Startup Crossfit: Soul Cycle with Mindfulness

What's up, everyone. This is Alex Lieberman, co-founder, and Executive Chairman of Morning Brew. Welcome back to Founder’s Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. Today, I'm bringing back a fan favorite: Startup Crossfit. Let's hop into it. 

Poised for success or primed for failure? 

So for those of you that were not part of Startup Crossfit last time, here's how it works: I take a business idea that I've thought of, or a business idea that was submitted by the Founder’s Journal community. And I take it through the gauntlet. What's the goal of this? Basically, it's to determine if this business idea is poised for success or primed for failure. And it's also just getting us all in the habit of working through ideas, analyzing them, and also realizing that like not every business idea is going to be the perfect idea and that's okay. It is a process. What I'm going to do is give the idea a letter grade at the end to give you a sense of how bullish I am on this business. Let me start with the questions that I'm going to ask about this idea and that you should really think about asking about any business idea or side project idea that you have.

There are six questions that I ask when assessing the feasibility of any business idea, the first, how painful is the problem? The second, why is the solution significantly better than what's already out there? The third, how defensible is the business at scale? The fourth, what's the ambition of the business? The fifth, what makes me a good fit or a bad fit to start this business as its founder? And finally the sixth: How can I test this idea quickly and cheaply, but with high fidelity? High fidelity, meaning I have a good sense after the test, if this can be a legit business or not.

Sub 30

So now what I want to do is break down the idea and answer each of those six questions as we go through. The name of the business and I came up with it in about five minutes, so it's not perfect, but it's good enough, is Sub 30. Sub 30 is a global exercise movement that combines content and community to make getting healthy, actually fun. The problem that Sub 30 solves is that working out sucks for many of us. It’s boring yet it is incredibly necessary. So people either choose to suck it up and they just hate working out and working out at the gym. Two, they join a group workout class, which can be really expensive or inconvenient. Or three, they just opt out of working out altogether, the worst of the three options. With Sub 30, what you end up doing is you take a short fitness quiz where you provide your fitness level, types of exercise that you prefer to do, and how often you're going to commit to exercising. Sub 3  then places you into a fitness group that will be your group throughout the Sub 30 program. You'll have a calendar of all of your classes that can be integrated with your Google Calendar or whatever calendar app you use. And each invite we'll link to a zoom link where you'll do your 30 minute or less classes each day with your group. 

And here's where Sub 30 is different. There are no instructors. Sub 30 will curate 30 minute HIIT workouts designed by professional instructors, but classes will be for and by the community. Members of the sub 30 community will have the opportunity to volunteer to lead classes, which just requires a training from Sub 30, the corporate brand, and being given the workout that Sub 30 designs. And then you're given a music playlist as well that you use during your Zoom with the group, and in doing so, by leading or volunteering to lead these classes, you get a significant discount on your Sub 30 membership. This makes it a super capital-efficient business model since you don't have instructors, but it also creates a truly deep sense of community since no other workout brands or exercise companies I can think of are truly community led.

So that's Sub 30. 

6 questions to answer 

Now let's go back to the six questions I asked in the beginning. Question one, how painful is the problem? From my experience, very painful. Unless I am playing a sport, I fricking hate working out. I find myself getting distracted. I find any specific discipline of working out, like CrossFit or spinning, to become unbearable after a month or two of doing it. And all of that said, I understand how important exercise is for my health, which basically guarantees pain in either direction. Either I hate the exercise while I'm doing it, or I hate myself for not exercising if I decide to skip a day.So I would say the problem is pretty painful.

Question two: Why is the solution significantly better? This is where I honestly think that Sub 30 is suboptimal. I think the solution is better, but not significantly better. I think that it's better from a business perspective in the sense that it is a model based off of restricting time versus say, taking an exercise trend that could become a fad where it’s big today, but not big tomorrow. I also think it's better and unique in the sense that it is a truly community-led fitness business, but I worry that it is not significantly better for a few reasons. First, there are a lot of HIIT-based exercise businesses out there from Barry’s to F 45 to Peloton’s app. And while the emphasis on community I'd argue is greater here, I don't think that it's a 10X better solution. Second, I also worry that given it's not focused on a specific discipline of exercise, say Pilates or CrossFit or anything else like that, it's not niche enough to build a loyal audience. And that prevents it from being significantly better as well. Question three, how defensible is the business at scale? And the answer is relatively, but not significantly. This business doesn't benefit from true network effects like a Google. It doesn't benefit from scale economies like a Netflix, and it doesn't benefit from high switching costs like an Apple. The defensibility of this business truly is based off of community and brand. And those two things can be powerful. It's just really difficult. When I think about businesses that have incredible brand and community defensibility, I think of religion, like Christianity, I think of Burning Man, the event. I think of communities like YPO or Chief that are highly curated communities based on a job or based on a specific interest. But I just argue that it is very, very hard to stay sustainably defensible based on a community, especially if your community is not highly curated.

Question four: What is the ambition of the business? So I think there's an unrealistic ambition here and a realistic ambition. The unrealistic ambition is to help eradicate obesity through exercise and nutrition that is both fun and approachable. And while I love that vision and I would love nothing more than to accomplish it, I don't think the idea of Sub 30 in its current form has the ability of realizing that vision. And then I think there's the realistic vision, which is you can probably build a nice lifestyle business by helping people who hate working out hate it less through content, time restriction, and community.

Let's just say, for example, that we price this at $50 a month, which feels like a mid-tier gym membership. It's cheaper than Equinox, which is like 300 bucks a month, but it's more expensive than something like Blink Fitness, which is $25 a month. At that price at $50 a month, you need 1,667 customers sticking around for a year for it to be a seven-figure revenue business. And you need 16,667 customers for it to be an eight-figure revenue business. Do I think it is possible to convince between 1,700 and 17,000 people on planet Earth to join this Sub 30 community? Absolutely, which is why I think it can be a nice business that covers the lifestyle of one or two founders that operate it. 

Question five: What makes me a good fit or a bad fit to start this business? While on the side of me being a good fit, I am definitely a customer of this business like I'm a customer of Morning Brew because I find normal exercise excruciating, but I do it. That's how I thought about this idea in the first place. I also understand community and content well from building Morning Brew. So I see a great content play with Sub 30 that would be able to market this community where you can create social accounts where you use user-generated videos of Sub 30 workouts with the exact exercise routines for people to try it on their own before joining the community. Where I'm not a good fit is as it relates to expertise around exercise. I'm not an expert on workout theory or workout construction. So that would definitely be a blind spot that I would need to fill through a partner in the business or an early employee. The sixth and last question to ask about Sub 30 is how can I test this idea quickly and cheaply, but with high fidelity? Here's the test. I would host a 30-day exercise challenge with people. I would charge $50 and the goal is to get a group of people to work out daily together for 30 days and the pitch is that we're going to get healthy together with Sub 30 or less than 30 minute workouts every single day. And I will be leading the workouts with a music playlist.

At the end of the 30 days, I will see how many people completed the challenge versus how many people ended up leaving and I'll survey the remaining group and ask if they would continue being a part of this community at the same exact cost of $50 a month. And I would find these people to participate in this challenge through posting on Twitter or LinkedIn to my existing, built-in audience. And I would have someone that is a personal trainer volunteer to design the workouts for us, which would fill the blind spot of me, not knowing how to design great workouts. I'd create a shared calendar for everyone and host the exercises daily on my personal Zoom. And that would be my high fidelity test that would honestly not cost anything other than my time.

The grade

So let's bring this all together. What is my temperature on Sub 30? I like that it's community-driven. I think it takes on a real need, which is making exercise enjoyable and approachable. I like that it is capital-light and it has localized network effects for people to invite friends into the community. But I don't like that it's not very defensible, since there's no proprietary content or hardware or software. I don't like that exercise is so competitive and a lot of brands like Peloton or Barry's already offer in-studio or digital short workouts. And I don't like that the brand has a risk of being perceived as this community for lazy people who don't want to work out.

So my grade on Sub 30 as the idea stands right now is a C. I think it can be a nice lifestyle business that someone wills into existence and builds into a meaningful income stream for themselves. But I think that the solution needs to be improved. I think something proprietary, whether it's IP or hardware or software, needs to be involved to create greater defensibility. And I think I need to test out many of the alternatives to Sub 30 that already exist to understand if this problem that I'm trying to solve is already being solved really well.

 I'd love to hear your thoughts on Sub 30, any ideas that you think could take it from a C to a B. And also if you have any ideas you want me to take through the ringer on the next Startup Crossfit. Just shoot me an email to alex@morningbrew.com or DM me on Twitter @businessbarista. Also make sure to pound the subscribe button for Founder’s Journal, whether it's on Apple, Spotify, or the podcast player of your choice. That is the number one way that we grow the podcast. And finally, if you already subscribe, make sure to check out Founder’s Journal content on Morning Brew's YouTube channel. Go to YouTube, search Morning Brew, and click on our channel. There, you will see an entire playlist of Founder’s Journal videos, like how to deal with imposter syndrome or why Ethereum actually matters. Thanks again for listening and I'll catch you next episode.