May 27, Planet Fitness, Inc. filed their S-1 for a public offering of 10,000,000 shares. The company has been listed on the New York Stock Exchange (NYSE) under the symbol “PLNT” with a recent stock price of $17.85 (May 26, 2016). 

I thought this would be an interesting S-1 to pore over as I haven’t reviewed an S-1 in a while and my interest in all things fitness-related. In fact, I have some aspirations to own a gym one day (my own, not a franchise).  

Let’s dig in…
  • “An emerging growth company” as part of the Jumpstart Our Business Startups Act of 2012
  • In addition to the “Planet Fitness’ trademark, the company owns rights to “No Lunks”, “No Gymtimidation”, Judgement Free Zone”, etc.
  • Standard membership is $10 per month includes free fitness instruction to everyone from staff trainers; $19.99 PF Black Card is available for system-wide store access + access to special amenities (i.e. tanning equipment, massage beds, other)
  • 1,171 total stores with typical stores ringing in at ~20K sq. ft. – 1,113 franchised and 58 corporate-owned. Believe in opportunity to more than triple size with 1,000 stores already committed with franchisees
  • Company focuses heavily on “judgement free zone” and creating an environment where members are not intimidated by members or high fees
  • New stores in 2015 signed up an average of 1,300 members per store before even opening their doors – reflect strong brand
  • Each store is required to spend 5-7% of monthly dues towards local advertising
  • Franchisees typically experience >25% return on initial capital investment in the second year of operations (net of advertising and royalties)… most franchisees reinvest capital into Planet Fitness with 90% of new 2015 stores opened by existing franchisees
  • Equipment have typical useful lives of 4-7 years franchisees then provide a predictable, growing revenue model for re-equipping stores
  • Revenue growth
  • Store growth
  • PF Black Card members as a percentage of total membership from 42% 2011 to 57% 2015 with average monthly dues per member $14.24 to $15.64
  • Planet Fitness closed an IPO August 11, 2015 of 15,525,000 shares opening at $16.00 per share
  • Revenue (2013-2015): $211,009 –> $279,777 –> $330,537
  • Number of stores (system-wide, 2013-2015): 749 –> 918 –> 1,124
  • Number of members (system-wide, 2013-2015): 4.8M –> 6.1M –> 7.3M
  • Over 20% of members joined through Planet Fitness websites in 2015
  • Franchisees’ unlevered investment in 2015 for a new store ~$1.9M including fitness equipment purchases and construction (~12 weeks for new construction)
  • 756 employees across corporate owned stores and 180 employees at the company’s headquarters located at 26 Fox Run Road, Newington, New Hampshire
    TAG Panel on “How Dynamic Sales Orgs Drive Results”. Pictured from left to right: Jon Birdsong, Mary Ford, Ryan Radding, Eric Mercado, and Kyle Tothill
    I attended a Technology Association of Georgia (TAG) event for sales leadership a couple weeks ago about “How Dynamic Sales Orgs. Drive Results”. The panel included:

    The majority of the discussion revolved around engaging sales teams either in mentoring and coaching or via direct incentives. Here are a few take-aways:

    • There’s a spectrum of engagement and performance that ranges from (low to high): Resistant, Reluctant, Existent, Compliant, Committed, and Compelled. Mitigate (or remove) reps in the first three groups while promoting and sharing practices of the high performance reps who exhibit innovation and leadership.
    • Drive engagement in these areas: Connection (connect individuals together to form the team), Support (mentoring and coaching), Reward (incentives), Progress (clear career progression model), and Structure (ensure alignment and understanding of roles and responsibilities).
    • Measuring success and engagement should go beyond metrics and activities. Include personal goals – set, met, exceeded? Understand that the “outside” lives of reps has a very real impact on work performance.
    • Beyond retention and promotion stats, evaluate the effectiveness and engagement of the team with referrals by reps and how quickly reps ramp up.
    • Gamification plays to the competitive nature of sales reps with a layer of transparency and accountability.
    • Pull ideas from reps on selling, don’t just push “best practices”. Sales reps can be innovative in how they sell and pushing “best practices” may not be conducive to the reps’ individual styles.
    • Coaching tends to have a “master-subordinate” structure set with boundaries while mentoring allows freer structure and less formality. Mentors tend to go beyond sales topics or even at the current job. Have/ establish both.

    Good points raised by the team, and continues to illustrate that to drive sales, it’s all about driving engagement from the team. Companies are organizations of people. Engaging the people within, at the group and individual level, can produce a culture that drives sustainable practices for business growth and team motivation.

    “Always be curious, and take closer looks at things you think you know.” Image of Curious George from: http://socialtextjournal.org/wp-content/uploads/2010/08/thecurios.jpg

    I get a lot of laughs when people see how I use Microsoft Office program in non-traditional ways such as PowerPoint for photo-editing and Excel for messaging (vs. Word).

    Over the last several years, I’ve appreciated how to utilize my resources as best I can. When running full-time in a boot-strapped startup, spending money is for necessities. However, the market doesn’t care if you don’t have the money for things like Photoshop — they want results. So I’ve learned to make-do with what tools at my disposal. It’s forced me to be creative and incredibly curious.
    For example, PowerPoint is actually quite good at doing light photo editing. I always used PowerPoint before for presentations and slide decks, but can be used easily for formatting pictures and creating black and white images, graphics with emphasis, tutorials and getting started guides, etc.
    Excel has become a fascinating messaging tool for me, not Microsoft Word. With Excel, I create different iterations of value props, email copy, etc. Then, I use formulas to count words, characters, and more. This helps me reduce my word count, create simpler messages while tracking the efficacy of the iterations.
    Meager resources and focus on priorities have forced me to be more creative with my resources. This also represents a lot of my philosophy in startups and, perhaps, in life.
    • Limited resources can empower greater creativity and curiosity to solve problems
    • Always be curious, and take closer looks at things you think you know. There’s a good chance there are layers you did not know about (applies to people, too)

    What are some unconventional tools you use and how? How has limitations empowered you to be more creative, more curious to get things done?

    Note: my early days in corporate settings gave me a strong foundation with Microsoft tools, hence using these specific tools.
    I had lunch with a friend who was lamenting the challenges of selling to execs and then selling into the lower-level users of his startup’s SaaS product.
    His startup is gaining momentum after some initial hurdles, but the area he sees with the most need of improvement is around lower-level buy-in from the organization. Getting leadership to buy into the vision and benefits is, for the most part, easy. (Rare is it when a startup comes to the table with a “bad” idea.)
    Once the message comes down from the execs to the mid-level managers and those under them, that’s where friction builds. This isn’t a surprise as these are the users on-the-ground who are typically working hard to implement all the other initiatives the execs have thrust upon them.
    Especially in a product that is iteratively (even if many times) better than an incumbent, the challenge is usurping the established process and the known benefits andrisks. Not knowing the unknown risk is one of the greatest challenges for new users.
    My buddy also shared that it’s fascinating how execs continue to believe driving transformation from the top down as “bosses” works. This might have worked in the past, but in today’s millennial-driven workplace, dictatorship rarely works. Instead, environments fostering collaboration and exchange of ideas and feedback excel.
    Some thoughts on getting buy-in from lower-levels:
    • Understand the change management aspects of an organization including the culture at each level – don’t fail at these principles
    • Consider the benefits for each consumer of the product (execs, mid-level managers, lower-level users, etc.)
    • Almost more important than benefits, consider the risks. Why would the user not want to use the product? There are jobs at stake, work-life balance, etc.
    • Empower and promote the main users of your product. Provide them with support, and make them feel valued. If they feel valued and love you, they will can be a powerful ally in the company

    At the end of the day, to properly sell, ensure customer success, and retain customers, it’s imperative to consider the benefits and risks to each level of consumer and user. Be empathetic to each consumer.

    So last Thursday, I wrote my 200th post – most popular posts since hitting 100. It’s taken a little while to get here, but has sped up considerably after posting twice weekly since last year. 

    We tend to reflect at the end of the year or after some big event that’s transpired. For me, that was hitting 200 posts, so I’ll take a moment to share six reflections over the past year (100 posts).
    1. Wrapped up a considerable amount of consulting projects including an iOS app project, product management, new website build, sales and biz dev process development.
    2. Wrote a book about startup and entrepreneurship focusing on lessons from failure – Postmortem of a Failed Startup: Lessons for Success (getting great reviews and feedback).
    3. The goal of consulting was to find my Next Great Move, and it successfully led me to a full-time role with an early-stage startup (SalesWise) – “No More Consulting For Me – I’ve Joined A High-Growth Startup!
    4. Learning a lot with SalesWise including all the tools available. Bootstrapping companies in the past, many tools were priced out of range, so I built a lot manually. With a funded startup, there are many tools available that can accelerate learning and growth.
    5. Given a number of talks. I can’t wait to do more with students and beyond.
    6. I’ve struggled with high levels of anxiety, but found outlets to “right the ship”. Since, I’ve included more ways to escape and gain mindfulness.
    It’s been a trip the last year. I’ve grown in many ways. I’ve met extraordinary people. I’ve made mistakes, and found successes. 

    I’ve continually discovered that there’s always room for improvement – it starts with putting one foot in front of the other. Adjusting direction from lessons learned always helps, but you still have to take that step forward.

    There — good improvised look at the last year. Always refreshing to step back every so often, and find clarity on what’s happened, what went well, what can be improved, and goals upcoming. Stay tuned on what’s next!
    … 200 posts, that is. Since this time last year (just about), I’ve published twice weekly to hit the 200-post mark in much faster span than my first 100. I have to say that 200 posts really doesn’t seem like much, but it really is.
    Each post (with the exception of maybe two) has taken a couple rounds of editing and some thought process to author. It’s a good bit of work, especially now as I’ve taken on the full-time gig at SalesWise wearing lots of different hats from sales to marketing to customer support to website build.
    So reflecting on my last 100 posts, here are the most popular posts:
    It’s interesting to see which posts have resonated better than others, and I’m starting to draw some conclusions. I’ll share them on my next post – #201!

    I re-read an article back from 2013 “7 Guidelines for Startups in the Crunch” from LinkedIn. The article is about entrepreneurs and startups on a “foggy island” where revenue is trickling in, and they’re at a precipice of either folding, pivoting, or otherwise.
    The first tenet of the article was “Be an athlete, not a robot”. That is, it’s easy to continue working day in, day out, hour after hour, like a robot, but that’s not necessarily conducive for successive. Athletes, on the other hand, know that to operate at peak performance, they must take time to exercise, eat well, rest, and recover.
    This guideline comes coincidentally after speaking to a friend about the importance of taking time to rest and step back to assess directions. My friend has been burying herself in her craft for years, and only until recently has found time to step away, look around, and gain clarity on her direction. It’s been refreshing and eye-opening.
    Reminding me of my own experiences (and perhaps recently), I focused so much on trying to get keep my startup alive that I just buried myself in my computer, trying to sell, and the like. I was so focused on today and tomorrow that I didn’t step out to assess if what I was doing was the right direction.
    This happened when we built an awesome feature that no one got to use at Body Boss. We spent so many hours grinding to build out a new feature and trying to sell it that we burnt ourselves out. We didn’t step back and assess if our approach was correct. We were exhausted and dejected.  
    When we’re so focused on the things right in front of us, we don’t see what’s really happening at the grander scale. We’re grounded in our purpose and our why – good. We’re doing what we want and what we believe to be right. However, we get lost when we focus too much on what’s in front of us without stepping away to take care of ourselves (to prevent burn out), and gain clarity on our direction.
    Stepping away allows us to assess the WHAT and the HOW of what we’re doing. Can our process be tweaked to achieve desired results faster (or realized our direction is incorrect faster)?
    Even for a startup in the crunch, it’s important to take time away, assess our state of the business (and ourselves), and gain clarity on what we’re doing. It could be save your business, and prevent you from burning out.
    I was recently interviewed for a documentary about an entrepreneur I wrote about last year. I was asked what I saw in the entrepreneur and the entrepreneur was asked what I brought to the table, especially when we first met.
    The entrepreneur cited how early on, she consistently pitched what her app was about, and found little traction. After she and I met, we talked about sharing more of her story. Since then, she’s been featured in numerous magazines, radio interviews, free invites to technology conferences, and meeting all sorts of powerful, influential figures.
    What my friend didn’t see initially was the opportunity to share her WHY and her PURPOSE. Her app was all about helping others. Her very powerful, hit-home story could coalesce the masses, if shared.
    What I advised was really bits and pieces from my learnings from Joey Reimanof BrightHouseon purpose and Simon Sinek’s TED Talk on “How Great Leaders Inspire Action” — specifically, “people don’t buy what you do, they buy why you do it”.
    In an age of data bombardment and advertising, it’s amazing how personal stories can create strong empathy towards the purpose of brands and people. It creates a strong rallying point for employees building influential values, and can be a powerful tool for marketing. Sharing our purpose and our why amplifies our message to the masses.
    I finally finished Think Like A Freak by Steven Levitt and Stephen Dubner, the authors behind Freakonomics. The book brings to light stories and examples where unconventional thinking solved problems and motivated change.
    Think Like a Freak by Steven Levitt and Stephen Dubner available on Amazon
    My key take-aways/ favorite stories:
    • Not-for-profit org, Smile Train, routinely sent out mailers asking for donations (typical charity outreach) till for one campaign, they gave mail receivers an option to donate and opt-out of mailing forever or donate and continue receiving the mailers. Surprisingly, many recipients appreciated the ability to opt-out, and chose to receive periodic updates AND donated. Meanwhile, many who opted out did donate, and Smile Train saved money on never having to send mass mailers to those individuals again.
    • Zappos offers $2000 to any new hire to quit and neverbe have the ability to be hired again. This gives Zappos the ability to weed out those who would not fit into Zappos’ customer service culture. Meanwhile, a bad hire could cost the company upwards of $25K – Zappos’ return for $2000 was well justified. Less than 1% of new hires took the $2000.
    • Levitt and Dubner wanted to see how helping others make a resolute decision would affect others’ happiness and success. They created a website that let anyone ask a question of what they should do (quit a job or not? Ask for a raise, or no? Go to a concert or go to a dinner?). The site simply ran a coin flip. Levitt and Dubner found that there wasn’t a direct correlation of answer-seekers being happy or unhappy after going with the direction of the website. Levitt and Dubner concluded that more time trying to make a decision has little bearing on being happy or being more successful – just choose a direction.
    • Levitt and Dubner studied how often soccer players took penalties – shooting towards the sides or straight down the middle. Goalkeepers dive to the left 57% of the time, and to the right 41%; meaning, goalkeepers stay in the middle only 2% of the time. However, only 17% of penalty kicks are straight down the middle. Why? Because players think that when shooting down the middle if the goalie happens to stay (kick is missed), then players will be more easily ridiculed. Shooting to the side offers sanctuary in that “at least we tried, and the goalie got lucky”.

    There are several other examples of innovative, unconventional thinking. It’s fascinating thinking about how I could use some unconventional thinking to better market and sell.