Musings on people, strategy and growth in building a fitness business with a work-from-home team
The 13th of March, 2020, was a particularly hard day at JEFF.
News of the Coronavirus had gripped us all. After a record prior sales month, the beginning of the pandemic saw our revenues literally fall off a cliff. We cancelled our lease, moved to WFH, and retrenched several roles. Telling people they had lost their jobs over Zoom will remain one of my professional lows, forever.
That evening Johno, my business partner, drove home and fell to his knees in his driveway. After a gruelling year of building a largely gym-based digital coaching business he thought we were finally done. So many business owners were in the same position. But his wife, Julie, had a different view. She came outside, told him to dust himself off and get back in the game.
Over the prior 6 months Johno had worked closely with Didi, our fellow business partner, and a broad range of rockstars at JEFF HQ, to codify and grow a 1-on-1 fitness coaching business. We were trying to figure out how to digitise what personal trainers do, add nutrition support for optimal results and get it to scale. I had played a supportive role while funding the business in its early stage.
While our purpose was clear: help people change their lives through daily fitness; our future was now anything but clear.
We were down to 13 team members and our product, 1-1 digital fitness coaching, felt like it had no future. We had already been battling with the economics of acquiring customers in a highly competitive space, serving them to achieve dependable results, and all the while trying to generate sufficient margin to sustain a small business. Maybe the coronavirus had just sped up our demise?
We dug in, with an uncompromising focus on how best to serve our customer in this crazy time.
Two weeks later we launched live daily workouts in Facebook for free. A collaboration with Discovery Vitality saw this grow to hundreds and then thousands of people joining us live each day. And then 27,000 people joined us for SA’s Biggest Workout on the 13th of April. A week after that we launched a new product, JEFF Life, for just R200 per month, giving people access to what is now 50 live workouts a week and a library of thousands of inspiring, energising, motivating 30-minute workouts. Our tagline became “JEFF is the new gym”. People made bumper stickers and put them on their cars. Social media blew up in support of what we were doing. We spiked to 20,000 active users a day on social media. A new product - part freemium, part paid - had been born. And new life had been blown into our team.
Little did we know back then how important complimentary, interlocking products were going to be in order to sustaining a digital fitness business. But more on that in our evolving strategy below.
First, the human stuff.
Human performance precedes operating performance, which precedes financial performance. Wise words from Mark Lamberti, who I am fortunate to count as one of my mentors.
Human performance during Covid is a challenge for all business leaders. In reflecting on the last year at JEFF, I’m thoughtful on human performance during Covid and specifically in the context of a startup.
In talking with other business leaders in this time, it became clear that many well established businesses initially found it easy to trade on many years of relationships with their team members. Zoom wasn’t nearly as fatiguing when you had known the person on the other side of your screen for a few years. But for anyone starting up during Covid, we were recruiting people over Zoom and only had the benefit of meeting them in person many months later, if at all. To deal with this dynamic, we held what we called “Daily Alignment” with everyone in the company in attendance at 9:30am every day. This gave us the chance to feel connected to everyone else, checkin on our emotional states, and do our best to catch the seeds of misalignment early. It worked well. But as time went on it became a heavy 30-minute tax we paid every day. As lockdown levels decreased, we moved it from a daily rhythm to a weekly rhythm. It still serves us well today to run a bi-weekly team alignment meetings in what is still a WFH organisation.
Hiring in from known networks really helped counterbalance what was otherwise a very new, very unfamiliar team. We have grown from 13 to 80+ people in 9 months. And we’ve had the privilege of previous colleagues, friends, university mates and customers join our incredible team. Hiring key roles warm has been crucial to operating hot.
And at times we have overheated. One of the big changes arising from working at the office to working from home, which has been in play ever since we could take digital devices home and, more recently accelerated even further by Covid, is that the locus of responsibility for how work gets done has shifted from the company towards the individual. I have seen many team members battle with this at different times in their tenure at JEFF. Fast-paced, high-intensity environments get us to burnout faster. And combined with a high-trust, purpose-driven environment, it also gets us to huge leaps in developing our personal ability to manage how we get work done. We work with a very resilient team at JEFF.
The virtual meeting world is much colder than the warm in-person world. To combat this, we tried to add as much “connection” to our virtual meetings as possible. In our daily stand ups (DSU), the person who gives their updates first nominates the next person to go, and so on. This seemingly small act has the benefit of making people feel much more connected to each other, in a different configuration every day, because they feel a degree of recognition from and connection with the person who nominated them to go next. It may be surprising to hear someone thank the person who asks them to go next, but in a colder digital work, the smallest hint of warmth goes a long way. In looking for leverage in building teams over Zoom, this is one of those “small and big” things.
For a decade now I have been asking my direct reports the same question in checking in to meetings:
It turns out this is more important than ever before in hosting team meetings. I don’t ask it all the time. But when it feels like we need a dose of connection, it’s a great way to start a large meeting to improve the sense of connection and do better work together. Human performance first. Always.
Having a purpose of changing lives through daily fitness, which is not only inspiring but also has an immediate feedback loop, has helped us bring 110% of ourselves to work every day. It’s not surprising that some fitness brands become almost cult-like movements - there really is a fundamental impact on one’s daily wellbeing when we exercise and eat well, and some people really want to share their joy with fervor. With social media as public as it is, this customer sentiment makes it hugely rewarding for people in a business like ours. We are fortunate to be building a startup with such an immediately positive feedback loop.
We have undergone major changes to the way we operate. And more recently we’ve been thoughtful on the strategy that underpins our operations.
It turned out that running live daily workouts was a great way for people to be inspired by others and get them to dip their toes into fitness. And when they became more serious about their fitness journeys, they started signing up for our 1-1 coaching service. We had created a funnel of products, and our revenue began to climb. Importantly, we had learnt the value of an integrated product set to serve a customer that has a fundamentally transient relationship with their fitness journey. People go into and out of fitness for a variety of reasons. We might wake up one day with low energy, see an unflattering picture of ourselves or be inspired by someone else’s recent fitness achievements. And the minute we get sick, injured or experience a setback, we may opt out of our fitness commitments. It’s no wonder that fitness businesses - and even more so digital fitness businesses with easy-in, easy-out dynamics - battle to establish good economics.
Despite our rocket-like growth post launching live daily workouts at the beginning of lockdown, we continued to battle with our economics. Our costs grew faster than our revenue, despite achieving 8 X revenue growth in the months that followed. We needed to make some fundamental changes if we were going to harness this new post covid customer behaviour to grow profitably.
Towards the end of 2020 I was fortunate enough to be introduced to Kent Bennett of Bessemer Venture Partners. We were considering VC funding to give us runway to figure out our economics. After several calls Kent gave me some guidance that has become seminal to building a stronger business. He cautioned against getting addicted to paid media as a way to grow and instead challenged us to focus on optimising for our “resting growth rate”. Basically you remove any growth from paid media and you have your resting growth rate. And he said the best thing we could do to get our resting growth rate up was work on our product instead of focussing on our marketing. Good God, was he so right!
Offering a variety of integrated products to meet the customer at their points of need on their transient fitness journeys has become a central thesis at JEFF. And being a digital-first business makes this infinitely more possible to do than would be the case for traditional physical-first fitness companies.
In addition to our live daily workouts product and 1-1 coaching service, we have recently launched 21-day and 45-day challenges, giving people shorter, fixed-length programs to commit to to make meaningful progress in their health and fitness journeys. The community has responded enthusiastically as they are now offered another way to extend their fitness journeys. At JEFF, we are quickly becoming product development machines as we strive to follow the advice of an industry legend who told us to “touch them every day, and don’t let them get bored!” We are really just getting started with our product set.
For the last 12 months, the consistent theme at JEFF has been our “race to profitability”. By November last year, we had made little progress towards achieving it. And in March of 2021, we set ourselves 5 company priorities that, come hell or high water, we would achieve. The anchoring priority was to achieve “profitable revenue growth”.
As we reflect back on the past quarter, we have finally done it. Instead of funding the business on a monthly basis, we have generated positive free cash flows for several months in a row.
I am so proud.
Proud of our team and our ability to go from a deeply uncertain future accompanied by eye-watering monthly funding requirements, to a profitable business, underpinned by a strong strategy, with a clear future where we are on track to do between R50m and R100m in revenue this year serving 10,000+ customers from 43 countries around the world.
Here are a few more highlights through the lens of numbers:
We have a community of 100,000+ people across our social media platforms;
We’ve raised R1.5 million + for charitable causes close to our community’s heart;
64%+ of our customers exercise with us every week;
Our NPS across all products sits at 83;
Our community has lost 32,000 kg over the past year as they have started exercising and eating well;
Here is where we serve customers today, with a focus on SA and the UK:
