Jamie Ward explains how his model is attracting 100 new gyms per month
Exercise is about commitment. Not only do you have to commit your time and energy, you also have to commit a hell of a lot of money to join a gym, and then even more to stay on as a member.
It can cost dozens, or even hundreds of pounds a month, and all of this for the slim hope that you will shed a few winter pounds in time for summer.
The reality is, though, that in this ever-busier metropolitan world we live in, few of us have the time to make this monetary and physical commitment worthwhile.
We not only want more choice about when and where we exercise, we also want the power to decide how often we work out and how much we should pay to do so.
But while every industry from media to tech has busied itself trying to accommodate our changing needs, the gym sector has stayed frightfully stagnant – at least until now.
Since opening up in 2011 payasUgym has worked to transform the market by adding a crucial missing element to the exercise equation – choice.
Company co-founders James Ward and Neil Harmsworth started off believing that going to the gym should be like going to the cinema – or anywhere else for that matter – and so set up a website which scrapped the pomp and procedure associated with gym membership.
The premise is simple. payasUgym.com lets you buy a one-off entry pass or a short-term membership to a gym so you can go where and when you want.
Sure enough, simplicity has done the trick. The company was founded in February 2011. It’s gone from under 300 participating gyms in early 2012 to almost 1,200 now, and is adding about 100 new gyms every month.
Considering there are only about 6,000 gyms in the UK that means that the London-based entrepreneurs have already secured just under 20% of the market and could well hit 50% by the end of next year. This is no small feat in a growing £4bn-plus annual industry.
So as temperatures started soaring and we all started thinking about perfecting our beach bodies, we thought it would be a prime time to catch up with Ward and see if his commitment was paying off.
So, Jamie, talk us through how it all started?
My co-founder Neil and I were working in the corporate world, doing M&A for Ernst & Young. But we were also trying to train for a big swimming race and we found it very difficult to find a good gym with a pool that was convenient and easy to use.
It seemed ridiculously impossible. There was nothing online that would give us a flexible way to get fit, and we were always chatting about this on the way home.
We quickly decided that there was something here and that we could fill a gap, because e-commerce was consolidating a lot of sectors but it wasn’t having an impact here.
But if it was so obvious, how come you were the first to think of it?
Well it may seem obvious, but the more I looked into the market, the more I understood why this had not been done.
It is hard to get the framework to get a gym up and running; to find the space, to fit the equipment, to find the staff, to win the customers and to keep them coming.
Customers were very receptive to our idea, but the gyms were harder to convince.
The reality is, though, that our lives have been changing so much that the old model wasn’t working well. Plus, there was also element of the recession because in years gone by, disposable income was higher so it was less necessary to try and win customers.
Since “Austerity Britain” kicked in, however, people have started looking at ways to save money. An expensive gym membership that you don’t use often was an obvious choice. So this helped gyms to become more receptive.
What made you take the risk of launching the company?
I have never minded risk. I decided to quit my job while my wife was four months pregnant, which sounds crazy to most people.
I always figured that we would try it for six months and if it was going well, then great, and if I found that it wasn’t working then I figured I would just go out and get a new job.
But we did a fair bit of research early on which suggested we were onto a strong idea.
We surveyed 3,000 people and we got massively positive feedback. People didn’t just like it, they were coming back saying that they thought it was amazing, and saying that they couldn’t believe they had not thought of it first.
So we started out around my kitchen table and stayed there for about six months until my baby girl was born, at which point we got kicked out! Then we hired this tiny and disgusting Putney office, which looked like a crime scene.
My partner Neil even slept there for nine months because he could not afford rent.
How did your initial fundraising round go?
We had the idea in 2009 and in 2010 we started the fundraising push. We went to a lot of angel investors, private clients et cetera, and spoke to hundreds of people – but we had a smart strategy.
We deliberately chose to meet first with the investors we knew would not invest. We knew they would be the most critical and that they would ask all the tough questions and point out all the possible flaws in our plan.
So we went to five of six meetings like this until we were sure that we had answered all the questions and perfected our pitch.
I would seriously advise anyone who is pitching to do it the same way. Never go to choice A on your first time.
This way, by the time we got to the people who were likely to invest in us, we found a lot of interest. We managed to get most of the funding sorted in about six months, which is pretty quick.
We started off slowly but then in 2012 we reached a major tipping point and started getting loads more gyms on board. We now have more than 1,100 gyms and are adding about 100 gyms every month. London is our core focus and has about 25% of all our participating gyms.
So how did you convince the gyms that they should introduce your flexible payment approach?
Some gyms were easy, but others were much harder. So in early 2012 we started to have a look at how we were perceived in the industry and we realised that it wasn’t always positive.
A gym manager referred to us as “those two men and their dog who think they can come into our industry and tell us what we do!”
So we tried to change our approach and started integrating more. We took lots of meetings with industry leaders and professionals and made sure that we listened and established ourselves as a credible authority.
It was crucial because we went from 300 gyms in the first few months of 2012 to 800 by the end of the year. Now we are at more than 1,100 and adding 100 nationwide every month.
We also had to explain that we were not just selling a pay-as-you-go format. What gyms need above all else is footfall. They need to get people into the gyms – and they were struggling to do this.
Our service is basically marketing. We get people to gyms. If they like it, they will want to come back and join for a month or a year.
Before, the gyms were giving away lots of free passes to get people to visit. But if they were not convinced yet, the pass would run out, the customer would not come back, and the whole thing would have been a waste of time.
Which gyms have signed up to payasUgym, and can you compete with the big players like Virgin Active?
We have a lot of independents, but we have a lot of hotel groups, the Living Well gym chain
, and a fair few group operators, running groups of public and private gyms.
So far we have 200 gyms in London, which is more than any of the big names.
While you may think that places like Virgin dominate, they actually don’t. There are about 6,000 gyms in the UK, but just 570 belong to the top seven brand companies. That is not even 10% of the market, and we already have 18% of the UK market.
So while we don’t have any of the big names yet, we work with very high quality gyms at top hotels, but lots at universities and schools too.
Many of these gyms are brand new. There is a gym in SE1 that has just undergone a £4m conversion, but they have no marketing budget. A session there is just £4.
How do you make money?
We take commission which varies between 20% to 30%.
We are also pretty confident that we will keep getting lots of repeat customers. Yes, some may join a gym permanently, but this will never be for everyone.
Eight out of 10 people want to use gyms on a flexible basis and they want to keep that element of freedom and choice. At the end of the day, if you use a gym seven times or less a month, we are always going to be cheaper.
Plus, our corporate goal is to never give out our customers’ contact details. This is crucial as people don’t want to give their information to get free passes.
We expect to hit sales of £4m this year and £12m next year.
So where next?
We are at 18% of the market but our plan is to reach 40% of the market soon.
London is absolutely a priority. Our first 100 gyms were here and we currently have 25% of all our gyms in London, but we have also been growing out of the capital too.
For now we have been focusing on growing our network, but we now feel we are finally at the right stage to take this to the customer and grow our customer base. We are literally starting this now.
We already have 70,000 users – which is quite small – but we have a potential market of 15 million people here in the UK.
And we don’t just want to expand geographically, but into other sectors too. At the moment we are trying to move into gym classes. We already have the gym network and customer base, so it a natural extension as much of the hard work been done.
Eventually we see ourselves working with all the gyms and all the big brands, because as we grow even the bigger players will realise that we are a huge advantage.
Thanks for your time Jamie!
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