Hermosa Beach in the South Bay region of Los Angeles is famed for its sunsets and year round oceanside water sports. It is a place where westerly breezes ensure fresh air and relative coolness despite the town enjoying almost 12-month sunshine.

It is the sort of place that justifies its name, which in Spanish, means beautiful.

Just a few months ago, Conor O’Loughlin relocated there as part of his mission to make Glofox the world’s number one gym management software company. It was a lofty ambition, but, from its base in Dublin, Glofox had already proven itself by expanding into 48 countries.

More than two million people use its software to manage everything from booking individual gym classes to paying monthly fees across 2,500 customers. Glofox is localised in eight languages, including most recently Japanese.

By any measure, Glofox is one of Ireland’s most exciting and ambitious startups with the potential to be a $100 million business, or more. It had raised $13 million from an array of venture backers like Octopus Ventures, Notion Capital, Partech, Silicon Valley Bank and Tribal VC.

O’Loughlin knew moving to California, arguably the world capital of health and wellness, made business sense. After all, he was already flying to the West coast 15 times a year, and O’Loughlin knew being in the United States would not only help it expand there, but also make it easier to get to its other growing markets like Australia, Singapore, and Japan.

With two children under two years of age, he and his wife were in the middle of moving their lives to begin their American dream. Then, Covid-19 struck. Suddenly, it was a battle for O’Loughlin to come back to Ireland, as long haul flights overnight shut down.

For three days, O’Loughlin camped at Los Angeles International Airport until finally he secured a flight back to Dublin. As he crossed the Atlantic, Ireland was going into lockdown along with much of the planet.

Everything was being shuttered, including the thousands of gyms and health studios Glofox had spent six years cultivating and servicing.

From spectacular sunsets, O’Loughlin was flying home to Dublin to face a much harsher vista.

But sometimes good fortune, as well as talent and hard work, intervenes. 

“We are giving them more avenues to generate revenues during this tough time.”

Conor O’Loughlin was in his living room in Dundrum, south Dublin when we spoke yesterday. He is, he admits, flat out balancing work and two young children.

He recommends I buy a trampoline for my garden – as he has – after I apologise for being slightly late to our call due to family commitments. I promise to take this advice on board. 

Earlier that day, O’Loughlin had sent me over a press release – embargoed until this morning – announcing that Glofox had just raised $10 million in new funding and that it had launched a new platform for live streaming and on-demand content for gyms and studios.

O’Loughlin can’t say who some of the new funding is from, but that’s a point to which we will return.

The deal, however, has been months in the works and closed just before Covid-19 really took off. “It was good timing,” O’Loughlin admits.

“It is a great testament to what we have built and how we plan to continue to innovate and create distance between us and our competitors. We can do it with a stronger balance sheet now.”

This is not to say simply the cash injection will make it easy. “From a fitness industry perspective, it is a very worrying time from the bricks and mortar aspect of it,” he says.

“The majority of gyms have been forced to close their doors. It is forcing our industry to think about how it can adapt and pivot to provide services to customers at home through digital channels.”

O’Loughlin predicts that Covid-19 will have a lasting impact on the world of exercise. “There will long term be a hybrid approach where gyms and studios will have to have a more digital offering. When gyms reopen again customers will have different expectations,” he says.

“Those gyms that will be successful will be those able to provide a good experience in digital formats. Members will want more flexibility and to have a fitness experience which doesn’t just stop at the front door of a gym.”

O’Loughlin said Glofox’s mission was to be the operating system for the fitness industry. It had already developed some solutions for remote training – and Covid-19 had accelerated this. “We pivoted our roadmap slightly to meet our customers’ needs during this crisis from a product perspective,” he said.

“We are positioning ourselves to support our customers through this.”

Today, Glofox has launched a new platform that enables gyms and fitness studios to deliver live streaming and premium on-demand content. O’Loughlin said a key reason people used local gyms was because of the community aspect of classes.

Enabling live streaming of such classes, he said, kept this spirit alive and gave local fitness entrepreneurs an advantage over impersonal classes like the Body Coach Joe Wicks who streams to millions of people daily.

“It is difficult to compete with Joe Wicks on one level. But where local entrepreneurs can be successful is around enabling their members to have a more social aspect to their fitness. We can help them translate that online.”

Glofox, he said, was offering its customers advice as well as discounts in order to enable them to transition their business to remote training. It has also added an ecommerce element to allow gyms to sell equipment or nutritional information.

“We are positioning ourselves to support our customers through this,” O’Loughlin said. “We can help them give more value to their members which allows them to justify their members’ dues.”

“We are giving them more avenues to generate revenues during this tough time.”

“Netflix didn’t kill the cinema. People will still want experiences”

When it started out, Glofox was primarily aimed at small and medium sized businesses. About 18 months ago, however, it started to work with larger groups.

Some of the world’s biggest health franchises including Tough Mudder Bootcamp, SNAP Fitness, F45 training, Elite Bodyworks, Fit 7/8, 9Round, Greco Fitness, and Switch Playground all use it.

It targets boutique type fitness providers who invest heavily in delivering premium experiences rather than old-style ‘stack members high and hope they don’t come too often’ type operations.

“It gives us an opportunity to create distance and to come out of this with a very strong product built for a new wave of fitness entrepreneurs.”

 “The rise of boutique experiences has been a source of sustained growth for us,” he said.

He said gyms that do not have strong communities will find it hard to survive Covid-19. “Netflix didn’t kill the cinema. People will still want experiences,” O’Loughlin said.

“People are itching to train with their friends. Gyms with strong knitted communities are the best positioned and the most successful gyms will adapt and provide more flexibility with an enhanced digital element to their offering.”

Earlier this year Glofox began working with Gympass, a giant corporate fitness business that prior to Covid-19 was a Brazilian unicorn after it raised $300 million from Softbank.

Gympass is a massive discovery tool for employees to try-out new work-out or wellness experiences. Glofox is working even closer with it now by using its digital products to help Gympass users continue to access classes even as many gyms remain closed.

O’Loughlin said many consumers were prepared to spend more on health and wellness because of Covid-19, but they just needed a way to do so.

“This new fundraising gives us the ability to keep investing in our product when a lot of our competitors are not,” he said.

“It gives us an opportunity to create distance and to come out of this with a very strong product built for a new wave of fitness entrepreneurs.”

“We have the best minds to come out of this crisis with a product and team that will be category leader.”

“Being overly conservative right now is a good thing”

Conor Stanley is one of Ireland’s shrewdest early stage software investors. He invested in Intercom’s first $1 million seed round many years before it became a $1 billion business. The co-founder of Tribal.vc has backed other Irish startups including Boxever, Pagefair, and Balcony TV.  He was also a backer of beauty salon software business Phorest, which raised €20 million from Susquehanna Growth Equity (SGE) in June 2018. Stanley sits on the board of Glofox and is close to the business. He shared an office with it on South William Street in Dublin 2 before remote working took hold.

Over the years, I’d sometimes see Stanley deep in conversation with O’Loughlin in Clement & Pekoe, a nearby coffee shop, back when people used to go to such places.

Stanley said he was drawn to Glofox because of its proposition and its people. “I instantly hit it off with Conor. It was clear he was a strong leader; incredibly focused and detail orientated while being highly personable and grounded,” Stanley said. “He’s built a very strong team around him.”

O’Loughlin’s co-founders are Anthony Kelly and Finn Hegarty, and the business employs about 100 people. Stanley said he was not deterred by the crisis from backing Glofox. “The evidence from the market is that they have built the best end user product that can serve both enterprise franchise customers and smaller local businesses around the globe,” he said.

“The company will double down on their product investment over the coming year of uncertainty. I’m confident this will leave them very well positioned to return to rapid scale in 2021.”

Marieke Christmann, a principal with Octopus Ventures, said early stage tech companies played a crucial role in mitigating the economic and social impact of Covid-19. “In a time when we are restricted to our homes, it’s more important than ever to support consumers so they can exercise and stay healthy,” she said. “Glofox is at the centre of this trend in the fitness industry; we are excited to see the continued success of this talented team and to support them on their growth journey.”

“There is a need to be more conservative during a time like this.”

O’Loughlin said he was appreciative of his backers, but cautious about using their money wisely.

Up until now, Glofox, like many early stage SaaS firms, was primarily focused on growth, rather than day-to-day profitability. Covid-19 has changed that. The next funding round can no longer be taken as certain for any venture backed firm. “We are looking at this like a lot of businesses are – you need to be approaching this like this is the last money you will ever raise,” O’Loughlin said. “I think that mindset and that approach is the best way to look at it.”

“We were growing exceptionally well coming into this,” he said. “We would see a lot of positive growth next year. But taking that mindset gives us the ability to have financial optionality where we can see a path to profitability.”

O’Loughlin said he could not name one of the new investors in his business. There are rumblings it might be a big player with existing interests in the fitness industry.  “It is a decision we made that it was in the best interests of them and us not to name them,” he said.

“We are lucky with the VCs we have. They have been very supportive of the path we want to take. We are very much about building an efficient business. The growth that we were seeing definitely justified a lot more foot to the floor mentality but their mindset, as well as ours, has shifted. There is a need to be more conservative during a time like this. Being overly conservative right now is a good thing; that way we can always accelerate when the time is right.”

*****

Glofox’s biggest competitor is a giant company called Mindbody which was bought in late 2018 for $1.9 billion in cash by Vista Equity Partners. At the start of this month, Mindboy laid off or furloughed 700 of its 2000 staff as part of its battle to survive.

“It’s a tough day, a really tough day,” Mindbody chief executive Rick Stollmeyer told local Californian reporters. “If you’d asked me a month and a half ago, is there anything that could possibly happen that could shut down all 60,000 of our customers at once, I would have said ‘No, that’s impossible.’ But that is exactly what is going on right now.”

O’Loughlin takes no pleasure in Mindbody’s distress. Glofox has had to make its own hard decisions, albeit on a smaller scale. “We did have a number of layoffs, around 15 per cent, which reflected that gyms were closing, and we weren’t willing to make the same amount of investment in new customer acquisition.”

“We had a duty of care to our customers and investors and the business to make sure that in all scenarios we have financial optionality,” he explained. “Given what is happening and will happen we had to make sure we had the ability to survive and thrive. We are however maintaining our investment in supporting our current customers, R&D as well as investing in helping new customers.” 

O’Loughlin said smaller competitors to Glofox could struggle. “If you hadn’t raised when the music stopped you are probably in a very hard position,” he said.

“For us this is an opportunity to invest in a product that is going to lead the next generation of fitness. We are fortunate when we closed, and where we are now. A lot of competitors are going to be weakened and we can come out of this stronger.”

*****

The interview is winding down. Will O’Loughlin someday move to Hermosa Beach?

“We will still move. The overarching reason to do so is still valid,” he replied.

“I think as a company we will travel less and be prepared to work more remotely. But for us, the US is still a big focus as it is the market leader.”

O’Loughlin said gyms in the United States are expected to be among the first businesses to reopen.

“We are an operating system for gyms and studios so for us we are the lifeblood and the electricity of fitness entrepreneurs’ businesses. We are having a meaningful impact on their ability to be successful. Supporting fitness entrepreneurs is compelling, purposeful work.”

“We have done that in multiple countries and we have a tight knit team that has really stood up in a time of crisis and supported those business owners at a time when they are needed.

“We have positioned ourselves not as experts in software but experts in what it takes to be successful in the fitness business. Seeing that unfold in a time of crisis and the feedback we have received has been overwhelmingly positive. That is down to our team and that’s why we do it.”