Episode #509: Mauro Frota on Building Out Global Kickboxing Innovation with BHOUT

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1:00 Go get them. This is Pete Moore on HALO Talks NYC. I am on location LA Convention Center, Ursa 2024. I'm here with my friend, Mauro Frota. Nice. Nice. I'm gonna say that again. Mauro Frota. And we're gonna talk about bout. If you don't know about bout, you're gonna know a lot about it by the time we're done with it. So start up a new concept in the kickboxing space using technology, understanding unit economics. So Mauro, tell me how you got here. Well, this all started actually, with a dream 8 years ago, like a vivid dream sleeping at night. I love that, man. Yeah. The universe is telling you something. Yeah. So what'd it tell you? I actually dreamt about this product. I dreamt that I was playing with a boxing bag. So engaging like in a in a video game but with a boxing bag. But the technology was not there, so we had to wait a a few years. And then we became this cliche of a start up. We started actually at my garage. Fig figure that out. What were you doing before? When you were having a dream, what was your day job? At that moment, I was the master coach for, Precor Iberia. So I worked with Precor until they were acquired by, Peloton. Gotcha. So I was with them for 3, 4 years and that was my main job at the moment. So I was traveling back and forth between Portugal and Spain and and coaching all around. The benefit of working for Precorp, just like any entrepreneur or or coming out of

2:30 college. You know? I love saying, you know, when I was in banking, like, I get to learn and see a lot of different things. And you start to like, your brain starts to process business models, start to process. Like, it tells you where to go and how to think about, like, investigate that or, like, that's not a good business. This could be a good business. So what what do you think triggered the dream? Like, what was there something that you saw before? Was there, like, a comparable company that you're like, they're not doing this in in my in the modality I wanna do it in, or maybe I'm not look. I'm not a dream. I I told people about dream architect, by the way. It's a fucking joke. I don't know why I do a cheap dream architect. Private equity guys think of crazy entrepreneurs love it. They're like, yeah. I gotta architect my business, like a house. So enough about me, Moore. Let's drink every time I say Mauro. Drink like a shot of protein powder.

3:19 What do you think that you learned along the way that something, like, hit you? Was there like, were you focused on group x with Pete court? Did you see something you're like, oh, dude. I like No. Actually, my background is on martial arts. So I've been I've been, training and teaching different martial arts since I was 11. So I've started with Okinawan karate. I did kickboxing, white tie. I competed until I was 21. I moved to Brazil. I learned Brazilian jiu jitsu, Moore, wrestling. I became, ultimately, a rest, an MMA coach. So that was part of it. I mean, that's part of what I like. I I always wanted to bring, combat sports to the masses. I mean You gravitated definitely towards, like, your passion. And then said, hey. Look. I I see things.

4:02 I know how the bricks and mortar work. Like, there's a void here. Exactly. But it's gotta be it can't just be a void of, like, just a kickboxing club. There's there's plenty of those. So what kind of, like obviously, when when Precor is out there, they had the best technology at the time before COVID. And I think they were kinda to me, they were like the Audi as a car analogy. Agree with you. Yeah. They're like the Audi, and then there's like a BMW and a Mercedes and, like, Rolls or whatever. But they were, like, high quality, great technology, never out of out of order sign on a Precor. Yeah. Almost never. And just like durability. So working for that and understanding, like, hey. This is like the culture and this is like your ethics or, like, this is how, like, I wanna work for a company that has that believes in, like, their product and that support too. And then what what triggered, like, I wanna do this full time and I wanna, like, develop technology? Yeah. So, actually, we look into into into Pete core, but we also look into companies like Apple, for instance. There's actually funny funny story. When we started Let me decide if that's funny. Tomorrow. Okay. No. Just kidding. Go ahead. But, when when we when we, hired our, product designer and we told him, look, man, if Apple ever designs a boxing bag, how would it look like? So that was actually the the premise. And and funny enough, I think we just won an award for, the design of the product. So, Where was that? It was at, Fast Company. Oh, nice. Yeah. And we got also 1 of

5:34 the best inventions of, the year by Time Magazine. So I listened to a great clip from Steve Jobs Talks about Apple for a second. And when he talked about, like, product design Yeah. And, it was it was something he said, and there was something else that I wanna bring up. Like, every product is designed, and people need to incorporate different thoughts about where it's gonna be, the durability of it, the design, how does it feel, how does it look. And they always said that somebody also said, like, a product design or a service is like a fight between engineering, finance, and marketing. And everyone's, like, gotta, like, agree on, like, this triangle. I would agree. Yeah. Role did you play in that triangle?

6:16 And what were you trying to figure out, like, a price point? Were you trying to figure out, like, the product, and then the product will get to a price point? How did you think about that? Because I've never designed a product. We had we had different stages, Pete. I mean, we started by setting ourselves to build the best hardware and software possible Mhmm. And hiring the best people possible possible to to do that. So that was the premise. And everything else came by default. So we started building the team. We started designing the product. We started designing prototypes for every part. We now have 4 Pete, pending on the product. So everything is quite new, experimenting with new materials, like bio materials for the exterior made from made from cactus leaves. So, the the the the Integrity water bladders, so everything is quite new, quite different. So, I mean, I I think we've tried, like, for most parts, like, 5 to 10 prototypes, so far. So that was the premise. We want to build an amazing hardware. It must be highly durable. I want Francis Ngannou, who who is MMA guy, boxer guy, who has the the the strongest recorded strike ever. I want him to hit our bag and feel that it's a sturdy bag. It's not something that he can, I mean, just overthrown in the in the in the floor? So that was that that was the prime the premise. I It's so interesting when you think about your product.

7:41 Right? You're like, this thing's gonna get the shit kicked out of it for, like, commercially, like, 12 hours a day. And I wanna design something that also has, like, technology in it, and it's almost like a, like a football helmet. Yeah. Trying to design. But we started but we we started in b to b. So we started with the product being tested 10 to 12 hours a day by our clients. So I think we are the opposite of, say, Peloton or Tono Yeah. Because they went straight into the b to c, market. So we started in b Pete b. So we we made sure that the product was sturdy. I mean, let's 3 to 4 months testing in our club is equivalent to 2 years of home use. If we imagine that a regular person will use it 2 to try that Pete to 3 times a a week, that's it, man. So we made sure that everything is pretty durable, and we haven't had hardware problems yet.

8:36 And every part that that can be damaged quickly like the the the the outside vegan leather or something like that, we made sure that people could actually, replace it by their own very fast and very easily. So This is Pete Moore. I wanna let you in on a little secret. There's this company called Promotion Vault, and what they do is they give out rewards from retailers that allow you to incentivize your members without having to do 0 down and 1 month free or giving away shakes or giving away t shirts. What you wanna do is build a rewards program that lasts, that people value, and that doesn't discount your own products and services.

9:20 So here's the deal. There's something called rewards vault. The rewards vault is going to allow a member to set up their own profile. They are going to answer questions. You are gonna get those answers. You're gonna be able to target those members, and you're gonna reward them inside your club, inside your spa, and outside of the club, and outside of the spa to get them to become loyal, to get them to pay their monthly dues, and to be rewarded properly for the actions. A lot of companies are cutting back on rewards. You shouldn't be. Promotion Vault's your answer. Trust me. This is real. So there's only a couple of brands that have their own equipment and are also in retail. Right? So you got Peloton that had their Peloton cycling studios. TRX had some, like, TRX training, but they never really blew that out like I thought they could. No other equipment companies basically said, like, I either wanna, like, sell into the industry or I wanna basically have this hardware to myself like a like a closed network or a closed open or closed guard, whatever they used to call it, AOL or something.

10:27 So, Maro. I like it, Pete. I I do too, man. By the way, if anyone knows, means fleet. Okay? So we're setting up setting up a fleet of kickboxing innovation studios. Conquering the world. Conquering the world with the CEO and founder. Marvel. So as you think about that, you had to say, okay. Size of the market is, yeah, I could go sell kickboxing bags in, and I could go and, like, walk around the show, and I could, like, sell you 20 bags. Or you're you're a guy that's like, this is what I think of you. I don't think you're willing to leave the experience to someone else. That's why I think you're in the business. You're like, dude, I'm not gonna let you use my back because I'm not sure you're gonna use it the way I want. He's basically. So that's like an Control freak. Like a hands on control freak CEO of somebody who's like, dude, that experience is gonna be hell. I want it to be. It's gonna be awesome, or it's not gonna be it's not available. Exactly. So talk about Yeah. Yeah. Yeah. What goes through your head when you when you say that and then also Moore franchising. Yeah. So you're actually allowing somebody to do that basically with your, like, oversight, if you will. You know? So we we actually started testing this in a club in a club setting. So we have 16 bags, and that club became the most profitable club per square feet or square meter in in Portugal. So imagine this, it's a 2, 000 square feet club, 200 square Pete, and we have 750 active members in just in such a small space. 50% EBITDA last year, 35% above, gen in January February. So we should have, like,

11:59 a 60% EBITDA. So it Okay. So the numbers that you're quoting me right now with only 16 locations, if you said, what is the Academy? Yeah. 16. 16 bags per Pete. 16. Yeah. Yeah. Yeah. So the equivalent of that in the US is solid Moore. Yeah. Right? Where they got 16 Pilates machines, plus or minus. They have 1 person that works in a location. That person checks people in. People clean their own Pilates machine. And the price point of Pilates has not been erased to the bottom like every other fucking thing in this industry. Right? So everyone's held that price point. So when you're talking about the unit economics We actually just increased prices this month. Yeah. What what what's the average per in in US dollars per class? Well, you you you need to you need to figure out you need to understand that we are in Portugal, so the economics are made for Portugal. We are entering the US market this year, and we will charge How much does it cost in port in Portugal?

12:51 In Portugal, it's €40, so 40 something dollars. Per class? No. No. That's per month. Oh, per month. Remember that Portugal is a country where the average person makes €1, 000 Pete month. That's the average salary in Portugal. The average salary in New York is €8, 000. Rental on, like, a 2 bedroom overlooking the water? It's like $1, 500. Out of here. Talk to you soon. We're we're gonna continue this podcast from Lisbon. Lisbon. Yeah. Yeah. Is Lisbon on the water? Yeah. Yeah. Yeah. Yeah. Alright. Let's start part 2. It's the only capital that has the sea. Just no. That's amazing. Yeah. But but in the US staggering number of members, though, for for a location of that size. So I wanna give you credit for that.

13:32 I also wanna let you know, or investors that are listening to this, that if those numbers are replicable into other markets Mhmm. That you should think about this almost as a Pilates class and not as a traditional kickboxing or a class. Yeah. So, Mauro, continue. So and and, so this year we are expanding to we are opening 20 units. We have 4 sorry. 2 units now doing presales and doing amazing numbers. We are announcing 5 more locations next week. And we are opening we are expanding to our Portugal. We are opening Spain. We are opening Brazil. And we are actually opening we should open, the US starting in New York next year. But we actually just came from Dubai Square we had a very interesting meeting with a new investor, a new potential investor. He's willing to add on our substantial seed rounds. We could be Are you building these as franchises or corporate owned? Owned. Both. Both. Okay. So corporate owned is gonna be the US? Yeah. Yeah. So we have we are we are We should talk about where that should be in New York offline, and and and what kind of model. And then walk you around to so we deal we're not gonna walk around model. We're gonna take classes together. Okay? We take, like, 3 a day, for 1 day, and that's it. Perfect. And then we'll go to workout recovery. We'll watch Talladega Nights together. It's a movie. You seen it? I I like Farrell? Yeah. Yeah. Yeah. Yeah. So let me tell everybody online here so I have this on tape. So the last 4 weeks, I watched Talladega Nights 3 times. I don't know why. There's nothing else I

15:02 wanna watch. You you seen the Moore. Yeah. Yeah. Okay. So I was joking around with my my junior guy here, Jason, and I kept using that. There's, like, no one's, like, the religious on here too bad. I'm just like, I want baby Jesus to show up in in a tank top that says HALO, and he's wearing, like, an EBITDA hat. And then gonna talk about kickboxing with me, and he's gonna kickbox while I'm talking tomorrow. So I've been saying that for the last 3 days to my friends making shit up. We go to dinner last night. That actor is sitting across from me at the restaurant. Wow. What's the probability of that? 1 in a1000000 or more? It's the universe. The universe. The the universe is bringing things together. So the universe has now brought you to this industry where hardware is kind of been viewed as, like, a punching bag or a check bag. And, like, you were gonna just destroy this thing, but now we're actually gonna put technology in it. We're actually gonna turn it into something that collects data. The 1 thing that that the studio industry has not done, and I'm pissed that they have not done this, that you can do or you're probably doing already, Mauro, is I can take my my location in New York City, and I can say, we're doing a competition today, almost like the Olympics. We're doing kickboxing today inside of our club versus Lisbon, and it's like a 6 AM. Man.

16:12 You know, versus like a like a noon class. That'd be sick. It's like you're in my mind. Let me let me share something with you. Halo Talks, baby. We are now we are now working with the University of Lisbon and through them with the Olympic Committee to bring about like so like an extra game into the Olympics. So we are working on this as we speak. You know, e games, like, you should go to Saudi Arabia. Like, they're going crazy with this whole e game. We just came from Saudi. Community or something. We just came from Saudi, man. Yeah. Exciting stuff happening, in that part of the world for us. So there's gonna be there's gonna be people that come to you and say, hey, man. Just let me buy 20 bags. Okay? And I'll just put them in my club. Is that something that that you're gonna be open to? Because you're basically, like, controlling the experience through the data and through the programming. Could somebody screw that up, I guess, is what I'm asking. The AI we are building, I think, is resilient enough to to provide that experience. We have we have a lot of, b Pete b clients, ordering the the first bags to do a pilot. Yeah. So I can give you a few examples. Outside of the fitness industry, we have LinkedIn. So LinkedIn want wants our bags to their offices. But we have a few I mean, we have, like, the Marriott Hotels. So so is there is there a is there is there a a live class component of this Square you, like, you're feeding in classes or no? We don't feed in classes. So we are want somebody there physically to to run the class? We are in the exergame industry. So you you go you you go to the bag to fight online. Okay. So that's the technology is pretty amazing. We can now process a strike in 200 milliseconds. I'm just kidding. No. Keep going. It is. It is. No. It's good. Okay. I I believe

17:42 you. And it's unique. So, I mean, everything that is tangible in a real fight, we can measure it. So we can measure, the number of strikes, the accuracy, the power, the Pete. We can measure your technique, compare it with a pre trained biomechanical model. We can we can track your exertion. This is transformed into points or everything that is tangible in a fight transformed into points, and you fight for points. You play for points. Got it. So it's a it's it's like How many users do you have? So you have some consumers that have the product or only in in the studios right now? Now only in the studios. We are we are What's the age range of what's the age range of people that have come in there? Average. We just actually did, there was someone doing a master thesis on our club. So we have the numbers. So average age is 35 years, but it goes from from 18, 17 until, I would say, 60. Yeah. Yeah. And what like, it it's hard to do these things for a long time. Like, I do cycling. Obviously, I'm good at it.

18:37 No. I'm just kidding. I'm like, yeah. I'm good I'm good riding a bicycle, bro. You ever seen me ride a bicycle without a helmet indoors? You're mad. Shit, baby. Sorry for not to curse you. Hope you're not listening to this in the car with your kids on a carpool. My point is, how long can you do this workout? 30 minutes? 45 minutes? Like, an hour? The the the system we we have now is a 45 minutes I mean, that's that's that's pretty intense. Yeah. Yeah. 1 of the things I love about Pilates and I love about kickboxing is, like, if you do this program 3 or 4 days a week, within 4 weeks, like, you look at the mirror and like, dude, this shit, this is working. Like, I go do soul side class. You know? Yeah. I feel better, but it's not necessarily, like, you know, dynamic change in the mirror. So as you think about per unit of client base Yeah. That you have. Per unit of time, boxing is where you spend more calories. Is there is there a is there a study, or could you make 1 up? No. No. No.

19:29 There is there is. I wanna know, I wanna know a time to, results like, bar chart or graph? Say, like, 2 minutes like, 5 minutes doing cycling will get you here, and 5 minutes doing, you know, battle will get you here. Is there is there something like that? Of calorie expenditure? Either calorie expenditure or, like, I guess it's calorie. I'm trying to think about, like That a I'm trying to I'm trying to even be more vain about it. I'm trying to say, like, if you do my workout for 45 minutes for 5 days and you do this workout for 45 minutes for 10 days, this is what you're gonna look like in my case, and this is what you're gonna look like in this case. I mean Is that can you do that for me? Our yeah. We can I mean, we are we are working with 3 universities right now? So So how the because I think that's something where From engineering to to to, exercise sciences. When you come to New York, we're like I'm giving you, like, a marketing playbook here, but, like, we're buddies now anyway.

20:24 Not your punching bag, by the way. I'm your dream architect. That's the bag. So, no, I want I wanna go through this on this call because on this on this podcast because I want people to think about their business. A lot of people market their business and forgot about what people are trying to get out of their business. Okay? So when you come to New York City, people run around all the time. They don't have much time. Okay? They walk into a soul cycle class 3 minutes before it starts, and sometimes have the people leave before the stretches because I want an extra 3 minutes to get go to the next thing. Right? Yeah. So if you're able to come to New York and say, this is the most effective 30 or 45 minutes you could put towards fitness, do you all gonna get x amount of results versus and not, like, to actually put names on, like, versus soul cycle versus.

21:07 But if you could say, like, this is the most this is the most valuable minute with me. It's like 5 minutes somewhere else or 20 minutes or 30 minutes. Like, that to me is, like, how you sell this. You need to get people in there. Yeah. Because people want results in a mirror. That's what Pilates does. 1 of the best thing we we now have 2.5 years of data. It's not like we started yesterday. And, we our our LTV, our life time value now is without any binding contract. So people actually using the product is at around is 23.7 months, where the average of the industry is around 6 months. Talking about what a member, the member will look at the charity. The lifetime value. Yeah. So, I mean, most important is that people are actually sticking to it. It's a sticky product, and we are actually targeting not necessarily the fitness savvy, boy or girl. We are we are targeting the what the industry calls the other 80%. So actually the ones who do not like to move, those are the ones we are targeting. We we became efficient, at least in Portugal, to bring them in and have them stay for long longer periods of time.

22:12 This is Pete Moore. Here's the last tip for you of the podcast. We are partnered up with a company called Higher Dose, higherdose.com. They are the leader in workout recovery products, infrared technology, LED light masks, neck enhancers, and other products such as Pete mats and sauna blankets. If you have not gotten on the workout recovery train yet, your time and your stop is now. You gotta get these products in there before these workout recovery and spas end up saturating your Moore, having your members walk out of the club and going into 1 of their locations for $200 per month where they're paid 39 to you, let's become an expert in workout recovery if we are already an authority in workouts. Higher dose, check it out. There's a wholesale code, and we look forward to helping you augment your products and services to meet the demands of your members. And, hey, let's get people happy, healthy, and sweaty, and the recovery should be just as good as the workout.

23:23 The 1 thing that I'm that I'm hoping is gonna happen over time, it is just like to plant the seed for people how to think about, like, cooperative marketing. You know? I go to Soul Cycle. I've been going there for 7 years, pretty religiously. But I don't think I'll be I'm gonna go and do, like, solid Moore, and I'm gonna do, like, y 6, y 7 yoga. And I wonder if, like, that 23.7 months, like, hey. Work with me for 2 years. Keep me, like, 1 or 2 days a week. You wanna try yoga? Go do yoga 3 days a week, but don't loot don't untether yourself from me. And I feel like somebody's got like, ClassPass, like, they got credit system and gym passing, go to all these things. I feel like somebody's gotta come up with, like, I want a real prescription. Okay? I wanna look like this. I wanna feel like this. Okay. Do about 2 days a week. Go to NormaTec compression boots. Go to infrared sauna. Do a cold plunge. Do 2 yoga classes, and go bike outside, you know, on Sunday afternoon. No one's doing that yet. Yeah. Because I want a prescription. And I feel like what you're doing is, like, a high value creation of of, like, time management Yeah. As well as a really cool product and also the ability to do, like, these challenges between diff everyone loves a challenge. And if I could challenge somebody in Lisbon with my 20 people in a kickboxing crew, like, Lisbon JPMorgan versus Lisbon, New York. I mean, that would be sick. Right? Like, people might even fucking livestream that. I mean, I wouldn't watch it because I'm busy. I might be watching it by being in another battle class. But that's that's the premise of the of the companies. We are, again, in the extra gaming industry. On exercise plus Oh, Exergaming. That's what Exergaming is? Exergaming. So exercise plus gaming. So

24:56 you you actually play a video game and fight other people online. Or in the studio, it's more of a social play. We call it social play. So people are are, playing together. Let's put it like that. So they are not necessarily competing. They are, contributing, to to the to overall Moore. But we have actually 3 modes. So we have the learning mode Square our AI can actually teach you the technique. We have play mode, which is what we use for the clubs. And we have fight mode. Fight mode is pure competition. Yeah. So and we are willing to put money on it. So we are willing to pay Pete, If if you are a champion at Baut, you will actually be paid, like in a in a regular sport. So that's where we are going. We are taking this all the way to the Olympics. Great. Well, you've heard it here first on HALO Talks.

25:41 Reach out to the about team and my good friend, Mauro Frotta. We're creating a fleet of awesome experiences, so get on board now because the ship is leaving the port. See you soon.