Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, Greg Stewart
[00:00:00] S0: If I think about the two big world things happening that probably most impact your business, they're out of your control, it's AI and GLP-1s. And I'm really curious how you think about both of those things as creators of opportunity, as potentially risks. [00:00:00] S1: I'll mention GLP-1 fast. And then AI is like a much bigger conversation. On GLP-1, it's interesting because all the science would support that you need a strength training plan alongside your GLP-1. You're at risk of so much muscle loss. So we think that's actually a macro tailwind and something that will help us. It's not something that we've investigated to date, but can totally see us working with some of the bigger GLP-1 providers at some point. The science backs that relationship. So that's not something that scares us. In fact, it's a question we asked in our survey, which we've never asked before. [00:00:00] S0: Are you on it or are you thinking about it?
· Greg Stewart
[00:00:00] S1: Yeah, people who are fitness enthusiasts doesn't mean that they're not on GLP-1s. And so we're going to continue to learn more there. On the AI, I think what gets exciting for us is that it feels like we can have our cake and eat it too now in that in the beginning, we felt like we need to focus on a venture scale business here and solving a problem that's solvable for a customer with software, which felt like one-to-many programming. Now with what's available to us in AI, we're able to deliver that personalization as well, which four years ago, we couldn't have. Two years ago, we couldn't have launched Nutrition with our same team, you know, six months span like we did. Beyond that, what I get excited about is that in an age of a lot less differentiation in tech and commoditization of certain features, because it's become so easy to people think you can just use ChatGPT to build an app, I would challenge someone to try to build the experience that we've built using AI. And I think we're going to continue to lean into things that AI can't touch, which is we've built a compelling brand. We have a tremendous amount of trust from our members, which is really exciting. We deliver a human experience at scale because of it. We've been thinking about it for four years. We've been using it as a tool for three years. It is chapters for us. In the beginning, it was a non-coding tool. It was how do I synthesize information? Well, it was amazing. I could take 5,000 responses and really understand what's happening. And so then it was everywhere. I can take it to think about how do I create compelling TikTok hooks based on all of this survey data or user data. That's a tool. It saves time. But it happened at the exact right moment where our entire team is 50 people, and that includes 20 full-time coaches, so 30 people excluding coaches. We started scaling at the right moment where AI started to become a use case that made us not have to go hire or expand the team just to solve a problem that we were looking to solve. The team would have been a lot bigger if this were four years ago, if we didn't have AI in every element of our business. The second chapter for us is using and incorporating the product, not replacing the human. We believe in humans as motivation. It's really important to feel like having a relationship with the coach.
· Greg Stewart
But I don't want to have coaches and reading chats all day and interacting one-to-one with users. I want it to feel that way and use tools to expand the capabilities of our coach. We have teams with 60,000 people that are in it. And now the chats are big and cumbersome and complex. And the coach's message isn't the only reason they're there, but it matters. And the magic moment for a coach is saying the right thing at the right moment that makes the most people satisfied with what they're saying. What isn't a great use of time, which was happening, is scrolling the chat for an hour to go figure out what's happening here. So we built a product called Ladder Pulse that automatically comes in, reads every single chat that's come in, tells you, here are the three most burning questions. Here's the content you should create. Here's the member you should respond to because they've never been responded to by a coach. Send. Done. So now we've removed all the cognitive overload of what to say. And it's all powered by this tool that we built purposely for the business. We're building software now to go support a better experience that's built on AI. Nutrition is a great example. We have never gone into Nutrition if there was no AI. MyFitnessPal had to build a database over time by hand that became the value of MyFitnessPal. That's not the hard part anymore. The hard part is the consumer experience and knowing what to do with the data. So it opened up the capability that wouldn't have taken the business sideways for five years to go solve that problem. And then we're inventing products from scratch. I'll give you two examples. One, we have, I told you, north of 300,000 paying members. We have one person that touches support. It's not even a full-time job. We have tickets coming in every single day. And we spent time trying to understand, who's coming in? What are they asking? What are the buckets here? And we built a product. That person's name is Maeve. We built Maive AI, M-A-I-V-E. And we built a customer support tool from scratch. It's purpose-built for our company that manages now 90% of the flow coming in. And the experience is as good or better. And it's faster than it was before. And we made it ourselves in our team. That would not have been possible five years ago. That solved the huge problem.
· Greg Stewart, Patrick O'Shaughnessy
Now we don't have to expand that team and we can deliver a better experience through that. And we have a person on our team who only works in AI. That's the job. And he's been doing that for a long time. [00:00:00] S0: How do you think about saying no to potentially juicy revenue opportunities that aren't core to the subscription, complete a workout, acquire customers? I can imagine a Ladder dating service. I can imagine Ladder being an origination platform for GLP-1, or Ladder coach tools. [00:00:00] S1: Which is absolutely a business. [00:00:00] S0: The Ben Thompson sense of aggregation theory. You're maybe a consumer aggregator. You've aggregated a lot of demand in this specific space. Historically, those companies have figured out how to monetize in lots of different ways. How do you think about the siren song of hire our poo and new sources of revenue?
· Tom Digan
[00:00:00] S2: But a lot of those businesses have died too because of doing too much at the same time. We've had a multi-phase vision from the beginning of what this thing can become. And our goal is to be the de facto product in this category. And we have stepping stones that we anchor to and they get moved around. But we have a vision for how to go do that. I think about new ventures, new business, push versus pull. Are we being dragged into this area by our members? Is it so freaking clear that this is going to be really exciting and solve a really important problem for people that are relevant to us? Like nutrition. Nutrition was on the board as an investor deck that you have from five years ago. But it didn't make sense to build it until last year. When we had critical mass, it was very, very clear from our members that that was going to move the needle. And now we'll build products on top of that. So we're ruthless in prioritizing. You have to make a clear, clear case of what this does to the business. We have no Android app. People think that's insane. But building an Android app requires basically pausing development on iOS, splitting the team's focus in time, playing this game of catch-up for a user that has much lower revenue potential and could absolutely take the business sideways for a year. Will we have an Android app? Yes. We won't have it this year. It's these levels. In my mind, we have to go earn the next level. And if we earn the next level, what should that be? Let's figure it out and then start the work on that. So I think all of these things that everyone talks about later, we'll go do all of them. But I'm playing like a long game here. This is not go sell the business. Let's go build the generational business in consumer that solves the most problems for the most amount of people.
· Patrick O'Shaughnessy
[00:00:00] S0: In that big, long-term vision, fitness, working out, and nutrition are two obvious major food groups of the vision. What else is on that? Understandably flexible. But what are the other big stepping stones that you think about?