Todd Wadler is a former investment banker and is the co-founder of BoxUnion and the current CEO of Title Boxing.
Todd talks to us about starting BoxUnion, how he grew it into a profitable business, and how he applied the lessons he learned to over 150 franchise locations with Title Boxing.
Connect with Todd here.
Episode Link
This episode of The Fitness Founders Podcast can be found on Spotify, Apple Podcasts, and anywhere you get your podcasts.
Transcript
Kevin: How is it going, everyone? Welcome to the Fitness Founders Podcast. I’m Kevin Mannion, VP Marketing here at Glofox. This week we talked to Todd Wadler, former investment banker, founder of BoxUnion, and now CEO of Title Boxing. Todd talks to us about starting his first location of BoxUnion, how he learned to grow a profitable business, and how he is applying that to over 150 franchise locations with Title Boxing. Let’s have a listen.
Todd Wadler, welcome to the show.
Todd: Thanks, Kevin. Thanks for having me.
Kevin: Great to have you on, Todd. I’m really interested in learning a bit about your career and how things are going at Title Boxing. It’s great to have someone who is running a pretty big franchise on the show, so thanks for coming up.
Todd: We’re here to share my story as well as my fitness journey and now being the CEO of Title Boxing Club.
Kevin: Great. Okay, let’s take it from the start, Todd, and tell us a little bit of your background and how you got to where you are today.
Todd: Absolutely. I probably had a little bit of a less traditional path as some others in fitness. I started my career in investment banking which is a business really built around building relationships and providing advice to entrepreneurs, companies, and various stakeholders. The last place that I was at I was a founder of a firm called Moelis & Company which is a global brand publicly traded on the New York stock exchange. It was in that experience and some others that I really found this burning desire to start my own business and really chase passion and chase something that I really enjoy. Quite frankly, build a team and motivate people to be their best selves. About 10 years after being at Moelis, which the company still continues to have a very successful run at, I decided that I was really passionate about fitness and I wanted to explore what that could look like and what within fitness would really drive me. Again, like I said, a little less traditional but maybe than some others who have started fitness businesses.
But given my background, I analytically really evaluated with my business partner, Felicia Alexander, who continues to be with me today through all of this and an incredibly important part of our organization holistically. We really evaluated what were the modalities that we thought we could make a difference in. This is back in 2015-2016. We really stumbled on boxing as something that we thought hadn’t seen the growth yet and the investment yet that would really lead to a more widespread adoption. We dug into the stats there. What it really was is that it tended to be more male and older than most categories within boutique fitness. We dug into that and what we really saw was that it had to do with what the locations look like. That gave birth to BoxUnion.
That was really where we started down our boutique fitness journey, Felicia and I. And we opened our first studio in Sta. Monica, California in 2017. Really what we did there is we turned boxing. Instead of going into a more traditional boxing gym, we turned it into maybe feeling more like walking into a spin studio, or yoga studio that had significantly more investment dollars to make it look nicer. But also sophisticated programming that really was meant and designed to engage consumers. With BoxUnion, really leveraging the BPM theory and music to drive a hyper efficient 45-minute workout.
Kevin: Got it. One question that springs to mind, Todd, just jumping into the details because you came from a banking finance background and you obviously did the analysis to pick the right niche, modality that you felt the growth was there. You then have to go and build a location and a business that resonated with members and that was authentic. How did you manage to do that?
Todd: Yeah, great question. One of the big things that I believe in business is you get to network, build relationships, and talk to lots of different people. Felicia and I, we would go out and we would meet with people from the boxing world, people from the spin world, and people from this big box fitness world, and really try to hone in on what it was that we thought [unclear] our experience and what we thought it needed to look like. Talk to consumers, go to classes at other places, and just keep that network going. It was from then as an entrepreneur, whether it is starting a new brand or whether it is being in a franchise system, it really holds on being able to draw on multiple areas. Not as being the expert in how to build out this space but knowing the right questions to ask the people who know how to build out the right space. You don’t have to be a major in exercise science but speaking to people who come from that to make sure you’re thinking about the programming in the right way.
It was really a lot of networking, a lot of conversations, a lot of dialogue, a lot of learning. And then ultimately at some level you’re like the chef with a lot of ingredients, you keep refining it once you even open the doors. And then it’s really an evolution from there. The first one probably feels more like a revolution. But from there, from one to two, we have three BoxUnions in Los Angeles. It’s really about evolution.
Kevin: Okay, that makes a lot of sense. Tell me, Todd, still on BoxUnion, from when you opened the door the first day, how long did it take you until you were confident that you would figure it out what you wanted to achieve, how you wanted things to work?
Todd: It took, I would say, roughly 9 to 12 months. Literally, when you open your first one, and we didn’t spend a ton of marketing dollars upfront on that first one, it was literally us and our team working every role within the studio and seeing – “Okay, we got 2 people in class. Now can we get 2 people to 4, 4 to go to 8, 8 to go to 16? Now, can we sell out classes?” I would say it was in that first 9 months that we saw we knew we had something special. It wasn’t just because we wanted to convince ourselves of that. It was ultimately the reviews of the customers, seeing how the referral network. A lot of launching these businesses is not about spending all the social media dollars in my opinion to run paid ads. It’s going at a local farmers market. It is walking down the street. It’s talking to the person who came in who is like, “I need to do this with my 3 friends”, and bringing them in. Then you’re not selling them, they want to be a part of it. It was really at that point where we saw and recognized that we thought that we were sitting on something that can really have some legs to grow.
Day one we didn’t walk in and say, “Alright, we’re going to have one. By year 2, we’re going to have two.” We never looked at it that way. We only built one that would have been great as well. Even though we had this corporate background, banking background, and we did obviously want to scale, we never put that cart before the horse if you will. We always let the consumers, the reviews, and the room. One thing I say to people is, “Let the room be the smartest person in the room.” To do that you have to be collaborative. You have to learn from others. Listening to the room is something I always tell people because the room is the smartest person in the room. And the room when you’re building this business is not only the employees and your team members, but it’s the members who come in, it’s the first time guests who show up. It’s really from there, networking, and it’s at that point when you see all that and you listen to the room that we started to realize about 9 months out we thought we had something that had some real legs to scale.
Kevin: Got it. Did you have financial criteria or growth targets that you decided, “Okay, it’s time for a new location.”? Or how did you make the decision to go from one to two to three?
Todd: We were really fortunate as the first one was starting to ramp in that 9-12 month timeframe. We were approached by some different investors, “Hey, we think there is something really interesting about what you’re doing here.” In fact, our lead outside investor was a member of ours. He and his wife said, “We really, you know, it resonates what you’re doing and how you blend mind, and body, and music, and boxing to create this experience that’s really empowering for women, for all people that releases stress.” From there we went in, I guess I went into investment banking mode which I had come from and said, “Okay, let’s really talk about raising some outside capital to help us fund our next couple of studios.” We’re fortunate enough that [unclear] our first studio with a nice runway and ramp and you can see that just through some of the metrics in our business at that time. We really felt it was at that point to keep going. We were looking at what our month over month sales, what our membership growth looked like, how we scale our expenses to be mindful of that, but not hamstringing the business.
One of the things a lot of people focus on in fitness, that I hear a lot of business owners say is, “Oh, I need to lower my expenses. I need to lower my expenses.” Don’t get me wrong, you have to manage and be mindful of your expenses. But in fitness these businesses have significant operating leverage. You need to make sure you’re spending enough dollars to drive that future growth. Like I say, getting into the local community and really investing and bringing more people into the family as we always said it. Bring them in because once you hit that crossover point, the expenses basically don’t go up and then the revenue starts all then starts to float out of the bottom.
Kevin: What have you learned through those experiences about investing in new membership sales versus investing in retention? What is your mental model for where to invest and how to know that you’re on the right track?
Todd: I always say we invest in our team and our culture. That’s where we really start the investment because that’s their day to day. It’s your team, whether it would be the front desk or whether it would be our coaches or trainers that are the ones that bring the experience to life. If they are doing that, then they want to bring more people and more members along. That will really be where it’s at. People, consumers, want to go to places where people feel that the team members that are there and the workers that are there want to be there, and they are treated well. And then they tell their friends because that’s a positive mindset type of culture and a place. We’ve always invested in our team and our culture first. From there, what your question is, well, initially clearly you’re investing in new membership sales. You’re always going to have an element of investing in new member sales.
But, boy, retention of members and retention of just customers who might be package buyers versus members, those are and the tale of that extending a member from 7 months and on an average life to 8 months or 9 months will be the biggest driver of your business once you’ve got into a meaningful number of members in your business. Obviously, in the beginning, you got to bring in more people and more members. But retention is absolutely critical and that’s something we run some very specific retention places around how we engage through emails, how we engage through different milestones of how many classes, and there’s a lot more. I know we haven’t got into it yet that we’re going to be bringing to the Title Boxing Club which is stuff that we have been doing at BoxUnion to drive retention because I think that is one of the most important things. Remember, a retained member is the member who then also tells their family member about it, their friend about it. They start a new job, they tell their new co-workers about it. Then, you’re driving organic marketing and not having to go spend a bunch of money on Facebook Ads and other things to just drive new leads into the door.
Kevin: Got it. I guess we’ll start moving on to Title Boxing, your newest venture. But would you say that BoxUnion has been your testing ground before figuring out how to make these businesses run well? Or what do you think about BoxUnion versus Title Boxing?
Todd: Yes, Kevin, I love that. I wish I could tell you that. When I started BoxUnion I thought I would ever be at a place where we get to lead these franchises of Title Boxing Club into the future. Like I said in the beginning, I really did it from a passion – an entrepreneurial passion, a fitness passion, a building teams passion. And then from there, a lot of opportunities come about.
The way Boxing Title Club came about is we had our 3 clubs, we were shut down for COVID, we launched a digital service called BoxUnion Digital which got off to a great, great start during COVID and has continued to perform really well for us. And then we received a call from the owners of Title Boxing Club saying if we had any interest in combining the businesses. As we started to talk to them it became clear to me that if there’s going to be a combination we would be bigger than the seller. So to answer your question, then specifically at that point, yes, we felt like being operators first focusing on the place we’re running inside of a studio from the marketing place, to the sales place, to the product and programming of what we do, to the retention place, to had to hire a team, we thought we had really honed our skills. Recognizing, as I said before, you are always growing, and you are always learning new things, and you’re always networking. That’s just who I am and who our team is. But at that point, we said, “Okay, we think we have something at BoxUnion…” Not in all the things we do. Don’t get me wrong, but we have some things we think we can add to the Title Boxing Club.
At the end of last year, at the end of 2020 we announced the acquisition of Title Boxing Club. We are now almost 6 months of ownership, and we are excited to be partners with all of our franchise partners across the country, and helping to deliver a fresh and new perspective and excitement around the brand. We’re really seeing that from a lot of our franchise partners, an openness and willingness to work together to see what we can all achieve and help grow their businesses and make them more profitable.
Kevin: Got it. Now, given what you have learned yourself and what you’ve learned at Title, what do you think makes a good franchise brand?
Todd: Obviously, from a brand perspective, brand awareness in a category that has significant opportunity to grow, I think those are what make a brand special where someone in Title Boxing Club absolutely has this. It’s one of the most recognized brands, Title Boxing, that exist in the boxing category worldwide. That I think is the first of a great franchise brand where you are looking for small business owners that would be attracted to that and believe that business could do well in their local market.
As far as from a franchise partner franchisee perspective, I think what really makes someone that has enough entrepreneurial desire with the right mix of operations, finance experience combined with passion for what the category that you’re entering. I think passion in of itself is probably not enough because these are businesses. Kevin, you asked me the question earlier when you went to go over your first one, how did we do it. Again, you got to know a little bit about a lot of different things and ability to ask those right questions. And so I think for franchisees that don’t have and don’t come with some of that experience, of course some of that can be trained, but still you are the CEO and in effect the president of that store and of that location. That requires you to be wanting to do it, the passion to do it, but the understanding of how to do it. And then for us to work successfully with them, we got to understand motivation and how to drive them and provide the necessary support and training for them to ultimately be successful.
Kevin: I guess this is a little bit like the growth and retention within the club question. How do you now decide where to spend your resources on – improving the existing operation and helping your franchisees be successful versus selling new locations and scaling the brand? How are you thinking about that?
Todd: We’re probably a little bit different than a lot of franchisors. I, obviously, newer to the franchise space. However, I’m not new to the fitness boxing operations and club space. I think a lot of brands initially are clearly, because they are trying to franchise their brand, they are focused on franchising. And they are focused on selling the next one, selling the dream. I think that’s a lot of franchise brands. I believe that with strong operations, in an operation first focused, you will long term sell more than you otherwise could. Because it’s so critical and important that the existing franchisees are successful in generating profit so that when prospective franchisees call and they say, “Yes, this is working and I’m feeling I’m being heard. I’m feeling I’m being supported to be able to deliver that.” That has been our focus since acquiring Title Boxing Club. We’ve been, like you said, “What did you spend your most time doing in the last 6 months?” We’ve been very clear with our system that we’re driving culture and we’re investing in the team. We’re bringing a lot of people with a similar mindset and work ethic to be a franchisee centric service model because we feel so comfortable about what the playbook needs to look like because we’ve done it successfully. And we’re also not afraid to continue to own these clubs. Whereas, a lot of franchisors have a very limited number of clubs they own. They might only own one but they franchise a ton.
Kevin: Yeah, got it. Now, it just occurred to me that coming into a business where there are 100 or more franchisees, you as a leader of that business have a lot of selling on yourself and the vision to do. How did you take those first steps to build everyone’s confidence that you knew how to run the business and what was important for the business?
Todd: Like I said before, really being communicative with them, talking to many, many, many of them, hearing from them, understanding they want support and they want help. And I was there to tell them help is on the way. Now, does that mean I’ve won every single one over? Probably not. But I’ve told them, and I’ve been very clear. I’m a relationship based person, my goal and my focus is to earn your trust. My hope and my focus is that when we pick our heads up 6-12 months from now that you say, “My business is performing better. I’m making more money.” The corporate, the support center that we created has helped you deliver that value.
It’s really been hosting a lot of individual calls, hosting monthly calls, operating with transparency. Sometimes we have the answer, sometimes we don’t. You set up a marketing committee, a product committee, a training committee which has franchisees’ GMs, coaches, trainers on those committees hearing the ideas. And then, sifting through having our master plan of what we want to do and that’s what we’re going to be rolling out and evolving. Remember what I said before, an evolution not a revolution. We’re going to evolve this over the next 6, 9, 12 months to really hopefully drive better results for our franchisees.
Kevin: Got it. Have you fully figured out yet what a playbook is going to look like? Or how much of this support structure you can put in place and what you need to do to make it successful?
Todd: On our team alone, we’ve hired a significant number of people. We brought in a Chief Operating Officer, who is a COO at Gold’s Gym. We brought in an industry leading Chief Marketing Officer and Chief Digital Officer from Skyzone and Universal. And then Felicia, my business partner, also makes up our C-team and C-suite. Under them we have moved some of the people that were existing at the company into roles that can really help deliver more support. As well as we’ve hired a significant number of people from outside of the business to really bring that support to them.
The benefit where we started the conversation was that we have, and Title Boxing Club has a playbook. What happens in these businesses because they are small, local businesses is they experience significant turnover. We know and we haven’t fully yet rolled out some of our robust playbooks but we have the playbooks. We know what works at a hyperlocal level whether it be it worked for us, whether it be it worked for Title, or whether it be through our sharing and discussing with our franchise partners what’s worked in their clubs. We have that playbook. Now, it’s about getting in and training against the playbook in the right order so that we can drive real value. That’s what’s really going to be happening over these next 6-12 months for us, and really supporting people in whether it would be sales, whether it would be product, whether it would be more marketing automation.
There are so many different areas that we want to be able to tackle with them but we absolutely now have established our team. We’ve established the playbooks. We know what works and we believe that will then be long term going to drive that value. And that is that evolution we’re talking about.
Kevin: Got it. It sounds like that the development of the playbook is I guess half the battle. The other half is figuring out across the network how to make something that everybody adopts and that the processes are in place so that people use it.
Todd: Absolutely. And that’s where we’ve hired some amazing field operations folks who aren’t living in the corporate office. They are living in the markets. Their job is to travel, go be with your franchise partner, and go to train them. Because that’s where that turnover we see being an issue in any of these companies. By the way, I don’t care if it’s corporate owned or if it’s franchise partner owned. You change out the GM. How is that GM being trained, the new one, to be able to deliver all that value inside those four walls? It’s a constant battle and I think so many probably franchisors are good at the selling of the franchise, good at the initial training. But it is that ongoing support that if I was a prospective franchisee and franchise partner, that’s what I would be looking for. Where could I go to learn from people who know how to operate that are making the investment into the franchisor to send people into my field to help me train and are supporting it by other technology solutions? Which we’re bringing into this company so that on an ongoing basis there is continual talent and personal development of our teams.
Kevin: Okay, right, that makes sense. Now, I want to ask just the last couple of questions on some broader topics because that’s been really insightful into the operations of the franchise. I’m just really curious from an industry perspective. You invested in online BoxUnion and learned a lot from that. How do you feel that online is fitting into the industry call it post lockdown?
Todd: I’m a big believer in the hybridization of fitness. I’m a big believer that some new habits have been formed. But that fundamentally consumers, and we’re seeing it in our studios in California that have just reopened, and the performance has been fantastic. It’s because consumers and people just want to be in communities and next to each other. They want to be back the way life was. With that being said, maybe somebody who is coming in 3x a week might come in 2x and do one digital workout. We feel like it’s our job to be able to provide them, both to our company owned, but more importantly our franchise partners to be able to give them a skew of products that they can sell, make money on, and be able to support the consumers to extend the brand.
One of the other things I would say that has been interesting to me is I think people that go to gyms generally speaking the stats are something like 15% of the population goes to a gym, or club, or studio. What does everybody else do? Well, there are more people exercising. They exercise at home or go for runs, etc. I do think digital provides a new entry point for people to say, “Oh, I’m going to do this from home to build up my confidence to be able to walk into the gym.” I think if gym owners in the physical world will embrace digital it will ultimately grow the top of the funnel and will extend that lifetime value, that retention if you will and bring significant value to their business. It’s scary, but I think digital, especially even in something like boxing where there is a skill element to it to learn the punches in the comfort of your own home, or apartment, or in a park might feel great. And now you’ve built up that confidence to be able to show up at the gym and join that gym.
Kevin: Yeah, that makes a lot of sense. In terms of the business model, the idea of digital is something that a franchisee can sell and make some money for themselves, etc. Is that I guess the primary way that you’re doing it right now or are you centrally selling it?
Todd: We both centrally sell it and market it, and therefore build local brand awareness for Title Boxing Club physical locations. But we also sell it through our franchise partners, With our team just getting their C lives under them if you will that’s something we’re going to be talking a lot more to our franchise partners about. Because I think that could be a really nice tale in economics for our franchise partners once we more efficiently roll it out. It also will ultimately create a really interesting lead funnel for our franchise partners, for people who have a location near their zip code.
Kevin: Got it. It’s almost multi-use. You’re using it at the top of the funnel to build awareness and then almost after the first visit as an add-on or additional part of your membership.
Todd: Absolutely, and one of the things I always say to people whether it is within our business or outside of our business. If you’re a physical location you should expect that consumers will also have some type of digital extension and digital product. If we’re not going to be the ones to provide it to them, someone else is – Peloton and some of these other brands that are out there. It’s really up to us to stay in front of our consumer or we’re going to allow over time our consumers to really join and go with other brands.
Kevin: Got it. And then just wrapping up, a last couple of questions. First, now having reopened. I presumed most of your locations. What are you learning about the people that are walking through the door in terms of what they want and how that’s changed or not changed?
Todd: I wouldn’t say it has changed very much. Obviously, California was a little bit slower to reopen. This week is the first time physical distancing has been removed. You no longer have to wear a mask, and we definitely saw a nice little uptick caused by that. I think initially it was people who were much more comfortable and willing to show up in a gym. I do think it’s going to take real time to get back to the historical levels of say 2019. I don’t think that’s necessarily happening this year. We’ll continue to be on that road I believe in 2022. And from a lot of people, I think 2023 will be where we really get back to those high watermarks and higher levels. But I would say, again, consumers want to show up. They want to do their workouts. But as hyperlocal businesses, it’s on us to get out into the community and tell them we’re still here and we’re here to support you and be community builders.
Kevin: Got it. That makes a lot of sense. And then the last question. What is the biggest lesson that you have learned in the last 12 months?
Todd: I’m going to tie maybe two things the way I think about it. One is dream big and anything is possible. When COVID hit, I hosted a call with BoxUnion and I said, “I promise you we’re going to exit COVID stronger than we entered.” It’s really sad and unfortunate we saw a lot of businesses and fitness not make it. But because I think we dream big, we put out this opportunity into the universe, we ended up coming out of COVID as the largest player in fitness boxing. The second lesson was to continue to really dig into and invest in culture and team and that’s what I’d say since acquiring Title Boxing Club. That has been the lesson I learned is make the investment, live with what you know, be open to what you don’t know, learn from people, and then you still get back to anything is possible and you will grow your business.
Kevin: Got it. Okay, Todd, we’ll leave it on that positive note. Before I finish, just tell everyone where they could find you and how they can find out more about Title Boxing.
Todd: Absolutely. Please visit us at titleboxingclub.com, and see if there is a location near you and check us out. We really appreciate that. We don’t have any Title Boxing Clubs in Los Angeles. And so if you’re in Los Angeles, please go and visit our BoxUnion studios and we’d love to see you there. Personally, I’m always reachable. You could reach me at Todd Wadler on LinkedIn. My email is [email protected] or [email protected]. I’d love to hear from you. I’m on some other social channels all under the name Todd Wadler. I always look forward to connecting with people, and networking, and building relationships, and learning.
Kevin: Got it. Okay, Todd, this has been a really great education. We covered so many topics. Thank you very much for coming on the show.
Todd: Thank you for having me, Kevin. I really appreciate it.
Kevin: Pleasure.
