Amy Garvoille wanted to get back into the gym.

She was looking for a routine and stumbled upon a fitness app called Aaptiv. It offers audio workouts where trainers coach users through the moves and encourage them throughout the session. Garvoille signed up for a free trial and was hooked after two workouts.

“I’ve never been someone who works out,” said Garvoille, a 45-year-old high school English teacher in Madison, Wisconsin. “I always get bored, and when I do work out, I’ll say I’ll walk on the treadmill for 30 minutes. I never really pushed myself and I didn’t realize that until I tried Aaptiv and saw it wanted me to go to level 8, and I thought, ‘Oh my God. I’m going to die.”‘

When Ethan Agarwal founded Aaptiv in 2015, he wanted to create something that would give people access to a personal trainer wherever they are. He came up with the idea while traveling as a consultant at McKinsey & Co.

He had gained around 40 pounds and wanted to get back in shape. He tried booking sessions with personal trainers, but it was hard in some of the places he traveled for work.

He saw an opportunity to create something that would give people access to a personal trainer no matter where they lived and at a significantly lower cost. There were other apps on the market that used video instruction, but none that used audio.

Agarwal decided to focus there, creating workouts ranging from yoga classes to marathon training, all with coaches narrating the tracks. The idea intrigued Insight Venture Partners. The firm led Aaptiv’s Series A and Series B rounds of funding, which raised $38 million.

“You’re not sitting and staring at a screen while you work out, but the tech world didn’t appreciate that,” Insight Venture Partners Vice President Harley Miller said. “What (Agarwal) and his team are building really resonated with us and its regard for the common consumer and natural human behavior.”

Erica Goldenberg, a 31-year-old account manager at a tech start-up in Chicago, was nervous about not having video. But she has been using Aaptiv for the past year and found the instruction is clear enough to guide her through treadmill exercises and strength workouts.

It’s a twist that has helped Aaptiv grow to about 200,000 paying members since the app launched in January 2016. More than 14 million Aaptiv classes have been taken since then.

“I would say there was a void in the market, a white space in the category for a long time,” said Robin Thurston, who co-founded MapMyFitness, which was acquired by Under Armour in 2013. “The devices for a while had to catch up. I think Ethan took advantage of that, and now it wouldn’t be that uncommon during a workout to have Aaptiv talk to you and guide you through that program in the gym or outside.”

Thurston gives Agarwal credit for what he’s accomplished with Aaptiv because it’s hard to break through the crowded digital health and wellness space. It can also be tough to make money.

Aaptiv relies on subscriptions for revenue, while some other apps use advertising. Last year, Agarwal focused on shifting its subscribers from monthly to annually.

He realized that like many start-ups, Aaptiv was burning through cash. It was growing quickly and spending enormous sums on marketing to keep adding subscribers. He wanted to change that so Aaptiv had a steady, reliable revenue stream.

Aaptiv increased the monthly fee to $14.99 from $10, or nearly $180 a year, compared with a flat $99.99 for an annual membership. About 90 percent of Aaptiv’s new members sign up for the annual plan.

The idea worked because fitness lends itself to long-term commitments, Miller said. Some other wellness companies in Insight’s portfolio, like meditation app Calm, have also moved to this model.

That gives the company a steady stream of revenue and allows them to focus on improving the experience for its existing customers rather than only thinking about acquiring new ones.

Fitness fads are always changing. Agarwal knows that. He tries to keep members in Aaptiv’s ecosystem by adding new classes from across the spectrum.

Still, Miller knows people substitute it with other workouts. Members Garvoille and Goldenberg both take classes outside of the app.

Agarwal says the company will improve as it ages and gathers more data. He insists Aaptiv isn’t a fitness company, rather it’s more like Netflix and Spotify. He admires the companies for using data to inform their strategy, like creating shows and building playlists.

Agarwal predicts Aaptiv could go public in 2020. He says it won’t suffer the same fate as boutique fitness brand SoulCycle, which pulled its IPO registration last month, citing “market conditions,” three years after filing it.

One criticism companies like SoulCycle have faced is they only work in major metropolitan areas where people are willing to spend $35 per class. The difference between Aaptiv and others in the space, Agarwal says, is it’s affordable and accessible wherever you are.

“You have to ground passion with sound business,” he said. “My job is to build a great product, inspire and motivate people. If I don’t do both, there’s a high chance of failure.”

Source: Tech CNBC
This fitness app wants you to have a personal trainer in your pocket