Mind Pump: Raw Fitness Truth - 1572: Is Tonal Worth the Money? With Aly Orady

Episode Date: June 10, 2021

In this episode Sal, Adam & Justin speak with Aly Orady, the CEO & founder of Tonal. How is Tonal worth as much as a technology company?! (1:50) A look behind the metrics of the average Tonal customer. (4:36) What is Tonal and why do people use it? (7:22) Why Sal is skeptical of the consistency model. (10:48) How they use the data to personalize the workout. (13:21) What are they doing to customize the Tonal experience for the individual? (16:16) Where does he see the business most vulnerable? (19:37) How do they recruit their coaches and educators? (27:39) At what point do they get scared about people falling off? (29:47) Have they run into any supply chain/demand issues? (33:49) How they are investing into scaling their business. (39:30) Does he see this turning into a performance piece of equipment for athletes? (42:11) Why he believes the resistance is more than adequate. (44:29) How does he deal with the safety aspect? (46:14) The moment he knew he had something here. (48:52) When was the initial release to the public? (53:00) Does he see the trend of at-home workouts changing with gyms opening back up? (54:41) The importance of strength training. (57:07) The value of storytelling when it comes to marketing. (1:00:02) Why being the CEO is the best job in the world. (1:02:48) What has he learned during this whole process? (1:04:55) Why if it was easy, he wouldn’t do it. (1:07:33) Featured Guest Aly Orady (@aorady)  Instagram Tonal Related Links/Products Mentioned June Promotion: MAPS Prime, Prime Pro, and the Prime Bundle 50% off!  **Promo code “JUNEPRIME” at checkout** Visit Felix Gray for an exclusive offer for Mind Pump listeners! Tonal, the at-home fitness company backed by Amazon, hits $1.6 billion valuation on new funding round, readies for IPO A Study to Utilize a Tonal Exercise System to Improve Low Back Pain (LBP) Treatment Outcomes Steph Curry, Paul George Among Athletes Investing in Tonal Mind Pump #1525: The Death Of The Gym Industry?: A Reality Check With UFC Gym CEO Adam Sedlack The Resistance Training Revolution – Book by Sal Di Stefano Mind Pump Podcast – YouTube Mind Pump Free Resources

If you want to pump your body and expand your mind, there's only one place to go. Mite, op, mite, op with your hosts. Salda Stefano, Adam Schaefer, and Justin Andrews. You just found the world's number one fitness health and entertainment podcast. This is Mind Pup, right? In today's episode, we interviewed the CEO and founder of Tonal, Ali Orady. Now, this episode is basically us questioning whether or not Tonal is worth the money.

You know, they got a huge valuation recently and we were pretty vocal of our criticisms of that valuation. He heard the episode, wanted to come on our podcast and talk to us about it. So we had a great debate, great discussion. We think you're gonna love this episode quite a bit. Now it was brought to you by our sponsor Felix Gray.

Now they make some of the best blue light blocking glasses you'll find anywhere, and they look good, and they also don't change the color of the world around you. So they're not orange or red. They're clear, but they're still effective at blocking blue light. By the way, all month long, you're gonna get 10% of the sales of three specially selected frames, which are gonna be donated to New York City's LGBT community center for end trans

lifeline. So this is for Pride Month, which is pretty cool. Head over to FelixGreyGlasses.com. That's F-E-L-I-X-G-R-A-Y glasses.com forward slash mind pump to check out their stuff. Also, before the episode starts, all month long, two of our programs and one of our program bundles are on sale. So, maps prime, maps prime pro, and our prime bundle, all 50% off, just head over to mapsfitinistproducts.com to go sign up or check them out. But make sure you use the code June Prime with no space for that discount. I should open since I was the one that did the Instagram post and probably stirred the

pot first. Yeah. And we weren't going to originally start in this direction, but since you listened to the only episode where I think we really probably went after a tonal a little bit, I do want to bring that up and I do want before I bring it up or we go here, I do want to preface it by. When we talked about it, the main thing was the valuation that just was mind-balling for us. Like, we've been in the fitness space for a very long time, we've seen lots of fitness

products come and go, very, very aware of valuations on companies. And to see that valuation on a business that's this new and this early already was just like blue all of our minds. So we of course had to speculate and talk about it. And of course we got into some debates, we got into good debate with one of my buddies. But this is what led to this conversation. I said, well, you know what, about it. And of course, we got into some debates, we got into good debate with one of my buddies.

But this is what led to this conversation. So, well, you know what, fuck it. Let me just reach out to the CEO. He's right up the road and let's have a conversation and let's hear it from the horse's mouth. Like, how the hell did the company explain yourself? Yeah, because it was a 1.6 billion, right? When you got, you were able to raise an additional

quarter billion dollars with that. So total, I think total raise was what, 450 overall, Billion, right? You were able to raise an additional quarter billion dollars with that. So I think total raise was what, 450 overall, right, to date. And it felt like you guys got valued like a tech company would and not like a fitness company. That's what we talked about in the show that you listened to. By the way, when you listened to our episode, were you like, oh, the whole time?

We're on these guys. No, not at all. I mean, I think I was watching the episode and you guys like, ah, the whole time. Where are these guys? No, not at all. I mean, I think I was watching the episode and you guys were going back and forth and like putting out all the theories, like how could this company be worth $1.6 billion and you had all these hypotheses

and I think one of you, I want to actually nailed it. One of you, I don't remember who, but one of you said the only way a technology company, or sorry, fitness company can be worth $1.6 billion is if they could actually get people to work out consistently. Like not like other fitness equipment where you like you sell them something on like six months later, it's a towel rack. If you could sell them something and actually get them to work out consistently, then I could

see how a company could be worth that much. And that's actually exactly the answer. People who buy to almost work out consistently, it's one of the most consistently used products in the world. It's just, it's incredible. products in the world. It's incredible. The product was designed to do that and it was structured so that our interest would be aligned with our members where we wake up every morning and I don't check our sales metrics. I check our engagement metrics. I see how many people worked out. I see how long they worked

out. That's what we kind of live and die by. That's really the answer to the other thing is it's been six years. So this was not an overnight success. I mean, I started the company back in 2015 and I'm happy to share those early stories if you want, but it was like a six year build to this. Okay, so when you say that it's one of the most used, is that most used pieces of fitness equipment

or just tools in general, like what do you say that it's used so much in comparison to what? Well, let me just give you an example, an example metric. People who buy a tonal, it comes with a monthly subscription service where you're best paying to have all of our coaching content and all the AI that personalizes the workouts. In any given month, the cancellation rate is about 0.1%. Wow. Right. So 99.9% retention month over month. And you look at that metric and like Netflix,

they lose about 2% a month. Right. So, you know, and we're 0.1% and Netflix is something like people don't quit. They use it forever. They enjoy it. They binge watch. And so it's when you're able to actually deliver results to people and get them to use the product in a way that actually improves their lives. Well, they just keep using it and they remain members and that's what drives that. So I gotta dive into those numbers because that is, okay, this is mind-boggling to me

because, and no wonder it got evaluated like that, because we know what the average person falls off for a gym membership. I mean, you get a gym membership and you start working out for a while. It's up like 60 to 70% of things in six months. That's right. Yeah, within six months. And so you're telling me, you're retaining 90% plus percent.

Well, hold on. So the way the model correct me if I'm wrong, right, you buy the tonal piece of equipment, average costs, $3,000 or so dollars, right? And then you're required to do a 12-month membership initially. And then after that are people month to month? Yep. Okay. When you're looking at the metrics of people sticking around, are you looking at the second

year? Is that what is that we're talking about? There's a lot of ways of measuring. So one is you just look at the entire customer base and you look at what your monthly turn is. The thing you look at is you can look at on a cohort basis. So like, hey, let's look at everyone who started in like January 2019, and now we're like, you know,

26 months later, how many of them are still used. It's still in like the mid 90s, in terms of the percent. Okay, and so. And what's the, what's the usage look like for these people? Like daily, weekly, monthly. So 40 minutes sessions on average, about 14 points, something times per month.

So in a given 30 day window, it's about 14 times. Yes, but every other day on average, almost every points, something times per month. So in a given 30 day windows, but 14 times. Yes. But every other day on average, almost every other day, that's insane. 40 minutes. Yeah. Now, how many, and I'm, I'm skeptical, not, not of those metrics, but skeptical that what that's going to potentially mean in the future. And we can get into that.

And it's just again, it's based on my experiences of trainer. But let's, let's talk a little bit more about that. How many members do you guys have when Like, you started selling memberships early, day one, six years. I'm assuming most of your sales probably happen in terms of the bulk of your product and your memberships. Probably in the last couple of years, I would assume COVID probably caused a big spike

in sales and production. So how many total members you have and then how many? What's the growth curve? Yeah, what it looked like, yeah. Yeah, so let's maybe back up and talk about, it is okay, I mean, let's talk about, like, what is it? Right, what is it and why do people use it so much?

And then we can talk about kind of like the growth path. Okay. But, you know, I started the company back in 2015. Right, and so, you know, my career started in late 90s. I was working for Hewlett Packard in the super computing lab, designing computer chips. So, you know, my career started in the late 90s. I was working for Hewlett Packard and the super computing lab, designing computer chips. So, you know, you are right, I did start in tech, right?

And back then, if you came to me in the late 90s, I'll leave one day, you're gonna be the CEO of a fitness company. I would have like fallen out of my chair laughing. Like, I had no idea, I was, you know, I was overweight. I was like literally a chubby kid, war glasses, could code since I was like seven years old, designing computer chips, 15 years in technology,

here, right here in Silicon Valley, I was actually over in Sunnyvale, not too far up the road from where your studio is. And then by the time I'm about 35 years old, I'm overweight, I have type 2 diabetes, I have sleep apnea. So I decide that I'm gonna get healthy, I quit my job, I focus entirely on getting healthy, I lose 70 pounds in about nine months,

and there's that entire journey of of learning how to get fit, learning how to eat well, and learning at cardio is not going to get me there. Like I remember this moment where like, I'm a few weeks in, I've lost a bunch of weight, I plateaued, I'm on a treadmill, or a bike, and I'm looking at, I'm like, how come all the personal trainers are in the weight room?

Right? And you go like try and walk into the weight room, and well, you're in there, and it's intimidating. You don't know what to do do and you kind of do the obligatory bicep pearl and bench press. But that entire journey and by the end of all that, I've lost all this weight, I'm sitting at the gym one morning and I'm thinking to myself, and this is kind of the moment

where it all started, I'm thinking to myself, I'm gonna go get another job, it's gonna be really intense, it's gonna be long hours. How am I gonna stay healthy? Am I gonna come to the gym every day at 6 am in the morning? And I just wanted to take this giant cable cross-over machine that I was using, shrink it down and bring it into the home. And that's how Toronto was born.

I realized that if I could create a strength training system that ran on electricity instead of big metal plates and gravity that I could shrink it down. And once it runs on electricity, it's electronic. You can make it smart, you can make it intelligent, you can tie data into it, and you can start to build the equivalent of a personal trainer right into it.

And so that was the goal from day one, is can I build the equivalent of personal trainer, and can I make it convenient enough where if it's in the home, people will actually use it. And so, I went home ordered some parts, three and a half years of technology development. And then by 2018, late 2018, that's when we announced Honolulu and began selling it.

So years of development, dozens of patents, a large large team to bring this really technologically revolutionary thing to market. But at the end of the day, when you ask the question, hands, you know, a large large team to like bring this really technologically revolutionary thing to market. But at the end of the day, when you ask the question, right, like how are we driving that engagement? Well, the reason people fall off the gyms, because they got to drive there every morning. And with tonal, you don't have to drive, you don't have to drive to the gym. It's right there, you get up and you can go work out within five minutes, you're up at

the tonal, you're working out, you're warmed up. You don't even have to put your shoes on because most people don't put their shoes on. They just work out in the comforting convenience of their home. You have amazing routines and you have personalization where we're making all the decisions for you that a personal trainer would. Choosing how much weight you should lift, we're choosing when that, deciding when that weight should go up or down, we're giving you feedback on your form. So if you make it convenient,

you give people great workouts. Of course they're gonna use it. Now here's what I'm skeptical with that, because what you're saying sounds great. And I agree that driving to the gym plays somewhat of a role. I agree that having your workout set up for you probably helps. But here's a deal, I know what the statistics are for people who have home equipment.

And I mean, dumbbells, barbells, like very versatile, the most versatile piece of equipment you could ever own as a dumbbell or a barbell. I could do anything with it. I also know what the statistics are with live personal trainers, like trainers actually train people in person. They don't come close to the numbers that you're giving me,

which is why I'm skeptical, because I know, okay, it's at home, you can work out whenever you want, resistance training, by the way, I wanna commend you on that observation. That's 100% right. Resistance training is the superior form of extra size, especially when it comes to weight loss and health,

especially if you're not working out that often. So great job there. Personal training makes a tremendous difference, especially if you're not working out that often. So great job there. Personal training makes a tremendous difference, especially when it's live. But those numbers, I know what the numbers are with phenomenal trainers. They still don't come close to what you're saying with this .01% or whatever, 1% drop off. And what it reminds me of is what I've seen so many times in the fitness industry where I remember, at one point I was part of 24-hour fitness when they were exploding. Eventually they sold for a couple billion dollars.

I remember when curves came on the scene, I don't know if you remember them. They were this small, pneumatic equipment, you know, kind of facility that was targeting women who were uncomfortable working out the gym. They, at one point, became the fastest-growing franchise, crazy usage, people are showing up, it's incredible. They eventually plummeted CrossFit, I remember CrossFit did the same thing. They tapped into the kind of group model

where you've got people working out with you. Very community-based. And it's community-based, which is also very important, that makes a big difference. You also saw them do this type of thing. And so that's the skepticism I have. By the way, I think your equipment's great. I think what it does great.

But my skepticism is on this consistency model. Because in my experiences of trainer, it's not about the equipment. It's not about the convenience. Those play roles. But what gets people consistent is far deeper and more challenging than that. And so, but I do know that your equipment includes technology

and includes data. And I can't help but think that that also played a role in the valuation. I've seen companies get valued very high because they're able to collect lots of data on their users. What does that look like? What kind of data is it working with? What is it collecting?

Well, you're right, but it's not for the reason you think. So yeah, we have a lot of data. In fact, you use a dumbbell today. Yes, dumbbells may be versatile, but what they don't have is they don't have data flowing in and out of them. They're dumb. They're literally dumb.

They can't be connected to a computer. And creating the world's first electronic digital strength training machine is what allowed us to make it smart by connecting it to a computer and connecting it to the internet. And that means there's data flowing in two directions. We're getting a lot of data out of the system where we can see your power, your range of motion, your acceleration, your form. We have accelerometers in the handles so we can measure motion through the three dimensions.

We have a camera and you put all that stuff together. And now what we have effectively is all of this data on our individual user. And what we do is we use that to personalize the workout. The second thing we do, and we're talking about data in two directions, is this motion notion of command and control. And that's a technical term, but what it means, you can't ask a 40- pound dumbbell to instantly become 38 pounds. That's exactly what you can do.

You can do it. You can be in the middle of a bicep curl and the AI is looking at all this data and it's saying, oh, they're not going to finish the set, right? They're going to struggle the last two reps and the spotter kicks in and it just ticks the resistance down by one or two pounds and and they're able to finish that set, and that responsiveness and that reactivity. We're not, the data is there for us to make better workouts, and to better personalize the workouts to every single individual.

We're using all that data to understand you better. Everything you do on Tonell is a little mini test. We're like, hey, we want you to do 12 deadlifts at 176 pounds. That's what we believe you can do, but we're also testing you to see how are they doing at that? How's the range of motion? How's their power output? Where does it begin to roll off?

Then we feed that back into deciding what we're going to do next with you. You get stronger at your deadlift. What does that mean for your squat? For instance, all that data about being smarter instance, so all that data is about being smarter about you, but it's also about being stronger about just physiology and the community in general. I mean, you go back and you pull research on like everything we know about strength training

and like what are those research studies? They're like 25 college freshmen at such a such institution for one semester. And now when you're talking about, you know, tens or eventually hundreds of thousands of users, not over one year, but over five years or 10 years, it's literally like the largest strength training physiology data set in history. Like we are pushing the limits on physiology.

We're asking physiologists questions. They've literally never been asked before. We're commissioning original research to answer those questions. We're working with institutions. Like that data isn't about trying to sell you something like on Facebook. We take privacy very seriously. That data is about making better workouts. Better workouts equals better results, better results equals better consistency. Right. So I have a question that along the lines of personalizing. This is one of the greatest

challenges as a trainer and coach we've've always had, even in person. It's also one of the biggest hurdles in places that we thought we were most vulnerable when we started to sell digital programs online. So that's how we monetize, right, or one of the ways that we monetize is selling digital programs. And when we sat down and wrote these programs,

what we were very aware was, okay, I know when I personal trainer client that I'm calling audibles all the time, there's no clients falling the exact same program. So I have to always adjust. Now how are we going to sell a program to the masses with integrity and know that we do that? Well, that's where the podcast came in was, okay, we're going to sell these programs,

but then we're also going to communicate to them like they need to learn to assess themselves and do these things. So how are you, I mean, you talked about some of the things you're researching with it, but what exactly are you guys personalizing for these clients to make it individualized for them? It's a lot of different things. And one thing I want to be clear about is something

I think you touched on, which we're not trying to have AI just spit out a workout program for someone out of the blue. What we look at it is we have coaches on our platform and those coaches are creating programs. The AI is taking those programs in further personalizing them. We consider it a superhuman coach. It's a human coach who created a program who stood in a studio in front of a camera and filmed the workout.

The AI is coming in and taking it a step further and personalizing it. So what are we personalizing? We're personalizing the weight selections, how much weight are you listing for every single rep and we'll adjust the weight mid rep, we'll adjust the weight set to set day to day. We're personalizing the pacing of the workouts. So you all know, like if I stuck a video and just had you try to follow it, like across the video and try to follow it, you'd be, you know, one person might be falling behind, one person might be ahead.

And so we're actually like adjusting the pacing of the workouts and the edit. Our videos aren't actually pre-edited, they're edited as you work out. And so that's how we're able to adjust pace. We're also able to adjust instruction and form feedback. So all of those sensors, they're giving us data on you and we're able to use that to give you better feedback on your form. Hey, try going a little deeper into your squat. Hey, don't shrug your shoulders.

Hey, don't do this or hey, remember to do that. And it's much of that as possible. I mean, at the end of the day, this is always the conundrum with AI versus a human coach. What we can do is we can take, we can take like the notion of personal training and democratize it. Such a small percentage of the US population today gets to benefit from personal training one-on-one consistently for a long period of time. And if you can take it and make it more convenient so a much, much larger percentage of the

population can access it, but it's AI driven. Well, you're gonna get things that AI can deliver that a real personal trainer cannot, but there's also things that a personal trainer like you and being has that AI can't. I don't know if it democratizes it though, because the thing that the barrier that tends to prevent people from hiring trainers isn't the convenience,

trainers extremely convenient. They go to your house, it's the cost. And the cost of your product is about as much as it will cost to hire a trainer, it's a $3,000 plus entry fee, and then there's a monthly fee on top of it, which is higher than most gyms. In fact, I wanted to go back and circle back to the amount of members you have because I do have a question around that. Are you able to share the amount of users that are currently using your product?

Well, we can't share financials, but what we can say is it's in tens of thousands. So you have tens of thousands of people. And to give you a sense, last year we grew 8x year-over-year. Okay. And so you started like projecting those growth rates forward. So out of your tens of thousands, it's fair to say that a nice chunk of that happened recently, relatively recently, a couple years. Well, I mean, to say that a nice chunk of that happened recently, relatively recently, a couple years.

Well, I mean, if we grew 8x, yeah. Yeah, exactly. Okay, so tens of thousands of people, big chunk of that is kind of recent. It's in the tens of thousands, which is a decent chunk, still not huge in terms of users when you compare it to other things. But there may be a bit of a self-selection buy. So what I mean by that is, when you look at the consistency and the stickiness of members in like, I don't know, fitness 19 or a planet fitness where people are paying 20 bucks a month or 10 bucks a month, and

you can pair them to a country club where someone's paying 200 bucks a month or 300 bucks a month, the retention is far higher with the country club than there is with the low entry type of fitness because your product is a high entry in comparison. That might play a role in some of the stickiness. And then also a big chunk of your people just came on. I'm very curious to see what happens four or five years from now because fitness tends to be plagued by this new thing, you know, kind of phenomenal, right? The new thing that comes in, everybody's doing it, it's really great, it's just going to

solve fitness, and then it becomes less popular as something else. Well, I mean, we could say here all day and we could speculate, but I would imagine, all of you being the CEO and founder, where do you see yourself most vulnerable? So let's answer a question in a few different ways. So here you have, effectively effectively what I'm going to call the most reversible piece of indiscriminate ever created. And I'm going to say more versatile than a dumbbell, more versatile than any cable machine.

The way to adjust dynamically, it can do eccentric overloads, so you can do a bicep curl with 40 pounds on the way up and 50 pounds away. I can get behind that. I can get behind that. It hasn't got a bottom build. So most versatile piece of equipment ever created, it's already in your home. It's affordable, right?

So with a financing programs, it's $149 a month. So that's the monthly subscription, that's the hardware delivery installation accessory. How long is that financing? That's 36 months. Okay, so three years, $149 a month. And then after that, it's 49 a month because you're just paying the members' keys and the hardware is fully paid off at that point. So 149, you know, you compare compare that to a gym member's shape,

you compare that to a personal trainer, I'm gonna argue that's affordable. It's already in your home, right? And so then the question for us is, where are we most vulnerable? Our vulnerability is when we don't wake up every day and ask ourselves, why are people working out and what do we need to do to keep them consistent?

And that's literally, that is our business model. That is what drove that valuation for the business. And that is where our incentives are aligned with the incentives of our member base. Is the deal is very simple. If we can keep you working out for the rest of your life into old age, you're gonna keep paying us $49 a month. And we wake up and we view it as like,

that's our business as like that's our You know that's our business model. That's our business to lose and so what happens five years from now Well, how is the world change and how we react to it? We have an incredibly versatile piece of equipment. We have a 24 inch screen. We have a mobile app That's in the user's pocket in our members pocket with them wherever they go and how are we going to use those things to keep people working out? And so at some point, it may become more about education, it may become about giving them different types of routines. It might be about understanding that when people do

begin to fall off the wagon, because maybe they had a life event, maybe they had a kid, how do you adapt the workouts, how do you adapt the programming? And so, yeah, I mean, you are right in that people, it's not like people like biotonal and they're working out 40 minutes a day, every other day, and every single member does that in perpetuity.

That's the average. But you start breaking it up into cohorts and groups of people, you see people who fall off, and then we start hitting them with email campaigns to try and get them back or push notifications. We try getting them into these things that we call fitness snacks. We're like, hey, it's only seven minutes. Just try one of our seven minute workouts and you're trying to basically win them back

and get them back into it. But at the end of the day, I think the answer to your question is, there isn't a silver bullet. There isn't a magic formula. What it is, it's a team of people who's like, job, incentive, their lifeblood. Like we live and die by this, and we're gonna pull out, pull all the stops and do everything we can to keep people working out for the rest of their lives.

Yeah, look, I tell you what, I like your message, and I think, I like your approach, but I do wanna say that, and I hate to be the, you know, what do they say, the turd and the punchball, right? But I hate to say, but that, and I hate to be the, what do they say, the turt and the punchball, right? But I hate to say this, but that, getting people to work out all the time is always everybody's focus in the godfather of the gym industry, Mark Maastroff,

or Ray Wilson, or, you know, or what we try to do, or anybody else, that's always the thing that you're trying to focus on. It's such a hard challenge, and I will say, it's like if you could solve that, not only will your company be worth 1.6 billion, I would say considering that obesity is a worldwide, modern epidemic, you would become

the most wealthy company in the world. I think you would surpass Google. If you could do that, so it's a very lofty thing to do, commendable that you're trying to attack it, very, very challenging. So it seems to me like the tens of thousands of users, the recent growth, it seems to me like they're like projecting, oh, this is going to be something that's going to be huge in 10 years or whatever. Whereas fitness companies tend to get valued on three times what

they're earning now. It sounds like you're getting valued on what we're probably gonna do, what we think we may do based off of our trajectory in the next five to 10 years. It feels like, and that's why I made that comment. It's getting valued like a tech company. I gotta remember when Netflix got valued, they weren't even making any money, but they were basing it on their users and projections.

Ooh, that's tough with fitness. So, brass tax companies valued on discounted cash flows based on the number of tonals they expect us to sell in next 12 months and an assumption that all of those people continue to pay us that subscription for four years. So you take that cash flow model, you do discounted cash flow, that's how you get to 1.6 billion. And at the end of the day, that's not even accounting for my vision and what you just said, like that is our vision. That's what the investors believe. They're not just valuing it at 1.6 billion today. They paid that price because what you just said

is what they're banking on us, possibly being able to pull off and becoming one of the most valuable businesses. And it's to the benefit of all of our members. That's where our incentives are aligned. And so, two years from now, three years from now, maybe we've grown by another 10X, right? And we have 10 times as many people, and we're working to keep them working out, keep them healthy, and we're not just approaching it as like, you know, you talked about this

thing last time, about like, it's not about binge exercise. It's 100% about consistency. You keep people consistent and you keep growing your community and everyone wins, right? And that's what those investors were banking on. But for me, I don't like, I don't wake up every day and like, look at the stock price. Like that's not how I think. No, you're looking at the retention, right? We're looking at the engagement metrics.

We're looking at like how and how do we basically make people's lives better because if you just do that, if you realize that if you make people's lives better, if you get them to work out consistently, and if you start to think more holistically, that's why we rolled out pre and post-natal workouts last, I think about seven or eight months ago, you start thinking about how you're going to basically serve people better and make their lives better. Everyone wins and that's what I wake up with and you just have faith that everything else rolls out. I didn't build a discounted cash flow model, some analyst who works for Dragon Year did, but I'm sure that the more this we do, the more they'll be happier and that's how you fund the business. Now the programming side of it, I'm just, I'm curious as to where you're finding your coaches

and what kind of qualifications you're looking for. Do you have a whole scientific staff you've brought in to bring in that health and fitness education? We started with that from the very beginning. A lot of what happens in the world of group fitness. If you look at the connected fitness sector in general, right, where you're talking about bikes in the home, trying to deliver a sole cycle, like experience,

or what have you, or you look at what's happening with growing and treadmill. A lot of what's going on with connected fitness, it's about group fitness, and it's really about entertainment. We're gonna take a piece of equipment, bring it into your home and deliver. We're gonna talk a lot about that. And entertaining, group fitness experience too.

And we did not start with entertainment as our core pillar. Like, look, it has to be fun, right? The worst workout in the world, I don't care how scientifically advanced it is, and if it's been blessed by 20 physiologists, if people aren't doing it. That's right. That's right.

That's right. So look, it has to be fun. It has to be effective. And our promise is, get faster stronger. It's like, how can can we give you the best workout in the shortest amount of time? When we went and recruited our first crop of coaches, we didn't go get entertainers. We got real coaches. We're talking about people who are studying to do our PhD in injury prevention. Coaches are worked up at a gym in San Francisco called Dekhati, which some of you might have heard

of. I'm from a really, really legit, legit, legit training gym with some of the best trainers in the country. And we started going around the nation, looking for these people. And then we also started building a layer of an advisory board and people who are experts. We haven't announced a lot of this stuff yet. There's a bunch of announcements coming in the next several months. But a lot of it has to do with just like trying to make sure that what we're doing is also

scientifically sound. How can we leverage what we know about physiology and how can we contribute back to the science of physiology to give people better workouts? We're also running like clinical trials with the Mayo Clinic for like the use of tonal and rehab applications. So like we're we are nerds when it comes to this stuff. I want to I want to I want to do Justin took it left. I want to go back to where you were at because what I'm curious about because you the thing

that I'm still hung up on I can't believe the retention rate, the retention rate and the usage is is mind boggling to me. Even as is and I think we all agree how amazing it is. I think in what you did as far as building it that way, I commend everything you've done. When you wake up and you look at that, if it goes and it's at 90 something percent, where does it get scary for you? At what point do you go like, okay,

this could become a problem? And I mean, obviously you're always wanting to keep it, but I know you're a realistic guy. You probably know that it's not gonna stay at 95% forever. Where do you go, oh shit. So, where gets scary for me is it's not about like, some metric like crossing them threshold, because the truth is we don't look at our community

as a monolith, right? I mean, it's easy to say like here's, you know, here's the big group and look at how you, we actually like break it up until like the little sliverer is in and we're like, here's the big group and look at how you, we actually break it up until the little sliverers and we're like, why is this group falling off? Right, why are people who seem to have this profile? Why are they as a small group,

but why is a small group beginning to fall off? Can we call them and can we figure out what they need and what happened? And so for us, it's about looking for those canaries of a coal mine of not, you know, it's not gonna be this thing where like, suddenly the entire community is just gonna like, fall off a cliff.

But it's gonna be this thing where you're gonna find these little pockets which are gonna begin to like, fall off in terms of their behavior. And if you don't figure out why that's happening, that could end up spreading. You could find like other pockets begin to have the same thing. And so that's really like that could end up spreading. You could find other pockets begin to have the same thing. And so that's really like our paranoia is about looking for the little groups of people who are starting to not be consistent or they're falling off

or what have you. What have you learned so far in that area? Is there something that you've learned or seen already? Well, we've seen a few things, right? So the first thing that we've seen is the way people use the product in the first month is a predictor of how they're going to behave forever. So those people who get the tonal and they use it 30 times in 30 days, I can pretty much guarantee you that they're going to use the tonal at least 20 times a month forever. So there's this element of within that group of people, it's self-motivated consistency, and the people who use the tonal, who get the tonal, and they're super, super like sporadic,

like they get it, and they use it seven days in a row, and then they fall off for 10 days, and then they use it twice. And people who are more, they're actually gonna be sporadic forever. And they're the ones who are more likely going to, they may never completely fall off, but they might go three weeks, stands, or five weeks, stands without using it, and then they come back. And you got to take a very, very different approach with those two different groups of people. In one group,

you're keeping them, you know, you're keeping them motivated by showing them their progress over time, and we have metrics like strength score, and you can drill down to any particular exercise and see your progress. And they're just looking to constantly be challenged. And if you can show them the journey, it just motivates them to stay even more consistent. But with the sporadic group, they probably bought a tonal because their life was challenging. Their life was like my life.

You have a crazy job, you have a child, who's 18 months old. And for us, it's about, for them, we actually go spend a bunch of time building mechanisms like You know leaderboards and streak scores were like you know if you miss more than seven days You lose your break your streak and we start sending you push notifications almost like taunting you back into like 48 hours and you're gonna lose your streak and and we give them badges when and so you start building different kind of Experiences with them the product to try and target the different groups.

Yeah, I'm going to be quite honest. The way you communicate fitness and the things that your tonal does, you do it better than any other company that I've heard in your space. I'm going to be honest with you. You understand the benefit of strength training. You understand how people get fit and stay consistent, better than some of these other companies I've heard and I think that's phenomenal.

Now there is another question that I have. I know one of your competitors, I don't know if you want to call them a competitor, Peloton, did very well during the pandemic. And then they hit a snag where the demand was so high that their supply couldn't meet that demand. And it actually tinked their stock. I know this because during the pandemic, I thought this would be a great company to invest in because I could see people moving to home fitness because gyms were closed. Have you guys run into anything like that yet? Because you also have this kind of advanced piece of technology. People need to have delivered.

How does that look for you guys? We got the same problem. Hold on. I mean, as we sit today, right, if you order a ton, it's at least 10 weeks before you get it installed, sometimes as long as 12 weeks, right? And so it's like, it's a 10 to 12 week delivery period from when you order today.

And that's a combination of the sharp increase of demand that we saw last year. We responded by increasing production, so we took our first factory and we increased production there by 6X. And then we went and got a whole second factory and brought that online. And that one's producing about the same now. So we have two factories producing tonals. We produce way more tonals every week than we sell,

because we're trying to clear that backlog of orders. But the thing you have to realize during the last years, the world was also falling apart. Right? Getting tonals across the ocean on, the world was also falling apart. Getting tonals across the ocean on boats, right now like international logistics, it used to be you could stick a tonal on a boat and 27 days later it would arrive in San Francisco. Now it's taking like 70-80 days just across the ocean. There's ports are clogged, trucking is falling apart.

I would assume supply chains too, with maybe even parts and things that you need to put on. There's a global semiconductor shortage, which is kind of what you might be alluding to. There's that. There are other things like, here's a funny story, but you know, like it's tonal as a cable system, that cable, that rope that you pull on,

that's actually like high performance sailing rope that comes from a factory in Italy. And they make like this rope for rope for sale boats, right? Italy was the first place to get hit by the pandemic in the West, and that factory shut down, and they're like, we're under quarantine, and we're like, no, no, you don't understand.

We need a million kilometers of this rope. Can you get it to us? Oh man. And the owner of the factory, like, literally smuggled some rope out and shipped it to our factory. Oh wow. And it's literally smuggled some rope out and like shipped it to our factory. Oh, wow. And it's like keeping stuff moving,

like scaling, 8x and keeping stuff moving when the world around you's falling apart as it's really, really hard. That's gotta be the most frustrating thing. It's also though what makes everything you're talking about, even more impressive though, I'm even more impressed that you can take 10 weeks to get the product of someone's house

and they still use the fucking thing. Because what we know in the gym space, if someone came in, bought a membership and then took 10 weeks off and I know, I never see them. You know what I'm saying? That motivation is, even if they spend the money

and they're getting deducted the money in the calendar, because fitness is such an emotional decision for so many people, right? They wake up one day, they look at themselves in the mirror, they go, oh my god, I'm fat, I feel bad about themselves and that motivates them to go do something about it. They go do something and if I did something about it, it's... You can lose them. Yeah, they're both somewhere else.

So the fact that they still wait, use it and then use it consistently is incredibly impressive. You know, it's kind of like Christmas. They're waiting, they're looking forward to it, and they're counting down the days, and they're going on our community on Facebook, and they're posting, and they're like, three weeks to go, and for them, it is a big moment. And trust me, I would rather have the tunnels in their homes than sitting on boats in the ocean right now,

and we're doing everything we can. And by the way, I just hired a new Chief Operations Officer or Vice President of logistics, the Vice President of Plenty. We're staffing up as much as we can. That's gotta be the most frustrating thing as a business owner to see the demand in the problem as you. I can't give you the product.

And you just, ah, that's like money. Just like, that's one of the, I remember when we first started the podcast, we would talk about, what if things exploded? Somebody gave us money and animated great point. We wouldn't know to do with it because we don't know yet and it would be a total waste. And I wasted it all.

Yeah, so do you have strategies like in the interim? Cause how long, let me ask you this, how long do you think until you guys are able to meet the demand so that when people buy the product, they can get it within a reasonable time? So our current projections are July. So we think that, you know, you order now, you're gonna, you'll get it, you'll get it by like, you know,

June-ish, but you order in July, you might get it in August. So like the wait times are definitely coming down with one little caveat, which is historically in the past, every time we like get enough product here that we actually lower the wait times, because we're able to like clear a bunch of that order, that order backlog, demand goes up commensually. And so it's like, you're like, okay, we just like, now it's no longer 10 to 12 weeks,

now it's like six to eight weeks, and suddenly a whole bunch of orders start coming in, because all those people who are like waiting for the wait times, and so assuming that we don't have a lot of that happening by the summertime, we should be in much more. Is that a majority of the investment that you've got, you guys got, is that where you're using this, is to figure out that problem right there. How do we get the product made and delivered to meet demand? A lot of it is going there. So our investments are number one,

a lot in like supply chain manufacturing, logistics, customer care. You got 10, 20 times as many users as you did, 10, 18 months ago, sorry, 12 or 18 months ago. And there's a lot more work to do there, right? And so a lot of investments are going there. We have a lot of investments going into product. And so content, we're gonna be producing way, way more content than we produce today.

And we're continually upping the quality, the production quality, you know, right now we're only on demand and like a lot of people ask us, when are you gonna be live? Like it's obvious at some point we're gonna be live. So those are, those are nice. It's like live clumps. Like on someone live? It's obvious at some point we're going to be live. Those are in this. It's like live class.

You're on someone's pre-recorded right now. Exactly. It's a big screen that projects, do you have plans for other entertainment and stuff to be presented on that or is it pure fitness? It's pure fitness, but when we think about scaling content and we already have about a dozen different modalities, we have yoga, we have polities, we have hit classes, boot camp classes, so we have a lot of different stuff. And again, when you're driving consistency, we think of like strength training as the

trunk, but we also want to cover all the branches. So investments there, investments in AI, in the intelligence to personalization, the more personalized you can make it, I think the better it'll be for our members, like the more they can use it, the more they're going to get results, results keep you coming back. Then, of course, that's another big investment. Then the third one is just on marketing. Let's be honest, people who know about tonal people who have touched tonal, they have the religion.

I have never, in years of talking about tonal, I have never been able to over-hype the product. None of you have touched it, right? None of you have visited that one. I was in the mall and I saw one, but I didn't do anything with it. I promise you that when you go touch one, you're gonna like look at me and say, Ali, this thing far exceeded my, I had no idea, this thing's amazing.

I'm really strong though, I only go to 200 pounds. I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, I'm eating. Even this is kind of power. All I'm like, I'm like, I'm like, I'm like, I'm like, I'm like, even just this kind of power. All I'm gonna say is you'd be surprised. 200 pounds on tonal is not like 200 pounds. Oh really? There's no momentum or something.

Well, like he gets slowed down, it slows down the eccentric portion of it. Yeah, I'm out of these two arms. Yeah, there's the, I'm just gonna make this for me. There's the eccentric and there's also the momentum in inertia is in there so you don't get to generate all your power in the first 10% of the wrap cut. And so it's way, way harder.

And it's a product where I literally have not figured out the set of words to overhype it. No matter what I say, people touch it and they're like, wow, this thing's amazing. And so it's fair to say we also have a lot of investments to make in marketing to get more and more people aware of what this thing is and how amazing it is. And it's kind of like the journey we took with electric cars.

Like when we were kids, we were always told that electric cars were like, they were the alternative for the environmental nuts. If you're an environmental nut, you're gonna drive electric, but you're compromising. And anyone who's serious about cars was always gonna drive combustion engines. And now you get in a test line,

you realize that a car like that can outperform a combustion engine in every dimension, acceleration, emissions, reliability, range. Like you can do better in every single dimension. And that's kind of the moment that people have when they touch a tunnel for the first time. They begin re-evaluating a lot of what they thought they knew about equipment.

Now it's a great elevator pitch weather. Oh, yeah. And I still haven't overhyped it. I promise. Yeah. You got to touch it. So you're pretty much focused on the general public and just trying the main objective is to get people using them, becoming more healthy in their habits.

Do you have any plans on because you're seeing all this data and all this, these analytics of like how to adjust things to squeeze out that, the maximal amount of performance, like where do we see this as being like, maybe an alternative being all just high performance driven and in sort of the sports performance direction? We have been pulled into that world. So we have been pulled into the world of physical therapy and rehab and again we haven't gone deep in there yet because again we have this this focus on consumers and that was like the Mayo Clinic clinical trials we were talking about. We've also been pulled into the world of pro-athletics where we have a lot of pro athletes using

using tonal to train, a lot of strength and condition coaches are using it. We've actually had about two dozen athletes like personally invest invest in the company, and in the Orlando bubble about half the teams are using tunnels. They had to go set up these makeshift gems, and for them, they're like, well, we're going to get to animals because it works in a compact space. It's smart. We get data. We don't have the million dollar facility that we were used to. And now those homes that followed them back, after they left the bubble, a lot of them took them with them. And so we're starting to get more and more into that world. And for us, it's fun and it's exciting to be in the world of pro sports.

But we also are calling it the fact that we also don't want it to become a distraction from our core mission. Our core mission is like hundreds of millions of Americans who need to be more fit, who need to be more healthy. Right. And you can have a lot of fun along the way, but you can't forget your mission.

You gotta keep the main thing the main thing. There's a couple of things that I think you did really good. One is it's a cable system. So it allows for fluid movement. That's way more individualizable than a machine that's stuck on a track or in a particular way. This way, free weights are so good because free weights allow you to move in all kinds of different directions. The second thing that you did that's really good and I have not heard

this from people in your space is that you said strength training is the trunk and then the branches is everything else as trainers, that's 100% accurate and correct. I wanna go back to the 200 pounds that you guys advertise as the max load or whatever, and you say it's different than 200 pounds, because I know 200 pounds for me and the gym, you know, the some exercises you could do with that,

but for other exercises, it's not nearly enough weight or whatever. Are do you have anybody have you had people say hey This is not enough resistance? Where's that not an issue at all? It is not an issue at all We we are not we are not having people tell us that it's not it's not enough resistance for them In fact most people in fact if you go in our community y'all often see posts the effective like if you are skeptical You know if you are skeptical, the 200 pounds on tonal isn't enough for you, I just got my tonal and I can tell you you have nothing to worry about. It is a lot of resistance. Now, don't get me wrong. If you are a football

player, you're probably doing 800 pounds squats and we're not substituting for that. But if you're talking about general population, even people who are strong and have been going to the gym for years, it's way, way more than adequate. And at some point, the more, like, especially with masks, like when you're lifting freeways, the more you lift, the more injury prone you are.

And at some point, you start adapting the protocols. You're like, okay, well, look, we're gonna, we don't need to necessarily lift 300 pounds. We can lift 200 pounds in a system with no momentum and no inertia, eccentric overload and all these other protocols. But we're going to add on an extra set or we're going to do something a little different with the protocols. Because you have someone who's also working out at home alone and right? And you know, you don't want them lifting hundreds and hundreds of pounds.

Sure. So you're finding different ways to increase the intensity or tension to continue progressing. Right. What happens when we get a glitch? Like, what? I'm just curious because a lot of things are software driven now and we're kind of moving on this digital space.

We know what's going to happen with weights. We know what that looks like. Now what happens when we get somebody that's holding on to these cables, there's some malfunction. I mean, obviously you've thought about all this. I just want to hear you think your way through that. Sure. I mean, this is a question of like safety, just like how do you deal with safety and how do you engineer a system like this for safety?

And the answer is just kind of traditionally speaking the way you engineer these things is you kind of take the part of the system where safety matters the most and you isolate it Right, and so for us we actually have not one but two computers on a tunnel We have the big kind of is a it's actually like an Android-based 24-inch tablet. You never see Android as all hidden behind the scene, but we think of that as the entertainment system. That's where you see the coaches, that's where you see the videos, that's where the UI is. But that is not where the important stuff happens.

There's a whole separate computer that's dedicated to controlling the electromagnetic, the digital resistance, and that's a really, really kind of small, concentrated, highly Q8 system certified by safety regulators at UL. Like we basically have gone through entire like safety and regulatory processes to make sure that the underlying technology and the digital weights are safe. And we've even built like emergency brake systems in there. So like, if there's a power failure, like you don't, tension doesn't go to zero instantly, there's, there's a brake that kicks in. And so like you have to think through the stuff right and um and I I called up people and like the medical devices, you know, world in their leaders

I'm like hey when you're making like a robot that like does surgery on someone How do you make sure it's safe right and right and like you you get you know You start to like learn how they're thinking about the world and how you isolate things and you got to ask yourself, well, if this thing fails, what kicks in instead of this thing, and you just got to work through it. What's your split men to women who have your product are able to share that? Yeah, it's about 45, 55. So 45 what women?

Oh, wow. So that's a decent, that's a pretty decent split. It looks nothing like a weight room, right? Which is, which is, like, it's not the 80, 20 split or the 85-15 that you'd normally see in a weight room. And I think it's like, it's in the home, it's more accessible, you know, it's more approachable. And I think that's really helpful. That's actually a really good statistic.

You see all women or all men doing something, and there's something, in my opinion, there's usually something wrong with the product or how it's being communicated. Well, I feel like we've had you on the hot seat for long enough here. It's all good. It's fun. That's great.

I think you think you handle yourself great. Let's talk now about some of the fun stuff, right? And probably the neat part, probably more fun for you to talk about. And that is the journey of getting this thing started. And when did you know you had something? When did those first, you know, hundreds or thousands of orders start to come in and like giving kind of like the short version

of your six and a half, seven year journey in this thing. So, look, story of entrepreneurship is like, when did you believe and when could you prove it? Yeah, yeah, yeah, we believe it at the beginning, right? So I believed it. I'd say I believed it about three months after I got started. Oh, wow. That quick.

Yeah. And effectively what happens is I was at the gym that day I was telling you about. And I go home, I order some parts, they start arriving, I'm strapping them to my kitchen counter and beginning to build a prototype. And what I'm really trying to ask myself is, can I invent the world's first electronic digital Frank training system running on this like wonky, like on electromagnetic, right? And what I'm really trying to ask myself is, can I invent the world's first electronic digital training system running on this wonky, on electromagnetic, right?

That's what I'm thinking. And it took me about three months to build something that proved to myself, enough that I could believe that this was possible. It wasn't great. It wasn't the digital weight system that could go from five pounds to 200 pounds, which is what Tonell does today. It didn't go below 25, and it didn't the digital weight system that could go from five pounds to 200 pounds, which is what Tonell does today.

It didn't go below 25 and it didn't go above 40. So it was like, you know, but I could do 30 pound bicep curls with 35 pound eccentric. And I knew there was something here. I knew that if I kept going, this could change the world. But frankly, no one believed me. I mean, you go call up investors,

you're driving up and down, Silicon Valley, and you're meeting with investors, and you're getting all the things, but don't people actually like going to the gym? Why would they want to work at it? Were you already pitching that early too? Were you already looking for money at that time? Oh, I mean, it's a hardware company.

It took us like 20 something million dollars just to get the product out to market. Wow. Right. Because like, it was, it was years of development. We were like at a hundred employees by the time, by the time we launched. So like, this isn't like a lot of times when you hear like hardware companies here in Silicon Valley, it's like a printed circuit board with like two pieces of plastic on the outside. Like, it's like a clam, it's called a clamshell design. Like two pieces of the plastic and they kind of hug one printed circuit board and one person can make that. This was not that.

This was like engineering something new from the ground up for years, right? And so yeah, we needed the money, I needed the money. So I was out pitching and people just did not believe in the early days and it took a little bit of progress after a little bit of progress after a little bit of progress to get people to believe and so the first check I ever raised was like $250,000 like barely enough money to like pay one engineer for like a year. And so like I hire like a couple of engineers and we're paying them and so like now I know I only got enough money to pay these people

for six months. I'm still I'm still not making any money, right? And so, you know, what we built was a better prototype. And this one went from like 20 pounds to 60 pounds. And then we kept going. And like, I remember this one moment that sticks in my head was we called it the birthday challengers. It was my birthday in the year 2016. And it was like, on all these birthday, which is in the summer, I think same birth July like your kid, right?

You know all these going to do a full-body workout on a tonal prototype and it was the first prototype We had that was like fully adjustable and the arms could adjust and you know and you could do everything that you could You know almost everything you could do on today's tonal And that was like the first prototype in 2016. And we showed that prototype to investors. And this one guy came in, his name was Rob Coneybear. And he was, he was the lead investor in Nest, like one of the early investors who invested in that Nest thermostat. And I remember, I remember the moment where I knew that, that I had a real believer. He was doing bicep curls on tunnel., and he looks at me and says, hey, Ali,

when the rest of the world sees this, do you think they'll ever strengthen the old way again? Oh, well. And I'm like, I'm like, I got him. And literally it was maybe 60 days later, we had $10 million in our bank account. Wow. And that's when we are off to the races.

Right. Wow. When was your first, I guess, take off with the sales to the consumers? So we launched in August of 2018 2018 and we started shipping in October. And, you know, I'd say it was by maybe January of 2019. As we just went through that holiday season and into the new year's, new season started to deliver the product nationwide. We initially started with just like a San Francisco, like we were only studying orders in San Francisco

and we got broader and broader. By March, we were nationwide. That's really where things started to really pick up, really take off. The holiday season in 2019 was just incredible. It was mind blowing for us. We had showrooms in three different cities and they were just like flying off the shelf.

People, I remember one first walked into our showroom in New Jersey and bought three tonals for their three kids who all lived at the same house. I can't share. And it just started to build on itself. And then we had this amazing holiday season and then we were just getting ready to take a breather because it's a little bit seasonal, right? What happens is you have big November, big December, January, February, and then it kind of like levels off. And then it starts to grow again starting September as you head into the next holiday season. So summer is like that's your level off time. That's when you're preparing your supply chain. That's when you're preparing your marketing

plans for the next holiday season. And so we're just starting to like get ready for like the big next cycle and then COVID hits, right? And it was like literally we kept having whatever we sold the prior Black Friday, that Black Friday day, like a worth of sales, just kept happening over and over and over again for months on end. Right? And that's how we grew ADEX in that one year. And that has not slowed down. It is not like I was just going to ask you if you if you foresee that that may be challenging with gyms reopening But you're saying there's no slowdown. You know people had to build entirely new habits

Like the hardest thing we do is teach people habits the hardest things we do and once people have learned to have it Like they're not gonna just unlearn it and snap and snap back to you So for all those people who had gym memberships and driving to the gym was part of the routine now they figured out completely Other ways of accomplishing exercise had gym memberships and driving to the gym was part of the routine. Now they figured out completely other ways of accomplishing exercise. And I don't, that's just not gonna reverse, right? The trend towards at-home workouts was already happening, right?

And Paul's ended that, right? They proved that. And it accelerated through the pandemic and I don't think it's gonna reverse course. I think what we will see, and I say this for the sake of the entire industry, is I really hope that a lot of gyms are gonna be reinventing their business models.

Like the idea that you're just gonna drive somewhere just to like access equipment, I don't think that's a really sustainable business model anymore. Oh, it wasn't just so you know, even 10 years ago, I mean, we try and explain that to people all the time. It's like one of the common questions we get at. How come you guys don't own a gym?

Like, because it's terrible. It's not profitable. It's kind of a, it's a very dead model. There's just not a lot of money in it because it's not very consistent, not very successful. And so, and by the way, a lot of the surveys that they've been doing since the pandemic agree with you. It was, we challenged the, one of our buddies is the president for UFC gyms.

And we interviewed him and one of the things that we challenged him, because he was, you know, obviously hopeful for things going back to normal and that we're gonna see this big surge back in the gym. And the way we challenged him was like, do you think so? Because what we're reading is that a lot of people were forced to change their behaviors

and a good percentage of those are saying, hey, I kind of like this. Yeah, totally. I mean, another example, completely unrelated, but like I never did like grocery deliveries before, before a tonal, sorry, before COVID. And now that I've experienced what that's like, I am never setting foot in a Costco again.

Right, I used to go to Costco every two months and it was like, it was like with shopping carts. Yeah. And it was, it was, it was painful. Like going to Costco, but you know, you did it and you're like, it was only, it's, I only got to do it, like five or six times a year, but I got to do it. And now I get Costco delivered twice a week. And it's amazing. And I'm never going back in. Yeah. It's pretty cool. It's pretty cool. And I think that's just like there are a bunch of things in the world that have changed like that. And, and it's, it's for the better. It's pretty cool. And I think that's just like there are a bunch of things in the world that have changed like that. And it's for the better, I hope. Yeah, right.

Do you guys pulling from people who work out already or you guys seeing people start working out with your product? So that's a funny question. So, and I'll tell you what, you'll see why I say it when I tell you the answer. The person who like goes to our website and buys the product and hits like submit, they

are definitely someone who is already working out. In fact, I'd say on average four times a week before they bought the tonal and they're often buying the tonal to take it to the next level. Oftentimes they live with someone who does not work out. And what we're seeing a lot of is people who have either, sorry, people have either not previously worked out consistently or people who have not previously strength trained at all. A lot of, you got a lot of people who bought the tonal. They were married to someone who was a cardio junkie that did zero strength training.

And now we're getting them into it. Right. And to me, that feels like a huge win because I think we all know, like in this room, we all know that if you're going to do one thing into old age it's not a lot of cardio. You do not want to run your way into old age. That's a lot of wear and tear on your body and it's a lot of as you get older a lot of metabolizing muscle right and you want a strength train as you get older and the fact that we can get people like a little bit off the cardio train and more a more balanced strength training type of a behavior. I think for us is a huge one. Yeah, that's the right direction.

If you're gonna pick a direction, that's the right direction. Well, I think that's, I mean, that, I think there is enough for you to feed off of just that in a loan. 100% just a people that are home running on treadmills, running outside every single day, I mean, that sells entire book.

The resistance training revolution is about that. Is that, you know, about, you know, in the 70s, there was this running revolution, and people got on this kick, and we haven't got out of this kick, thinking that this is the best way to get healthy, and it couldn't be further from the truth. So, and that was actually one of the things

I think that we liked best about your messaging. I mean, we listened to some of your interviews and some of the stuff you've talked about. And we definitely align here. I mean, we agree 100% that that is the right message to be presenting to the masses. And there's a lot of people that don't know it still. Yeah. I mean, it's the science says this, the research has said this for decades. But but getting that out into the world like, you know, we talk about like having to market

tone. A lot of what we're doing is marketing strength training, right? Just reminding people how important it is for them to do it because a lot of the reasons people don't strength training today is deep down inside. They know they should. They just don't know how, right? And we get to help them with that. Yeah. Or the stigma, right? That I'm going to touch weights and then I'm going to look like Arnold tomorrow, as if it was that easy to do that. It's not. Yeah. So you'll get stronger, you'll feel stronger, you'll feel your muscle, you'll, you'll, you know, you'll be like, you know, three weeks into a routine,

you'll be in the shower, lathering up, you'll be like, oh, hello, what's that? Right, like you have those moments for sure, but looking like Arnold, like that's, that's a whole nother level. Yeah, that's, that's not gonna happen. Yeah, that one happened. What are all the different ways that you guys

are advertising and marketing? that you guys are advertising and marketing? I think you have some partnerships with some MBA players and stuff and share with us a little bit like all your different marketing strategies and maybe the ones that maybe didn't know we're gonna work out and they worked out really well or ones that you thought would be really good

and then it'd be as good as you are. Like what have you seen? You know, it's funny, but I think a lot of it is we have a lot of the stuff that's really fun and stuff we're doing on social media and a lot of the storytelling that we can do around athletes and all that sort of stuff. The bulk of it though still goes to traditional TV, Facebook, Instagram, like your traditional YouTube, your traditional media channels are still doing, I think, the bulk of the heavy

lifts. And then what we're able to do is basically tell a bunch of stories around it. And so a lot of the pro athletes who got tonals, it's the footage of them using the product that we're able to use, where we're not using that to on TV to get someone to visit our website for the first time, but once people have started following us on social media

and they begin to see that, it helps them begin to understand, hey, this thing is a little bit different. If it's good enough for a pro athlete, it's definitely good enough for me. Yeah, storytelling is one of the most important things, especially when it comes to marketing. Did you hire and contract that out? Are you responsible for telling that story? What did that look like? It's a lot.

It's a lot of different people, for sure. I think, so I have, first of all, I have a chief marketing officer who's incredible. He spent six years as a chief marketing officer at Ironman before that he was vice president marketing at Equinox for four years. So about 10 years just kind of like in the direct industry, he's built an incredible team, including a vice president for marketing who came from Gatorade. And then we have internal designers. We have external brand agencies.

So you're working with an entire family of people to tell the story like this because it's a rich story. And it's a complex business. So when you talk about how I spend my time, well, hey, it's not just about marketing the product. It's not just one piece of software, like a mobile app, for instance, where your world is about building the software and selling it. Where we have to manufacture this stuff in Asia.

You've got to ship it across the world. We've got to install it in people's homes. We run studios and down in Hollywood where we film. We start thinking about all the facets of the business. I'm really kind of the integrator of like, how does all this stuff fit together? And how do I make sure that everyone is rowing in the same direction? Yeah. But I have, like, the marketing is done by my marketing group and the content is done by

my content group. And, you know, while I was, like, I have, like, early footage of me, like, in the machine shop, like, making those first prototypes, I don't do that anymore. I haven't been in a machine shop in years. Yeah. And I miss it. I haven't been in a machine shop in years. Yeah, and I miss it. I won't lie. I totally miss it. Well, take us into a little bit of what type of character it takes as far as who you are to be a founder CEO,

then get a company value that high, and then have all these other very intelligent people working around you. Like, is there any thoughts of stepping out of the CEO role? And what has that been like for you and what does it take to be that guy with all these different people that you're now leading and telling what to do? You know, I love it. I love it. It's like, it's actually the best job in the world because you get to, you know, you're in a position where you get to orchestrate all of

this stuff. And in the early days, I didn't feel that way at all. Like, you know, most of my career, I spent in technology and if I ever like picked a title for myself, like, I didn't feel that way at all. Most of my career, I spent in technology, and if I ever picked the title for myself, I want to be the chief technology officer. I love technology. I want to spend my world in tech, and that's where I thought I was going to end up. But what I've realized over the years,

as you get to see how all of these different pieces build together, you're not just thinking about the technology. You're thinking about how the technology works with the marketing and how the marketing works with the technology and the in-home delivery experience and you're building this thing. And I like to joke that as a CEO, I do nothing, but I'm responsible for everything, right? And that's kind of what it means to orchestrate. It's like, I actually can't do anything. If I have to stop and go do something, I have failed my team and my team has failed me. Because if I'm going and doing some one very, very specific thing,

there's probably like eight other people who are waiting on me for where I'm not giving them what they need. And so in some ways, like again, it's all about just keeping everyone aligned and growing in the same direction and making sure they're thinking about things the same direction and making sure that thinking about things the same way and challenging each other's thinking, what does it take?

It takes humility. It takes that beginner's mindset of like starting every day, almost from a place where like, I know nothing, right? And asking people, wait, why did you say that? That was different than I would have sooner, different than this other person was assuming. Like, and that's what's hard about building such a multifaceted business. Yeah.

And being a guy who was not really a fitness guy, obviously, and you openly admit that. Or a marketer. Right. What is this whole process taught you about? I mean, you're obviously pretty savvy and smart, though. There are not a lot of people in your space are touting resistance training as the main form of exercise. So you've obviously read a lot of studies and you've learned what have you learned during this

whole process? Well, first of all, strength training was, I mean, for me, it was the unlock. It was what actually got me to achieve that really lofty goal. And as you know, like, you know, remember, type two diabetes, right? Trying to lose weight, trying to burn all this fat, recompose my body. Like, you need, you need to add significant amounts of muscles to your body, trying to burn all this fat, recompose my body. Like, you need to add significant amounts of muscles to your body in order to control your blood sugar levels and drive your A1C levels down. And so, like, I had no choice but to learn about this stuff to get healthy.

But in terms of what I've learned, I've learned that when it comes to strength, strength becomes like a foundation in your life. For me, like, I have, I work 12 hour days, back 7 a.m. to 7 p.m. every single day, right? And the only break I take, because I take an hour in the middle where I go do my workout on my tonal, and that's my mental reset, right? And I've learned that like the physical stuff is, it all, it supports you emotionally, it supports you mentally, and that's a huge part. The other thing that I learned is everyone needs a coach, right? And if you're strength training, you need a coach

or a personal trainer or a tonal that's gonna help you guide through your journey, but I also have an executive coach, right? Where they're coaching me as I develop into CEO, I've never done it before, right? So I have an executive coach. I'm also in like a coaching program with a bunch of, where it's like a peer group,

where it's groups of CEOs who get together every quarter and we get together like, you think this is, you know, you're calling this the hot. So you think, you think this is the hot. Try getting in a room with like seven people who are just as driven as you for two days and you're each basically doing run downs of each other's businesses.

And like being like, hey man, when we met three months ago, you know, you said you were gonna do, why haven't you done that? What changed in your business? What's your reason? And it's tough love, but it's also like, you walk out of the sessions and you always learn something because you're either realizing,

wait, why didn't I do that? Or like, wait, why did I think that was important back then? And now I know it's not. Like, you're always, and the same thing, why did I think that was important back then? And now I know it's not. You're always, you know, and the same thing, you're watching other people's businesses, and you're kind of seeing the holes in their thinking, and then you're going back and you're like, well, what am I forgetting about my business? Right.

And so these coaching processes are just, they're essential in everything you do in life. And you're either challenging yourself for your not, you're either going to the gym every day and doing the same bicep curl at the same number of pounds that you did three years ago, or you're trying harder every single day and you need someone to push you. So let's uh, 10 years later, tonal is worth hundreds of billions of dollars. It's the Amazon of fitness equipment, right? Where are you? What are you doing? I'm still running tonal. You're still running that. You haven't sold or not.

You wouldn't cash out. Never did it for the money. I mean, at the end of the day, like, look, man, we all die and you don't take the money with you, right? So, I think about, yes, I'm sure if I make a lot of money, some of it's going to go to my kids and they're going to have, hopefully, better lives and better education is a little bit more security. But,, you know, I don't know what Bezos is

gonna do with all that money. I hope he's gonna give all of it away or like 99.9% of it because he's not taking it with him and his kids don't eat it either, right? So, so at the end of the day, like, there comes a point where you realize, like, you get up every day, not for the money, like, if you're doing it for the money, I could have just like packed up a long time ago and been like, I'm gonna spend the rest of my life on a beach, right? That's not why you do it.

Very cool. Well, I'll tell you what, dude. Good job. Thanks. Yeah. I enjoy talking to you. I think your message is good, and I think you guys are trying to do what you're trying

to do, but the right way. I think if anyone can do it, it'll be you guys. I still think it's gonna be very challenging, but I do think you guys have the right approach. So it can't be easy and it shouldn't be easier. I'm going to do it. Yeah, we'll be rewarding. Absolutely. Yeah, thanks for coming on, man. Thanks so much, you're having a great day. Thank you for listening to Mind Pump. If your goal is to build and shape your body, dramatically improve your health and energy, and maximize your overall performance, check out our discounted RGB Superbundle

at MindPumpMedia.com. The RGB Superbundle includes maps and a ballad, maps for performance, and maps aesthetic. Nine months of phased, expert exercise programming designed by Sal, Adam, and Justin to systematically transform the way your body looks, feels, and performs. With detailed workout blueprints in over 200 videos, the RGB Superbundle is like having

sour, anum and Justin as your own personal trainers, but at a fraction of the price. The RGB Superbundle has a full 30-day money bag guarantee, and you can get it now plus other valuable free resources at MindPumpMedia.com. If you enjoy this show, please share the love by leaving us a five-star rating and review on iTunes and by introducing MindPump to your friends and family. We thank you for your support and until next time, this is MindPump. This is Mindbomb.