Episode #554: Entrepreneurial Drive and Innovation-The Story Behind the Stallworthy's Your Reformer

0:00 I am super excited to announce that we now have a formal partnership with the Prospect Wizard. And when I say wizard, I mean wizard. Obviously you have a website. This allows you to convert your website traffic visitors directly into leads. It's not just another chatbot and it's not AI but it allows a visitor to call, text or leave a voicemail immediately. Goes to you, your sales team or anyone else in the club instantly. MIT shows a study that if you contact the lead within 10 minutes, chance of them converting goes up nine times that of the average. We got the Atlanta clubs on it. Vita Fitness, Gold's Gym, Mountainside City Fitness, Philly, College Park. Become one of the next Halo companies to deploy the Wizard.

0:48 It's easy to use. Go to the prospectwizard.com get a free 30 day trial. Talk to my boy Dave Gallen. He will get you all set up and let the leads flow based on the Wizard. Go get him. This is Pete Moore on Halo Talks nyc. I have the pleasure of bringing to our podcast Emma and Ben Starworthy from Melbourne, Australia. I know the full waltzy Matilda from my Katiki Tour back in 1993. We are going to talk about pilates, we're going to talk about Australia, we're going to talk about the Internet and we're going to talk about running a family business. So welcome to the show.

1:29 Thanks, Pete. Great to be here. So shout out to Brian for Brian Anderson for hooking us up. And you know, it sounds like you guys have been, you know, serial entrepreneurs, always have big business ideas since your childhood. So you want to take us through, you know, that itch and now what's being scratched? Yeah, the itch has definitely been there. There's no doubt about it. I was fortunate at the age of 22 to buy a rundown health club. So I got the opportunity to purchase that club and yeah, it was extremely run down. I was actually with Em at the time. So she's been on the journey right from the start. And yeah, from that rundown health club, we worked together, we built it to six clubs through a lot of innovation and doing a lot of things ahead of time and we exited that health club. We're very fortunate. There's a lot of different stages along the way of that journey. It's been a few itches scratched along the way. I mean, there's definitely that entrepreneurial spirit innately. We've had laser skirmish businesses and we had a farmer's golf business and we had a lease that was gonna be a bar and a restaurant. So we've had lots of things along the way that we've learned to laser focus in on, I guess, one core thing and do one core thing really well. So Ben's learned to be restrained in that regard. But I think when we've launched Euroformer, the sky's the limit. We can dream big. It can be a global business. When we had our chain of

3:00 gyms, realistically, you're looking at a 5 to 10 kilometer radius in terms of your catchment realistically around there. So that's limited in terms of where what you can dream. So it's been really exciting on this journey. I definitely wouldn't describe myself as an entrepreneur. I thought I would be in the corporate world and climb the ladder and that Ben talked me into joining the business and I've learned to take risks and enjoy the journey and haven't looked back since. That's great. So, you know, by I was saying this earlier today, but, you know, experience is what you get when you don't get what you want is what one of my mentors said to me a very long time ago. So, you know, when you jumped into this health club opportunity, did you have a vision for, you know, what was going wrong or, you know, were able to kind of identify quickly what the levers were and maybe talk about how much confidence you started to gain, you know, as a couple and as a team going in and saying, look, I could diagnose what the problems are. I also know how to execute, not on PowerPoint, but actually know how to make change quickly. And that kind of gave you the confidence to start to jump into some of these other opportunities. Because she understood that, like, okay, this is kind of like a case study. And if I can nail the case study, then, like, it gives me more confidence to do next ones.

4:24 Yeah, absolutely. I think the first thing, Pete, I mean, the club was losing $10,000 per month. It was completely run down. So even just doing things like a paint job and getting some things improved in the facility, I only had three months of working capital, so I didn't have a lot of time on my side. So I had to get things moving quite quickly. Fortunately, there was a great team in place. We had a team of about 15 team members at the time. And for the 13 years we had the health clubs, we still had six of those original founding team members. So for me, it was about how do we upskill the team to get the most out of their day, where do we need to focus our time and then ultimately listening to the members. All of our inspirations really come from what our members need, what they want. How do we keep reinventing the clubs? What one of the main things we did was back in 2010 seems a long time ago now. We went 24 7. Our membership went from 900 members to 1500 members within three months. So we really saw that demand and where they could take the clubs and constantly. Yeah, yeah.

5:27 That gave us the confidence, I guess, to know that, you know, we were good at execution. So it was just about making sure that you recognize what the trends are. What are you seeing, what's going to work in your space? What do you ultimately customer centric, focused, you know, what solution are you solving for them? And that's been something that we've continued along into this business as well. And then that team piece that Ben mentioned, again, learning and developing as leaders and as managers and then creating a high performance team. So it's been exciting with your reforma to start fresh and really bring together some amazing people who have a shared vision and objectives of the business and then, you know, to be able to achieve great things together. So one question I have would be, are you changing it to 24 7? Do you think those 600 incremental members that resonated with them and they actually used it, or just the fact that that option value was there kind of created a different view of the value, you know, price to value. It's definitely a mixture of both. Without doubt. The value proposition definitely changed. We took away the excuses and the barriers at that point of making the decision.

6:41 And I think it was, you know, people want to be onto something that's trending. Right. It's like, wow, you see that 247 gym that's open up. So it definitely created a bigger radius for our clubs than a traditional 5 kilometer radius. People will prepare to travel because obviously we're open, we're available. Yeah. So I hope that answers the question. And did, did you keep the. The. The same name or did you change the name when you bought it? We just added the 247 to it, so. Oh, sorry. When we went 24 7. Yeah. So we'll Pinnacle Health Clubs. Yeah, we kept the same name right. From the start and. And you sold it to a company called Viva Leisure. Was that deliberate?

7:22 Did they come to you? How did that evolve? Yeah, it wasn't deliberate. That wasn't actually, you know, we're looking to continue to grow. We're up to six health clubs, all successful. And we started going down a process of what was next. Do we need a raise? How do we get to 10, 20 locations? So we bootstrapped the whole thing and then going through that journey, come across Viva Leisure, and they were aggressively growing and they were on a different journey of going, wow, we need to get into Melbourne. We need to get into Victoria. There's a great chain there. We started conversations with them when we were introduced to them through someone that was supporting us. And that was prior to Covid. Things started moving quite quickly. People were quite interested in our group. And then Covid, of course, hit. So we had a false start there. We reopened after six months. Conversation started again. Melbourne locked down again in two weeks. And we're like, okay, well, that's probably off the cards. So we just focused on making sure our clubs were as strong as possible during that time. We had a really, when I say a successful Covid period, it really was successful. Australia was quite fortunate with some of the initiatives from the government and we're really able to leverage that to keep our team working and really contributing to supporting the business.

8:41 Post opening for the third time, Veeva did come back and eventually we negotiated terms and things moved quite quickly from there. They're a great company to deal with and they still are. This is Pete Moore. I want to 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 zero down and one month free or giving away shakes or giving away T shirts. What you want to do is build a rewards program that lasts, that people value, and that doesn't discount your own products and services.

9:22 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 going to get those answers, you're going to be able to target those members, and you're going to 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, your answer, trust me, this is real. You know, one of the takeaways, and my day job, besides doing the podcast here and, and some professional education, is mergers and acquisitions. And, you know, when you have a company like Viva that has a stated growth plan that wants to be in your market and wants to buy you, they have kind of like a Limited timeline to say, okay, you know, we'll transact with you as quote unquote, the platform in Melbourne. If they bought someone else, you know, they might not come back to you at the same price. They might not want to talk to you anymore because they feel like they've accomplished, you know, their, their land grab if you will, and have some, some, some assets in the ground. So can you talk about. And, and what I usually say is when the big 800 pound gorilla comes around, you know, wherever you are, you know, try and get a deal done because there's a finite amount of capital and if they're a strategic partner,

10:55 strategic buyer, they might only be strategic one time and that's when they want to buy and not when you want to sell. So can you give a little bit of insight into that? Your gut said, hey, I'm not going to let this fish off the line, if you will, as an analogy. Yeah, I think, I mean to take a step back, we did so much work on our model and what we wanted to be as a company. So we positioned in, you know, we're a full service club but we really chase yield in our clubs and they come from our personal journey really like if we, if we take a step back. How we found Reforma Pilates, first of all to modality was through our fertility journey and that's when we first found Reforma Pilates. Yeah, I mean there's the long list of benefits to so many people, those consistent Pilates practice and I've got my own personal story with that. But through that awareness we wanted to kind of be able to bring that and we knew our demographics, our customers, our members would really receive that. Well in Australia, Reforma Pilates was starting to really have a growth trajectory as well. And we knew people were having pain to go to a studio down the road and paying for their heat program as well. And we wanted to be able to bring it all on one umbrella and not lose people, but then also be able to provide an affordable membership. So we created, I guess boutique brands because the boutique element of it was important to the experience.

12:20 So boutique brands under the overarching gym brand and then offer a studio membership. So we had a unique model that we're seeing so much more now in the fitness industry. But you know, this is going back sort of seven, eight years now that we introduced it, maybe longer. So we knew we had something that was a little bit different, some learnings that Viva Leisure could look at from a strategic sense as opposed to just ideal locations that was Making profit that they could plug into their business. Was it Pilates, a separate entrance or was under your, your Pinnacle door? It was, it was, it was within Pinnacle. That was made a separate boutique within Pinnacle. So yeah, that did have a separate entrance within club. It had a separate brand and feel and aesthetic. Like when you walked in, a different smell even. We really wanted it to be a different vibe from the overarching other spaces.

13:17 It had its own zone. Just to give you some numbers on that as well, Pete, just for anyone listening, we originally had launched a small group training program in all of our clubs. And we see that a lot now in the industry, right. And everyone's chasing yield, how do we get it? So we did a small group training program that we could integrate roughly about six and a half percent of our membership base. So for a 2000 member club, we had 130 members in there paying sort of 40, $50 per week. You know, that was still really healthy for that program. But when we incorporated wellness so that being with formal Pilates and yoga, dedicated studios across three of our clubs, but then reformer across all of the clubs, that integration went to 30% of all of our membership. So just having that additional wellness element brought in a brand new member to the clubs that we'd never seen, had been living in the area. And then some of our payers that were some of our foundation members, they might have been on, you know, some of the lowest rates were prepared to pay 40, $50 per week to now have access to what they saw as their future training program. To go back to your question though, about the acquisition and not wanting to lose it, it might not be coming back around again. You're right to the point. So, you know, we had this and we were confident in our negotiations with them because we knew our model and the numbers and what was showing up. So therefore we were also comfortable with it, not with them walking away and us continuing to grow in a space that we felt there was a lot of

14:48 opportunity in the fitness industry coming of COVID lockdowns here in Melbourne in particular. But you've got to be able to put your personal attachments. There's a lot of personal attachments to your business, to your baby and look at it as a commercial. So what, you know, make sure you're equipped with the right advisors around what is a realistic valuation that you can, you know, have some wiggle room in negotiation to move with and then be able to know what's my bottom, what would I walk away from, what am I comfortable with? So you can then go in there and be comfortable with either decision and have no regrets. That's great. Yeah. I always say you gotta negotiate from a position of strength. You also gotta look at it unemotional. We've done deals with owners that, you know, miss the first opportunity and then, you know, things unravel sometimes after that because you don't have as much confidence in your business. You think, you know, get a little bit wary about whether the buyer is going to try and tie you up and then, you know, undercut the deal.

15:52 So the first bite's usually the best. One to stay present too. I think you start to picture what your life could look like if you didn't have this business or if you had this exit plan. It's very easy to do that. And so that I think that's part of also, if it doesn't come through, really hard to come back from. Yeah, yeah. So. So once that transaction happened, you sold everything to them. Will you still retain some of the reformer part of the business? Everything? Yeah. All six health clubs got it. Yeah. 100 team members handed over. Yeah, got it. And then from a non compete standpoint, and I'm not sure how things work in Australia, but what you do talk about what you're doing now and how that is not tripped up by your, you know, the sale.

16:44 Yeah, so our non compete was more based around opening up bricks and mortar facilities, you know, not competing, going open up a health club or consulting to local competitors and things like that. So yeah, really what we've gone and created, we're not opening up bricks and mortar facilities. You know, we're a manufacturer of a product, we have digital solutions and yeah, we more obviously chat a bit more around that, but it didn't compete with Fever. Now when you take a look at the Pilates and you know, class pass came out and said that Pilates was a top 20, 24, you know, workout. I don't think you get through a trade show without four or five, you know, new Pilates machines and different, you know, you know, digital subscriptions.

17:30 So what's a special sauce that you say, hey, look, our machine is based on xyz, our content, our commitment to the product, which I don't think some people take into account, you know, that some early stage manufacturing businesses of equipment like you also have to bet on the fact that they're going to be there for maintenance, for content creation, you know, for ongoing support for a community instructor. So how have you kind of position that and how is, how did you kind of Rewire your brain, if you will, to say, hey, all that human interaction that I had at Pinnacle and Pinnacle 247 with the people that worked for you as well as the members, you know, you. That was basically, you kind of wore that brand as like on your sleeve and they had confidence in you. And now you're kind of saying, well, you know, now I'm selling you a device. So talk about, like, how you've been able to kind of manage through digital is not necessarily human, but I can push that through content or I could kind of create a community, even though I'm not beating heart in front of you. Do you want to start off?

18:46 Yeah. I mean, I still think it is from our beating heart. I mean, a big part of why we're successful is the way we communicate, the way we engage a community. So, yes, we sell hardware, we sell products, and we sell digital software as well, but we, we sell solutions. So from a D2C perspective, we bring the studio offering to your home. From a commercial perspective, we provide a range of different solutions depending on the business model. And it all comes from what, I guess, needs the customer has and what, what problems it's presenting for them that we are solving, you know, and I think because we are so innately attracted to, or I guess passionate about Pilates and the benefits that that can provide as that combines so beautifully with the business acumen that we have and the model, the robust model that we've built to continue to talk to our core customers in a way that some others are not. And are you provide. Are you selling into clubs as well as selling into the home?

20:07 And do you feel like you're like maybe the wholesale channel, if you will, is more of an extension of who you are. And knowing that this, what you've, what you've, the success you've had by putting a group exercise boutique inside of a club, that you're basically replicating that and scaling it from what you learned and what you built before. How's that for a long winded question? Okay. We'Ve got it. There's different models that we see. I mean, we're supplying to eight of the ten major gym chains here in Australia now. And each of those gym chains will have a slightly different variation on what reform Pilates is for their community. So some will be full on demand, where we'll have our reformers and what we call our kiosk, and they'll come in. Some of our facilities will have 20, 24 units in a separate part of the gym. People will pay an additional five to ten dollars per week to access that space and those members unlock access to unlimited Reformer Pilates. So then we've got smaller like you think of a Snap Fitness even during like we supply to Snap Fitness here in Australia and it's been really successful for their network. Some snaps are bigger, some are smaller. The smaller ones finally have two to four machines with the kiosk. Then some of the biggest snaps will have a full studio offering but then run it as a hybrid and run the digital outside of the classes. So yeah, really it's depending on the space they've got available. What we've been able to create is we've been able to make reform plays accessible for

21:39 any facility. Whether that's two machines, one machine or 24 machines. That's now an option. Yeah, and a follow on question that I've been preaching for like 10 years that a health club is effectively an equipment church showroom and that at some point there should be a QR code that says you want to buy this piece of equipment for your home, you know, click here on this QR code or scan this and you know, they basically become your distributor. Have you seen any of that as a potential even like cutting the club in on some kind of sale price or like leveraging that relationship or. Is that great idea Pete? But that just. It's not how it happens. I mean it's a great idea Pete, but yeah, at this stage it's not something that you know, we're focused on.

22:28 But there's definitely, don't get me wrong, exposure definitely supports brand awareness for sure. But what we're finding, I mean it does depend on the region. So you know, there's from a home market perspective there's lack of accessibility to start particularly in Australia. It's a large country but you've got very dense pockets in metro. But then we have a lot of people who live regionally who can't get to a studio or can't get to a gym nearby. So that can be of having something that can be in their home that they can do is, you know, has been life changing for them. But in the metro cities where you've got plenty of options, the feedback we get from our customers there is that they actually like having the convenience of it at home, but they still want that in studio. They'll still go to their gym or their studio once. Like to call it a die hard. If I think about someone like me who has two little children at home, busy working as well, juggling career, juggling family Everything. It can be very difficult to get to as many classes as I would love to get to or that I used to get to before I was a mum. So I can get to my one that it's my ride or die. That's the time I get to and then I can supplement it and stay consistent and still get some amazing results and benefits from it with having it at home.

23:47 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 PEMF mats and sauna blankets. If you have not gotten on the workout recovery train yet, your time and your stop is now. You got to get these products in there before these workout recovery and spas end up saturating your market. Having your members walk out of the club and going into one of their locations for 200 bucks per month where they're paying 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 sweating. And the recovery should be just as good as the workout.

24:58 You know, during COVID I spent a lot of time on my, my soul cycle bike Pilates. You know, equipment during COVID was not really as, as prevalent as it is now, obviously. How do you feel about, from, from a, from equipment that's at the home to results and motivation that can be done by yourself. Where does the Pilates machine kind of rank if you want to like force rank in that? I have no idea what the answer could be to this, but I'm. That's why I'm asking the question. And we'll have our instructor. I mean, for me, where it ranks is it depends on where that person is in life, right? Because there's a certain person that really, really could benefit more from reform of Pilates. And I saw that through our journey to fertility as an example.

25:49 So, yeah, I think it depends. I think the people that we see the most in our community, they really need Reforma Pilates. It's a massive part of them. But in terms of using it, I think part of what you're asking is will they use it at home, how do they stay motivated and that sort of thing? I think, you know that that is not any dissimilar to any other piece of equipment in terms of engagement with challenges and giving them, you know, taking the thought out of what should I be doing today? We have a range of lengths of classes in terms of time, range of options. We've got physio, physiotherapist led classes that can cater for different injuries or different stages of life, et cetera as well. So sort of we try to have enough for everyone. But then I think the unique thing about Reformer Pilates specifically is that people find that it's so varied in what you can do. There's so much variety in every single workout when you turn up and the feeling of empowerment and that kind of mindfulness improvement that you can get from the movement as well. Kind of all couples to kind of really drawing you back each time. And also we're design led with our equipment. We want it to be a pride of home equipment that you have there. So people are really proud of this piece and they think about this space and create more of a haven.

27:05 So again, drawn to having that me time to allocate it to them in their home to keep going back to. We haven't had that kind of story where you used to hear that treadmills become your clothesline. That's not what we're hearing with the Reformer. Yeah, gotcha, gotcha. Well, we can talk for a long time, I'm sure. But in closing here, any quotes or entrepreneurial takeaways that you can expose to us or, you know, how you've gone and become successful serial entrepreneurs and you know, stay married and have kids and you know, parameters maybe, or no parameters would be like, look, we're on life and we're on business like 24 7. Like free, you know, free, free will, whatever. We want to talk about it. Okay. I mean, one thing that I've always been big on is it's not what happens to you in life, it's what you do about it, how you come back from that situation. So I think Covid represented that best for everyone.

28:03 And yeah, I think we have challenges on a daily basis as entrepreneurs, business owners, mums, dads, husband and wife. So it's all about, yeah, what you learn from that and how you come back from it. And I think for me it's really about what I've learned from this business in particular is it's cliche, but it's true. Finding what you're passionate about and if you can then build a business or a career out of what you're passionate about, that I have found has been the secret sauce in terms of motivation and pushing through. Awesome. All right. Pilates everywhere, anytime. The stalwarty family. Congrats on what you built, man. Look forward to seeing a Pilates machine here in New York City that I can jump on. And great, great work of the passion. Thank.

29:14 You, Sa.