You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Really excited to catch up with our next guest, talking about Rick Stallmeyer, founder and executive chair of Mind Body. He founded that company. As I mentioned, I met him when I was working in my books What Equity All about the fitness industry? Um So he's a longtime practitioner of this. He has seen the rise, the growth, and now really the stress that
the fitness industry is under. But at a time when we need to be talking about wellness more than ever. Rick, really nice to have you with us. How are you? Jason is great to be back, Carol, great to be back. I'm doing well and uh and thank you for having me on. So tell us about kind of the state of fitness right now. I want to talk to you about some of the things that are going on with
your company. But but give us the sort of the big picture because you know, here we are in the Tri state area, New York is about to basically kind of let people go back to the gym next week about a third of the people their capacity, you know, social distancing, all of that. This has got to be a very stressful time for the fitness world. It really is, and it's it's it's really a dichottic out there. I mean, what we're seeing right now is they supply constrained market.
People want their fitness classes, they want their wellness services and experiences more than ever. And you know, one of the well I guess one of the unintended consequences of this mishmash of state and regional reactions or responses to COVID is that what we've seen around the country. As you know, some states never really closed down completely. Other states reopened very quickly. Um, we all know those stories. You know, you're in the Tristate area, which has been
probably the model of how how discipline the approach has been. Um, what we've seen in every one of those cases is when the businesses are open or when they reopen, Uh, they get flooded with consumer interest because people's wellness has been severely impacted by this pandemic. Yeah. I do think it's interesting. So you talk about people flooding back, and I do think about what about new folks who may
be thought, Okay, it's not that important. I've got work to do, or I've got you know X to do and now they're saying, wait a minute, this has got to be fitness. Wellness have to be a part of
my regular living. Well, that's right. I mean we all know, of course, you know, the pretty existing conditions around obesity, hypertension, and heart disease, cardiovascual disease, type two diabetes, those things, of course have been shown to be major risk factors for COVID, and I think people, a lot of people have gotten that memo. I mean people that I talked to,
people that I see UM. At the same time, being restricted to our homes for such an extended period of time, you know, for many people that they put on weight, for many people their their their fitness has struggled. UM. And then lastly, you know, wellness isn't just physical, is it right, It's also emotional wealth, It's a sense of
social connection, it's community. And I think we're all suffering in this country, in fact in most of the world from the impact of having all of that so severely disrupted, and it's why we remain very bullish about the industry we serve for the long term. But of course this is a really challenging time on both the consumer side
and the business owners. And so for those business owners, Rick, what can you do and what are they doing collectively to have their voices heard at the state and local level, because, as you said, it's been a little bit of a patchwork. And and I would imagine you know in part because and you know this much better than I do. You know, these are small businesses in many cases that are struggling. What's the message that you're helping get to public officials
about the importance of these businesses. Well, what we have we have been doing what we can to advocate UM, both UH in Washington as well as at the state capitals. I planned personally to do a lot more of that, you know, as you alluded to at the beginning here. Um, I've just transitioned from being CEO, I mean, a role that I've had for twenty years, handed the baton to Josh McCarter. These our new CEO, and Senel Rogers Car who was our CTO, has been elevated to president and CTO.
I mean, this is a dream team. These guys in the executive team around them by far the strongest you've ever had. So I can feel very confident in and the company's continue growth and innovation. And what I want to spend more of my time doing is that outwardly based and role um. These these businesses are almost all
small business owners. Even if you owned an Orange Serial Fitness or an F forty five franchise for example, the classic franchise Z is a typically like two spouses um who invested in this business and are running at hands on every day. And of course so many these businesses are just independent Mama Papa shops, and no one has been advocating on their behalf even looking at how the states generally have have issued edicts around whether they could
open and close as sort of a broad brush. You know, no gyms can open, so it doesn't matter if it's a eighty thousand square foot health club with hundreds of people streaming through the door, or small little yoga pilates or group exercise studio that maybe in normal times might have had twenty people in class and now with social distancing they have maybe eight people. I mean, these it's
not high risk. They we have seen firsthand. If you take the proper precautions, the social distancing, the mask wearing, you can go in and have a great experience very safely. And I'm not sure. I don't think many people are telling that story to our government leaders who are making new decisions. So, Rick, you and I caught up a little earlier in the pandemic for the Bloomberg Business of Sports podcast, and you know, one of the things we're talking about is, and this goes back to where we
left off in our conversation, these are small businesses. Many of these boutique studios, especially mom and pop type shops. Uh, a lot of them are just going to go out of business. I think you would even predicted maybe a quarter of them, uh, would just ultimately have to hang it up, fold up shop. What do you what do you make of that prediction? Now, well, it hasn't happened yet. Um, these businesses have proven far more resilient than we've hoped.
And of course we've been rooting farm from the very beginning of the of the pandemic. And you know, immediately when the as the lockdown started in the late March, they started adapting. And of course the most obvious thing was delivering their classes and experiences via video and so live streaming video and then putting up libraries a video on demand. They started doing that spontaneously and my body
has been innovating rapidly. We now have virtual wellness platform enables them to do that in a way that they can sustainable businesses and and I talked about that Jason. Now what you see, of course, is a lot more of these activities going on outside UM. And the science indicates it being outside is just simply safer than being in a room which we speculating air. And lastly, of course it's just immaculate cleanliness, a lot more distance between
workout stations, UM, and everybody wearing masks. And you know, we've what we have seen UM, I think is a remarkable adaptation of an industry. That being said, you know this kind of brutal two steps forward, one step back, one step forward, two steps back. Uh. You know at
some point it's going to start taking a pole. Uh. And UM, you know we were rooting for all of these businesses, UM, but I think we still are probably going to expect some some notable amounts of business failures in the months ahead, given what it just appears that the pandemic and how it's going to develop. And then we're not going to get out of this very challenging
situation right for at least a few quarters away. It kind of breaks my heart about those who have, As you said, sometimes it's it's a couple who started a business and they're just not going to make it through. UM. You talk about live streaming, there's in studio, there's outdoor classes, depending on you know, kind of where you live. You know, Rick, what we love about talking with you is, you know, you guys do have the platform where you get inside
into so many different businesses. What other data points are you able to kind of see that are revealing about what's going on right now and what might continue for for sometime or kind of stay with us as we all kind of pivot and and kind of embrace some of these change ways of doing things, including working out and staying well well. First of all, we're seeing you know, rising consumer demand for these activities of all types, of
all categories, and of course fitnesses leading part of that. UM, we see high sensitivity in the consumer side. We've been serving you know, millions of consumers on our platform, uh, and we've been serving people in a scientific way and you know, more than consumer res indicate that yes, rigorous sanitis sanitization is important. About three fourths of them say the new layouts are really important and they like what
they're seeing. If you haven't visited one of these studios in a long time or since the pandemic started, I encourage you to go look at him and understand it. UM. We can now leverage technology in ways that really just minimize the kind of contact, for example, contact with check in and contact with payments. UM. That's extremely important to consumers today and I think that it is going to
be challenging for these businesses. But but the ones that do get through this to do that, whether there's are going to face a really remarkable market UM. And for some of the most forward leaning businesses, what they're doing is as they see UH. In downtown retail areas. Of course,
businesses of all types have been failing. That's opening up space and you see the more well capitalized brands swooping in because it was really a shortage of prime retails space that was holding back the industry before COVID hit. And so I think you're going to see a real changeover UM. Lastly, the ability if I'm going to commit
to a membership or a prepaid package at this particular studio. Well, I want to know that regardless of what happens, whatever the state of social distancingmustrictions or lockdowns in my region, that I'm gonna be able to keep engaging. So just being able to have hybrid memberships is very important to people today, and we see that happening already in the
businesses that we're serving. If I can just follow them, I also do wonder by having such a platform as your own, it kind of creates, um a tracing platform that you know, if a case breaks out at a certain you know, studio or workout or gym in place, that immediately you can say, okay, these are the people that were there, and we can kind of be right on top of it from the get go. We haven't
been asked to the vulge that data. I mean, we treat data confidentiality, both businesses confidential data and consumers confidential data very seriously. So um it's not something that that that we would just um easily offer up. But if there were some kind of organized process, uh, you know that that we could assist, and of course we'd have to get people's permission, I think, to allow us to
share what you're talking about as geolocation. Um. You know, we we know it's where are you physically at certain times and if somebody came down with it, who was around them in the recent activities? You know, that would have to come from you know, we don't have to come from government say that, and I think consumers would
have to explicitly uh approved that. Yes, you are allowed to use my information for the purpose of COVID contact tracing, you know, a very narrow specific thing because you know, remember what was happening before COVID was all this movement around data privacy. It is amazing how much we have changed. I think, all right, Rick, before we let you go, you got one minute to tell us about your book. When's it gonna be out? What's going to be about?
So my book is called Building a Wellness Business That Lasts, and it's a definitive guide for the post COVID world, and it's all the things necessary for an entrepreneur to conceive, plan, build out, and open their own wellness business. Everything we've learned across the last twenty years, as well as really important insights in the first five months of the COVID pandemic. And it's coming out into October. All right, well we're looking forward to that. Ye tell us all about it.
You have learned so much, I know, over the course of the last twenty years. And this was a business Carol, as I think you know that. Rick literally started in his garage back in two thousand months. So uh, really nice to catch up with him, such a thoughtful guy. Can't wait to read the book. Rick S. Tolmeyer the executive chairman and founder of Mind Body