Brett Maloley - Ladder: The Fitness Marketplace

**Patrick O'Shaughnessy** (0:04)
Hello, and welcome everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_1** (0:24)
Patrick O'Shaughnessy is a principal and portfolio manager at O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:47)
This week's episode is part of an experiment and so requires a longer than normal introduction. I've come to view this podcast as a learning tool, a means to understand a new topic in a short window of time. One of those areas is venture capital and startups, an area that one year ago was completely foreign to me. I think the best way to learn is aggressive immersion in a topic along with some consequences, what we often call skin in the game. Accordingly, this is a conversation with the founder of a startup in which I personally am an investor. I say this in full disclosure because I believe in being very transparent with you, but also because I obviously want this business to do well. Part of the reason I invested was because I thought I could personally affect the outcome, in part by exposing the model and ideas to you all. I deeply respect your opinions and collective breadth of knowledge and welcome thoughts that you have on this startup and this topic. The founder in this case is Brett Maloley and his company is called Ladder. Ladder represents an overlap of many topics we've explored together over the past year. We've talked about venture capital, health and well-being, the difficulty of fundraising and power law outcomes in startups. We also spent an entire episode with Alex Moazed talking about the business model that Ladder is pursuing. This is what Alex calls the platform business model and what my favorite technology writer Ben Thompson calls the aggregator model.
Alex wrote the book Modern Monopolies about this model which describes how companies like Uber, Airbnb and others serve their clients.
Platform companies sit at the intersection between consumers and producers in a given category, helping make life easier, cheaper and or better for consumers and more profitable and flexible for producers. But the value creation itself is about facilitating exchange more efficiently than it is about actually creating the underlying product. Airbnb, for example, doesn't own real estate, the value in this case, but they unlock the potential of real estate owned by others. Same for Uber, which so far doesn't own any cars. As Alex explained to me in our discussion, a key sign of a market which might benefit from a platform company is some form of latent, untapped supply. That brings me back to Ladder. The company is being built to unlock latent potential in fitness and potentially other types of coaching. Personal trainers work 11 hours a day but have 4 hours of downtime. That is the untapped supply in this case. Ladder will allow two key things. Much cheaper access to a real fitness coach for consumers who don't want to spend hundreds of dollars a month in the current format, and a way for trainers with lots of free time to both get new customers and to better engage with their existing customers. Think of it almost like Open Table, which started as a way for restaurants to better manage their reservations but turned into a liquid market for consumers to make reservations themselves.
The reason this is so interesting I think is the enormous size of the commercial fitness industry and the fact that it hasn't changed in a long time. I love people who have an almost bizarre level of knowledge in a niche field, and Brett certainly fits that bill. He grew up with the industry, his mentors and relatives have literally built the commercial fitness industry what we think of as gyms and personal training as we know it. He knows how this legacy model works and ticks, the flaws and benefits of different business models and why the future might be different, with a much larger percent of the population using a fitness coach and maybe other types of coaches in categories like nutrition and health.
To see the app in action and get paired with a coach, Brett kindly set up a promo code of sorts like you often hear on other podcasts. If you search for ladder coach in the app store, download the app and then use the promo code ILTB as in Invest Like the Best, you'll get 50% off the service forever. I don't get any cut of that at all. In fact, you could think about it like a subsidy that I'm in part paying for as an investor. Brett and his team are data heads and their main goal early in this company's life is to generate data on the relationships between consumers and their new coaches to figure out what works best for both groups and to constantly improve the service so the early adopters among you get a permanent discount.