Member Brief: The DTC Fitness Conundrum

The sense of invincibility is derived from a series of remote misses. This is the sensation of hearing the sirens, bombs, and explosions. You can see the enemy aircraft overhead but the bombs never hit your headquarters or home, they always explode down the proverbial range. When you survive the bombing, you note the ease of survival. There is no shaking, no visible damage, nor any personal distress. As a result, remote misses feel like invulnerability. For many of the rest of us, we are not remote misses. We are the near misses; we can feel, hear, and see the presence of damage and destruction. We move a little slower and more carefully. We operate with a vulnerability that endears a humility and an empathy for the tasks ahead, our teammates, and our partners.

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No. 351: On WFH and Community

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On working from home, fitness, and community. The first weekday after the major disruptions began and on Twitter, a small group of venture capitalists were organizing times to meet at the preferred gym of the moment. Over thirty minutes of replies and excitement, a small group of forty-year-olds organized around a Monday morning Peloton ride. Within hours of this exchange, California’s Bay Area issued a shelter in place order. What was an optional gathering may become the norm. As more cities prohibit recreational travel, free flow to gyms, restaurants, and social gatherings have all but ended.

There are no atheists in foxholes. According to historians, World War II was the first time that the aphorism was heard. For one, it’s a dated phrase. But given the mass closure of businesses, the shuttering of travel, government mandated self-quarantine, the closures of borders, the calls for shared sacrifice, the tumbling markets, and the fear of impacted welfare – this is the closest that many of us have come to the second-order effects of global disruptions. For many, if not for all, wellness is no longer a luxury. As the stress of the isolation continues to mount, community is more of a priority.

Regardless of the aphorism’s original intent, the phrase means something different in this day and age. A number of Americans have begun to shun organized religion altogether. In its place: sports, diets, politics, professional communities, and brands. If atheism is a lack of belief, we rarely see it these days. For secular institutions, we are avid believers. They are our religions. In Imagined Communities, I wrote:

In this way, America has not become non-religious. Rather, America spent the last several decades forging new communities. These types of communities don’t show up in Thompson’s polls. America believes in brands.

Add the belief of fitness to the above list. COVID-19 arrived at a pivotal time for The Related Companies (TRC) and their subsidiaries: Equinox, SoulCycle, and Pure Media. The retail real estate sector is suffering from wide disruption – a result of government mandate. With stores, bars, restaurants, and gyms closed, Stephen Ross’ portfolio is being impacted in ways that few would have foreseen a month ago. Then, two of the first recorded cases of COVID-19 transmission in private gyms occurred within two separate Equinox facilities: New York and Bethesda, Maryland. The company has thus far resisted nationwide closures. March 2020 was ripe for TRC’s first attempt at a direct-to-consumer fitness strategy. But to add insult to injury, the launch of SoulCycle’s DTC product was thwarted when SXSW was cancelled.

Customers will have to exercise patience: Shipments roll out later this spring to select cities including New York, Los Angeles, Chicago, and Austin, where the bike was scheduled for a splashy SXSW debut before COVID-19 concerns spurred the festival’s cancellation. [1]

Shipments will not begin until late Spring, giving direct competitors like Peloton, Mirror, and Tonal the runway to market to as many former gym goers as their marketing budgets will allow. As premium fitness companies like Equinox face growing criticism for acting too slowly in the face of a deepening public health crisis, we are certain to experience a boom in direct-to-consumer fitness. 

Peloton is “just a bike with a tablet attached” according to a number of critics. Former Google marketer Adam Singer recently quipped:

My wife is going to win her battle of buying one of those Peloton things isn’t she?Maybe I can find a clunker exercise bike and glue a tablet to it to save some money. I can’t win. This timeline is against me at every macro and micro level possible.

A timely article that touched on critics like Singer. The New York Times also covered the botched SXSW rollout at length in “Maybe You’ll Stop Mocking Peloton.”

A company within the Equinox Group’s portfolio, Equinox Media, also chose this week to introduce Variis, an app featuring content for home workouts from Equinox, SoulCycle and Precision Run, among others. (The company said it had intended to release Variis at South by Southwest, the festival in Austin, Texas, before it was canceled.) [2]

It would seem that community is at the center of this conversation, not the equipment itself. To that end, that trench war aphorism means something different today. As a growing number of entrepreneurs and technology workers adopt a new distributed work lifestyle, there will be new appreciation for connectivity – even if purely digital. With the increased threat of traditional connectivity being disrupted, digital methods of fitness community no longer seem novel.

For many, fitness is a form of organized religion. When New York’s Rumble decided to close, its faithful revolted over social channels. The same can be said for Barry’s Bootcamp, OrangeTheory, and a number of other organizations with “cult” followings. There are providers that are well-positioned to benefit from this shift from premium gyms and group fitness classes to in-home fitness. 2PM published this in September 2018:

By building systems that allow community to be gained outside of physical retail outlets, these tools are aiming to become the new medium for instruction and training.  These internet-enabled equipment manufacturers aren’t just selling plastic and metal, they’re selling virtual community. With the advent of polished functional fitness gyms like Orangetheory, SoulCycle, and CycleBar, fitness consumers have grown to value the ability to: a) train with a group b) and track progress over time, with the use of a provided IoT device. [2]

While SoulCycle’s late-Spring launch lands outside of the arbitrage window: Mirror, Tonal, and Peloton are clear beneficiaries. Premium, community-driven providers like Equinox will certainly lose customers to these digital solutions. Especially if these community restrictions continue through the summer. Digital communities like Whoop also have an opportunity to bridge the gap between outdoor activities and in-home fitness. And if real-time connectivity is not a primary need, traditional fitness brands like Rogue will surely benefit from an impending shift to in-home fitness. A recent Instagram post suggests: “It doesn’t need to be fancy to be effective.” A clear nod to the company’s growing number of connected fitness competitors.

Joe Vennare on Twitter

At-home and connected fitness is seeing a bump in sales and usage. @Hydrow_by_CREW sales increased 3X in recent weeks. Home usage is up more than 40%. @tonal Weekly sales up 36%, weekend sales up 82% WOW. This weekend saw the highest usage in company’s history. https://t.co/VXNLYr2crN

As more Americans track the news, panic and disarray will set-in. A lack of community may exacerbate the symptoms of depression as consumers are told to avoid professional settings, social events, and now health and fitness communities. For many of us, the idea of war was as foreign as the lands that they’re fought on. And shared sacrifice is something that many of us ready in history books. In this way, community is more crucial than ever.

In 2017, The Atlantic’s Zan Romanoff wrote: Gyms provide ritual and community, serving as a sort of religion. They also promote values American culture already worships—capitalism and overwork. If fitness is the new religion, community is its driver. And what many consumers felt was a luxury may now be more of a necessity. In this way, this pandemic is as close to a proverbial foxhole as many will ever know – a sudden lifestyle change with immediate consequences.

Consumers with means will do whatever they can to mitigate isolation. This means that it’s likely that DTC fitness critics will reluctantly adopt digital community fitness. In the long-term, digital communities may not replace premium gym experiences. There will always be a need for them. But in the interim, these DTC products will be good enough. Some semblance of community and camaraderie is better than none at all. Because there are no atheists in foxholes. We all want to believe in something.

Report by Web Smith | About 2PM

Update: (5:39 PM) Equinox has now closed all locations.