Beachbody’s chief executive hates working out. But that might be the secret to the fitness and nutrition firm’s success.
“I’m constantly trying to solve my own problem,” said Carl Daikeler, who co-founded the company in 1998.
Long known for infomercials hawking its high-octane, in-home workout DVDs, the business really took off after launching a multilevel marketing program in 2007, according to Daikeler, which turns its customers into “coaches.”
He said that being a Beachbody coach offers its fitness program alums the opportunity to cash in on their success by selling the firm’s products to curious folks ogling their washboard abs – a trait that turns them into walking billboards for the company’s products.
Coaches pay about $40 to sign up and can buy the products at wholesale. The company charges them roughly $16 a month to operate their own Beachbody Web store. Fitness newbies are welcome to sign up, too.
Though the program got off to a sluggish start during the recession, its ranks have swelled to about 400,000 as of this year.
That network marketing model has helped Beachbody strengthen its revenue by more than 68 percent from 2012 through 2014 – ballooning to almost $1 billion last year and landing the firm on the Business Journal’s Fastest Growing Private Companies list.
That growth puts the company at No. 90 on the list, but what’s impressive is Beachbody’s billion-dollar size. It’s one thing for a company with, say, $100,000 in sales to report eye-popping 4,000 percent growth, but it’s a whole separate challenge for a behemoth to grow fast enough to show up on the list.
Indeed, only six firms on this year’s list had revenue in excess of $100 million in 2012. They include JustFab Inc. and Wash Multifamily Laundry Systems,
both in El Segundo; Irwindale’s Superior Communications Inc.; Los Angeles-based Knight Insurance Group; and Montrose Travel in Montrose. With the exception of JustFab, which tripled its revenues, all the others racked up only double-digit growth.
So how has Beachbody managed to grow so quickly?
Its intense in-home workout titles, such as P90X and Insanity, coupled with meal plans and a line of meal-replacement shakes and nutrition supplements, continue to comprise its line of core products.
But the firm has rounded out its library over the last few years, adding workouts that ditch push-ups and explosive jumps for Pilates, tai chi and hip hop-inspired moves. Beachbody also launched an online streaming site for its content this year, which costs $3 a week.
Even though YouTube has flooded the market with a raft of free workouts, Daikeler doesn’t see the platform or its ilk as a threat.
“There have always been inexpensive alternatives,” he said. “You can trace it all the way back to Jack LaLanne giving free fitness classes on TV in the 1950s. But something that’s so available and free to start is just as easy to quit.”
In fact, he said having to plunk down serious cash for Beachbody’s fitness programs, which range from $60 to $120, is a boon.
“If we just gave this stuff away, it wouldn’t work,” he said. “They have to step up and have skin in the game. They’ve got to put their money down and say, This is worth it to me.”
Beachbody’s comprehensive packages requiring a commitment for 21 to 90 days help as well, said Daikeler.
But it wasn’t easy building Beachbody’s fanatic following.
“At the beginning, we were competing with these vibrating ab belts and very inexpensive calorie-reducing protein shakes,” Daikeler said. “But the nature of peer-to-peer marketing, where you see a friend get real results, is too compelling to argue with.”
The direct-selling model has come under scrutiny lately as companies such as downtown L.A. supplement maker Herbalife have been accused of operating pyramid schemes.
However, Daikeler stressed that if a customer doesn’t achieve desired results, their coach is obligated to remind them of Beachbody’s money-back guarantee.
“Network marketing has a bad reputation of people loading up on stuff,” he said. “We’re emphatic. We never want that to be the case. Coaches don’t traffic on relationships for their own financial gain.”
Given the rise in popularity of Beachbody’s products – P90X alone has brought in more than $1 billion – it’s reasonable to question whether the firm might have saturated the market.
“No, not even close,” insisted Daikeler. “There are 200 million people overweight or obese in this country. From my perspective, as proud as we may be about $1.3 billion in revenue this year, it’s very possible that we are missing the mark, and if we had done things better, we’d be at $20 billion.”
But the question he is working hardest to figure out is the one that applies directly to his own life: preventing workout burnout.
“I’m not going to pretend we’ve solved it. I haven’t solved it for myself,” he acknowledged. “We’re constantly reinventing ourselves and not afraid to cannibalize past successes with new ideas.”
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