Tom Digan & Greg Stewart - Building the World’s Best Fitness App - [Invest Like the Best, EP.454]

My guests today are Tom Digan and Greg Stewart. Tom is the co-founder of Ladder, and Greg is its CEO. Ladder was my first angel investment. What followed over the next seven years is one of the most unlikely and dramatic business stories I’ve been a part of. Today, Ladder is the number one grossing fitness app in the App Store, approaching $100M in ARR with more than 300,000 paying members. But the path from near death to dominance involved debt collectors, leadership changes, and a full reset during the pandemic. Tom and Greg built Ladder by being relentlessly empirical about their customers, ruthless about prioritization, raising money wherever they could, and doing whatever it took when most founders would have quit. We cover the messy early years when survival meant negotiating creditors, how they found PMF by reading thousands of app store reviews, and how they built a TikTok growth engine with no performance marketing experience. They share their long-term vision for becoming the category winner for health and fitness and the impact of AI and GLP-1s on their business. This is a conversation about how hard it really is to build something valuable, told by two people who lived through all of it. For the full show notes, transcript, and links to mentioned content, check out the episode page ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠.⁠⁠⁠⁠⁠⁠⁠⁠ ----- ⁠Ramp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠ramp.com/invest⁠ to sign up for free and get a $250 welcome bonus. ----- ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Vanta is trusted by thousands of businesses and continuously monitors your security posture and streamlines audits so you can win enterprise deals and build customer trust without the traditional overhead. Visit vanta.com/invest. ----- ⁠Rogo⁠ is the AI platform for finance. They're building agents for Wall Street that are trained to understand how bankers and investors actually do work: from diligence and modeling, to turning analysis into deliverables. To learn more, visit rogo.ai/invest. ----- ⁠WorkOS⁠ is a developer platform that enables SaaS companies to quickly add enterprise features to their applications. Visit ⁠WorkOS.com⁠ to transform your application into an enterprise-ready solution in minutes, not months. ----- ⁠Ridgeline⁠ has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Visit⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ridgeline.ai⁠. ----- Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠). Timestamps (00:00:00) Welcome to Invest Like The Best (00:04:26) Episode Intro (00:05:45) Ladder: The #1 Fitness App (00:09:28) The Messy, Early Years (00:14:47) Sponsors (00:16:20) The Darkest Point (00:18:17) Why Greg Joined Ladder (00:19:45) The Turning Point: Ladder 2.0 (00:21:57) The Key to Negotiating with Creditors (00:23:16) Fundraising Challenges and Strategies (00:25:50) Developing Ladder Teams (00:31:31) Listen to Your Customers (00:32:57) Launching Nutrition (00:38:53) Sponsors (00:39:31) Don’t Listen to Investors on Product Feedback (00:40:18) The Cave Process (00:43:13) Crossing the Chasm (00:43:53) How to Crack TikTok (00:51:10) The Content Frontier (00:52:07) Controlled Bets at Scale (00:54:19) Why you should Build a B2C Company (00:57:37) The Impact of AI and GLP-1s (01:02:32) Sponsors (01:02:53) Staying Focused on the Core Product (01:05:00) Building the System of Record for Health and Fitness (01:09:45) What It’s Like Talking to Investors Now (01:12:32) The Kindest Thing

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Patrick O'Shaughnessy?

  Ramp is the only platform built to make your finance team leaner, faster, and better, saving businesses 5% annually on average, so you can stay focused on growth. Ramp just opened for business in the United Kingdom, so if you're running a business in the UK, you can now use Ramp's AI-powered finance platform to manage cards, expenses, bills, approvals, and accounting all in one place. I run my business on Ramp, and so should you. Learn more at ramp.com/invest. Rogo is the AI platform purpose-built for financial institutions, serving tens of thousands of bankers and investors at hundreds of leading firms worldwide. Rogo's AI agents autonomously execute large chunk of your firm's workflows. They can screen deals,

• 0:42Patrick O'Shaughnessy?

  draft SIMs, run buyer outreach, and do diligence on data rooms, all with full security and compliance handled. Every action feeds Rogo Intelligence, the firm's context layer, turning years of deal experience into a secure, governed institutional memory that makes each new transaction stronger than the last. To learn more, visit rogo.com/invest. OpenAI, Cursor, Anthy, and Vercel all have something in common. They all use WorkOS. To achieve enterprise adoption at scale, you have to deliver on core capabilities like SSO, SCIM, RBAC, and audit logs. Instead of spending months building these mission-critical capabilities yourself, you can just use WorkOS APIs to gain all of them on day zero. Visit workos.com to get started.

• 1:30Patrick O'Shaughnessy?

  Hello and welcome, everyone. I'm Patrick O'Neal, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus, along with all of our podcasts, at colossus.com.

• 1:54Speaker 01

  Patrick O'Neal is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc.

• 2:22Patrick O'Shaughnessy?

  Ladder was my first angel investment ever. It was made entirely on trust in Tom Digan at a point when I had no idea what I was doing in venture capital. What followed over the next seven years is one of the most unlikely and dramatic business stories that I've been a part of. Today, Ladder is the number one strength training app. They're approaching $100 million in ARR and more than 300,000 paying members. But the path from near death to dominant fitness app involved debt collectors, leadership changes, and a full reset during the pandemic pivot. At one point, Greg Stewart entered what he calls a cave process, where a huge amount of effort and time went into cracking the TikTok algorithm, just to make short form content work as a growth engine. Tom and Greg built Ladder by being relentlessly empirical about their customers, ruthless about prioritization, raising whatever amount of money they could from any investor, and

• 3:07Patrick O'Shaughnessy?

  willing to do whatever it took when most founders would have quit. In this conversation, we cover the messy early years, when survival meant negotiating creditors at 20 cents on the dollar, how they figured out their customer by reading thousands of app store reviews, and how they built a TikTok growth engine without any performance marketing background. Tom and Greg share their long-term vision for becoming the system of record for health and fitness, their approach to AI, and why they still have no managers on a 30-person team. This is a conversation about how hard it is to really build something valuable, told by two people who lived through every part of it. Please enjoy.

• 3:40Patrick O'Shaughnessy?

  Ladder was the first ever angel investment that I made, which effectively was a bet on Tom. This was before I had any idea what I was doing in private markets. And I've learned a lot from watching you guys build over the years. The story is fairly amazing and unlikely and dramatic, which is why I'm excited to do this with you guys, to tell the story of the business that you've built so far and where it might go. The idea, I think, for our conversation today is to show people how incredibly hard it is to build something that ends up being very valuable, and the twists and turns that happen along the way. It's amazing that you've ended where you are, but I find it all the more interesting how you got here.

• 4:23Patrick O'Shaughnessy?

  And of course, we'll also talk about where you're going. Maybe to begin, since not everyone will know what the business is, just literally describe what the actual product and business is, and then I want to tell the real dirty version of the story of how you got here.

• 4:36Speaker 02

  Ladder is the number one app for strength training. We've built a system that's designed to make it as easy as possible to maintain a consistent routine. We spent a lot of time thinking about personal training. Arguably, the most reliable way to get to the results that you're looking for is hiring a coach. Unattainable for most, inaccessible for most. But personal training, if you think about how it breaks down, it's programming, coaching, and accountability. Programming, you know exactly what to do. Someone prepared it for you. There's no guesswork, there's no thinking. Coaching, you have an expert there to guide you, answer your questions. And accountability, you have a coach standing in front of you. And you don't want to piss off your coach, he's a really powerful motivator. Then we took those three pillars and designed an experience from ground up to get as close as possible to that experience.

• 5:21Patrick O'Shaughnessy?

  How has it been so successful? Because I feel like this is almost like Silicon Valley meme. You have a fitness app, like, there's 4,000 million fitness apps. To what would you attribute the fact that this one is the one that seems to have come to dominate in a sphere of competition?

• 5:37Speaker 02

  It's gonna sound simple, but it's understanding your customers. Being an engineering-first business, if you look at most companies in our space, they're started by creators. And they're good products, they're good companies, but the creator is the face of that business. They make every decision, and they don't have a DNA that's rooted in engineering, in problem solving. And when you look at these apps, they're mostly just content libraries, and the motion is just constantly creating more and more content. But what we saw was, nobody was spending time thinking about how to use these incredible levers to deliver an experience that actually increases the odds of you continuing on. We looked at apps like Social Networks, and we looked at Duolingo, all these apps that

• 6:21Speaker 02

  were using all these powerful motivational mechanics and pointing them at an action for social media networks, it's selling your attention. For Duolingo, it's learning a language. And so we took that mentality of, how do we use software to create an experience that's totally different than what exists today, that isn't reliant on a never-ending content machine? And it's been guided by our members. We spend more time than you could imagine just speaking to our members, dissecting exactly what we should focus on, based on what they care about. And so, I think it's just not looking at other companies for inspiration. We just don't look at fitness, almost ever.

• 6:57Patrick O'Shaughnessy?

  Just to give people a sense of scale, roughly how many people use it, what sort of revenue does the business do? Just give people a sense of how big the business is.

• 7:04Speaker 03

  We're north of 300,000 paying members today. At the beginning of '23, we were 9,000 paying members. So the growth's been exciting. We're getting pretty close and knocking on the door at 100 million ARR. So been very exciting from a revenue growth perspective. But it all boils down to we've created a product that gets people the results that they want and they stay with us.

• 7:24Patrick O'Shaughnessy?

  Having laid that quick, simple groundwork for what the thing is, I would love to rewind time. And Tom, have you talked about, actually, we've literally recorded podcasts at the same table. Do you know what year that was?

• 7:34Speaker 03

  2017, maybe.

• 7:35Patrick O'Shaughnessy?

  2017. The beginning chapter of the business, call it 2017 to 2020 or so, was a struggle to stay alive. And you personally put so much of your time, your reputation on the line to go do this thing. You left a really lucrative, successful hedge fund career to do it. Maybe you could just tell the story of those early years and what was going on. Again, I want to paint the story of 100 million ARR is awesome. Congratulations. That's really fantastic. I'm very happy as an investor. But the more interesting part of this is what it takes to get there. So maybe set the stage for us.

• 8:10Speaker 03

  So Ladder started as a side hustle for me, I guess. A high school classmate that I went to school with up in Boston had pitched me on a fitness startup. The product didn't exist yet. I think it was a pitch that I was just looking to swing at at the time, was very interested in startups and technology. And he asked me to put some money into the business, which I did. I then raised the rest of the money, ended up joining him as co-founder and president of the business. And my condition for joining the business was to move the company to Austin, Texas. For me, that was less about warm weather and change in lifestyle. It was about separating myself from safety nets and putting distance between New York and my Bloomberg terminal and the easy way out, because I assumed it would get hard. I didn't know it would get quite as hard as it did. But there's really two ladders.

• 8:55Speaker 03

  There are two different companies here. Same name, I would call Ladder 1.0 as everything pre-2020. And after 2020, the name's Ladder and we're in the fitness space, but it was a different team. It was a different product. What we were originally building was more of a managed marketplace for personal training. There was heavy emphasis on personalization and a relationship with another human. We thought that was really the opportunity. What we'd come to find out is that business would be very operationally complex, difficult to scale. Ultimately, as you scale that business, it starts to look more like a call center and you'd be inclined to start to automate away the very human you were selling in order to build anything that had margins worthy of venture-type economics and scale.

• 9:38Speaker 03

  So, uninteresting, but what we were seeing was that all of the innovation in the space was focused on the casual fitness consumer. We were noticing that it was all very cardio-based and we saw that this fitness enthusiast customer was really being ignored, strength training in particular. There was no one selling strength training solutions and we got excited that there was this fitness enthusiast customer that was already working out that had a huge pain point around just planning their workouts daily. And we got excited that this is something that we can solve with software. So, we find ourselves in Austin, Texas, and by the time I get down there, I realized startups are really hard and it didn't quite look like what I had been hearing on your podcast as far as like the iterating and the learning and it was hard, it was messy.

• 10:23Speaker 03

  We were kind of out of money the whole time. We didn't have really any customers to speak of. There was no signs of product-market fit at that point. Fortunately, this is where Greg enters the picture. So Greg and I went to Notre Dame, which should disclose that all three of us were classmates at Notre Dame. Greg and I reconnected in Austin, Texas. He had left banking and has now been building startups for a period of time. It was very obvious that he had this small team that believed in him very much and it was clear that he wanted to build something very meaningful in consumer. So I spent my time tricking him into joining us, if you will, and eventually I got him under the hood and excited about what we were building.

• 11:00Speaker 03

  Why I was so interested in startups myself is that I had this sense that you could will something to happen in the startup world. It just felt like if you were willing to not stop and you just keep going, it seemed like sheer force determination, you could build something. That was appealing because in the hedge Fund space, I can promise you in the finance world, that's not possible. You can't just will hedge fund returns. I think Bernie Madoff tried to do that and it doesn't work. It was obvious to me that he shared that same belief. We'd be in the middle of doing something messy, like the debt collector, whatever it is, something hard. And in that same next conversation, he's talking as if our success is inevitable and we're going to build this enduring business. I was attracted to that. I've always felt that way. And so I could just tell that Greg seemed like the type of guy you wanted to be in a foxhole with.

• 11:45Speaker 03

  So it's now the end of 2019 and I'm realizing that we have this opportunity to reset and to really think about what can ladder 2.0 be. But in order to do that, we need to refocus, restructure, was thinking about what a leadership transition could look like. I found myself in a position where I was our largest financial shareholder. In addition to being in the company as a co-founder, early days, it was all people like yourself that had put money in because they trusted me personally. So I felt naturally this obligation and my role and mindset shifted from one of co-founder to trying to be a steward of the business. And at that point, this is the day after Christmas, 2019, came to the board and proposed that we needed to make some pretty significant leadership changes in order to really reset the business.

• 12:30Speaker 03

  And as part of that, we had some changes at the executive level, including naming Greg CEO. Felt like at that moment, we had this sense of we can go build this thing now. Our problems were hardly solved, but it felt like the problems were now worth solving.

• 12:44Patrick O'Shaughnessy?

  Vanta automates compliance so your team can spend less time on security reviews and more time getting customers. Vanta cuts audit prep by 82% and gives you instant up-to-date proof of trust without all the manual work. So you can close deals faster and with less friction. Customers report a 526% return on investment and more than 16,000 companies use Vanta, including Ramp, Harvey and Snowflake. Get started with $1,000 off at vanta.com/invest.

• 13:14Patrick O'Shaughnessy?

  Ridge line is the first end to end system of record with embedded AI for investment management firms running portfolio accounting reconciliation, reporting, trading and compliance on one unified platform. Firms are moving off legacy technology and on to Ridge line because of how far ahead Ridge line's AI features are compared to anything else in investment management software. I've been hearing from a lot of investment managers about AI and they fall roughly into two camps with some unsure where to even start and others convinced that they can build their own order management system over a weekend. The reality is that running an investment firm will always require governance, controls and a single source of truth for your data and no amount of AI enthusiasm changes that requirement. Ridge line is built on exactly that foundation, which is why I believe

• 13:58Patrick O'Shaughnessy?

  that the firms that come out ahead in the AI era will be the ones running on Ridge line's unified platform. If you're serious about your firm's AI strategy, Ridge line should be part of that conversation and you can request a demo at ridgeline.ai. Just to put like a finer point on the situation for you personally, you've left this job where you're making a bunch of money. You're in Austin, you moved your family, you've gotten most of your good friends and your family, as far as I understand it, my family, so many people that you cared about that cared about you too, to invest in this thing. What did that feel like? What was the darkest point and what did it feel like for you personally?

• 14:32Speaker 03

  It just felt like there was nothing we weren't willing to do to make it work. I think that's why it was appealing to meet someone else that felt that way that was going to be in that foxhole. I should have learned that lesson and said, I need to not raise money from friends and family. Instead, they were the only people at that moment that I needed to double or triple down. You just had to go even further all in. Not sure I would do it again or recommend other people take that path.

• 14:52Patrick O'Shaughnessy?

  Why not?

• 14:53Speaker 03

  You have to just know deep down that you'd be willing to do whatever it takes, including some very difficult conversations with your wife and you're building a family and you're leaving a lot on the table on a much easier, cushier hedge fund, country club type existing here in the Northeast. And you want to go and do something hard. Turns out it's pretty fucking hard.

• 15:13Speaker 02

  I think that dynamic is why Ladder's here. Your motivation was delivering to everyone in your life. That sits with you every single day. I don't think there was a moment.

• 15:24Speaker 02

  that where he thought we weren't going to figure it out. I can't think of one day we were like, it's not going to happen. We were going to figure it out. And on my side, I don't have that same dynamic I do now, but it wasn't true when I first joined. Not everybody was invested in Ladder. But I had a conversation with my wife where she said, this is the last one. If you don't figure this one out, there are no more startups. It had been 10 years of not a lot of success tied to a lot of work. And my wife married an investment banker who was a closeted entrepreneur. And she's been an investment banker for 18 years. And it's been a long time of, you know, I'm going to the clubhouse. I'm going to figure it out today. I promise it's coming. It's coming. That's been an enormous motivator of like, no, this is going to work. There's this no scenario where we can let this not get to the vision that we set ourselves

• 16:08Patrick O'Shaughnessy?

  Why did you decide to join it? If you think about the circumstance that you were opting into, he said it best. No money, no product market fit, needing a whole new team. Why not start a new company or something? Why come into this specific situation?

• 16:21Speaker 02

  It was this perfect moment that is very unlikely to ever happen again. I was building a company inside of a big real estate private equity business, a consumer company, which had all kinds of complexities of trying to be an innovator inside of a really established company. But I had this amazing team of people, some that had been with me for a couple of ventures, some that I worked with for two to five years. Really powerful team that could build anything. It was a product and engineering and and marketing, but a core group that we wanted to just keep working together. And we wanted to be in consumer. We wanted to work on a hard problem. But we had a group of people that were not at a stage of life where they could take zero salary and start something from a garage. People were starting to have kids. Life is starting to happen. We got spouses. And so just starting something from scratch.

• 17:06Speaker 02

  And we thought about it. It just seemed like it was a hard task to keep the group together. And that was my number one focus is to keep this group together. It's special. And I wanted to hold on to it for dear life. So like, that's what I was solving for, consumer and bring my most important people and let's take another swing together.

• 17:25Patrick O'Shaughnessy?

  Talk about what a given day was like when you guys joined forces. There's still this mess to clean up. And then there's this thing you have to go build. And it's like two sides of the coin. What would a day look like in those early days?

• 17:37Speaker 03

  It's literally late March 2020 when we have zeroed in on the concept for this new product. And we're having to go fully remote. The team's new. So everyone's working from home other than Greg, myself and Johnny. The mornings were for the messy stuff. It was figuring out how to untangle some of the situations we found ourselves in. Debt collectors and actually just trying to fix things so we can move forward. In the afternoons, we're actually building product and Greg's focused on winding the team up and iterating on what we're about to build and launch. A few months later, we're raising money at any moment during that. I'm spending every moment redialing people that are already investors and reaching out to new people. What I remember most though about those days, because it was hard, but it was also so exciting.

• 18:20Speaker 03

  And I think about at night at 10 o'clock, we had finished, the whole world had stopped. Everyone's at home. We've been in the office grinding since 6 a.m. And at 10 o'clock, it would be like, all right, like whatever win we had that day, let's celebrate. And it was like, you've seen that scene in Goodfellas when they're all in prison? And when wise guys go to prison, it's not like everyone else. They got lobsters coming in and-

• 18:38Patrick O'Shaughnessy?

  Slicing the garlic.

• 18:39Speaker 03

  Slicing the garlic with the little razor blade. For us, our version of that, we're cooking steaks on the grill. We're smoking cigars in the office because no one else is coming in. I'm shaking martinis up there and we're high fiving about raising $10,000 checks. That was exciting because frankly, it felt more like the startups that were romanticized by the podcasts and books and all the fun stuff. It was survival. And when you're in a moment where it literally is survival, it's not hard to know what to work on. Or it wasn't hard for us to know what mattered. We needed to not run out of money. So Digan was spending time trying to solve that problem. We were in debt and owed a lot of people a lot of money. And it's a startup, so it's really hard to get a clear picture of the financials and where money is going. And it was the first thing I worked on was where's the money going?

• 19:24Speaker 03

  We put that piece together and no one can really see this or is looking at it. You realize like money's going in different places that we're not totally aware of.

• 19:32Speaker 02

  And mission number one was figure out the cash flow. And we got visibility into that. And then we had some money that we owed to people. And we owed some like hardcore creditors, like American Express, who doesn't really mess around. And I learned and Digan learned all about how to negotiate with creditors. And that was a new skill set for me.

• 19:48Patrick O'Shaughnessy?

  What's the key to that?

• 19:50Speaker 02

  Begging. Tell them you have no money. Like we'd get them to really believe, and it was true, that there's a chance you get zero. There's a door to negotiate. We were negotiating with big creditors at 20 cents on the dollar. We knew the list of groups that we owed money to. And it was like sales. We're like, all right, we gotta go one by one and figure out how to close the door on this and not let it overhang the business. And so raise money, get money back to the right people, clean up the house to survive. And then we had this moment around this time where we had this existing business that's not working. There's some insights that are coming out of it, but it's really not working, but we're still trying to maintain it. So we're living in this in-between moment of keep that thing alive so we can pitch something to folks on the outside.

• 20:35Speaker 02

  But also, what are we gonna do? What are we gonna build? Isn't this, there's no path in this thing that we've built. So there are really funny stories where Digan was pitching, I'm pitching, and you're basically trying to figure out what the investor likes. And you're like, let me tell you about this one-to-one business we got. It's like super exciting. Oh, you don't like that? We're thinking about this social concept. You just live in this world of figuring out, how do I make it through? And there were enough wins, the micro wins on survival felt big to us. And there was enough to celebrate, to keep going and wake up and go do it again.

• 21:08Patrick O'Shaughnessy?

  If you were to teach a class on fundraising for startups now, you've done this as masterfully as anyone with the cards you were dealt, what would the lesson plan look like?

• 21:16Speaker 02

  One of the biggest lessons, particularly from that moment, is selling people on your conviction. In that moment, we were selling both the product that we were about to shut down, but we didn't really even have visuals yet for the new product. So it was as much just selling the team and the conviction on what you were about to build. I think the best example of that, a story about another friend of ours, we'll call him Bill, in March 2020, trying to kickstart a round. But no one's gonna lead this round naturally, because who would lead a round in our business?

• 21:42Speaker 03

  us at that moment. And so I was about to lead another inside rounds where basically I'm pricing the round and passing the hat to all the boys and whoever would listen. What happened there was now I need some more cash. I don't think Brayden knows how many times I wrote checking into the business. This was another example of being like, all right, the only way to get this going is to write the first check and lead with that conviction, showing that you had skin in the game here again. At this point, I'm trying to figure out how to sell anything that's not nailed down. And so it's 401k, put that in, done. What else can we do? This story here is funny because I'm looking at the line items on the balance sheet, if you want. I'm like, oh, permanent equity. That's Patrick's friend Brent B. Shore. And Brent came and told his story on this podcast. He has an unbelievable strategy and it's called permanent for a reason in that, you know, he buys these family owned awesome businesses and then holds them forever.

• 22:28Speaker 03

  And so there isn't a liquidity profile here. But I read the documents and it said that if you found another LP to sell to that you could sell. And so I called Brent and said, hey, I need your investor list. And he's like, S and P is down 35%. We're in a global pandemic. Of course, I'm not giving you my investor. You're my smallest investor. But he does me a solid. And he's like, hey, you should call Bill. Bill's a friend. He's Patrick's friend. You know, Bill, another Notre Dame guy. So I called Bill and Bill's a gamer. So he's just like, what are you looking to do? When do you need this buy? What are you thinking? How do we mark this? And I'm like, market's down this, what about down 10%? And he's like, what about down 50? And we do the dance and we end up somewhere in the middle. And I'm like, you're done, but I need the money tomorrow. And he's like, I'll send you the money tomorrow and I'm investing in whatever this is going into. He doesn't even really know what ladder is, but he's like, well, I'm in.

• 23:15Speaker 03

  The point there is in particularly those early days, it's important to have skin in the game in whatever way you can. For us, it was about being able to show that level of conviction and urgency. Bill didn't need to see a deck. We didn't have a new product yet. He knew you were involved and he was just like, if you're willing to do this, I need to be involved too.

• 23:33Patrick O'Shaughnessy?

  So he bought your stake and then also invested in the round that you were that you were investing in.

• 23:37Speaker 03

  Exactly. Yeah, I think he matched what he was sending me, which was awesome. And that kicked it off.

• 23:41Patrick O'Shaughnessy?

  Wow. We're glossing over a lot. Maybe we'll keep returning. I love that story. Let's get to the point now where things are starting to feel like, okay, now we have to build this next thing. Maybe this is a good opportunity to ask you what you now know about the world of fitness and people that want to get fit. What becomes your North Star for what product can we build here that's scalable that can get to what it's become?

• 24:03Speaker 02

  Yeah, it was no magic bullet that said, "Go do this and you'll win." But we spent a lot of time, the first two, three months I was there, trying to dissect the current business. And the current business was this one-to-one, essentially marketplace, connecting independent contractor coach with a consumer who is looking for personal training. We're studying the behavior and watching what's going on here. And what I noticed was that coaches could set their own price. And some people had crazy high prices. Some people had more approachable prices. And they're building this as customizable program. "I'm building it for you based on your very specific goals, and that's why I'm charging you this amount." And on the backend, we could see that it really wasn't personalized. It was big bucket personas.

• 24:48Speaker 02

  The names were Sally Pilates. And that was being billed as super personalized programming and charging like you would work with a coach. But we could see like these big bucket personas. We're like, "Okay, maybe personalization isn't the secret here, but it's having good programming that's relevant to you." In that same moment, I went through the list of coaches, and there weren't a lot of coaches that were making a lot of money on this. But we had a couple that were making four or five grand a month. And I spent time with them, and I asked them, "What are you doing differently? How are you making this thing when everybody else is struggling with it?" And we had one in particular. And I was like, "All right, so you're making four grand a month. Your earnings aren't growing. How did you get there? Why isn't it growing anymore?"

• 25:31Speaker 02

  And Lauren was a trainer in New York, like a high-ticket trainer in person. And she was filling up all of her downtime with online clients with Ladder. And we had no idea how to grow. So she figured out, I have this Instagram profile. She had five or 10,000 people. And she was telling a story to her audience, and they were coming in. But she filled up all of her time, and she couldn't take on any more clients. I'm like, "That's a bad business. You've capped how big this can get. The constraint is human time." So these two insights of calling bullshit on personalization, watching what Lauren was doing and seeing how she was growing, and piecing those together into what became a trial test or an MVP of this vision. We didn't know what we would build, but we said, "There's something in these concepts."

• 26:16Speaker 02

  And in February 2020, we said, you can't take on any more business, Lauren. What if we Jimmy rigged the existing app? And we created an experience where there could be more than one person in there. You're going to program for a group of women. You'll go out to your Instagram audience and you'll say, hey, this is for, I'm in New York, busy women in New York kettlebell training. I'm an experienced coach. I'm going to give you new workouts every week. It's not customized, but very specific persona that she was talking to. And we're going to have this chat in the app where we all can talk to each other. And the app looked like shit. The functionality barely worked, but the concept was clear. We're in process of dying in this moment. She went out to her Instagram audience and we had like 100 people sign up at 100 bucks a month. Very fast.

• 27:01Speaker 02

  I'm like, that was the most exciting thing I'd seen yet, other than getting wins against American Express in her creditors. And that was awesome. We're like, okay, there's demand. Lauren's audience, they came in very clearly. There's interest in this concept. And so that first month, we were just watching what was happening because there was nothing else to look at from a product perspective. I think what the most amazing and impactful thing to me was these people had found each other in the app. They were similar personas. They lived in a similar place, busy women, following the same workouts every day, interacting with the coach and each other. They'd never met each other, but they started posting on Instagram about Lauren and ladder. And then we saw them meeting up in New York at the park together. They'd never met each other before. And that was like magical.

• 27:45Speaker 02

  There's community elements and social and they're happy. And we'd never seen anything like that in the original version of the product. So all these little glimmers of hope on this concept of programming. It's not personalized, but it's high quality. It's meant for a specific persona. The social accountability element, all these things were like bubbling up as real tangible proof points of something that could be interesting to go work on. That group, the renewal rate was 90% plus. People paid again. I was like, damn, like they're doing the workouts and they're staying with us. And if you looked at the app, you would go, this is garbage. But the promise was being delivered on what we were proposing. We ran one more trial with another coach. It was the exact same outcome. I talked to almost all of those women on the phone.

• 28:29Speaker 02

  It was like, who are you? How did you find Lauren? Why'd you go into this app? What problem were you trying to solve? And we talked to all of them and built a relationship and like all those were inputs.

• 28:40Patrick O'Shaughnessy?

  Did anything surprise you in those conversations?

• 28:42Speaker 02

  It validated a lot of things that we were learning in real time. It's like, why did you join? I'm tired of thinking about what workout to do. I'm already into fitness, but I spend time actually planning this. It's a pain point for me. I don't want to go spend a thousand dollars on a coach. I need something more approachable, but I need help with a plan. I need to know that I'm doing the right thing. I want a coach that is helping me and have confidence that it's the right thing to do. And that was a real thing. And then we saw them meeting up and they would say, oh, I met someone just like me. And they had the same pain points and they've become a friend and we work out together. And that was magic. And so all these little kernels, just speaking and forming a picture that got clearer and clearer and clearer. It was the beginning of what that product would be.

• 29:22Patrick O'Shaughnessy?

  Everyone's very fond of the Elon algorithm for company building now. It's been passed around as like one method for doing this. If you had to distill your algorithm for how you proceeded from that initial kernel of an insight of, okay, here's something that people are paying for and like. And we can do something with this all the way through to where the product is today. What's been your, as the CEO, algorithm for that iterative improvement to get from the original kernel to now?

• 29:49Speaker 02

  Well, I can tell you number one is don't listen to investors on product feedback. That is by far number one. But for us, it's just two things. It's prioritization, ruthlessly prioritize. You have to prove to each other that this is going to be additive to the product. And additive to the product means we have a thesis that is going to increase workout completions. That's our North Star. We're solving, not for getting you to pay one time, we're solving for you to actually complete workouts with Ladder. And what can we go build to go improve the odds of you doing that and staying with us? And how we get to that is we don't guess. We absorb every piece of information that's coming in and it's all driven by our members. And if you ask the right questions and you have people that are talking to you,

• 30:32Speaker 02

  you can start forming a picture of what are the huge buckets that actually move the needle? And you can do some work to figure out how complex is this to go build and go do it. And don't do 10 other things just because it's interesting or you can't do it. Just do the one thing and do it really well and do it again. That's still the case today. We just launched Nutrition. It's the biggest thing we've built since the first version of the product. And people on the outside were like, that should be a separate app. Or like, that's a different business. And we're like, well, to our customers, not. We did this survey a year ago. You had 5,000 people spending 50 minutes and it was qualitative and quiet. And we were trying to figure out what are the biggest bets that we could go make? We were ready for a big project and we didn't want to guess. And out of that work, it became very clear that it was nutrition.

• 31:16Speaker 02

  And what we learned was we have a third of our members who are tracking macros. Of that third, 90% are using an app. Of that 90%, most are using MyFitnessPal, and they hate it. And they're really tired of managing their problem set in two different spaces. And what we learned through that experience and talking to members was that for the consumer, it's one problem set. I want to lose weight. I want to gain muscle. There are inputs and outputs to that math equation. Outputs is activity and exercise. Input is what you're eating. And they're managing this in two places, and they know that's not the right way to do it. Because if you worked with a coach, these things are all symbiotic together. But it all started with a kernel from our members. And we had a really clear line of sight that this would move the needle.

• 31:58Speaker 02

  They were telling us, I want you to use all of these things, motivational mechanics, streaks, badges, celebrations, and help me with the other side of the equation, which is going to dictate success or not. And then, once we have that kernel, we do another survey. We go very deep on nutrition, like extremely deep to understand. And we all review it, read everything, we synthesize it, and it gives us a blueprint. And when you do that, it becomes obvious what to build. What does very deep mean? The nutrition survey, that was probably a couple hundred questions. We read all of them. Now you can put them in ChatGPT. In the beginning of this, I would copy and paste App Store views into a Word doc. I would read every single one of them, and I'd organize the words by buckets. I would color code them, and I would do ChatGPT.

• 32:40Speaker 02

  And I have these documents that are 100 pages long, and it's all just deconstructed words from our members. And very similar to survey work. In the beginning, we would do that with surveys. We'd dissect the themes. What do people care about? And now you can use ChatGPT to synthesize all of this. What is the biggest bet that we can make on behalf of our members? And then we'll think about what are the building blocks of what this should do? Is this nutrition coaching? Is it macro tracking? What does the feature set do? And you aim questions at uncovering the pain point and what they're looking for. And that becomes the guide on the first version of the feature. But what did you learn there? What do people want on nutrition? There are two halves to this from my perspective. It's looking backwards and looking forwards. What they were doing Is tracking, looking backwards. Make it really easy to track macros.

• 33:26Speaker 02

  I want to know if I'm in a surplus or a deficit. I want good visualizations and I want it to be really easy in terms of how to log. It's very tedious. It's very hard with some of the existing legacy products. So give me an easy way to do this. And so the looking backwards to us was basically the table stakes. We need to give a really easy path to tracking macros, logging your meals, logging your food, and telling you what's happening as a result. And then if we do that and we do that really, really well, there's going to be a whole other opportunity to tell you what to do, not what you did, but what to do. Members want to know what to eat specifically. Where should I get it? At a restaurant, here's the menu. What's the best choice right now based on my goals?

• 34:08Speaker 02

  They want prescriptive advice, but the looking backwards was what they were using for the apps that they were using at that moment. It was mostly MyFitnessPal and there was no brand affinity or love. It was just the tool that existed, that there was trust because they had the biggest database. They had done it for a long time. But there was just a lot of pain in these conversations on how they were doing this stuff. So we made a conscious decision not to charge for it. So we're going to give this part away. We want to go build trust with this group and win over tracking with Ladder. We're not going to convince a whole new group to do this. We're going to go get the people who are already doing it. We're going to do it better and we're going to win their trust, start compiling this data. And there's a million products that we can now build.

• 34:52Speaker 02

  Like if you think about what nutrition does for us, it gives us the whole math equation of inputs and outputs. There's no product in the world that has that. So the picture around the consumer, it's the clearest of any other potential product or service around this consumer. We know exactly what's happening on both sides of the equation and that's going to unlock a whole bunch of products and services to help our consumer.

• 35:12Patrick O'Shaughnessy?

  And this would be things like I could take a picture of my food.

• 35:15Speaker 02

  We already have that. That was table stakes. Take a picture, that's easy, but also tell you what's the level of confidence and accuracy because there are trade-offs if you use take a picture versus scanning a barcode or entering very specifically an ingredient or a recipe. So we had to nail that use case, make it super solid. Like make it very easy to use. And that was the beginning of building trust. Even in that process that you act like, how do you figure out what to build? We built the first version. We have a group of 2,000 members who are beta members and we give it to them. But first we do it to the team. That's the alpha. We're all giving feedback with a Slack channel. Everyone's communicating on what's happening. That helps the picture get clear. And then we release to our beta members and it's in the wild and they're using it. And you hear it right away. What's wrong? What's the gaps?

• 36:00Speaker 02

  What do you need? We would survey these users every week. We had a question, how likely are you to switch from your existing app that you're using? And when it started, the number was 20%. Pretty low, not super exciting for us. And then we would go build and make the picture clear and help fill the gaps of what folks were experiencing. And it kept going up, kept going up, kept going up. And like, there's a point where you could just keep building the MVP forever. But it was 85% one day and it was like, we're ready. We're done. This is ready for the wild. And then we released it and it's been a home run. We're in week six, we're almost 4 million meals logged, which is insane. Thinking about those early stories where we were literally, we knew all the people in the app.

• 36:42Patrick O'Shaughnessy?

  Your finance team isn't losing money on big mistakes. It's leaking through a thousand tiny decisions. Nobody's watching. Ramp puts guardrails on spending before it happens. Real time limits, automatic rules, zero firefighting. Try it at ramp.com/invest. As your business grows, Vanta scales with you, automating compliance and giving you a single source of truth for security and risk. Learn more at vanta.com/invest. Ridge line offers one unified platform that automates away the complexity across portfolio accounting, reconciliation, reporting, trading, compliance, and more, all at scale. Schedule a demo at ridgeline.ai. Every investment firm is unique and generic AI chatbots don't understand your process.

• 37:26Patrick O'Shaughnessy?

  Rogo is built by finance professionals. It's connected to your data, learns your process and quickly produces client ready outputs. Check them out at rogo.com/invest.

• 37:37Patrick O'Shaughnessy?

  The best AI and software companies from OpenAI to Cursor to Perplexity use WorkOS to become enterprise-ready overnight, not in months. Visit workos.com to skip the unglamorous infrastructure work and focus on your product. You said before, "Don't listen to investors on product." Can you say more about that?

• 37:54Speaker 03

  Well, I think, one, don't listen to any one person on product. Everyone has a unique use case, persona, problems, solutions that they're looking for. So no one person is the source of truth. If you get one piece of feedback, that's just one piece of feedback. So when we talk about investors, I remember earlier meetings, it would be like really prescriptive advice saying, "You should go build this." And it's like, "Maybe. I don't know. Like, that's what you want." And then we would go test that, their user base, and ask them. And they would say, "No, I don't want that."

• 38:21Patrick O'Shaughnessy?

  Yeah, it's an extremely empirical way of building it.

• 38:23Speaker 03

  It's just empirical, and it doesn't have to be completely precise, but it becomes very clear what the big, chunky buckets are and everything else on the fringe. It's like, that's not that important. But what is important becomes very, very obvious, even if it's in line with what investors are looking for or not.

• 38:37Patrick O'Shaughnessy?

  At various points through this business, you and I have had a call, and it will be some period where you describe him having gone into like a cave-like process to go study some new topic. Some new thing has become the bottleneck for the business. I can think of several occasions when he was studying X, Y, or Z. Describe from your perspective this cave-like process that you've seen him go through to unlock these bottlenecks.

• 39:00Speaker 03

  Probably four years ago, when we're trying to figure out growth, we've built a product, people love it, they're using it, they're telling us what we need to build and what features we need to evolve to improve it. But we still haven't figured out how to grow. The way you get from zero to one million ARR is very different than the one to 10. For us, Greg's view was, "Look, let's go run some experiments." And so we're looking at some different ways to grow, saying, "Here are the different options right now." There's SEO, and we're thinking about how to go and start to create content on search. We have a lot of assets in the app that we can leverage there. We're looking at some different channels, TikTok being the most obvious, where it's just all the eyeballs are there, but the brands aren't there yet. That was compelling to us. We understood that the consumer was very interested in engaging with short-form video. Meta hadn't quite copied that with their Reels product yet,

• 39:44Speaker 03

  but it was obvious that that's where the consumer... was going with their attention and yet the brands weren't there spending yet. We partnered with coaches, these world-class coaches who were all creators. None of them knew TikTok yet. They were all Instagram native. In fact, I don't think any of them at this moment were even on TikTok. And we were excited to go figure this out. And it was hilarious because Greg, I don't know if you've seen his Instagram. It's not particularly cool. He's not a creator, but he was like, I'm gonna go and become the TikTok guy. And I'm like, all right, Mr. TikTok over here. I was like, you gotta go hire somebody. I'm like, I'll figure it out. So he goes all mad scientist on trying to just understand every aspect of TikTok to the point where fast forward two years later and the big dog engineers from China are in our office.

• 40:27Speaker 03

  Cause Greg would be calling and being like, the algorithm's broken. And they'd be like, no, it's not. And then Greg would go get a bunch of information from Ryan Ma and send it through. And they'd be like, oh, wait, he's right. There's something wrong with Ads Manager. Cause the ad tech was very new. And so Greg was very much triaging and troubleshooting their ad tech in real time. The other story that I just speak to Greg going into his cave. It is winter 2021, probably March or February. And I don't remember like the Texas freeze when like the entire state shut down. We had an inch of snow, but we lost the power grid. So anyways, Greg goes into a cave because there's nothing else to do. And he's reading the book Crossing the Chasm, great book that I think all founders have read. But Greg's output of reading The Crossing the Chasm was a hundred page slide deck that he sends me when the power comes on.

• 41:10Speaker 03

  And we finally have internet again. And he's just like, I figured out who our customer is. Ultimately, that was very important work because it set up what we were about to go do on TikTok that you couldn't have success without understanding who that customer is.

• 41:23Patrick O'Shaughnessy?

  What did you find in the book?

• 41:24Speaker 03

  Not trying to be all things to all people, especially early on. You can go after a big market problem, but you don't have to start there. We were trying to tell a story to everyone. The world was upside down. Consumers were up for grabs because your gym folks were at home. Everything was a mess. All these other companies are launching and we're saying, we're weights, we're body weight, we're gym, we're home. It was all things to all people and it wasn't working. Like we weren't getting to the right person. And Crossing the Chasm just helped me zone in on who is the most important person that we're talking to right now and who's finding success? And how do we speak specifically to that person and not go try to tell a story that's relevant to a Peloton user?

• 42:07Patrick O'Shaughnessy?

  You have unlimited time right now to talk to us about solving this problem, how you cracked. The code of growing through something like TikTok. The more detailed, the better. I just think, obviously, it was a A or the critical moment for the business early on, once you had figured out the product. Just riff on the experience, literally what you did.

• 42:25Speaker 02

  Yeah.

• 42:25Patrick O'Shaughnessy?

  And what you learned.

• 42:27Speaker 02

  Had a whiteboard meeting where like, what are the growth loops that we think are available to us, that we think we have an advantage on, that we think we can do within our own team, that we can learn fast enough to get proof points and to dive in on, go all in on. And TikTok came out of that as the winner. And what we started to do was make content, and we knew nothing. I had this breakfast meeting with Atsul, who leads branding creative. And I was like, hey, man, do you want to work on TikTok with me? And he was like, sure. This guy is building all of our amazing campaigns, like he's shooting for Nike and all these things. Need you to make TikToks with me, and it's just gonna be me and you. He's got the creative mind. And we grabbed a coach, and we said, hey, we're gonna start an account from scratch. You're not on TikTok. We want to go learn.

• 43:10Speaker 02

  Give us all your video that you have on your iPhone. So you have this inventory of video, you have a smart, creative person. We started handles in the coaches' names. Then we started to create content. And very, very quickly, we started to learn what was the content that worked. And we were dissecting every inch of it. What worked multiple times in a row? Why? What are the commonalities? How is this product used? It's not Instagram. It's like TV. People are consuming content for entertainment. And it's not a social platform. It's a media company. And so you have to think about, what is the right content that is educational, provides value, that gets to the right person? Because unlike Instagram, where you have an audience that you're creating content for, you have to create content that the algorithm knows who to put in front of the right person.

• 43:55Speaker 02

  So it's all about the content. But the advantage for us at that moment was, it didn't matter how many followers you had. You can start from scratch. Nobody knew how to go do this. But that first account that we started, I remember being on the playground with my kids, and Atsul was like, dude, one's ripping. And it was like a million views. And we're like, holy shit, that's amazing. That video took you two seconds to make. And it was like, do it again. We did it again. We took that account from zero to 250,000 people and... Forty five days and we weren't thinking about paid at all. We were thinking about what is TikTok as a product? How is it being consumed and what content wins? How do we create that content? So we got views, we had proof points of traction and then we said, all right, we have blink in bio. Can we get somebody into the app?

• 44:40Speaker 02

  And we did very quickly and we're getting the right people into the app. And all these things were like starting to compound. We started another account, did the same things. We're like, we can do this organically. It was three months and then we said, let's start putting some money behind this and see how it goes. We had no performance marketing team. We had no agency. I was absolutely against hiring anybody outside the company. And I just committed to learning how to be a performance marketer on TikTok. Because we didn't come from performance marketing or Facebook, we had no preconceived notions of how things should go. And when you talk to Facebook marketers who are moving to TikTok, they're applying all these rules and heuristics of Facebook and Instagram to TikTok.

• 45:21Speaker 02

  But these are two separate platforms. You have this Chinese app and a different algorithm. Why would those rules matter over here? I spoke at a all hands for TikTok and I was talking about some of our strategy and I had conviction in what we were doing. And I was like, yeah, I make budget changes seven to 10 times a day. And if you talk to the TikTok group, they're like, you shouldn't touch it for two weeks. It's the learning phase and all these things. Well, all those people came from Facebook and all the rules they were telling me were Facebook rules. And at the end of the meeting, this woman comes up to me and she was like, that was really interesting because the things you had most conviction in are the opposite of what we're telling our clients to do. I realized pretty quickly that everybody is taking this mental model over here and applying it and not trying to figure it out from scratch of like, if it works, do it again. Who cares what they tell me it worked, do it again.

• 46:07Speaker 02

  That was an important piece of just thinking on our own on how this should go. I launched my first ad. Okay, we can do this. Very quickly, it was getting people into the app and then it just became a drug addiction. I mean, it's like trading. I'm bad at mental math, but I'm also fascinated by traders. And when I was a goldman, I would interact with traders. It was just magic to me, all the screens and the attention span. I was like, how does this happen? But it felt like that for me, like I'm moving money around, driving growth for the business and it became a video game. It's like, how do we beat the video game today? And I had this amazing creative partner in Atso. I can figure out the ugly of how to be an AS manager person as my job. And those two things together unlocked that channel to just keep going, keep pushing on.

• 46:48Patrick O'Shaughnessy?

  I feel like the rewards for doing this in a consumer business are extremely high. And so lots have probably tried, but not lots have succeeded. What do you think it was that let you start to win the video game? Was it the knowledge of how to cut a video together? Was it topics?

• 47:02Speaker 02

  No. The creative side, what we learned is the for you page is making a decision on your content of who your content is for, and then shoving it to that person. So the first game on the creative side was can we create content that gets to the right person for this coach? This is a CrossFit modality. Can we get to CrossFit people using content? And that was just iteration. We would do something.

• 47:24Patrick O'Shaughnessy?

  And so you'd say like, what does a CrossFit person care about?

• 47:26Speaker 02

  What do they care about? What's their problem solution statement? What should a coach say to get you in? We learned about hooks, what you say in the beginning, the first three sentences. It matters. What should a hook look like? What do I need to say? It gets a billboard that I need to get your attention very quickly. And we had a lot of bad content that didn't work. And then we had stuff that started to work. And we have these whiteboards where we dissect every inch. It's like, what is she wearing? What word was first? What was the setting of the gym? What was the movement? What did we say? And all of the insights of that come from knowing your customer. It's not, hey, we magically figured out TikTok. We did. But our edge was we know our customer inside and out. I had dissected these app store reviews so deeply that we knew the words that were coming out of the mouth for people in CrossFit coming into the app. And we use that as our ammunition on how to speak to them and create compelling content,

• 48:10Speaker 02

  hooks that got to that person and told the story very fast that got them to keep going, to follow, to come into the app.

• 48:16Patrick O'Shaughnessy?

  And just to orient, in the history of the business, how much revenue or whatever was there at the start of this S curve? And how quickly did it accelerate?

• 48:25Speaker 02

  Four, five million of era. We were getting some success, but like the beginning of the TikTok journey, it started at three million, but five when we started to put money into the machine.

• 48:32Patrick O'Shaughnessy?

  And it sort of exploded since there.

• 48:34Speaker 02

  It exploded, but one of the things we learned that was critical to TikTok is you have to own the creative. And this was like not typical for brands in our space. They'd hire an agency, the agency would make creative. But we're learning all this stuff on the organic and we're learning the iteration cycles are so fast. You can't just hand it off to an agency and hope that it comes back correctly. So we started investing in creators full time. We had JDs on the website in It said full-time TikTok creator. People were like, what the hell is this job? But it's no different than social media jobs 10 years ago. That's not a job. Well, it is a job. It just wasn't a job yet. And it was the same dynamic. So complete control over the creative. We have these coaches on our team. Gave us this edge on compounding learnings. This mini-agency that was figuring it out across all these different creators that we controlled,

• 49:20Speaker 02

  that we weren't just waiting and hoping that somebody on the other side of the fence would throw us the right thing.

• 49:24Patrick O'Shaughnessy?

  If that was the frontier then, what is the frontier now?

• 49:27Speaker 02

  What we're thinking about now is the short-form video strategy will always be a core part of our strategy. That's not going away. But I think what we learned.

• 49:35Speaker 03

  It's expanded. We'll be on TikTok at this stage.

• 49:37Speaker 02

  Exactly. I think what we learned last year, though, is that we certainly don't have a product problem. We have a very special product. Our customers love us and they're asking us to go deeper with them. But most people still don't know who Ladder is. We're consistently top three or four in our category in the App Store. And yet, the awareness is very low. I think that's largely a function of the short-form video strategy that we had that was speaking with creators in these winning formats to a specific persona that wasn't really leading with the Ladder brand. Now, we're excited to go and think about celebrity partnerships and out-of-home and TV. And we're already making these campaigns. Now, we're just going to go and put them in these other channels. So that's certainly a big focus of next year is just telling a wider story that frankly is just going to amplify what we're doing on short-form video.

• 50:21Patrick O'Shaughnessy?

  How are you going to be empirical about that in the same way that you've been about product and marketing so far?

• 50:26Speaker 02

  It's small controlled bets, big on scale, but limited on bets that we're making. So if it's a celebrity partner, we need to know exactly who that audience is. Is this someone that resonates with our user? Are they going to amplify the right message that represents Ladder? To date, we had no leeway to spend money that didn't turn into results. It was like, here the money in the bank, turn it into users, keep doing it again. And this is a little bit different. What we've realized very quickly is we do have an awareness problem. People have heard Ladder. We're getting big. We're the number one grossing fitness app in the App Store. We're top 100 in the US of all US apps. It's big. So we need to go invest in really concentrated bets that speak very specifically to our user, that leverages the

• 51:08Speaker 02

  Creative horsepower in our team. We have really special people in our team that can create stuff that no one in the world can from a from a brand perspective. So it's not as perfect of a science and I kind of bucket it in two different paths, but my thesis over time. It's going to make the short form engine a lot more efficient. If people are not aware of ladder. We have like one video where we're trying to convert you. They're learning about ladder in that video. If you've seen and build trust with someone who's endorsing it, or you have consciousness of nugget. Yeah, there's a higher likelihood that that person is going to take the first step. So I think the two play together and. You asked like, what was the supercharge over the last couple of years? We did deal with General Catalyst that changed the game for us and their customer value fund.

• 51:51Speaker 02

  And essentially what we realized is the capital mortgages aren't funding CAC. In consumer companies, we can't just go raise a bunch of money just to put it into TikTok. The appetite's not there, no matter how good the product is. And General Catalyst has solved that where they're financing our investment of growth every month. So the payback happens over time. It's not as much of a cash hit. But it lets me think about half the house is this very performance, very controlled. You can underwrite it, which General Catalyst did. And now we're going to go invest in some squishy stuff that should be proven downstream that it has an impact and makes things more efficient, but it'll be iteration. Nothing else. It will be a game of figuring out what works, what doesn't.

• 52:29Patrick O'Shaughnessy?

  If you think about the experience of, you said you had built some enterprise companies before this versus consumer. It seems like in the last five years, for a long time, no one invested in consumer because actually really up until, I guess, very recently, AI is of course unlocking things in interesting ways. If you were to pitch a young entrepreneur, a teenager or a young college student on building a consumer business rather than the much more traditional B to B thing that's dominated the startup world for a long time. What would your pitch be? Why is it fun and different to build this kind of business?

• 52:59Speaker 02

  The fun part is you get to see it every day and it's impacting people. That's real. We're providing real value. We're changing lives. I read these stories every day coming in to our team of like, what happened to this person because of ladder? What else could inspire you more than that? We're not selling their attention to advertisers. We're helping their lives. That's really fun. And the feedback loop is fast. You make something, you know exactly what happened. That's exhilarating. You have a report card that's your users. And no one user is the right answer, but collectively they are. I'd say what people don't realize in consumer is how freaking hard it is. And there is no quick fixes. There is no, growth hacks are not a real thing. You have to be black belt at building products for the consumer and growth.

• 53:41Speaker 02

  You have to have both of those things within your own team to survive. And then be able to raise money to go fund that, which is its own mission. So in my mind, if you want to get into consumer, like you gotta love talking to people. You got to love extracting information from human beings to go create solutions for them. It's not like, I think it should be. That's how consumer companies die because they just freaking guess. And it doesn't match what the consumer is looking for. So it's really hard and you have to be excellent at both sides of the house. Half our team worked on workout completion, half of them works on trials off TikTok. That's the business. Very simple. But we are equal weight in black belt on both of those skills. And without either one of them, there would be no ladder at this stage. Great product, no growth, doesn't work, doesn't get funded.

• 54:23Speaker 02

  Great growth engine, no product, leaky bucket, doesn't become a big company. Both those things have to be true to be able to build a company that's durable and last. And just be ready for 10 years. It's not gonna be six months every year. It's gonna be a slog and constantly problem solving along the way. So it's splashy, it's fun, but it's really fucking hard to do.

• 54:43Speaker 03

  Probably say don't do it. There's probably easier things to get funded to do. But listen to the stories, as Greg said, when you hear from one of your members about how ladder has changed their life in some way. And it's easy to, when you're looking at the charts and everything, that gets lost on you sometimes, but you're constantly pulled back by these stories. And we, I think our creative team does a great job of telling those members stories and that's something we'll continue to do. Our customers, as Greg said, they literally tell us what to do. I mean, we sent them our annual survey out this year, we had 5,000 responses that take an hour on average is what people are spending. We already have 5,000 responses in the last two days. And they're answering 230 of our most burning questions about what to build from here, what companies to partner with.

• 55:23Speaker 03

  Would you be interested in supplements coming from ladder, everything as relates to all the different surface area that we could explore? So that's really exciting to us is just continue to listen to them. They're huge advocates for us. So we're gonna continue to do that.

• 55:37Speaker 02

  If you want to be by yourself with headphones on, working on consumer, it's a losing strategy.

• 55:40Speaker 03

  I see that all the time where it's like you're just building shit. You gotta be talking deeply to the user to understand.

• 55:47Patrick O'Shaughnessy?

  If I think about the two big world things happening that probably most impact your business that are out of your control, it's AI and GLP-1s. And I'm really curious how you think about both of those things as creators of opportunity, as potentially risks.

• 56:04Speaker 03

  I'll mention GLP-1 fast and then AI is like a much bigger conversation. On GLP-1, it's interesting because all the science would support that you need a strength training plan alongside your GLP-1. You're at risk of so much muscle loss. So we think that's actually a macro tailwind and something that will help us. It's not something that we've investigated to date, but can totally see us working with some of the bigger GLP-1 providers at some point. The science backs that relationship. So that's not something that scares us. In fact, it's a question we asked in our survey, which we've never asked before.

• 56:35Patrick O'Shaughnessy?

  Like, are you on it or are you thinking about it?

• 56:36Speaker 03

  Yeah, just to people who are fitness enthusiasts, doesn't mean that they're not on GLP-1s. And so we're going to continue to learn more there. On the AI, I think what gets exciting for us is that it feels like we can have our cake and eat it too now. And that in the beginning, we felt like we need to focus on a venture scale business here and solving a problem that's solvable for a customer with software, which felt like one to many programming. Now with what's available to us in AI, we're able to deliver that personalization as well, which four years ago we couldn't have. Two years ago, we couldn't have launched nutrition with our same team, you know, six month span like we did. Beyond that, what I get excited about is that in an age of a lot less differentiation in tech and commoditization of certain features, because it's become so

• 57:18Speaker 02

  Easy to people think you can just use chat GPT to build an app. I would challenge someone to try to build the experience that we've built using AI. And I think we're going to continue to lean into things the AI can't touch, which is we've built a compelling brand. We have a tremendous amount of trust from our members, which is really exciting. We deliver a human experience at scale because of it. We've been thinking about it for four years. We've been using it as a tool for three years. It is chapters for us. In the beginning, it was a non-coding tool. It was how do I synthesize information? Well, it was amazing. I could take 5,000 responses and really understand what's happening. And so then it was everywhere. I can take it to think about how do I create compelling TikTok hooks based on all of this survey data or user data? That's a tool. It saves time, but it happened at the exact right moment

• 58:03Speaker 02

  where our entire team is 50 people and that includes 20 full-time coaches. So 30 people excluding coaches. We started scaling at the right moment where AI started to become a use case that made us not have to go hire or expand the team just to solve a problem that we were looking to solve. The team would have been a lot bigger if this were four years ago, if we didn't have AI in every element of our business. The second chapter for us is using it incorporating in the product, not replacing the human. We believe in humans as motivation. It's really important to feel like you're having a relationship with the coach. But I don't want to have coaches and reading chats all day and interacting one-on-one with users. I want it to feel that way and use tools to expand the capabilities of our coach.

• 58:46Speaker 02

  We have teams with 60,000 people that are in it. And now the chats are big and cumbersome and complex. And the coach's message isn't the only reason they're there, but it matters. And the magic moment for a coach is saying the right thing at the right moment that makes the most people satisfied with what they're saying. What isn't a great use of time, which was happening, is scrolling the chat for an hour to go figure out what's happening here. So we built a product called Ladder Pulse that automatically you come in, reads every single chat that's come in, tells you here are the three most burning questions. Here's the content you should create. Here's the member you should respond to because they've never been responded to by a coach. Send, done. So now we've removed all the cognitive overload of what to say. And it's all powered by this tool that we built. purposely for the business.

• 59:30Speaker 02

  We're building software now to go support a better experience that's built on AI. Nutrition is a great example. We'd have never gone into nutrition if there was no AI. MyFitnessPal had to build a database over time by hand that became the value of MyFitnessPal. That's not the hard part anymore. The hard part is the consumer experience and knowing what to do with the data. So it opened up the capability that wouldn't have taken the business sideways for five years to go solve that problem. And then we're inventing products from scratch. I'll give you two examples. One, we have, I totally have North 3000 paying members. We have one person that touches support. It's not even her full time job. We had tickets coming in every single day and we spent time trying to understand who's coming in, what are they asking, what are the buckets here? And we built a product.

• 1:00:12Speaker 02

  That person's name is Maeve. We built Maeve AI, M A I V E. And we built a customer support tool from scratch. It's purpose built for our company that manages now 90% of the flow coming in and the experience is as good or better. And it's faster than it was before. And we made it ourselves in our team. That was not possible five years ago. That solved a huge problem. Now we don't have to expand that team and we can deliver a better experience through that. And we have a person on our team who only works in AI. That's the job. He's been doing that for a long time.

• 1:00:42Patrick O'Shaughnessy?

  How do you think about saying no to potentially juicy revenue opportunities that aren't core to the subscription, complete a workout, acquire customers? I could imagine a ladder dating service. I could imagine ladder being an origination platform for GLP-1 for

• 1:00:57Speaker 02

  or ladder coach tools.

• 1:00:58Patrick O'Shaughnessy?

  or ladder

• 1:00:58Speaker 02

  She's absolutely a business.

• 1:01:00Patrick O'Shaughnessy?

  In the Ben Thompson sense of aggregation theory, you're maybe a consumer aggregator. You've aggregated a lot of demand in this specific space. Historically, those companies have figured out how to monetize in lots of different ways. How do you think about the siren song of higher ARPU and new sources of revenue?

• 1:01:19Speaker 02

  But a lot of those businesses have died too because of doing too much at the same time. We've got a multi-phase vision from the beginning of what this thing can become. And our goal is to be the de facto product in this category. And we have stepping stones that we anchor to and they get moved around, but we have a vision for how to go do that. I think about new ventures, new business, push versus pull. Are we being dragged into this area by our members? Is it so freaking clear that this is going to be really exciting and solve a really important problem for people that are relevant to us like nutrition? Nutrition was on the board as an investor deck that you have from five years ago, but it didn't make sense to build it till last year. We had critical mass. It was very, very clear from our members that that was going to move the needle and that we'll build products

• 1:02:04Speaker 02

  on top of that. So like, we're ruthless in prioritizing. Like, you have to make a clear, clear case of what this does to the business. We have no Android app. People think that's insane. But building an Android app requires basically pausing development on iOS, splitting the team's focus in time, playing this game of catch-up for a user that has much lower revenue potential and could absolutely take the business sideways for a year. Will we have an Android app? Yes. We will have it this year. It's these levels. In my mind, we have to go earn the next level. And if we earn the next level, what should that be? Let's figure it out and then start the work on that. So I think all these things that everyone talks about latter, we'll go do all of them. But I'm playing like a long game here. This is not go sell the business. This is go build the generational business in consumer that solves the most problems for the most amount of people.

• 1:02:49Patrick O'Shaughnessy?

  In that big, long-term vision, fitness working out and nutrition are two obvious major food groups of the vision. But what are the other big stepping stones that you think about?

• 1:02:59Speaker 02

  It's the system of record for health and fitness. I guess what Greg's talking about and how we've talked about it for a while. There's a category winner in every category. Transportation, it's Uber. In short-term housing, it's Airbnb. In Spotify and music. There's no clear winner in the health and fitness category. Clearly needs to be a mobile-first company. It needs to be a product that has engagement that looks like social that we have. Nutrition was the next obvious step and it increases the surface area for us to really think about these other product extensions, line item extensions. Some of what we talk about is there's so much commerce already happening in the app. We see it every day. We see, hey, coach, what's that creatine you're having? Should I be having whey or vegan protein? And love those new shoes. Where do they come from?

• 1:03:41Speaker 02

  People are sharing links all day. There's different chats based on supplements or on food or on apparel for that matter. We're watching, we're learning. There's an opportunity for us to reduce friction there and start to think about, is that a marketplace? Is it look more like an Amazon experience at first while we're learning and then we're building our own branded products? Our members want to tell us that they got a DEXA scan and they would like this to be their system of record for their biomarkers. There's a lot of people building companies in the biomarker space. I think that would be a really cool, maybe partnership to start, or it could be a feature of our business. So we get excited about if we build a compelling product and brand where people are opening this app 10, 15, 20 times a day. There's a lot of opportunity for us to insert other products and experiences into it.

• 1:04:26Speaker 02

  So there's a long list that have been on the whiteboard since the beginning. What I think about is product expansion and user expansion. And product expansion, there's no like, oh, man, that's brilliant. It becomes obvious when you look at it, but we lost nutrition. Now we have inputs and we have outputs. Our members want us to tell them, what supplement do I need to go take to make me whole? They want to buy that from us. Those will become businesses for Ladder when there's critical mass and it becomes very clear that this is a real problem that we can solve uniquely for the business. So all those things start to open up. I think there's user expansion too. We have a very specific user. It's a very big market, but it's not everybody in fitness right now. So we think about Ladder, it's how do I get 100 million people to be working on Ladder every day? It might be a different problem set than the current product right now.

• 1:05:11Speaker 02

  We spend time thinking about how do we get the people earlier in their fitness journey into Ladder? Because if you think about our product, it's progressive programming. So they need to know that programming is valuable. They gotta be into strength training. Okay, that's its own bucket. They need to be able to pay for that, use a phone during a workout. All these things are big market, but they're inhibitors to broader fitness. And we've got this content library that is not valuable to our members. Our members are paying us not to think. They don't want any choice. They want to know on Monday, what exactly should I do? And we asked this question in a survey. We said, what would you pay for the whole library? And it was like a dollar because it's not valuable to them. I already have my Monday workout. I don't need 10,000 workouts, which is every other fitness product. So I think it's going to be a path. It's not this year. It's not next year where we give the individual content away,

• 1:05:57Speaker 02

  where we give away every other product, which is just the library because the library isn't valuable and isn't what our members are paying for. But it starts to map to how consumers in the outer rings of fitness are consuming content. What we learned, you know, investors would come in and say, who's your biggest competitor? Is it Peloton? It's like, no, it's YouTube by far. It's not even close. It's people going to YouTube and typing 45 minute upper body dumbbell, give me a workout and then consuming it on YouTube. YouTube's not built for fitness, but the content lives there. We need an on-ramp to ladder that mirrors that consumption pattern. There's amazing content, the best content, you're getting it on YouTube. It all lives here. It's free. There's motivational mechanics that are important. It amplifies the importance of social and the power there.

• 1:06:40Speaker 02

  So I think there will be a premium component that it will be the right moment to hit on it. But we've been talking about and thinking about it for a long time on how do we get to the wider rings? And then over time, you move those people, just like we do on TikTok, into this concept of a plan. Hey, now you've done 40 workouts, they're in seven different teams, but you're not really happy that your results aren't there. I got a different way. We can tell you exactly what it should be. The analogy I give to folks outside of the business is you're working on a puzzle. Puzzle, you got the picture on the box and you got all the pieces. You got 10,000 pieces. And the picture is what you want to go build. Well, our members have the vision of themselves. That's the box that they're solving for. And we give them each piece in order, one by one, to construct the puzzle that they're starting to solve. No thinking at all. Well, most products in fitness is just a bunch of random pieces.

• 1:07:25Speaker 02

  And it's like, pick up a piece that you feel like doing today. That's not a great strategy to getting to results.

• 1:07:30Patrick O'Shaughnessy?

  One more question is what it's like talking to investors now versus early on. This thing has changed quite a bit. Your sources of capital have gotten.

• 1:07:39Speaker 02

  We talk about push versus pull.

• 1:07:40Patrick O'Shaughnessy?

  Yeah, increasingly sophisticated over time. I was the least sophisticated at the start. You've got much smarter, more institutional investors ever since the beginning. Say a little bit about that journey.

• 1:07:51Speaker 03

  What's exciting is just on the investor landscape in general is that there's not much innovation being funded in fitness right now. When we first started trying to tell the story and raise money to institutional investors, it was like, how could you possibly compete with Peloton? They're a $50 billion company in that moment.

• 1:08:06Speaker 02

  You should build AI weights. That's what I remember multiple times. I was like, that seems like a bad idea.

• 1:08:11Speaker 03

  Where's the hardware? And then Peloton has their post-COVID troubles and they're like, oh, well, Peloton didn't make it or that story got very hard. How can you build a good business? It can't be done. So it's being used against us twice now. But all that while, we've been iterating on product and shipping product to every other day and listening to our customer and building something that our members are telling us is really, really valuable. And so we have this amazing head start where we feel like we just don't really have any competition. So that's been really exciting. It was hard for a moment. Now we find ourselves in a position where when you get to this growth stage, people can see the numbers, you can look at App Store metrics and see that our business is inflecting and see that the growth rate has been really strong. And so there's a lot of investor interest.

• 1:08:54Speaker 03

  What's unique about conversation with investors now is we're in a strong position in that because of the general catalyst deal, we control the timeline on raising money. Our business now generates cash, it sustains itself. That doesn't mean we don't have huge ambitions. We do, as Greg just talked about, like we want to be the system of record in health and fitness. That's where it'll require raising additional capital, at least another round, and continue to invest in particularly product and engineering. Fortunately, we have some great investors already around the table right now. And the way we've been approaching it is start to go and spend time with a small group of really high quality investors to get to know them outside of the context of a fundraising round, which is not something that we were used to. Now you have time to actually build rapport and get to know people when you're not raising money.

• 1:09:37Speaker 02

  One of the things important there four or five years ago was it's cash. We just need cash. I don't care who comes from terms. Sure. Sounds great. We need money. We're dying. There was no selectivity and this G C deal has given us a lot of leverage where we have more money than we did when we closed our series B a year ago. And it's giving us time to really think about who are the people that we want in the boardroom, who are the people that we want advice from in talking to companies in their portfolio. And just even before we're thinking about it, just knowing who are the five human beings, forget firms, that's less important to me. Who are the people that we're really excited with for the next leg of ladder? And we now have some cushion to go be smart. That was not possible.

• 1:10:17Patrick O'Shaughnessy?

  This remarkable journey is completely crazy. I know it's hopefully chapter one or two and it is a long story to still be written. What is the kindest thing anyone's ever done for you? And you can take that either personally or professionally, however you want to take it.

• 1:10:31Speaker 03

  It has to be my wife through all of this. She married an investment banker in New York and San Francisco. And that has a path and a vision for life that you can predict and it studies that. And then I turned into this entrepreneur who was making no money. And we have three children, like she is also working very hard, but she has given me the room to make this possible. And if that dynamic wasn't true, there's just no way that I could do this. There would be no path. It's a huge burden that she took on and it's a huge component of how we got here. Greg just went with the wife, so I can't do that, even though that would be the obvious. You've got to thank my wife, who's been putting up with me since we were 19. What I'd say is I would thank my dad, actually.

• 1:11:13Speaker 03

  When I try and describe to my kids what it is I do or what my role is, I always say that I sell. That's what I do. And when I think about that, the quote that always got me excited was what Ken Griffin would say, where I don't even think it was his line, but if we're all going to eat, someone's got to sell. And that always pumped me up that selling was important and it wasn't always something that was transactional. But I learned sales watching my dad. It's not something he told me. It was something that just being with him. So we commuted to school for years, two different private schools, or it was like an hour commute and could be longer with traffic. And this is early 90s, mid 90s. You've got those old Zack Morris cell phones. And my dad was a mortgage originator, so he was always on the phone. And he was basically a traveling salesman, but on the phone in the car the entire time.

• 1:11:56Speaker 03

  He's a lefty, so he would have his phone on his shoulder and he would have his notebook on his left hand, taking notes and the map, and he'd be driving with his knees. And my brother and I would be listening to my dad selling, basically, every day. The three things that he taught me about sales are, one, to be effective in sales, you need people to like you. Ideally, they want to root for you. And if you're really good, you can get them to potentially quit what they're doing and want to join you. That would be like the best thing. But then, second thing is, they need to trust you, because that's kind of all you have. Integrity is everything when it comes to sales. And the third thing is, you need to be relentless, but not in an annoying way, just deeply persistent. That's just carried me well through two very different careers to date. And he's just been an awesome role model and someone I think about trying to teach my own kids lessons like that.

• 1:12:42Speaker 03

  Amazing place to end. You are one of the best salespeople I've ever met. The car rides worked.

• 1:12:46Speaker 02

  It was effective getting me into Lauer.

• 1:12:47Speaker 03

  Yeah, thank you so much, guys.

• 1:12:48Speaker 02

  Thank you.

• 1:12:51Patrick O'Shaughnessy?

  If you enjoyed this episode, visit joincolossus.com where you'll find every episode of this podcast complete with hand-edited transcripts. You can also subscribe to Colossus Review, our quarterly print, digital, and private audio publication featuring in-depth profiles of the founders, investors, and companies that we admire most. Learn more at joincolossus.com/subscribe.

• 1:13:30Patrick O'Shaughnessy?

  You know how small advantages compound over time? That's true in investing and just as true in how you run your company. Your spending system is your capital allocation strategy. Ramp makes it smarter by default, better data, better decisions, better economics over time. See how at ramp.com/invest. As your business grows, Vanta scales with you, automating compliance and giving you a single source of truth for security and risk. Learn more at vanta.com/invest. The best AI and software companies, from OpenAI to Cursor to Perplexity, use WorkOS to become enterprise-ready overnight, not in months. Visit workos.com to skip the unglamorous infrastructure work and focus on your product. RidgeLine is redefining asset management technology as a true partner, not just a software vendor. They've helped firms 5X in scale, enabling faster growth, smarter operations, and a

• 1:14:15Patrick O'Shaughnessy?

  competitive edge. Visit ridgelineapps.com to see what they can unlock for your firm. Every investment firm is unique, and generic AI doesn't understand your process. Rogo does. It's an AI platform built specifically for Wall Street, connected to your data, understanding your process, and producing real outputs. Check them out at rogo.ai/invest.