Joining VeloClub not only supports the work we do, there are some fantastic benefits:
by Wade Wallace
May 19, 2020
Listen to the full podcast episode here.
Chip Hawkins: (Wahoo Fitness):
Yeah. So I was born in New Orleans, Louisiana to young parents. My mom and dad were dating in high school, so I was actually a surprise.
And ended up spending my early life in … Well, my dad went to LSU, four years at LSU as a kid in a trailer park in Baton Rouge, Louisiana. And then he went on to become a surgeon, so all through my young life I travelled all over the place while he went to different schools. Memphis, Tennessee, and he did the GI bill. So I was a couple years in Fort Leonard Wood, Missouri Army Base. But he finally became an orthopaedic surgeon when I was in the middle of eighth grade in US Junior High. And we moved to Ocean Springs, Mississippi, which on the Gulf coast. The Mississippi Gulf Coast, between Florida and New Orleans. So I say I’m from Ocean Springs, but the reality is I only lived there from eighth grade til 12th grade, and then I moved away for college and I’ve never gone back. My family’s still there.
Wade Wallace: ::
But formative years, what were you like back then? Were you a tinkerer? Were you a engineer at heart your whole life at that point? Or an entrepreneur?
Oh yeah, I was yeah. My mom always tells stories, like I was taking things apart before I could walk. And then I think I was probably five or six when I learned how to actually put them back together. She always laughed, she said I took apart the TV and then put it all back together, and it would just rattle like crazy and it didn’t work anymore. But those were my first attempts.
And did you go right to university and study engineering?
I did. I did. Yeah. Mechanical engineer undergrad. So I always said I was going to be an engineer. My nickname was MacGyver in high school, so I was always making some gadget or messing with something my whole lifetime.
And you went on to do a master’s degree in engineering as well? I mean that just says you were a numbers guy, you were really good at this. Was academia a profession you were pursuing at that point or were you just wanting to further your education and had a special interest in it, or?
It’s an interesting question. I’ve always wanted to be an entrepreneur and I really wanted to go get an MBA, but that was really just to learn how to run a business and how to be a businessman, which was kind of the entrepreneurial thing. But my personal love was engineering, so I ended up doing both. I went to Rice in Houston and it’s the craziest story, I signed up in the engineering school and got in and then found out that they have a flat tuition. And so I signed up for the MBA program and did them both for the same cost.
Is that right?
They had an entrepreneurial MBA program that I was able to do.
Because I would have done the bare minimum. And I think a lot of other people would as well. You did the maximum.
Well, it was the same cost. It wasn’t a cheap school, I mean, Rice is an expensive private school in Houston, really good school. But yeah, when I found out it was a flat fee instead of by the hour … It was funny because in grad school for engineers, two or three classes, they say six credit hours or nine credit hours is considered a full load. And in the business school, it was more like 15. And so I was taking 21 or 23, and the engineering counsellor was like, “Dude, you can’t do this.” And I was like, “Well yeah, I can.” And so it was pretty funny, but totally different worlds, the engineering school and a master’s program like that in the business school, but a lot of fun.
what a strong combination as a foundation to build on though, what did you do after university? This probably would have been what, mid to late nineties you would have graduated from that?
Yeah, that was ’93, I guess, I graduated from there. I went to work, my wife and I were … I was already married and my wife was wanting to get her MBA. So she kind of put me through school while she was working. And so then I got a job and we were in Houston where Rice is. And so I went to work for a company called FMC, which is a huge manufacturing conglomerate, and I wanted to run a manufacturing business and in the MBA program, I loved operations management and all the theory of constraints and operations inventory. And you read about all these case studies, and it’s like, “I want to go do that.” And so I found this manufacturing company and went to work for them right out of school.
And it was interesting because I went to … as an MBA, you don’t go in to run a plant. So I went into their mergers and acquisitions group for an energy company that did … It was a broad thing, they did the Bradley Fighting Vehicle, which is a military tank. And then they did oil fields and wellheads is what they did in Houston where I was. And then we did pea harvesters, these huge farm machines. I mean just everything, the jet ways that you get from the airplane. The building, that was Jetway, that was one of their companies. So all of these companies were under the umbrella of this vice president that I worked for and we were looking at buying other companies in Houston. So I did that for a year, and then I wiggled my way into being a plant manager at one of the manufacturing facilities, which is what I really wanted to do.
That’s a pretty successful trajectory for a young 20 something.
Yeah. It’s that typical MBA story. You go into the company as an analyst and then you get an opportunity to go prove yourself, and this was especially challenging because the oil field equipment had … I want to say they had nine of these plants that made wellhead valves around the world. And they all did exactly the same thing. Well, one of them just happened to be across the street from the headquarters of everything. And that was the one that I was supposed to run. And that’s not an easy thing to do, you get so much more attention. If I had been in Caracas, Venezuela where one of the plants was, no one from headquarters ever even visits, they just send the numbers in and you do your job. But here it was in the center of everyone’s attention, which made it a better opportunity.
Because ironically it was the worst performing plant they had. Because I think so many people went in and out. But I spent about a year and a half and just applied what I learned in MBA school, and found that it worked. They didn’t have good on time delivery, they didn’t have good … Pretty much everything was messed up. But it was by the book and was able to implement a lot of things I learned and had a ball doing it, and really got to love the guys that work there. And it turned into it a really profitable success story for me. And I’ll never forget, I got the President’s Award, and I think it was a thousand dollar bonus check. And I’m a numbers guy. They were making $500000 profit a month where they had been losing that much. I was like, “Wait a minute, this isn’t right. I just made these guys a fortune.” So that was what I was like, “Okay, I got to go do this on my own.”
And as I said, my wife was getting her masters in business while I was going through this. And so when she graduated … I’m always talking about owning my own business my whole life. She’s like, “Okay, well this is your chance. I’m going to go get a job and you’re going to go start a business, be an entrepreneur.” And so she’s a city girl, so it was going to be Denver, Colorado, Atlanta, Georgia, or DC. Those are the cities that she wanted to live in.
So she interviewed and got a job in Atlanta where we are now, excuse me. And we moved here and she wouldn’t let me interview with anyone. It was, “You’re going to go …” And at the time I had just done this manufacturing turnaround. So I was going to buy a manufacturing business and I was going to turn it around and I was going to make a fortune. Well, it turns out I didn’t have enough money to buy a broken … I needed a messed up manufacturing business, but I quickly found out that there are lots of messed up manufacturing businesses, but no one admits that they’re messed up. So they were plenty messed up, but they were still way too expensive. But I spent gosh, six months here looking for, “What am I going to do?” And ultimately looked at probably 15 different businesses and it wasn’t that I was going to try to start something, I was trying to find something that was broken that I could turn around.
You’ve already done that and knew you could do that.
Yeah, I knew I could do it. I had already proven to myself, I could do it. I had all the confidence in the world. But things got in the way, mostly it was these businesses, I liken it to kind of real estate agents for businesses. These business brokers, they’re selling these businesses and they’re saying how great they are and how wonderful they are, and they’re blowing a lot of smoke most of the time. And so you’d have to spend a lot of time really learning what you were buying and figuring out whether it would really work and what the opportunities were.
And long story short, I ended up realizing that I couldn’t afford any of the manufacturing businesses, whether or not they made me money, and started looking at other types of businesses. And I ended up with a sign repair business that basically fixed neon lights and parking lot lights in retail shops, shopping centers. So grocery stores would have a big parking lot and big pole lights up front and the neon sign on the front. And I found a business that had been purchased only nine months before, and run into the ground is what had happened. So they had nine of these bucket trucks that go up and down, you can go up and work in the air, big utility trucks and one employee. And I ended up buying that and trying to rebuild it from nothing really.
And what was a lot of money to you at the time? Were we talking a $50000 business or couple thousand?
Yeah. Yeah, so it’s interesting. I had saved my life savings. So $25000 and my grandfather loaned me $50000. And so when I say I bought that business, it was in such bad shape that I signed a note, an SBA. I assumed an SBA loan for $700000, but I didn’t have to pay anything on it. And so I really bought the business without paying a penny, but I had to have working capital. So I had my life savings and a $50000 loan from my grandfather, and that was what went in the bank to try to make a go of it.
Right. So this is a big business then? Not a small business, medium, I guess.
Yeah. They had had about 12 employees and they had these nine trucks that all were owned by the company. And they had been really busy before it had been purchased by this previous guy. It’s an interesting story. He came in with the intent as an absentee owner of buying this business and he was going to franchise it because it was profitable, it was a really neat business. He thought, “Well, I’m just going to buy this. I’m going to take this model and I’m going to send it all over the country.” And I think he had a wealthy family. And so he had a dry cleaning franchise in Pittsburgh or something, and he didn’t even live in Atlanta, but he came in and the craziest thing, I bought it from him, but I really bought it from the previous owner because this guy had run it into the ground and everyone had left and the previous owner was still owed money.
So he was running it and trying to find someone to take it over. So the previous owner is tell me the story of what happened the day this new owner comes in. He had 12 employees and these are really nice, good guys, but these are kind of Georgia rednecks, they’re set in their ways. And he came in and said, “I bought this business. If you had accrued vacation, take it up with Jeff. That’s not me.” Any handed out applications and said, “You guys fill out these applications, we’ll talk about what you’ll be paid and what we’ll do with you going forward.” And they walked. Every single employee bar one-
Walked out the door, he ran them off. They weren’t going to put up with that. So in the first day he destroyed a highly successful business that had been around for 15 years. So we had one employee left and so he hired a general manager to go hire a bunch of employees. And you went back to the Indianapolis or wherever he was from, and it didn’t work. He didn’t pay any bills. So I came in nine months later and the old owner was in there. The old owner was in there and he had hired a couple of guys he talked into coming back and working for him, and they were trying to make a go of it but they had gotten so far behind. It was a service business, so if the first letter of a Kroger grocery store goes out, it says, “Roeger”, they want you out there the next day.
And they were months behind on everything. So it was bad, but that’s I bought. And it did have a lot of potential, and I was naive. I thought, “Well, I’m just going to go visit all these customers and tell them, ‘Hey, I’m here, going to make everything good.” And they had all found new suppliers. That was the hardest part, is getting people to come back. There’s a lot of hard things about that, finding good employees because everyone had left, and then earning the business back. And luckily I was a handy guy, so I spent the first nine months or a year, all day I would go fix signs with the bucket truck.
And then at night I would take a camera and take pictures of broken signs … and I was an introvert, I’m an engineer, so I’d make postcards of the broken sign, like the restaurant, and I would just mail it to them and say, “Hey, I can fix this for you. Do you want me to fix it?” With our phone number, and then wait for the phone to ring. And so that was how I drummed up business.
So you’re the owner of this business, you’re fixing signs, you’re doing sales as well, and kind of everything. How many employees did you have?
So there were two of us when I started, there was the one guy that knew what he was doing and me, and I gradually hired once I got in there and owned it, he talked a couple of the other guys into coming back, but it took a while. And it took a while to get the business back, to get the customers to come back.
But I ended up doing that. It was successful and it worked. And I think I had it for two and a half years. And had it back to about where it was before it had been sold, before I got there, had all the trucks running and a bunch of employees, and it was a great business in some respects. And all businesses are fascinating, they all have their good and their bad points. This one from the good perspective, it had great margins, highly profitable. The bad side is it was a service business. So the employee has to be an electrician, they can’t be scared of Heights. They have to have a CDL, so we have to be able to drive a truck and then they have to be able to deal with customers.
And it’s hard to find those guys and you can’t afford to pay him a whole lot. So that was the hardest thing was finding people that could do it. And then you’re sending trucks around Atlanta, which is one of the worst traffic cities in the US. And so I had … I mean I got horror stories of trucks breaking down, trucks catching on fire in front of a … I had a truck catch on fire in front of a grocery store in grand opening day. The guy calls me and says, “Chip, the truck’s on fire.” I was like, “Don’t call me, call the fire department.” It was a great business in some respects, but in a lot of ways it was … I mean, the headaches were enormous with that. So I did that for a couple of years and actually had a guy just walk in off the street and want to buy it.
And I said not yes, but hell yes. Because the stress was crazy and I didn’t grow up dreaming of fixing signs. It was a fun job and it did well financially for me, but it wasn’t real satisfying to go to work every day. And so I ended up selling it, just a month or so later I was out on the street looking for something to do again. Wow. And so I kind of went through the same exercise I had done the first time. I went and started calling these brokers and looking for businesses, and I grew up … I told you earlier, I grew up on the Mississippi Gulf coast. I grew up sailing, wind surfing, water skiing, loved the water. One of the businesses I found was a company called Wahoo Boat Docks.
And I saw it and it was like, “Well that’s my business.” And it was a small business that had been bankrupt that they had pieced back together and put up for sale. And so that was an instant like, “Oh, I got to check that out.” And I went and looked at it and ended up buying it. And that was in ’02, I guess, that I bought that. And it was the same thing. It was a company that had been quite successful, that had been pretty big. And they had overextended themselves and gotten into financial trouble with a bunch of commercial projects and gone bankrupt, chapter seven bankrupt in the US. And the bank took everything.
And so the owner had taken deposits for these residential boat docks. So when I say boat dock, it’s like a garage for your boat on a Lake. Big Lake, so ski boats-
I’ve looked at the website recently, and they’re impressive boat docks. They’re beautiful.
Yeah, they’re really beautiful.
Were they like that back then?
Yeah, they were. We made them better over time, but yeah, they were big, a thousand square foot structure, second floor diving board, really nice, not inexpensive, kind of like a little house on the water.
Yeah, yeah. I didn’t think Boat docks could be that until I saw that. They’re impressive, I encourage everyone to check it out.
Yeah, they could be awesome. We built some over the years that were amazing. We had PGA golfers in Texas for customers that were trying to outdo each other, some neighbors. And I think the biggest one we made was 7000 square feet and four stories. I don’t know what that is in square meters. So, you’ll have to … it’s big.
Well that’s a massive house for anybody.
Yeah. A massive four story house. Yeah. So his house overlooked a cliff and we had a big bridge over the cliff to the fourth floor. And then you would walk down into the bar area that was all air conditioned. And then you walked down again to where all the boats were kept. Fascinating, beautiful thing.
Now is this also a problem that you saw needed fixing from a product and technical point of view, or just from a business point of view? Because it’s clear you love to tinker, you love to make things better. How did you see this approaching it as a business and a product?
Well, it was it … yeah, I kind of skipped the whole, “Why did I do it?” Part there. So the business had been building these small residential docs, but the primary business was doing commercial marinas. So they would go do a whole bunch of slips for a whole bunch boats for marinas. But what I saw when I went and looked at it was this really-
… but what I saw when I went and looked at it was this really ingenious design for an aluminum structure that floated, and it was done well. The original owner did a really good job with it. But when I saw that, what he had done is he’d built them in North Georgia on one lake and he’d go to people’s houses and he talk to them about them and he’d sell them. And what I saw as the opportunity to, not franchise it, but basically, manufacture those docks and find people to sell them for me.
And so we built a dealer network where we would build it in a factory and send it to wherever someone wanted to install it. And that was kind of the business idea. And that was from the very first day I talked to him, I was like, well, this is what I… I don’t want to go be a dock installer, but I could build a really cool dock and make this into a really good business, because there were no national big dock builders.
Basically, if you wanted to get this kind of dock, you would call the local dock builder or lumberyard. There was usually somebody that on the side would do this kind of stuff, but they weren’t professional.
Wade Wallace: :
And you had enough of fixing signs. You didn’t want to do that stuff anymore. You wanted to build the network?
Yeah. When I get to build the docks, which was what I did, and I actually found a partner in that business that wanted to go do the sales part, and so I was able to focus on, designing the docks, strategy and that sort of thing. And my master’s in engineering was in structural dynamics. So if there’s anything that has dynamic structures, it’s a dock that’s floating on rough water made out of metal. So I got to use all my engineering at the same time.
And Wahoo, I remember seeing, I think it was probably 2012 at Interbike, the first time I ever saw this Wahoo trainer, where did this come from? The first thing I thought of was a fish, because there’s a Wahoo fish. Was the name at that point, was it the Wahoo River, was it the Wahoo fish? Where did that come from at the time?
So Wahoo Creek is where-
Yeah, Wahoo Creek is a tributary of Lake Lanier in North Georgia, and that’s where this guy started the business. He lived on Wahoo Creek and he built them in his garage or in his barn behind the house, and so he named it Wahoo Boat Docks. And yeah, when I bought it, I was, “I’m going to keep that name.” I loved it. We didn’t build them on Wahoo Creek anymore. We had moved to the big city of Gainesville, but we were close to the lake still.
But yeah, that was the origin of Wahoo Fitness, it’s where Wahoo Fitness eventually came from. But, yeah, Wahoo Creek in North Georgia.
Wow. And at this time, were you a fitness enthusiast of any sort or how did that come to be part of your life?
It’s an interesting story. I was fitness for the sake of fitness, never. I mountain biked with my wife some and friends some. Growing up, it was wind surfing, water skiing, but never go out and do a triathlon or go out and go jogging or anything like that, I played tennis.
But I was getting mid thirties and getting a little heavier every year. And it’s funny, I had a kind of aha experience with a duathlon. My wife challenged me to go do a duathlon with her. We were at a party with some neighbors. And so I think eight of us went to do this duathlon in Callaway Gardens in South Georgia. And it was a dare for me because everyone there did that kind of thing. They rode bikes a lot or they jogged, and didn’t do any of it, but I was like, I can do that. And so I didn’t train at all. I just went down there. I [Inaudible 00:04:16].
So was a five K run, a 20 mile road bike, and then a five K run to finish. And I did the five K run without walking, which is the furthest I’d ever run in my life. And I got on the mountain bike. I had a mountain bike, but it was a road course. So I got on my mountain bike and I did the 20 miles barely. I mean, I’ve got memories of that, they’ll never leave me. Going up a hill, being passed by people that did not look like they should be passing me, just feeling awful. And so I finished the 20 miles and I’m supposed to do another five K, and I literally couldn’t pull myself off the bike. I just peeled myself off the bike and sat down and wanted to cry. I couldn’t run again.
So I was done. I didn’t finish the race. First ever duathlon and I didn’t finish. One of the neighbors that went with us was 71 years old and he finished next to last, not last, but he’s telling stories at dinner about how, “I didn’t finish last.” And I’m like, “Well, yeah, because I was behind you too. I didn’t even finish at all.”
But I kind of came away from that day thinking, you know what? I probably shouldn’t be in such a physical condition that I can’t do something like this and it was really life changing. I mean, I started exercising. I signed up for a boot camp and I don’t know if you’ve seen boot camps, but this is where you do a little PT test at the beginning, pushups and sit ups and you run a mile. The first day you run a mile and I was a 10 minute mile. And then at the end of 30 days, you do it again, and I think I got down to like eight and a half minute mile, and I was hooked. I did that three months in a row.
But this was no longer exercise, I guess for you, was it? It was competition. It was, I guess the byproduct was exercise, but-
It’s totally it. The bootcamp it was that stupid PT test. I was competing with myself. But yeah, there was a guy that ran a six minute mile. He was the fastest one there. And I remember thinking, damn, if I could ever do that. That was incredible. And I don’t think when I was doing bootcamp I ever got to the six minute pace.
But interestingly, during that, I met a girl who had just done an Iron Man. She was in the bootcamp with me and she’s like, “No, you should do a triathlon.” And it’s like, well, that sounds like fun. So I signed up for a triathlon after doing three months of boot camp, and that was a blast. I did it on my mountain bike again.
Right. You finished?
I finished, yeah. And at that point I was like, I actually could maybe be competitive. And I met a guy, Martin Bog is his name, on the run. I’m doing a five K run at the end of this little sprint triathlon. And this guy in front of me, he’s ahead of me on the run. He stops running and picks a turtle up out of the road and walks it over and puts it in the woods. I caught him because he was saving a turtle and started talking to him. But it turns, out he was part of Dunwoody Cycling, and he ran a cycling club, which is real close to my house.
And he said, “No, you should come out and ride with us.” And I had never done road biking at all. And so before I went out, I got a Schwinn Airdyne or a Schwinn Recumbent, and started trying to work out and doing the-
The Recumbent? One of the ones you sat down in, or the Airdynes that CrossFitters use that the…
No, it was the cheap sit down. You sit back and you could watch TV and pedal, but it had a… You cranked on it for a while and the lights would come on and you could do a 40 minute program. And so I did that for several weeks before I got up the courage to go out and try to ride with these guys, because they rode in the mornings at 5:30.
So I did, I went out and I had been riding that Schwinn Recumbent hard enough that I was actually decently fast by the time I went out and rode with them. And that completely hooked me. The first time I went out, it was a funny story. They did the six mile loop, that’s really what created Wahoo Fitness, but the six mile loop, the first day, they would do four or five loops on Tuesday mornings. And I happen to go out on a Tuesday morning. And I didn’t know the course.
And so I’m riding with these guys in the dark, scared to death, and I had lights, but I didn’t have very bright lights. And we’re climbing this hill and they’re just walking away from me and I’m like, “I’m never going to get home.” And the funny thing is, it was a triangle. We never got very far from the car, but I had no idea where I was. So I gave it everything. I had to stay with them, so I didn’t get lost.
And at the end they were laughing because they were trying to drop me and I didn’t let them drop me, but I ended up doing that four days a week with those guys for years. We would do the Tuesday loops, would be like team time trial mode, after I started riding and got used to it. And I’m such a numbers guy, at this point I was getting really into it. I went back and did the duathlon the next year and got fifth place overall. I bought a PowerTap. So I had a power meter on my bike. I had a Garmin GPS and this is like 2007, 2008. So PowerTap was all there was.
But I bought them because I wanted to track whether I was getting better, and I would time these six mile laps, and I’d put them in a spreadsheet and I’d publish them to a webpage and it would have lap time, it was my average power, why they cared, I don’t know, but nobody else had a power meter. So I would post this and we would kill ourselves trying to better those times every week. Before long, before I would even get to work, which was still in Gainesville in the dock business, the guys would all be emailing me like, where’s the numbers? Where’s the numbers? How did we do today? Because there wasn’t a Strava or any of that stuff.
So I would spend an hour every Tuesday, tabulating all these numbers and PowerTap and the Garmin didn’t talk to each other, so you didn’t get power data with your GPS data. So I had Excel macros that I wrote that would collate these together so I could actually see what power I did, where I was. And that’s what I-
Even at that time from memory, Garmins were only hitting the main stream, like the little 510s I think, they were still rare.
Yeah, this was 305. So it was first gen, I think they had a 301. So second gen ever, Garmin.
Yeah. They’re big.
Yeah. It was big, it talked to a heart rate monitor, but that was about it. And then the power meters didn’t have wireless yet, so it was really just cadence, heart rate.
And that was the Garmin standard, ANT+ right, who owned that protocol?
Yeah. Well, at the time they didn’t own it. It was a separate business, ANT+, so they were Dynastream out of Canada. They were working with Nike and doing the little shoe pods.
Yeah, right, that’s where I’m from.
Just outside of Calgary, yes.
Okay. Yeah. But that is the technology that ultimately, I discovered trying to figure out how to save myself the time of tabulating all that data. So this was right around the time that the iPhones were out, and I had an iPhone and I’m doing these laps and I’m thinking, “If I could just get all this data in my iPhone, then the app could automatically put it on a website and this could be 100% automatic.” So I was kind of dreaming of Strava before it existed and creating everything.
And so the challenge to doing that was that there was no way to get this data from any device into an iPhone. And that led to me finding ANT+ and ultimately building this little 30 pin ANT key that would plug in the bottom of the iPhone and let you connect heart rate monitors. And then power meters, eventually Quarq came out with a power meter that would talk…
So that was what… I was figuring all this out, this is while I’m still working at the dock business, but trying to figure out, “Well this would be cool.” And so I start tinkering. I’ll never forget, going in to my business partner, the dock business and saying, “Tim, I think I’m going to start this business.” And I had been screwing around with it for a couple of months and figuring things out. But I had decided I needed to go to Canada to this ANT conference where they talked about ANT+, and it was like a $1,200 plane ticket. I was like, “So I’m going to spend 1200 bucks and take a week and go to Canada.” He was like, “What are you talking about?” We built those docks in North Georgia.
“This has nothing to do with docks.”
This has nothing to do with docks. It was actually good timing because it was the real estate crunch in the US where real estate had crashed. And so we were doing fine financially, but we had been growing, doubling every year. From the time I started it, it was highly successful, doing great. We weren’t growing because there just weren’t a whole lot of houses being built. And so-
Well coming up on 2008-ish, hey?
Yeah, around 2008. So I had a lot of time on my hands because the business wasn’t growing, there really wasn’t anything I could do, it was macro economic. And I had guys in the business that had time on their hands. And so my little hobby turned into the way to keep us busy. And that was how we ended up building the ANT key, and ultimately getting it licensed through Apple and starting to sell it online. All this was done at Wahoo Boat Docks as part of the dock business.
So you started tinkering, you made a ANT+ dongle that plugged into the iPhone. And so there’s no Bluetooth LE at that time, the Bluetooth low energy. And what did you do with this data once it was on the iPhone? Did you create an app or did you just look at it or…
Yeah, so I started working on an app. I had a guy in Wahoo Docks that was writing an app, but I’m also looking around and seeing what other people are doing. And there was a huge push to use the iPhone running. They had the headsets and you could listen to music. They had GPS built in. So tons of people were using it for running. And it turns out the number one request when I’d go on these sites, like MapMyRun or Runkeeper, big apps with hundreds of thousands of users, the number one thing on their customer support requests was always heart rate data.
And lo and behold, the ANT key enabled heart rate monitor talked to the iPhone. And so that was where most of our sales went. I mean, I was doing it for cycling, but those were our first customers.
How did you sell these dongles, and how did you get the word out there that this exists now?
Well, through a lot of ways. One, it’s interesting, Ray Maker was one of the guys I reached out to. He was just starting a blog. I think he had done two or three, like the Garmin 305 was the only GPS out there. And so I got to know Ray and he’s like, “Yeah, I think other people would love this thing. I think it’s a good idea.” Because I was basically trying to validate whether I should pull the trigger to buy the parts to make 1,000 of these things, because you can’t really make one electronic device. The tooling and all that stuff. So as I was going through, I was like, “Well, I got to make 1,000 and I’m trying to figure out if I make a thousand, will I ever sell them? Is this going to take me six years to sell, or am I going to sell them in a month?”
And so ultimately, I was reaching out to people. I reached out to Robin Thurston at MapMyRun, and he was one of the first ones who was like, “Yeah, we’ll buy them.” And he didn’t want to send his customers to us, he just wanted to buy them and sell them themselves. And so, pretty much everywhere I went to these apps, they would say, “Absolutely,” because they knew their customers wanted it. And so those first thousand sold within probably 30 days from when we finished them, to all different people for all different reasons. So it was kind of an instant success.
And would Apple play ball with you to sell them on their site? Or could you have a commercial relationship with them in way that was beneficial to both of you or…
Well, we had to go through a huge exercise to get the dongle made in the first place. It has to be licensed from Apple, the Made For iPod program, they called it MFI. And so that was probably the hardest thing, not the electronics and the software to make it work, it was getting Apple’s approval to do it. So they did bless it, but they didn’t see it as something that they would sell. I remember going out and trying to sell it to them a few times, and basically the story was, it looks like we forgot something. We’re not going to sell a dongle that plugs in the bottom of the phone that makes the phone look bad. It looks we forgot something.
So they weren’t helpful when it came to selling the ANT key for us, but they gave us, they gave us a path to sell it on our own by selling so many iPhones to the world.
Right. Right. And so you just kept on selling these ANT keys and thinking, “Wow, there’s a business here,” or how did that progress from there to you creating Wahoo Fitness?
So they sold extremely well. One thing that I didn’t think of when I was doing it, because I already had a heart rate monitor and a speed and cadence sensor power meter, but most people that were looking for heart rate didn’t already have a heart rate monitor and the ANT+ heart rate monitor. So quickly I realized, I need to make all these other sensors as well. And so we ended up selling more of the dongles with a heart rate monitor in the box, or the dongle with a speed and cadence sensor in the box, than just the dongle.
And so that’s twice as much revenue as just the dongle. So we ended up starting to build out a whole range of products to go with it. And yeah, it was probably only about a year in or nine months in when I was like, “Well, this is a real business.” It’s real sales, lots of business. And it didn’t take long to realize it didn’t fit well with the dock business. Now, the average price was $79, and I think the average price of the docks is like $29,000. The guys in the dock business were fully capable of helping me build it and get there, but it just didn’t fit from a transactional perspective. And so I kind of had a aha moment again, and said to my partner, we shook hands and said, “You stay here and run this dock business. I’m going to go build this fitness business and see what I can do with it.”
This podcast is brought to you by VeloClub, CyclingTips’ membership program that allows us to produce independent content that’s not driven by clicks, advertorials page views and all the things that can make online content a race to the bottom. Because of our members, they enable us to create content with only our audience in mind, and it keeps it free for everybody.
If you like this, and you want to see it continue for less than a cup of coffee a week, we would love to see you become a member. There are many other benefits in joining too. You can find out more at cyclingtips.com/signup. Now, back to the show.
You split off and started Wahoo Fitness, and then the whole Bluetooth low energy was a protocol that became popular. And for listeners, Bluetooth at that point, it wasn’t really meant for heart rate data. It was an old just file transfer and pretty clunky thing, and it was very power hungry. How did you get from ANT+ dongles to now all of a sudden, being able to have heart rate monitors talk to the iPhone, and be first to that? Because that’s pretty significant, I imagine.
Yeah. So this Bluetooth low energy technology was actually hinted at and in the works for many years. And so even when the first year I went with the ANT+ conference, that was always the thing they didn’t talk about was Bluetooth low energy. “We’re doing ANT+, you need to adopt this and use this.”
But Bluetooth low energy was… Essentially, the original Bluetooth was meant for file transfer and audio headphones. So it couldn’t do the heart rate data. The difference was that Bluetooth energy allowed you to have very low power, so you could use a non rechargeable battery, like a coin cell battery. And so it was always out there and we knew it existed. The threat to us was, when is it going to get stuck in things like iPhones, because Apple’s already told us they’re not going to sell our product, because it looks like they forgot something. Well, they’re not going to put ANT+…
Well, there were two things they could do. They could put ANT+ in the iPhone and make it work with all the things that Garmin has, or they could put the standard Bluetooth low energy in the iPhone. And so the ANT+ guys are always saying, “Well, they’re going to put the ANT+.”
… iPhone. And so ANT+ guys are always saying they’re going to put the ANT+ in the iPhone, don’t worry. Ultimately, they didn’t. They put Bluetooth Low Energy in, but as a hilarious story, we had gotten to know the guys at Apple really well and the head of the MFI program called me and he said, “There’s a product we recently introduced that has a technology that I think you’d be really interested in. You should take a look at it.” And that was it, cryptic. “There’s a product we just released that has the technology you might be interested in.” So I have no idea what he’s talking about, so I go on Apple’s website and I’m looking. It’s like, “What?”
They had just launched the MacBook Air for the first time and it didn’t say anything special about it. It didn’t say anything about Bluetooth or anything. So I went and bought one. I gave it to my software engineer, Michael. And said, “Michael, tell me what’s in this.” And we found that it had Bluetooth low energy and they had the entire Core Bluetooth stack, which is what Apple uses to talk to Bluetooth low energy, completely undocumented. That we kind of reverse-engineered all the documentation out of their code and figured out how to communicate with it. And the same company that we bought all our chips from that did the ANT+ chips was also working on prototypes of the Bluetooth chips. So I’m calling them saying, “Hey, I need Bluetooth chips. We got to get our devices updated to try to make a Bluetooth one.”
And so we did, we went as fast as we could, put the Bluetooth low energy chips in our heart rate monitor that ultimately called the Blue HR. And this was I’m going to say May, June, timeframe. And every year the iPhone comes out around September and so we’re thinking, “Okay, they’re going bring out an iPhone that’s going to have Bluetooth low energy in it.” And that was kind of the clue they gave. And So we went off and-
A big bet, so a big gamble, hey?
Yeah. So I bought all of the… Actually, they were engineering samples at the time of the Nordic Bluetooth chips that they had because they weren’t on the market yet. They told me they’re not going give any-
Those are the small chips that you put into the heart rate monitor to talk to the MacBook Air?
Yeah. It’s the chip that goes on the board. They’re telling me “Well, they’re not going to be available until next year.” And I was like, “Well, you just sent me 10 of them. You got to have them.” And they’re like, “Well, those are engineering samples.” Like “I don’t care. I’ll take them. How many did you have?” And they’re like, “Oh, we got like 10,000.” “I’ll take them.” So we bought all of the engineering samples because they’re just like, “Well, they’re engineering samples. You can’t use them in your product.” It’s like, “Well, they work. Are they going to not work after they’ve been working?” They’re like, “No, no. If they work for your purpose. They’re not going to break over time.” So we did. We totally went out on a limb and bought them all and finished the design and got it ready, and all sat around watching the iPhone announcement when they did it and they didn’t say anything.
They didn’t say anything about Bluetooth, but they put a little table on the screen and it had Bluetooth low energy up there. We’re like ” Yes!” And so it worked and we launched the Blue HR Heart Rate Monitor like a week after the iPhone launched. And that was game-changing because all of our customers switched over immediately. No one else had it. We were the only one in the market. Apple took it. All their stores globally had the Blue HR, and then we quickly made a speed and cadence sensor so we had both of them in the stores. And yeah, it was awesome. So we could have been an existential threat. Could have put us out of business if we hadn’t built it because as scary as it seemed that the ANT key would go away, it really didn’t. We just finally quit selling it like a year ago which is like five years after they quit making any phones with 30-pin connectors. So that’s-
That’s interesting because it’s a competitor of Garmin now who owns that technology, correct? So it’s a funny space to play in that connecting a Garmin through ANT keys and also just selling your own computing units, isn’t it?
Oh yeah. Yeah, it was always. And the first couple of years it was DiamondStream and then they got bought by Garmin. And they did a good job. Garmin did a good job of leaving them separate because they’re an industry standard. They’re supposed to be impartial and not help one or another. So yeah, there’s lots of stories around that as well, but they’ve done a generally good job. And all the guys in Canada are trying to be standard, but they’re ultimately owned by Garmin so Garmin’s going to use a little leverage here and there. You can hardly blame them.
Yeah. Wow. So before I cut you off, I mean I’m glad we went into that because that’s fascinating. You were going into the CompuTrainer. And-
Yeah. So with the CompuTrainer, about the same time, I started training for the triathlons I was trying to figure out how to get faster on a bike. And so I wanted to do that course at Callaway Gardens where I did the duathlon. I wanted to ride that course in my house and to train for it. It’s got a bunch of hills, I can’t just go out and ride around here. I want to practice the exact course. And so I found the CompuTrainer which had this course creator and it was adjustable resistance and so you theoretically could do just that. You would just load in a course and you could ride it and the power would change. And so I bought it, it was like $1,800 and it sucked.
Everything about it. The software was awful. People love them, but they were not that good. I hated the drag. So you put your wheel on and you put the roller up against the wheel and the drag just made it so unnatural. And so immediately I’m thinking of ways to make a better trainer. And really the software that went along with it was so bad that constantly I’d wake up in the middle of the night thinking about how that should work versus how it does work. And so I was from way back then before I even started the ANT key, I already had the CompuTrainer. And I was already waking up and kind of sketching what a KICKR would look like, what ultimately turned into the kicker. And it wasn’t until several years later I’m in Atlanta, in our office here, selling heart rate monitors and ANT keys and thinking, “Because I don’t have to just dream about this. I’m in as a business now. I can make this trainer.”
And so that’s what we did. I said, “Let’s work on it.” And so ultimately started working on the KICKR and launched the KICKR. It took a lot of time and a lot of work. And again, it’s a lot different than a [boat dot 00:00:53:21], but it’s also a lot different than a one piece of electronic PCBA. A little board in a heart rate monitor is a lot different than a KICKR. But the KICKR is right up my alley. It’s motion and flywheels and belts. A perfect mechanical engineering toy, so it was a blast.
There’s also a fundamental difference between a hundred dollar heart rate monitors and ANT keys and small electronics and that, that can be easily shipped in a small package and then a hundred pound or whatever, 80, £50 KICKRs, the logistics required to run that business. Were you going off gut feel and winging it, or did you have a business case and business plan that said there’s a market here? How did you approach them that area of the business?
It’s funny. I knew that there was a market because I’ve wanted it so bad myself. Same way the ANT key and the heart rate monitor, I knew it. Ultimately, what surprised me was I looked at what trainers were out there and they were the very best that you would buy. The CompuTrainer was such an outlier, it was 1,700, $1,800. There’s nobody else that had anything like that. They’re all what we call dumb trainers now. And I think the most expensive ones were like $350. And so I was looking at that thinking, “Okay, I can sell one for twice that much because I’m going to put all this cool stuff in it. If I can make this for $700, the world’s my oyster. Everybody’s going to have to have it.”
And so fast forward a year into building it and working on it’s like, “I’m not going to be able to sell this thing for $700.” So we ultimately got it finished and built and I had it $1,200 and I didn’t think that we’d sell. I knew we’d sell them, but I thought at $1,200 it was cheaper than a CompuTrainer which I knew was a piece of crap. But it was just too much to be mainstream in my mind. People aren’t going to pay that much for a trainer, but they did. It was an instant success. From Interbike, we announced it at Interbike in Vegas I think 2012 or 2013. We stole the show. Everybody wanted one, everybody was talking about it and that was so much fun.
Correct me if I’m wrong, but it seems that one of the big parts that made up the success of it was you decided to create an open platform for software to be developed on it. What was the rationale behind that decision? Because it was a stroke of brilliance and you didn’t come from a software background and possibly familiar with these models.
Yeah. There were several things driving that. As I talked about the ANT key, we had built this API that we gave to all these different apps that allowed them to talk to our hardware. So Runkeeper, MapMyFitness, Strava, anybody that wanted to work with our hardware would do it and that openness is what drove us to have all the success. We had an app, we gave it away and probably 5% of the users actually used it. It was never that. And we still have it, it’s our Wahoo app today. But it was the ability for other people to write software that was so brilliant. And I always wanted to write software for the CompuTrainer. I tried for years to get those guys to let me.
I was trying to make a dongle that you could plug in the CompuTrainer that would have an ANT+ radio so that other people could write software for it, myself included. Because I just wanted to be able to do the Course Creator. They absolutely refused. Said it wasn’t fast enough, it was way too high tech. So ultimately I had to make the KICKR to be able to accomplish it. But that’s just so natural. No one can make the perfect software themselves. I wanted to go practice at this time, I wanted to go practice that course. That was what I wanted to do. But other people wanted to play. Zwift has come about now. There’s a lot of cool stuff that people want to do with it and people always want to evolve. It’s just the natural way to do it. You can never make the software yourself that’s going to satisfy everybody.
Yeah. At any point in the Wahoo Fitness journey up until this point, did you take on investment from family and friends or bank loans to be able to build, or were you growing on retained profits? Or how did you find that part of business?
So the initial starting capital came from the doc business. It wasn’t that much money that we spent. I kind of stole employees that were already working in the doc business, so it was kind of nights a week that we were working on it. I gave them some equity and said, “Hey, if you’ll stay around at night and help me finish this thing I’ll give you a stake in this new company.” So that got it off the ground, but it grew so fast that we did need capital. I was selling the ANT keys quicker than I could buy them, as fast as I can make them, and I would need to go order a half-million dollars worth of parts and I didn’t have a half-million dollars to order.
So I went to the bank and I had a good relationship with the bank because doc business was fairly sizable and successful. And he said all we need is two years of tax returns. It’s like, “Well, I’ve only been at this for six months. I don’t have two years of tax returns to give you.” So ultimately the banks wouldn’t loan anything, even though we were profitable from the start. Because we built these keys with employees that already worked for me that were already covered by the doc business. So I did.
When I first moved to Atlanta and we opened that office, I think we had ended up raising $900,000 from friends and family. My son’s grandfather, most of the money was from him. He had just retired and was looking for things to do and I met him at Starbucks and told him the story and he said, “Yeah, I’d love to help.” And he’s still on our board and a fantastic part of the story as we’ve grown. That was our kind of kickoff capital because we needed to buy inventory. It wasn’t like we were just going to hire a bunch of people. It was just working capital is what we needed. And over the years we’ve done that a couple of other times. Our growth story has been pretty amazing. We’ve grown, I don’t know what the annualized rate is, but it’s pretty phenomenal from kind of a startup in 2010 to where we are now.
Yeah. And so what’s the element? You kind of went outdoor. You were quite an indoor brand, I think. At least the way I knew you in those early days of the KICKR. What was the strategy and the thought process behind going outdoor with a computer to take on the whole mighty Garmin? That’s crazy.
Yeah, it’s funny because my friends call me the Fred of the group. I was perfectly happy putting my iPhone on my handlebars with my Wahoo app and pulling people along. So I was fine with that. But over the years I came to the realization that people did not want to put iPhones on their handlebars. That was what I wanted at first. That’s a lot of the reason the ANT key existed was we built a waterproof case with an ANT key built-in for your phone that was indestructible, so you could put it on there and go out in the rain. So I was always trying to push people to put their phones on their handlebars. And the element was me finally giving in and saying, “Okay, people aren’t going to accept this,” but I didn’t.
I hated Garmin’s. I had used them before I started using my phone. I did not like the software interface. Their hardware is nice, but the software was just horrible to use and clunky and I thought we could do better. And so Dan and some of the guys that were working with me were like, “Yeah, we can’t use an iPhone because people don’t want to put their iPhone on their bars, but we can make a better computer than what’s out there.” And we said, “Yeah, let’s do it.” And so again we spent a few years and a lot of time to get it done, but we ultimately built a really good bike computer.
Was it more difficult than you expected or was it as straightforward as you thought it would be going into it? Or how did that go?
I probably always underestimate it. I look at a problem and say, “”Oh yeah, that’s an easy thing to do. I think I had the right ballpark of how hard it would be, but it’s always the last 10%. You can get 80, 90% of it done, but getting that last 10% and getting all the little nuances right. It has to work. It has to work well. People have to be really excited about it or it’s not going to be yes. So yeah, it was quite an undertaking but it was worth it. It’s been fantastic. I love with the KICKRs you can never see, I never saw anybody with them, but with the ELEMNTs now I see people everywhere. The ELEMNTs and BOLTs and ROAMs, and it’s really fun to be able to see people ride. “Hey, I made that.” I love it.
And that group that you used to ride four times a week with around that triangle, are they now doing their mornings on a KICKR or you still ride with them?
It’s funny, they do. Yeah. But they also still ride. I’ve been running more. I need to get out my riding, I’ve been running the last few years. I’ve been hooked on running. But yeah, they’re still out there. I still ride with them. It’s funny, one of the groups used to be just hardcore. They would go out. If it was actively raining they might call it off, but it didn’t matter how cold it was. Wet roads, they were out there. And they’ve slowly all gotten KICKRs and now they all get on Zwift. They all get on their KICKRs and then they have discourse servers, so they have a chat server. And it’s funny because one of them is my kid’s pediatrician and he’s always like, “Yeah, you ruined it for us. It used to be if it was below freezing and now if it’s below 68 degrees.” Any excuse and they’re on the KICKRs instead of going outside.
Well Chip, I moved all the way from Canada to Australia to basically never to ride indoors again. So I have you to blame that I’m out there every morning in my shed filled with spider webs and often prefer that to getting outside. So yes, but I think it’s also a great thing. Now I’m curious, from what I understand looking at your website and that. In 2018 you sold a part of the company too what is it? Norwest Equity Partners, a private equity firm. You don’t actively run the business from what I understand, you’re chief engineer. Do those two coincide of you no longer have to run the business, you can hire people better than you? Or what is the thought process behind that and how does it intersect with private equity coming in?
They’re sort of unrelated but I guess related in some ways. I mean I’ve always been a Jack of all trades so I kind of know what to do about how to run a business. I’ve got a good sense of it. But especially as we grew, the skills you need to run a big organization with departments are different than the entrepreneurial skills to start a business or run a small business where you kind of get to make all the decisions. And so I’ve always believed in focusing on what I’m good at and finding and hiring people to do the other stuff. In the doc business that was Tim. I basically built the business, the operations, made the docs, figured out all the logistics. Tim found dealers and did all the marketing side.
So very much the same way. We hired marketing people and as it’s grown it’s been less and less of my comfort zone, but we continue to have more and more products. So the ability to focus on the product side of the business and build what we’re doing next takes up more than all of my time. And so we have hired and had awesome people join us, and some of those have just naturally been a whole lot better at running an organization with a whole bunch of people. I mean we’re over 200 people now and it’s fascinating and awesome, but I hate standing up in front of people. In our company meetings, I rarely say anything. I sit in the back of the room and I might have a comment every once in a while.
So that’s always been my style is I’m the chief engineer and just working in and on the products. I go to all the board meetings and all that stuff and I play a part in it. Mike’s attorney who’s been with us for five or six years now came on as a chief marketing officer and he just naturally runs the organization and knows how to run a business and how to run it in the department structure. And so over time he kind of took on more and more responsibility. And ultimately it’s funny, he became the CEO last year and really for two reasons. One, because that was the job he was doing and so I was like, “Okay, let’s call you the CEO now.”
But as we grew and added people, people didn’t want to talk to me about engineering stuff because I was the CEO. And so I was like, “I can’t be the CEO anymore. I want to write code and the new guys don’t know me well enough to know that they can ask me code questions or talk to me about the hardware.” And so a lot of it was like, “Let’s make it clear that I’m not the CEO. Mike’s the CEO, Mike’s running the business. I’m going to help you guys build the products.” And it’s worked to a large extent. New people have to get used to being comfortable with me that I’m the big boss but I’m not really the big boss. I’m sitting with them and I’m doing the product work which is the fun part anyway.
Yeah. I think that’s just a really interesting aspect of you, Chip. Because there’s a bit of a contradictory there where you’re obviously a competitive person and at the same time the release of ego to step back and not run the company that you founded is quite at odds with each other. Do you ever find yourself disagreeing with the way the businesses run and you-
Yourself disagreeing with the way the business is run and you have input on that, or you just hands-off?
Well, in a lot of ways, I think the success of the business is the products we choose to make. That’s generally been my… We have a lot of discussions about it, but it’s pretty much what we’ve launched is mostly what I want to launch. That hasn’t changed and because we’ve had success with each of the different categories we’ve gone into. All the investors we brought in are fully on board with letting me do that. To the extent that we decide, how to go into Australia or how to do… Those are things that are better left to people that are good at distribution models and sales forecasts. I love to understand what’s going on and be involved, but I rarely make many of those decisions or even get involved in them.
On the other hand, we get into tons of knockdown, drag outs, over product features and product cost and what should we do and what we shouldn’t do. One of the coolest things about Wahoo is, most of our employees are cyclists and runners and endurance athletes. That’s been a big part of our culture is people that work here are customers. That makes it so that we all fight about what it should do and how it should do it. That’s probably where we have more arguments is, “Can we put this feature in or not? Can we get it done on time or not?” That sort of thing.
Now it seems that most of your history has been about, I’ve got an idea and I can make this better. Then you’ve set out to. Almost by force, you’ve been forced to go and make a better, a computer, a better indoor trainer. Now you’ve started acquiring companies like the Sufferfest and Speedplay. Has there been a bit of a change of philosophy? What drives those business decisions, rather than making a better pedal for example, or a better training platform? Why have you decided to acquire?
There are different reasons in each case. Speedplay, I’m a mechanical engineer, I love the mechanics of a bike. I can’t tell you how many times I’ve tried to make a new transmission. I shouldn’t say that out loud, but we’re not building a new… Chains are stupid. Why do we have a chain on a bike? Looking at pedals, I always was thinking I could build a better pedal. When I looked at Speedplay, I found the better pedal. It’s brilliant. Richard did a fantastic job with the pedal. I met Richard a few years ago and we hit it off right away, a lot in common he’s done. He showed me… He made the first turbo trainer. I don’t know if you know that Richard from Speedplay. [inaudible 01:12:18] it’s a Turbo.
Yeah I know of him.
That’s what they call it. I can’t get them to call it a KICKR. They call it Turbo. That was his brand. He made the Turbo before he ….
A lot in common, it really-
He was reaching an age where he was ready to retire. When I looked at the Speedplay pedals, I loved a lot about them, but I also found a lot of things that could be improved. Ultimately it seemed like great opportunity. That business’s fantastic. It really hasn’t been run in a terribly professional manner. You can’t buy them in a lot of parts of Europe. They didn’t have good distribution. It didn’t really tell the story of, why they were better. It’s a lighter pedal, it’s double-sided, you can adjust the flow. Everything about it is… I went and checked the list of what do you want to pedal? They got it. They didn’t really tell the story. It’s a bit of, seeing an opportunity and saying, “We can take this brand and with Wahoo’s help make it way more than it’s ever been.
That’s the vision behind that. We had the capital to go do something like that. So we did. I think sometime soon you’ll see some really cool things come out of that. That’s where I’ve been spending a ton of time and it’s a blast. It’s really getting to play pedal business now. It’s a lot of opportunity. The software side was Sufferfests’. Exact opposite. I would say at Interbike couple of years ago, I had somebody set up a meeting between David and I, David McQuillen, we hit it off right away. Just think the same, the cultures of the companies are the same. We’ve been trying to figure out how to participate in… We’ve never had our own software, but in a lot of ways we buy a KICKR and send people off to try other software and absolutely love what David’s done.
We were able to work out a deal where we acquired Sufferfest. We’re not trying to be everything to every person. They’ve got a fantastic platform that we can bring consumers. It’s been awesome to bring them into the fold. You don’t think of Wahoo is a software company, but we already had like 60 or 70 software guys, now the teams are working together and it’s really, fun to see. Having all our brand ambassadors meet with their brand ambassadors and the weekly… the little rides we’re doing they are just awesome. It’s been a lot of fun.
Yeah. They bring a great community and I know David is great as you say. It feels a little bit at odds with, the KICKR being an open platform to work with any software. I can only imagine Zwift was a big part of your success. How do you balance that tight rope with, all these different platforms and then owning a, I wouldn’t say a competing platform, but maybe competing for wallet share and having the Sufferfest Meanwhile, so with Zwift and all the rest, how do you balance that tight rope?
I don’t know that it has to be balanced. The biggest challenge that I’ve had is we’ll introduce new things in the hardware and they’re super important to me and us, but they’re not super important to Zwift. When we put a climb out, we’ve got all kinds of cool things it’ll do. I got to go sell them on the idea of making the climb integrate with Zwift or make it so that the climb just works and they don’t have to do anything. Being able to have a tighter integration, I think will allow us to do really cool things and there’ll be more natural. If anything, it’ll just push the other software guys to adopt it, for our newer hardware products quicker, because we’ll have the best experience because we’re taking advantage of the hardware capabilities.
In a lot of ways, it just let’s be closer. I think there’s, “What do you do on Zwift? What do you do with Sufferfest?” You train, we’re trying to make people faster, help them train with Zwift. People are racing they are having more social. Everyone’s got their own idea of what they want to do and what they want to use, and there’s a place for everything. We don’t want to try to get everyone to come be SufferLandrians or everyone to be part of that. Certainly it helps that we can. We think we can do a good job and hopefully, make some of our consumers have a kind of, end to end experience between all the different products that are [inaudible 01:17:20].
I think it helps that David in the Sufferfest crew did a great job at not positioning themselves as a competitor to Zwift. They compliment it very well. That must help hugely. I think it’s safe to say that you guys at SufferFest, Zwift really put indoor training into orbit. We’re a massive part into making it the immersive experience and entertaining experience as it is now. That also attracts competitors and Zwift has job postings on hardware. Does that keep you awake at night with the competitors starting to emerge?
No, I don’t think so. I think we’ll stay ahead. We’re constantly innovating, we’ve been at it for a long time. We’ve still got lots of ideas coming. The indoor bikes are just starting. I think we’ve got a two or three year headstart on everybody with the bikes. It’s inevitable. The grass is always greener. Zwift’s got all their online people and they’re looking and saying, “Hey, we should be in hardware. Peloton is in hardware.” It’s hard to have a business that does everything. That’s why Sufferfest is more of an adjacent to us. It’s a way for us to give our customers a really good experience, but we’re not trying to be the end all be all.
I really believe Zwift is in the same camp. They’re not going to make a product that they’ll try to close that ecosystem. Maybe I’m wrong. Maybe Eric would say, “Yeah, we’re going to build the perfect bike and the perfect trainer and if you want to use Zwift you’ll have to buy a Zwift trainer.” I think in their mind, it’s something that they can’t afford to not do because they see the success of companies like Peloton and they’re chasing that. It’s not easy. Hardware’s hard. There’s room for all of us. The number of people riding indoors has grown exponentially, but it’s still a small portion of all the riders out there. There’s still room for more.
Yeah. You seem to really want to tackle the immersiveness of indoor training and try to get everything. You’ve done a really good job at getting everything together and maybe the last, or maybe the Holy grail step to that is, virtual reality. With the way virtual reality is right now, it’s probably not practical. Is that something you could ever see yourself taking on? Or are you just going to leave that to Facebook and Oculus? Is that just too big?
I’m a tech nerd, so I’ve been an early adopter of all of them. I had the HTC Vive, Oculus Rift. You should see [inaudible 01:20:16] taking a tour of my basement. I’ve got the surround screens. I love virtual reality. It’s just the current hardware implementation and experiences is just so restricting. It’s not ready for exercise.
I’d love to-
Just ahead of its time at the moment?
It really is, It really is. The capabilities are incredible and who knows this current COVID-19 thing may drive people to more of these immersive experiences. Be driven to become more popular. Zwift has done some demos over it and it’s a surreal experience to sit on a bike and be pedaling and look down and see legs that are going that aren’t yours. I’ll never forget, the first time I did that, I was like, “Oh, that’s like, these little legs.”
I almost fell off.
Yeah. It’s hard to get. It just has to be perfect. It’s hard with sweating and everything else. I would love to see virtual reality work, but I think it’s got several more years of being a novelty before it really takes off.
I can’t really describe why, because I could hook you up to the Oculus and some amazing experiences, but it just hasn’t caught on. It’s a little bit too… There’s too much hardware too much set up, I think, to make it natural.
25 years ago, when I was going into university, we were talking about it all being a few years away and it’s been a lifetime. It’s been a whole generation away. It is a new frontier though, isn’t it?
I’m curious. Is there any times you thought that this could fail? The whole journey through Wahoo fitness? Have you ever been on the edge of thinking, “Wow, this might not work. The company might not work.” Or has it been quite a steady trajectory for you?
We’ve been profitable every year, but one. That part has been steady. We’ve had so much growth that we’ve taken. I’d say we’ve taken lots of risks along the way. Not many companies would go into new categories every couple of years and reinvent ourselves. There’s been lots of periods where we took a big gamble to do something that, knock on wood it’s paid off in almost all cases so far. We’ve had our misses on products. It’s been generally good. I’ve always had, as an entrepreneur, I look at the businesses I’ve got, to have enough capital, enough cash that we can afford to make mistakes. Sometimes that means picking a bigger loan than you really need, or you’re bringing in a little outside capital when you get away without it.
It’s bootstrapping, but in a way that allows you to be aggressive as an entrepreneurial company and grow as fast as you can. With that approach kind of once a year, we’d look and say, “Okay, if everything goes right, we’re going to have to buy this much stuff. We’re going to need this much cash. If we do that and then the shit hits the fan, we’re going to be out and we’re going to be out of money and blah, blah, blah.” We need to have this cash pile in order to go for this amount this year. It’s an exercise that used to be just done in a quick format, kind of almost back of the envelope by me and now it’s done, a really crazy, cool budgeting process that does that. We’ve got, here’s what we think our sales will be.
Here’s what they could be. Here’s what we’ll order. Here’s what happens if they don’t go where we think they will. A long winded answer of, yeah, I never really lost sleep over, are we going to be around? It never got that crazy, but we definitely push the envelope a lot. Now it’s crazy to think that we’ve become, it’s a real business. It’s not a startup, it’s not a small business. We’re like a real business. Hard to imagine now.
Could you have ever believed you’d be where you are right now, 20 years ago, or whenever you first started? Is this a dream come true for you?
It is, it is. In a lot of ways I’m on the sidelines, just looking in. I can’t believe we’ve got… Our office is 30,000 square feet that we’ve got everybody in and it’s full. We had a company meeting this morning and I’m looking in Zoom and down in the bottom, there’s like 185 people and I’m like, “Oh God, there’s too many people.” All on our company’s meetings.
It’s really fun. I love it. It’s something I’m really proud of. No, I never thought that. I remember in the early days when I was looking at those businesses to buy 1,000,000 in revenue. That was huge. Have anybody ever do that and now we’re significantly more than that. It’s crazy.
Yeah. Has there ever been a point where you’ve said, “I’ve made it? I’ve done what I’ve set out to do.” Or do you ever look in the rear view mirror?
Now, there’s still more to do. If anything, I’m starting to think, “Crap, I’m 50 years old. I wish I was younger. I’m going to run out of time.” There’s still so many things left.
Yeah. I just love creating and products and categories. The road ahead is fantastic. Indeed, fun though, I’m having more fun now than ever. I’m really getting to do without restraint, all the products I want to do and all the things I want to do. It’s a blast.
Man. That’s so good to hear. Last question. I don’t always ask this, but I think it might apply in this case. I’m always interested in the answer. How much do you attribute your journey and success to luck, hard work and smarts? I know you got the smarts down, and you’re obviously a hard worker. How do you partition those, to attribute success to?
That’s a tough one. Those are all important, but I think if I had to look at what success takes? It’s a little bit of all that. Then it’s actually trying, I think so many people just don’t take that first step and that’s the thing. I attribute that to my wife. When I moved to Atlanta, she said, “You’re going to find a business.” I actually had a job offer, I was going to do an interview because I was on the side. I think it’s just trying is a lot of the… It’s not the idea. It wasn’t because it was the KICKR was the greatest thing ever. It helps to have the right product and the right timing. That can certainly cause extraordinary success in some cases. I think if you try hard and you’re smart about it and you work hard and you actually go for it, there’s a lot of different ways to be successful.