Episode #540: The Evolution of Youth Sports Tech with Jeremy Kelstrom of Alaris

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I am super excited to announce that we now have a formal partnership

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with the prospect wizard. And when I say wizard, I

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mean wizard. Obviously, you have a website. This

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allows you to convert your website

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Immediately goes to you, your sales team, or anyone else in the club instantly.

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MIT shows a study that if you contact the lead within ten minutes,

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chance of them converting goes up nine times that of the

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average. We got the Atlanta clubs on it, Vida Fitness,

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Gold's Gym, Mountainside, City Fitness Philly,

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College Park. Become one of the next halo

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companies to deploy the wizard. It's easy to use. Go to the

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prospectwizard.com. Get a free thirty day trial. Talk to

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my boy, Dave Gallon. He will get you all set up and let the

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leads flow based on the wizard. Go get them.

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This is Pete Moore on Helu Talks NYC. I had the pleasure of

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having a long time software industry veteran

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hailing out of Seattle. Company was originally out of San Fran.

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We're gonna talk about software. We're gonna talk about the growth in youth

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sports and youth camps. We're gonna talk about how b two b

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software is the place to be. And I'm happy to bring Jeremy

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Kjellstrom from Alaris, who is a client of Integrity Square and has

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become a good friend. So, Jeremy, welcome to your first Halo Talks.

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Thanks, Pete. Happy to be here. So I know you started this company,

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you know, a short fourteen years ago, similar to ours. I think we might have

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the same, anniversary date on, on on what what you

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started. So give us a little background on where you saw the opportunity,

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why you decided to dig in and dedicate your life to this, and, you

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know, where things are at now. Yeah. You bet. So

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try to give you the condensed version. So I started Alaris coming out of

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graduate school actually in the in the recession of o nine,

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and it was pretty interesting. We were born out of a business plan competition.

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Rolls Royce, of all companies, was the company that put on

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that competition. We won that. And what it was at the time was

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a signature recognition technology. And it was

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acoustic based so it could listen to the sound of your signature as opposed to

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an image, which was a really cool and novel technology. I think why we

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won is we recognized that we couldn't go right after the big

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markets like credit cards. We had to find an entry point. And for

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us, we settled on childcare as that entry point.

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But quickly, as we got into childcare, we realized that was a tough business to

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scale, state by state licensing, all that. And

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so we stumbled into working with our very first YMCA back in the

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day. And they said, hey. We've got this thing we call kids club.

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And so that was unlicensed. We put our signature tech in

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there, built a really nice, simple user interface,

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tablet based check-in experience around that, and they loved it. And then

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we said, well, hey. What can we improve? They said, you know, the one thing

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we don't love is the signature technology. And so we're like, oh,

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wonderful. Our core technology, you don't love. Right. So we

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after a lot of years of trying to make the signature work, we decided to

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make a tough decision and pivot away from that, and we went kinda all

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in on that. And so we really took off,

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at the time because it was super niche. Nobody had done just kids club

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check-in. And so from there, we then got into, you

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know, lots of other regular health clubs. Mountainside fitness was our

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first. But the big piece there was

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that we stayed true to our roots and what made us successful

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with getting the kids club application in

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place. And then we extended that to things like youth

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camps, after school care, group fitness tracking. And so we've

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really expanded now into a full booking and check-in management

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platform. So so a couple couple questions. Yeah.

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Yeah. From from an entrepreneurial standpoint, because we've got a lot of entrepreneurs on the

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phone here. Dave and I have also been, you know, entrepreneurs. And and that

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that I wrote down as before you said it, but, like, that pivot, you know,

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it's sometimes hard to swallow when you're like, hey, man. Like, we got this resident

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knowledge. Like, maybe the market just doesn't understand it. And then say,

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like, look. Customer feedback is telling us something, and I'm not gonna, like, rest

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on my laurels and be like, you're wrong. I'm right. And I've had some of

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those issues in the past where we've developed software based on where we think

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the market's going versus what the market's telling us they want. So can you just,

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like, kinda expand on that for a minute? Yeah.

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Absolutely. I think in hindsight, I we should have pivoted way

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earlier. I my personality is definitely one of,

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like, tenacity. I'm gonna make this thing work. But we should have listened

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to the market sooner. And it was a really tough decision because here we

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had five patents. It was the whole reason we started the business in the first

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place. But to your point, the market was just like, meh, we

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don't really care. And it was kind of this technology trying to find

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a home. And so I think the real lesson there for entrepreneurs is

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if you have a a tech that you're going out and saying, hey. Please like

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this thing. Your chances of success are minimal versus

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if you come to a market, find that need, and build for that, you know,

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product market fit, light years ahead of of,

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you know, your opportunity to, you know, be successful. And so I think that was

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the big lesson we learned there was really keeping a pulse

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on what the market actually wanted and being a more

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customer product driven focus. Yeah. So we just launched something

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called the two minute drill. I don't know if you've seen it on LinkedIn, but

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every Wednesday, we do two minute drills. So this is what revenue is, expenses, return

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on ad, ad spend, EBITDA. And every week, we're gonna launch a new

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one. So what I'd like to do is is, Dave, we're gonna turn this segment

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right here that we just did into a two minute drill on the

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pivot, and we're gonna edit that as the pivot. And

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then we're gonna we're gonna splice in what I'm gonna ask you now, and then

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we'll have, like, two a podcast and and a and a and a two minute

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drill by Alaris. Alright. When you think about the

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pivot and you say, alright. I'm listening to clients of what

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they want, but I'm also actually like, they're identifying to me

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what their frustration is, and they think that I could solve it. So could

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you kinda just expand on what was their frustration with kids

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club, and how did you kinda dig in and say, now let me let's

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reset the process, or I get what you're doing. Let me give you

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assistance to do it the way you wanna do. Yeah. Yeah.

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Absolutely. So for for us, what we recognize,

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first, their frustration was they were doing everything on paper, and there was

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really no software out there that did exactly what they needed. You either

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had a full blown child care management software that was totally

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overkill, or you had these sort of afterthought kids club check-in

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experiences that the member management systems have built just

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to try to help the customers, but not really understanding the pain.

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So I think the big thing we did was actually spent I think

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I'm gonna say I spent a good two months actually in the

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environment living, breathing what they go through. Love it. And that's

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where all of our product ideas came from. And I think what you're alluding

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to as well that you have to be careful of is taking the

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customer fully at face value and instead making patterns.

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So hearing their frustration, but translating that to actual

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scalable software versus we made that mistake sometimes where

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one customer was adamant they had to have this one feature, and we

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just took that at face value instead of trying to step back and see how

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that fit into the whole picture. Yeah. That's great. Appreciate that. You know,

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so so as you've kinda gone through COVID, you know, everyone's up and

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and running operations. Some things have become more

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important than others. I think, you know, cycling used to be, you know, a go

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to on people's calendars for for a group exercise. Everyone kinda,

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you know, might have cycled their way out of COVID. You know, some people weren't

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able to bring back a lot of their instructors. So what's been the

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focus or what's been the inherent growth in the daycare,

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in the kids' youth sports performance, in the camps

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that, you know, groups have said, hey. This is a

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great use of square footage inside and outside

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of our locations, and it could become a very material revenue

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stream without any incremental CapEx. Yeah.

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Absolutely. I think COVID was, you know, for us, a really scary time

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because our software was purely used when people were at the club.

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So navigating that is probably a whole separate Halo talk.

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But in terms of the positives that came out of the

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COVID experience was obviously a renewed sense of the

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importance of health, not only for adults, but also

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kids. And the other was maximizing other

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revenue streams outside of the, you know, the walls of the club.

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And so for a lot of clubs, that was like camp oriented

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programming. That because during COVID, you know, you could still run

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things outdoors. So we we were fortunate that a lot of our

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customers were leaning on us to help them manage those outdoor

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programs. So that was a big area, that we saw a lot of growth

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in. And that's ultimately what led to our our newer

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platform we call our bookings app. And so, initially, we were just

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doing check-in management, but with the expansion of those programs, we

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pivoted also into, like, being able to offer these things

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online. And so I think those those two things,

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sort of the renewed focus on health and this sort of add

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need for additional revenue streams and then outdoor programming

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really, was a a second growth for our company.

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This is Pete Moore. I wanna let you in on a little secret. There's this

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company called Promotion Vault, and what they do is they give out rewards

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from retailers that allow you to incentivize your

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members without having to do zero down and one month

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free or giving away shakes or giving away T shirts. What

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you wanna do is build a rewards program that lasts, that

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people value, and that doesn't discount your own products and services.

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So here's the deal. There's something called rewards vault. The rewards

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vault is going to allow a member to set up their own profile.

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They are going to answer questions. You are gonna get those answers. You're gonna be

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able to target those members, and you're gonna reward them inside your

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club, inside your spa, and outside of the club and

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outside of the spa to get them to become loyal, to get them

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to pay their monthly dues, and to be rewarded

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properly for the actions. A lot of companies are cutting back on rewards.

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You shouldn't be. Promotion Vault's your answer. Trust me. This is

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real.

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Now, obviously, in any software, which I've been involved in,

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probably one too many, you know, the sales cycle is

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always something that you think is much much much

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quicker than is rational. Yeah.

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So, you know, as you get into some of these clients like

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YMCA, a JCC, a, you know, an

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Eos Fitness, a Mountainside, and I'll come up I'll make up a

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new term here that might become like, you know, oh, Jeremy and I kind of,

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you know, co trademark this term. But, you know, you kinda run it like

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a piggyback SaaS gross model

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here because you're basically growing off of clients that you spent a

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significant amount of time with. And when they add a new location, they're not

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bidding out, like, let's figure out what software we're gonna put in. Right? They're gonna

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be like, hey. You know, click on another, you know, club,

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you know, user ID in there. So talk about

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maybe, like, how you've benefited from that, maybe

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how more connected you've been, and how

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people rely on you as kind of part of a mission critical launch. Like, you

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can't really launch without me anymore. Right. Yeah.

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No. It's you're absolutely right. And on the sales cycle front, you know, in

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the early days, obviously, those that was a lot longer, and then that was a

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couple factors. One, it was, you know, being an unproven

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company. The second was just, you know, a lot of these companies were

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really kind of trying to time that with maybe a transition to a new member

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management system or just really kinda dragging their heels in

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general. But, yeah, once we were able to get in with

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these groups, the sales cycle is, like, significantly reduced.

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And I think kind of this new term we're coming up with maybe is related

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to, like, kind of this land and expand approach, right, where we once you get

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into that customer's environment, you prove that you

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are a true partner, not just a vendor.

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That, like, confidence boost translates into them

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being very willing to expand with you. And to your

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point, with a lot of our member management partners, that's been a

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big focus for us is really being great partners with them like an

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ABC Fitness, a Club Automation. And their confidence

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has increased so much that they rely on us to your point as

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mission critical. And so there are lots of deals we're brought in

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on where it is just said to the customer, hey. You

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can't use our software unless you get Alaris. Right. So that's

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been a testament to, I think, both, you know, our partnerships with the

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the clubs themselves, but also the member management partners.

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Yeah. Now as you take a look at and just to kinda educate

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some people on if they're they're starting up a new software company in any kinda

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niche of the industry, how important is it for you when you walk into

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a new client, and to be able to say, hey. Here's all my

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my my partners on on the membership management side. That's

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already taken care of. You don't have to worry about those API and, like, we're

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on a, you know, we're on a bad phone with them, if you will. Yeah.

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In addition to that, if you're running some of these larger entities,

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which, you know, five or ten years ago may have not have been, like, an

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moment for anyone. But if you say to me, you know, hey. I'm powering Mountain

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Side, which is owned by garnish station. I'm pow powering EOS, which is owned by

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another private equity from BRS. I'm powering the YMCAs, which have

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seemed to have somewhat unlimited donation capital. How

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much does that kinda change the discussion, and how does it make the

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reference check component of this to kinda, like, fast track

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new prospects onboarding versus, you know, what you used to

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deal with, which you and I used to deal with, like, probably a lot of

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trips on Southwest Airlines and, like Yeah. Multiple demos in in

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any which way. Yeah. No. I mean, the

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references are are massive, and the, I would

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say, the member management integrations are

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probably one of our biggest differentiators quite honestly because there's there's other,

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you know, somewhat at least substitute competition to

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what we do. And that once people realize

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they would have to run another system as a standalone versus having a fully integrated

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experience, it's really a no brainer. So that has been massively

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powerful, and that for us, that's why we focus so heavily on getting all those

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integrations. And and not only just having tight integrations with a

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few, but with many also instills confidence because the

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reality is a lot of these clubs are constantly kinda thinking, hey.

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Should I go here? Well, oh, good to know. If I switch from this to

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that, Alaris is integrated with Volts, so no problem there. So that's

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been big. But then, yeah, having those strong brands,

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as reference points has also been just

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incredibly powerful. In the early days, again, to your point,

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like, just proving over and over showing up on-site, spending

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all this time, that has significantly reduced, especially

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on, you know, in the YMCA side when you can say you've

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got the big guys like a Greater Houston YMCA. It's just

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an immediate sort of, like, you are worthy.

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And then I think the the club side, yeah, like an EOS, like a

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CHUs that are customers. That's been great. And, one

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one pretty interesting experience when we first got the California Family Fitness

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Group, who's, of course, now in shape, they asked us a

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question. They said, well, okay. We always like to

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ask you know, give us a customer that you currently have that's happy with

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you, and but we also wanna talk to somebody who left you and and

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understand why. And at that time,

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we had some great reference points, but I actually couldn't give them a

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reference of somebody that left us because we had never lost a customer. That's good.

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So that was pretty cool experience. Now COVID changed that a little

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bit, but pre COVID, we had in our you know, I think it's seven

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years at that time and never lost a customer. Yeah. So,

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look, from a standpoint of, of size of your business, do you

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got a lot of ground to potentially capture. You know, one of the things as

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an analogy, you know, when ABC

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financial, you know, probably four or five years ago changed their name to ABC

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fitness. I personally was kinda surprised by that because I'm like,

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why would you kinda limit yourself, like, out of my halo, you know, acronym? Like,

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you could do day spas, you could do haircutting, you could do massage, you know,

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you could do all these other things. And they came to the conclusion, like, hey.

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Actually, fitness globally is big enough, and there's plenty of runway

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and plenty of revenue and plenty of EBITDA to capture. So, you know, when

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you think about where you are versus where you can

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be, are you in, like, you know,

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5% of what you think is available? Are you in

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10%? I mean, you haven't really gone global yet, you

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know, to speak of. So how how do you think of that if I was

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to say, hey. I wanna get involved here as an investor. Or, like, hey. Where

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are you at? Like, what inning are you really at? You know, what what would

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be the answer to that? Yeah. Yeah. I I think that the

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reality is although we do have a strong footprint, you know, in the North

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America market, I think we're really just scratching the surface of what

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our potential is. I think what we're really seeing you

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know, we we're we're first, we're really growing the check-in management side. But now that

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we have this bookings platform, we just completed a brand new

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complete upgrade to our entire system. So we're on the latest, greatest

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technology now. We're finding that, you know, the member

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management partners that it's tough for them to be all things to all

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people, and they have, you know, a lot of legacy features.

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And so we're finding more and more that there's a big

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demand to bring in Alaris to help round out their feature

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set. And so I'm seeing most of the growth around

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that is being able to offer these new features around

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the bookings platform. And, really, kind of our pitch and

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our vision, if you will, is really being that second software

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partner. A trend I've been seeing over the years is that health

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clubs have been struggling to find sort of the best of breed

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product in each of these functional areas, but then they're left with, like, 30 different

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software vendors. None of them are talking to each other. So what we're

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trying to do is consolidate those software partners that they have

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and kind of just get you down to your two core main systems. Gotcha. And

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so like, you know, member management and us. And we're really

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seeing that, feedback being well received in the

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market. Got it. Look. You could have taken in

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a boatload of of, you know, institutional capital,

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run-in the red for several years, kind of like talk to talk with private equity.

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Like, hey. I just grew my revenue. Like, it doesn't matter what my EBITDA or

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cash flow is. You know, obviously, you've been very prudent and methodical about

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that. Talk about, like, what's in your DNA on why you did it that

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way and how you feel now, you know, given that you're running a profitable

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SaaS business. Yeah. Yeah. I think, you know, I think

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it's not to, you know, compare myself to Bezos, but I think it is

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you know, can be likened to Amazon where we really focused on the product

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experience. We weren't focused on profitability. We wanted to get the the

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product market fit down. And we could have taken shortcuts and,

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you know, done more of, like, a payments play or whatnot where we could have

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gotten revenue, but we really focused on the customer

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experience, making sure the product was right. And I think the

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other thing that we did differently than other groups out there is

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we focused on what I would call a bottom up approach. You know, a lot

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of times, people just focus on making the, you know, the CFO

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happy or the CEO happy, But then those

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decisions trickle down to their staff, and oftentimes, there's a misalignment, and the

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frontline staff are frustrated. And that ultimately

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bubbles back up, and then you lose that customer. But we focused on

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really making sure that ground level employee who, by the

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way, has lots of great feature ideas is happy.

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And by doing that and focusing on that, I think that's what's led to

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our the product that we have today and ultimately has now allowed us to

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become profitable.

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This is Pete Moore. Here's the last tip for you of the podcast.

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00:20:53,895 --> 00:20:57,735
We are partnered up with a company called Higher Dose, higher dose

338
00:20:57,735 --> 00:21:01,095
dot com. They are the leader in workout

339
00:21:01,095 --> 00:21:04,799
recovery products, infrared technology, LED

340
00:21:04,799 --> 00:21:08,399
light masks, neck enhancers, and other

341
00:21:08,399 --> 00:21:12,100
products such as PEMF mats and sauna blankets.

342
00:21:12,559 --> 00:21:16,080
If you have not gotten on the workout recovery train

343
00:21:16,080 --> 00:21:19,705
yet, your time and your stop is now. You

344
00:21:19,705 --> 00:21:23,245
gotta get these products in there before these workout recovery and spas

345
00:21:23,465 --> 00:21:27,305
end up saturating your market, having your members walk out of the club

346
00:21:27,305 --> 00:21:30,905
and going into one of their locations for $200 per

347
00:21:30,905 --> 00:21:34,399
month where they paid 39 to you. Let's become an

348
00:21:34,399 --> 00:21:38,080
expert in workout recovery if we are already an authority in

349
00:21:38,080 --> 00:21:41,759
workouts. Higher dose, check it out, is a

350
00:21:41,759 --> 00:21:45,395
wholesale code, and we look forward to helping

351
00:21:45,395 --> 00:21:49,235
you augment your products and services to meet the demands of your

352
00:21:49,235 --> 00:21:53,075
members. And, hey, let's get people happy, healthy, and

353
00:21:53,075 --> 00:21:56,615
sweating, and the recovery should be just as good as the workout.

354
00:22:00,600 --> 00:22:04,380
And there's two more questions here before we, before we end our first podcast.

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What's your team look like, and, you know, how do they feel

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about where you where you are and where you're going, you know, from a growth

357
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trajectory? Yeah. Yeah. The team's excited.

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We we're a, you know, a lean team for sure. We've purposely done

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that. We, have a great, tech group that does

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all of our software. Like I mentioned, we have all the latest,

361
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greatest technology. Proud to say we are,

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actually have more females in the group than than males.

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So some of you out there will appreciate that. But, yeah, I I would say

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the team's really excited, especially coming out with this new platform and just

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ready to go to the next phase of the company. Great. And then my last

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question, which probably should have been my my first or second question is, the name

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of Alaris. Well, you know, how did that come to be? Yeah. Yeah. It's kind

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of a cool origin. I you heard me mention that, you know, we were

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founded, with Rolls Royce as our partner. And a little known fact, a

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lot of people think Rolls Royce only made cars, but they're actually more known for

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jet engines. Yeah. Sure. And, so

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what we were trying to think about, we wanted to pay homage to Rolls Royce

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when we founded the company. And so we went through kind of an

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ideation experience of different words. And so, a word we

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came across called is a Latin

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rooted word, which means, to take flight. And so we

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thought, well, what a cool way as a startup. We're trying to take

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flight, but then we're also paying homage to Rolls Royce as a,

379
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you know, a jet engine company. So that's the origin of it. And

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we just iterated on that until we found a word we liked, Alaris instead

381
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of Alara. So yeah. Gotcha. Alright. Well, great. Well, look,

382
00:23:43,025 --> 00:23:46,625
look forward to seeing you at Ursa HFA this year. Been

383
00:23:46,625 --> 00:23:50,385
tracking your your your growth and and your credibility and success in the industry. So

384
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congrats for building that up over, you know, fourteen,

385
00:23:54,200 --> 00:23:57,880
fifteen period, year period of time. I think it was,

386
00:23:58,440 --> 00:24:02,280
Paul Schauer that at, ABC I did at one of our first interviews, and

387
00:24:02,280 --> 00:24:06,015
he's like, yo, ABC, we're a thirty eight year overnight success.

388
00:24:06,015 --> 00:24:09,055
And he kinda, like, you know, laid back and chuckled, but it was, like, all

389
00:24:09,055 --> 00:24:12,895
hand to hand combat, basically, you know, by going around and being like, hey. Look.

390
00:24:12,895 --> 00:24:15,375
You you gotta trust me with your data. You gotta trust me that I'm gonna

391
00:24:15,375 --> 00:24:19,030
actually send money, you know, into your account, you know, out of, Little

392
00:24:19,030 --> 00:24:22,710
Rock, Arkansas, you know. So, that that's how that started. So

393
00:24:22,710 --> 00:24:26,390
congrats on on building what you built and, you know, look forward to, to

394
00:24:26,390 --> 00:24:29,910
checking in with you on more success. Awesome. Thanks, Pete. Really

395
00:24:29,910 --> 00:24:32,225
appreciate you having me. Got it. Go halo,

396
00:24:35,325 --> 00:24:35,825
baby.