Wellness Technology Revolution With Therabody

Running shoes, yoga matt, water, and laptop are laid across a wooden floor in someone's home representing fitness and wellness in the consumer space.
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In this episode of TD Cowen’s Retail Visionaries Podcast Series, Benjamin Nazarian, Co-Founder & Executive at Therabody, joined Max Rakhlenko, Cowen’s Retail & Fitness Analyst, to discuss Therabody’s growing wellness ecosystem and innovative product launches shaped by customer insights and wellness goals. They also discuss hardware, proprietary software, digital content, and biometrics, which shape many of Therabody’s new category-creating products.

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Transcript

Speaker 1:

Welcome to Cowan Insights, a space that brings leading thinkers together to share insights and ideas, shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Max Rakhlenko:

This is the Visionary Podcast Series about visionary ideas and people. My name is Max Rakhleno, and I’m Cowan’s retail and fitness analyst. In this episode, we’ll delve into the topic of personal wellness as the industry is in admissible revolution with Therabody firmly at the center. We are pleased to be joined by Benjamin Nazarian, co-founder and executive chairman of Therabody. Therabody is a wellness technology leader with the mission to inspire and enable every body and mind to keep moving. Therabody invented the category-defining therapy device called the Theragun and has since expanded beyond muscle recovery into hardware, proprietary software, digital content, and biometrics. So Ben, thank you so much for joining us, and I really look forward to this conversation.

Benjamin Nazarian:

Thanks for having me, Max. Excited to be here.

Max Rakhlenko:

Great. So with that, you had a really explosive year with new launches, partnerships and exciting growth. What are you most proud of, and what were some of your biggest learnings?

Benjamin Nazarian:

It was definitely a really exciting year. We got a lot done, and sometimes it’s hard to believe how much we got done in just one year. I would say what I’m most proud of is we launched 12 new products last year in 2022. In fact, a lot of people thought that we cannot get that done, but it was two years of working on R and D to come out with category-defining new products. And we didn’t come out with products for the sake of coming out with products. It was really listening to our customers, understanding their needs, and then giving a lot of leeway to our engineering and R and D team to be creative and have no boundaries. And with that, they came out with really category-defining products.

So earlier in the year, as Theraface, we’ve created a new category called Facial Health. There’s a lot of skin products, beauty devices, nothing that was really thinking about the pain that people have, caused by the muscles in their face, which usually leads to migraines, headaches. So Theraface is a Theragun for the face, but we added a lot of other modalities that also help the skin be healthier. Then we came out with Jetboots, which are the first wireless pneumatic compression boots out there, and that has really revolutionized that industry. We’ve had over 300 teams we use to use other competitors products. They’re now using Jetboots.

And then most recently, with the launch of the fifth Gen Theragun Pro, we came out with the goggles we call the Smart Goggles, which had biometrics integrated to that product. And again, revolutionary in that it was sold out four times last year. Sales completely exceeded what we expected, but what’s interesting about it is customers who were buying that product did not have a facial massager and now upgraded to Smart Goggles. We are getting people into this category and buying the Smart Goggles that were not previously customers of anything of this kind of product. So again, it’s another category-creating product, and that’s pretty exciting.

Max Rakhlenko:

And you actually touched on a lot of the topics that I’ve got followup questions for you. So my next question for you is… You’ve touched on this. But you’ve done a really nice job of expanding from one key product that you’re known for, which is obviously the Theragun, to really being a holistic wellness company with many different products. Why was this the right strategy for you, and how did your customer insight shape the products that you brought into place?

Benjamin Nazarian:

I think it’s a really important part of our strategy. You’ve mentioned customer insights. We listen to our customers very closely. They have such a big impact on how we think about our strategy and product development. But just to step back one second, back, I think it was probably 2018, we only had Theragun. It was a single SKU company, it was a Theragun Pro. And we realized that a lot of people are using our products for pain, not for recovery. A lot of athletes use it for recovery, and recovery was becoming big. But the same way Dr. Jason used it for his pain from his motorcycle accident, and that’s why he invented the Theragun, we realized people are using Theragun for Pain.

I made a comment internally, which turned a lot of heads. And we were talking about who’s our competitor. And I said, “Our competitor is Advil.” If people are taking Advil for muscular pain, then that’s who we want to go after and they can now use a Theragun instead of Advil. And we’re going to do a lot of good and help a lot of people if we are an alternative to Advil. And I think that’s what’s happened.

A lot of people do use our products, especially Theragun for recovery, but now we are seeing so many people using it just for pain. And that’s why physical therapists use it. People during COVID did not have access to massage therapists or physical therapists, and they bought a Theragun. And when we realized that there’s a lot of health and pain issues that people have, well, Theragun doesn’t solve all of those problems. And there’s a lot of great technology out there. And the same way we democratize Theragun for the everyday consumer, we can now do that with other technologies. And so in 2020 we rebranded the Therabody, and with that, we wanted to build out an ecosystem of complimentary products.

And that’s how it started. And I think Theraface is a good example of that, where people were using the Theragun for their face. And even though our instructions say, “Do not use it above your shoulders,” people started doing that and we asked them, why are you doing that? And they were telling us that they were using it because it helped them with their headaches, with migraines, with muscular pain, TMJ. And so we realized, “Well, there’s a lot of merit to that, but you should not be using a Theragun, it’s way too strong, on your face.” And so we came out with a product that was specifically designed for the face and the muscles in the face. So consumer insights and consumer feedback really led to our product development strategy there.

Max Rakhlenko:

Yeah, no. That totally makes sense. And we’re going to get into some of your newer products, but as I was doing some of my prep work for this podcast, I came across a large media company that recently referred to your fifth generation Theragun as the Rolls-Royce of massage guns. So just wondering, what’s your take on that? And how does this sort of motivate you to continue to innovate and improve the product as well as really help people?

Benjamin Nazarian:

Well, I think it’s a big compliment when somebody calls your product the Rolls-Royce of a category, because Rolls-Royce stands for premium quality, comfort, technology… It’s in a class of its own. Yet I don’t think it’s completely accurate to call a Theragun, the Rolls-Royce of the massage gun, because we’re not trying to be elites and serve the 1%. In fact, there was a product out there before Theragun came about. It was called the DMS, it was $3,000, and it was used by pro athletes, but they only had one per locker room. And so, when we came out with a Theragun, it really democratized that technology and every athlete, every pro athlete, bought one for themselves.

And then we ended up making a whole category of massage guns, percussive therapy devices, and who would’ve ever thought this would be its own category? But that’s exactly what happened, because we’re able to democratize it and make it available for everybody. So although I’m very flattered by that comment, our goal is to make our products… They are premium, they are more expensive, but there’s great value in there because there’s a lot of quality and technology in there. But our goal is to make it available to everyone.

Max Rakhlenko:

And no, that makes sense. And everything we see, if you watch the NBA, if you watch any other sports, both college, professional and high school, you guys are basically ubiquitous now with a lot of the locker rooms and things that you see for a lot of those athletes. So that makes a lot of sense. And Ben, coming out of the pandemic, personal wellness has really been top of mind for many people. Do you think wellness has sustained power? And how do you think it could further evolve over time? Or is this more of a temporary trend and people are sort of going to go back to living the lives that they did previously?

Benjamin Nazarian:

Well, I certainly hope people go back to living the life that they did previously. I think we’re all over this concept of COVID and lockdowns, but I think the one lasting impact that COVID will have is people are now even more focused and putting more emphasis on their health. And there’s no doubt that COVID by itself, through variants, is not going to ever go away. It will be like the flu. So the stronger your body is, the healthier you are, the easier it is to fight off the common cold or the flu or COVID. And I think there’s going to be a very strong emphasis on wellness and each of us taking care of our bodies, because I think the other thing that will not change is people understanding that we are responsible for our own bodies, and we cannot rely on the healthcare system or doctors if there’s a pandemic. So the stronger we are, the better the chance we have. And I think what we’re doing is providing products to people that is not just a solution on recovery, but living a better, healthier lifestyle. And that’s not going to change.

Max Rakhlenko:

Right. Yeah, I think, especially starting the year, I think that there’s always a focus early on. And I do think we’re now a few years into this new normal, and people are definitely becoming more focused on their health. We’ll discuss some of your partnerships a little bit later, but it does seem like there is a new normal out there. So you touched on a lot of new exciting product introductions in 2022. Just curious, any surprises, any learnings? What’s been the one or two products that shoppers have most gravitated towards?

Benjamin Nazarian:

I think the Smart Goggles would probably be the biggest surprise. Even internally, we were really excited about it, but I don’t think we realized how big of a hit it would be.

We know sleep is a problem, we know tension and mental performance, mental health, is a major concern out there. There’s no question that we put a lot of stress on our body. Being behind a Zoom call every second of every day does not help. And we looked at that problem and took a very different approach. And what the Smart Goggles does is it helps you with tension. I use it sometimes in between meetings or after a long day at the office before I have to go to a dinner meeting. It helps me just relax. It’s kind of like a quick meditation and I’m not really good at meditating. So it’s a really cool hack on meditation. And then I use it every night before I go to bed. And the biometrics that we built in there shows that it works and that positive feedback reinforces that behavior. So all of that has made it a big success.

And as I said earlier, people who were never buying or using any products like this are buying it and we’re hearing that they’re using it. Not hearing it. We get the data on our app multiple times a week. So the behavior is really good, showing that it works, that’s why they’re coming back to it.

Max Rakhlenko:

And you touched on biometrics. And it’s really sort of next step, next generation for a company that started with Theragun. So just curious, are you developing everything internally as part of your R and D? Is this a partnership? Or how are you approaching the biometrics side of the offering?

Benjamin Nazarian:

The biometrics for the Smart Goggles, we developed all that internally with the software internally. And the reason the biometrics is so important is because when you use the goggles, it makes you feel better. It helps you feel relaxed. But now we can show you on our app that your heart rate started at certain level and it went down significantly when you use it, especially in conjunction with Theramind, which is our proprietary content. So when a user sees that, “I didn’t just feel better, but I can actually see the data that it worked,” then that positive feedback is really important and builds confidence in that product, in our brand, and then drives that repeated behavior, which we think is really important.

Otherwise, if people are using your product once or twice and putting aside in a drawer and never coming back to it, that’s not really setting yourself self up for a successful business model. So I think that biometrics really provides that. We had a partnership with Aura where they provide something that we were not able to develop internally, and so we partner with them. And same thought process there, but you’re doing it with a third party.

Max Rakhlenko:

I was going to ask you later, but since you touched on it, we’re excited about your innovative collaboration with Aura. So curious, how did that come about? What are you working on together? And what can we expect in the future from you two?

Benjamin Nazarian:

Yeah, so I’m an Aura customer. And as you could probably guess, data is important. And I’m a big believer in data. And I think what I realize as a consumer, and I would imagine others would feel the same way, is it’s great to get the data, but what do you do about it? What are the actions you need to take in order to improve your data?

And when I met the CEO of Aura, Tom Hale, I shared my vision with him that I love the Aura ring, I love the data, but we can help you and your customers. We can be the solution for them so that when somebody gets the data, now they can understand, if you are using a Therabody product, how does it impact the data? How do you improve the data? And how do you make a difference? So that feedback loop is really, really important for when you use a device to see that it works like we do the Smart Goggles, but more so, when you get the data, what do you do about it? Well, we are the solution. We are the “so what” of the data.

Max Rakhlenko:

Yeah, no, that’s great. And how are you thinking about the data and your offering holistically? As you know, you’re clearly building a pretty significant wellness ecosystem. So how do you think about the future? How do, potentially, partnerships come into this, whether it’s Aura, whether it’s anyone else? And how does this tie to your long-term vision for the company?

Benjamin Nazarian:

We are looking at the everyday consumer and, “What are the challenges that they’re facing?” We’ve tackled performance, we are tackling stress, we’re tackling sleep. These are all really important need states that we are going after. And our products… And, obviously, pain as well. And each of our products compliments each other and goes after each of those need states in a very unique way. And what we’re trying to do is, as I said, drive a healthier lifestyle. So our products are also used throughout the day. It’s not, “Hey, I got injured or I worked out, therefore I should use the body product.” How do we integrate our products into every day of every person out there and become important part of them, just like they’re using information technology as part of their every day to be more productive? Well, how are they using body to be living a healthier life? And part of that is also the data. And if we can’t do it ourselves, we’ll partner with the right people to provide a complete solution to our customers.

Max Rakhlenko:

And with that, I’m just curious, is there an ability to be more prescriptive and offer solutions, offer… obviously not workouts, but different regiments for your shoppers is to use? Is that something that we might see in the future? Or how do you think about that part of the business?

Benjamin Nazarian:

Yeah, we’ve already started doing that. So our app does provide protocols showing how to use our products in different need states. Again, whether it’s pain related or recovery. Recovery after running is very different from golf. So we have those protocols specific to each activity as well. What we’re really working on this year is improving our recommendation engine. So as we get the data, whether it’s from Aura or Strava or Apple Health, we can start proactively giving consumers solutions so that they can be integrating it into their everyday lifestyle.

Max Rakhlenko:

Yeah, no, that’s awesome. I think that’s going to be very exciting. And maybe just switching gears a little bit, but we talked about various sports teams, but you have partnerships with athletes and all sorts of professional teams. So can you just discuss that part of your business, how you’re thinking about that channel and just opportunities to leverage and grow those relationships?

Benjamin Nazarian:

Yeah, we really focused, at the beginning, on athletes, because we knew that they would bring a lot of credibility to a new product that no one knew about and there was a lot of, I would say, lack of trust in. And we knew athletes would help overcome that, and then they would help bring the market awareness that our marketing budget, or lack of a marketing budget, was not able to drive. And so our hope was that somebody would use it on the court during a game and that would really both drive the credibility and the market awareness. And so the first year of our company, all we did was spend time training athletes and athletic trainers on professional teams on how to use a Theragun. And we’re very lucky. When Kyrie Irving hurt his back during game five of the championship in 2017, he asked a trainer to use a Theragun on him. It was caught on TV, and that’s when we went viral. It was on Twitter and we made the press as a result, and that’s when we started blowing up.

So that brought us a lot of credibility and brand awareness. But our products are not just for athletes. And that’s part of the message that we’re trying to get out there is to make it relatable to the everyday consumer. And even now, the way we work with athletes is showing their everyday day life and what they’re doing outside of the gym or the field and how are they using our products, so people can see that, “Yeah, I have the same problem and how I can use their body product just like a pro athlete.” And it’s going to be a big part of our messaging this year.

Max Rakhlenko:

Making it more normalized and relatable to that everyday individual. And no, that makes sense. And obviously, with athletes, the reach is wide, so that, that’s great for you guys. Something that I’m curious about… You’re, in part, a category creator, and now you’re starting to see more and more competition. So as the market grows, how does that impact your strategy, whether it’s products, marketing, everything in between, as there are more and more copycats out there?

Benjamin Nazarian:

Yeah, I’m a big believer that competition is great, not even good. It’s great. First of all, I think when there are so many called copycats, knockoffs, it shows how big this category is, that there are other companies that are investing in providing a product to the consumer. The reality is we’re not going to be able to satisfy every single consumer. And I’m a big believer that every single person out there should have some kind of percussive therapy device. Obviously, we believe we have the best one. It performs better, better quality, better specs. And what I think is going to happen is people will come into the category and realize that maybe that product they bought was not as good as they had heard about Theragun. And there will be a huge upgrade cycle, and people will then upgrade to Theragun as well, because we are the category leader, and we have 70% plus of the market share in the premium category on a global level, some markets we’re actually 90% plus.

So competition doesn’t make me afraid, but what it does do is actually fuel us, energize us to keep innovating and keep outpacing the competition. And again, I think that’s great for the consumer. So all in all, consumer wins through competition. That’s a great thing.

Max Rakhlenko:

Yeah, no, the competition makes the market bigger and therefore you’ve got a bigger TAM that you’re able to go after. So that makes sense. I was curious, what about advertising? Obviously, there’s a lot of channels that we’ve seen your products in. How do you think about the right channels for you and your shoppers? And then how does that drive your LTB to CAC?

Benjamin Nazarian:

Yeah, it’s interesting how fast the advertising market has evolved over the past few years. You know, talk about the rapid pace of technology and how fast technology evolves. I don’t think we thought that the advertising market would change as fast. I remember, when we started advertising in 2017 on Instagram, our agency said, “This will never work. No one knows what a Theragun is. No one’s going to buy 600 product that they’ve never seen or tried. So how the hell do you want to market on Instagram and drive sales?” And luckily, we broke convention wisdom by doing it and not listening to the experts. And it worked really, really well.

Obviously, that has changed really fast with Facebook and Apple’s privacy rules changing over the past year. So we’ve had to evolve, we’ve had to change. And I think part of advertising, similar to R and D, is innovating and figuring out what works and what doesn’t. And so our strategy has been very quick short hits with different platforms to see what works, and if it does, we invest more in it. And we’ve done everything from outdoor TV, connected TV to podcasts, and we keep investing on in the areas that have had the best success.

Max Rakhlenko:

So you’re staying nimble and then trying to lean into various opportunities as they present themselves is what it sounds like.

Benjamin Nazarian:

Yes.

Max Rakhlenko:

Yeah, no, I think that’s right. I think IDFA, to your point, has obviously brought a lot of challenges to people advertising online via various Apple products. And I think the more nimble that you can be, the better ROI you’re going to get on that ad spend. So just a couple other quick questions for you. What can you share regarding growing wallet share with some of your customers as you continue to scale and add new products to the portfolio? Are you starting to see customers buy more and more? Or is it really growing the customer base more than the share wallet?

Benjamin Nazarian:

Yeah, we’re going after both. So when we started the company, we only had one product, there’s one SKU. Then when we came up with the mini. We were hoping people would get a second product for their gym bag, golf bag, travel. And we thought, “Okay, now they’ll have two products.” But that really didn’t start until about roughly 18 months ago, two years ago. So we set up our business to be profitable on the first sale, because we didn’t have the luxury of thinking about LTV and CAC and, “We’ll make up for it on the second sale,” because there was no second sale. We thought someone’s going to buy a Theragun, and hopefully they’ll upgrade in a few years.

Now that we have a much broader ecosystem of products, we are actually investing a lot in the data analytics to be able to track that. And we’re seeing the same customer buying multiple products, and anecdotally, through the app, we can see them also using multiple products as well. Sometimes they’re buying it and it’s a gift, but we are seeing multiple products being sold to the same customer. And that’s the benefit of not just the brand being as powerful as it is, but having the broader ecosystem and broader product line.

Max Rakhlenko:

And to your point, it’s a very giftable product. This holiday season coming out, I’m sure that you guys had a solid winner. We’ve seen that those gifts given to a lot of people, so I imagine that’s going to be a big part of the business going forward.

Benjamin Nazarian:

Yeah, it has been. And our corporate gifting where you can add a logo to our product has been growing substantially every single year.

Max Rakhlenko:

And I guess, with that, you pretty recently raised a very nice fundraising round. So just curious, what are your main goals now? What are you looking to use the capital for? And how is it going to fund and really drive the next leg of your growth?

Benjamin Nazarian:

Yeah, we raised $165 million round last summer. It was, and I think it’s still, a very difficult capitol markets environment. And to be able to raise that kind of capitol, I think, speaks to our brand, our technology, our market leadership and market share that we have out there. And we’re able to now use the capital. A lot of it was [inaudible 00:26:47], and we wanted to make sure we are not financially stretched going into an economically uncertain time. It also gives us the firepower to do acquisitions, and I think there will be great opportunities. Over the past few years we’ve already acquired three companies, and I would imagine there’s going to be really good opportunities this year for us to compliment our technology and our product ecosystem, but it really just gives us a lot of flexibility. We’ll also be investing part of that in our Reset stores and our digital app.

Max Rakhlenko:

So actually, maybe on that, can you just provide some more color on the Reset stores? How many do you have? What’s your vision for them? And then just longer term, what’s your vision for the company? And what should we expect to be launched over the next, say, 12 to 18 months?

Benjamin Nazarian:

Yeah, Reset came, again, from just talking to our athletes, where they were coming to us and asking us about, “How do they optimize their recovery?” And we realized even the professional teams had some technologies but didn’t have one area of their gym or their athletic training center that had all the best recovery technologies. And recovery doesn’t just mean recovery from athletic performance. It also means injury prevention and staying healthy so they don’t get sick. And so we brought all that under one roof in one location. We called it Reset, and it’s meant for people to be able to… Again, democratizing what pro athletes had access to, making it available to the everyday consumer. And you can go in there and help you with recovery with stress, immunity boost. We have IV, but we brought all of these technologies together. We have five locations right now, and we’re still optimizing that model.

But the feedback has been fantastic. It is a membership model, and people come multiple times a month, and I think it’s a great area of growth and also showing our technology and how it can help the everyday consumer. So I think that that’s a big push for us this year. With respect to the industry and where it’s headed over the next 12 to 18 months, we see a lot of great technology and benefits around LED lights. LED lights have a proven track record. It works, and it has proven benefits, but I don’t think it’s been provided to consumers in a way that is as usable as it can be and as affordable with the education. And that’s where we come in, and that’s where we shine. So we’re looking at LED products and seeing, “How can we bring that to the market?” We brought that with Theraface, as part of that product, and now, we’re thinking about how to develop more products around that technology.

Max Rakhlenko:

Wow, that sounds really interesting. I can’t wait to see it once you guys launch those. So Ben, the last question I’d like to ask, before I let you go… What part of the job do you enjoy the most? And what has been most rewarding for you?

Benjamin Nazarian:

It’s been definitely a challenge. When you are involved in a company that’s grown as fast as we have, there’s a lot of curve balls, and you got to make sure you’re resilient and you can withstand that. And what gives me the fuel and the energy for that is when I meet people and they talk about how much they love our products and how much it’s helped them. And I think it’s pretty rare to meet people, complete strangers, whether it’s an airport on a vacation where they see you’re wearing a their body hat or the emails we get from customers saying that we change their lives. Again, it’s hard to think of other companies that having that kind of impact. And that is very, very gratifying, and I’m very blessed to be part of a company that can do that for people.

Max Rakhlenko:

I think that’s an excellent way to end this conversation. Ben, thank you so much for joining me today. It was an absolute pleasure.

Benjamin Nazarian:

Thanks, max. Had a great time.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowan Insights.


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