A kazakhstani revolutionizes fitness training: anyone can attain a sculpted physique as a hunk or fitness babe
Entrepreneur Iliyas Issatayev spent six years experimenting with new technologies within his chain of fitness clubs, Invictus Fitness. He succeeded in creating a startup, Hero’s Journey, that dramatically alters the approach to fitness and motivates people to train three times more frequently.
Presently, Hero’s Journey is thriving and profitable, operating a single gym in Astana and securing investments for the establishment of an additional gym in Almaty. Nevertheless, Iliyas is already contemplating international expansion, with aspirations of launching Hero’s Journey in New York to make a mark in the US fitness market within a few years. The entrepreneur has generously shared his valuable insights with Digital Business as part of a collaborative initiative with the Astana hub “100 Startup Stories of Kazakhstan”.
In fitness, the client places blame solely on themselves
—I am a serial entrepreneur with a 12-year history in business. My journey began with supermarkets, and later, I assisted my friends in launching a CrossFit project that unfortunately did not find success. However, I developed a strong affinity for the fitness industry, particularly after the stress I encountered within the supermarket industry.
In the realm of retail, regardless of your efforts, you may find yourself labeled as the proverbial “villainous entrepreneur.” This perception suggests that you profit from practices such as short-change or exploiting expired goods. Remarkably, this blame tends to be directed at you as an individual, rather than the supermarket itself. This proved to be a significant challenge for me, as I became so absorbed in the day-to-day operational intricacies that I lost sight of the world beyond.
In the realm of fitness, it’s a different story altogether. When a client is satisfied, you’re hailed as the world’s finest. However, when a client encounters setbacks, they tend to attribute it to their own shortcomings and lack of motivation. Here, there isn’t a consistent moral burden, allowing you the opportunity to unwind and concentrate on your duties.
Invictus Fitness, my project, came to life in 2016. Since then, we’ve risen to become the dominant force in the Kazakhstan fitness market, currently holding a share of around 23%. In the current year, the count of our clubs will expand to 30, and I foresee that by the close of this decade, we may reach a total of 175. Presently, we assess the entire fitness market in Kazakhstan at roughly $100-110 million, and it could potentially grow to $250 million by 2030. If we persist in fortifying our position, achieving profitability is within reach.
— How did the idea for startups come about? You can simply proceed with expanding the chain of your fitness clubs.
— I firmly believe that integrating startups into conventional business operations is not just a requirement but an inevitable step for companies with long-term aspirations within their industries. Digitization and adopting a startup mindset are crucial. For instance, the colossal Amazon is on the verge of surpassing Walmart in revenue, yet it maintains the spirit of a startup. Similarly, Kaspi adheres to a startup approach in the Kazakhstan market.
By the way, transitioning to a different format necessitates the establishment of distinct teams. Conventional business structures may not readily support the growth of startups, and managers primarily focused on the core business often struggle to initiate bold and innovative endeavors.
The emergence of the Hero’s Journey was driven by the need to address a particular issue. Invictus Fitness boasts a sound business model; however, many individuals still do not maintain a consistent workout routine. This is a common trend in the industry: the fitness market thrives on the sale of long-term exercise passes. Clients often make indulgent decisions, purchasing extended passes but infrequently visiting the gym. As a rough estimate, a fitness club might sell 3,000 passes to just 1,500 club members. It’s worth noting that people tend to stick with products they’ve grown accustomed to.
So I began searching for a solution, which ultimately led to the establishment of a startup.
— So, concerning the business, everything was going well, but you opted to consider the clients’ issues?
— Profit can be generated through various avenues, including network marketing and Taros…
But our aim was to identify the actual problem and employ technology to address it. Today, there are opportunities to develop fresh customer offerings that did not exist in the past. A prime illustration of this is Uber, which revolutionized the taxi industry. We aspire to achieve a similar transformation within the fitness sector.
A series of tasks instead of an unlimited pass
— What is the core concept of your startup?
— First and foremost, I’d like to clarify a common and significant misconception. Hero’s Journey isn’t merely an app; it’s a fitness studio. You can’t simply take our app and work out at a different location. The app serves as one of the interfaces for client communication. A staggering 75% of our startup’s success is attributed not to the software but to the innovative, fully automated fitness studio we’ve introduced. The conventional fitness clubs we are familiar with were established in the 1980s, primarily catering to bodybuilders who were willing to dedicate 5 hours to training. However, this approach no longer aligns with the preferences of contemporary individuals.
— What is the client experience like with Hero’s Journey?
— To begin, the client purchases the “First Step” monthly program. Through the application, they receive a set of specific tasks. It’s not an all-access pass to the club but rather a series of clear tasks. These tasks include visiting the Bootcamp program four times, Full Body program twice, Upper Body program twice, Legs program twice, and attending the Push and Pull programs once each. The schedule will only display the tasks currently available to the client. They only need to find a suitable time, sign up, come to the fitness studio, and locate their designated station. Each station is equipped with a tablet displaying the avatar of the hero and the name. Following that, the application and instructor assist with the training.
Hence, the client encounters a distinctive experience, akin to being in their first year at university, where the instructor outlines, “Do this, then do that, and here’s your homework.” By way of analogy, conventional fitness is more akin to having a library pass, granting you access to come and read whatever you prefer.
In Hero’s Journey, it’s as if we guide the client step by step. Our mission involves examining the client’s journey, pinpointing the causes of any issues, and adapting the product to assist clients in enhancing their performance.
— What occurs after the initial month?
— We conduct a fitness test that determines the client’s subsequent training path. Following this, we propose the purchase of an annual program. Once again, it’s not a haphazard club visit. There are several monthly programs, each designed with specific objectives in mind – whether it’s weight loss, muscle gain, balanced training, functional development, or workouts focused on the buttocks and legs. Clients need to activate the one that aligns with their goals and engage in training. Each successive monthly program is more challenging than the last. Ultimately, clients progress to the extreme training phase, after which we offer lighter programs for recovery.
The client adheres to a carefully planned journey, always aware of the purpose behind their training and their specific goals. In total, the results are three times more effective than in traditional fitness.
— What motivates individuals to engage in more training through your gyms and application?
— There is no miraculous element. You cannot state, for instance, that if the Parmigiano cheese is of high quality, the pizza will unquestionably be delicious.
Moreover, at Invictus Fitness, we conducted numerous experiments, incorporating principles from behavioral economics and psychology, in order to devise a solution that would encourage people to engage in significantly more training. Within Hero’s Journey, we compiled a comprehensive list of the factors contributing to low training rates, ranging from fundamental issues where many individuals arrive at the gym without a clear plan because only 20% opt for a personal trainer.
We have successfully merged the gym and group formats, which were traditionally separate verticals. Our approach incorporates gamification, the establishment of SMART goals, meticulous planning, and more. Each of our tested hypotheses contributes a 5% improvement, and collectively, they lead to substantial growth.
— What are the advantages for the business? Thanks to Hero’s Journey, people frequent the studio more regularly, enabling the sale of fewer passes per square meter…
— We aimed to implement the business model that has proven successful in the USA, where clients pay for each training session. However, our market overwhelmingly rejected this approach, with a strong preference for unlimited passes.
Hence, in Hero’s Journey, we initially introduced limited passes and significantly raised prices. Consequently, Hero’s Journey generates double the revenue per square meter when compared to the theoretical earnings of a traditional fitness establishment in the same location. In comparison to the typical fitness club, our earnings are likely four times higher.
— How do Hero’s Journey and Invictus Fitness coexist? Will the startup gradually erode the traditional business?
— I don’t believe this will occur. There are plenty of other fitness facilities besides Invictus Fitness, and many clients are convinced that they require traditional fitness. As a result, both products can coexist, as they cater to different market segments.
What hunks and fitness babes need
— Who visits your innovative fitness, and what motivates these people?
— I will outline three client categories. New clients at Hero’s Journey, who had limited prior fitness experience, encounter a positive experience and maintain a regular training routine. However, these clients often believe they could achieve similar results in any other fitness club. In theory, their average satisfaction level stands at 7 out of 10.
The second category consists of professionals who would fare adequately in any standard gym. In Hero’s Journey, they may find a potential lack of variety, resulting in their satisfaction level fluctuating between 6 and 7.
The most content Hero’s Journey clients are the ones who have tried fitness multiple times – individuals who purchase a new pass every January or February, pause in May, and then October resolve to return in January. We estimate their satisfaction level to be at a perfect 10 because, thanks to Hero’s Journey, their lives have finally transformed. They commence sharing their successes through Instagram stories and enthusiastically invite their friends to join the club. These are precisely the kind of clients we aim to attract.
— Is there a considerable number of hunks and fitness babes in Hero’s Journey?
— If you were to visit our club today, you might assume that there are numerous fitness enthusiasts. However, in reality, these individuals are ordinary people who have attained this level of fitness with us over the course of a year and a half.
If we consider the stereotypes you’ve mentioned, the open gym format is better suited for them. They are well-versed in what to do and don’t require extra motivation. However, these individuals make up only 1-1.5%.
—Is going to a gym considered trendy in Kazakhstan?
—In developed nations, around 20-22% of the population holds a fitness club membership. On average, this percentage is approximately 15% in Europe. In the CIS, the highest rate is in Moscow, reaching 12-14%. In Kazakhstan, the figure is only 1.5%, with a maximum of 2%. However, the cities of Astana and Almaty exhibit slightly higher rates, at roughly 4-5%.
However, the situation is rapidly evolving. Fitness has become a symbol of success, with people sharing their workout photos and videos on social media. The popularity of fitness is on the rise in Kazakhstan, and this trend is irreversible.
Initially, Almaty, and subsequently, New York
— What is the current utilization rate of the sole Hero’s Journey gym in Astana, and does it operate profitably?
— Our current usage hovers around 90%. However, attracting new individuals has proven challenging due to errors in estimating the throughput capacity of certain constrained areas, like the changing rooms.
We are currently operating at a profit, with an economic performance twice that of traditional fitness, boasting a net margin of 41%. Prior to securing our investment round, we were even disbursing dividends. However, we have since altered our policy and now allocate all profits toward the development team.
— What are your intentions for Kazakhstan? Do you have plans to establish additional gyms?
— Our immediate objective is to launch a gym in Almaty and evaluate our product in a new market where it is unfamiliar. This gym will be larger, with a capacity 80% greater, and our aim is to double the revenue. We are hopeful to commence operations in January 2024. This expansion will enable us to expand our development team from 11-13 people to 30, facilitating faster hypothesis testing and product enhancement.
We are in discussions about establishing an additional gym in Astana through a franchising model in spring 2024.
Following this, there won’t be further extensive expansion in Kazakhstan. Our attention will shift towards obtaining another round of investments to establish a small chain, encompassing 7-8 Hero’s Journey gyms in New York. Following that stage, we intend to alter our strategy and focus solely on franchising. In the USA, there are institutional franchise buyers who can acquire regional rights, leading to an entirely distinct growth trajectory. In theory, this could involve opening 2,000 clubs within 7 years and eventually entering an IPO with an estimated valuation in the billions of dollars.
Simultaneously, our mission is to maintain our identity as a Kazakhstan-based company. As our business expands in the USA, we plan to strengthen our research and development (R&D) operations in Kazakhstan. For instance, our goal is to have 1,000 developers working from Almaty and Astana, providing services to the US market and exporting services worth $100 million annually.
— For what purpose do you require the $900,000 in investments that you’ve secured? Why did you opt not to rely on your own funds for development, particularly when the project is already generating profits?
— Our total funding round will reach $1.3 million. We are currently waiting for additional institutional investors. These funds are necessary for the launch of our gym in Almaty.
We secured investments for several reasons. Firstly, we can’t afford to wait and accumulate funds over an extended period to launch new gyms. Time is passing, and if we don’t take action, someone else will.
Secondly, investments provide a sense of security, ensuring that my team and I are not operating under a collective illusion, and the market is prepared to have faith in the success of our project.
Thirdly, this evaluation permits us to officially structure the option program for our employees.
Lastly, this marks the initial phase in our endeavor to secure a round of investments in the USA. As a startup, we are compelled to adhere to the established protocols: showing that others are investing in us and so forth.
— Do you need expertise from investors?
— For the USA, yes. One of the partners from Big Sky Capital Fund resides in the USA, and he has already forwarded a comprehensive presentation featuring potential locations in Miami. He is currently working on a similar plan for New York. This hands-on assistance is highly beneficial and proves to be more efficient when executed on-site.
Fitness clans for singles
— What is the reason for prioritizing the USA over other regions like Europe, Korea, or the UAE?
— The presence of investors and the substantial growth potential are pivotal considerations. If our product proves successful in New York, the valuation we can achieve will likely surpass that in all other regions.
Moreover, the USA boasts the largest fitness market, with New York, particularly Manhattan, being the epicenter of this industry.
The cultural factor also plays a significant role. I have no insight into the markets in Saudi Arabia, Korea, or the UAE. However, the US market is quite transparent. At times, I feel like I understand Americans better than some Kazakhstani individuals. Despite having never studied or lived in the USA, we are operating within the information framework of the USA. New York is also straightforward to comprehend: people rarely use personal cars, eliminating parking concerns. You simply consult the map and establish the gym in a district with more competitors. In contrast, I have no idea where to begin in Dubai.
— Is it possible for your successful concept in Kazakhstan to falter in the USA?
— No, I am entirely confident in our potential for success. The only difference is that we will need to experiment with our approach, essentially putting substantial effort into marketing, reconfiguring business models, and so forth. For instance, in Kazakhstan, annual passes are marketed with the help of Kaspi installments, whereas the US lacks annual passes and installment options. This necessitates refining our business model and communication strategies, which, in turn, calls for hiring local teams and experts and jointly searching for the right Product-Market Fit.
— Besides the global expansion of gyms, are there any planned functional modifications for Hero’s Journey?
— In the near future, we will initiate the provision of a complimentary pulsometer to every client. This advancement will facilitate the tracking of each client’s condition and enable us to offer more precise recommendations regarding their next steps, whether that involves slowing down or, conversely, intensifying their training.
There is a significant initiative to create communities that encourage individuals to join clans, support one another, and foster communication beyond the confines of the fitness club. In the contemporary world, as people spend increasingly more time online, there is a rising sense of loneliness among many. Incidentally, this is one of the reasons why numerous individuals turn to the gym – it’s a place where they can discover companions and forge new friendships.
I won’t divulge all our plans because we’re still determining our top priorities. When you have a clear understanding of your objectives, you can continually enhance the product.
— How easy is it for others to replicate your startup model and surpass your position?
— I believe it would be exceedingly challenging. You must have a deep involvement in the fitness industry, a profound understanding of its inner workings, and a willingness to experiment. Hero’s Journey is the culmination of six years of testing various ideas. This product can only be crafted by industry experts. It would necessitate several years and significant financial resources – I, personally, have invested $2 million of my own funds.
I am acutely aware that if we achieve our objectives, numerous competitors will emerge. Our mission will be to outpace the competition by expanding our team and recruiting top experts. This is where the advantage of having our development base in Kazakhstan comes into play, as for every American developer we hire, we can employ ten talented individuals from Kazakhstan.
— Share your personal fitness experience. Do you use Hero’s Journey?
— Not at this moment. I currently reside in Almaty and am experiencing a strong desire for a gym. I’m the type of client who struggles to find the inner motivation to consistently exercise. So now I am into lifting heavy weights, which I find more appealing than running or engaging in other sports activities.
However, during my time in Astana, I had the chance to work out with Hero’s Journey and was thoroughly impressed by it. Moreover, I had the opportunity to engage in direct interactions with clients. Consequently, our entire team is eagerly anticipating the launch of the club in Almaty. This venture represents a new phase of growth, benefiting both the company as a whole and each of us individually.
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