With Conor O’Loughlin, CEO, Glofox.
COVID is leading to a rapidly accelerated change in our business, our customers and our industry as a whole.
In the second episode of our “Reimagining” podcast, Conor O’Loughlin, founder and CEO of Glofox, shares his COVID experiences, rescuing, recovering and ultimately reimagining his business and industry.
Conor is a professional rugby player, turned tech entrepreneur. He founded Glofox back in 2013 to merge his loves of fitness, tech and business and seven years later, Glofox is a technology platform serving thousands of gyms, studios and fitness franchises all over the world. At the start of 2020, having just completed a new round of investment, Glofox was growing fast and then in March 2020, every single one of their customers closed their doors.
When did you realise the significance of this pandemic?
It really hit me when I saw it in our numbers. Our customers were closing their doors around the world. Up until then, I had a more localised lens of the virus having been in both LA and in Ireland and honestly I thought Ireland was overreacting. We have customers in 60 countries and I just could have never previously imagined them all closing for business. But that’s what happened and within a matter of a few weeks it really took hold and that's really when it hit home.
How did it feel?
I had just moved to LA with my family, with two kids under two and we were in panic mode to get back to Dublin. So it was a bit of a mission to get flights out of LA and to move back and deal with all the logistics. At the same time, as you can imagine the business was demanding a lot of my time, we were just closing off an investment round and things were very uncertain. Everyone wanted more and more of my time demanding clarity and reassurance. So balancing the two - work and personal - was really difficult. When I think about it now, it was quite overwhelming, but thankfully, I didn't really get much of a chance to stop to think!
What saved me personally was having a supportive partner; that was probably the biggest factor in helping me to push forward through this time of crisis. So we got back to Dublin and into a routine which we're still in and which we know works for now. Obviously we have been forced into remote working and into this blended work life balance, but we've seen positive aspects to that too; we have more family time and a greater understanding for people who have kids jumping around in the background on calls. So there have been positives; you just have to make it work.
The fitness industry has been hard hit by this, but there are opportunities too. We've seen a lot of positivity in our industry and the changes we are seeing are creating excitement for a lot of what we're building toward. But this change has been hard for everybody, everybody's going through the same process and trying the best they can to get that balance right between home life and business.
How did you come to terms with the changes you need to make to ensure survival?
This crisis has presented opportunities for us but, as with a lot of other businesses, we were hit hard with our forecasted revenues being cut in half and worse. So we had to make quick, decisive decisions and take painful actions. We cut costs in every corner of the business. We wound down some of our offices, we implemented company-wide pay cuts, redundancies and furloughs. I came to terms with this because it had to be done; the actions we took had to be drastic because there was so much uncertainty.
We were faced with two hard truths.
Firstly, we didn't know (and still don’t) when our customers are going to reopen their doors and whether there will be a second or third wave.
Secondly we believe that a return to “business as usual” is a false reality.
Those two hard truths forced us to build a far more focused business strategy, and then look at how we should resource accordingly.
Tell us about the mind shift from playing to win to playing to survive?
I think of it as a survivor's winning mentality.
We're coming to what I believe will be a U-Shaped Recovery and nobody can predict the scale or length of this recession and what the extended recovery could look like. So capital is going to be more difficult and costly to raise. Now we're lucky that we have just gone through a recent round and are in the fortunate position that we could act quickly and give ourselves more financial optionality.
But we are also building a path for survival in all scenarios. Revenues fall far quicker than costs so you have to get ahead of that and make aggressive changes.
At the same time the competitive landscape is quite interesting. Our industry is made up of a lot of older competitors that lack the agility to adapt to the shifts that the industry is going through and at the other extreme, there are competitors at a much earlier stage who may find it difficult to keep their head above water.
So we’re in quite a nice position. We've now got a leaner team, but are still investing heavily in R&D, innovation and creativity so we see this as an opportunity to create distance between us and our competitors by being more innovative and more efficient and coming out ready to accelerate growth, when the time is right.
So there is an opportunity in this crisis, that depends on a shift to the survivors winning mindset. We are building a far more efficient business and it feels quite good now when we are looking at those efficiency metrics. We uncovered spend that was wasteful and needless and are building a healthier business and future.
What are you now doing differently?
Customers and the team are the two most important things for us to focus on.
We serve thousands of SMBs in over 60 countries and they're going through a really tough time at the moment. And we have focused our efforts on helping them navigate the pandemic.
We allocated a ton of our content resources to developing a dedicated COVID-19 knowledgebase and running webinars on everything from how to run digital classes to how to adjust their financials and change their operations.
We’ve accelerated our product development and roadmap on that shift to digital fitness, focused on two areas. The first is the ability to allow our customers to seamlessly deliver live classes by our platform. And the second was to allow them to offer on demand content, primarily video, that they are able to segment by various membership types. So both of these capabilities enabled our customers to earn money while their doors were closed. But it also helps them to accelerate their own transition into digital environments, which is going to be a core factor for their future success post COVID.
Then in addition to that we started benchmarking across different countries, delivering a report to all our customers every week on the trends we were seeing and how they benchmarked against them.
We also implemented deep discounts and free periods to ensure clients could keep their business open and they didn't have to cancel the software from which they're getting benefit in this time that they were in lockdown.
And lastly we even gave our smaller customers our premium features for free for a period of time, to help them market to their members and ensure they were optimizing their membership retention.
Then from the team perspective, we realised that over communicating was so important. So we shifted our cadence and comms and now do all hands meetings twice a week. We’ve started implementing more sophisticated remote working practices, which wasn't too much of a leap for us, but we have matured are practices around small things such as how we run the meetings, setting up social interactions, doing joint workouts, having ad hoc coffee meetups and more. And it's all created more psychological safety with the team too and more sense of unity.
We’ve had such a positive response from the team that our employee NPS is at an all time high, in spite of going through pay cuts and layoffs. It’s testament to the reaction of the team and to how well they all rose to the challenge and that’s exciting to see. But obviously, it's something that we're staying very, very close to. I think the key theme for us is over communicating with our customers and staying very close to what's happening and over communicating with our team as well.
Tech founders are highly resilient and adaptable so how do you see the next six to 12 months playing out for Glofox?
It's obviously tough for any business to predict how long this is going to go on. But we're starting to see the green shoots of recovery as markets around the world open, based on the data that we have. For us we are very practical about what a positive scenario looks like, what our base case is and what a doomsday scenario would look like. We have various decision criteria over the next six to 12 months to help us determine what we might have to do, if for example we had to activate the doomsday scenario. And while that is very negative, it still gives us a lot of comfort to know that in all scenarios, we will withstand this.
The business is now obsessed with efficiency and efficiency metrics; revenue efficiency and R&D efficiency in particular. We're constantly looking at our normalised cash burn and base burn. And we see a path for us to have a healthy, profitable business and not be reliant on capital markets coming back anytime soon.
So that all gives us comfort that we have really leaned up our business and we can accelerate out of this crisis.
Then from the market side, it's extremely interesting. There are a lot of opportunities that we're ideally placed to take advantage of. We're spending a ton of time out in the market, understanding the dynamics and the behaviors of what our customers are seeing and dealing with. I don't think that COVID invented any new behaviors, rather it accelerated these existing trends. It's catapulted these bricks and mortar businesses into the future and they are looking for direction and they're looking for a path. It's a really important role, where we can advise on how to sustain a lot of these new competitive threats and opportunities that just weren't previously there.
We’ve developed these new digital solutions, but now there's also considerations around how businesses are reopening and now we're supporting them in terms of capacity management, touchless check ins and social distancing too.
Then internally, as a team, we're trying to balance our resources to make sure that we are making the right bets not just to serve today, but to serve us into the future, post COVID.
COVID is leading to rapidly accelerated change in many businesses. So how do you imagine the fitness industry playing out?
There are businesses and gyms out there that are never going back. They're going to continue to run virtual classes, they have seen the digital light.
Then there's others that can’t wait to cancel their Zoom account and open their studio doors!
But overall the biggest change is the shift towards the customer, offering fitness on their terms.
Pre COVID most of the fitness industry was based on the four walls of the fitness business and fitness business called the shots. Now it seems like this omni channel fitness will become a thing - building a digital offering on top of physical locations makes a lot of sense. But practically, pulling it off is tough, especially for smaller businesses. And that's a role that we see ourselves being pivotal to. It's not necessarily saying that every fitness business in the world is going to run a combination of virtual classes and on site classes and be a hybrid model. But I think what will happen is that fitness businesses will need to provide consumers with fitness on their terms.
Then there are a lot of interesting things that are happening generally in the industry to around instructors and trainers being able to unbundle from gyms and studios themselves to be able to monetize their own audience.
So there's a lot going on in the industry, competitive threats for sure but also incredible opportunities, opening up the possibility of additional revenue streams, additional services and accelerated change.
So how do you feel now?
I actually feel very excited. Obviously it does not feel good to be sitting here when pretty much all of your customers have their doors closed and your growth has been significantly curtailed. But I think how the industry is changing and how we're positioned is quite exciting. We're nicely placed to propel ourselves into a market leading position. The way our team has responded and our customers have reacted is bringing me a lot of pride and motivation for the road ahead. While the future is very uncertain, I think we're in a good position to come out of this and to blaze a trail for the fitness industry around the world in 2021 and beyond.