How Ladder Became #1 Strength Training App

0:00 Today's episode is a conversation with the founders of the company that was my very first ever angel investment, a company called Ladder. At the time, I had absolutely no idea what I was doing. I didn't know the first thing about venture capital, startup investing, technology, software, all things I've learned a lot about through Invest Like the Best and elsewhere since. But at the time, I was betting on my friend Tom. As you'll hear Tom and Greg discuss the story of building this company together.

0:23 This is a classic example of what it really takes to build something special and valuable in the world of startups. It has not been a straight line. It's a company that easily could have died and probably should have died many times. But it has survived and gone on to thrive, reaching almost hund00 million of recurring revenue and building what they hope is the system of record for fitness and health. I believe this story is a great example of what it really takes to go the distance. Of course, the story is still being told, but I love this episode with Tom and Greg because it's an inside look at the difficult things that any founders will have to go through on the way to an ultimately great story. We try to get into all the nitty-gritty details. What went wrong, what they did to fix it, and why they're now on the right trajectory. Please enjoy this great conversation with Tom and Greg, the founders of Ladder.

1:15 So, Ladder was the first ever angel investment that I made, which effectively was a bet on Tom. This was before I had any idea what I was doing in private markets. And uh I've learned a lot from watching you guys build over the years. The story is fairly amazing and unlikely and dramatic, which is why I'm excited to do this with you guys to tell the story of the business that you've built so far and and where it might go. The idea, I think, for our conversation today is to show people how incredibly hard it is to build something that ends up being very valuable and the twists and turns that happen along the way. It's amazing that you've ended where you are, but I find it all the more interesting how you got here. And of course, we'll also talk about where you're going. Maybe to begin, since not everyone will know what the business is, just literally describe what the actual product and business is. And then I want to tell the the the real dirty version of the story of how you got here.

2:12 >> Ladder is the number one app for strength training. We've built a system that's designed to make it as easy as possible to maintain a consistent routine. We spent a lot of time thinking about personal training. Arguably the most reliable way to get to the results that you're looking for is hiring coach. Unattainable for most inaccessible for most. But personal training, if you think about how it breaks down, it's programming, coaching, and accountability. Programming, you know exactly what to do. Someone's prepared it for you. There's no guesswork.

2:41 There's no thinking. Uh coaching, you have an expert there to guide you, answer your questions. And accountability, you have a coach standing in front of you. You don't want to piss off your coach. which is a really powerful motivator. Then we took those three pillars and designed an experience from ground up to get as close as possible to to that experience. >> How has it been so successful? Because I feel like this is almost like a Silicon Valley meme like you have a fitness app like there's 4,000 million fitness apps to what would you attribute the fact that this one is the one that seems to have come to dominate in a sea of competition? I think it's it's going to sound simple, but it's understanding your customers and really being an engineering first business. If you look at most companies in our space, they're started by creators and they're good products, they're good companies, but the creator is the face of that business. They make every decision and they don't have a DNA that's rooted in in engineering, in problem solving. And when you look at these apps, they're mostly just content libraries and the motion is just constantly creating more and more content. But what we saw was nobody was spending time thinking about how to use these incredible levers uh to deliver an experience that actually increases the odds of you continuing on.

3:55 We looked at apps like social networks and we looked at Dualingo. all these apps that we're using all these powerful motivational mechanics and pointing them at at an action. For social media networks, it's selling your attention. For Duolingo, it's learning a language. And so, we took that mentality of how do we use software to create an experience that's totally different than what exists today that isn't reliant on a neverending content machine. And it's been guided by our members. We spend more time than you could imagine just speaking to our members, dissecting exactly what we should focus on based on what they care about. And so I think it's just not looking at other companies for inspiration. Like we just don't look at fitness almost ever.

4:37 >> Just to give people a sense of scale, like roughly, you know, how many people use it? What sort of revenue does the business do? Just like give people a sense of of how big the business is. >> Yeah, we're we're north of 300,000 paying members today. I think at the beginning of 23, we were 9,000 paying members. So the growth has been exciting. We're getting pretty close and knocking on the door at 100 million of AR. So it's been very exciting from a revenue growth perspective, but it all boils down to we've created a product that gets people the results that they want and they stay with us.

5:04 >> So sort of having like laid that quick simple groundwork for what the thing is. I would love to rewind time and Tom have you talk about actually we've literally recorded podcast at the same table. I don't know do you know what year that was? 2017 maybe >> 2017 the beginning chapter of the business call it 2017 to 2020 or so was a struggle to sort of stay alive and you personally put so much of your time your reputation on the line to go do this thing you left a really lucrative successful hedge fund career to do it maybe you can just tell the story of those early years and what was going on and why it was such a again I want to paint the story of like 100 million AR is awesome congratul ratulations. That's really fantastic. I'm very happy as an investor, but the more interesting part of this is is what it takes to get there. So, maybe set the stage for us.

5:52 >> So, ladder started as a it was really a side hustle for me, I guess. A uh high school classmate uh that I went to school with up in Boston had pitched me on a on a fitness startup. The product didn't exist yet. I think it was um a pitch that I was just kind of looking to swing at at the time. Was, you know, very interested in startups and technology. He asked me to put some money into the business, which I did. I then raised the rest of the money and ended up joining him as uh co-founder and president of the business. And my condition for joining the business was to move the company to Austin, Texas. You know, for me that was less about warm weather and a change in lifestyle. It was about separating myself from safety nets and uh putting distance between New York and my Bloomberg terminal and kind of the the easy way out cuz I assumed it would get hard. I didn't know it would get, you know, quite as as hard as it did.

6:40 There's really two ladders or two different companies here. Same name. I would call ladder 1.0 as everything pre2020 and after 2020. The name's ladder and we're in the fitness space, but it was a it was a different team. Uh it was a different product. What we were originally building was more of a managed marketplace for personal training. We thought that it was about there was heavy emphasis on on personalization and a relationship with another human. We thought that was, you know, really the opportunity. What we'd come to find out is that business would be very operationally complex, um, difficult to scale. You know, ultimately as you scale that business, it starts to look more like a call center and you'd be um, inclined to start to automate away the very human you were selling in order to build anything that had margins, you know, worthy of venture type economics and scale. So uninteresting. But what we were seeing was that all of the innovation in the space was focused on the casual fitness consumer. We were noticing that it was all very cardiobased and we saw that this fitness enthusiast customer was really they were being ignored. Strength training in particular, there was no one selling strength training solutions. And we got excited that there was this fitness enthusiast customer that was already working out that had a huge pain point around just planning their workouts daily. and we got excited that this is something that we can solve with software. So, you know, we find ourselves in Austin, Texas. You by the time I get down there, I realized, you know, startups are really hard and it didn't quite look like, you know, what I had been hearing on your podcast as far as like the uh the iterating and the learning and just um you know, it was hard. It was messy. We were kind of out of money the whole time. We didn't have >> really any customers to speak of. There was no signs of product market fit at that point. Fortunately, this is where Greg answers the the picture. So Greg and I went to went to Notre Dame. I should disclose that all three of us were classmates at Notre Dame. And uh Greg and I reconnected in Austin, Texas.

8:36 He had left banking and has now been building startups for a period of time. It was very obvious that he had this uh small team that believed in him very much and it was clear that he wanted to build something very meaningful and consumer. So I kind of spent my time um you know tricking him into joining us if you will. eventually, you know, I got him under the hood and excited about um about what we were building. And why I was so interested in startups myself is that I had this um this sense that you could you could something to happen in the startup world. It just felt like if you were willing to not stop and you just keep going. It it seemed like you could just sheer force determination, you could build something that was appealing because in the hedge fund space, I can promise you in the finance world that's not possible. You can't just like will hedge fund returns. I think Bernie Maid off tried to do that and um and it doesn't work. It was obvious to me that he shared that same belief. We'd be in the middle of a doing something messy like a debt collector, whatever it is, something hard. And in that same next conversation, he's talking as if our success is inevitable, you know, and we're going to build this enduring business. And um I was attracted to that. I've always felt that way. And so, you know, I could just tell that Greg seemed like the type of guy you wanted to be in a foxhole with. So, it's now it's now uh the end of 2019 and I'm realizing that we have this opportunity to reset and to really think about like what what can ladder 2.0 be.

9:59 But in order to do that, we need to really refocus, restructure, was thinking about a you know what a leadership transition could look like. I found myself in a position where I was our largest financial shareholder. you know, in addition to being in the company as a co-founder early days, it was all people like yourself that had put money in because they trusted me personally. And so I felt this this naturally this obligation and um you know I think my my role and mindset shifted from one of co-founder to trying to be a steward of the business. And at that point this is the day after Christmas 2019 came to the board and proposed that that we needed to make um some pretty significant leadership changes in order to really um in order to really reset the business. And as part of that we had some changes at the executive level including naming Greg CEO. But it felt like at that moment like you know we we had this sense of like we can go we can go build this thing now. Like our problems were hardly solved but it felt like the problems were now worth solving.

10:57 >> Just to put like a finer point on the situation for you personally. You've left this job. We're making a bunch of money. You're in Austin. You moved your family. You've gotten most of your good friends and your family as far as I understand it. My family. So many people that you cared about that that cared about you too >> uh to invest in this thing. What did that feel like? What was the darkest point and what did it feel like for you personally?

11:18 >> Well, it just felt like there was nothing you you weren't willing to do to to make it work, you know? And I think that's why it was um it was appealing to meet someone else that kind of felt that way that was kind of going to be in that fox. I should have learned that lesson and said I need to not raise money from friends and family. Instead, they were the only people at that moment that I needed to double and triple down. Um you just had to go even further all in. Um not sure I would do it again or or recommend other people take that path.

11:42 >> Why not? You have to just like know deep down that you'd be willing to do whatever it takes, you know, including like, you know, some very difficult conversations with your wife and you're building a family and, you know, you're leaving a lot on the table on, you know, a much easier, cushier, you know, hedge fund, country club type, you know, existing here in the Northeast and, uh, you know, you want to go and, you know, do something hard. Turns out it's it's pretty [ __ ] hard. I think that dynamic is why ladder is here, though. I mean like your motivation was delivering to everyone in your life and like that that sits with you every single day. I don't think there was a moment where we thought we weren't going to figure it out. Like I can't think of one day we were like it's not going to happen. Like we're we were going to figure it out.

12:25 And on my side I don't have that same dynamic I do now. But it wasn't true when I first joined. Not everybody was invested in ladder. But I had a conversation with my wife where she said this is the last one. Like if you if you don't figure this one out there are no more startups. It had been 10 years of not a lot of success tied to a lot of work. And my wife married an investment banker who was a closeted entrepreneur.

12:48 And she's been an investment banker for 18 years. And it's been a long time of like, you know, I'm going to the clubhouse. I'm going to figure it out today. Like I promise it's coming. It's coming. And that's been an enormous motivator of like, no, this is going to work. I mean, we're there's just no scenario where we can, you know, let this not get to the vision that we we've set ourselves on. Why did you decide to join it? You know, if you think about the circumstance that you were opting into, uh he said it best, you know, no money, no product market fit, like need needing a whole new team, you know, why not just like start a new company or something like why why come into this?

13:22 >> It was kind of this perfect moment that is very unlikely to ever happen again. I was building a company inside of a big real estate private equity business, a consumer company, uh, which had all kinds of complexities of trying to be an innovator inside of a really established company. But I had this amazing team of people, some that have been with me for a couple of ventures, some that I've worked with for two, five years. Really powerful team that could build anything.

13:47 This is product and and engineering and and marketing, but a core group that we wanted to just keep working together and we wanted to be in consumer. We wanted to work on a hard problem. But we had a group of people that were not at a stage of life where they could take zero salary and start something from a garage. People were starting to have kids, you know, life is starting to happen. We got spouses and so just starting something from scratch. And we thought about it. It just seemed like it was a hard task to keep the group together. That was my number one focus is like keep this group together. It's special and I wanted to hold on to it for for dear life. So like that's what I was solving for consumer and bring my most important people and let's take another swing together.

14:28 >> Talk about what a given day was like in when you guys joined forces there's still this mess to clean up and then there's this thing you have to go build and it's like two sides of the coin. How what would a day look like in those early days? >> It's literally like late March 2020 when we've zeroed in on the concept for this this new product and we're having to go fully remote. the teams knew. So, everyone's working from home other than Greg, myself, and and Johnny. And the mornings were for the messy stuff. It was um you know, just figuring out how to untangle some of the situations we found ourselves in, debt collectors, actually just trying to to kind of fix things so we can move forward. And um in the afternoons, we're actually building product and Greg's focused on, you know, winding the team up and, you know, iterating on what we're about to build and launch, you know, a few months later. Um, we're raising money kind of at any moment during that. Like I'm spending every moment redialing people that are already investors and reaching out to new people. What I what I remember most though about those days cuz it was it was hard but it was also so exciting. And I think about um you know at night at like 10:00 we would finish the whole world has stopped.

15:35 Everyone's at home. We've been in the office grinding since 6:00 a.m. And at 10:00 it would be like all right like whatever win we had that day let's celebrate. And it was like um you've seen that scene in Good Fellows when they're all in prison. And when wise guys go to prison, it's not like everyone else. They got lobsters coming in and >> slicing the garlic. >> Yeah. Slicing the garlic with the uh with the little razor blade. You know, for us, our version of that, we're cooking steaks on the grill. We're smoking cigars in the office cuz no one else is coming in. Uh I'm shaking martinis up there. And uh we're high-fiving about raising $10,000 checks. That was exciting cuz frankly it felt more like the startups that were romanticized by the you know podcasts and books and you know all the kind of fun stuff.

16:13 >> But it it was survival and like when you're in a moment where it literally is survival it's not hard to know what to work on where it wasn't hard for us to know what mattered. We needed to not run out of money. So Degan was spending time trying to solve that problem. We were in debt and owed a lot of people a lot of money and it's a startup so it's really hard to get a clear picture of the financials and where money is going and it was the first thing I worked on was like where's where's the money going. We put that piece together and you know no one can really see this or is looking at it and you realize like money's going in different places that we're not totally aware of and mission number one was like figure out the cash flow and we got we got visibility into that and then we had we had some money that we owed to people and we owed some like hardcore creditors like American Express who like doesn't really mess around and I learned and Degan learned all about how to negotiate creditors and that was a new skill set for me.

17:05 >> What's the key to that? What's the lesson? uh begging you money. >> Like when when you get them to really believe and it was true that there's a chance you get zero, there's a door to negotiate. Like we were negotiating with big creditors at 20 cents on the dollar. >> And we knew the list of groups that we owe money to and it was like it was like sales. We're like, "All right, we got to go one by one and figure out how to close the door on this and not let it overhang the business." And so raise money, get money back to the right people, clean up the house to survive.

17:39 And then we had this moment around this time where it's like we have this existing existing business. It's not it's not working. There's some insights that are coming out of it, but it's really not working. Um, but we're still trying to maintain it. So we're kind of living in this like in between moment of like keep that thing alive so we can pitch something to to folks on the outside, but also like what are we going to do? Like what are we going to build?

18:01 isn't this like there's no path in this thing that that we've built. So there are really funny stories uh where Degan was pitching, I'm pitching, and you're basically trying to figure out what the investor likes and you're like, "Let me tell you about this one to one business we got." It's like super excit Oh, you know, like that like we're thinking about this social concept and you're just kind of living this world of figuring out how do I make it through?

18:24 And there were enough wins like the the micro wins on survival felt big to us and there was enough to like celebrate to keep going and wake up and go do it again. If you were to teach a class on fundraising for startups now, you you you've done this as masterfully as anyone with the with their cards you were dealt. What would the lesson plan look like? >> One of the biggest lessons particularly from that moment is like selling people on like your your conviction in that moment we were selling both like the product that we were about to shut down, but we didn't really even have visuals yet for the new product. So, it was as much just like selling the team and the conviction on what we were about to build. Like I think like the best example of that is a story about um another friend of ours named we'll call him Bill in March of 2020 trying to kickstart a round but no one's going to lead this round naturally cuz who would who would lead a round in our business at that moment. And so I was about to lead another inside round where basically like I'm pricing the round and uh passing the hat to you know to all the boys and whoever would listen. And um and so what what happened there was now I need some more cash. I think Braden knows like how many times I wrote check in into the business. But I kept um this was another example of being like all right the only way to get this going is to write the first check and then you know and and lead with that uh with that conviction showing that you were you know had skin in the game here.

19:39 Again at this point I'm trying to figure out how to sell anything that's not nailed down. And so it's you know 401k put that in done. Uh what else can we do? And um this story here is funny because I'm looking at kind of the line items on the balance sheet if you will. I'm like, "Oh, permanent equity." And uh that's that's Patrick's friend, Brent Behore. And uh Brent came and told his story on this podcast. Uh he has an unbelievable strategy, and it's called permanent for a reason. And that, you know, he buys these family-owned um you know, awesome businesses and then holds them forever. And so you're not, you know, you're not necessar there isn't like a liquidity profile here. But I read the documents and it said that if you found another LP to sell to that you could sell. And so I called Brent and said, "Hey, I need your investor list."

20:22 And he's like, you know, the market S&P is down 35%. We're in a global pandemic. Like, of course, I'm not giving you my investor. You're you're my smallest investor. Like, you think I'm But he does me a solid and he's like, "Hey, you should call Bill." Bill's a friend. He's Patrick's friend. You know, Bill, another Notre Dame guy. So, I call I call Bill and uh and Bill's a gamer. So, he's just like, "Uh, what are you looking to do? When do you need this by?" And he's like, "What are you thinking? Like, how do we mark this?"

20:45 And I'm like, "Well, the market's down this, you know, what about down 10%." And we and he's like, "What about down 50?" and we do the dance and we end up kind of somewhere in the middle and I'm like you're done but I need the money tomorrow and he's like I'll send you the money tomorrow and I'm investing in whatever this is going into. He doesn't even really know what ladder is but he's like but I'm in and like I think the the point there is like just like in particularly those early days it's important to have skin in the game in whatever way you can. Like and I think you know for us it was about um being able to show that level of like conviction and urgency like Bill didn't need to see a deck. We didn't have a new product yet. He knew you were involved and he was just like if you're willing to do this like you know I need I need to be involved too.

21:24 >> So he bought your steak and then also invested in the round that you were that you were investing in. >> I think he matched what he was what he was sending me which was which was awesome and that kind of kicked it off. >> We're glossing over a lot. Maybe we'll keep returning to fun. I love that story. Um but let's get to the point now where things are starting to feel like okay now we have to build this next thing. Maybe this is a good opportunity to ask you what you now know about the world of like fitness and people that want to get fit like what becomes your northstar for what product can we build here that's scalable that can get to what it's become.

21:57 >> Yeah. It was no magic bullet that said go do this and you'll and you'll win. But we spent a lot of time the first two three months I was there trying to dissect the current business. And the current business was this onetoone essentially marketplace connecting independent contractor coach with a consumer who is looking for personal training. And we're we're kind of studying the behavior and watching what's going on here. And what I noticed was like the coaches could set their own price and like some people had crazy high prices, some people had more approachable prices. And they're building this as customizable program.

22:33 like I'm I'm building it for you based on your very specific goals and that's why I'm charging you this amount. And on the back end, we could see that, you know, it really wasn't personalized. It was like big bucket personas and like the names were like uh Sally Pilates, you know, and that was being built as super personalized programming and charging like you would work with a coach. But we could see like these big bucket personas. were like, "Okay, like maybe personalization isn't the secret here, but it's having good programming that's relevant to you." And that same moment, I went through the list of coaches, and there weren't a lot of coaches that were making a lot of money on this, but we had a couple that were making four or five grand a month. And uh and I spent time with them and I asked them like, "What are you doing differently? Like, how are you making this a thing when everybody else is is struggling with it?" And we had one in particular and I was like all right so like you're making four grand a month your earnings aren't growing like what's going how did you get there and like uh why isn't it growing anymore and Lauren was a trainer in New York like a high ticket trainer in person and she was filling up all of her downtime with online clients with with ladder and we had no idea how to grow. She figured out like I had this Instagram profile. She had five or 10,000 people and she was telling a story to her audience and they were coming in but she filled up all of her time and she couldn't take on any more clients. I'm like that's a bad business. Like you've capped how big this can get. You the constraint is human human time. So these two insights of calling [ __ ] on personalization, kind of watching what Lauren was doing and seeing how she was growing and piecing those together into what became like a trial test or an MVP of this vision. We didn't know what we would build, but we said there's something in these concepts. And in February 2020, we said, "Okay, uh, you can't take on any more business, Lauren. Like what if we jimmy rig the existing app?" and we created an experience where there could be more than one person in there. You're going to program for a group of women.

24:37 You'll go out to your Instagram audience and you'll say, "Hey, this is for I'm in New York, you know, busy women in New York, kettle bell training. I'm an experienced coach. I'm going to give you new workouts every week. It's not customized, but very specific persona that she was talking to. And we're going to have this chat in the app where we all can talk to each other." And the app looked like [ __ ] like the functionality barely worked, but the concept was was clear. We're in process of dying in this moment. She went out to her Instagram audience and we had like a 100 people sign up at 100 bucks a month very fast.

25:09 Like that was the most exciting thing I'd seen yet, you know, other than getting wins against American Express and her creditors. And that was awesome. We're like, okay, there's demand. Like Lauren's audience, they came in like very clearly like there's interest in this concept. So that first month it was uh we were just watching what was happening because there was nothing else to look at from a a product perspective. And I think what the most amazing and impressionful thing to me was these people had found each other in the app.

25:37 They were similar personas. They lived in a similar place, busy women following the same workouts every day interacting with the coach and each other. They'd never met each other, but they started posting on Instagram about Lauren and Ladder. And then we saw them meeting up in New York at the park together. They had never met each other before. And that was like magical. We're like, we have this community elements and social and they're happy. And we had never seen anything like that in the original version of the product. So all these like little glimmers of hope on this concept of programming that's not personalized, but it's high quality.

26:10 It's meant for a specific persona. This social accountability element. all these things were like bubbling up as real tangible proof points of something that could be interesting to to go work on. And that group like the renewal rate was like 90% plus like people paid again. We're like damn like they're doing the workouts and they're staying with us. And if you looked at the app, you would go this is garbage. But like the promise was being delivered uh on what we were proposing. We ran one more trial with another coach. It was the exact same outcome. I talked to almost all those women like on the phone. It was like who are you and like how did you find Lauren? Why did you go into this app?

26:48 What problem were you trying to solve? And we talked to all of them and built a relationship and like all those were inputs. >> Did anything surprise you in those conversations? >> It validated a lot of things we were learning in in real time. It's like why did you join? I'm tired of thinking about what workout to do. I'm already into fitness, but I spend time actually planning this. It's a painoint for me. I don't want to go spend $1,000 on a coach. I need something more approachable, but I need help with a plan. I need to know that I'm doing the right thing. I want a coach that is helping me and have confidence that it's the right thing to do. That was a real thing. And then we saw them meeting up and they would say, "Oh, I met someone just like me." And they had the same pain points and they become a friend and we work out together and that was magic.

27:28 Uh and so all these little kernels just speaking and forming a picture that got clearer and clearer and clearer was the was the beginning of what that what that product would be. >> Your finance team isn't losing money on big mistakes. It's leaking through a thousand tiny decisions nobody's watching. Ramp puts guard rails on spending before it happens. Real-time limits, automatic rules, zero firefighting. Try it at ramp.com/invest. Every investment firm is unique and generic AI doesn't understand your process. Rogo does. It's an AI platform built specifically for Wall Street connected to your data, understanding your process, and producing real outputs. Check them out at rogo.ai/invest.

28:05 The best AI and software companies from OpenAI to cursor to Perplexity use work OS to become enterprise ready overnight, not in months. Visit works.com to skip the unglamorous infrastructure work and focus on your product. >> If you think about the uh everyone's very fond of the Elon algorithm for company building now, uh it's been been kind of passed around as like one one method for doing this. If you had to distill your like algorithm for how you proceeded from that initial kernel of an insight of okay here's something that people are paying for and like >> and we can do something with this all the way through to where the product is today.

28:39 >> What's what's been that your as the CEO algorithm for that iterative improvement to get from the original kernel to now? >> Well, I can tell you number one is like don't listen to investors on product feedback. That's that is by far number number one. But for us is it's two things. It's prioritization like ruthlessly prioritize. You have to prove we have to prove to each other that this is going to be additive to the product.

29:03 And additive to the product means we have a thesis that is going to increase workout completions. That's our northstar. Like we're solving not for getting you to pay one time. We're solving for you to actually complete workouts with ladder. And what can we go build to go improve the odds of you doing that and and staying with us? And how we get to that is we don't guess. Like we absorb every piece of information that's coming in and it's all driven by our members. And if you ask the right questions and you have people that are talking to you, you can start forming a picture of what are the huge buckets that actually move the needle and you can do some work to figure out how complex is this to go build and go do it. And don't do 10 other things just because it's interesting or you can do it. Just do the one thing and do it really well and then do it again. And like that's still the case today. like we just launched nutrition. It's the biggest thing we built since the first version of the product. And people on the outside were like that's a that should be a separate app or like that's a different business.

29:59 And we're like well to our customer it's not. You know we did this survey a year ago. You had 5,000 people spending 50 minutes and it was qualitative and quant and we were trying to figure out what are the biggest bets that we could go make. We were ready for a big project and we didn't want to guess. And out of that work it became very clear that it was nutrition. And what we learned was we have a third of our members who are tracking macros. And of of that third, 90% are using an app. And of that 90%, most are using My Fitness Pal and they hate it. And they're really tired of managing their problem set in two different spaces. And what we learned through that experience and talking to members was that for the consumer, it's one problem set. I want to lose weight.

30:40 I want to gain muscle. There are inputs and outputs to that math equation. Outputs is activity and exercise. input is what you're eating and they're managing this in two places and they know that's not the right way to do it because if you worked with a coach these things are all symbiotic together but it all started with a colonel from our members and we had really clear line of sight that this was would move the needle they were telling us I want you to use all of these things motivational mechanics streaks badges celebrations and help me with the other side of the equation which is going to dictate success or not and then once we have that kernel like we go very we do another survey we go very deep on nutrition like extremely deep to understand and we all review it, read everything, we synthesize it and it gives us a blueprint. When you do that, that becomes obvious what to build.

31:23 >> What does very deep mean? >> Uh the nutrition survey uh you know that was probably couple hundred questions. We read all of them like now you can put them in chatbt. In the beginning of this like I would copy and paste app store reviews into a word doc. I would read every single one of them and I'd organize the the words by buckets and I color code them and I would do chat GBT and I have these documents that are 100 pages long and it's all just deconstructed words >> from our our members and very similar to survey work in the in the beginning we would do that with surveys we dissect the themes what do people care about and now you can use chatbt to synthesize all this what is the biggest bet that we can make on behalf of our members and then we'll think about what are the building blocks of what this should do is this nutrition coaching? Is it macro tracking? Like what does the feature set do? And you aim questions at uncovering the painoint and what they're looking for and that becomes the guide on the first version.

32:19 >> What did you learn there? What do people want on nutrition? >> There are two halves to this. And from my perspective, it's looking backwards and looking forwards. What they were doing is tracking looking backwards. Make it really easy to track macros. I want to know if I'm in a surplus or a deficit. I want good visualizations. And I want it to be really easy in terms of how to log. It's very tedious. It's very hard with some of the existing uh legacy products. So give me an easy way to do this. And so the looking backwards to us was basically the table stakes. We need to give a really easy path to tracking macros, logging your meals, logging your food, and telling you what's happening as a result. And then if we do that, and we do that really, really well, there's going to be a whole other opportunity to tell you what to do. not what you did, but what to do. People want to, our members want to know what to eat specifically. Where should I get it? I'm at a restaurant. Here's the menu. What's the best choice right now based on my goals? They want prescriptive advice.

33:17 But the looking backwards was what they were using for uh the apps that they were using at that moment. It was mostly my fitness pal. And there was no brand affinity or love. It was just the tool that existed that there was trust because they had the biggest database. They had done it for a long time. But there was just a lot of pain in these conversations on how they were doing this stuff. So we we made a a conscious decision not to charge for it. So we're going to give this part away. We want to go build trust with this group and win over tracking with ladder. We're not going to convince the whole new group to do this. We're going to go get the people who are already doing it. We're going to do it better and we're going to win their trust. Start compiling this data and there's a million products that we can now build. Like if you think about what nutrition does for us, it gives us the whole math equation of inputs and outputs. There's no product in the world that that has that. So the picture around the consumer, it's the clearest of any other potential product or service around around this consumer.

34:15 We know exactly what's happening on both sides of the equation. And that's going to unlock a whole bunch of products and services to to help our our consumer. >> And this would be things like I could take a picture of my food and you're like, I'm >> we already have that table. Take a picture. That's easy. but also tell you what's the level of confidence and accuracy because there are trade-offs if you use take a picture versus scanning a barcode or entering uh very specifically an ingredient or or a recipe. So, we had to nail that use case, make it super slick, make it very easy to use. And that was the beginning of like building trust. Even in that process though, you have to like how do you how do you figure out what to build? We built the first version. We have a group of 2,000 members who are beta members and we give it to them. But first, we do it as a team. That's the alpha. We're all giving feedback. We have a Slack channel.

35:00 Everyone's communicating on what's happening. That helps the picture get clear. And then we release to our beta members and it's in the wild and they're using it and like you hear right away. What's wrong? What's the gaps? What do you need? And we had a question. Uh we would survey these users every week and we had a question. How likely are you to switch from your existing app that you're using? And when it started, uh, the number was like 20%. Like pretty low, not super exciting for us. And then we would go build and and make the picture clear and help fill the gaps of what folks were experiencing. And it kept going up, kept going up, kept going up, and like there's a point where you could just you could keep building the MVP forever, but it was 85% one day, and it was like, we're ready. Like we're there, we're done. This is ready for this is ready for the wild. And then we released it. And it's been a it's been a home run. We're in week six. were almost 4 million meals logged which is insane thinking about those early stories where we were literally we knew all the people in the app. Yeah. We were like it was our buddies who were in the in the we knew the faces.

36:01 >> Yeah. >> So a really amazing experience. >> You said before don't listen to investors on product. Can you say more about that? >> Well I think one don't listen to anyone person on on product that everyone has a unique use case persona problems solutions that they're looking for. So no one person is the source of truth. If we get one piece of feedback, that's just one piece of feedback. So when we talk about investors, like I remember earlier meetings, it would be like really prescriptive advice on you should go build this and it's like maybe like I don't know like that's what you want and then we would go test that with our uh with our user base and ask them and they would say no I don't want that.

36:37 >> Yeah. >> Extremely empirical way of building. >> So it's just empirical and like you don't it doesn't have to be completely precise but it becomes very clear what the big chunky buckets are and everything else on the fringe. It's like that's not that important. But what is important becomes very very obvious even if if it's in line with what an investor is looking for. >> At various points through this business, you and I have had a call and it will be some period where you describe him having gone into like a cavelike process to like go study some new topic like some new thing has become the the bottleneck for the business >> and I I can think of several occasions when he was studying X Y or Z. describe from your perspective this like cavelike process that you've seen him go through to unlock these bottlenecks.

37:19 >> Probably four years ago when we're trying to figure out growth, we've built a product, people love it, they're using it, they're telling us what we need to, you know, to to build and what features we need to evolve to improve it, but we still haven't figured out how to grow, right? Like that, you know, the way you get to from 0 to 1 million AR is very different than the, you know, the 1 to 10. And for us, um, you know, Greg's view was, look, let's go run some experiments. And so we're looking at, you know, some different ways to to grow, saying, you know, here here are the kind of different options right now.

37:46 There's SEO and we're thinking about how to go and start to create content on search. We have a lot of assets in the app that we can leverage there. Um, we're looking at some different channels. Tik Tok kind of being the most obvious where it's just like all the eyeballs are there, but the brands aren't there yet. So like that was compelling to us. Like we understood that like the consumer was very interested in engaging with short form video. Um, Meta hadn't quite kind of copied that with their reals product yet, but it was obvious that that's where the consumer was going with their attention and yet the brands weren't their spending yet. We partnered with coaches, these world-class coaches who were all creators. None of them knew Tik Tok yet. They were all Instagram native.

38:22 In fact, I don't think any of them at this moment were even on Tik Tok. And we were excited to go figure this out. And it was it was hilarious because Greg, I don't know if you've seen his Instagram, but like it's not particularly cool. Like he's not a creator, >> but he was like, I'm going to go and become like the Tik Tok guy. like I'm going to be the guy. And I'm like, "All right, like Mr. Tik Tok over here." And >> I was like, "You got to go hire somebody. You got" I'm like, "I'll I'll figure it out."

38:43 >> So he he goes all like mad scientist on, you know, trying to just like understand every aspect of Tik Tok to the point where like fast forward two years later and like the big dog engineers from China, you know, are in our office cuz like Greg would be calling and being like, "The algorithm is broken." And they'd be like, "No, no, it's not." And then and then Greg would go get a bunch of information from Ryan Mod and send it through and they'd be like, "Oh, wait.

39:06 He he's right. There's something wrong with ads manager cuz like the ad tech was very new and so Greg was very much like triaging and troubleshooting their ad tech in real time. The other story that just speak to Greg going into his cave. Um it's it is winter 2021 probably March or February and I don't if you remember like the Texas freeze when like the entire like the entire state shut down. >> We had like an inch of snow but there was no uh we lost the power grid. So anyways, Greg goes into a cave because there's nothing else to do and uh he's reading the book Crossing the Chasm, great book that I think all founders have read. Uh but Greg's output of reading the crossing the chasm was um a 100page slide deck that he sends me like when the power comes on and we finally have internet again and he's just like I figured out who our customer is. And um ultimately, you know, that was very important work because it set up, you know, what we were about to go do on TikTok that you couldn't have success without understanding who that who that customer is.

40:01 >> What did you find in the book? >> Not trying to be all things to all people, especially early on. You can go after a big market problem, but you don't have to start there. >> And we were trying to tell a story to everyone. Like the world was upside down. Consumers were up for grabs cuz your gym folks were at home. Everything was a a mess. all these other companies are launching and we're saying we're weights, we're body weight, we're gym, we're home. Like it was all things to all people and it wasn't working. Like we weren't getting to the right person.

40:31 And Crossing the Chosm just helped me kind of zone in on who is like the most important person that we're talking to right now and who's finding success and how do we speak specifically to that person and not go try to tell a story that's relevant to a Pelaton user. It just helped me like just move away all the noise and narrow in on what mattered for this person and build a whole kind of growth strategy around around that.

40:56 >> Like you have unlimited time right now to talk to us about solving this problem and like how you've how you cracked the code of growing through something like Tik Tok like the more detail the better. I just think obviously it was a like a or the critical moment for the business early on once you had figured out the product just just riff on the experience like literally what you did. >> Yeah. >> And what you learned.

41:18 >> We had a whiteboard meeting. We're like what are the growth loops that we think are available to us uh that we think we have an advantage on that we think we can do within our own team that we can learn fast enough to get proof points and to uh to dive in on go all in on. And Tik Tok came out of that as the as the winner. And what we started to do was just make content and we knew nothing, but we grabbed uh I had this breakfast meeting with Edel who leads Branding Creative. And I was like, uh, hey man, um, do you want to work on TikTok with me? Uh, and he was like, sure. This guy is like building all of our amazing campaigns. Like he's shooting for Nike. He's done all these things. And I'm like, I need you to make Tik Toks with me. Uh, and it's just going to be me and you.

42:01 >> He's got the creative mind. and we grabbed a coach and we said, "Hey, we're going to start an account from scratch. Uh, you're not on TikTok. We want to go learn. Give us all your raw video that you have on your iPhone. So, you have this inventory of video. You have a smart creative person." We started handles in the coach's names and we started to create content. And very, very quickly, we started to learn what was the content that worked and we were dissecting every inch of it. What worked multiple times in a row? Why? What are the commonalities? How is this product used? It's not Instagram. It's like TV.

42:35 People are consuming content for entertainment and it's not a social platform. It's a media company. And so you have to think about like what is the right content that is educational, provides value that get gets to the right person because unlike Instagram where you have an audience that you're creating content for, you have to create content that the algorithm knows who to put in front of the right person. So it's all about the content. But the advantage for us at that moment was it didn't matter how many followers you had. You can start from scratch. Nobody knew how to go how to go do this. But that first account that we started, I mean, I remember being on the playground with my kids and uh Edel was like, "Dude, once one's ripping and it was like a million views." We're like, "Holy [ __ ] like that's amazing. That video took you two seconds to make." And it was like, "Do it again." And we did it again. And we took that account from zero to 250,000 people in in like 45 days. Like we weren't thinking about paid at all. We were thinking about what is the pro what is Tik Tok as a product?

43:33 How is it being consumed and what content wins and how do we how do we create that content? So we got views, we had proof points of traction and then we said all right we have blink and bio. Can we get somebody into the app and and we did very quickly and we're getting the right people into the app and all these things were like starting to compound. We started another account did the same things. So we're like all right like we can we can do this organically.

43:56 It was like three months and then we we said let's start putting some money behind this and see how it goes. We had no performance marketing team. Uh we had no agency. Uh I was absolutely against hiring anybody outside the company and I just committed to learning how to be a performance marketer Tik Tok because we didn't come from performance marketing or Facebook. We had no preconceived notions of how things should go. And when you talk to Facebook marketers who are moving to Tik Tok, they were applying all these rules and heruristics of Facebook and Instagram to Tik Tok.

44:30 But these are two separate platforms. You have this Chinese app and a different algorithm. Why would those rules matter over here? I spoke at a at a all hands for Tik Tok and I was talking about some of our strategy and I had really high conviction in what we were doing and I was like, "Yeah, I make budget changes seven to 10 times a day." And if you talk to the TikTok group, they're like, "You shouldn't touch it for two weeks." like it's the learning phase and all these things. Well, all those people came from Facebook and all the rules they were telling me were Facebook rules. And at the end of the meeting, this woman comes up to me and she was like, "That was really interesting because the things you had most conviction in are the opposite of what we're telling our clients to do."

45:06 And then I just I realized pretty quickly that everybody is taking this mental model over here and applying it and not trying to figure it out from scratch of like if it works, do it again. Who cares what they tell me it worked? Do it again. Um, that was an important piece of like just thinking on our own on on how this how this should go. I launched my first ad. Okay, like we could do this. But like very quickly it was getting people into the app and then it just became a drug addiction. I mean it's like it's like trading. I'm bad at mental math but I'm also fascinated by traders. And when I was at Goldman I I would interact with traders.

45:36 It was just magic to me. All the screens and the attention span just like how does this happen? But it felt like that for me like I'm moving money around driving growth for the business and it became a video game. It's like how do we beat the video game today? And I had this amazing creative partner in Zel. Like I can figure out the ugly of how to be an ads manager person as my job. And those two things together unlocked that channel to just keep going, keep pushing on. I >> I feel like the rewards for doing this in a consumer business are extremely high. And so lots have probably tried but not lots have succeeded. What do you think it was that let you start to win the video game? Was it the knowledge of like how to cut a video together? Was it topics was >> no what we learned is the for you page is making a decision on your content of who your content is for and then it's shoving it to that person. So the first game on the creative side was can we create content that gets to the right person for this coach. This is a crossfit modality. Can we get to crossfit people using content? And that was just iteration. We would do something >> and so you'd say like what does a crossfit person care about?

46:38 >> What do they care about? What's their problem solution statement? What should a coach say to get you in? We learned about hooks. what you say in the beginning, the first three sentence. It matters. What should a hook look like? What do I need to say? Like, it's a billboard that I need to get your attention very quickly. And we had a lot of bad content that didn't work. And then we had stuff that started to work.

46:53 And we have these whiteboards. We dissected every inch. It's like, what is she wearing? What word was first? What was the setting of the gym? What was the movement? What did we say? And all of the insights of that come from knowing your customer. It's not like, hey, we magically figured out TikTok. We did, but our edge was we knew our customer inside and out. Like I had dissected these app store reviews so deeply that like we knew the words that were coming out of the mouth for people in CrossFit coming into the app and we used that as our ammunition on how to speak to them and create compelling content hooks that got to that person and told the story very fast that got them to keep going to follow to come >> just to orient in the history of the business. So like how much revenue or whatever was there at the start of this kind of scurve and and like how quickly did it accelerate? Five at the end of >> yeah it was yeah four four five million of era we we were getting some success but like the beginning of the Tik Tok journey it started at 3 million but five when we started to put money into the into the machine >> and it sort of exploded since then >> it exploded but like the one of the things we learned that was critical to Tik Tok is you have to own the creative and this was like not typical for brands in our space they would hire an agency the agency would make creative but we're learning all this stuff on the organic and we're learning that the iteration cycles are so fast. You can't just hand it off to an agency and hope that it comes back correctly. So, we started investing in creators full-time. We had JDs on the website in 2023. It said full-time Tik Tok creator. People were like, "What the hell is this job?" But it's no different than social media jobs 10 years ago. That's not a job. Well, it is a job. It just wasn't a job yet. And it was the same dynamic. So, complete control over the creative. We had these coaches on our team gave us this edge on compounding learnings. this mini agency that was figuring it out across all these different creators that we controlled that we weren't just waiting and hoping that somebody on the other side of the fence would throw us the the right thing.

48:41 >> If that was like the frontier then what is the frontier now? >> What we're thinking about now, right, like is the short form video strategy will always be a core part of our strategy. That's not going away. But I think what we learned >> it's expanded well beyond TikTok at this stage. >> Exactly. I think what we learned last year though is that we certainly don't have a product problem. We have a very special product. Our customers love us and they're asking us to go deeper with them, but most people still don't know who Ladder is. Like we're consistently top three or four in our category in the app store and yet like the awareness is very low. I think that's you know largely a function of the short form video strategy that we had that was speaking with creators in these winning formats to a specific persona that wasn't really leading with the latter brand. Now we're excited to go and um you know think about celebrity partnerships and out of home and and TV and we're already making these campaigns. Now we're just going to go and put them in these other in these other channels. Um so that's like certainly a big a big focus of next year is just thinking about telling a telling a wider story that frankly is just going to amplify what we're doing on short form video.

49:42 >> How do you how are you going to be empirical about that in the same way that you've been about product and and marketing so far? It seems like a very different kind of harder to be empirical kind of. >> It is, but it's it's small controlled bets, big on scale, but limited on bets that we're making. So, if it's a celebrity partner, we need to know exactly who that audience is. Is this someone that resonates with our user?

50:04 Are they going to amplify the right message that represents ladder? And like to date, we we had no leeway to spend money that didn't turn into results. It was like here's the money in the bank, turn it into users, keep doing it again. And this is a little bit different, but what we've realized very quickly is that like we we do have an awareness problem. People haven't heard of ladder. We're getting big. We're the number one grossing fitness app in the app store.

50:26 We're top 100 in the US of all US apps. It's big. So, we need to go invest in really concentrated bets that speak very specifically to our user that leverages the creative horsepower in our team. We have like really special people in our team that can create stuff that no one in the world can from a from a brand perspective. So, it's not as perfect of a science and I kind of bucket it in two different paths. But my thesis is over time, it's going to make the short form engine a lot more efficient. If people are not aware of ladder, we have like one video we're trying to convert you.

50:59 Like they're learning about ladder in that video. If you've seen and build trust with uh someone who's endorsing it or you have consciousness, a nugget, yeah, there's a higher likelihood that that person's going to take the first the first step. So, I think the two play together. and you asked like what was the supercharge over the last you know couple of years we did deal with general catalyst that changed the game for us and their customer value fund and uh essentially what we realized is like the capital markets aren't funding CAC in consumer companies like we can't just go raise a bunch of money just to put it into TikTok like the appetite's not not there no matter how good the product is and General Catalyst has solved that where they're financing our investment growth every month so the payback happens over times. Not as much of a cash hit, but it lets me think about half the house is very performance, very controlled. You can underwrite it, which which General Catalyst did. And now we're going to go invest in some squishy stuff that should be proven downstream that it has an impact and makes things more efficient, but it'll be iteration like nothing else. It will be a game of figuring out what works, what doesn't.

52:02 >> As your business grows, Vanta scales with you, automating compliance and giving you a single source of truth for security and risk. Learn more at vant.com/invest. Ridgeline is redefining asset management technology as a true partner, not just a software vendor. They've helped firms 5x in scale, enabling faster growth, smarter operations, and a competitive edge. Visit ridgelineapps.com to see what they can unlock for your firm. >> If you think about the experience of you said you' built some enterprise companies before this versus consumer, it seems like in the last 5 years, for a long time, no one invested in consumer because actually really up until I guess very recently, AI is of course unlocking things in interesting ways. maybe pitch like if you were to pitch a a young entrepreneur, a teenager or a young college student on building a consumer business rather than the traditional like B2B thing that's dominated the startup world for a long time. What would your pitch be? Why is it fun and different to build this kind of business?

52:56 >> The the fun part is you you get to see it every day and it's impacting people and that that's real. We're providing real value. We're changing lives. I read these stories every day coming in uh to our team of like what happened to this person because of ladder. Like what else could inspire you more than that? We're not selling their attention to advertisers. Like we're helping their lives. That's really fun. And the feedback loop is fast. You make them think you know exactly what happened and like that is a that's exhilarating. You have a report card that's your users and no one user is the right answer but collectively they they are. I'd say what people don't realize in consumer is how freaking hard it is. And there is no like quick fixes. There is no growth hacks are not a real thing. You have to be black belt black belt at building products for the consumer and growth.

53:44 Like you have to have both those things within your own team to survive and then be able to raise money to go fund that which is its own mission. So in my mind if you want to get into consumer like you got to love talking to people. You got to love extracting information from human beings to go create solutions for them. It's not like I think it should be like that's how consumer companies die because they just freaking guess and it doesn't match what the consumer is looking for. So it's really hard and you have to you have to be excellent at both sides of the house. Half our team works on workout completions. Half of them works on trials off Tik Tok. That's the business. Very simple. But we are equal weight and black belt on both of those skills. And without either one of them there would there would be no ladder at this stage. Great product, no growth, doesn't work, doesn't get funded. Great growth engine, no product, leaky bucket, doesn't become a big company. Both those things have to be true to be able to build a company that's durable and last.

54:35 And just be ready for 10 years. I mean, it's not it's not going to be 6 months or a year. It's going to be a slog and constantly problem solving along the way. So, it's splashy. It's fun, but it's it's really [ __ ] hard to to do. >> I'd probably say don't do it. There's easier there's probably easier things to to get funded to do. Um, but listening to the stories, as Greg said, when you hear from one of your members about how ladder has changed their life in some way, and it's easy to to um, you know, when you're looking at the charts and everything kind of, you know, that that gets lost on you sometimes, but, you know, you're constantly pulled back by these stories. And we I think our creative team does a great job of telling those those member stories, and that's something we'll continue to do.

55:13 Our customers, as Greg said, they they literally tell us what to do. I mean, we we sent our annual survey out this year. we'll we'll get, you know, we had 5,000 responses that take an hour on average is what people are spending. We already have 5,000 responses in the last two days. Um, and they're answering 230 of our like most, you know, burning questions about, you know, what to build from here, what companies to partner with, would you be interested in supplements coming from ladder, everything as it relates to all the different kind of surface area that we could explore. So, like that's that's really exciting to us is just continue to listen to them. Like they're huge advocates for us. Um, and so we're going to continue to do that.

55:50 >> If you want to be by yourself with headphones on, working on consumer, it's a losing strategy. I mean, like like that. And I I see that all the time where it's like you're just building [ __ ] You got to be talking deeply to the user. >> If I think about the two like big world things happening that probably most impact your business that are out of your control, it's AI and GLP1s. And I'm really curious how you think about both of those things as creators of opportunity, as potentially risks.

56:18 >> I mean, I'll mention like I'll mention GLP1 fast and then AI is like a much bigger conversation, but like on GLOP1, it's interesting because um all the science would support that you need a strength training plan alongside your GLP-1 to, you know, you're at risk of so much muscle loss. So, we think that's actually a, you know, kind of macro tailwind and something that will help us. It's not something that we've investigated to date. Um, but, you know, could totally see us, you know, working with some of the bigger GLP1 providers at some point like that. You know, the the science backs that relationship and so that's not something that scares us.

56:51 Uh, in fact, it's a question we asked in our survey which have never asked before >> like are you on it or are you >> Yeah, just these are people who are fitness enthusiasts doesn't mean that they're not on GLP1s and so we're going to continue to learn more there. you know on the AI I think what gets exciting for us is that feels like we can kind of have our cake and eat it too now and that at in the beginning we felt like we need to focus on a venture scale business here and solving a problem that's solvable for a customer with software which felt like one to many programming now with what's available to us in AI we're we're able to deliver that personalization as well which like four years ago we couldn't have you know two years ago we couldn't have launched nutrition with our same team you know in a you know six month span like we But I think like beyond that um what I get excited about is that in an age of like you know just a lot less differentiation in tech and commoditization of certain features because it's become so easy to people think you can just use chatt to build an app. I would challenge someone to try to build like the the experience that we've built you know using AI and I think we're going to continue to lean in the things that the AI can't touch which is like we've built a compelling brand.

57:59 We have a tremendous amount of trust like from our members um which is which is really exciting. We deliver a human experience at scale because of it. We've been thinking about it for four years. We've been using as a tool for three years and it it is chapters for us. In in the beginning it was a a non-coding tool. It was how do I synthesize information? Well, it was amazing. I could take 5,000 responses and really understand what's what's happening. And so then it was everywhere. Oh, I can take it to think about how do I create compelling Tik Tok hooks based on all of this survey data or user data. That's a tool. It saves time. But it happened at the exact right moment where our entire team is 50 people and that includes 20 full-time coaches. So 30 people excluding coaches and we it came we started scaling at the right moment where AI started to become a a use case that made us not have to go hire expand the team just to solve a a problem that we were looking to solve. like the team would have been a lot bigger if this were four years ago if we didn't have AI in every element of our business. The second chapter for us is is is using and incorporating in the product, not replacing the human. We believe in like humans as motivation. It's really important to feel like we're having a relationship with the coach. But I don't want to have coaches and reading chats all day and interacting onetoone with users. I want it to feel that way and use tools to expand the capabilities of our coach. We have teams with 60,000 people that are in it. And now the chats are big and cumbersome and complex. And the coach's message isn't the only reason they're there, but it matters.

59:29 And the magic moment for a coach is saying the right thing at the right moment that makes the most people satisfied with what they're saying. What isn't a great use of time, which was happening, is scrolling the chat for an hour to go figure out what's happening here. So, uh, we built a product called Ladder Pulse that automatically you come in, reads every single chat that's come in, tells you, "Here are the three most burning questions. Here's the content you should create. Here's the member you should respond to because they've never been responded to by a coach. Send.

59:56 Done." So, now we've removed all the cognitive overload of what to say, and it's all powered by this tool that we built purposely for for the business. We're building software now to go support a better experience that's built on AI. Nutrition is a great example. We'd have never gone into nutrition if there was no AI. My fitness pal had to build a database over time by hand that became the value of My Fitness Pal. That's not the hard part anymore. The hard part is the consumer experience and knowing what to do with the data. So, it opened up the capability that wouldn't have taken the business sideways for 5 years to go solve that problem. And then we're inventing products from scratch.

60:29 Like I'll give you uh two examples. One, we have I told you north 30,000 paying members. We have one person that touches support. It's not even her full-time job. We have tickets coming in every single day and we spent time trying to understand who's coming in, what are they asking, what are the buckets here and we built a product. That person's name is Mave. We built Mave AI, M A I V. And we built a customer support tool from scratch. It's purpose-built for our company that manages now 90% of the flow coming in and the experience is as good or better and it's faster than it was before. And we made it ourselves in our team. Like that would not have been possible 5 years ago. So like that solved a huge problem. Now we don't have to go expand that team and we can deliver a better experience through that. And we have a person on our team who only works in AI. Like that's the job. And he's been doing that for a long time.

61:16 >> How do you think about um saying no to potentially juicy revenue opportunities that aren't core to the, you know, subscription, complete a workout, you know, acquire customers like uh I could imagine the ladder data dating service. I could imagine ladder being an origination platform for GLP1 for >> or ladder coach tools >> or ladder coach tools. Absolutely. Yeah. In the Ben Thompson sense of aggregation theory like >> you're maybe a consumer aggregator. >> Um you've aggregated a lot of demand in this specific space.

61:47 >> Historically those companies have figured out how to monetize in lots of different ways. How do you think about the siren song of like higher RPO and new sources of revenue and >> but but a lot of those businesses have have died too because of doing too much at the same time and like we've had a we've had a multi-phase vision from the beginning of like what this thing can become and our goal is is to be the de facto product in this category and we have stepping stones that we anchor to and they get moved around but we have a vision for how to go to go do that. I think about new ventures, new business as push versus pull. Are we being dragged into this area by our members?

62:25 Is it so freaking clear that this is going to be really exciting and solve a really important problem for people that are relevant to us like nutrition. Nutrition was on the board as an investor deck that you have from 5 years ago, but it didn't make sense to build it till last year when we had critical mass. It was very very clear from our members that that was going to move the needle and now we'll build products on top of that. So like we're ruthless in prioritizing like you have to make a clear clear case of what this does to the business. We have no Android app.

62:51 People think that's insane. But building an Android app requires basically pausing development on iOS, splitting the team's focus in time, playing this game of catchup for a user that has much lower revenue potential and could absolutely take the business sideways for a year. Will we have an Android app? Yes. We won't have it this year. And so like it's these levels in my mind like we have to go earn the next level. And if we earn the next level, what should that be? let's figure it out and then start to work on that. So, I think all these things that everyone uh talks about ladder, we'll go do all of them.

63:19 But I'm playing like a long game here. Like this is not go sell the business. Let's go build the generational business in consumer that solves the most problems for the most amount of people >> in that big long-term vision. You know, fitness, uh, working out and nutrition are two obvious like major food groups of of the vision. What else is on that understandably flexible, but what are the other like big stepping stones that you think about?

63:44 >> It's the system of record for health and fitness is kind of what Greg's talking about and how we've talked about it for a while. There's a category winner in every category. Transportation, it's Uber. In short-term housing, it's Airbnb, Spotify, and music. There's no clear winner in the health and fitness category. Clearly needs to be a mobile first company. It needs to be a a product that has engagement that looks like social that we have. nutrition was the next obvious step and it increases the surface area for us to really think about these other product extensions and line item extensions like you know some of what we talk about is like there's so much commerce already happening in the app right like we see it every day we see hey coach what's that creatine you're having uh you know should I be having whey or vegan protein and you know love those new shoes you know where do they come from people are sharing links all day there's different chats based on supplements or on food or on on apparel for that matter matter. We're watching, we're learning. Like there's an opportunity for us to reduce friction there and start to think about is that a marketplace, you know, is it looked more like an Amazon experience at first while we're learning and then we're building our own kind of branded products. Our members want to tell us that they got a DEXA scan and they would like this to be their system of record for their biomarkers. And there's a lot of people building companies in the biomarker space. I think that would be like a really cool maybe partnership to start or it could be a feature of our business. Um, so we get excited about, you know, if we build a compelling product and brand where people are opening this app 10, 15, 20 times a day, there's a lot of opportunity for us to to insert other products and and experiences into it. So there's um there's a long list that have been on the white board kind of since the beginning.

65:23 >> Yeah. What I think about is like product expansion and and user expansion. And product expansion, there's no like, oh man, that's brilliant. is like it becomes obvious when you look at it but we launched nutrition now we have inputs and we have outputs our members want us to tell them what supplement do I need to go take to make me whole they want to buy that from us and like those will become businesses for ladder when there's critical mass and it becomes very clear that this is a real problem that we can solve uniquely for the business so all those things start to open up I think there's user expansion too like we have a very specific user it's a very big market but it's not everybody in fitness right now so we think about ladder it's how do I get 100 million people to be working out with ladder every day. It might be a different problem set than the current product right now. We spend time thinking about how do we get the people earlier in their fitness journey into ladder because if you think about our product, it's progressive programming.

66:13 So they kind of already know they need to know that programming is valuable. They got to be into strength training. Okay, that's its own bucket. They need ability to pay for that. Use a phone during a workout. Like all these things are big market, but they're inhibitors to broader fitness. And we've got this content library that is not valuable to our members. Our our members are paying us not to think. They don't want any choice. They want to know on Monday what exactly should I do? And we asked this question in a survey. We said, "What would you pay for the whole library?"

66:40 And it was like a dollar because it's not valuable to them. What am I I already have my Monday workout. I don't need 10,000 workouts, which is every other fitness product. So I think there's going to be a path. It's not this year. It's not next year where we give the individual content away where we give away every other product which is just the library because the library isn't valuable and isn't what our members are paying for but it starts to map to how consumers in the outer ring rings of fitness are consuming content.

67:06 What we learn investors come in and say who's your biggest competitor? Is it Pelaton? It's like no it's YouTube like by far like it's not even close. It's people going to YouTube and typing 45minut upper body dumbbell give me a workout and then consuming it in YouTube. YouTube's not built for fitness, but the content lives there. We need an on-ramp to ladder that mirrors that consumption pattern. There's amazing content, the best content. You're getting it on YouTube. It all lives here. It's free. These motivational mechanics that are important. It amplifies the importance of social and the power there. So I think there will be a premium component that it will be the right moment to hit on it. But we've been talking about and thinking about it for a long time on how do we get to the wider rings and then over time you move those people just like we do on TikTok into this concept of a plan. Hey now you've done 40 workouts. They're in seven different teams but you're not really happy that your results aren't there. I got a different way. We can tell you exactly what it should be. And like the analogy I I I I give to folks outside the business is like you're working on a puzzle. Like you're working on a puzzle.

68:06 You got the picture on the box and you got all the pieces. You got 10,000 pieces and the picture is like what you want to go build. Well, our members have the vision of themselves. That's the box that they're solving for. And we give them each piece in order one by one to construct the the puzzle that they're trying to solve. No thinking at all. Well, most products in fitness is just bunch of random pieces and it's like pick up a piece that you feel like doing today. That's not a great strategy to getting to results. One more question is um what it's like talking to investors now versus early on. This thing has changed quite a bit. You've your sources of capital have gotten >> we talk about push versus pull.

68:42 >> Yeah. Increasingly sophisticated uh over time. I I was the least sophisticated at the start. You've gotten to much much smarter, you know, more institutional investors ever since the beginning. What what say a little bit about that journey? Well, you know, I think what's what's exciting is that um just just on like the investor landscape in general is that there's not much innovation being funded in in fitness right now. When we first started trying to tell the story and raise money to institutional investors, it was like how could you possibly compete with Pelaton? They're a $50 billion company in that moment.

69:13 >> You should build AI weights. I remember multiple times that seems like where's the hardware? And then Pelaton has their postcoavid troubled and they're like, "Oh, well, Pelaton, you know, basically, you know, didn't make it or that story got very hard. How can you build a good business? It can't be done." So, we're like, "All right, so it's being a used against us kind of twice now." But all that while we've been iterating on product and shipping product every other day and listening to our customer and building something that, you know, that our members are telling us is really, really valuable. And so, we have this amazing head start where we feel like we just don't really have any competition.

69:46 So that's that's been really exciting. It was hard for a moment. Um now we find ourselves in a position where you know when you get to this kind of growth stage um you know kind of people can see the numbers. Um you can you know look at app store metrics and see that our business is inflecting and you know see that the growth rate has been really strong and so there's you know there's a lot of investor interest. You know, I think what's unique about conversation with investors now is we're in a strong position in that because of the general catalyst deal. You know, there's no we kind of control the timeline on raising money. Our our business now generates cash. It sustains itself. Um as and you know, that doesn't mean we don't have huge ambitions. We do as Greg just talked about like we want to be the system of record in health and fitness.

70:26 That's going to require raising additional capital at least at least another round and continue to invest in particularly product and engineering. Fortunately, we have some great investors already around the table right now. And the way we've been approaching it is uh start to go and you know, kind of spend time with a small group of really high quality investors to get to know them outside of the context of a fundraising round, which is not something that we were used to. You know, now you have time to actually build build rapport and uh get to know people when you're not raising money.

70:55 >> What I think is important there like four or five years ago, it was it's cash. That's we just need cash. I don't care who comes from terms. Sure, sounds great. like we need money, we're dying. >> Like that that there was no selectivity and this GC deal has given us a lot of leverage where we have more money in the bank than we did when we closed our series B a year ago. And it's giving us time to really think about who are the people that we want in the boardroom.

71:17 Who are the people that we want advice from and talking to companies in their portfolio and just even before we're thinking about it, just knowing who are the five human beings, forget firms >> because that's less important to me. who are the people that we're really excited with for the next leg of ladder and we now have some some cushion to go be smart on that and that that was not possible. >> This remarkable journey is completely crazy. I know it's hopefully chapter one or two and there's a long story to still be written. What is the kindest thing anyone's ever done for you and you can take that either personally or professionally, however you want to take it. I think it it has to be like my wife through all of this. like she she married an investment banker in New York and San Francisco and that has a path and a vision for life that you can kind of predict and at steady state and then I turned into this entrepreneur who's making no money uh and we have three children like she is also working very hard but she has given me the room to make this possible and if that dynamic wasn't true there's just no way that I could do this like there would be there would be no path for me so like it's a it's a huge burden um that she took on and I think it's a it's a huge uh component of how we got here.

72:30 >> Well, Greg just uh Greg just went with the wife, so I can't do that even though that would be the obvious. Got to got to thank my wife who um been putting up with me since we were since we were 19. I would thank my my dad actually. Um you know, I feel like when I when I try and describe to like my kids what it is I do or what my role is, I always, you know, say that I sell. That's what I do. And when I think about that, like the quote that always got me excited was um what Ken Griffin would say where I think I don't even think it was his line, but if we're all going to eat, someone's got to sell. And that always kind of pumped me up that, you know, that selling was important. And it wasn't always something that was transactional. But I learned um sales watching my dad. Like it's not something he told me. It was something that just um being with him.

73:11 So we commuted to school for years, two different private schools, or it was like an hour commute and could be longer with traffic. And this is kind of early 90s, mid9s. You got those old Zach Morris cell phones. And my dad was a mortgage originator, so he was always on the phone and he was basically a traveling salesman, but on the phone in the car the entire time. So he would have he was a he's a lefty. So he would have his phone on his on his shoulder and he would have uh his notebook on his left hand taking notes and the map and he'd be driving with his knees and we would just be listening to my brother and I would be listening to my dad selling basically every day. The three things that he taught me about sales are one to be effective in sales, you need people to like you. Ideally, ideally, they want to root for you. And if you're really good, you can get them to potentially quit what they're doing and want to join you. That would be like the best thing. But then second thing is um they need to trust you because that's kind of all you have. Like integrity is everything when it comes to sales. And the and the third thing that you need to be like relentless, but not in an annoying way, just kind of deeply persistent. And um that's just kind of carried me well through two kind of very different careers to date. And um you know he's just been an awesome role model and you know someone I think about you know trying to teach my own kids lessons like that.

74:24 >> Amazing place to end. You are one of the best sales people I've ever met. Uh so the the car rides worked. It >> was effective getting me into ladder. >> Yeah. Thank you so much. >> Let's go. Thank you. >> You know how small advantages compound over time? That's true in investing and just as true in how you run your company. Your spending system is your capital allocation strategy. RAMP makes it smarter by default. Better data, better decisions, better economics over time. See how at ramp.com/invest.

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