Let's Get Physical

The Wacky World of Fitness

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The hardest part about CrossFit is not telling everyone you do CrossFit. 

Same with being on a Keto diet, or doing a Peloton class (confession time… I just got one!)

And although society has always been vain by nature because sex sells, it seems like the fitness craze of late is a lot more wholesome. 

People are now craving community over vanity, and I think that’s a beautiful thing.

As we learn more about human biology and lifespans extend, there is an underlying common denominator in longevity: fitness. 

We’re first introduced to the concept of activity as kids. We play handball in the school yard, then try to make the school team for a popular sport. 

The benefits behind this are twofold. The first is that you get the heart beating and blood flowing which increases your personal fitness, and the second is that you make more friends along the way. 

The latter is what a lot of this new craze is focused on.

The gamification and socialization of fitness. 

This week, in <5 minutes, we’ll cover the business of fitness:

  • Why Are People Engaging In This? 👉 Positive effects on getting moving

  • Traditional Fitness Mediums 👉 Team Sports, Gyms

  • Evolution 👉 Changing Media Consumption —> Influencers Over Sports Idols

  • Examples in the market today 👉 CrossFit vs. HomeFit

  • How GRIT’s Playing it 👉 What we like in the space

Let’s get started!

1. Why Are People Engaging In This? 👉 Positive effects on getting moving

First, let’s get the obvious out of the way. The benefits of exercise are:

  • Combats health conditions and diseases (Stroke, Metabolic Syndrome, High Blood Pressure, Type 2 Diabetes, Depression, Anxiety, Cancer (many types), Arthritis, Falls)

  • Controls weight

  • Improves mood

  • Boosts energy

  • Promotes better sleep

  • Puts the spark back into your sex life

  • Can be fun and social

The most difficult things in life are “hard things” to do, but life becomes a lot harder when you don’t do them: reading, studying, eating well, drinking booze a little less, practicing discipline, and exercise.

I was listening to comedian Tim Minchin doing a commencement speech at a university and he had this (somewhat morbid) advice to give:

“Play a sport. Do yoga, pump iron, run, whatever but take care of your body, you’re going to need it. Most of you mob are going to live to nearly 100 and even the poorest of you will achieve a level of wealth that most humans throughout history could not have dreamed of. 

And this long, luxurious life ahead of you is going to make you depressed. But don’t despair. There is an inverse correlation between depression and exercise. Do it, Run, my beautiful intellectuals, run!”

We know it’s good for us, but we have to marry the pursuit of movement with something we actually enjoy doing, or else it’s more difficult to create a habit.

2. Traditional Fitness Mediums 👉 Team Sports, Gyms

The easiest way to get in shape is to combine it with something you love. For me, its golf, wakesurfing, hiking and biking (I hate running). My university roommates didn’t really understand this because one of them commented that they “weren’t trying to be the best at exercising” so they would rather play a competitive sport. Fair enough. Different people like different things. 

By combining a group of people with a common interest, what you get at the end of the activity is a new tribe. A new gathering of like-minded individuals who can join you in this endeavour. 

This was historically done through team sports, individual sports, and gyms. It was tough to find something a bit more casual that was outside these 3 buckets. 

Team sports like hockey, football, soccer, and baseball have a very developed infrastructure. You would play them in school or with friends growing up, then you would watch the professionals from developed leagues play on distributed cable television. 

Sport is then further propagated through culture by mediums such as television and music, then commercialized by brands like Nike and Adidas. 

These team sports systems did not emerge overnight. They developed (like the NCAA) and expanded (like when Jordan went to China) before commercialization. 

This staying power, cultural identity, and continual investment are important factors. Remember this for when we get to the fitness section below. 

Individual sports are similar although the pursuit in chasing excellence is typically more lonely. No one really cared about golf until Tiger, so having a star athlete helps propel viewership. But it is a similar idea. 

Gyms may look completely different but they are indeed quite similar. You can go after an individual pursuit when you toss in airpods and hit the benchpress in silence, or you can join a packed Zumba class with an overenthusiastic instructor. 

But outside of the weightlifting community, I find it highly unlikely the average person can name 3 currently active bodybuilders. 

And that is because there is no cultural infrastructure supporting this. 

This is where the fitness community comes in…

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3. Evolution 👉 Changing Media Consumption —> Influencers Over Sports Idols

I wrote in my Olympics newsletter how the viewership metrics are all falling off. This is true across several traditional sports. 

So what are people doing with their time instead? Flocking to more digestible, short forms of content. This means highlights and clips instead of live sports and TV shows. In an article last week, we saw that social media consumers in the UK and the US are now spending more time on TikTok than YouTube. 

The prevalence of an influencer society is rampant. Growing up, people no longer want to become the best football or baseball player in the world. They want to become a TikTok or Instagram star. 

This influencer-heavy media consumption shift is incredibly conducive to at-home fitness. Let’s take the example of the best fitness start in social square: Kayla Itsines.

 She now has +13MM followers on Instagram that track her fitness and wellness programs. She started out just posting tips and videos on how to live a healthier life, and evolved it into an app called Sweat. This app charges $19.99/month and gives you in-depth workouts that you follow at home or in the gym. 

The important shift in this ideal is that the average consumer can follow their passion across multiple facets of culture. They are watching the videos on instagram, posting workouts themselves, and this is how they consume lifestyle media.

And more and more people are forming their lifestyle identity around fitness instead of traditional sports.

Let’s walk through a couple of public market examples to really drive this home…

4. Examples in the market today 👉 CrossFit vs. HomeFit


Wahlberg-backed F45 went public back on July 15 price at $16/sh and faded a bit, sitting at around $14.20 as of the time of writing. 

This gym was really at the center of the CrossFit movement. What they did was genius in terms of creating a tribe that associated their identity with a product/service. It kind of seems like a cult when you go in there. But that’s not necessarily a bad thing when their beliefs revolve around picking things up and putting them back down instead of paying exorbitant amounts of money to become a level 5 wizard.

Not dissimilar to wearing Gucci flip flops, people loved posting that they were part of the F45 community as part of their identity. And when someone holds such high value to a brand, the pricing power shifts to the seller.

F45 offers consumers “functional 45-minute workouts that are effective, fun, and community driven.” They are the fastest-growing fitness franchise in the United States. Having a franchise model de-risks the businesses by making it asset-light, scalable, and profitable.

They were definitely hit hard by covid, but now have 91% of their 1,555 studios reopened. 

If you believe that physical togetherness is still important, and things will get better, this could be an interesting entry point, although I’d wait until they print a couple quarters of growth to consider it more seriously.


The FinTwit community has been up in arms over the last couple of weeks as the bull vs. bear debate rages on. As a side note, to lighten the mood, first check out this hilarious Twitter thread on Peloton placement… 

Peloton’s value prop is an interactive fitness platform that enables the streaming of immersive, instructor-led boutique classes through a one-time fee for the hardware ($1,495 for the bike) plus a subscription ($39/month).

This business model was very conducive to COVID as people tried to counteract eating and drinking their sorrows away during lockdown. But does this have staying power?

The bear thesis mostly revolves around the premise that this is just a bike fad with an iPad glued on, and they got some fuel to their fire on the last week of August. Peloton slumped as much as 15% after they warned that a price cut would eat into their bottom line and that it found a problem with the way they account for inventory. 

The bull case revolves around the community aspect that I have mentioned above as well as the forecast that people will not go back to in-person spin classes (low churn). 

Another important part of the bull story is product expansion. People like to draw a comparison between Apple and Peloton. If the Bike is the iPhone, the Treadmill is Airpods. I have one major problem with this analogy. Airpods and iPhone are much more complementary goods (can have both) whereas the Treadmill and the Bike are substitute goods (one or the other). 

But let’s look at just AirPods as a product category… 

If they can dominate within a loyal userbase or even capture non-bikers with the treadmill, there could be something there.

The most important thing to me in this story is to keep an eye on churn. How many subscriptions are being canceled? Without subscriptions, Peloton is just a low margin fitness equipment company.

So far the churn has been insanely low:

Check out the thread by Joe Pompliano here. At the time he wrote it December 2020 Peloton had 3MM members. Today it boasts +5MM.

Further, this week they announced expanding into athleisure line:

Peloton is launching its own apparel brand that puts it in direct competition with Lululemon and Nike

And although I just bought the product, I’m yet to own the Peloton stock. At 150x PE, a strange (maybe desperate) merchandise expansion and competitors breathing down their neck I don’t feel compelled to buy the stock…yet.

Wrapping Up…

The media and entertainment landscapes are evolving. You should take a step back and think about this. 

Old economic thinking focuses on the supply of labor as the summation of the hours that individuals choose labor instead of leisure. You then arrive at a wage AKA a price for labor in terms of how much they must be compensated to substitute leisure for labor. 

But what if you can be compensated for leisure?

Fitness influencers and the internet as an open social platform have forever changed this equation. 

And more and more people are starting to use and identify with fitness instead of sports. 

This is not something you want to miss. 

Until next time. Always Yours. Incessantly Chasing ROI,

-Genevieve Roch-Decter, CFA

P.S El Salvador’s new bitcoin wallets could cost Western Union and similar companies $400 million a year. Time to short $WU?!

What else we Grittin’ On?

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P/E RATIO. The problem with the Shiller P/E is that it keeps saying: “don’t buy now”. And the S&P 500 keeps rising. Following the famous P/E rule over the last 40 years, you would have owned equities for a grand total of 7 months (eye roll).

APES. NFTs of cartoon apes sell for $24.4MM at Sotheby's auction. Tell me there’s too much money in the world without telling me there’s too much money in the world.


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