe where BasicFit just made a major power move. They've agreed to acquire CleverFit, which is a German-based franchise fitness with roughly 493 clubs and 1 million members spread across seven countries.

7:29They actually have some non-branded clubs, other brands here in the US. I think, Matthew, you and I visited one called Fred Fitness, which is part of that family a couple of weeks ago. The deal is worth 175 million euros and will bring BasicFit's total footprint to more than 2 ,100 clubs across 12 countries, making it Europe's largest fitness network. So on paper, this looks like pure scale, but to me, there's been a deeper story here. BasicFit operates company-owned, low-cost models, while CoverFit runs a franchise model, which is entrepreneurial, decentralized, and really heavy on local ownership.

8:10Investors initially weren't sure what to make of it. BasicFit's stock dropped about 4 % after the news came out. UBS actually flagged potential delays in integration and expansion. I actually work on a lot of M &A strategy in the world that I'm in now and over the last 10 years. Leon, really question for you. I mean, you've kind of seen some of these integrations happen and you've seen large scale rollouts close up. What do you think the real motivation is behind this acquisition? Is it geographic reach? Is it basic for getting into franchising? Or do you think it's something else entirely? I think it's probably a bit of both.

8:45I mean, I only read the story yesterday, but, you know, and again, not heard some of the rumors, Moe, but, you know, it definitely just something I got to yesterday. But for me, it's a little bit of both. You know, BasicFit have been exploring that franchise model. And, you know, as we know, they've been growing 100, 200 clubs a year for many years now. So, you know, it's growth by acquisition as well as, you know, being able to test a new business model in franchise. you know I certainly think it's you know it's going to be a busy road ahead for them for sure

9:20Matthew Januszek:clearly for clever for it clearly it makes sense otherwise they wouldn't do it but what do you see what does it mean for the industry in terms of other fitness brands what does it mean for the consumer do you think by by having this offering does it does it mean that they can continue to get affordable access to fitness around the whole of Europe. I'm just curious to get both of your views on that one. I was actually surprised at the valuation. I would have thought that if the same deal happened to the US, it would get a much higher multiple, given the scale of both organizations coming together.

9:59I think Leon's right. Franchising is a muscle, and it's something that you have to be really, really good at. I mean, you look at basic fit, which is all corporate-owned. They probably didn't have the team and the people, so they might have wanted to execute franchising to scale their growth, but they probably didn't have the infrastructure, the team, all the tools that are needed. It's a very different business than a corporate-owned business, and that's why you very rarely see successful examples of that. In the US, you've got Crunch Fitness, which has a few corporate-owned gyms, but mostly have grown through franchise, and they're not adding many more corporate-owned gyms anymore.

10:33Gold's Gym is another one, which is owned by RG Group, which is another German company that has a couple, I think about 20 or 30 corporate-owned gyms, but largely most of it is franchise-based. And I just want to add that I think that from a theme perspective, we're seeing a lot of M &A happen here, but most of it, Matthew, has been driven in the US at least through private equity. So the fact that this was purely done on a balance sheet basis, I think is remarkable. I think there's a great deal for basic fit. They've got such a good reputation. They have an incredible technology stack. I'll be curious to see how this integration happens.

11:11And I don't think it's going to be all that easy. I'm with you on that, Mo. When I sat back and actually thought about the integration, it was wild. And certainly from the tech side of things, I think that's going to be one of the most, If that is a plan, I think that tech integration is certainly sizable. And I think that's going to be a huge task and something that I don't think is critical to rush, but I think it's going to take some time. So I think, as you said, the integration is going to be quite interesting.

11:48Matthew Januszek:If you think of Tesla and a lot of people think that they're an automobile company, they make cars and vehicles, but really they're a technology company and what they've been able to build into their cars and the data that they capture and how that integrates with other products that they've currently got and are developing is that there's a much bigger picture than competing with other automobile, if that's what you call them, automobile, it sounds weird, car manufacturers, but probably been in America too long. But I was just curious, like now you've got this scale. I just I wonder whether some of this could be about data and technology, because the gyms themselves, as you as you guys have explained, it's very difficult to integrate.

12:34Matthew Januszek:It's not like it's in America where everything is one country, one language. It seems as though Cleverfit are operating in a number of different countries with different cultures. and it's a lot more diverse and probably, or definitely a lot more diverse than you'd see in the United States. So I just wonder, as these organizations get bigger, do you think that there's any of them looking at it from a different play and that there could be a different business model outside creating affordable gyms? I think so. I think technology can be certainly a big growth factor of an acquisition. um i'm conscious that basic fit already do quite a lot of home fitness um and i'm wondering what other business models they could spin out of that uh but again it's um you know it's a really interesting one because you know i think clever fit use the e-gym app and you know basic fit have their you know their homegrown app i believe i believe i think they use virtual gym yeah so they've got a homegrown one so they're you know for me there'll be lots of questions as to um you know, which one of those is successful, you know, what's the engagement like, you know, and I think it'll be interesting to see whether we, you know, continue to use a supplier, whether we continue to grow our homegrown team and merge those two together.

13:56I think, you know, there's a big question on what data that we need to merge together and put into some kind of lake. So I think there's, you know, there's quite a lot to consider there. And again, I don't think it's something that should be rushed because i think you know you've got two really successful businesses that could essentially run in parallel um and i believe there's kind of strategic conversations happening next april from what i read so there's certainly i don't think there's any pressure to start moving on anything in 25 and you know maybe start to execute on uh kind of single brand and maybe you know some of the technology integration into 26.

14:31it's absolutely a complicated deal. And even as a vendor who serves the industry, thinking about partners like WellHub or Sport Alliance that are both in Club of Fit E-GEM, what would it mean for those contracts besides all the other integration issues which are happening? Well, let's move on to our second story, which has actually, if you guys want good entertainment, go look at some of the Reddit posts under Strava with this, because it is hilarious. So I'm calling this one of the more dramatic headlines and connected fitness. So at the end of September, these are both companies I've worked with.

15:07These are both companies I've known. I'm actually a Strava shareholder. That's a different story. But at the end of September, Strava filed a lawsuit against Garmin claiming patent infringement on segments and heat map features, which by the way, I've not been able to find in my Garmin Connect app, and alleging a breach of a 2015 partnership agreement. Then barely three weeks later, Strava dropped the case entirely. So Garmin accounts for roughly a third of all activities uploaded to Strava. So if that integration broke, millions of athletes would have been stranded overnight. The trigger seems to have been Garmin's new branding policy, which requires its logo on third-party uploads.

15:51Strava is calling it excessive and overreaching. Leon, you've seen plenty of partner disputes. Was this a strategic warning shot or a misstep on Strava's part? Yeah, that's a really interesting one. I wonder how strategic it is because I think they're heading into an IPO, and it's caused quite a lot of noise. And as you said, comical noise. It's kind of like social media is riddled with people just thinking like, you know, absolutely huge lawsuit, and then a one-page exit saying, we're now pulling out. So I'm not sure if it's a case of all news is good news, but I'm not sure if the timing was perfect in terms of an executive team that makes a decision to do this with one of its biggest partners.

16:39So I'm not sure whether the timing was strategic or not. But I do believe that if you have integrations, I think, are essential in most industries. is the whole micro SaaS world runs on API integrations. And I think it's something that's essential for us in fitness. But I think if you have a partnership like Strava and Garmin, I just think there needs to be a lot more to it. The way I used to think of or still think of partnerships is there's kind of a works with, connects with, and integrates with or partners with. So it's works with, integrates with, partners with. And I think if you've got one that you like a strategic partner like Garmin Strava, then I think there's a lot more round the table conversations that should be had and a bit of an expectation of who's going to do what and a bit of a document that suggests what we're going to do with the data, etc.

17:40So I think that, I don't know, that might already exist. But, you know, one of the best ways to stop those partner disputes is to, you know, to have it documented, especially if they're a strategic partner, because you're going to get pretty close and your integration is going to be pretty deep. So I think definitely, I'm not sure if it's a strategic play, Mo. I'm not sure what your take on that is, but I'm not sure the timing's perfectly with the IPO coming around the corner, apparently.

18:07Matthew Januszek:I'm not familiar with either. I don't use either products outside of the fact I recognize the brand. So can you give us an overview of those two brands and which one you mentioned? I've just scrolled through some of the stuff on Reddit and there's a lot of criticism of both brands on there. But which one would you say is more of a favored brand across the two? And I suppose, yeah, give some context to sort of what position those two brands sit and why, you know, what could be going on here? Before this, I would probably have said Strava is the community, right? Because you could bring in all your wearable data, no matter what wearable you have, and you can all engage with your community and your friends and cheer each other on.

18:50What the issue here is Strava has gone through complete management revamp. They've brought in a lot of people who aren't from the industry, candidly, like not even if you think of Strava's DNA originally, they were formed by people who I know, Michael Horvath and Mark Ganey. phenomenal individuals, roommates in college, formed this in New Hampshire in their dorm. I think they went to Harvard, actually, but they're from New Hampshire on the crew team and built this in their dorm room. And for the longest time, when you go to the Strava office, they had things like showers and bike racks, and they worked out once a week and all the things.

19:27You go to the new office now, which I've been to a couple of times, right in downtown San Francisco, the shower's in the basement. It's not thoughtfully built around outdoorsy fitness. So just the DNA has changed. Part of me wonders who they're getting advice from, if it's their new legal counsel or whoever is advising them, because going after a community, which is exactly what they did, right? So imagine if you're a part of this. Matthew, imagine if you're part of the MyZone community, which you are. You are in the hall of fame and the highest tier at MyZone. And imagine if MyZone just said, you know what?

20:04I'm not going to charge you$100 a year for a subscription. And you have to buy a new hardware. Or they completely changed something that is so core to what you've worked so hard to achieve. That is what Strava did. So I'll just say it bluntly. I think Strava completely misread this one. They picked a fight with their biggest data partner, the very company that is feeding them the most valuable user activity in their ecosystem. It's the equivalent of biting the hand that literally powers your platform. That is how crazy this is. So Leon said it well. I mean, in a world where partnerships have really driven product value, they picked the wrong strategy.

20:41So instead of lowering up, which is what Strava did, they should have leaned into collaboration. Get in a room, fly over to Garmin. Don't have them come to you. renegotiate the terms if you have a concern about it, show collaboration, show, I would even come out of this with a tighter integration and tighter partnership, even a co-branded kind of campaign. So when you build an ecosystem business, which is exactly what Strava is, you cannot afford to alienate your supply chain. And that is what they did. Here's what happened after, right? Garmin, a lot of Garmin users just deleted Strava. They are, they have churned, if I were to take a guess Strava has turned at least 5%.

21:22And you're right, Leon, I mean, they are approaching an IPO. This is the absolute worst kind of news that you need. And I know people personally who've canceled their memberships to Strava over this. The other thing to mention there, Mo, is this, it's almost like Strava focused a lot on the community through the years and built out the product, but not so much on the partner strategy. I remember working with lots of wearable and aggregators, people that integrate with multiple aggregators and bring that data in. And the biggest risk there is change to API strategy and lawsuits about how you're using the data.

22:01But for me, that's the beauty of API is that I can pull in the data from your ecosystem. I might have to pay for that or not, but I can pull that data in. How I process that and display that is completely up to me because I'm doing that for my customers. So I think that Strava might focus more on that community element and not so much the partnership thing. And I remember probably about five or six years ago, they literally turned off about 4 ,000 integrations for any customers that weren't premium accounts. So if you were a business that had 80 % of your integrations from Strava basic customers, your business just collapsed overnight.

22:39So I think you've got to get these integrations and works with, integrates with, partners with and tight and documented if it's a huge part of your business. But to see these two behemoths playing as they are at the moment and then backing down quite simply with a couple of page document was really interesting. So Strava had the lawsuit, I think, on the other side. They just sat there. They're like, you want to come after us? Come at me. And they did not blink. They did not budge. And really, all the credibility was lost on Strava's part. So Matthew, hopefully that was helpful. Does that help you provide some context?

23:21Rob it whole. There's a rob it whole. It really is. Well, I want to move on to our third story, which is really interesting. We've talked about this app, Ladder, which candidly has grown faster than any other digital app. So when a lot of digital at-home companies are really struggling for growth, Ladder continues

23:39Matthew Januszek:to do really, really good things. And I think it's because they create small groups, they have a coach that you can relate to, and they have community. And the programming actually works. So you make a good product that people want, people tend to stay. But they still are struggling with retention like anyone else, candidly, even the gym industry. So they just recently launched adding nutrition into a snap. So nutrition is interesting because food tracking, I believe this year in 2025 has gone through this complete revolution and we should probably do a whole episode on it. In fact, a couple of episodes ago, we had Rami from Alma speak about that.

24:17I think that episode has come out on his new AI based tracking app or added tracking into its ring app. So you're finding everyone getting into food tracking because again, as the old adage goes, right? Abs are made in the kitchen. So Ladder added nutrition tracking to its app. Now users can log meals, track calories, macros, and align food intake with their training plan. This is really a retention strategy. Here's why. Studies show that users who track both workouts and nutrition have a 30 to 40 % higher retention rate than those just tracking workouts alone. So Leon, I will start with you here.

24:53I mean, this to me seems like a natural evolution. I don't know if you've used the latter app, but do you think that this is the new baseline as we go into this new integrated wellness ecosystem? Absolutely. I think it's a super smart move. And I think, you know, some of the stuff that I've read, you know, they spoke to their customers first and they said, you know, you know, which for me is one of the most underused and most critical thing. And I think the customer said, hey, yeah, we'd love to just have it all under one roof. You know, we want to know calories in and we want to know calories out.

25:25and what the benefit is to us. But I think it's a fantastic move. I think, and I also think the way that they've pulled it together, they haven't just chucked in like a barcode scanner. They've done the picture scanning AI. They've done the voice, which I think is fantastic where you just describe your meal and it estimates the calories. But the other thing I really love about here, this new feature or this new product even, is that they've added in the gamification. So they put in the rewards, the streaks, the badges uh you know and again i think that's one of the most underutilized uh one of the most underutilized things for you know continued retention or continued engagement so for me it's absolutely a natural next step for you know this complete wellness platform um you know and i think they've come out the gate i'm i wasn't super familiar with ladder i'm aware of them but i've not used it but i think it's a a super smart uh product and i think they've um you know not just come out with some kind of clunky mvp i'm sure they've did that across their tests but you know they've come out with a well-rounded product that they use a scene to like you should tell your digital nomads in southeast asia because they will all love ladder it is it is really good is perfect for your community.

26:46Yeah.