Poised For Expansion The Future Of The Fitness Industry

300% Growth In 10 Years ?

@BryanKORourke, CSO, CEO, Principal Houston Golds Gym, FIT-C, Vedere Ventures

bryankorourke.com

bryankorourke.com @bryankorourke

GREATEST TIME IN HISTORY TO BE IN OUR INDUSTRY

AND BUSINESS AS USUAL IS DEAD

HOW WILL YOU RESPOND ?

MY STORY STARTS IN 1983

1993

I INNOVATED ACROSS INDUSTRIES

1996

INTRODUCED AUTOMATED ESPRESSO

1997 GOT INTO HEALTH CLUBS

2005 GOT INTO GROUP FITNESS

STARTED INNOVATING AGAIN 2006 #TheCloud

AND AGAIN 2007 @bryankorourke @GaryVee

PAST 10 YEARS ENTERED AGE OF ACCELERATIONS

2016

http://www.fittechcouncil.org/podcast/

WE KEEP INNOVATING

GROWTH REQUIRES INNOVATION

1 BILLION MEMBERSGROWTH REQUIRESDISRUPTION

SAPERE VEDEREDA VINCI TO KNOW IS TO SEE

RISING TIDES LIFT ALL BOATS

DISRUPTION IN THE ERA OF MASS ACCELERATION

DISRUPTION EXAMPLES : RESTAURANTS OFFER A

DINNING EXPERIENCE

THIS OFFERS A DINING EXPERIENCE

BANKS OFFER FINANCIAL SERVICES

THIS AI OFFERS FINANCIAL SERVICES

CONCERTS OFFER MUSICAL ENTERTAINMENT

THIS APP DOES THE SAME

THIS CLINIC OFFERS MEDICAL CARE

THIS APP OFFERS MEDICAL CARE

HEALTH CLUBS OFFERHEALTH & FITNESS EXPERIENCES

DISRUPTION: THIS OFFERSHEALTH & FITNESS EXPERIENCES

DISRUPTION: THIS OFFERSHEALTH & FITNESS SERVICES

THIS OFFERSHEALTH & FITNESS EXPERIENCES

DISRUPTION: THIS OFFERS FITNESS EXPERIENCES

AND SO DOES THIS

INDUSTRY DEFINITIONS HAVE CHANGEDTHE LINES ARE BLURRED

WHAT ARE FITNESS EXPERIENCES BECOMING ?

HOW WILL THE INDUSTRY EVOLVE ?

WHAT WILL MEMBERS REALLY WANT ?

HEALTH CLUBS HELP PEOPLE GET HEALTHY & FIT. . AND

WEVE ENTERED A NEW ERA

YOU MUST APPLY FRESH THINKING TO REACH MARKET POTENTIAL

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

DISRUPTION BY CONVERGENCEOF TRENDS

PEOPLES BEHAVIORS

HEALTH & FITNESS INDUSTRYCONVERGENCE DRIVERS

Old school definitions dont apply - dizzying diversity

Bifurcation : mass affluence driving niche luxury models and middle class driving utility businesses.

Urbanization : cities are driving global growth and represent the majority of health club operations.

48

Power has shifted to fitness consumers Exane : 10% luxury is digital now 40% by 2020

3 CONSUMER TRENDS

G R E AT E R U T I L I T Y A N D C O N V E N I E N C E & R E L E VA N C E F O R

U S E R S

PERSONALIZATIONA C K N O W L E D G E M E N T A N D

R E C O G N I T I O N E M B R A C I N GA M I S S I O N

ENGAGEMENT

FLAUNT CULTURE

NOT JUST FITNESS

BENEFICIAL INTELLIGENCE

N E W WAY S O F D E L I V E RYT H AT I N C R E A S E U S E

A N D R E L E VA N C E

SERVICE REDEFINITION

OMNI-PRESENCE

TRENDS + VISION = REINVENTING MODELS

3 KEY CONSUMER TRENDS

PERSPECTIVE SHIFT

STATUS

Personalization: greater utility, convenience & relevance

BENEFICIAL INTELLIGENCEEnhancing User Experience ThroughBuilt In Intelligence

OMNIPRESENCENew Channels, Nuanced With Context In The Right Place At The Right Time

Personalization is hard

Engagement: acknowledgement recognition mission

STATUS:Experiences Via Design, Gamifying, UX, Community

FLAUNT CULTUREAllow Users To Remove Barriers And Celebrate And Flaunt An Authentic Transparent Experience

Service redefinition : delivering new and different

PERSPECTIVESHIFT:Reposition Renew, and Refresh Service Offerings In New Ways

NOT JUST FITNESS:Lifestyle, Mindset, Nutrition, Holistic, Longevity

G R E AT E R U T I L I T Y A N D C O N V E N I E N C E & R E L E VA N C E F O R

U S E R S

PERSONALIZATIONA C K N O W L E D G E M E N T A N D

R E C O G N I T I O N E M B R A C I N GA M I S S I O N

ENGAGEMENT

FLAUNT CULTURE

NOT JUST FITNESS

BENEFICIAL INTELLIGENCE

N E W WAY S O F D E L I V E RYT H AT I N C R E A S E U S E

A N D R E L E VA N C E

SERVICE REDEFINITION

OMNI-PRESENCE

TRENDS + VISION = REINVENTING MODELS

3 KEY CONSUMER TRENDS

PERSPECTIVE SHIFT

STATUS

CONSUMERS TECHNOLOGY

GLOBALISM ECONOMICS

4 HEALTH CLUB INDUSTRYCONVERGENCE DRIVERS

HEALTH CLUB INDUSTRYCONVERGENCE DRIVERS

TECHNOLOGY

P H I L O S O P H Y O F E . O . W I L S O N

W E H AV E PA L E O L I T H I C E M O T I O N S , M E D I E VA L I N S T I T U T I O N S A N D

G O D - L I K E T E C H N O L O G Y65

@Bryankorourke @Kevin2Kel lyFREE COPY OF THE BOOK

The greatest products of the next 20 years have not been created yet.

Kevin Kellys View Of What Will Happen With Technology12 Inevitable Forces

68

01 Becoming 02 Cognifying 03 Flowing

04 Screening 05 Accessing 06 Sharing

Move from fixed products to constant upgraded services and

subscriptions.

Make everything smarter via cheap AI from the cloud.

Unstoppable streaming. You are certainly now in the data

business.

Turning all surfaces into screen experiences.

Access to services at all times move away from owning assets.

Mass-scale collaboration. Key innovations built on sharing.

BE CO FL

SC AC SH

SCREEN

SCREEN

AC & CO

12 Inevitable Forces

72

07 Filtering 08 Remixing 09 Interacting

10 Tracking 11 Questioning 12 Beginning

Harnessing intense personalization to anticipate

desires.

Unbundling products and basic parts and recombining them in all

possible ways.

Immersing ourselves inside computers to maximize

engagement.

Total surveillance for consumer and citizens benefit.

Promoting good questions is far more valuable than good

answers.

A system connecting all humans and machines in a global mix.

Kevin Kellys View Of What Will Happen With Technology

FI RE IN

TR QU BG

CYBER PHYSICAL SYSTEM : THE HOLOS

CONSUMERS TECHNOLOGY

GLOBALISM ECONOMICS

4 HEALTH CLUB INDUSTRYCONVERGENCE DRIVERS

CONVERGENCE DRIVERSECONOMICS

CONVERGENCE RESULTS IN DIVERGENT MODELS

New Delivery Systems

Profit Margin

Dupont Formula : Return On Equity

78

EBITDA

SALES ASSETS EQUITY

SALES ASSETS

Asset Turnover Equity Multiplier

X X

Profit Margin

Dupont: Return On Assets Where the Growth Is

79

EBITDA

SALES $3M AVG

SALES $3M AVG

Asset Turnover

X =53% 100% 53%

Profit Margin

80

EBITDA

SALES ASSETS $1.6M AVG

SALES $1.6M AVG

Asset Turnover

X =34% 100% 34%

Dupont: Return On Assets Where the Growth Is

8 Distinct Fitness Delivery ChannelsHealth Club Models

82

High End Full Service

Middle Market

Low Price HV Boutique

Full Service, Full Amenities, Higher

Prices, Digital Integration

Financially Challenged, Low Pricing Power,

Legacy Burden

Hi-Growth Space, Low-Cost, Low-

Service, Upcoming Digital, Lower Markets

Program Focused, Cross Over Lifestyle,

Multiple Monetization, Omni-Channel

Health Club Models

83

Lifestyle Community

Pure Digital

Medically Integrated

Alternative Models

Outdoors, Indoors, Lifestyle. Connection,

Data Driven, Streaming Content, Anywhere

Anytime,Home Market and More

Outcomes Based, Integrated, Population

Health

Corporate, Multi-Family, Alternative

Models

8 Distinct Fitness Delivery Channels

Business Models Will Merge Different Aspects Of Each Of These With ALL INCLUDING DIGITAL COMPONENTS

Merging Of Offerings - Key Digital

84

High End Full Service

Community Digital Medically Integrated

Middle Market Low Price High Value Boutique

Alternative

OLD MODEL OF VALUE

CU

STO

MER

S

TRANSACTIONS / $

IE: Valuable Companies

NEW MODEL OF VALUE

REC

EPTO

RS

COGNITION

IE: New Valuable Companies

CHALLENGE IS NOT THE TECHITS PEOPLES MINDSET

Good News : A Growing Market: sick care is not sustainable and public primary prevention is the answer. Technology will help. #PassPhit

Personalized Primary Prevention Is Here - Your DNA

S CURVE REINVENTIONTHE PATH FORWARD

HERE WE ARE : CONSOLIDATION AND REENGINEERING - S CURVE

91Bricks & Mortar Biz ModelsKey Driver Is Profitability

DIGITAL OMNICHANNEL MEDICAL BOUTIQUE LIFESTYLE COMMUNITY

HEALTH & FITNESS INDUSTRYCONVERGENCE DRIVERS

GLOBALISM

100,000 Yrs. Ago, 6 Dif ferent Human Species Inhabited Earth - Cooperat ion Key

How we operate and invest must be mindful of sustainability

We must cooperate globally to impact policies that address the huge risk and opportunity of global health

We must globally share our insights and cultural diversity to drive innovation and success

HOW WILL YOU RESPOND ?

OBJECTIVE QUESTIONS

DESIGN ENHANCED PROFIT

UX OMNIPRESENCE SERVICE SCOPE

CLUB OPERATORS FOCUS

TOOLS & RESOURCES@IHRSA @FITTECHCOUNCIL @BRYANKOROURKE

S CURVE REINVENTION

FORWARD LOOKING PLAN

Poised for growth Disruption Will Make Our Industry Better

SAPERE VEDEREDA VINCI

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

4 HEALTH & FITNESS INDUSTRYCONVERGENCE DRIVERS

The greatest products of the next 20 years have not been created yet. Kevin Kelly

HEALTH & FITNESS INDUSTRYCONVERGENCE DRIVERS

GLOBALISM

bryankorourke.com @bryankorourke