On Mindbody, Classpass and the battle to become the Uber of fitness

Over the past few weeks I've received numerous phone calls from Investment Analysts, who work for Institutions investing in public companies, wanting to get my opinion about Mindbody. As you may be aware mindbody IPO'd back in August. 

My standard reply has become that I'm not really in the business of providing industry analysis to investors looking to allocate tens of millions of dollars in capital, but if they want to join me on Strengthen your studio, our podcast about the business of yoga, it would be an interesting discussion and I'd love to have them as a guest.

Then they tend to not want to talk to me anymore so I thought  post on the matter would be nice.

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While mindbody provides software and payments processing to small businesses in the "health, beauty and wellness" space, what's most notable about them right now is that lately they have been pushing the mindbody connect app very heavily.

They've gotten so aggressive with pushing the app that it's downright intrusive and degrades the student experience for their customers. Visit the schedule of a company that uses mindbody, they interrupt the flow and ask you to download their app. If you register for a class at a business that uses mindbody, they send you a text message asking you to download the app.

Why is this?

It's one thing to want to provide an app as an option for people to interact with your system. We do the same thing. But why would mindbody care so much about people using and downloading the connect app? Why do they care if you register for yoga class or book a massage via the company website, or via their connect app?

The answer lies in their S-1 filing and understanding what's going on in the technology industry as it relates to investment dollars and company valuations. Throughout mindbody's S-1, which shows they are losing about 50 cents for every dollar in revenue ($70 million in revenue, $35 million in losses), and that they make 37% of their revenue processing credit cards, they repeatedly refer to themselves as a "marketplace". Over and over again, they pound the drum that they are the worlds largest marketplace connecting wellness providers with practitioners.

As a company with $70mm in revenue, $35mm in losses, has never been profitable and is currently valued on the public markets at somewhere around $750 million, being a b2b SaaS company is simply not enough for mindbody anymore.

Small potatoes people! 

What's big now in the tech investment world is Marketplaces.  Everyone wants to know what's going to be the next "Uber of __" or the next "Airbnb of ___". 

Which brings us to ClassPass. 

What ClassPass is trying to do is to become the Uber of fitness. For a monthly membership fee, ClassPass members can visit any participating gym/studio/box up to three times per month. Why I believe this matters in the mindbody discussion is because classpass, who has been around for only 2 years, is currently valued in the private markets at $400 million, on reported revenue of $60 Million. Because they're private, what we don't know is whether they're profitable, or if they're losing money, and if so, how much.

But in any event, private investors are assigning more than half the value, and they're only $10 million less in revenue than mindbody, who has been around since 2004.

I don't think these numbers have gone unnoticed by mindbody, and I think the stage is being set for mindbody to attempt to compete with classpass, and in the process start competing with their own customer base. I also think acquisition is possible but I don't know that mindbody can afford classpass at this point. 

However it plays out, mindbody will, I believe, quite literally attempt to turn their customers into a product.

I should take a moment to point out that we're now in full on speculation territory here. These are my opinions and my readings of the tea-leaves, not some insider knowledge I have. But the opinions are informed by S-1 fillings, news reports and observing real things happening with real products.

And of course the other reality: If mindbody wanted to put their customer's needs ahead of their own, they'd already not be doing a lot of the things they are doing.

Remember the question: Why does mindbody want their customer's customer to use the Mindbody connect app so badly? Why do they care how a student books a class at a yoga studio? The ClassPass valuation makes that question a little easier to answer, doesn't it? As a public company with a fiduciary responsibility to their shareholders, I simply don't think mindbody can ignore all of this, and it explains the groundwork they're trying to lay down.  

At $60million in revenue ClassPass would have about 50,000 customers. That's a lot of customers, but one thing I've learned about serving these businesses is that you get access to a lot of individual practitioners for every customer you serve. If you assume an average of at least 1,000 students for every individual studio, mindbody probably has access to over 70,000,000 individual students/practicioners. Add in students from churned customers for whom they still have data and the number is probably threefold.

If Mindbody came out with some sort of 'Mindbody Pass' and they got one tenth of one percent of their active student user base to convert, they'd have 70,000 paying student customers.

This, I think, is whey they're pushing the connect app so hard.

Now again, it's important to keep in mind this post is being written by someone who worked with a team of people to build an entire system to compete with mindbody, primarily because I thought their calendars and account setup process were disrespectful.

So I'm very very biased.

But as far as I can tell, mindbody is a company that scaled too early with broken per unit economics, is currently selling dollars for fifty cents, has never been able to turn a profit, IPO'd because they couldn't raise more money on the private markets with the valuation they wanted, and are laying the groundwork to steal customers from their own customers because they have a fiduciary responsibility to maximize shareholder value. 

The very existence of ClassPass serves as a constant reminder of the "opportunity" mindbody has, as long as they're willing to turn your studio into an uber driver.

Strengthen Your Studio: A conversation with Brendan Gibbons of Devotion Yoga

If you've been thinking to yourself that there might be a few small things you could do to improve the finances at your yoga studio, you'll be hard pressed to find a better way to spend 30 minutes than by listening to this conversation with Brendan Gibbons of Devotion Yoga.

Brendan shares a slew of great tips that can help your studio - ranging from customer service at the front desk, pairing down your pricing options, and focusing on memberships. Brendan has helped Devotion Yoga more than triple their memberships and has helped put them on a more solid footing and you can do the exact same thing with your studio with a bit of intention.

Check out the discussion below, or subscribe to the Strengthen your studio podcast in iTunes.

Building a beautiful website for your yoga studio with Squarespace and Tula Software

I've been wanting to do this for a while now: a casual walkthrough of how to set up the initial infrastructure and framework for your website. In this video I walk through how you can use Squarespace and Tula Software to build a great looking website where your customers can view your calendar, sign up for events, make payments and manage their accounts - all while staying on your website.

Check out the video below:

Introducing Series Registration

We're really excited to announce another update to our registrations system today - the ability for students to register for an entire series of events.

Prior to today people could either register for an individual event via the calendar, or they could make a purchase via our payment forms, and then register for the classes that pass is good for. Registering for a group of events however - such as a course like a beginners series - was sub-optimal for students and occasionally confusing for studio owners.

Now every event series you create, whether it's a regular class or a special event, will come with a dedicated series registration widget and link. Just like with individual classes you determine whether payment is required or not, and we handle the purchase options accordingly.

How it works

To begin using this new feature, you simply create a series of events as usual. Now however you'll see a new link when viewing the Event Series page that says "Series Registration". Clicking that link will expose a registration widget and link just like we provide for custom payment forms and calendars. In other words, using the same pattern you're already familiar with.

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Copy/paste the link for quick access, or embed the widget into your website for a custom feel.

Guest access and logged in access

Of course, this wouldn't be a feature built by Tula if we didn't go to great lengths to ensure that both returning students with accounts, and new students without accounts, could both interact seamlessly with everything. Whether payment is required or optional, and whether your student is logged in or not, they can quickly and easily sign up and make a payment without ever leaving your website.

We're thrilled to be able to provide this new powerful feature for those of you that have been asking for it, and check out the short video below to see the full feature in action.

NamasDay Weekend Recap

We had the good fortune of sponsoring the NamasDay festival in West Chester, PA last weekend, and as is often the case with yoga festivals, I walked away with a new perspective on a number of things while learning, and re-learning, a number of lessons. 

The importance of connecting individual lessons

I started Saturday off with an hour of the Acro Yoga workshop taught by Lex Peters. About 30 minutes into the class though I realized it was being taught in a way that allowed the students to experience AcroYoga in a more advanced way than we otherwise would have been able to do. The thing he was doing is that each time we learned something new, he would connect it to the previous thing we had just learned.

So over the course of 3 or 4 moves, you practiced the first one 8 times, the second 6, the third 4, and so on. And so the result is that as you were learning new moves, the things you learned earlier were simultaneously being reinforced. To draw it, it would look like this:

What was powerful about this though is that it allowed me to, for a moment, experience AcroYoga in a way I hadn't before: as a fluid connection of moves. I'd only ever felt that 'flow' in a vinyasa class, but getting a glimpse of it with Acro was a real joy. 

That one hour changed what I thought I might be able to do should I choose to explore this part of practice more.

Transformations in my hips

I often have experiences at yoga festivals that I consider transformative. Not necessarily in a big grandiose way, but what I mean is that I have marked experiences that change the way I look at or feel about something. When this happens in such a way that you feel it in your body, the experience is stronger. At the NamasDay weekend this experience came to me by way of Marni Scarloff's two hour hip-opener class. 

I love hip-openers because of the emotional release they provide. Someone else in class joked that they'd be over in the corner crying most of the class. And so with this being a 2 hour hip opener class I fully expected it to be one where I might be a little emotional and get a bit weepy in pidgeon pose. 

And while this happened, something else happened too.

I ended up having the good luck of being Marni's demonstration prop for pigeon pose. After watching me do pigeon pose on my own, I raised up and she had me start entering into it again. But this time she began making super tiny adjustments all over my body from the very beginning. A slight modification in my foot, straightening my leg, moving my shoulder, raising my arms. All over my whole body, tiny tiny modifications. And I hadn't even started to bend forward over my knee yet.

All of this was taking strength. It was hard. And I was thinking, pigeon pose was always an intense but effortless pose for me. Yet here I was this time sweating from the effort.

And that's when it hit me: That with the right modifications, the source of our struggle is also the source of our strength. That where we are weak, we can become strong. That where we feel pain, we can find joy. That the light can come from the same place as the darkness.

My physical body seems to have absorbed this lesson, and the feeling I have in my hips now is less sorrow and more power.

The name of the class was Transformative Hip-Openers - which is more spot on than I could have realized.

The importance of counterposes

I ended the day with a celebratory class led by Leo Rising, Alex Auder and Noah Julian. But my lesson this time came not during the class itself which was wonderful (This crew gave some of the best adjustments I've felt), but instead came at the cocktail party after. 

A few of us were hanging out talking and all of a sudden Leo says something to the effect of "I'm sorry....but sometimes you just need to get a counterpose in there!"

It was one of those things where my mind instantly re-focuses on something. Counterposes, yes! Why are these counterposes so important? What happens without them? Why does this seem to be such an important insight?

We know the answer almost intuitively.

If you're doing a twist in one direction, and you keep pushing and pushing and pushing, without ever offering a counter-pose, not only do you feel off-balance you actually feel some pain in the direction you were going. It's not that the twist in the one direction is bad - it's that by itself it's incomplete.

I started wondering, where else in our lives might we need more counterposes, and what might they look like?

A reminder to try something new

We ended the night with some fun at Johnny Gillespie's house, founder of Empowered Yoga. In his basement he keeps what essentially amounts to a full on cross-fit gym. With weights, bars and dumbbells aplenty, people started messing around with the equipment just a bit. A couple of us hung on the horizontal bar hanging from the ceiling.

When I did this, my lower back released instantly. Full on cracking and opening all within my lower back.

We evolved from a species that can climb trees, and yet it had been years since I felt the full weight of my body being supported by my hands. Johnny quipped that he got a kick out of yogi's that were so able to feeling their bodies, but who rarely took the time to feel what it feels like to hold a five pound weight over their heads.

It reminded me that for as much benefit as yoga provides, I enjoy the occasional thing that's different. This combined with the Acro Yoga lesson has me wanting to try out some more arial and acrobatic things I've had on my mind for a while, and that trying something new can feel very good indeed.

Effort first, payoff later

And of course the lesson I always learn at these events is how much work and effort putting these things on takes, but that ultimately it seems very rewarding and worthwhile. Mary, Becca, Carly and everyone at Philly Area Yoga and the NamasDay festival are a constant inspiration for what a small group of people can accomplish. We're so happy they continue to involve us with their festival, and if you're looking to check out a wonderful event I highly recommend it.

We'll be back in Philly for their Spring event - we hope to see some of you there!