This will be one of our shorter blogs, but it actually took a lot of work to research and gather the data.
We did some research. We went and analyzed the software headcount in 11 companies in the Direct to Consumer (D2C) connected fitness market:
- Zwift
- Tonal
- Tempo
- Mirror
- Peloton
- Hydrow
- Forme
- Echelon
- Fightcamp
- Liteboxer
- Ergatta
We gathered the start / end dates for everyone related to software development (as well as job titles and locations) from LinkedIn, and then we estimated compensation (cash only, not including stock) based on each person’s location. This also excludes any outsourced headcount who worked for another company (some startups got going with consulting firms like Sweatworks).
The chart shows the growth in headcount by month from start date, and the dollar totals are the estimated shown to date. For Peloton we stopped counting just over month 100, because it then started going into insane growth that would have destroyed the chart.
What’s the big lesson learned from this data? And why did we bother?
Well, building all that software user experience stuff is a lot of work. Programs, challenges, videos, profiles, leaderboards, wearable integration, etc - none of it is rocket science, but it’s a lot.
At Tribe, we use this chart when talking to newer D2C connected fitness startups, and to brick and mortar brands. In case you weren’t watching, over the past year, money has got a lot more expensive and difficult to find in connected fitness. Raising the size of investment rounds that Peloton, Tonal, Hydrow and others raised in their spectacular ascents is now folklore. So what to do for new entrants who are trying to match the user experience of these established pioneers?
A key observation that helped inspire Tribe was that the vast majority of these connected fitness companies (excluding Zwift) have a lot of functionality in common. Videos, timelines, leaderboards, programs, challenges, badges, etc - the modalities (type of exercise) are different, the user interface looks different, but so much of the core capability set from a software perspective is the same.
Tribe has been building these capabilities as a platform - so new connected fitness startups and brick and mortar brands going digital can avoid having to be 30th+ company to reinvent the same wheel. With a platform, the final user experience can look different and have some unique features, but the engine under the hood is standardized so the manufacturing effort can be shared.
You really have to ask yourself, what business do you want to be in? Do you want to be a content company, or do you want to become a software company?
For almost everyone in the fitness industry reading this blog, you probably don’t have the budget or expertise to go reinvent this wheel - whether in-house or via an outside consulting company. If some consulting company tells you that they can build the whole connected fitness experience for $1M, I’d suggest showing them this chart, and asking why it cost all the market leaders so much more money than the price tag on that consulting company’s proposal.
If you want to build a compelling connected or interactive digital fitness experience - come talk to us, and save more of your precious dollars for marketing, sales and operations rather than writing software.
