Future - Remote Personal Coaching

The Future of Fitness

Hello! If you’re reading this you’re probably either my friend or one of my 69 Twitter followers (of which about half are likely ghosts). So for that, I thank you; hopefully, you learn something new.

Cold Intro is the name of my newsletter where I will attempt to write interesting commentary about young & exciting consumer startups. I aim to expand my knowledge base of companies, analyze their unit economics, & learn about new business models. For those reasons, these are not meant to be stories. I don’t intend to give extensive background into the company story or the founder’s lives, but rather try to explain the business model and how it might look in potential future states. To do so, some explanation & story-telling is involved, but I hope to keep it brief. Storytelling is an important part of any start-up, but wading through the stories and finding facts is ultimately the job of every business analyst.

Future - The Future of Fitness

For the first piece, we’re going to talk about personal fitness startup, Future. Founded in 2017, Future is on a mission to become “The Future of Fitness” by connecting customers with a digitally-native, fully dedicated personal fitness coach. That’s right, your fitness coach is now remote. You work from home, why shouldn’t your fitness coach? At $150/month, users are paired with one of Future’s world-class personal coaches who instantly becomes a part of your life as they provide full workout plans & daily communications to help achieve your goals.

Future User Flow per Future Website

Future UI

Sounds crazy. Who would pay $150 a month for a trainer they don’t even physically train with? I certainly felt this way until I considered the benefits the internet brings to both the business model and user experience.

Like most things shifting digital (education, career, friendships, etc.), the idea is that the advantages the internet creates are great enough for us to supplant our IRL experiences for a fully-online one. For Future, the advantages of going remote are scale, affordability, and flexibility.

• Scale: Future coaches can reach their clients every day, multiple times a day. On average, coaches and clients exchange 4 messages per day.

• Affordability: $150/month to be paired with a world-class trainer. For perspective, 2-3 sessions with an in-person trainer will cost $150.

• Flexibility: Future is available whenever best fits your schedule & environment. If you’re on the road & have to do a late-night workout without any gym equipment, your coach will be there for you with a bodyweight workout & the motivation you need.

Flexibility also pertains to Future’s hiring, as the ability to coach from anywhere gives them access to the widest talent pool. 80%+ of Future coaches have trained Collegiate, Pro, or Olympic athletes in their career.

While it’s ultimately up to the consumers to decide if the pros outweigh the cons, the business model has caught the attention of some elite athletes. Future recently raised $75mm in Series C funding with investments from the likes of Kevin Durant, JJ Watt, & Rory McIlroy. They have also recently become the fitness coaching partner of the Knicks & the Warriors.

Meet the Founders

Future was Co-Founded in 2017 by serial entrepreneur Rishi Mandal (CEO) and UI/UX wizard Justin Santamaria (CTO). Quickly running through their backgrounds it appears obvious they’re the perfect couple to build what Future aims to be - a brand new user experience that changes the way humans interact & connect.

Rishi has a long & impressive background. After studying Astrophysics at Stanford, he joined Slide, founded by PayPal Mafia member Max Levchin. Rishi worked his way up to Product Lead until Google acquired Slide in 2011. He soon left Google to co-found Sosh, an algorithmic recommendation machine for social activities. Basically, Sosh was a mix of machine learning & good taste that gave users personalized & up-to-date recommendations of things to do. Not just, “Hey, here’s a list of concerts near you”. Anyways, it was a cool product and Postmates ended up buying it in 2015. Rishi ran product there for a short period until his entrepreneurial itch was again too strong & he joined Khosla Ventures as an Entrepreneur in Residence, rubbing elbows with the likes of Keith Rabois & other great VCs. His tenure there was short as the idea of Future began swirling around in his head from an early point, and within a year Future was born.

Justin’s background may seem briefer but is just as impressive. After studying CS at Stanford, Justin joined Apple to build software applications for the iPhone. During his time, Justin worked on some of Apple’s best products, & ones the world had never really experienced prior. He wrote the original messages app for the first iPhone & then went on to lead the teams that built FaceTime & iMessage (among other things). FaceTime and iMessage are the two biggest reasons I won’t even consider owning anything other than an iPhone, the UI/UX is too damn good. Justin eventually left to lead the Platforms & Guest Experiences teams at Airbnb, another incredible app experience. It’s very obvious from his background Justin is highly creative and has a serious knack for building new and exciting applications. Future seems to fit the bill.

Business Model:

Below are the 2 (or 5) most important topics when discussing Future’s business model & ability to scale:

1. Operating Leverage

2. 3 C’s - Clients, Coaching, Cost

Operating Leverage:

The fulcrum point of Future’s ability to scale is in their operating leverage - utilizing as much capacity as possible out of their fixed costs, which in this case is coaches. Future isn’t aiming to be the Uber of Fitness - their model is to employ their coaches directly & fully own the whole experience, & in turn, creating a large fixed cost on their P&L. Therefore, simple math tells you each coach needs to maintain a minimum number of clients to be profitable (revenue*clients - coaches wages). There doesn’t appear to be many incremental costs in adding new clients (marketing aside), so each additional client’s revenue should flow almost directly to the bottom line, creating an obvious incentive for Future to maximize their number of clients per coach. Below is my rough estimate of their current unit economics:

[Please note these are rough estimates and mainly intended to be a guide on thinking about the unit economics.
This also excludes things like customer acquisition costs (free months), corporate discounts, coaches benefits, & the Apple Watch Future provides for a $99 deposit upon request.]

Playing around with these numbers you can start to see at what levels the business model works or fails. We’ll touch a bit more on this below.

3 C’s - Clients, Coaching, & Cost:

Future likely struggles & will continue to struggle with managing the supply & demand between coaches & clients. There is a *mostly* fixed number of world-class personal coaches in the world, and on top of that, an upper limit on how many clients they can manage before they are overworked and clients are underserved. Future needs a large supply of coaches to handle client demand & still provide a best-in-class experience for both parties.

Due to this supply/demand balance, Future’s pricing power will likely be tested. Will they be able to sustainably raise prices without affecting churn and new adds? Today a membership costs $150/mo., this is argued to be inexpensive as they provide multiple daily interactions at the same cost as 2-3 in-person training sessions. However, I’m not convinced $150/mo is a low enough threshold to convert people who don’t currently pay for an in-person coach, are just getting into fitness, or are simply undecided. Maybe it’s cheap to a certain sector of tech entrepreneurs highly engaged in fitness (looking at you, Keith Rabois), or NBA players, but if your goal is to elevate the world’s fitness levels, you have to meet the world at their price target. How do you solve this? The solution might be found in tiered pricing.

$150/mo. is a lot to me, but it’s peanuts to the Golden State Warriors or New York Knicks(Future partners). Why not sell a $75-99/mo. option, a $150/mo. option, and a $300-500/mo. option? At a lower price point, I’m willing to have a less than world-class coach with potentially fewer communications. And on the flip side, someone paying $300-$500/mo. should get the best treatment that Future can give.

Future competitor Kickoff tiered pricing model

Tiered pricing can increase both coaching supply and client demand (lower prices and “less-than-world-class” coaches), increase their *Truly* Addressable Market ( the honest version of TAM), and potentially even increase their average selling price. This strategy has obvious tradeoffs - the largest being an inferior product experience on the low-end - but it’s worth a shot. I imagine Future will test pricing at some point & I would not be shocked to see some sort of tiered pricing.

The Future of Future

What makes investing in early-stage companies exciting and ultimately financially rewarding, is being able to look pasts today’s pre-scale economics and envision how a company might look far into the future.

I see a couple of pathways:

1. Stick to core business & focus on product-led scale. As Future improves its tech & product solutions for coaches it should, in theory, allow them to increase their client-load, which (as discussed above) has a nonlinear impact on their bottom line. This is priority #1 from my outside perspective. However, it’s important to note, there is some sort of an upper limit where a coach has too many clients, creating a poor scenario for both parties. Let’s imagine Future can scale to 60 clients per coach at an ASP of $200/mo. (tiered pricing allows average prices to rise while still charging less for some users), and by the time this is achieved they’ve amassed 100,000 clients. Future then looks like a $240mm annual top-line business with ~$120-$140mm in variable margin (using my wacky formula above & boosting coach salary).

2. Future ventures outside of fitness into complementary coaching services like nutrition, mental health, and career. If they’re able to profitably scale the fitness business, going horizontal seems like a promising next step. This would have the benefit of increasing the addressable market, improving the value-prop to the user, and delivering incremental margins at scale.

3. Coaching Platform. Currently, Future vets & hires all their coaches as they want the experience to be world-class. They are not trying to be the “Uber of Coaching”. However, to reach the largest market, this could be the fastest unlock. Future can pivot to a platform model that aggregates supply & demand, allowing coaches to get their own clients & set their own pricing, and Future ultimately takes a cut. The upsides of this model are (potentially) improved pricing, improved flexibility for coaches, and lower cost burden to Future. The obvious downsides are that this model is much more susceptible to competition (at least early), creates very low switching costs for coaches, and Future loses control of the user experience.

Keep in mind both 2 & 3 are half-baked & far-down-the-road ideas that first require near-perfect execution today on product innovation and user experience. I still think the core offering (at scale) is a market-leading profit machine at best, and a healthy acquisition target at worst. However, it’s interesting to think about the different opportunities that could arise out of their current model.

Summary

So, I didn’t touch much on competition here as I wouldn’t be able to do it justice in short-form, the fitness space is hyper-competitive & comes with some very large players (Apple, Peloton, Lulu, Nike, gyms!). What I will mention though is that Future is focused on doing one thing, and doing it very well. Meaning they will likely offer the best experience for exactly what they do - remote personal coaching. It’s also very possible that Future is complementary, not substitutive, to many fitness offerings available today.

Future is certainly facing a massive market with tons of potential, but to succeed at scale they will need to execute flawlessly on tech & product, expand their coach-to-client ratio, and potentially enter tangential markets. To me, this is a founder bet with a very high potential for acquisition & a small chance of being a multi-billion dollar public company.

Thank you for reading, if you’ve made it this far, you are most definitely my friend, or incredibly bored. or both. Feel free to follow up with me on Twitter: @_agarner.