Want A Great Business Idea? Find A "Cohort"

0:00When someone comes to my door, I know, because I'm using SimpliSafe. I get an alert straight to my phone and I can see, is this someone I should unlock the door for because I know them? Or is it someone I need to tell to get lost? But here's the thing I love most about SimpliSafe. It works when I am not looking at my phone too, because when I'm not keeping an eye out, SimpliSafe is. SimpliSafe is proactive with a double layer of defense that stops crimes before they start. First, AI-powered cameras spot potential threats outside, and then live agents step in, talking to the person through the camera and letting them know they're on video and police will be dispatched if they don't leave.

0:44They can even trigger a loud siren or spotlight. That's how you help stop a crime before it starts. And SimpliSafe makes it easy to use. There are no long-term contracts, no hidden fees. You can cancel at any time. It was named Best Home Security Systems by U.S. News and World Report for five years running. It offers a 60-day money-back guarantee, so you can try it and see the difference for yourself. This month only, take 50 % off any new system. This is one of the best prices you will ever see for SimpliSafe, so don't miss it. Just go to simplisafe.com slash problem solvers. Again, that is SimpliSafe, S-I-M-P-L-I, S-A-F-E, simplisafe.com slash problem solvers and lock in your discount.

1:33There's no safe like SimpliSafe. From Entrepreneur Media, this is Problem Solvers, a show in which entrepreneurs do what entrepreneurs do best, solve unexpected problems in their business. We were completely wrong. And I'm just like, it's not selling. It was like, we have to start from scratch. I'm Jason Pfeiffer, the editor-in-chief of Entrepreneur Magazine.

2:21what have I learned from other people? Oh, okay. That founder uses this framework to assess a problem. Is that useful in this situation? No, not exactly. Maybe that other, oh yeah, that person talks about this three. Anyway, this is what I always do. And when I hear from listeners of problem solvers, they tell me that they do a version of that too, which is why I'm so excited to talk to the person I'm talking to today. Because the reason we connected is over an idea. I think you are going to be thinking about a lot. It is an idea that he calls cohorts. And cohorts is a word I'm sure you've used in many different ways, but perhaps never quite like this.

3:01The idea is that when you're trying to solve for a problem, the first thing you want to do is find cohorts of people who have already solved that problem. I have a physics background, so an attraction to then try to understand a problem from first principles. What is it that makes this problem hard? What is it that these people are actually implementing to solve this problem? And then the obvious next question is, how could I learn from that and take this to more people? Okay, we're going to dig into that in great detail because for as simple as that sounds, it is very nuanced. Also, we're going to see how it plays out in the very successful company that was created really out of this problem-solving strategy by this person who you just heard.

3:45So let's meet him. I'm Rishi Mandel. I'm the CEO of a company called Future, where we give people personal training with a remote coach. And we are now the largest provider of personal training in America. And Rishi does not exactly have the background that you would expect someone to have when they say that they have built the largest provider of personal training in America. Okay, get this. In short, Rishi started in academia, got degrees in physics and math, was getting a PhD in physics, but then decided he wanted to do something more tangible. That was his words to me. So about 16 years ago, he moved over to building things.

4:22Also his words. I really like the way that he's describing this. His first company was acquired by Google. Then he started another company that was acquired by Postmates, which was then acquired by Uber to power Uber Eats. And then he was an entrepreneur in residence at a big VC fund and a couple other things until he realized that there was a large opportunity in the fitness space. And why? Because really, there was a large problem to solve in health. Americans spend a lot of money, a lot of money on healthcare. Also, we're not very healthy. And he thought, maybe there's a way to solve for that and also to build a great business.

5:00And then he thought, cohorts. I have to go to the cohorts. So on this episode of Problem Solvers, we are going to dig into exactly what this cohort strategy of problem solving is and how Rishi has applied it to build such a strong business. All coming up after the break. Do you want to put your product in front of millions of customers? I mean, who says no to that? Well, I have the answer. It is Walmart Marketplace. That's the platform for you. With more than 120 million unique monthly visitors to Walmart.com, according to Comscore, Walmart Marketplace is one of the fastest growing e-commerce platforms.

5:43And right now, they're running a limited time promotional officer for new sellers. If you join today, you can save up to 50 % off referral and fulfillment fees. Unlock the scale of one of the world's largest retailers and gain instant access to millions of customers on marketplace.walmart.com slash solvers. That's marketplace.walmart.com slash solvers. Head over and get started today. Conditions apply. All right, we're back talking with Rishi Mandel, CEO of Future, about his cohort model of problem solving, which he has used, as he will explain, to build future, to build the future of future. And to start, let's level set with where this model of cohorts is most useful.

6:35I think the topic then today is really about starting and inventing something new. That's, I think, where these ideas are really applicable. And the best summarization of what we're about to talk about is there's this quote, I think it's attributed to the author, William Gibson. And the quote is, the future is already here. It's just not evenly distributed yet. And I think what that might point to, and by the way, I was telling you earlier, I grew up in the Bay Area where early adopters abound. You can sometimes see that there is something that's working for a small group of people. And you could wonder, could that apply to more folks?

7:12And so when I think of just outlining this strategy, I think that is the core belief that I have, that a lot of great ideas exist, but people don't have access. And so this idea of using cohorts, actually, there's multiple ways that we think about this at our company, and I've built and scaled multiple companies now, and this is applied every time, is it's worth identifying a problem and then thinking about where are their small groups of people, even if they're self-selecting somehow. or not relatable to everyone? Where are there small groups of people who have solved this problem for themselves somehow?

7:47What is it that they're doing? You and I talked about, I have a physics background, so an attraction to then try to understand a problem from first principles. What is it that makes this problem hard? What is it that these people are actually implementing to solve this problem? And then the obvious next question is, how could I learn from that and take this to more people? And so that is the best summary, if that makes sense. Yeah, it's funny. in a minute, we'll put some meat on this philosophy because we're talking in the abstract right now. But what you just described made me think about all of the businesses that are oriented around finding solutions in nature.

8:26The idea is that nature has already developed some cellular structure that can be replicated or some ecological system that can be replicated. Because if something developed organically and it works, then that's worth learning from. And in a way, that's what you're describing. It's not necessarily nature with birds and lizards, but it's nature in that people are out there and they face some problem and together they develop some solution that maybe they didn't turn into a company, but just is a thing that works within a community. And if you can identify what that is and understand the logic of why it was built the way that it was, then perhaps it is the foundation of a company.

9:09Am I right? That's very beautifully said, actually. And I think your connection to looking at nature for solutions down to, we have a very, probably in the version we'll talk about, was studying how people naturally solve these problems. But a topic du jour today is artificial intelligence, right? And I think the underlying bet of artificial intelligence is that the human brain, And human thinking and thought is a physical process at the end of the day, right? If you go back 4 ,000 years, there was a belief that the human heart was, maybe there was a physical piece to it, but there was some magical piece.

9:47That's what lights up humans. And over time, we've been able to replicate a human heart, in fact, outsource a human heart for some people. We've done the same for lungs and physical muscles, how we can lift things. And the bet with AI, as far as I can see, is that physical thought is a purely or human thought is a purely physical process. And so that is a great example of what you're talking about. And for us, it's a very similar line, which is where have organic solutions occurred? And then how could you learn from that and replicate that? Yeah. The fun fact to build off of what you just said there, which is not a tangent.

10:25we won't stay long on it, is that the ancients thought that the heart had a lot of the function that we now understand the brain to have, that thinking lived in the heart, cognitive abilities were inside the heart. And for a while, they thought the brain was just a kind of lumpy thing in our head and didn't function. Okay, let's talk more specifically about what it means to identify a cohort. And I know that this is something that is core to the way in which you have built future. So I want to talk about that. But before we just jump into that, maybe take me into what it would look like to look at a problem and then find a cohort that has solved it in their own organic way.

11:04What are we talking about? What are the actions and mechanisms of this? Yeah, let's do it. Let's rewind to 2017. I'm thinking a lot about human health. And if you look at America, where I'm based, you would look at the picture and realize that we spend trillions of dollars on healthcare every year. 20 % of GDP,$12 ,000 per person per year, about 50 % more than the second place country in the world. We spend a lot on clinical healthcare. And yet, by many measurable markers, life expectancy is decreasing over time. Quality of life is degrading over time. alarming stats, 75 % of Americans are obese and overweight and increasing.

11:4670 % of the military's fighting force is obese or overweight and deemed unfit to serve. 10 years ago, zero states in the United States had an obesity rate of 35%. Today, half do. And that's just one area that you can talk about the challenges in mental health. You can talk about many challenges throughout our system and consumer health. So this was a picture we were looking at. And there are, by the way, many reasons why we are where we are. Some of them are genetic. That would be very hard to change. Some of them are socioeconomic. Access to fresh food is hard for people. The ability to have the time to engage in healthy behaviors, access to green space.

12:28These are all socioeconomic challenges. And then there's a component to this that is behavioral. It's only a component. It's not the entire answer. And when you look at the rates of Americans who are able to and willing to make the time to be active enough, it's about 20 % of Americans meet the CDC's bar for activity. And that number hasn't changed in like 40 years, 20%. 80 % of us try and fail. 20 % can maintain the right amount of activity. And so this is a big, vast problem. And pretty quickly, I think my co-founder, and I'll tell you a little bit more about how he factors in a moment, he and I realized we neither have the skills nor the expertise to look at the clinical aspects of health.

13:16Once somebody is diagnosed as ill or in a category, there's actually a fair amount of resources available. Yes, we spent a lot of money on those. However, there is before you are clinically diagnosed as such, there is essentially you're on your own, right? Our modern society expects you as a functioning adult to manage five things on your own every day. That's how you're moving, how you're eating, how you're sleeping, how you're dealing with stress or mental health, and whether or not you take your meds is up to you. And there's a large non-compliance rate of people taking their medications. So we started to look at the non-clinical everyday aspects of health.

13:52And I think just based on where we had come from, we actually had a lot of empathy for the average person to say, this is a lot to manage, actually. Each of those things I just named, mental health, is a vast domain that is complicated. And if you've ever tried to Google what to eat, what's healthy, that's changed decade over decade, year over year, and based on who you talk to. And so these are large, confusing, intricate domains. And what we felt like is it's actually understandable that your average American can't have the job they have or two jobs that they have and have a partner or they're dating or have a family obligations and a social life.

14:37And they have to manage all these bills they have to pay. They have so much on their plate that frankly, it feels a little unreasonable to ask people to then research, find solutions and implement solutions around these various areas. And there's not a lot of help for your average person. Here's a stat. The average person sees a primary care physician once, maybe twice a year for 15 minutes on average. That's what you get. And in that 15 minute visit, you get eight minutes of talk time. And then the other seven minutes are being measured and waiting and typing. This describes me. So not a lot of support and a lot to manage.

15:10What happens is we all try, actually, the majority of Americans every year pick up a workout routine. This is common in January, for example. They go and try. And within three months, about half of them have dropped off. Within the year, about 80 % have turned off of that. So those steady 20 % of Americans are just moving consistently. And Richie, as you're laying all this out, I just want to orient how you're coming to it, because ultimately we're going to be talking about how you started to think through developing a solution. As you said, we're going to rewind to 2017. You're laying out this situation, which exists in 2017, exists today, existed before 2017.

15:49But 2017 was when you started, I assume, focusing on it. And so you're seeing this problem. Plenty of others see a version of this problem too, right? You're not the only company in the world focused on health, but you're seeing something to solve and you're trying to figure out what solution you can develop to address what is clearly a need. You totally got it. So a lot to manage, hard to do that on our own. We try and we spend a great amount of money and energy and time every year, actually. So the willingness to try to solve that problem is there. The enthusiasm from consumers is there. Efficacy is low.

16:25And so what we started to ask ourselves is where are their pockets of people who have managed to nail this, who have managed to exhibit high performance or healthy living for years on end, not three or six months at a time, like most of us can hack here and there, but where are their populations of people who can be active and maintain high performance for multiple years on end when they also have a lot of demands on the time. And when you ask that question, you start to look around, you find these really niche populations. And what we saw was, okay, I'm going to give you an obvious example, professional athletes.

17:01They can maintain high performance for years on end. From a college playing career through a pro career, that can be two years, three years, four years. If you're LeBron James, it can be 20 years. There's a wide spectrum there, but years on end of performing at a high level when you are also traveling and doing media and have a lot of demand for time. Okay. That's interesting. Obviously there's going to be a genetic component there, but let's think about how to do it. There's also an incentive component there, right? I immediately think of the reasons why the cohort you're identifying isn't me in the case of professional athletes have a, they may have a genetic disposition, which they do, but also they have a economic incentive to keep themselves healthy because it is the product that they're selling, which is not the same for meat, for example.

17:48Exactly. This is what happens. And we have to work through this. When you look at these small organic populations, they're not relatable to the general population. And yet my assertion is it's still worthy of saying, but how are they solving the problem? Now, maybe there are, and I need to understand there are components this year that are not going to relate, but what fundamentally are they doing? So we saw pro athletes. We looked around and said, very busy people who can manage to have high performance for years on end, and who else are these? And we saw, okay, A-list celebrities, actually. A lot of these people are in the limelight, traveling a lot and so on, and they can perform at a high level cognitively, physically for some years on end.

18:26And then Fortune 100 execs, like business people at the top of the top, have a ton of demands on their time. Same sort of thing. What we see is that are able to perform at a high level. And understanding these people are not reflective of everyone. The question was, how are they solving the problem? And our expectation was that we would find varied solutions and then that we would engage with them. And I think in this case, what we were very surprised to find was they all did the same exact thing, which is they didn't try to manage these five disparate parts of your health on their own. They weren't Googling at night for ways to get active and then writing down a plan for Mondays and Wednesdays and Fridays, push-pull, upper-lower splits.

19:06They weren't trying to take it on themselves. What they were doing, because they were, as you noted, able to do this, is they were getting help. All of them. What they were doing was getting a personal trainer who came to their house and told them exactly what to do. Or a chef who stocks their fridge with 12 meals a week, knowing their preferences, what's healthy, and so on. They were surrounding themselves, We saw this consistently with a constellation of experts who could tell them what to do, help them make it happen, keep them accountable. And actually, those relationships also got to know them and built this great relationship.

19:41A lot of times what we would see is, oh, my trainer is someone I invited to my wedding or vice versa. And they started to build these relationships. So we found that consistently, that they were getting this help. And the question we started to ask then was, of course, that's expensive. Like average person can't afford a personal trainer at$100 an hour. that'll end up being$15 ,000 a year as discretionary spend just on one aspect of your health, multiply that by five. And now this is a ludicrous solution. But we said, why are they all reaching for help? Like in a word, they were all getting a coach, right?

20:12What fundamentally works about coaching? Is that replicable in any way at some scale? And what we study, we watched hundreds of hours of people working out, normal people with a personal trainer, Kevin Durant with a performance coach and everything in between. And what we saw as a coach does three things for you. Think about your physical training as a starting point. A coach tells you exactly what to do, no matter the constraints of the day. When we watch people, typically they would meet up with their coach and be like, my right shoulder is hurting today, or I slept like crap last night. And the coach would say, okay, no problem.

20:44No cognitive overhead for you. I'm like pre-computed what we're going to do. Now we're going to go light today, or we're going to go hard today. And you could just turn your brain off and follow along. It's actually a great gift. If you are someone who is a mother and a student and balancing all these different things in your life, to not have to wonder, am I on the right plan? Am I doing enough? Is a gift because this coach tells you, don't worry about it. I got it. Here's what you're going to do. So they tell you what to do is number one. The second thing they do is they keep you accountable.

21:12In this case, what we saw was people were rushing out the door to get to their personal training session because someone was standing there and expecting them to do it. or you feel this physical need to mirror that other person's level of investment, engagement in preparation. So they're telling you what to do, they're keeping you accountable. And the third thing we saw, this was actually when we knew there was a company to build, was when we were standing around on gym floors, watching people and their personal trainer, we started to notice, and I started to bring a stopwatch and clock it, that a non-trivial amount of these interactions, 20 % of 30 % of what's happening here is they're just chopping it up.

21:51They're talking trash about the Knicks. They're talking about the vacation they're taking to Hawaii. And you're like, any rational technologist probably would look at that and say, okay, this is wasted time. I would abstract this away, give you a performance plan and shame you into doing it or something. That's like the product to build. But we realized that this third component, like the getting to know you bits, is actually critical to being able to push you harder to understand your needs better, anticipate your hurdles. And so we boiled it down to three things. We're like, all these people are getting help.

22:19They're getting coaches. And what a great coach does, it seems, is tell you what to do, keep you accountable, and get to know you. Take a beat to see you as a person. And that's when my co-founder, Justin Santa Maria, he built the first version of iMessage and FaceTime at Apple and spent a decade running communications for iOS, watching how you can build intimate connections between two people who are not physically standing next to each other and thought deeply about those problems. And then he was at Airbnb thinking about the guest experience and guests and hosts also never meet physically in space and time.

22:53And yet you have to build trust to transact and empathy so I'm not trashing your place as a guest. And so I think putting all of this together, we thought, I wonder if you could tell me what to do from afar that seems tractable, keep me accountable from afar. I wonder if I could actually feel like I get to know my personal trainer, even if I don't see them in person, maybe we text every day. That might feel pretty tangible. And then third, what if we built a health company, a fitness company that actually by design asks his coaches to make some time to understand their client or their athlete outside of their fitness to say, Hey, by the way, I know you had a board meeting and you were stressed about that.

23:35How'd it go? And it turns out like almost no other health companies prize that and make, especially when they're trying to scale, make time for that. And so we found those three components and said, this might actually apply to a lot more people in a different format remotely. And that's what we do today. Future employees, many coaches, many specialties and body types and locations will match our customer to that coach. And that coach's promise is I'm going to build you a new plan every single week because no week is like the next. I'm going to touch base with you every single day over text message to keep you going, accountable, and also motivated.

24:14And I'm going to make time all the time to just check in on you as a person. That's what we deliver. And then now fast forward a handful of years, a half decade, and there are people across all 50 states, young and old, who use future, get a coach, and are succeeding. And we strap an Apple Watch onto them so their coach can see from afar if they're doing it or not. The touching base every day, the average member will trade a thousand text messages a year with their coach. That's three every single day, seven days a week, which means that intimacy is achieved or that trust is achieved. Yeah, that's a lot.

24:48I'm not sure that I text my wife that much. Okay. So it was really helpful to hear how you took the cohort idea, started doing that research that drove you to do the research that you were doing. And then what I heard was really two primary things that you were doing. Number one is that once you identified a pattern, you saw what this cohort was doing. You tried to understand the logic of it. Why are they doing it that way? You also tried to understand the mechanisms of it. How does it function in their lives? Which is why you're sitting there. Sounds weird and slightly creepy with a stopwatch, watching people socialize with their personal trainer.

25:24But that's the nature of business, isn't it? But it made me think that there's another thing that you had to grapple with, which was you had to understand what the patterns or behaviors of that cohort were and how they do or do not get replicated in the average person who you're reaching. And then how to bridge those gaps if they don't. What I was thinking of in particular here was that executives and pro athletes, which is where you started, are people who are very used to having an ecosystem of other people doing things for them. The average person is not used to that at all. They don't have any access to that.