Episode #557: From Taekwondo to Tech-Marco Benitez on Building Rook and Connecting Fitness Data

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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 people on Halo Talks nyc. I have the pleasure of bringing our only taekwondo champion and bio medical engineer to Halo talks. In over 600 episodes, we have not had someone with these types of attributes. So Marco Benitez, welcome to your first Halo Talks. Well, thanks, thanks so much. Very excited to be here, man. So really, really appreciate it.

1:28 Awesome. So for our audience here, Marco started up a company called Rook R O. Okay. So if you want to start out and just tell us, you know, where this name came from because I, I play a little bit of chess so I know I got a rook or a castle and you know, tell us how you, you came up with this and why you decided that that four letter word was where we're headed. Yeah, well that's, that's a really good question because there's a lot of people who ask me the same thing. And everyone relates everything with Chase, but no, in fact it's with the around the crows. So we were thinking about crawls and when they are flying together, there's a group that work together and they, it's, they are one of the smartest birds in the earth. So and that's why we, we call it Rook because we are a group of birds, you know, flying together and every single time everyone will take their leadership in different type of areas. So that's why.

2:23 And everything is connected between each other and they don't know why or how, but everything is connected between. And that's exactly what we do. We connect data. Love it, love it. So give us your background. You know, I already gave the abridged, you know, top two out of 10 or what have you. But what you've learned where you saw the frustration. Maybe also give us an analogy because I think there are several good ones in other industries where you need this kind of middleware. You need this group in between to kind of direct traffic and direct data. Yeah, well, being a middleware it's a lovely part because you can bring and be very specialized in different type of things with data. For example, my background, I'm definitely a taekwondo guy my whole life. Exercise sports, that's my thing. I love sports. I love because give you a lot of, you know, discipline, perseverance. There is a lot of things, very good things over there.

3:19 But secondly also work in big pharma. Big pharma in clinical trials. So clinical trials. I learned a lot around the middleware. The clinical trial is something that apparently looks like from the beginning you have to create a protocol. You need to create a molecule and then find different, you know, find to solve different type of problems with different diseases. But in the meantime in the middle there's a lot of vendors working towards this to achieve that specific thing. Like you know, generate all the data from the data, you know, from the, from real world evidence to identify the problem. So there is a lot a different type of thing. So my learnings during these whole years is like if you special specialize in specific thing around data and you can create things and even more important, when you have a lot of information or data, you can improve people's lives. That's why we start to build rook because it's very important now. Data is the new oil so we can help people to being better.

4:18 Gotcha. And then you know, when you started this up, were you currently at a different job and kind of moonlighting this? How quickly did you put your team together and then you said you raised some VC money, you know, so to give us a little bit of info on that. Yeah, I, I can start through. Well, when I was in the big pharma I was over there like I don't know, probably 12 years in the big pharma. And again, different typ of learnings. When you work with an enterprise, you identify that it's, it's. You have to be very structured. That's the first and important thing. Even though that they are very long and old companies, they give you a very good structure of how to build a company. That's something that they give it to me. Secondly, also as I said before, when you have a lot of information, you can create things. But even more important, when you have a Lot of data. You can improve people's lives. So that's why we start to build Rook, because we were okay. Health industry, they are. There is a new wave of gadgets. There is a new wave of wearables, these commercial wearables. In fact, some of them start to receive FDA clearance. That's impressive. Now these wearables are becoming medical devices. So we identified something that potentially could be very interesting. The problem out there is, like a lot of industries, what we made a lot of research over there. A lot of industries want to pull the data from these devices, these wearable devices. However, they don't know how to pull all these data. They need to integrate all the wearables that are outside and make sense of all

5:51 this data. And we saw the problem since the beginning because before we create Rook, we have a platform for the fitness industry, like My Zone for Latin America and these type of things. So we started to integrate all these wearables in our own platform. And we saw them. We saw the people, the big problem over there. Once we extract the data and once we start to make sense of all this information, we saw the big problem over there. So that's why we started to do this API for other. So you actually had. So you actually had a company that was doing the equivalent of my own with the body traps, heart rate monitors, and it kind of morphed it into like, hey, why don't we just not sell our own into studios or locations? Let's actually scale this and kind of move up to the. Not the food chain, but the. The data chain to say, let's just do this as agnostic. So how do companies like this, you know, get paid? I'll give you an example. Like, I use Zell or Zelli, right? For.

6:50 For transfers. They're obviously just connecting two different banks, and there seems to be no transaction fee. There's a company called Plaid. Plaid, which basically is like, doing that as well. So how does that business model work for, like, the delay people here and myself? Thank you very much. Even though I went to Harvard Business School, I don't fucking know this. You know, how work and how do you kind of fit yourself in on something meaningful? Yeah, there's, like, different. Yeah, Plat. That's the perfect example. But because normally when we talk with different investors, they are like, okay, you are the platform, the wearables data, and the medical devices data. That's close. When I read. No, you know, you nailed it, Joe. I didn't know. I didn't know. You nail it. So you so that's cool. So yeah, it's mainly around some companies charge per API call what we charge per active user. It doesn't matter matter that you send one time data or 1 million of time this information which only charge per active user. So it's very simple, it's per use and you, if you want you, we can tier you in different buckets.

7:56 Where. Who'S actually paying for the active user? Who, where's like what, what, what, what constitutes me as an active user? And then is it the device that makes me the active user? Is my data going to somewhere else which makes me the active user who owns me? Yeah, well it's the payer. So that depends a little bit because we work mainly with a fitness industry but also we work with sports and also with insurance companies. So in, in the case of the insurance companies, the payer, I will say that at the end of the day everyone, the end user is always, always the one who pays everything. Right? So that's, that's something too. Every single time that we go to one specific service, we are the ones who pay for that service. And on top of different type of services that the same you know, thing you are, you are buying. So but for not for us we are B2B meaning that we charge to the carriers or we charge it to the insuretech companies like I don't know betterfly or these type of companies that are using these data for a specific thing, they are the ones who are paying us. Or for example in the fitness industry and fitness app or the gym, if the gym has an application, they integrate my API which is only a code and they give access to more than 300 wearables so they can pull the data from the end users and make sense of all this information, make engagement or different type of things. And every time

9:27 someone upgrades a device, does that require a different API on the back end, on your end or coding or what have you? Well that's exactly the problem that we are taking out from each company. So instead of. Because if they doesn't have a rook, they have to integrate all the wearables, they need to integrate the Apple Watch, the Polar, the Garmin, the Suunto, the. Huawei and upgrades every time. Yeah, exactly. Maintain those integrations and then make sense of all this data because they need to standardize, normalize, harmonize, take out duplicity. Well, we take out all these problems, take out that problem and they only have to integrate my API which is just a code. In my code we have already more than 300 wearables. And we make sense of all these data and we deliver clean and very structured, standardized, normalized, very easy to use the information.

10:24 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. 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 Vaults. Your answer, Trust me, this is real.

11:28 I've got two questions. First question is there are 300 wearables out there. There might be a new one that comes out, you know, every week. Who knows who it's backing, what country it's from. Is there a threshold where you, like, look like, I'm not taking on a new wearable and actually devote time to that API and understand your system until it gets to X number of users. I'm asking you this one because we got a lot of entrepreneurs on the call here. Listen in to the podcast, and I feel like it's hard for entrepreneurs to say no. And you, you always want to just say, like, oh, there's a new device, let's just add it on. Like, we'll get to 305, we'll get to 3 10, and you realize, like, return on time. You know, you could have said no to those things and say, hey, once that thing gets some critical mass, then we'll add them on. That was my question. 1. That's, that's a really good question. And, and this is something that at the very beginning, we, we struggle, right, because you are focused on what you see outside. And if you don't have a lot of feedback from the client or potential client that depend on the, that you are, it's like, it's an, it's like you start to do a lot of Things and doesn't nothing works. So, so to answer your question is like we have to ask to our clients, that's the important thing. And first of all, the market share, who are the ones who are in the market share the most want, you know, is the Apple Watch, maybe the Fitbit. We make all these research and we start with something. Then when we have a client or a potential client, we start to ask, okay, what's the wor, which wearable do you need and why?

12:59 And that's when we start to create the things for our clients. And then what we identify is that the same problem and the same wearables that those are, those ones are the ones that need the other companies when you are in the same industry because we are working with insurance companies. So they have already a specific target of wearables because of the fda, because of the gdpr, you know, information outside because of different type of things they already know know which kind of wearables they need. So those ones are the ones that we have already got it. Okay, my second question is and, and just as a, an update for our audience and for you, this, this year we started doing every Wednesday we do a two minute drill from our Halo Academy. So I teach people on here's what revenue is, here's ebitda, here's recording revenue, here's what your balance sheet looks like, here's how you do, you know, member attrition, retention, all that kind of stuff.

13:55 What I'd like to do with you right now is I want to do like a cut, a two minute drill that will be that we do separately. And then it'll be like, hey, you want to listen to the whole podcast coming here? So let's do one on like the benefit of a B2B SAS company, why those companies are valued the way they are and why the recurring revenue is so sticky that to take you out and replace you with someone else is like a completely unnecessary financial decision and actually a much bigger nuisance that you would ever take that you're saving money on us. So I'm gonna start it. I've got Marco on here. We're doing our two minute drill segment. So Marco is with Rook. Start up a company that's a B2B SAS player which basically sits as middleware in the middle of all the wearables and all the data providers and, and actually getting that into their one of 300 app of choice or onto their fitness app, whichever they use. So Marco, when you started this company and thought about the business model, talk the benefits of how this business model works over time. Yeah, well, first of all it's because the pain that we are taking out, that's the first and important thing. Do we understood why they need this type of thing? What are the pains that we are taking out? Secondly is working with enterprises is the best way because it's take time. It takes a lot of time to close some deals and but once they are closed, you will receive a lot of feedback from them and you will be in the heart of the company.

15:23 Because we as an API solution, we live inside the platform, inside the app. So for them it's a no brainer to still work with us and make a partnership and sometimes invest in the company. So we have some companies that already invest in Rook because we are not anymore like a vendor. We are like a part of the complete ecosystem. So it's great to work with them. Yeah. And then on the SaaS side, software as a service just for our listeners here. When you think about that business model on a monthly basis, Marco's getting a dollar amount from each one of his clients. It's such a de minimis part of the entire financial expense structure on a per user basis that there will really be never any way for someone to come in and say hey, I can do this API better than you. Right. Given the interchange costs. And also when you think about it from an investor standpoint, when Rook lands a deal, they land that deal as long as that company stays in business and hopefully continues to grow. That is a a accelerating recurring revenue membership model through SaaS fees that allows these companies to trade at 5 to 10 times revenue historically, because it's hard to pull out, you don't really need to pull out that expense. And it's very, very unlikely that someone who's on either side of your client base and your user base are going to build the middleware because they're conflicted and they're not actually neutral party and. It'S predictable at the end of the day. So when you are talking with investors and also for you, you want

16:55 to hire people, everything that can be predictable. When you have some clients, that's perfect. That's the type of things that investors love. And if you're an entrepreneur and you do a B2B software play and it works like Rook does, then you can sleep at night instead of not sleeping anymore. So welcome to the Halo sector on that. Thanks Marco. Back to our originally started podcast. So Marco, thanks for the 2 minute drill. From a standpoint of, you know, where you take this company. Do you bring on more salespeople? Do you go international? Do you go and advertise at trade shows? Like how do you get this infiltrated? We're just on a call someone, one of the guys where they said like ABC Fitness a 38 year overnight success, right? Or another guy just told me it takes eight years to build something that people like really want in scale. So how do you think about that?

17:46 You know, Taekwondo is obviously, you know, you can win or lose and it, you know, play several matches in a day. So how do you think about the long game? Yeah, I think everything is a long game. There is not no easy, easy roads. It's a ways like at the end of the year is like the Taekwondo for example. If you want to. I am black belt for them. But to become a black belt is something that takes time. It's not something that happened from one day to another. It took you to learn a lot of stuff. You have to work every single day. You have to, you know, go to the tournaments, prove yourself. There's too many things that need to happen during the whole, you know, it took me at least 15 years to become a black belt and be a teacher and be someone in the industry. So it's not something that happened from one day to another. It's the same thing with companies is there is like a one day turn on and turn off new companies, unicorns.

18:42 It looks like that, but it's not even short. You know, it's like the, the egg and the chicken. There's a good book over there like the good for to great. It's. It tells you like hey, the chicken. It doesn't appear from one day to another. It take a lot of time. You have to be the perfect temperature, have to be the perfect environment to be to do you know that the chicken born. So it's. It's something that you know, everything is allowed around the long term. So on our side today we are this company technology company that helps to be a pipe. Like we strike the data, we structure the data and we deliver that data. But at the end of the day we want to become a data science company. A data science company is because we have a lot of data. We can help them to improve people's life. We can help to do business, you know, business smart business decisions with all this information. So it's like a helping them to do something with the data to insights, do predictions. Those are the type of things that we are in. That's our ambition.

19:57 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.

20:52 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. So. So one of the things. Well, first off, we got to get you a copy of our book, which is called Time to Win Again, which is basically 52 takeaways from Team sports to ensure your business success. We'll, we'll drop ship a couple of those for you, for your team guys. But we basically say it's good to great meets Where's Waldo? In like a bullet point, like cartoon character format. So we did that during COVID You'll love it. We'll get a book out. Second thing that I wanted to, to, to, to reference here with you on the, on the business model as it relates to, like, where this is going.

21:40 I use this term. Somebody asked me at a tech conference, like, what do you think of AI? And I said to like all these operators. And I kind of leaned in. So I'll just lean in because I got room in here. I'll be like, you can't have artificial intelligence until you have intelligence. Exactly. Okay. And I step back and I'm like, just think about that. You got to collect all this data. And then when you say, hey, I'm going to provide this information, you know, in this industry, I find that you might not have, you might have to do more than just give them the information. You might have to tell what it means and then what to do with it. So how do you feel about kind of not only just being in the middle, but saying like, I'm coming at you right now and I'm actually going to tell you what the ship means. I'm going to tell you how to monetize it or optimize it or you know.

22:23 Yeah, I mean that's again a really good question because I know everyone has a label say it's like a bumper sticker. It's like everyone has a bumper sticker about the AI. That's something that impressed me a lot. And it's, it's. I know, I know there is a hype over there and I think that will change everything. AI is changing everything, I believe so the problem is that if you don't know exactly what problem you are solving, who cares? The AI. Exactly, exactly. It doesn't make sense. So I, I, I with you. Definitely 100 with you. Yeah. So you know, in closing here, can you give us, you know, who the right clients are to that, that you're looking for right now, either what trade shows you're going to be at or how to reach you guys and, and so on and so forth? Yeah, well, first of all we have different type of clients, but mainly the ones who are looking and we can help with A lot of value is in the fitness industry. Definitely everyone who wants to extract the data but to engage with the end users to try to understand a little bit more around them, we are a perfect fit for them because we can give you a lot of insights today because we started with the fitness but rather now we are moving towards, you know, with the insurance companies. Insurance companies, they are doing very interesting things and they are moving to the preventive side.

23:52 Preventive more than reactive. So CPT codes are starting to move on the preventive side. So everyone who works with insurance companies and want to integrate this type of technology or working with an insuretech because normally the carriers are not the ones who are, you know, the, the state farms, they, they are not building the technology but they are working with insuretechs. The insurtechs are the ones who are building the technology. So with them that's where we can find a lot of clients over there in the digital health space too. So yeah, definitely the ones who once ap wearables in their own technology. We are the ones and we can help because it's very consultative. It's not something that, you know, we are not selling a product, we are selling consultation. Yeah, so, so Marco's company again is Rook. They are a flock of the most badass crows you're ever going to meet. Let them help you move your data, get results and then provide the AI as the special sauce. So Marco, look forward to meeting you in person and we're going to rip the two minute drill also, so thank you helping us unravel what a B2B SaaS business is and why it's so interesting and predictable and exciting once you kind of nail the actual business model and provide the results. All right, man. Good to meet you. Awesome. Good to meet you, too.