Happy Sunday!
It turns out that fame is a good business model
The formula is simple:
Step 1: Build a massive audience
Step 2: Launch auxiliary businesses that pair well with your brand
Step 3: Use your platform as your primary distribution channel
Step 4: Profit
We’ve seen this playbook over & over again:
- Mark Sisson launched the popular diet blog Mark’s Daily Apple. In 2015, he started Primal Kitchen, a sugarless sauce brand, and sold it for $200M four years later.
- Mr. Beast built one of the largest Youtube channels, watched by over 100M kids. In December 2020, he launched Beast Burgers, a burger chain that operates out of ghost kitchens. Six months later, BB passed $100M in revenue. He recently announced that he is raising money for his ventures at a $1.5B valuation.
- The Rock built a massive Instagram following and frequently posted pictures of himself drinking tequila. Rather than promoting someone else’s tequila brand, he launched Teremana. This year the 2-year-old brand will ship 1,000,000 cases, making it the fastest-growing tequila brand of all time.
In fitness, no one is running the playbook better than Christian Guzman…
Alphaland – Disneyland for bodybuilders
Christian Guzman is an OG Youtuber with 1M subscribers and 1.1M Instagram followers. He built his following by vlogging about his life as a bodybuilder and gym owner.
After becoming one of the most recognized fitness personalities on Youtube, he launched an affordable athleisure brand called Alphalete, which will do over $100M in revenue this year.
For context, CrossFit apparel brand NOBULL launched 3 years earlier and did an estimated $58.7M last year, according to Growjo. It raised money last year at a $500M valuation.
Despite Alphalete’s success, Guzman continued operating his gym.
In February 2020, he bought an 18.5-acre commercial complex that would house the clothing brand and the gym.
The gym portion, called Alphaland, opened in January of this year and was an instant success. The 30,000-square-foot complex has three gyms, a food court a VIP lounge, a retail space, a soccer field, and two basketball courts.
Aside from being massive, what makes Alphaland unique is that it is tailor-made for influencers. Members and guests are encouraged to take selfies and vlog their workouts.
Influencers journey from every corner of the world to make content in Alphaland. Some have even relocated to Houston to train at Alphaland every day.
This TikTok with almost 700k views does a good job of explaining the appeal:
@connorsinann Gym reivew #fypシ #alphaland #gymtok ♬ moment – Vierre Cloud
Does Alphaland make any money?
Because the gym serves a specific niche, Guzman can charge a premium price. A monthly membership is about $300.
And since Alphaland has turned into “Disneyland for bodybuilders,” people happily pay $30+ for a day pass.
Earlier this year, Guzman shared Alphaland’s YTD revenue numbers:
And in a recent podcast, he said Alphaland is on pace to do “$11-12M this year.”
As a former gym owner, these numbers are staggering.
Every year Club Industry publishes a list of the top 100 health clubs by revenue. The top spots are taken by fitness juggernauts like Planet Fitness, Equinox, and Life Time.
Right now, Alphaland would be the 3rd largest single-location gym on the list and #34 overall. That’s crazy, considering it has been open for less than a year.
For context, Two-Brain Business looked at revenue data for 10,657 gyms and found that the average gym does $190,800/yr in revenue. Alphaland did $228,000 in day passes the first month it opened.
Alphaland’s real estate made Guzman $9.5M
Because of the gym’s success & Guzman’s great timing. Alphaland has created other opportunities for Guzman.
He said he has been approached by PE firms to expand the concept into different markets.
But the primary wealth builder for Guzman has been the real estate. He bought the complex in February 2020 for $8.5M and put $1M into the renovation.
In March of this year, the property appraised at $17M, which means Guzman built $9.5M in equity in 2 years.
The additional equity allowed Guzman to take out a $7.7M line of credit against the property.
So along with owning one of the largest gyms in the world and getting a nice tax write-off, he also gets $7.7M that he can use to grow his clothing brand.
Not too shabby!
One hit wonder?
So you’re probably thinking, “a famous influencer opens up a gym for other influencers, so what? There cannot be that much demand for something like this?”
You’d be wrong.
Influencer gyms have popped up in Texas, Florida, and California.
The playbook for marketing these gyms is completely different than anything I’ve seen work for traditional gyms.
Take my second favorite influencer gym, Absolute Recomp, as an example. The frontman for AR doesn’t have a major social media like Guzman but uses TikTok as his primary marketing channel.
While this repels your traditional gym-goer, that may be the whole point.
Is it a viable business model?
It’s no secret that I think Planet Fitness has the best business model in the fitness industry. I am skeptical of the influencer gym biz because they’re running the opposite playbook:
Instead of a compact footprint, they want the biggest space possible.
Instead of members that don’t use the gym, they market to fitness influencers who use the gym every day for multiple hours.
Instead of a non-intimidating environment, these gyms are filled with attractive people that are filming social media videos.
Look at this video taken from Alphaland. It looks like a horrible place to workout:
@josh_nabbie I need me an empty ass gym #alphaland #summershred #bodybuilding #gym ♬ original sound – Josh Nabbie
Granted, this was on a special weekend, but I’ve seen other video tours where the gym looks equally intimidating. Check out this take from a fitness influencer with 300k+ followers on TikTok
So will there be an influencer gym coming to your town soon?
Unless you’re in a tier-1 city, probably not.
The niche will resemble the nightclub industry more than the gym industry. The best influencer gyms, like Alphaland, will make insane amounts of money while the second-tier gyms flop.
It’s going to be fun to see how this plays out.
What do you make of it all?
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Until next week,
John
