How Hydrow is capitalizing on a growing fitness sector

Hydrow was once targeted by Peloton (PTON) for acquisition but is now paving its own path on its rowing machines. The company recently reported that delivered unit sales for its rowing machines jumped 23% year-over-year. The company also acquired a majority stake in Speede Fitness this week, though the value of the deal has not been disclosed.

Hydrow Founder Bruce Smith joins Market Domination Overtime to discuss Hydrow's performance and give insight into the fitness sector at large.

Smith elaborates on what fitness companies need to succeed in the home exercise market: "The north star is the combination of three things. You need something to work out on in your home. You need really great content. You need really great software. And honestly, Peloton had that vision. We've never let go of that vision. We are never going to. You need a footprint in the home because that convenience is what really drives market adoption. And from our perspective, we've stuck to that north star."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Nicholas Jacobino

Video transcript

Well, there's a company making a splash in the fitness space.

Hydro manufactures rowing machines at a time where fitness trends have shifted from cardio to strength to some extent, it was once targeted by Peloton for an acquisition.

But now it's making a different deal to grow, acquiring a majority stake in Speed Fitness this week.

The value of that deal not disclosed for more.

We're here with the founder of Hydro Bruce Smith.

Thanks for being here, Bruce.

Appreciate it.

Happy to be here.

Yes.

So am I saying speed or do you say speedy?

Because it has the the end?

Now we had a lawyer in the deal who insisted that it was speedy, but I think it was a little passive aggressive.

That company is called speed.

But if you put an E on the end when you Google it, it is, it is fine.

No, we know the tricks, we know the tricks Bruce.

So, um you know, it's funny that this deal is happening.

Now, there was just a story in the Wall Street journal about how hit is sort of going out high intensity interval training and strength is coming in.

So is that what you guys were looking at when you decided to, to do this deal.

So, the most important thing for fitness is your cardiovascular system.

The second most important thing is strength and that's not something that's gonna change, it's permanent and we're not, you know, we don't chase fads, we chase the very best thing.

And what's really exciting about speed, exciting about speed is that they have this technology, it's variable resistance and that is uh tonal has that too speed has uh the next level of that variability.

And it's really, it's delivering a better workout in less time, which is the same thing that rowing does for you.

So for us, it's been part of the plan since the beginning.

We're a whole health company and we're so delighted to bring this uh to market with speed because they do have this really extraordinary technology.

And Bruce, I'm interested, you know, Julie kind of mentioned Peloton there, which, you know, is struggle and makes headlines for all the wrong reasons.

You know, I'm not asking to comment on Peloton, but I I am just curious more broadly, you know, Bruce, are you, are you all just pulling certain levers?

Do you think that that's helping you kind of, they're kind of helping you just navigate the market maybe more effectively than the competition?

So, you know, and I, I love Peloton.

I really do and I wouldn't be here if it weren't for John Foley and all the craziness that he started.

Um, the bottom line I think is that, um, the North Star is the combination of three things.

You need something to work out on in your home.

You need really great content, you need really great software.

And honestly, they Peloton had that vision.

We've never let go of that vision.

We're never going to, you need a footprint in the home because that convenience is what really drives market adoption.

And from our perspective, we've stuck to that North Star.

There was a huge bump, you know, massive amount of disruption, but it didn't change the basic fundamentals of the business.

It's an amazing business.

It's always gonna be a great business.

We want people to go to the gym, we want people to work out at home.

Most of all, we want them to be healthy and this is one of the tools that will help them feel better in their life.

So I hate to keep bringing up Peloton is the, is the, but, but it's a, it's a publicly traded company.

So we know their numbers, we know their numbers went way up in 2020 2021 when people were home and since then they have decelerated in terms of their sales.

What can you tell us about what you guys have seen?

You know.

So we had the same like massive ramp in the uh in the pandemic and we didn't have to spend much on advertising and, and I think everybody thought like, oh, this is the permanent new wave.

Um Of course, it wasn't, it was pandemic driven.

So we had a year of reset, it was extremely tough on everybody in the whole industry.

We did a big riff, you know, like we, we restructured but year over year our growth is just, uh we're, we're seeing, you know, back to what we started with, which is uh this year, up 23% year over year unit sales are much higher than that even.

So, you know, it's just grinding away at that uh really great, great marketing story and it's a promise to consumers never breaking that promise.

And the market is, is just beginning to be tapped, you know, the the penetration overall still in the mid twenties.

And we know that that market penetration is gonna get to the forties in the United States.

Beyond that, the world, which has just begun to wake up to this possibility, Bruce who I'm just, what can you tell us about who, who your customer is?

What's, what's the demo?

Is it young old man, woman, high income, who is it?

So it's people who have homes.

So they tend to be, you know, 35 and up uh relatively high household income.

A lot of people think that we would skew more towards female, but it's actually half men, half women.

And for us, the most important thing, they've never wrote, you know, rowing is still this relatively undiscovered thing.

Boys in the boat was a great movie.

How do they, how do they learn, Bruce?

Is there a tutorial?

Because there is a, there is, uh, thank you for the infomercial opportunity, but we, we teach you everything you need to know.

So I'm a national team, Bruce.

Yeah.

No, no, I appreciate it.

So, I'm a national team coach.

I coach for the United States.

I've been to the world championships 10 times.

We take that knowledge and we give it to you in your living room.

So, and it really is that what, what happens the most is that people buy them, buy the machine and they get it home and then they're so surprised at the immersive and the quality of the experience and just, just check out our Facebook groups.

It's full of rabid fans.

Um So let's get back to speed for a second because I'm curious, it, it doesn't, it's not selling the product yet to the public if I'm, if I've got it right.

So then why do it at that stage?

Do I make the acquisition at that stage?

And then when is the roll out going to happen?

And how will it integrate with, with hydro?

So they have some amazing IP around a resistance mechanism that generates more force.

So there are two products that we are going to bring to market over the next several months.

Uh The first one is for consumers in their home.

And that has resistance in the 3 400 range, which is more than enough for civilians.

And then their flagship product, which I tried and literally on the second repetition, I was like, we have to work with this company.

It's uh it generates more than 2000 of resistance.

And it's like using a professional weight rack.

And it's, it's really amazing.

It's for the commercial market.

And so it's that high, extraordinary experience in the gym and then super accessible blends right in seamlessly with the hydro experience together.

And it's putting those two experiences together because as I, as I said, at the beginning, what you really need is, you know, your heart and lungs to be healthy and you also need muscle mass.

And um I think the whole world understands those two things.

These are the two most efficient ways to accomplish that.

Bruce.

That was super interesting.

Thank you for coming in today.

My pleasure.

It was cool.

Thank you.