Maverick Community Update - December + January 2023
Maverick Community Update - December + January 2023

Maverick Community Update - December + January 2023

Table of Contents

🙏 Gratitude

We’ve moved out of our Playa Vista “test kitchen” location to focus exclusively on personal trainers and physical therapists, removing the group training element.

👍🏻 Here is what has gone well over the first year:

  • We’re on our way to building a trusted brand that is known for providing excellent service to the 150+ trainers, coaches, and group instructors that have used our space (77 Net Promoter Score → the Los Angeles fitness community loves Maverick).
  • We’ve hosted over 3,000 sessions and classes with only two full-time employees on payroll. We’ve found a way to make this business easy and cost-efficient to manage while providing excellent service.
  • We created camera, lighting, and computer infrastructure for individual coaches to produce Peloton and Apple Fitness quality production.

👎🏻 What hasn’t gone well:

  • We couldn’t negotiate a long-term deal with the Playa Vista landlord, and our rent was increased by 30% in the short term, with the likelihood that it would be increased by 40-50% if we wanted to stay long-term. Additionally, there have been countless issues with this location, including smell pollution, sound pollution, and poor service + communication from the landlord’s management company. We’ve discussed our agreement with our attorney and ended our lease ~3 months early to preserve our capital and focus on the future of Maverick.
  • Our revenue capped out at a high of $25,000 / month after 6 months (break-even = $35,000) and stayed flat for the next 6 months (“why” explained in the next bullet below).
  • The group fitness instructors, while they love Maverick, haven’t been who we thought they were in terms of their earning potential, commitment to full-time work, and consistency. We’ve averaged ~1 canceled class per day and have found even the top group instructors to be less than ideal Maverick partners, most earning well under six figures.

In summary, we’ve been doing a lot of the right things for mostly the wrong people, and we’re putting all our focus and financial resources into using these learnings to build a business around helping the most successful personal trainers and physical therapists.

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” -Warren Buffet

🏋🏻‍♀️ Why personal trainers & physical therapists?

  • Successful personal trainers and physical therapists have made the entrepreneurial leap, so they’re already working for themselves.
  • Successful personal trainers and physical therapists are working 30+ hours per week and are making six figures. They are committed and working full-time.
  • Facilities for personal trainers have successfully existed for the past 20+ years. We know this model works, and we see opportunities to improve the existing model and build a worldwide brand that’s known for helping the most successful trainers while also doing good for the world.
  • Christian, our Co-Founder, has 20+ years of one-on-one training experience and knows what the most successful trainers need.
  • There are 340,000 personal trainers in the US. This number has increased by 21.5% since 2012 and is forecasted to grow by 19% by 2031.

🤩 What makes our model different from existing models that employ trainers like Equinox and DogPound, and models like Self-Made Training Facility, which already allows trainers to run their own businesses?

→ Trainer retention is our most important metric, and we’re partnering with trainers in order to attract the very best. Here is what partnership means to Maverick:

  • Democratizing gym ownership - Maverick is partly trainer owned:
    • In addition to giving trainers space and tools to run their own businesses, we’re offering trainers the ability to earn ownership in Maverick. The more a trainer trains their clients at Maverick, the more equity they can earn in Maverick. Sharing equity creates high switching costs for the trainers, which means they will want to stay at Maverick for the long term (captive customers). Trainer equity solves a gym’s biggest issues → high trainer turnover and poor customer service due to lack of accountability.
  • System to grow that allows trainers to scale based on their knowledge + brand and go beyond trading time for money:
    • Successful trainers have excess demand but no system to organize and monetize it. We will help successful trainers monetize their waitlists by teaching junior trainers their methods, earning them a cut of revenue from clients they don’t have to train in person. Our goal is to help successful trainers work less and make more money.
  • Top-of-the-line equipment:
    • Our equipment can’t be compared to what you can find at the gyms above but more with equipment at professional sports facilities. Learn more about our equipment brands here: Keiser, Eleiko. Trainers can use our facility to train everyone from pro athletes to older people who need physical therapy work.
  • Commitment to do good and help others do good:
    • We’re committed to opening facilities in both affluent neighborhoods and in poor, underserved communities, which are “gym deserts.” We see a white space in “gym deserts” because there is little to no competition, and we believe the empowering the trainer model can lead to a greater buy-in in these communities. The fitness industry focuses on the 20% of people who already work out, ignoring the 80% who don’t, and much of the 80% lives in poor, underserved communities.
    • We’ve established a 501(c)3 non-profit to run in parallel with our for-profit to help train and certify aspiring trainers. We’ll give trainers at Maverick the ability to be mentors and give back if they want to be involved. People want to work at and for purpose-driven companies that are building something beyond themselves.
  • Marketing and sales assistance:
    • We’ll continue to leverage the technology we’ve already been utilizing to support trainer’s hybrid video approach and social media assets.

In short, we’re making successful trainers’ dreams come true by creating a business that they need if they want to grow.

🏦 On the business side, our model maintains higher margins than other gyms for a longer period with less volatility:

  • Fewer employees
    • The trainers are our customers, not our employees. Trainers at Maverick run their own self-sustaining businesses, which require us to have no in-gym staff for marketing and sales. We have one employee per day cleaning the facility and making sure trainers are happy. Additionally, our gym can be managed, and all electronics can be troubleshot remotely (HVAC, music, cameras, etc.).
  • Shared space + pay-per-use (co-working)
    • Trainers do not need their own studio and can share space and equipment at Maverick. Each trainer requires ~250 square feet, and the economics of sharing space (co-working) and charging per hour is extremely lucrative and low-touch.
  • Low turnover, long-term sustainable model
    • Our trainer equity plan allows us to build a more sustainable long-term model where trainers stay. This leads to higher sales (higher occupancy), less marketing and sales costs because we don’t have to focus on bringing in trainers or clients, and a more predictable and sustainable business. The average annual turnover for personal trainers is 80-90%.

🏪 Here is an overview of our real estate strategy. Click HERE to watch a 60-second overview of a buildout we’re putting together.

  • The ideal gym size is 2,500 – 4,000 square feet
    • Scarcity is important - each location will only fit 15 successful trainers.
    • Small, well-designed bathrooms with limited showers.
    • We’re working with CAA to design beautiful and inspiring gyms that have natural light, high ceilings, and natural materials (concrete, brick, wood, etc.).
    • The future goal is to include a recovery area (sauna, cold plunge) and co-working space for trainers and their clients. Third place philosophy in mind for the trainers.
  • There is trainer demand for over 300 locations in the US, and our goal is to build an international brand that is known for helping the most successful trainers in the world.
    • We’ll build locations in affluent areas as well as in poor, underserved communities with “gym deserts.” We see a lot of opportunity in the “gym desert” communities where there is little competition.
    • Maverick can work in any city with busy trainers, as the rent (per session fee) we charge trainers will be based on the rent that we pay our landlord. The more affluent areas will require a higher rent from trainers, and those trainers will demand a higher hourly training charge, and vice versa for trainers in “gym deserts.” Further, the “gym desert” location’s rents are low, $2.50/sqft (~$7,500/month), that there are opportunities to improve the unit economics of the gym because the revenue (per trainer session fee) doesn’t need to be as reduced as the rent (20% reduction on revenue fee vs. 40% reduction on rent).
    • We focus on the top 1% of trainers who are busy with waitlists (3,400 out of 340,000 total trainers in the US), and each gym, on average, will house 10 trainers → 340 locations.
  • We don’t need to be paying high rent to be located on the highest-traffic corner
    • Foot traffic is not essential, and clients will travel 15-20 minutes to see their favorite personal trainers.
  • Each facility buildout costs between ~$300K-$400K depending on the size of the facility
    • $250-$300K for equipment and flooring
    • $50-$100K for design elements
    • 1–2-year payback period

📈 Here is how we’re looking at growth and scaling Maverick:

  • Build 2-3 of our own corporate facilities and then franchise
    • The first gyms will be in Los Angeles. We’re targeting West Hollywood, Santa Monica, and Inglewood or South LA.
  • Maverick is the perfect franchise model
    • Great cash flow from day 1 (high margins)
    • Low build-out costs
    • Little management for franchisor (limited number of employees)
  • Franchising allows us to grow fast without constantly raising capital
    • There are network effects and economies of scale with adding gyms, and the faster we can scale, the more we can help the trainers while quickly increasing the value of the business.
  • Successful franchise companies are selling for over 10x multiples
    • It would take 67 locations to achieve a $100M (assuming $150K EBITDA, 29% margin per location).

✳️ Current challenges and risks:

  • Lack of capital
    • We moved out of Playa because we have limited capital and need to focus on our new business model.
  • Finding locations
    • Most landlords in Los Angeles are looking for credit tenants (large national brands like F45, Orange Theory) and are asking us for personal guarantees. Personal guarantees are worse for the business because they remove flexibility in case one gym location isn't doing well due to poor location, an unhelpful landlord, etc. While we're in the early stages of proving our model, maintaining flexibility is essential.
  • Partnering with the most successful trainers
    • We need ~25 sessions/day to break even and 40 sessions/day to be profitable at 30% EBITDA. Our number one focus is finding the most successful independent trainers to become Mavericks (the number of trainers depends on location size). Like any B2B business, finding customers takes time but, also like most other B2B businesses, retention is high once customers are on board.

💾 We believe the future of fitness over the next 10 years will look like this:

  • More personal, coach based
  • Younger, up-and-coming trainers want to work for themselves versus working for big corporations
  • Recovery + longevity focused
  • Co-working – third place
  • More focus on the 80% of people who aren’t being marketed fitness (people in poor, underserved communities are not currently working out)

👀 Things to look forward to:

  • We’re in negotiations on a new facility in West Hollywood which is ~3,500 square feet, is located in a great area, and is very reasonably priced. Watch a short virtual tour of the space HERE.
  • Marcellus Wiley is joining Maverick as a Co-Founder. Marcellus is an ex-NFL professional athlete who is currently working in media (formerly with ESPN, now with FOX SPORTS) and has connections with the NFL, and every successful professional athlete and trainer. This partnership with Marcellus is a game-changer for Maverick.
  • We’re taking our learnings over the past year and implementing them into a strategy that we know personal trainers want and need. We’re persistent, and we’re the right team to conquer this opportunity. The founding team is all in on Maverick.
  • We’re releasing new branding for Maverick – see our new website HERE and our IG HERE

🙏 Gratitude

  • CAA team for creating our new brand identity – Tem, Benny, Si, Oli and Stu… you’re all very talented.
  • Rick del Sontro for talking to me about Madabolic’s franchise success. And, Jared Okun and Michael Rabin for making this intro.
  • Jillie Davis for talking to me about her experience with Soul Cycle and giving insights into helping fitness professionals.
  • Charles Seltzer for sharing Crosscourt’s growth story. I’ve been loving playing bball at Crosscourt. Keep up the good work.
  • Rachel Lea Fishman and Josh Archer at Arketa for the intro to Charles at Crosscourt and for helping with our custom software needs (special shout out to Maggie for all of your help).
  • Ryan Morgan at Crossbeam for the venture debt tutorial. Thank you to Drew Karimlou for this connection!
  • JR and Taraj from Up n Go for letting us beta your new QR code software to rent gear from the gym with no employees required.
  • Brandon and Marcellus for joining the team and sharing your expertise, connections, and resources.
  • Ale for helping us create excellent content.
  • Beatrice for your help with the Fitness Fest in Playa.
  • Vansa Chatika via OnDeck for the fitness + community brainstorm.
  • Jim Crowell for the wisdom you’re consistently giving on our weekly calls.
  • Jenna, The SageHouse and Kelly Cooper for your copywriting help! The website copy is much better thanks to your help.
  • Gary @ Keiser for helping us with trade show passes!
  • Dillon Baer at Harlan Capital for taking the time to learn more about Maverick (and thank you to Ryan Morgan for the intro!)
  • Amira Polack for your unlimited intros and support!
  • Sam Karl @ KAMPS – great to see your new LA space and take a class.
  • Nick Kim for asking insightful questions and taking the time to learn more about Maverick. And, for your intro to Jillie Davis
  • Shawn Xu for your excellent coaching and friendship.
  • BXP team for taking the time to learn more about Maverick and seeing if we could fit at your property in Santa Monica.
  • Xan and Jake at Beta for your real estate advice and support.
  • Nathan Jensen at Radiance for staying in touch and being interested in our model as we grow.
  • Simone Khana at AJG insurance for your insurance guidance.
  • Team Maverick → Xavianca, Yoshi, Rey, Luca, Ale, Arshi, Santiago, Kristine, Steve, Christian – for all of your hard work and focus on putting our customers first!
  • Lacey Stone for your constant encouragement and excitement for Maverick.
  • Kim at Skop for sharing fitness connections and sharing startup stories with each other.
  • Fred Haney at Monday Club for the opportunity to pitch the group and receive helpful feedback (special shoutout to Eli Eisenberg and Cynthia Kirkeby for digging into Maverick). Thank you to Brandon for the intro.
  • Mika Leah for the brainstorm about the fitness space – excited for Goomi!
  • Nick Hensel for the brainstorm about influencer marketing – excited for Pickle!
  • Erin Schirack for the brainstorm about Mav Pass and how to best help wellness professionals – excited for Chi-Society!
  • Kim Stahler at Walla for the donation to Maverick Forward – you’re amazing!
  • Ilana Ettinger for intros and brainstorming the future of employees and work – excited for Urbane
  • Eric Posner at Sweve – excited for your great concept – fun to brainstorm the fitness space with you.
  • Alex Angeline – I always enjoy brainstorming the proptech space with you.
  • Jonathan Miller at Fitrepreneur for showing interest in Maverick and asking insightful questions.
  • Virginie Raphael – really enjoyed speaking with you. Excited for Full Circle.
  • Mark and Birgar at Incrdbl Studios for building our website and all of the animation. Excellent job!
  • Armand Patella for all of the intros you’ve made and our great brainstorming sessions.
  • Rick Bhardwaj – amazing to see Guru gaining such great traction. I always enjoy brainstorming the fitness space with you.
  • JT at Adidas for our pickleball paddles!
  • Silke and Kati and everyone at RSG Group for looking out for Maverick, including tickets to trade shows and allowing us to tour Heimat – unreal space!
  • Jeff Cayley for our discussion on equity. I’m always learning from you!
  • Alexa and Narges for always believing in us!

We appreciate your support. Please reach out via text, call, or email if you want to discuss further.