Episode Transcript
Speaker 0 00:00:08 Welcome to the breakout growth podcast, where Sean Ellis interviews, leaders from the world's fastest growing companies to get to the heart of what's really driving their growth. And now here's your host, Sean Ellis
Speaker 1 00:00:23 In this week's episode of the breakout growth podcast, Ethan Gar, and I find out what it's like to immerse yourself in FedEx R's world of virtual reality. This continues our theme of focusing on the health and fitness industries. If you missed it, go to breakout growth.net to see our growth study that we just published this last week on mirror, as well as get access to the previous episodes, covering some of the other health and fitness companies like, uh, like noon, for example, uh, uh, really, uh, breakout growth, uh, weight loss app that personally has helped me lose a lot of weight. So I've been excited about that. So FedEx are, if you're not familiar with it, they combined fitness and virtual reality in immersive boxing and dancing games that could very well change the way you exercise our guests this week is FedEx ours, product lead Nick's scope, Aaron, and, uh, Ethan, what did you find interesting about this interview with Nick?
Speaker 2 00:01:19 I love this interview. I mean, it's such a neat platform. I wanted to go out and buy one right after, but VR is really in its infancy and the platforms that are driving it, steamed Sony, Oculus, they're creating this totally new ecosystem. So it's kind of like the beginning of the app store. So it offers some really interesting opportunities and challenges for new companies and startups.
Speaker 1 00:01:39 Yeah, I agree. I think the, um, the advantages are pretty clear. I mean, if you look at companies like Evernote, they really grew in the early days by getting onto platforms early on. So that's one of the benefits of getting on platform early is that you can, uh, you can, you can intercept people as they're still exploring the platform. They have not established habits yet. So you can, if you can get into their way of using that platform, you're going to get a lot of, uh, ability to acquire those people and retain them. Um, and then yeah, if you can figure out growth before other people, can, you are going to be able to really be a trailblazer and probably not face a lot of competition because there's not really well-documented playbooks for operating within that plan.
Speaker 2 00:02:22 Yeah. But with that also of course comes some disadvantages, like right now, those platforms aren't offering like free trials and recurring subscriptions. So they've got to navigate and create a model that works within that ecosystem as it exists today, and also plan for a future that probably will be evolving every day and evolving quickly. So they're doing a great job with it. You know, they've done an awesome job building community and tapping into that community to drive word of mouth, which is something you and I always talk about as a principle of breakout growth, really, you know, being an advocate for your customers, getting people involved at, you know, um, so it's really, it's cool stuff. It's and they're moving really quickly. I think it's a growth story.
Speaker 1 00:03:00 Yeah. And I think just based on, you know, probably one of the big drivers of that is kinda taking advantage of the, uh, the fact that you can't do recurring, uh, recurring payments on the platform right now, FedEx are, is able to, or maybe it's a disadvantage in a sense, but, you know, as a consumer, it was really exciting for me to know that there's a one-time fee of $29 that I could potentially have this great fitness program that I could use for the next year versus, you know, a typical gym fee or even things like Mir or, uh, Peloton where you're paying a monthly fee. That's, that's pretty.
Speaker 2 00:03:36 Yeah. I mean, this really could be the new way people work out. We just don't know yet. Um, but the low price point is certainly there's less barrier to entry and it creates some exciting.
Speaker 1 00:03:45 Yeah. I, I got super excited about actually grabbing my Oculus and checking this out only to find out that, um, my Oculus is now outdated to the point where it doesn't support. It doesn't mean that it's not compatible. So, um, I thought I was tempted literally to spend $300 buying one because the price point is so exciting there, but the fact that I've recently bought two mirrors and, and have a Peloton bike, it was just, it was kind of overkill. There's I'm, I'm, I'm not using the stuff I have. So
Speaker 2 00:04:15 I hope this, I hope this isn't just a hint and like your birthday's coming up.
Speaker 1 00:04:18 Okay. Um, well, so I'm excited to jump into this, but before we do, I wanted to let everyone know that the next cohort of go practice starts March 10th. And, um, Ethan, you were actually in our last cohort, so it'd be great to hear from somebody who went through it, how you would describe it. What did you get out of it?
Speaker 2 00:04:38 Yeah, I'm a raving fan. Uh, it's a truly immersive way to learn growth and you know, you're doing it in a simulation, um, and live sessions. Uh, the live sessions with you guys in the last cohort were really fantastic. Um, learn so much from you and like during the process. Um, but what I really love most about it is through that cohort. I met a lot of great people. There's a Facebook community. Um, it's a way for people who are like-minded about growth to really engage each other and learn from each other, um, and put the learnings and the, and the challenges to work in the real world. So I loved it. I think that the simulation way of learning is great.
Speaker 1 00:05:12 Yeah, it's a, it's, it's definitely unique. And I think in particular, I've learned a lot from Ola. I get a former data scientist from Facebook. Uh he's, he's got a lot of complimentary skills to, to my skills. And that, that brings me to the point that, uh, one of, one of the challenges that we, you know, we're, we're constantly working feedback is any good teams should be doing around growth. And, and we did get the feedback that, um, it is really time consuming for people. And so trying to figure out how do, how do you have time to learn all the disciplines that you need to be good at to be good at growth? So anyone who's listened to a lot of our episodes, it's gonna see how multifaceted growth is and the things that you need to get. Right. Um, so how have we addressed that?
Speaker 1 00:05:52 We, we actually, um, are just in the process of launching a new skills that takes about 45 minutes to go through, but it really helps a prospective student understand where their strengths are, where their weaknesses are, and then we've, we've adjusted the course so that they can fast forward through the areas where they're strong, even skipped some of the live sessions, if they're really strong in those areas and then focus their time and energy in the areas that they need to brush up on and get better. So if you're a, if you're interested in taking part in this next cohort, that starts March 10th, go to go practice.io. So let's dive right in and find out what is driving sustainable growth for fit XR
Speaker 3 00:06:34 Sounds good. Let's do it. Hey, Nick, welcome to the breakout growth podcast. Hey, thanks for having me.
Speaker 4 00:06:48 Yeah. We're excited to have you on, I'm also joined by my co-host Ethan, Gar. Welcome Ethan. Hey guys. All right. So, um, obviously this is a podcast about growth and we really wanna dive into growth, but before we can get into the, the growth story, we really want to make sure that, um, we, um,
Speaker 1 00:07:07 I understand what your, uh,
Speaker 4 00:07:09 Your business is all about. So why don't we start with the product? Can you, can you give us a little bit of background on what, uh, and how do you actually generally say it fit?
Speaker 5 00:07:19 Yeah. FedEx are perfectly fine. Um,
Speaker 4 00:07:21 Okay. So yeah, what, what FedEx are, is, and, and the problem that it solves.
Speaker 5 00:07:25 Sure. So fit XR is via VR workout application. So think about what Peloton is doing in kind of like in the physical world with hardware we're doing in the VR space. So prerequisite for us is you need to have a VR device, but we are like accessible in all of our PLA like all the platforms from Oculus to PlayStation VR to steam platforms. So we're available everywhere, loves to be like platform agnostic.
Speaker 4 00:07:58 So, I mean, a VR headset can be kind of a little bit bulky. Is there, are there some that are maybe a little less bulky that you recommend or do they all tend to work pretty well?
Speaker 5 00:08:09 They tend to all work for you? Well, I mean, it depends, like we offer two types of workouts for the time being. So one is a boxing workout, which you're head is, should fairly be remain stable. Um, and the other one is dance and like dancing with a VR headset, like the smaller headset, usually the better their results. So people get quite intense when they actually like dance in a workout, but it's, it's something they really love to do. And we've seen some like crazy high scores happening during dance, which we can't really explain how they happen.
Speaker 4 00:08:44 Yeah. I mean, I, for me personally, I've found myself getting sweaty killing zombies, so it makes sense that, that there could be some pretty good, good workouts with a VR headset. And, um, and for what it's worth when I'm, when I'm killing zombies, I'm not, uh, I'm not worrying about the big bulky headset, so maybe not for the math problem anyway. Um, so, and then what, what kind of led to the decision to, to do this? Um, I mean, it it's, uh, like compared to other exercise programs, how, how is this really different?
Speaker 5 00:09:18 Yeah. Um, I think it's like, it starts off with like our like co-founders story. Right? Right. So we have two co-founders Sam and Samir, uh, and they actually met at business school, uh, and they were exploring different ideas. They had, uh, at the time and at a time like VR was still in it's kind of like considered infancy was something that was more a proof of concept type of situation and boxing. When you actually look at the VR headset for those that have never actually tried a VR headset, you have these two controllers that you put in both of your hands and naturally you're kind of like, yeah, I don't want to slice something with those controllers. You want to shoot something with those controllers. So we, I don't want to punch something with it. So it was just kind of like such a natural fit of creating a game that was punch based or boxing based.
Speaker 5 00:10:07 And then he's kind of like evolved into like this bigger idea of like, how do we recreate a whole workout from different workout styles into the VR space? How do you fully immerse yourself, um, into a VR space where we take, uh, a boxing exercise that you went to the gym at some point, and now we put you on a different planet or on the beach or on top of a skyscraper and all these cues come flying at you, and you're just trying to actually maintain your streak. So it's something that people really enjoy experiencing, but also like, because it's so immersive, it's you feel you're in a completely different world and it still is, provides the same workout as you have in a gym.
Speaker 4 00:10:55 Yeah. I w I actually had the CEO of mere on, um, several months ago before their acquisition, and I ended up buying a mirror device too. Um, that just basically during the pandemic to let my family get a little exercise and I did the boxing and was shocked that it, it, it winded me in about five minutes and, um, I play soccer multiple days a week, so it's not like I'm not out of shape, but I can see how an immersive boxing experience could be an even better workout and probably a lot more fun than seeing myself and shadow boxing with my image in a mirror.
Speaker 5 00:11:32 Yeah, definitely. Like, I mean, I run like five kilometers a day and I'm like a runner for like 10 years. And when I, the first time I played our game, I was kind of like, wait, my arms are sore. Like, how is this happening? Like, and it's also like, because it's such a simple mechanic, people come want to keep on coming back. Right. And you want to beat your high score and beat somebody else's high score consistently. So we have that like network effect, like already built in. Yeah. Actually I remember the first time I took a in-person boxing class, I don't think I've ever been as sore as I was. It was like a week of being sore after that. But it's, it's really interesting. Cause you're at the intersection of gaming, VR and fitness. Do you find like users gravitate more to the gaming side?
Speaker 5 00:12:16 More of the fitness side is a combination of both. I think it's currently a combination of both and it's actually like, it's changing and we see this every year. Uh, if you would ask me the same question, like about a year ago, I would definitely say our demographic is purely gaming base, but that's like how headsets have actually evolved. And like we touched on like the subject of headsets, it's like, this is where like full props to the Oculus team and what they're actually pushing, uh, is it's becoming more mainstream. Like, it's almost like, think about like where smartphones were before kind of like Apple launched the iPhone, or even like the first kind of like two or three generations of the iPhone. That's kind of like where the VR, um, hardware is, I would say right now. So there is kind of like, you almost can see it on the horizon of like, there's going to be a device that's going to like explode in terms of sales and be on the level of an X-Box. So have a Sony PlayStation. Um, it hasn't happened yet for all the publicly available data that people can actually see, but I think it's generally there. And like when people, like, if you ever seen, like, or like for you both the first time you tried VR and the VR headset, you're fully immersed, you're kind of like have a really wild moment that like, I've never I've haven't had since I actually had my first smartphone, probably.
Speaker 4 00:13:36 So, um, was that a concern? It looks like you've been with the company about a year. Was, was that a concern when you came in that, that, uh, maybe the platform hasn't, hasn't gotten that big yet in terms of what you could grow into or, or did, was it big enough that you thought, Oh, there's plenty of headroom within the existing size of the platform and it, and it will grow over time?
Speaker 5 00:13:59 I think a bit of both, like, I mean, there's always see, like, obviously we have some positive fear. Um, like we know there's currently, there's free, dominant, bought firms, right? Oculus, Sony, and steam. Um, and that might change in the future, right. There's rumors from Apple entering the space. There's rumors of like other, uh, big con like hardware brands also like entering the space. And therefore we want to kind of like remain platform agnostic, um, and not tie ourselves too much to a singular platform, but we definitely see that it has been growing. Like, and every time there is a public kind of like announcement of like sales of hardware devices, you actually see those numbers quite like exponentially going up. So therefore, like, we're kind of like, we're very confident in like where the market is headed and we just need to play a part, right.
Speaker 5 00:14:50 Part it is being the first mover in the space. Part of it is also like if we don't provide a good experience, nobody's going to download us. So we provide a good product. You know, when Sean interviewed, uh, the CEO of mirror, I remember one of the key things that drove the development of that was it was something you could do in your house that didn't take up a lot of space and Oculus, obviously it takes up even less space and it's super portable. Um, so I would imagine that the future will need, allow people to take their workouts and their, and their gaming and their fun with them wherever they go. Um, but obviously that's changed in the face of COVID no one went anywhere in the last year, has COVID impacted the business. Has, has that driven growth? Oh, massively. Like, I think since the first kind of like the lockdowns began March of last year in March or April last year, we've seen like really fastest conomical growth to a point where we needed to like adjust our own internal operations and development teams to actually like, be being able to cater that growth.
Speaker 5 00:15:53 Um, I think like even Oculus Dave admitted, they were like sold out like at some points on months on end, um, which is a really great thing. Right. But also that means the market is not growing as much as you actually want it to grow, but yeah, definitely like knock on wood. We're one of the areas that was very positively impacted by COVID and since kind of like lock downs kind, kinda like ceased in like summer and then going into autumn, we actually haven't seen like a drop-off. So for us, it's definitely been like a stepping stone and really a good one. So we've managed to retain most of those users. Gotcha. Yeah, that was sort of my next question is what happens after this, but it sounds like, uh, the new normal could be very good for you as well. Yeah, I think it's like, like I said, like, think about it really as best boxing exercise you've had, uh, like in real life. Now we take that into VR with the music that you like with really kind of like transporting you into completely new world and it's, you're still getting the same workout.
Speaker 4 00:17:01 Yeah. I'm personally super excited to try it now that I understand it a little bit better. I, uh, it's interesting because just yesterday my wife said, I really need to get back to the gym. They've just opened back up and I'm still interacting with my parents a bit. And so, um, um, I, wasn't thrilled about the idea of her going back to the gym. Both of our kids are in college, so we're, we're pretty isolated as it is. And I literally got to the point where I, when I said I bought a mirror, I actually bought it for my, my mother and my daughter was staying with my mother at the time. And so, um, I, I was on the fence of actually getting her, getting her something. And then I think one of the things that I found is I like I have a Peloton as well.
Speaker 4 00:17:44 And one things that I've found is once you, once you have a really good interactive at home workout, it's pretty darn convenient. You know, it's like suddenly the, the, you know, half hour or 45 minutes that you're putting toward a workout is entirely around the workout instead of, even if you're really close to the gym and you're 15 minutes each way and maybe add shower and before long you're, you're eating up an hour and a half of your day where, um, you know, a convenient at home workout is great. And then obviously what you guys are doing is sounds like it would be really fun to which, um, I w I would say not, not many workouts are actually fun. So, um, that, that, that's the main reason I'm excited to try it, but I'm curious when you look at kind of pre pandemic, and I know most of your time there has been during the pandemic, but, um, what, what some of those key growth learnings are that you've you've had along the journey with, with FedEx are particularly in terms of how to grow something in the, in the VR world. And, um, yeah. What some of those key growth learnings would be really interesting.
Speaker 5 00:18:51 Yeah, definitely. I think VR world in general is like, is such an interesting world because it feels like so, so much in its infancy, but then you can also like draw parallels to where, like the Apple app store or the Google play store were in like 2010. Right. So you're kinda like, Oh, I see why you guys are doing this. So it's very much like that. So things that actually frustrates you that like AB testing in a VR space is extremely limiting for the moment, but in your kind of like, so it wasn't mobile, the whole thing kind of like kicked off. But I think like for our biggest kind of like growth lever that we were like rely on is, is simply our community. So inherently we've, since the beginning set up quite a big, um, Facebook group where people have actually joined, um, and they've interacted with each other, like really, really well, like challenging each other, playing multiplayer games with each other to even like, actually like sharing tips of like how to lose weight in terms of like their diets.
Speaker 5 00:20:02 And it's really kind of like, it's fueled this kind of like grow for people being really connected to us. And we do generally like connect with them, run challenges. So in January we ran like a new challenge that she had to complete every single day. Um, and it's really has like this community feel where it's also like where people, cause we figured out why do people would like to go to the gym and the main kind of like insight that our customers and our users actually gave us is one. I like the workout that I'm doing too. I get really attached to like, to my instructor. And I would actually follow my instructor. If that instructor changes gyms. I was a big insight for us and in free is I like working in a class because there's people around me and I feel challenged and I like pushing myself.
Speaker 5 00:20:54 And we're kind of like, how do we replicate all those free things? Right. And great workouts, cool. That's game mechanics gave me vacation and we rely on the hardware for that. You have to the instructors, this is where we still want to do a bunch more work. And this is like full credit to, for example, Peloton has done an amazing job here of like their instructors to a point where some of their instructors are actually bigger, like social media influencers than the brand Peloton. Um, and then the first is the community. Right. And like, that's okay. That's something we can definitely replicate in like, you know, VR space and in like in a digital space. And we actually like really focused on those, the community and, uh, gave me like core game engine essentially. Uh, first, now we really want also like tacos of like, how do we tackle instructors? How do we actually get you that you can really become an instructor, like, uh, like be attached at first and only ones to do like workouts from that instructor because you trust those workouts are tailored towards you.
Speaker 4 00:21:58 Right. Right. And, and, and, you know, the fact is like chemistry, you're gonna, you're gonna click with some people and you're not going to click with other people. And it brings you back if you've got that, that strong chemistry. But, you know, I want to latch onto one of the things that you said. Cause I think that's instructive for, for people kind of in any growth role, which is you talked about being, being in an early platform. And I think, I think there's a lot to that in terms of, uh, you know, some, something like Facebook ads at this point, or even SEO, it's, there's a lot of experts in those areas now. And so you're competing against a lot of people who have it figured out. So it's not just figuring it out, but once you figured it out, it's, it's going to be really crowded where an emerging platform, if you can figure it out first, there's, there's a ton of opportunity for you to really grow with within that platform.
Speaker 4 00:22:49 And just a really weird kind of side parallel to that. I, uh, I had the similar thinking the other day when I was trying to get my parents a, um, a COVID vaccine. And we, you know, they had just announced in, in my County, you know, how this, how this, uh, online app was going to work for, for booking the appointments to try to get it. And my whole thing was okay, I need to bring my kind of growth mindset to this. Everyone's going to be trying to figure out this platform. I need to figure it out before anyone else to get my parents in it. I have the small window of opportunity of, I don't book them an appointment within the next week. I'm probably going to have to wait a month or more to get them an appointment. And, you know, kind of reading everything I could find and trying and experimenting, I was able to get them appointments to get them the shot. And I've a lot more peace of mind now that they have that first vaccine, but it's just, it is really interesting. I've kind of being first in something there's a lot more figuring out rather than just sort of reading proven playbooks. But if you can figure out before others, there's, there's a lot of headroom for growth.
Speaker 5 00:23:53 Yeah. I mean, there, there are no playbooks, like currently, like if you look at the VR space, you have one dumb end game. Right. Which is beat saber. And that's like a great proof of concept. But also like that game is fairly like limited in terms of like, whether they actually can evolve it through. Right. So it's like, think about to a degree. I go like always compare it to fruit Ninja on mobile apps. Right. So like, it was a great success, a massive success. And they made like a lot of like made a lot of very users, very happy with that kind of like core gaming County of slicing things. But they can't, we evolve that. Right. It's not a service it's, it's a game. Right. And like a game has its own limitations of where they actually want to push it. So I think like, you're right, like in VR space right now, there is no playbook. So it's like on people like me and like my counterparts in other like game studios to figure out how do you make this grow? Like where what's kind of like the next growth hack per se, right? It's like, what's the next farm will all of the Facebook newsfeed. Right.
Speaker 4 00:24:59 You have some other friends that you're comparing notes with each week or are you kind of, it's a solo journey where you're trying to figure it out.
Speaker 5 00:25:06 We have a couple of people. Like we, like, again, like the industry is so much in its infancy, that's kind of like growth within kind of like a product or a marketing role is still very early on. So a lot of like of not just our competitors, but like of game studios that are competing, like focused on different stuff, they still focus mostly on their core gameification rights and their core game. They have really figured out, okay, how do we actually do growth? How do we do marketing? It's getting a lot better over the last six months. And there has been like, probably like some really great hires that I know of in the industry and like those where like we're in touch and we compare notes, but it still is very, very early days. So that learnings from your audience,
Speaker 4 00:25:52 Your own playbook, what are you getting from them?
Speaker 5 00:25:56 Yeah. So I think it's really, so our audience is very diverse. Um, you would expect like a typical gamer audience essentially, right? It's like mid twenties, predominantly male, um, affluent. And like, what does, like what they actually like, but like, when we actually see from our audience is very much, like a lot of them are a lot more mature. Uh, we actually have a pretty big, like 40% of our users are actually females. Uh, which for me was very surprising that like VR is really kind of like, like you wouldn't expect that like specifically like VR being tailored to gamers, uh, they're predominantly male in the past. Um, but that's like drives our like content decisions very much. So. So when we decide of like what's boxing class or dance class, should we make a, we take big inputs from our communities, like what they like, what they don't like, um, to actually get the choreography.
Speaker 5 00:26:55 Right. And we want to test out in the future as well. Like how do we make like a potential beta group of users where we actually pre-release stuff and we actually get feedback like that. Um, but it's definitely like something that has shaped us very much so. And we learned a ton of like, Oh, people, for example, don't lie like extreme, long sequences of like only jobs. They like to like variety. And that kind of like informs our thinking when it comes to like con like content creation, which ultimately drives our retention. Right. We as every company have an aha moment, like at the onboarding journey and like, we want to reach out to how moments quite fast.
Speaker 2 00:27:38 Are you able to actually engage them in the game, like, and learn from them in the games themselves? Or are you using surveys and other tools?
Speaker 5 00:27:45 Uh, definitely like we, we do it in the game as well. Uh, we wrote heaven. You rely on the data. Like this is where we actually get like, uh, have a way like an upper step, like compared to like a boxing studio that's caters towards, uh, like in real worlds, because we know precisely how accurate you are with your left hand versus your right hand. I know you have a left stance or a right stance. Like we know exactly of like how you actually behave and we can actually give you that information back to you to actually improve over time. So,
Speaker 4 00:28:17 So for the data that you're studying, is that something that you had to kind of build your own data platform or, or to things like amplitude and Mixpanel work in an immersive VR environment?
Speaker 5 00:28:30 Uh, we're an app it's it's company. So shout out to amplitude it's for kind of like working with us, like, they'd been really like a great partner, but, uh, yeah, we, most of our stuff is either directly stored into our Redshift database and then we run SQL Christ to query stuff or, uh, historian amplitudes and we just do business analysis on it.
Speaker 2 00:28:52 So what does growth look like over the past few years? Uh,
Speaker 5 00:28:56 Pretty, pretty exponential. I think it started off with like proof of concept. Like I think I mentioned that like a couple of clients they already, because boxing, when you have the two controllers, he's just such, it's such a natural field that you want to try. We definitely seen in our early years, people going to the app stores searching for box and then kind of like finding us and like downloading a trial in the game. But what have you actually seen over, like, since the pandemic started, is people trying to use VR more to actually maintain their fitness. Right. And we've seen that even like, uh, kind of hardware developers are catching on to that. So Oculus announced a couple of months and months ago, Oculus move, which tracks tracks your movement across all of the apps within the Oculus VR space. And it gives you a target of like, how many minutes do you actually need to move? And like how active you were. So we see definitely there is like, there's been a fun, like fundamental shift of like proof of concept to now people like thinking and actually using VR as their primary method of actually keeping up, keeping up in shape.
Speaker 4 00:30:06 So I saw that you raised the, uh, seven and a half million dollar series a when, when did you guys raise that?
Speaker 5 00:30:12 Uh, I was a late last year, so late 2020.
Speaker 4 00:30:17 Okay. So, so based on a lot of the results that you, you were able to achieve during the pandemic, Ima what is it, uh, relatively expensive, uh, to, to build in, in VR? I mean, had you, did you have a pretty good, uh, amount of money that you had raised before that? So I kinda hire the team, build out the product and, and get, get to that product market fit where you were scaling or, or was that more kind of bootstrapped until you raise that series? A
Speaker 5 00:30:47 Yeah, I think that's a great question. Like it's definitely like VR as a space is currently it's expensive to developing, right? Like it's not, I make a mobile app. It's these days it's fairly easy. You can even do it with no code tools and you can go completely to publishing the app as well. Um, VR, because it's in a Fredy space, it's a lot harder. And like you do see even AAA studios, uh, struggling with it. Um, and that's part of the reason I think, or I believe personally that actually shied away a bit from it. The other one is actually like, what is the market size for them to actually get entered, to get, enter the scene. But we have seen more and more triple AAA studios actually entering, uh, entering the scene, which is great for the whole industry. Uh, but it's definitely not something that's fairly easy to kind of like launch compared to like to a mobile app.
Speaker 5 00:31:42 So for us, we're still in our, like a 60 something team. Most of like half of the team is engineering. Um, that's not even counting like product for data science. Um, and that's something that we actually like need to kind of like maintain as well. Like VR allows us to scale very, very fast with a fairly small team, but in order to start off, you need quite a big size team, like already to actually do something that's like very much usable. I think the day, even in VR of like proof of concept type of games or experiences are largely over people or users want to have more immersive things.
Speaker 4 00:32:23 All right, sorry. So have you been generating revenue kind of through the whole, through, through say all of 2020 and, and was that revenue enough to kind of, uh, build that team or, or had you raised some money prior to that series? A,
Speaker 5 00:32:40 Uh, we went through a seed round before already, so we definitely have like our growth targets, which we are, we want to hit. Like we believe the industry to be like massive in a couple of years time. And that's something where we actually want to raise venture capital as well. Uh, in order to kind of like to help us get there. We think we have a great product market fit now. Um, now it's for us to kind of like figure out what the expansion and also like to really work out, um, the details of the game to like Polish everything up. So everybody has almost, we want to be a place where you have a, like, for like experience, like in the VR world and in the real world.
Speaker 2 00:33:22 Cool. So what does, how are you guys making money? What's the business model today?
Speaker 5 00:33:26 So the business model today, and this comes back to like the whole thing around, um, the VR space being very early on where the mobile space as well was like crazy. The only way you actually make money is you are a one-off purchase. So, uh, and that's what we are our business Molly's currently right now as well.
Speaker 2 00:33:49 And that's, and that's because that's because you're limited by Oculus. That's the only way you can monetize with Oculus now, is that the driving force?
Speaker 5 00:33:57 Correct. So, uh, Oculus currently only supports that business model you could do off platform subscriptions, but that's like in my, like in our mind causes a lot of, uh, friction points because you would, at some point you need to take off the headset to either validate your email or to enter your credit card details probably on your mobile device, if not your desktop device, and then kind of gone back into the VR world. And that's kind of like, so intrusive that you interrupt the whole kind of like onboarding flow. We would rather, you, you like a better experience and keep you in the VR world from like, from the time you start the app to like, to when you're finishing your workouts.
Speaker 4 00:34:40 So does VR work like, like mobile platforms in the sense that you, that they take a cut of, of that one-off sale? Or, or is it, is it different?
Speaker 5 00:34:49 It's exactly the same. Yes. So all kind of like the platforms would take a certain percentage, which the first, but they would take a certain percentage of every sale.
Speaker 4 00:34:59 Cool. No, that, that, uh, essentially, I mean, there's, there's so much in VR that I have to learn still, so that's kind of basic, but I'm, I'm sure other people have that same question.
Speaker 2 00:35:11 So Nick, what are the big challenges you guys are facing? Where do you know what's? What are the headwinds to growth at this point?
Speaker 5 00:35:18 Yeah. Um, I think it definitely is part of it is market size. Like we are early on, uh, we are available on free platforms, but we're bonded by that, right? We're, we're not in a world where if we would be a mobile app, you have 5 billion devices, that's a big market. Like we don't have that. Like, we still counts our devices in millions, not in 10 millions yet, I would say. Um, and that is something that like, everybody has the same market and like, and you're battling for it. Um, and I think that's will change over time, but like, I think it's a big, it's hard for us to find the balance of when to actually employ some growth, like proven global growth tactics from playbooks, from other industries. Right. So we talk about performance marketing, for example, it's very hard to say, okay, when is the time for us to actually be started doing this, where we have enough, big enough audience to actually start optimizing things with our, like, if we have a too small audience, we're just going to like, kind of like spray and pray approach, essentially hitting everyone and hoping that something will actually stick.
Speaker 5 00:36:32 Um, so that definitely it provides its own challenge of like, how do we best utilize our own time of, and what growth initiatives should we actually spend our time on?
Speaker 4 00:36:44 So you, you mentioned that it's a, it's a one-off fee. Is there a trial or how did, how do they know they want to pay that money?
Speaker 5 00:36:54 Um, I think it's like, again, it's different for platform, but let's stick with Oculus because majority of people listening to this will most probably have an oxygen device. Um, it's currently on one-off feed. There are some companies that offer a demo, but there's also like with mobile as well. Like if you buy a game and you try it and you really don't like it, there is a mechanic that Oculus will refund you your money as well. Um, so there's kind of like technically a no risk scenario where like, Oh, I really don't like this game. I can get my money back. It's a possibility we haven't really seen that. And like, that's been like some like very encouraging factor for us that we've seen because again, like most of our growth comes from our community. So from us, like already, a lot of people are pre-sold when they actually buy the game already. So that's been like really, really like, again, knock on wood, the blessing almost.
Speaker 4 00:37:49 Hmm. So, so if you know, we've, we've touched in a few different places about growth. You've, you've talked about kind of early on the platform community, being able to, to really build an affinity with, uh, with a particular instructor. Um, is there anything that you would say is kind of the number one factor that's that's driving gross success today? Like is, is it product market fit is a, is it these influencers that you've talked about? I mean, there there's, there's so many different things that you've touched on. Is there one that stands out above the rest?
Speaker 5 00:38:20 I think it's definitely a product market fit. Like I think considering where the space is right now, you really need something that's very engaging. Right. And what are we seeing in the VR space right now is like all the developers, either going one over the two, like one of two categories, either they're focused on a story and they present you and star Wars is a great example. And the occupants right now, where they present you a fully immersive story of you being a character in the star Wars saga, and you want to do everything. That's fairly limited of like what you can actually do. Right. It's not an open-world, it's, you're basically a character in a movie, but like it's three 60 all around and you can do whatever you want. And people love that. Like, it's a great experience. And I think that's something where like the entertainment industry, we're also like looking to the future or are you going to the other buckets where you actually like thinking of like, yes, you have a proof of concept, but how do you actually make a service on fish?
Speaker 5 00:39:19 Right. So like, how do you utilize the hardware, um, into making something that's, uh, really usable. And like, I, again, like, I draw very big parallels here to the mobile industry where having GPS and a smartphone enabled a ton of stuff from like navigation to transportation. Um, and I wouldn't be possible if GPS wouldn't be like a component, all of your, of your smartphone. So I think it's like, people are very much exploring like that. Like one of the big things, and this is a very, actually very funny one and like, cause I've tried this because I'm very much afraid of Heights is, uh, people are using VR now to actually get like rid of their fear of Heights because you can actually get an app where you walk on a plank and because you're in a VR space, it feels so realistic that you're walking in a blank in the middle of Manhattan, like across the skyscrapers and it's horrifying, but you actually, it really works because you convince yourself in your mind that this is real and you're actually like, you're conquering your fear. So, and you're shaking and you're trying to cling onto the floor and everything. So it's super immersive. And like, I think it's like, it's generally just like really fun seeing roller courses, for example.
Speaker 4 00:40:40 Yeah. I've done one of the rollercoaster ones and that the, you definitely feel your stomach dropping out, but I want to come back to, to, um, a question that Ethan asked earlier about the challenges just as you've gone through this, I think the biggest challenge that I'm, that I'm seeing with this and correct me if I'm wrong with it, but it like this, this idea that Oculus and some of these VR platforms, the other ones don't don't support subscriptions very easily, easily yet in, in that kind of fitness world subscription is the model. And so, and then, then you add on top of that, that that trial doesn't really work in there. And so, you know, to be able to charge enough money, to get someone to yeah. T T to essentially be able to, to have a lifetime value on customers that, that funds a lot of the different components of the business. I just, that seems really hard to get those pieces working. Um, Oh yeah. How are you overcoming?
Speaker 5 00:41:45 Oh yeah. It's, it's very challenging. Like if restrict, you talk about like numbers, right? And like, if you think about it purely for, with, with a date, with your data hat on, like considering we charge a one-off fee and then yes, we do try to upsell you like downloadable content packs for like workouts, but technically strictly data looking like if you're a super active user and you haven't bought any of like the downloadable content packs, your lifetime value is actually diminishing over time for us because you're our cost to us. Right. You're at, across the business yet we don't generate any more revenue from you. Right. So naturally it doesn't, it doesn't incentivize all of like, Oh, we should retain you for a very long time. And I think that's also like part of like one of the downsides of the industry. There is no that like full recurring, um, revenue streams, where like developers would be focusing on, um, like retention so much.
Speaker 5 00:42:43 So currently it's more like, again, proof of concepts, Hey, pay $10, $20 here. And you have the game that's also comes from like purely from the game world. Right. You gave me like paying for upfront for a game is so kinda like the norm. Um, but we also have seen that massively being challenged in the last 10 years, right. With legends being a free game, Fortnite being a free game and still like generating a ton of revenue. And I think that will naturally like occur. Um, and I think like Oculus will like support different business models in the future. It's a question more of a time, not if
Speaker 4 00:43:24 I was like, they need to do that pretty quickly. But I do hear from what you're saying, the upsells are at least something that you can have kind of an entry point and then, and then additional ways to generate revenue over time.
Speaker 5 00:43:35 Yeah. And I think like over time as well, like VR space, again, drawing parallels with mobile, like I generally believe majority of the apps will, at some point probably become more freemium and figure out like a business model. That's kind of like caters towards them. Um, it's very similar, like to where games and mobile apps were at the beginning, right? Where's the one-off fee or maybe it was a freemium and you paid for a non-ag version of it. What are now like the biggest games are very much gamified and with in-game currencies fairly complex from like from the inside of how they're running, but present is very simple to the user. I think we're definitely like at some point going ahead into that direction,
Speaker 4 00:44:17 You've inspired even inspired me to want to, uh, track down whoever runs the platform for Oculus and try to get them on the show. Cause it's an interesting interview or conversation with them. For sure. Go ahead
Speaker 5 00:44:29 Either. So definitely Nick, it sounds like it's
Speaker 2 00:44:32 A good time for us to jump in a little bit deeper into how you guys are organized for growth. You told us a little bit about the team, but can you tell us how growth happens? You know, w how product marketing and growth are separated throughout the organization?
Speaker 5 00:44:44 Yeah. So we're still a 60 something person team, right? So that kind of like provides its own challenges, which is primarily like where to be focused on, uh, we have a million things we could be doing, but we need to pick up like the things that are going to like move the needle for us. Um, but at the same time, it also like ensures that we can be quite fast. We can be quite nimble and we have quite flexible teams. So definitely like working agile Kanban way, where we actually organize the teams based on features that are upcoming on our product roadmap. And in those kind of like, we can call on cross cross-functional teams, we just call them teams. We have a representation from marketing. We have a representation from product that's usually needs that teams, a product owner. And we have like also engineers are in some cases, even finance.
Speaker 5 00:45:34 Um, if that's a specific kind of like use case, um, every definitely like seeing that seems to be like a model we enjoy doing, and we have the philosophy of like pushing out features. And at the same time, it's also like we don't, um, stifled the innovation is essentially as well. So on the big top scale, we have a product roadmap. That's more, fee-based where we figure out our what's the biggest priorities like acquisition, is it retention? Um, and what are our big bets, right? Is that either like a new studio, for example. And that would be like, we only had box. Now we have box and dance. Is that another studio we want to work on? Is that something completely different? Is that a doc pack, for example, from an upsell perspective and based on that, are we formed in teams? Right. So who do we need from engineering, from engineering backgrounds in that team from product backgrounds, who do we need from the marketing background? So pretty much everybody in the company kind of like has two reporting lines, like one from one to your function leader. And then the other one dotted one with whoever is the product lead or product owner, essentially, as we call it internally of the feature you're currently working on for that quarter,
Speaker 2 00:46:50 That sounds like a great way to protect against silos. Is, is there a single metric that you guys use to try to align the teams like, and along the mission?
Speaker 5 00:46:59 Yeah, we definitely, we fully follow like the North star. So each team that we, we find quarterly, uh, with the whole leadership team, um, and we fund this team, so we call them like, we, we actually, we fund them, um, and each team gets a North star metric, right? So you have the autonomy to build whatever you guys in the team think will move the needle, but you need to move the needle by a certain amount of like certain amount of percent. Uh, for us that is very much part of like acquisition. So how do we get more users? And the other part is definitely around, um, ratings. So we call them ratings and that's kind of like our app store ratings. That's something we're very, very careful, uh, around. And we monitor consistently because we think as a one off, uh, payment, uh, game right now, like the game, the rating mechanic is so important for us because it identifies like people identified with, Oh, are you worth for me to spend my money on you? Or I'll spend it with somewhere else. And if you have the same rating as someone like they most probably will go with the cheapest option because they are just exposed to like the less of a risk. So something that we want to improve, like our core features that we improve our rating is definitely very close to our heart right now.
Speaker 4 00:48:22 Yep. So how do you see the organization evolving over time? Partly like how has it evolved over the course of this year, for example, and with this big round of funding that you've gotten, I'm assuming hiring is going to be part of that. Maybe, maybe you've got some other places where he to spend, that would be interesting as well to know, but, um, how, how do you see that, that organization evolving?
Speaker 5 00:48:43 Yeah, I think we're like, we're almost going to like turn at some point into more of a content powerhouse. Um, and we definitely see a version where we're going to have a core game mechanics as its own probably separate unit. And then we're going to have like a big content team. That's going to be producing a lot more workouts. Um, that's something that like, we definitely want to like foster because we know producing great workouts, like engages people a lot more. Right. And we figure out the instructor part of like our, uh, our app as well. Like that's going to be like the department, that's going to be mostly empowered by data out of qualitative or quantitative. So we definitely think we need to, um, even grow our content kind of like creation. We call them content creators, but essentially they are our instructors that actually choreograph, uh, each workout. Uh, and that's definitely like, I would almost say in a year's time, we're going to be seen more as a content company than almost as of kind of like a game, uh, because we need to, we're going to need to produce so much content for like our user base to be still be retained and engaged.
Speaker 4 00:50:01 Do you see, do you see that, uh, uh, digital content being more premium upsells, so that, that until, you know, up until the point where the subscription parts become available on Oculus, it's a, it's a way to extend that lifetime value or, or just simply simply a retention mechanism within the existing price.
Speaker 5 00:50:22 We'll see. I definitely, I always answered this question with our community will guide. Like we are going to listen very closely to our community and like what they will tell us, interest them and the base and that we'll, we'll take that on board. And then we'll kind of like about it. All, all of our options are we asking me to see more content is drives, we've run like growth experiments with this. Uh, the more content we release the higher the engagement actually is
Speaker 4 00:50:49 That makes sense. So, um, why don't, you know, we're getting toward the end here, why don't you kind of take us through the path of how most people discover, uh, the product fixed FedEx are and then how, what what's that path look like from kind of aha moment to becoming a raving fan who spreads the word about it?
Speaker 5 00:51:11 Yeah. Um, so most of the people that currently discover us are either through referrals through, from our community. And those are like completely organic referrals, or they're either like browsing on the Oculus app store or the steam store on the PSVR store. And they actually like find looking for a workout or looking for a box space workouts, and they actually find us like that. They look at our reviews, we definitely see, like, I've spoke about this. We know this, that they actually very much should read about our reviews quite a bit. Um, we're not a free product for your first kind of like downloads and then look at the reviews, um, very much a reverse kind of like psychology. Um, and then once the entered the game, we really kind of like want to guide them through currently both of our studios. So we give you a full fledged tutorial of how, like, what your stance should be, how should you actually punch?
Speaker 5 00:52:07 So that you're actually in a safe environment. We've had some mishaps of like customers broken like light shades or in glasses or, or punching walls, like famous fixture of somebody actually making a hole in the wall, which, uh, does happen. Uh, people get very feisty in, in games, but it's, we kinda like, we tried to make your, like, we want to make you as safe as possible, uh, and enjoy the workout. And then we really want to like, aha moment is just the workout. It's so gamified that you actually want to do, because what we see is that a lot of people, when they enter the game, they're skeptical. They like, see it more, this is a proof of concept. Oh, it's great for boxing. And then when they do it for like three or five minutes, they actually see, Oh, I'm really exhausted after this.
Speaker 5 00:53:02 This is something that's like is really engaging and fun, but it actually feels like working out. So most people actually discover us as a proof of concept. And then they actually grow of like, Oh, this could be potentially my main source of exercise. And they become like what we call internally super active users for us. Um, and we see like, uh, that aha is a certain amount of games, which I can say like public, how much that is in a seven day period. Like similar how Facebook had 10 days and seven days, we have a similar metric just for us. It's just like how many classes you complete in a seven day periods.
Speaker 2 00:53:42 So you you've told us a couple of times throughout the conversation, how important the community has become in this. What's sort of the aha moment where the user enters the community. Like what's usually the first thing they start talking about in the community. And how does that sort of evolve?
Speaker 5 00:54:00 Very question because the first and most prominent thing is that people, when they discovered the community is, um, either they love to have really long streaks. And I'm talking about like streaks of punches of hundreds to hundreds or even more, uh, we've seen people that like have a workout that has a thousands like queues to punch and they complete a hundred percent accuracy. It's quite insane. Um, and one of the main causes like, uh, main use cases for the communities, actually people going like, Oh, have they actually changed? Like what, uh, uh, district mode is, or have they adjusted anything? Because I swear I actually punched through it. I'd fast enough. And I hit the queue, but my streak went down to zero. So what's going on? Like, who knows they insights. So I ended up like the whole philosophical debate happens in the comments section where people are saying, look, no, they haven't updated anything.
Speaker 5 00:54:58 And people are saying they definitely have updated. And like, Oh, your battery is low in your like controllers. It's very like disengaging where people try to figure out like, what is really like the issue of the whole thing, but it's this drives this, like, it's, it gives us like this really good thing that like, people really loved doing to a degree where they're like, obsessed about like, something that has happened in might have missed a cue, like for real. But they're like so passionate about it that actually want to get like, Oh my high street, cause now it'd be like messed up because of that.
Speaker 2 00:55:29 That's awesome. It's amazing to see people just really engaging and loving the product at that level. So we're running at a time of air, as Sean said. So we always have one last question we'd like to ask before we wrap up. And that's, what do you feel like you understand about growth now that maybe you didn't understand coming into this role?
Speaker 5 00:55:46 Um, it's definitely like, I think the community part it's like listening, being so close to the community, um, has been something that I've never been that's close. Like I always be like more on the, like, partially more on the marketing side of growth, uh, than on the, on the product side of growth. But even when I was in the product side of growth, um, yes, you get user interviews and qualitative data, but here we actually like interact on a day-to-day basis with our community to a point where, uh, product leaders and product managers, and even some cases engineers go into like the, our Facebook group and they actually answer, uh, comments. So we get like direct feedback and that's something that's been so informative to our product roadmap that our product backlog is incredibly long. And I don't think if we, like, if we ever have we're going to get through it. So it makes our life very easy. But, uh, since I'm very hard of like what feature or what theme of features should we actually work next? Because we get so much kind of like direct feedback. So very fortunate to kind of like to have like a very kind of like active community.
Speaker 4 00:56:57 Yeah. I th I think feedback is, uh, it was an underrated, um, driver of just really good decisions, whether they're product decisions or growth decisions, or, you know, pretty much every decision in the business can be really informed if you, if you have a good way of collecting and deciding which feedback you're going to act on. But, um, so, so some of the key takeaways that I get through this conversation, and again, this is our first time that we've talked to anybody who's, um, who's, who's building in VR. So there's a lot of really interesting, um, takeaways for me. The, probably the biggest one is just the, the advantages of being early in a platform. You know, people, people have not built habits necessarily within that platform. So there are a lot more exploratory for new things that they can do. We we've, we've talked about that.
Speaker 4 00:57:45 Um, you know, if you're in a growth on a new platform, if you can figure it out before other people, you're going to get a lot of, uh, a lot of benefits there, but obviously new platform also comes with challenges. So, um, all the things that we've talked about from, from, uh, you know, not having a trial to not having subscription, um, but hopefully if you can, if you can establish yourself and, and really build a good foundation that as the platform matures, you'll be in a really good position to, to own, um, fitness on, on VR. So then another piece that jumps out to me is the, um, is, is just basically that your price I looked up during this call was, uh, is, looks like it's $29 to get started. And in games that may be expensive VR games. I know I've gotten some great VR games for free, but for fitness, a one-off $29 fee is a really cheap fitness program. If you, if you can make that work for yourself. So just like, uh, you know, a lot of other subsidized industries that are building kind of an audience that they hope to over time build a really valuable business around. It seems like an awesome opportunity for anyone who's looking for a new way to approach fitness, um, that, uh, you know, it's pretty cheap to get started.
Speaker 5 00:59:08 Yeah. I think my one other takeaway would just be, you know, you've really hammered home the importance of community, and it seems like your community is really reflective of your product market fit and it's then therefore part of that engine and it's driving your growth. So it's really interesting. And again, just as Sean
Speaker 4 00:59:22 Said, VR is at its infancy, but it seems like when subscription comes to, uh, to these platforms, the opportunities for you guys will just explode. Yeah, definitely. So I personally am going to definitely go out and, and try this and if it's as good as I expect it to be, I'll be, um, I'll be one of your many customers. So thank you. Thank you for taking the time. Um, this has been great. Um, learning about how you're scaling fit fix X, FedEx are, and I will be even more excited to see what you do going forward, because it sounds like you've got some, some great things ahead. So thank you for sharing all of that with us and for everyone listening. Thanks for tuning in.
Speaker 0 01:00:04 Thanks, Nick. Thanks for having me. Thanks for listening to the breakout growth podcast. Please take a moment to leave us a review on your favorite podcast platform and while you're at it subscribe. So you never miss a show until next week.
