How Zwift CEO Eric Min grew to $103M revenue and 300K customers in 2023.

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per talk 5 and6 million he is held bent on global domination we just broke our 100,000 unit soul Mark and I'm your host Nathan lka I just finished traveling southeast Asia for 4 31 days and I usually always get sick when I travel and quite frankly eating is difficult for me it's hard to find a restaurant and I'm spoiled in Austin with my personal chef well I took these little packets with me this time 30 of them in my carry-on suitcase they kept me totally healthy with 11 different secret ingredients you can see them at Nathan la.com juu I'll tell you more later on in the show that's Nathan la.com juice folks many of you reach out to me and you say Nathan so many guests on your show talk about the importance of batching but whenever I try and batch you tell me this you go Nathan they don't book backto back times so you or they don't show up after they book it's frustrating the answer is guys you have to use Smart Tools I use a tool called a cue scheduling at Nathan lat.com schedu I'll tell you specifically how I use it later on in the episode this is episode 659 coming up tomorrow morning I talk to somebody who might be the first trillionaire and the person that's going to decide this are farmers why drones and machine learning are directly connected to value for farmers who can use this data to save money so the question is simple will Farmers decide the first drone company trillionaire tune in tomorrow morning to find out good morning everybody Nathan lka here our guest today is Eric Min he is the CEO and founder of a company called zwift.com we'll talk all about all about it Eric's a tech entrepreneur a lifelong cyclist and is now spreading Fitness through virtualization and game of all right Eric are you ready to take us to the top yes yes very good so tell us kick us off here tell us what zift does and what's your Revenue model how do you generate money uh so zwift is simply uh you know creating a a virtual space where you know cyclists can can interact with each other uh in in real time we're trying to recreate the the social um uh all the social aspects of of cycling that uh that so many of us really enjoyed it's it's a personal problem that I tried to uh to solve um you know coming from New York and living in London all of my network being in in New York City I thought um you know could we could I recreate some of the social network that I had before in a way that just wasn't available and you know could we do that through a gaming platform and and create a social network where you know the interaction is is is real and physical and are you selling so uh guys I encourage you to check out the the website zwift.com but I mean the reason Eric I look at an idea like this and I go this is exciting is because for whatever reason when I work out if there's people watching or I'm competing with someone that I can beat I just work out harder it's something psychologically in my brain I don't know why so I love that I could be by myself here use whift to maybe compete against other people my question to you is though are you actually selling this whole bike as a as a piece of Hardware or is it just an add-on it's we're a pure software company it's a subscription business we charge $10 uh a month in in most uh most countries and um you we're asset light company we uh we work with so many partners who have all the different equipment that's already available in the market so we're really bringing all the different pieces together and create an experience that um you know that I think the industry has been talking about and promising for the last 25 years and the timing of bringing all this together is you know was is perfect for for today so Eric someone's listening right now they want to buy this what do they have to have for for like physically for zift to work right so the the most basic setup would be your iPad and um there's a there's something called a trainer that can attach to your traditional bicycle that turns it essentially into a stationary bike there a couple of sensors Bluetooth sensors and vaa it gets connected to to our game which is running on iOS it also runs on PCM Mac and then we based on your weight how fast you're you're pedaling and and a couple of other factors we Propel you in the game got it so your weight matters the kind of equipment that you have in the game actually matters the terrain that you're riding on in the game matters all of these things factor into you know how and the drafting within the game y these are all things that you you take for granted but it it's all you know happens in the real world and we take a that and model that and and and turn that into an experience in the game so what year did you launch the company in in 2014 January 2014 we put a small team together we seated the business with how much Capital um my Let's see we SE the business for I you know my my my partner and I we had an open checkbook but uh committed a couple million dollars to build this and we uh we were able to bring a product to life we had uh friends and family raised about $7 million um and we launched a beta product that uh go ahead no I didn't mean to cut you off but where are you at to date how much total Capital have you raised we just closed a series a around back in November we've raised $45 million a date so somebody listening Eric right now they're going to go what what the heck I can't learn from Eric he had millions of dollars to to fund his own company from at the beginning like why should I listen to the rest of this interview it sounds like you maybe had a win before zift what' you do before so my partner and I Al Mar he he and I built a trading platform for the financial and energy markets so on the back of um you know a little bit of success there we decided to do something completely different uh from Enterprise to something consumer facing um and you know we thought you know if we could do something completely different out of our comfort zone we could probably call ourselves true entrepreneurs and so um yeah so here we are with our second Venture and did you what how old were you when you launched that Trading Company your first company uh so I was about 30 years old okay and you built that up for how many years so that was over a decade um and so that that went on for some time uh so that was an interesting business Enterprise um and you know it it was tough is we learned a lot of lessons there we were able to monetize the business which is great and allowed us to you do something fun is rift but um you know Enterprise business is is tough Capital intensive and if you're not clever you you you don't walk away with very much at the end how what was the it finished that story for us I mean did you sell it you shut it down what so we were sitting on a what amounted to a100 million contract so we had a you know we had a decision to make do we reinvest the proceeds highly profitable contract do we reinvest it and and try to compete and scale our business or do we call it you know call it a day and say let's just take as much of that off the table uh we took a tough decision and it took us five years to take a lot of that off the table so someone let me just let me see if I can understand this properly a big uh company liked what you were doing and they said we want to buy a plan or a contract for $1 million and then you spent five years kind of executing that contract and in the process just extrap you took as much of that as you could out into your pocket and your Founders pocket right in order to return eight times uh it was a eight investors received eight times their money oh that's great how much Capital do you raise in that business $3 million okay got it you said three or 30 three three that's great and um okay good that makes sense good so now you guys kind of understand more I always I always appreciate when people kind of expl more about how they got that initial bump because Eric a lot of these Entre even Elon Musk he started with an agency and they snowball their winnings into the next winning and the next and the next yeah so that was yeah we were fortunate to be able to to extract um you know cash out of that business because if I look back it was incredible in a market that was shrinking that more competitors were coming into the space we just knew at that point it was time for us to leave and the difference between the the number one uh um you know vendor versus US you ranked in the top five was just insurmountable difference in terms of you know uh the power that the the a leader of a particular vertical had and so one of the things that we were set out to do is become a category leader and you could become a category Leader by creating a brand new category and essentially that's what we've done with Rift y so you're 30 for a decade you're building this trading platform now 40 you've made some money by taking again giving your investors adex on their money that first company and then using the rest to split between you and your co-founder on a from you know about $100 million contract you get out of the space you launch zift in 2014 you raised about 45 million bucks how many customers do you have to date so we don't we're not public about how many subscribers we have but I can tell you that we've had um some some simple basic information would include about over 300,000 accounts created 300,000 yeah 300,000 and um uh over over the course of of so far we've had over five million rides okay um and over five million hours of of pedaling the average ride is one hour which is pretty amazing for a stationary bike experience um we've another interesting um uh metric is that we've we've logged 88 million miles on on on on our um uh within within Z so the the engagement is is fairly High uh it's incredible that people log into with to watch other people other interesting met is 202,000 hours of what we call fan viewing people logging in just to watch other people this is very consistent with the gaming um you know the gaming industry and um so you know there's whether it's uh using twitch or or um or or or or Pro beam uh other streaming uh platforms people are actually uh broadcasting their experience on zwift and and and what is the so you mentioned I think back in November 16th based off my research Tech crunch reporter you guys had about 200,000 people signed up so between November and now it's now March 2017 you've signed up another about 100,000 people which I feel like if I'm getting that data right that's a good growth rate um that's right yeah help PE other people listening right now they kind of have this free model and they're always struggling with how to convert from free to paid what are some of the kind of key things you know you have to get a free user due to get them to convert into a paid zift customer so we don't have any free users what we have is a trial okay um and today what you you get is a little taste offt every month so uh you get to ride 20 kilometers or about 18 12 miles a month so everyone can dip in we don't have any year-long contracts at the moment so what we wanted to do at least in the first couple years to understand the behavior um most of our customers are outdoor cyclists so you know what they're used to doing is riding indoors them in the weather is not friendly and and going Outdoors uh when the weather uh improves so what we're under trying to understand is you know can we affect Behavior you know could we tweak the product so that zift is a proposition year round and these are experiments that we're conducting at the moment but we believe that over time the zift is is something that will be a year round proposition for for not just cyclists but Fitness enthusiasts when we get to that youit part of the market what what is do you I mean do you see seasonal issues right now and you're paid kind of cohort in other words are people signing up in the spring and cancelling for two months and then resigning up almost every business is seasonal people may not realize it gaming is industry is seasonal wait I hold on I have to disagree with you on that I mean there are plenty of SAS companies I've interviewed that are they they are not seasonal businesses they're like B sass yeah so that's so let's talk about uh uh consumer businesses so like gaming gaming is a seasonal business that that shocked me actually but it makes sense people spend less time playing games during the summer they probably go out go on vacation and so many businesses are actually more seasonal than we we think um but it's not to say I think zift could could smooth that experience zift is something that just makes it very easy for one to consume Fitness our our belief is that everyone is chasing Fitness and everyone would like to consume Fitness in the most efficient way and we think that um that solution is is probably in the home it's it's got to be very very you know uh cost effective so I think $10 is is is probably the Sweet Spot um and you know people like to to work out with other people yeah so that you need to bring a social community and so not after the fact but during the activity so what do you I mean when you you only have this one plan right you don't have any kind of like expansion Revenue systems built in place right not at the moment I mean that's those are all things that that will be coming we'll have U we have a number of different uh ways we can monetize going forward but right now we we uh we think we we have more building to do with the just the basic experience we've just I'd say from 1 to 10 we're at level two yeah we've got a lot you've got a lot of free users obviously signing up um you know so I mean help me understand I mean how seasonal is this business I mean are we talking 10% monthly customer churn are we talking 2% or 30% or give me a Range uh so from the numbers that we see today um it's it's probably you know 70% of the people will hang on throughout the year okay guys so 70% annual retention which means you're you're churning call it 3% of users per month and and I don't think they churn it's called pause pause okay well even that I mean Eric that's not a horrible number there are stats companies I talk to yeah there are stat companies I talk to that have double that monthly churn yeah no it's it's pretty happy with the retention I think the product will only get better as the network expands The Social Network expands there just this there it's more interesting to to participate in zift yeah um the content you know that we'll be investing in would be more interesting we're also crowdsourcing um content so what I mean by that is unlike other platforms where you might have to pay a spin instructor to create these spin experiences uh we've got a community of of of users who want to volunteer their services to be rde leaders yeah so so uh there are all sorts of I think the last I checked there over 700 events being organized every month by the by the community that's great what are you uh I mean you guys are doing a great job obviously with acquisition of users how are you like are you doing any paid spend and if so what's your ca 95% of our user acquisition is is organic and how's it happening and it's happening because it's more fun to to be on zo with your friends so well like sorry sorry Eric I meant like like are like are you incorporating a gold gym exercise into zift and and in exchange Golds has to put a card about zift on their entry table like is there a specific tactic you're using to drive kind of organic signups uh most most cyclists belong and so we're targeted cyclist cyclist Competitive Cyclist professional cyclist cycling enthusiasts they're all cyclist um and most cyclists belong to a tribe A club or a team and if if you like the experience the first thing you'll do is you'll want your friends on on zift with you so I totally get that Eric the land and then I get the expand part I'm talking about the land how do you land one person from a new tribe so well it's that's investing in in in the brand and creating awareness um we do very little on the on the digital on the you know digital advertising side how much would you say you spend per month I know it's a very small amount because it's only 5% of your signups but it's it's not very much at all like less than 100 Grand per month oh for sure come on that's that's that's a lot for us actually got it okay got it that's helpful um do you want to I mean is there a specific tactic you can give though for like I know it's you know organic and good content all the usual stuff but can you tell us a story about a specific thing you did that got you into a bunch of new tribes so I'll give you an examp example of what we what we invest in in terms of content so we invested in a in a project called sft Academy modeled after GT Academy so I don't know if you know Gran Turismo Academy I don't uh okay so there is a it was it's about 7 years old but basically it was a marketing uh advertising uh program between gr Turismo the Sony PlayStation game and Nissan where they would find Talent on the platform on the gaming platform and then take the the finalist to ATT track put them in a real car and see if they can find a real driver now they've been doing this for seven years and over the last few years they're actually finding real drivers partly because real drivers realize that this is a way to get a professional contract y um and so we took that model and created what we call zft Academy and we called out ladies all all over the world last year to join this program 1,200 ladies from around how did you call how did you reach out to them uh so it was just public Rel PR um it was through various channels media channels uh so 1,200 ladies from around the world signed up for this program and it three finalists so they they had to go through a number of different tests and training programs all on zift and they were being monitored by coaches certified coaches we took three finalists two happened to be two Americans one Dutch lady to mayorca Spain and um where they trained for 10 days with the professional team and the professional team would test these three Riders and offer a professional contract to one of them and one of them is now a professional Rider she was a former serus marathoner now a professional at the highest level and and is now completing professional events so this is just a an example of of content that we invest in because it's aspirational and during this program it's you know 1,200 ladies participated the vast majority of them know that they're not going to become a professional cyclist but they want to be part of the journey because if you go through the Journey you will become a better athlete yourself hey makes sense thanks for obviously Eric diving deep into that acquisition strategy it's helpful last question I've got before we wrap up it's it's kind of complex but uh I I a lot of entrepreneurs doing this I want your feedback on it your your series a I believe was about 27 million bucks back in November um I'm going to do some back then napkin math here so most companies in their series a let's assume aggressively are giving up say 25% of your business right which would mean you guys did you know call it an $81 million pre-money valuation and over $100 million post money valuation you're doing a maximum in terms of Revenue if if it's 10 bucks a user you've got 300,000 free users let's say all of them were paid that's you know somewhere around three million bucks per month maximum or call it 30 million annually do you ever worry because you're a great negotiator you had a first company had success you negotiated a high valuation do you ever worry about growing into the valuation um you know it's it's a it's a balancy act uh but um I'm not I'm not because I think we're going after a very very big opportunity um we don't we don't see anyone doing exactly what we're doing um so we're creating a whole new market and and I I believe the the um you know how we how we win this this opportunity is to build a community so for us it's a race to to acquire a million customer a race no pun intended it's a it's a race to get to a millionth subscriber and there are not many businesses that can CR a million subscribers pay subscribers right guys I get asked all the time Nathan you poost all these interviews hundreds of them per month how do you do them officially and guys the answer is simple people always agree to my calendar backtack meetings I batch my interviews to stay very efficient and the way that I do it is I use a tool called Acuity scheduling at Nathan lat.com schedu and the reason I use them is very simple they keep my noshow rate very low because they send out reminders about when the interview or the meeting is coming up and also they make it very easy to schedule time right I don't have to go back and forth to the email 10,000 times with people I'm trying to meet with okay Nathan lea.com [Music] schedule helps me so much and by the way look I like have so many meetings I'm the best at meetings okay I do them back toback very very efficient you guys know me many people say I'm the most efficient they've ever seen okay so I use the tool it's so efficient and by the way I got Gavin I said Gavin he's the CEO I said I want a great deal for my people he said Nathan well most people get a 14-day trial isn't that great I said no he's given us a 45-day free trial at Nathan la.com that's not going to stay up forever so go get it now Nathan la.com all right Eric on that note let's wrap up with the famous five number one what's your favorite Business book oh gez um crossing the chasm is is is a um is is is one that I I enjoyed um Jeffrey Moore it's a good one um number number two Eric is there a CEO you're folling or studying currently CE of gez no I'm following a few um I wouldn't say they're CEOs uh I you know I have some fantastic advisors name One Max leevin is an advisor of us I've got five incredible advisors and they all bring different things to the table um go number number three is there a favorite online tool you have like fresh books online tool Slack number uh four how many hours of sleep do you get every night six and what's your situation married single do you have kids married with three kids oh wow how old are you I'm almost 50 nice okay so take us back 30 years Eric last question what do you wish your 20-year-old self knew 20 year old self so what would I do if I were 20 years old no just like a piece of advice that you wish you had known when you were 20 oh oh oh I see um well I you know I think I I took my first uh I started my company when I was 30 years old um I think I could prob I should have started maybe three or four years earlier I think taking risk early on I mean when else are you going to take risk right I'd say is the early you can take risk whether it's a venture or or a profession um you need to get it out of the way earlier earlier the better that would be the advice I give there you guys have from Eric current CEO and founder of zwift again he would have started earlier started back when he was 30 uh that would have been about well around 20 uh I guess 2 and two-ish time frame with his Trading Company did that for a decade before he uh took a large contract executed over five years gave his investors a great return and pulled cases out for him and his co-founder sunk some of that money into his new company is whift launching that in again January 2014 it's now got over 300,000 uh users $45 million ra raised again uh paying customers pay about $10 per month for this community they're creating for indoor cycling and workout measurement Eric thank you so much for taking us to the top great thank you if you enjoyed Eric today go back and listen to yesterday's episode where there's basically $120 million up for grabs this is the closest thing to free money as you guys can get if you're a startup looking to raise Capital BJ Lackland of lighter capital is joining me to explain now you can get your hands on it it would mean the world to me if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe you know I hustle like heck to get these episodes out every freaking day for you guys and trust me I love it I would do it with no listeners but boy oh boy it makes my day and it makes my team's day when we see great reviews and get your feedback so thanks so much okay top tribe I love giving away free money I feel like oh we're giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google ads well all of you listening right now yes if you're listening you get $100 in free AdWords here's how you get it okay again thanks for listening get the free $100 from Google right when you sign up with my website post provider HostGator go sign up now to get your free money hostgator.com Nathan again that's hostgator.com Nathan so guys I'm so glad to be back in Austin I just got back from a major tour of Southeast Asia went to Sydney Bangkok Bali and Japan and you know I always get sick when I travel and this particular trip my gosh 15 different airports 20 different hotels I mean imagine flushing in airport bathrooms I was worried about germs and getting all the nutrition I need I mean finding a restaurant in Japan difficult because nothing's in English so it was hard enough to figure out the train system but my point is I had a guy named Drew canoli on the show who said Nathan if you're concerned about that take these little green packets with you you just mix them once per day with water they'll keep you super healthy you get all your nutrients and they'll keep you from getting sick so I took them and guys they worked unbelievably well I got no sickness just mix them with water once per day they didn't make my water bottles all sticky that's like nice a lot of these mixers they make them sticky it was very clean and smooth took them once per day never got six so they've got 11 superfoods and they're perfect if you're not traveling but you're just on the go from your office to work so you can check them out at Nathan la.com slj that's Nathan la.com slj [Music]