Atara Round-ups: 2020/21 sports-tech success stories. Greg Divall discusses how three companies have successfully navigated the changing face of the health and fitness space during the pandemic.
It is not exactly breaking news that technology has been transforming the world of sports for years, with investment in areas like e-sports surpassing $2.5bn in 2018, and the value of the overall sports-tech sector predicted to reach $30bn by 2024. As a large percentage of the global population went into lockdown in early 2020, several companies were fortuitously placed to support a market suddenly confined indoors and here are three movers and shakers in the space who have experienced particularly high growth over the last 18 months:
Founded by avid cyclists John Mayfield and Eric Min, online fitness platform Zwift burst onto our monitors in 2014, beginning their meteoric rise which culminated in a $1bn valuation in September last year. Since its launch, the California-based company has raised over $620m (most recently securing $450m after selling minority shares in a major round of funding led by global investment firm KKR) and has over 2.5m registered users across 190 countries with peak daily figures exceeding 20,000 users.
Zwift was originally conceived out of a desire to make indoor cycling training less tedious and swiftly (pardon the pun) evolved into a fully immersive gamified fitness experience, allowing users to train, race and interact with one another in a 3D virtual world. Used by amateurs and pros alike, users control their avatars with either a treadmill or static bike synced to the app, and have access to a variety of virtual worlds, ranging from GPS accurate climbs such as the iconic Mont Ventoux regularly featured in the Tour de France, to racing along London’s Thames Embankment, a route made famous by the annual Prudential RideLondon mass participation event. Notably, the developers have focused on making the virtual experience as genuine as possible by reflecting real world mechanics, with aerodynamics, gradient, drafting and power-to-weight ratios all having an impact on user performance.
Zwift was perfectly placed in early 2020 to take advantage of the sudden home exercise boom. Although achieving steady YoY growth from their inception, their subscriber numbers doubled in 2020 alone. Whilst gyms across the globe were forced to close their doors and, in many countries, outdoor exercise was strictly limited, the virtual world created by Zwift allowed its users to continue exercising on their indoor bikes and treadmills, and most crucially, provided the social connectivity that so many of us craved last year.
Towards the latter half of 2020, adverts for Zwift featuring top cycling pros began featuring more regularly during primetime slots and the company has successfully begun to blur the boundaries between the virtual and real worlds, hosting a Virtual Tour de France to replace the ultimately delayed live 2020 event, broadcast in more than 130 countries and reaching a global audience of more than 16 million viewers. This was closely followed by the ground-breaking first UCI E-sports World Championships in December 2020 and Zwift has also branched into elite triathlon competition, hosting the Super League Arena Games and providing fans with unrivalled access to live data for a truly immersive viewing experience.
Looking to the future, Zwift are currently developing their own hardware. With parallels to in-home fitness success story Peloton, the future is looking bright for this Unicorn.
Activity and fitness tracking platform Strava needs no real introduction. Closing a colossal $110m Series F investment round in late 2020 led by Sequoia Capital and TCV, the company was valued at $1.5bn according to the Wall Street Journal.
Part digital training diary, part social media platform, Strava is a California-based community for athletes. Founded in 2009 by Mark Gainey and Michael Horvath, Strava literally translates as “strive” in Swedish, which is embedded in the DNA of the product. Predominantly used for tracking cycling and running activities utilising GPS data, users complete real-world fitness activities before uploading them to the app, where performances can be analysed, leader boards contested and followers can comment or rate one another’s activities, providing virtual “kudos”. And this is precisely where Strava really stands out from the competition. Every uploaded activity is new content on the social platform, driving user engagement by encouraging interactions with the community both before and after completing their activity. Whereas other fitness tracking products are utilised merely to record an individual’s fitness activity, Strava has created an entire ecosystem for users to explore.
Although this success was not achieved overnight, a knock-on effect of global gym closures during the pandemic led to Strava experiencing significant growth in 2020. As lockdown measures allowed, millions more people began exercising outdoors and were attracted to the platform through the development of new features such as community goal-setting and virtual competitions. The app topped the list of highest grossing health and fitness apps worldwide in August 2020, has been adding more than 2 million new users per month and currently boasts over 70 million members with a presence in 195 countries. Originally adopting a freemium model to drive its stunning growth, in 2020 popular features such as route planning and access to leader boards were moved behind a paywall. Although initially creating a furore amongst its community, the pivot to focusing on the development of paid services has been a fundamental driver towards achieving Unicorn status and making the company profitable for the first time in 2020.
Things have not always been plain sailing though. Strava found itself in hot water in 2017 after publishing a global heatmap showing every single activity point uploaded to the app (3 trillion individual GPS data points at the time), unintentionally revealing the location of several highly sensitive military installations via military personnel’s activity uploads. Privacy controls were subsequently tweaked, but this incident highlights the tricky subject of data privacy with an app that tracks an individual’s GPS position.
A household, albeit slightly niche, name in the cycling community, The Sufferfest evolved from its humble beginnings in 2009 with founder David McQuillen initially providing individual training videos for indoor cycling, consisting of structured interval sessions accompanied by race footage to somewhat simulate the outdoor racing experience and alleviate the mindless boredom of cycling a stationary bike indoors, into a fully-fledged complete app-based training solution for the burgeoning cyclist. The Sufferfest has created a devout following and community of self-titled “Sufferlandrians” and as an avid user myself I have experienced their infamous mantra, IWBMATTKYT. In plain English, “I will beat my ass today to kick yours tomorrow!”
Designed by world-class sports scientists, their platform combines cycling workouts with supplementary yoga, mental and strength training sessions to provide everything amateur cyclists require to improve their all-round performance on a bike. Since its inception, The Sufferfest has been a self-funded enterprise, and YoY solid user acquisition numbers led to the 2019 acquisition from US headquartered fitness technology giant Wahoo, integrating the platform into its ecosystem of indoor training products.
During 2020, The Sufferfest saw its user base grow fivefold from the previous year, riding the wave of the huge increase in sales of indoor cycling training equipment during the early stages of the pandemic (cycle retailer Sigma Sports released sales figures for March 2020 showing the number of orders placed on turbo trainers and static bikes increased week on week by 440%). Combining this with an intelligent marketing strategy that saw the introduction of “All In” 30 day plans to help athletes during lockdown and expanding their free trial period to 44 days to attract new users.
The numbers speak for themselves, and it will be interesting to see what the future holds for The Sufferfest as their product is further integrated into the Wahoo ecosystem, particularly with intense competition in the virtual cycling space from the likes of market-leading behemoth Zwift and new kid on the block, the ultra-realistic RGT Cycling.
Without a doubt, these companies were ideally placed to take advantage of the tumultuous market conditions created by the pandemic in 2020/21 as people turned to technology to fill the void created by both a sudden lack of social interaction and access to outdoor exercise created by stay-at home government mandates. It will be fascinating to observe how these companies look to navigate an increasingly open market in a post-pandemic world and whether they can sustain their market position.
The Round-Up series is a collection of articles commissioned by Atara Partners to look at the success stories of some of the fastest moving technology businesses in the tech ecosystem.
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