Helping a Med Spa Owner Resist the Online Gold Rush

0:00Unternehmer/Gast What's up, brother? My name is Trev. We met in 2012. Great day with you, man. >> You had your gym in New York. >> Absolutely, brother. Happy [clears throat] to be here, man. So Uh thanks, brother. >> Yeah. >> You're the same. You're the same. >> you were eating like a bunch of fruit at that time. >> Yeah, I was. Not anymore. Now I eat chicken. >> [laughter] >> You remember that's funny, man. So, ended up actually growing to eight gyms. >> Whitwer? >> What's that? >> Whitwer? Last name? >> Boucherie. >> Uh no, now I remember. [ __ ] it. Yeah, yeah, yeah. I thought I was going to I was going to nail that one. I [ __ ] that up. Okay, keep going.

0:29>> It's all right. You still remember, great. >> Yeah. >> But uh I ended up growing to eight gyms, ended up selling it uh around COVID, and we ended up going into the med spa space. Still doing women's weight loss, but now we're doing like laser lipo for fat loss. We're doing high fat like basically uh Emsculpt, you know, for the >> how much more money you make now, right? >> Dude. >> Yeah. >> Ridiculous. So, we got a location in Buffalo, location in Denver, and the plan was to grow it into a brick-and-mortar thing. We're profitable, doing well.

0:54Alex Um we're at a about 3.9 LTV to CAC right now, about a 30% EBITDA margin. >> Okay. >> Um but I can't ignore the online space. I see that there's an online opportunity um in between the gyms and what I'm doing now. Believe it not, I was actually selling ED online. I was kind of going arbitrage. I'd market in like Dallas. I'd sell ED programs, and then I'd go to doctors who service it and say, "Hey, will you do this for a thousand?" I'd and I'd keep four type thing. So, I know how to sell online, and I just can't ignore that could be a potential huge opportunity before I go into a brick-and-mortar. I would just love to get your insight and feeling on

1:29Alex >> [laughter] >> Um I mean, I feel like it's the it's I mean, it's the classic woman in the right dress. Mhm. Um just being honest. It's cuz it's not Because could you do it? Yes. Could you do it if that were all you did? Yes. Could you do just brick-and-mortar? Yes. Could you do both? No. So, it's like the opportunity has to have a discount applied to it, which is the cost of distraction, which might be like an 80% discount that you'd apply to how well you do because you still have these other things that are going on. And so I would probably look at goal and reverse backwards. And so I mean to be clear, I've been you know king of like oh I see this other opportunity.

2:10I'm willing to just basically give away the thing that I'm currently doing if I really think that the next thing is going to be that much bigger. Um I mean the reason that I went from the gyms I basically gave my gyms away more or less to get into the turnaround business and we did like 30 something turnarounds over 2 years. So I was like okay cool and then from there I just basically gave up that business to do gym launch and so I've been cuz and you know everybody who told me when I had my my six gyms and I basically gave them away at cost they were like dude you spent all these years building these like are you crazy?

2:40Alex And I could have gotten them perfect for sale you know what I mean it probably would have taken me 18 months and then I could have quote gotten a better multiple on the deals but in 18 months we were at 3 million a month 4 million a month doing the other thing and so it was like but if I had still had the gyms I wouldn't have been able to do it. >> Right. >> And so I see either you the thing is you've already exited brick and mortar with a multiple location setup and now you're way more profitable I'm assuming with each individual med spa and there's a ton of M&A activity in the med spa space and like zero in the high service brick and mortar gym space and so I think it really comes down to goal. So if you're like I want to exit for this amount of money in this period of time then I would solve for lowest risk likelihood of hitting that. So if you're like I want to sell for 50 in the next six then you could probably just open up another four more locations five more locations of med spas and you're done.

3:36Like you got it it's right there. Um I'm assuming so so what's what's EBITDA of each location? >> Yeah well just to kind of give you an idea like between the two locations we're doing about a run rate between 2.5 and 3. That's it you know so >> Top line or bottom >> Top line. >> Top line okay then and margin so basically you're doing a million bucks a year in EBITDA right now from the two locations. Got it. So, 500k per Um which is actually a pretty lean model. Uh so, if you're doing like 1.2 with 500k ish Um or it'd be less than that. So, 400k, whatever. Um that's actually just a pretty lean med spa model overall. Um and so, the thing is is that I think they're Once you get enough size in the med spa space, which it usually would be like you probably have to get to 10 locations.

4:15>> Okay. >> Um to get that. Uh but at that point you'd be at 5 million, 6 million. You'd probably have some centralization, some economies of scale that would hit. Um and you'd be able to sell that for 50. Um once you got there. The alternative is like this ED thing or whatever. Um how long would it take me? And so, I'll I'll >> Well, just to be clear, I wouldn't be pursuing ED. I'd be doing weight loss. >> Okay, yeah, yeah. >> Yeah, yeah. >> The online thing.

4:42Alex >> Yeah, yeah. >> So, the thing is is that they're not the same and like if you were like, "Hey, I want to sell both these together." you wouldn't be able to. >> Well, my intention, like you said, would be like I would I see like the online thing is kind of like multi-locations and I would eventually just drop the brick and mortar. That was my thought. Okay. I'd go all in. >> So, I just I'll just explain it like this. So, So, let's say this is the current brick and mortar.

5:09And this is it. Just say this is year one, year two, uh whatever, year two, year three, whatever it is. The thing is is that let's say the next thing is online. Sometimes it's like the first year you're here, the second year you're, you know, here, and then the third year you're, whatever, here with your new the new opportunity. The thing is is that as these years continue, you have to compare it to what this would have been in year four, and then this would have been all the way up here in year five. And so, this is like I I've I've about this a lot because it's been the the single hardest decision of my career has been Woman in the Red Dress, which is why I probably talk about it every day.

5:51>> [snorts] >> Is it like the more skilled you become the more opportunities there are? It becomes really really hard to say no. But the biggest inspiration I have in my life has been um or one of has been uh Mr. Panda. He lives both above me and below me. Anyways, weird. And so the guy's worth 11 11 billion. Um and he's been selling chicken for 45 years. He brought General Tso's Kung Pao chicken to the United States selling um Panda Express. And he owns all 2600 locations. He owns the dirt, he owns the buildings, he owns he owns it all. He did 935 million dollars in income last year, tax-free.

6:26Alex >> Jeez. >> And so yeah, savage. He did 3.7 billion in sales and had a 27% net margin. >> [snorts] >> And so and he's been doing it for 45 years. And so I think about that a lot. And so it really just comes down to like either of these would work. Whichever one you see yourself sticking with the longest is the one that I would do because if you look at a 10-year horizon, it won't matter.

6:53If it's a 5-year flip, then usually the thing that you currently have it already has the devil you know and the online thing has many devils you don't know. And so everything always looks more attractive when you >> [snorts] >> when you're not in it. >> Yeah. >> And then you get in it and then you realize, oh actually you know massage spots have nurses and they walk off with the clients and actually getting nurses to work for us for the pay and then we got to train them and then they're like, oh okay, there's there's [ __ ] here too. You know what I mean? Like there's other stuff. And so um I think about this, which is cool, this other thing might be able to catch up to my current year three, but by the difference between year three and year four, going from 10 million a year to 15 million a year is not that hard of a jump. Going from zero to five in the first year, really [ __ ] hard.

7:33Alex And so I think about that as what is my fourth, fifth year of opportunity one versus and I think about this all the time because I've I've I obviously took the path that I did and that was because I got advice to to switch gears, but I think that right now I have the skill set that I could have 300 gyms. I think I could do that. And if I had 300 gyms, I might be richer than I am now. And so I I I take that into really careful consideration. So, to answer the question, I can't answer it, but I would cuz it's a you question. So, I think the the one big question I would answer above everything is which one of these could I do for 10 years? If you are a business owner and you are not growing as fast as you like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling road map, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it.

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