When Raj Kapoor – already a successful tech entrepreneur and venture capitalist – founded Fitmob in 2013, he wanted to free people from the restrictions and boredom of traditional gym memberships. Why should we accept being locked into one gym for a year at a time, with enrollment fees and a limited schedule of classes?
The Fitmob team created a marketplace where anyone could find classes that matched their interests and schedule, hosted by a wide range of fitness instructors around their city. As it grew, it evolved to offer unlimited monthly access to classes within a network of independent gyms and studios so that people can work out wherever they want and try all sorts of new fitness trends. Yoga on Monday, Crossfit on Tuesday, aerial fitness (yes, it’s a thing) on Wednesday? No problem.
In April, Fitmob joined forces with competitor ClassPass to take on the fitness market together. The united team is rapidly expanding to new cities and strengthening the existing network of fitness partners. For $99 per month, members get to participate in unlimited classes, including up to three at the same studio. It’s caught on like wildfire among many in the active lifestyle community and is a win for gym and studio owners who can tap into a large new stream customers.
Fitmob was one of Arena’s first investments, so last week I caught up with Raj post-merger to get his perspective from the founder’s seat:
EP: What do you see as wrong with fitness that Fitmob and ClassPass are making right?
RK: On the consumer side, two-thirds of the world’s population is obese or inactive and the current gym/health club solutions aren’t working. Entrepreneurs in fitness have historically been real estate moguls who want you to pay for, but then not use, their space. That’s the traditional business model.
We believe with mobile, social, and marketplace models flourishing it’s time for a change. To get fit, people need variety, convenience, value, and support by a community. Fitmob/ClassPass delivers this with a one-stop subscription to all the best fitness in your city. It’s magical to use and gets you hooked!
EP: How are studio owners impacted by all-you-can-use subscriptions?
RK: On the fitness industry side, there has been an explosion of boutique fitness, trainers teaching classes in public areas, and group exercise in general. But currently 70% of capacity is unsold and perishes. They need help in customer acquisition and filling spots to generate more revenue, and they need it done in the simplest way possible. Often the owner is teaching most of the classes themselves, so they’re super busy.
Studio owners partner with us to fill that unused capacity – they make more money than they ever have. They control the capacity they list and in turn we limit users to 3 visits a month per studio to minimize cannibalization of their direct business. It’s very different than the days of Groupon.
EP: What surprising things did you learn in the course of launching Fitmob?
RK: Our first vision was to create a service platform with trainers similar to how Lyft does for anyone who wants to drive a car to make money. The challenge was that we needed to find venues and were operating a complex three-way marketplace between the venue, the trainer, and the consumer. As we saw ClassPass take off, we realized going after existing inventory (instead of creating entirely new inventory) is the right first step.
My prior experience as both an entrepreneur (I was the Co-Founder & CEO of photo-sharing service Snapfish) and as a VC at the Mayfield Fund helped me avoid a lot of the surprises and challenges that first-time founders go through, but the big exception is in finding “product-market fit”. That’s the part of a startup that is unique every time and it’s the toughest challenge to navigate. Experience often doesn’t help in figuring out when the product-market fit will click, other than that you’re faster to iterate and can hire a great team.
EP: Why did Fitmob and ClassPass join forces and what’s next for the united company?
RK: We were gearing up for a big battle and thought our energies would be better spent on helping the consumers and the fitness partners instead of fighting each other. Fitmob brought a lot of direct relationships and experience with trainers that are a valuable addition to ClassPass. Our vision, mission, and cultures tightly aligned which was an important factor. As for what’s next: we want to keep growing an incredible platform that gets the world fit and healthy, living “the Active Lifestyle.”
EP: Since many of our readers are angel investors, can you share who wrote the first checks into Fitmob and what you expected of your investors as an entrepreneur?
RK: The first checks into Fitmob came from friends of mine or people who invested in me in the past – friends like James Currier and Stan Chudnovsky, and my partners from Snapfish such as Neil Cohen and Bala Parthasarathy. Arena’s Paige Craig got involved later as the driving force behind our convertible round (after our first round), which was critical to our growth and put us in a strong position when the M&A discussions came about. I originally thought we would raise $1.5-2MM in the convertible round but Paige churned up so much demand that it ended up over $6MM.
From a founder’s perspective, angel investors are most helpful when they periodically ask “How can I help?” and then deliver at the speed of an entrepreneur (usually helping with contacts, financing, or big strategy moves). They aren’t as helpful if they ask for lots of formal updates without giving anything in return or if they offer tons of unsolicited advice. Perhaps the most important thing is that they are always a cheerleader for their companies publicly, regardless of a given company’s performance – you don’t want an investor who has a reputation for being a fair weather friend.