THE WEEKLY HOWL IS TRYING TO MAKE ATHLUXURY HAPPEN

Black Tuesday: Last week, CrossFit laid off a lot of people. By a lot, I mean about one-third of its corporate staff in Northern California. From Boxrox:

Last Tuesday more than 40 CrossFit Staff were fired. This is close to 30 – 40% of the members of CrossFit’s Santa Cruz, CA office.

The vast majority of these individuals were from The CrossFit Games media team working in video, photography, graphic design and logistics for The CrossFit Games.

              Fast-growing companies aren’t the first thing that you think of when it comes to layoffs but it’s not unheard of. The downside of fast growth is that it can be very difficult to manage that growth well, particularly when it comes to managing costs and headcount. What’s interesting about these layoffs is that they seem to portend a complete change in strategy. The layoffs were concentrated in multi-media positions, i.e. the people that document the CrossFit Games. Of course, this means that major changes are afoot for the Games:

Our sources tell us that this is part of a move by Greg Glassman away from concentrating so much on The CrossFit Games, to shift the Media focus towards ‘CrossFit Health’, and to pay more attention to health rather than competition. One source told us that Glassman is ‘anti-games’, seeing the spectacle to showcase the sport in a dangerous way. 

Also:

According to our sources, there is a strong chance that the Regionals format that we all know and love will completely change! It looks like there will be a series of different events that will now count towards qualification for The CrossFit Games. Rumours have talked about competitions such as the Dubai Fitness Championship amongst others. 

It looks like Greg Glassman wants more focus on the affiliates and less focus on the Games. The question is whether CrossFit is a sports company or a fitness company? Up until now, the answer has been a fitness company that does a lot of sports marketing. But no one has infinite resources which means that tough decisions have to be made sometimes. From Morning Chalk-Up:

Today, CrossFit has more than 15,000 affiliates worldwide; more than half of those are located outside the United States. Perhaps even more impressive is the fact that Glassman has more affiliates in the U.S. than Howard Schultz has Starbucks.

Yet a significant portion of CrossFit’s financial resources goes to building and supporting a competition for the 0.01% of athletes, resources which could be going to support training and equipping these affiliates on the front lines in the fight against chronic diseases.

“We chose to make these changes to refocus our efforts towards the core of CrossFit: our affiliates, seminars and certifications, and our core mission: preventing and reversing chronic disease,” an anonymous source within CrossFit said.

Assuming that Glassman sees CrossFit as a fitness company, then it could make sense to outsource a lot of the Games work. CrossFit could probably convince CBS Sports to produce those documentaries for them. The cable sports networks need a ton of content to fill the air waves with. Let CBS Sports do what they do best (create content) and save a ton of money in the process. Then, get rid of Regionals. Right now, there are 3 rounds of CrossFit competition (the Open, the Regionals, and the Games). The Open is pretty cheap to conduct, all the competitions take place in the affiliates. Plus, it’s a big deal to the affiliates and a great way to promote and grow CrossFit. I can’t see them getting rid of the Open. The Games is the showcase of the sport and fitness in general. It has to be expensive to put on but they sell a lot of tickets, have a ton of sponsors and a TV deal. They’re not getting rid of the Games. The Regionals have to be more expensive than the Games (they hold 9 competitions all over the world) but without the same revenue streams as the Games. This they could get rid of. So how would athletes qualify for the Games? Use other competitions as qualifying events. Create a circuit of competitions in which athletes earn points. Earn enough points and you’re in. That way, CrossFit isn’t footing the bill for all of these competitions. And I am sure that competitions like the Granite Games would be more than happy to serve as a CrossFit Games qualifying event. This way, CrossFit can serve as more of a governing body for the sport. It can set the standards and hold the championship. This also might encourage more people to invest money into fitness competitions with the dream of becoming an official CrossFit event. The season would start with the Open in February, have a circuit of qualifying events through the spring and early summer, and then culminate with the Games in late summer. It might even be more fun than the current setup. The qualifying events can develop their own history and feel.  The downside to all of this is that you lose some control over your brand but that is something that CrossFit has never been afraid of. This is a company that uses an affiliate model instead of a franchise model. Yes, CrossFit will lose some control over its brand but this will free up a lot of cash that can be invested in growing/supporting the affiliate base.

Update:

-The Open is moving to November

-From the Open, every country with an affiliate will send one man, one woman, and one team to the Games

-The Regionals are out, there will be 16 qualifying events, win one and you’re in the Games

-The CrossFit Invitational is out

Good Old Days: Deadspin published an oral history of the original Gold’s Gym in Venice Beach this week. It is a good read and I highly recommend it but one paragraph stuck with me:

Charles Gaines (author of Stay Hungry and co-author of Pumping Iron): Among other things that’s not widely understood about bodybuilders, I think, is how good they feel. Working out they have these endorphins cascading their bodies. They’re eating enough meat for a male lion every day, and lying in the sun and screwing whoever they want to screw. It was a kind of paradise. They’re always tanned and they’re in great shape. That sense of physical well-being and pure physical pleasure was a big part of that scene.

              It’s a little provocative but this isn’t this why we all work out? Because it makes us feel good today. You feel good after your workout, it feels great to be in shape, and you’ll be more attractive to whoever it is you want to attract. These guys were just some of the first ones to get that and they built their lives around it. There was no money or prestige in it back then. They were bodybuilding bums who wanted to see how much they could transform their bodies. It’s crazy to think that this little hole in the wall gym in Venice Beach helped create the fitness culture in America but it did. And it sprung from a desire to feel good through exercise.    

Real Estate: If you want to run any kind of retail business, then finding the right location is critical. You want someplace with good visibility but you don’t want to get killed on rent. And it needs to be the right size and type of space. All of that gets harder when you opening up a gym (although it has been getting easier lately). And it gets even harder when you’re opening up a climbing gym. From Curbed:

The number-one challenge to developing a climbing gym is real estate, says Helt, and finding the right property, one that’s both big enough for a multimillion-dollar rehab, and, in the case of facilities that offer rope climbing, tall enough—often needing 45-foot ceilings or more.

What’s been especially interesting, and in some cases frustrating as the industry grows, is how climbing’s emergence runs parallel to both the post-Recession real estate recovery and a seemingly insatiable desire for warehouses and post-industrial properties for a variety of industries, including residential and commercial development, microbreweries, e-commerce such as Amazon, and in some states, cannabis growers.

“I think the word is out on how cool industrial warehouses can be and everyone wants it,” says Lance Pinn, co-founder and president of Brooklyn Boulders, a chain of climbing gyms with four locations in the New York, Boston, and Chicago area. “Once upon a time, there was a sweet spot when it came to cost and availability. For our first few facilities, we caught them just in time. But now, that ship has sailed.”

              There has been a lot of press coverage on the retail apocalypse and the death of the shopping mall. There has not been much coverage on the growing demand for industrial spaces (or the evolution of the warehouse gym). This has made finding a good space for a climbing gym very tough.

That’s one of the real challenges facing climbing gym developers; Finding massive spaces for adaptive reuse close enough, or soon to be close enough, to a large customer base, but before the real estate gets too expensive.

That’s led gym developers to focus on transforming any spaces that fit the bill, no matter how unique. Everything from churches to movie theaters to a hospital power plant have been remodeled for climbers.

              Most businesses just have to worry about square feet, not cubic feet. There is one bright spot in all of this.

Helt believes the challenges of funding and finding a new space actually work to the industry’s advantage. It’s hard to burst a bubble when it takes so long to open a new facility. He sees opportunity in places like the Dallas and Houston metro areas, with millions of potential climbers and less penetration.

              They don’t even get into the expense of opening up a climbing gym. It is not a cheap endeavor.

Stop trying to make Fetch happen: Athleisure has been the hot trend in athletic apparel the last few years but the industry leader has been resisting. Now it appears that they’re giving in. From Vogue:

 Throughout Nike’s 47-year history, athletes have always come first. That’s been a long-standing advantage for the brand—ultimately, it’s hard to argue against LeBron James and Serena Williams picking up trophies while wearing that swoosh. But as the lifestyles of the well-off pivot to a more natural fusion of exercise and daily life, and as athleisure becomes a fashion statement, Nike has lagged where other activewear monoliths have thrived. That’s about to change with its newest womenswear launch, Nike City Ready, a collection of athluxury pieces that targets the modern woman in an urban center, the woman who sees Bella Hadid leaving a training session in high-waist leggings and a bodysuit and wants to do the same.

              I think that Vogue understates how big of a deal this is. Nike prides itself on being a sports company that designs its products for elite athletes. They believe that this is their competitive advantage. For example, their running shoes are all designed for runners with narrow feet and good biomechanics. That is not most people. New Balance has been selling shoes in both lengths and widths for decades. It is not a radical idea that the size of someone’s foot could vary by both length and width. But Nike has resisted selling anything that an elite runner would not run in. Which is why it’s so weird to see them give in on athleisure. They have some very aggressive revenue goals that need to be met but still. Athleisure is the exact opposite of what Nike believes is a pillar of its success. They must think that athleisure isn’t going away anytime soon and that they can’t afford to be left out of it. 

The 7 Z’s of leadership: As a business school graduate, I have been trained to be a sucker for wisdom dispensed in a particular alpha-numeric format. Which is why I got excited about this article in Inc. 3 C’s? I am in.

Beyond the wellness movement, Geisler sees three key drivers of the boutique boom. You could call them the three C's: consistency, community, and constraint. Consistency is at the heart of any chain's appeal; like Levey, who was frustrated by how all-over-the-place yoga classes could be in their approach, consumers want to know what to expect from a business, no matter which location they enter. Geisler, a fan of Starbucks, makes sure that in all his studios little things like the layout of the bathrooms (and the free toe socks at Club Pilates) don't vary from one location to the next.

Community is the social aspect of working out. Exercisers want to get some of the same feeling they get from going to a cool bar or nightclub. The candlelight and loud dance music at Y7 certainly create a club vibe, but Levey says the rigor of the sessions themselves is what inspires bonding. "There's a sense of camara­derie," she says. "You're going through this difficult workout together."

A sense of shared affinity helps explain why people will pay more for membership at a single-purpose boutique than they would for a full-featured, big-box gym. "People who have dogs go to dog parks. Why?" asks Geisler. "Because everybody at the dog park has a frickin' dog. We're animals. We like to go to the watering hole together."

And we prefer the most popular watering holes. Hence, another aspect of boutiques' unlikely appeal: constraint. Small studios make for small classes that fill up fast, and when classes are frequently booked up or oversubscribed, it's a lot easier to charge $25 or $35 for a spot. "Look at the old nightclubs. People waited in line for hours," says Geisler. "Everybody wants to be part of that."

              The first 2 aren’t anything new but I am intrigued by the third C: constraint. The comparison to night clubs is interesting since fitness studios are the new night clubs (according to some). I have a hard time wrapping my mind around it because I’ve never been a night club guy. I hate waiting in line so I can stand in a loud, crowded space and be over-charged for drinks. Exclusivity in the form of long lines does not appeal to me. I have always thought that the hassle of booking SoulCycle classes sounded exhausting as well. But everyone is not like me and exclusivity definitely sells. Personally, I’m more of a Peloton guy.

But not everybody has time. Peloton's founder, John Foley, had worked at Barry Diller's IAC, Barnes & Noble, and Evite when, in 2011, he found himself getting frustrated by how hard it was to get a spot in a spin class. In Manhattan, where he lived, SoulCycle and Flywheel classes led by popular instructors were often booked up a week in advance. "I was thinking, if 2,000 people want in and only 50 people can get in, that, to me, screams distributed technology," he says. 

              What would that make Peloton? The equivalent of an intimate gathering of friends? You can just show up whenever you want and you’re guaranteed someplace to sit. And you don’t have to have your ear drums assaulted by music that is way too loud.

Tidbits:

-The women only model comes to CrossFit

-Google Fit gets an overhaul

-Online coaching is on the rise

-The ghosts of gym class truly haunt us all

-A gym designed for Instagrammers