THE WEEKLY HOWL IS GOING TO COURT

Voices in your head: There is a strange lifecycle to early–stage technology companies in which the metrics that get reported are users and money raised. These companies are young and presumably not yet profitable (nor do they report their financials because they are not publicly traded) so the media judges their trajectories by their ability to raise money from investors and the valuations that are derived from those investments. Aaptiv, the audio-based fitness app, is in that stage of development and the news looks good. From TechCrunch:

Health and wellness has been one of the biggest categories for development in the tech industry, with huge range of wearable devices and connected equipment being built to track how we are moving and helping us stay fit. Now, a startup whose app offers users a selection of audio-based, personal-trainer-led workouts that also monitors users as they progress through them, has closed a major round of funding that underscores how software — and specifically apps — are also capitalising on that trend. Aaptiv, which makes what its founder and CEO Ethan Agarwal described to me as “the Netflix of fitness” — providing streams of music-based fitness training on demand — has raised $22 million in funding.

The Series C round brings the total raised by New York-based Aaptiv to $52 million, and while the company is not disclosing its valuation, sources close to it tell me that it is now over $200 million. The company has picked up 200,000 paying members in the last two years, and says that its audio classes have been streaming more than 14 million times.

              What’s even more interesting is where the money came from.

The funding is significant not only because it will give Aaptiv some firepower to expand its product and user base further — more on that below — but also because of who is in this round.

It was led by Millennium Technology Value Partners (backer of illustrious tech names like Spotify, Facebook and Alibaba); with e-commerce investor 14W and Insight Venture Partners also participating. There is also a list of notable strategic investors, including Amazon’s Alexa Fund, Disney, Warner Music Group and NWS Holdings.

              The link between Aaptiv’s audio-based approach to connected fitness and Amazon’s Alexa is clear. I am interested to see where it goes. TechCrunch is already speculating as to whether Amazon might become interested in making Aaptiv an Amazon Prime perk. In that case, could that make Aaptiv an acquisition target for Amazon? Or for another tech giant that is trying to compete with Amazon in smart speakers? (Aaptiv’s CEO has indicated interest in an IPO) Warner Music is also interesting as it highlights the importance of music in fitness classes and how the music industry may want a piece of that.

But what really intrigues me is the inclusion of Disney. Aaptiv will join the Disney Accelerator, a program for tech startups “with a vision for making an impact on the future of media and entertainment”.  I don’t quite see the connection here. You could classify fitness classes as media but that seems like a very broad classification. The largest entertainment company in the world has just dipped its toe into the fitness industry and I am very curious as to why. Does this demonstrate an interest in fitness or is Disney interested in applying Aaptiv’s expertise in audio instruction to something else?

Apps: You probably know Peloton as the company that marries the intensity of a high-end cycling class with the convenience of your living room. Now they want you to also know them as the company that has joined a very crowded fitness app marketplace. From CNBC:

The company known for its spin bikes equipped with screens to stream virtual workout classes unveiled on Wednesday a new app that will be available to anyone, regardless of whether they purchase a Peloton bike or treadmill. Dubbed Peloton Digital, it includes a suite of live and recorded video and audio workouts.

At $19.49 per month, the digital subscription is Peloton's most affordable option. Its bikes sell for $1,995, treadmills for $4,000 and monthly class subscriptions for $39.

              It’s not terribly surprising to see all these fitness companies gradually encroach on each other’s territory. Technology moves fast and the fitness industry is growing fast these days. That puts pressure on these companies to grow fast as well. I would hope to see a little humility from Peloton’s President though:

Peloton will also battle countless other digital workout programs, including Aaptiv and Kayla Itsines, and dozens of others for attention in a crowded app store. Lynch brushes this off, saying people will flock to Peloton Digital because no one else competes at its level.

Most classes will include video to help guide people through the moves, except for outdoor running classes that will be audio tracks. Lynch said history shows that video works.

Aaptiv CEO Ethan Agarwal disagrees. He's built his fitness company on audio-only workouts with the idea that people aren't staring at a screen while they work out.

              There is a lot of arrogance to unpack there. Peloton expects users to “flock” to their app because everyone else sucks. And what is this “history” that illustrates the superiority of video? All of this stuff is only a few years old. Peloton’s history shows that video works because its users are sitting on a stationary bike. Does he not expect anyone to want to use this app in a gym?

              Peloton is not alone though as SoulCycle has also announced its intention to expand from physical locations and launch a media division. From The Hollywood Reporter:

With 88 North American studios, SoulCycle decided to launch its newest offshoot as a way to continue to spread its brand. 

The media division will focus on creating programming and experiences using a variety of mediums, including music, video, audio and experiential events. Content will be distributed across different platforms. Projects are already in the works, with releases scheduled for 2018.

"SoulCycle has always been about delivering the most inspirational and joyful experience possible to our community," SoulCycle CEO Melanie Whelan tells The Hollywood Reporter.

              I wonder what these “different platforms” will be because this sounds like SoulCycle is also launching an app but wants it to sound like more than that.  

Device fatigue: The tech industry is all about the future. It’s not enough to just make money with popular products. Tech companies have to be constantly finding the future. This can lead to some amazing innovations that change the way that we live our lives. It can also result in the industry trying really hard to convince people that they need another device. The last few years, we have been told that wearables and the quantified self are the future. But like Gretchen in Mean Girls, they might be trying too hard to make something happen. From Digital Trends:

And then, just like that, they were gone. Pebble is on life support after refunding Kickstarter backers for a product it can’t deliver. Jawbone is undergoing liquidation. Apple is scrambling to re-invent the Apple Watch as a health companion while FitBit is dressing up its watches for lifestyle-focused nights on the town. And remember the word wearable? It was the hottest thing at tech conventions just two years ago. If your device hooked to a belt loop or slid onto your wrist, you were guaranteed interest.

 

I can’t explain why other people are losing interest, but I know that in my case, it’s because fitness tracking has become a bit too much. It’s taken the fun out of it. We went too far. Personally, I burnt out on the quantification (and I say this as someone who plays in data all day long at Thinknum Media). It became tedious.

What was once a fun, stress-free ride around Prospect Park became an effort to beat user Crank69 on that last quarter-mile Strava segment. I’d obsess over the latest Garmin firmware. I’d wait to begin my ride once I knew all satellite receptors were locked and loaded, just to make sure I got that extra tenth of a mile. I’d review segments ahead of time to save energy for a grind just to beat Crank69.

And then I realized I wasn’t having fun. Instead, my fitness life was the boring, frustrating, grinding, level-up portion of a videogame that you choose to forget.

       First thought: Smartwatches are taking over because they offer more functions than just fitness tracking. After a user gets sick of fitness tracking, there are still a lot of reasons to keep wearing that smartwatch.

              Second thought: All the data in the world is useless if you don’t know what to do with it. The tech industry as focused on the gathering of data but hasn’t addressed the analysis of that data. One tracking feature that I don’t really get is sleep tracking. My fitness tracker will tell me how I slept the night before but I have no idea what to do with that information. I assume the goal is to sleep better in the future but does my fitness tracker help me analyze why I slept poorly?

              Third thought: it may not be the healthiest thing for people to measure every aspect of their workouts. Fitness is not as linear as we would all like it to be. We don’t get faster and stronger every single day. Fitness tracking can lead to over-aggressive measurement which could lead to discouragement.

 

Litigation: CrossFit is a company that is not afraid of the courtroom so it is not particularly surprising to hear that it has filed suit. What is surprising is that CrossFit is suing Reebok. From Footwear News:

The popular fitness training program on Thursday filed suit against Reebok alleging breach of contract and breach of covenant of good faith after it said the brand made a “unilateral change” in how it calculates CrossFit’s royalties.

In documents filed in U.S. District Court for Northern District of California, CrossFit claims that when it entered into a licensing agreement with Reebok in 2010, the company agreed to pay it royalties on the net sales of its branded merchandise. (As part of the agreement, Reebok had the exclusive license to sell fitness apparel and footwear products bearing the CrossFit trademark.  No one other than Reebok — including CrossFit itself — could produce clothes or shoes bearing the trademark.)

“In 2013, Reebok secretly reneged on the terms of the agreement,” the lawsuit stated. “Specifically, without ever advising CrossFit, Reebok unilaterally began calculating royalties based on a fictional ‘wholesale equivalent price’ … a dramatic departure from the net sales calculation Reebok and CrossFit negotiated (and which Reebok had been using for two years).”

CrossFit said this method of alleged underpayment continued through 2016 until an audit of Reebok’s financial records by CrossFit compelled the brand to make changes.

“For the first three quarters of 2017 — and for the first time since 2012 — Reebok paid royalties in accordance with the [initial] agreement,” CrossFit said in a statement. “Yet by the end of 2017, Reebok reverted to its previous royalty calculation scheme, and to date, Reebok has never paid CrossFit for any portion of its admitted ‘payment shortfall.’”

In total, CrossFit alleges it was underpaid at least $4.8 million in royalties.

              The relationship between CrossFit and Reebok has not always been smooth but it did appear to be working. Crossfitters embraced Reebok products, the CrossFit Games became a nationally televised event, and Reebok was making its comeback as a fitness brand. Now, in light of this lawsuit, it is hard to imagine that this relationship can be salvaged. The deal is up in 2020 which is bad news for Reebok. Reebok has engineered its comeback on sponsorship deals with CrossFit, the UFC, and Spartan Races. Losing CrossFit could be a crippling blow to the athletic apparel company. Eight years ago, Reebok was a money loser for owner Adidas. A failure to re-sign CrossFit would send them right back to that point. And Nike’s interest in the CrossFit ecosystem is only growing. It sponsors high-profile CrossFitters like Mat Fraser and Sara Sigmundsdottir and produces its own functional fitness training shoe. Nothing is guaranteed but it’s hard to imagine that CrossFit gets over this. And there will likely be a bidding war in 2020. CrossFit’s growth since 2010 has been explosive. And Reebok will have to contend with CrossFit’s animosity as well as Nike’s deep pockets. That’s not a good combination.

Stay healthy: One of the biggest changes in the fitness industry over the past 20 years is a shift from selling “magic pill” solutions to a competition to have the hardest workout. Overall, this is a positive development. You aren’t going to improve your fitness without putting the work in. Anyone trying to convince you otherwise is probably trying to scam you. One downside to this shift though is the potential for injury and even worse rhabdo. From the Daily Beast:

The biology behind Feszko and Shamburger’s pain—and rhabdo itself—is relatively simple. When an athlete works beyond their limits, their muscle fibers die, David Geier, an orthopedist and sports medicine specialist based in Charleston, South Carolina, told The Daily Beast. “The breakdown products of muscle get into the bloodstream. And little amounts of that would be OK. But a lot, that’s when you get organ damage—and it’s usually kidney damage.” 

What Geier describes isn’t the only form of rhabdo. Tragic accidents—like car crashes, or falling from a high level—can cause the same type of muscle death, and the same consequences. The subset afflicting Shamburger and Fezsko is known as exertional rhabdo, or rhabdo that’s caused by exercise.

Like Shamburger and Feszko, most exertional rhabdo patients suffer from extreme muscle soreness and swelling, as well as muscle weakness and dark red or brown urine. Treatment is simple—an IV drip and pain medication—and often extremely effective. Most patients return to full health after brief stays in the hospital (although Feszko says she contracted rhabdo four more times, without exercising). But if left untreated, components of the muscle fibers cause tubular kidney cells to die, which eventually leads to kidney failure. This could mean dialysis, or, if left untreated for even longer, death.  

              Rhabdo is nasty. There is an irony to the fact that people looking to improve their fitness and health could end up suffering such a debilitating disease as a result. Is this just the price to pay for our fitness culture? That some people will overdo it and contract rhabdo. I can’t accept that.

This expectation only gets worse, he adds, when mixed with the pervading “no pain, no gain” mentality of fitness. “The population in general thinks, ‘If I don’t feel sore, then I didn’t have a good workout,’” he said. “And that’s a myth. I tell people this on purpose in every class I teach: You don’t have to feel sore to reap the benefits of exercise.” 

Instead, Cannon encourages his clients—and anyone seeking to avoid rhabdo—to start slow, and pursue full-body circuit training with light weights and minimal reps. 

Geier recommends a similar level of caution. 

“While you’re working out, if you’re worried something’s going on, you look for more than just normal muscle soreness,” he said. “Like, ‘My muscles are really hurting, they’re starting to swell.’ You don’t try to push through that. You stop working out. If it goes away, great, then come back another day. If it’s not getting better pretty quickly, go to an emergency room.”

              Starting slow is the best advice. And don’t chase soreness. You should leave the gym excited to come back the next day. We all need to work hard but it’s not about being a hero on your first day. It’s about consistency. Coming back day after day and putting in the work. There is also an onus on fitness professionals to not let clients overdo it. A lot of trainers and coaches pride themselves on their ability to get people to push their limits during workouts. They need to also develop their ability to tailor workouts to people who are just starting out and recognize when clients are in over their heads.  

Tidbits:

-Most fitness instructors have day jobs

-A team has been disqualified from the CrossFit Games because one its members tested positive for a PED

-DC has its first Sweat Crawl

-Want a peek inside the CrossFit-Reebok deal