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How Hydrow is benefiting from the growing fitness sector

Hydrow was once a takeover target for Peloton (PTON), but is now paving its own path with its rowing machines. The company recently reported that delivered unit sales of rowing machines increased 23% year-over-year. This week, the company also acquired a majority stake in Speede Fitness, although the value of the transaction was not disclosed.

Hydrow founder Bruce Smith joins Market Domination Overtime to discuss Hydrow’s performance and give insight into the fitness sector as a whole.

Smith explains what fitness companies need to succeed in the home exercise market: “The north star is a combination of three things. You need something to exercise at home. You need really great content. You need really great software. And honestly, Peloton had this vision. We never abandoned her. We will never do it. You need a home footprint because convenience is what really drives market adoption. From our point of view, that’s what we hold onto to that north star.”

For more expert insights and the latest market action, click here to watch the full episode of Market Domination Overtime.

This post was written by Nicholas Jacobino

Video transcription

Well, there is a company that is making waves in the fitness space.

Hydro produces rowing machines at a time when fitness trends have shifted somewhat from cardio to strength training. Peloton was once a takeover target.

But now it is striking another growth deal and is acquiring a majority stake in Speed ​​Fitness this week.

No further value of this transaction was disclosed.

We’re here with Hydro founder Bruce Smith.

Thank you for being here, Bruce.

I appreciate it.

Happy to be here.

Yes.

Do I say speed or do you say fast?

Because it has an end?

Now we had a lawyer in the contract who insisted on it being quick, but I felt it was a bit passive-aggressive.

This company is called Speed.

But if you put the letter E at the end when you search on Google, it means everything is fine.

No, we know the tricks, we know the tricks, Bruce.

So, you know, it’s funny that this deal happened.

There’s just a story in the Wall Street Journal about how the impact of getting out of high-intensity interval training and how your strength increases.

Is this what you had in mind when you decided to make this deal?

So the most important thing for physical fitness is the cardiovascular system.

The second most important thing is strength and it is not something that will change, it is permanent and we are not chasing fashion, we are chasing the best.

And what’s really exciting about the speed, exciting about the speed, is that they have this technology, its variable resistance and this, um, tonal, it has too much of it. Speed ​​has another level of this variability.

And it actually gives you a better workout in less time, which is the same thing that rowing gives you.

For us, this was part of the plan from the very beginning.

We’re a pure-play health company and we’re thrilled to be able to bring this product to market quickly because they have some truly amazing technology.

And Bruce, I’m interested, you know, Julie mentioned there about Peloton, which, you know, is a struggle and making headlines for all the wrong reasons.

You know, I’m not asking for a comment on Peloton, but I’m just curious more broadly, you know, Bruce, are you, are you all just pulling certain levers?

Do you think it helps you in some way, just helps you navigate the market, perhaps more effectively than your competition?

So, you know, I love Peloton too.

I really wouldn’t be here if it weren’t for John Foley and all the madness he caused.

Um, I think the most important thing is that the North Star is a combination of three things.

You need something you can work on in your home.

You need really great content, you need really great software.

And honestly, Peloton had this vision.

We have never abandoned this vision.

We will never do this. You need space in your home because convenience is what really drives market adoption.

From our perspective, we stuck to that North Star.

There was a huge upheaval, you know, a huge amount of disruption, but it didn’t change the fundamental fundamentals of the business.

It’s an amazing business.

It will always be a great business.

We want people to go to the gym, we want people to exercise at home.

First of all, we want them to be healthy and this is one of the tools that will help them feel better in life.

So I don’t want to keep mentioning that Peloton is, but, but, but it is, it’s a publicly traded company.

So we know their numbers, we know their numbers increased significantly in 2020-2021 when people were at home, and sales have declined since then.

What can you tell us about what you saw?

You know.

So we had the same huge ramp during the pandemic and we didn’t have to spend a lot on advertising and I think everyone was like, oh, this is a sustainable new wave.

Of course it wasn’t, it was because of the pandemic.

So we had a reset year that was incredibly difficult for everyone across the industry.

We did a big riff, you know, like we did, we restructured, but year over year our growth is just, uh, we see, you know, back to where we started, which is uh, this year, up Unit sales of 23% year on year is even much higher.

So, you know, it’s just rubbing shoulders with this really great, great marketing story and it’s a promise to consumers and it never breaks that promise.

And the market is just starting to be tapped, overall, penetration is still in the mid-20s.

We know that market penetration in the United States dates back to the 1940s.

Beyond that, a world that’s just starting to wake up to this possibility, Bruce that I am, what can you tell us about who, who is your client?

What is it, what is a demo?

Is it a young older man, woman, high income, who is it?

So it’s the people who have the houses.

So they tend to be, you know, 35 and older, um, relatively high household income.

Many people think that we would lean more towards women, but in reality they are half men, half women.

And the most important thing for us is that they never wrote that rowing is still a relatively undiscovered field.

Boys on the Boat was a great movie.

How do they learn, Bruce?

Is there a tutorial?

Because it is, it is, thank you for the opportunity to use commercial information, but we, we, teach you everything you need to know.

So I’m the national team, Bruce.

Yes.

No, no, I appreciate it.

So I’m the coach of the national team.

I’m a coach for the United States.

I’ve been to the world championships 10 times.

We take this knowledge and give it to you in your salon.

So what really happens most often is that people buy them, buy the machine and take it home, and then they are so surprised by the immersion and quality of the experience that they just check out our Facebook Groups.

It’s full of angry fans.

Hmm. So let’s go back to the point for a moment, because I’m curious, it’s not, it’s not selling a product to the public yet, if so, if I put it correctly.

So why do it at this stage?

Do I make an acquisition at this stage?

And when will the implementation take place?

And how will it integrate with hydro?

So they have amazing IP around the resistance mechanism that generates more force.

So there are two products that we will be launching in the next few months.

Uh. The first is for consumers in their homes.

And this has a resistance in the range of 3,400, which is more than enough for civilians.

And then their flagship product, which I tried and literally the second time I decided that we had to work with this company.

Generates over 2000 resistance.

It’s like using a professional weight rack.

And this is truly amazing.

This is for the commercial market.

And so this extraordinary, intense experience in the gym, and at the same time super accessible, goes perfectly with the hydromassage experience.

And this is a combination of these two experiences, because, as I said at the beginning, health actually requires a heart and lungs, as well as muscle mass.

And um, I think the whole world understands these two things.

Here are the two most effective ways to achieve this goal.

Bruce.

It was very interesting.

Thank you for coming today.

The pleasure is all mine.

It was great.

Thank you.