Before we begin today’s pitch, please let me give you some background. I’ve been a competitive cyclist for about 15 years. Racing takes a higher level of commitment, so I haven’t raced all of those years, but I have been around it for long enough to really understand the customer base. I train with my race team, travel with them and have spent countless hours talking about all-things riding. When I first started, there was no such thing as interactive apps, training guides… cell phones were hardly a thing, ha ha! In those days if you wanted to get fast and train correctly, you had to read and figure it all out yourself. And so I read “The Cyclists Training Bible” over and over. I wanted to figure out how to apply the principles outlined in the book easily, so I wrote a program. It was awesome, really easy to use and I had a small following of guys who used it and depended on the updates every year. I even reached out to the author of this book (Joe Friel) to see if he was interested in partnering to make it more sale-able, but didn’t have luck with that. Coincidentally Training Peaks came out soon after and had quite a few similarities to my program….hmmmmm J. But my point is, I’ve been thinking about how to apply cycling training principles easily for A LONG TIME! Today we have several companies that automate a lot of the planning and workouts and they are all based on power (you need to have a power meter). I won’t go into the technicalities of training with power, but know that it can take time and proper planning to “peak” for a race that you want to do well in. Let get into it. This is Thor. He a typical customer of Trainer Road. He races and takes it seriously. He uses TR all winter and loves the workouts. He follows them pretty closely as this is easy to do in the winter. He lives in an area that gets a lot of snow and where it gets dark in the evenings quickly, and so to help in these long winter months, he uses TR to tell him what he needs to do. It works and every spring he comes out strong! But after that the weather starts getting better he starts riding outside. TR doesn’t work outside, so initially he tries to follow a pseudo plan. But it doesn’t take long before he’s just “riding” and not really “training”. He’s noticed that after the spring, his fitness never improves and he wishes he could follow a program like TR only in the summer. He needs help in the summer too! I suspected Thor’s story was pretty common… at least it is in my circle of cyclists. So I put out a survey. I asked 850 cyclists who are part of a facebook group in the Boise area to complete a survey. 31 responded and the results were exactly what I suspected. But as I internalized the results more, I realized that we have a huge business opportunity in the area of outdoor training. 75% of competitive cyclist use a power based training system in the WINTER ONLY! But really interesting is that 30% said they wished they had a training tool for riding outside, and this is where the majority of their riding occurs. Here are some more stats extracted from that survey. You really start getting a sense of the user pain-points and business opportunity here. 50% are disengaged from their training apps for a majority of the year! They cancel subscriptions, etc, but interestingly, they are willing to pay a decent amount for the ability to train outside… I asked! Here’s a quick estimate of the business opportunities we have. If I worked for trainer road, I’d be able to run some SQL code to dig into the numbers more accurately, but this is what I can do for now. Please note this is for US only! Europe is probably 2-3 times the size. 70,000 competitive cyclists is the number registered with USA cycling. I figure that not all of these cyclist train and some might not race. But there’s also a portion of competitive cyclists that don’t register with USA cycling, so these two groups probably cancel each other out. The numbers “feel right” considering various stats I’ve seen and even number of employees at TR per linkedin. The first opportunity is to stop the bleeding with customers cancelling subscriptions. Not only does this hurt us financially, but it shows we’re doing nothing for our customers during this time. The second is acquiring new customers. Considering the survey, I’m estimating the opportunity for TR at $3,2M in the US only… if we can nail it! 30% is from customers of zwift, sufferfest and then just “other”. The potential is there to possibly double revenue, but in an actual business setting with TR we’d do a deep dive into this number. This is too large of a problem that the industry doesn’t know about it, at least that’s what I think. I think solutions are in the making, and if they aren’t, great! A fun thing about the cycling industry is that things don’t change as quickly as other tech, so it’s a little easier to predict into the future (example disk road brakes). But here’s a look at the competition we know of right now. Training Peaks and Today’s Plan has the ability to sync with a Garmin or Wahoo device. Here, take a look at my Wahoo. I have it set to follow a workout – check out how ’90’s this looks! The interface is extremely rudimentary, but it can be done. Users of Zwift, TR and Sufferfest are out of luck for the summer. But there is talk about how to bring these tools outside. See the link. This dude actually puts a PC in his backpack to make Zwift work outside! Clearly customers are thinking about it. Check out the comments… some say “brilliant idea”. As for Stages… I tested Stages for 2 months. It’s a good app, but extremely complicated. I wouldn’t recommend it to anyone not willing to invest serious time into figuring it out. My Chemistry professor friend loves it, but he’s the only one I know that uses it religiously. So here’s a fantastic, modern solution for Thor’s problem. We take the current TR app and tweak it (significantly) so that it can be used outside. Very importantly – we start off by offering an Android and IOS cell phone for less than $300. Only one of the 31 cyclists I surveyed were willing to use their own personal cell phone as a head unit, so it’s important to offer a dedicated cycling phone/head unit. The second critical change is the feature to navigate forward, backward between intervals. Imagine you have 5 intervals to complete, 5 minutes each. TR’s program has you starting at 10 minutes in. But it’ll take you 20 minutes to get to a good location to do these intervals. TR outside must be able to accommodate for this (something we’re not concerned with inside). And so Thor uses this training system for an entire season. It works! He loves it as he is able to get faster in the summer by following TR’s planned workouts! It’s one of those kinds of things where he wonders what he ever did before TR outside. He’s completely engaged to the app as he sees it during every ride. He even finds himself spending more time in the app when he’s not riding, analyzing his power numbers. There’s literally nothing not to like about it, and it makes training a lot of fun… he is hooked to TR! He even finds himself less concerned about Strava segments and more concerned about hitting his prescribed power numbers. Thor knows that these Strava segments haven’t done much good for his training, so he’s thankful to have a different goal to work towards. Thanks you TR Outside! Let’s talk about the strategy for developing this and getting it into our customer’s hands. We’re going to take an agile approach so that we get customer feedback early on. We don’t want to wait for every single function to be perfected before releasing as we may not even know if these features are what customers really want! The first step is to release an MVP. We could limit availability and advertise primarily to testers and our beta group. It would be a supplement to user’s current head unit. We have to get the training and interval functionality right as this is the most important differentiator of this whole initiative. I’d like to talk to the dev team to understand if it makes sense to go ahead and put GPS data in the MVP (especially for testing), but right now I’m not sure. After that we’d make this more official and take care of all of the “satisfiers”. We’d be able to replace user’s head units and have a very powerful tool for training. You can argue that the interval functionality makes this version a delighter, but we don’t want to stop there. We want to completely drop the competition. That’s where we take advantage of all the functionality of a cell phone and start adding in features that cyclists can only dream of right now. Like usable maps! Imagine if you could download a race course on your TR app and see exactly where you are on the course… how many climbs are left, etc. Brilliant!!! Let’s take a look at the main players in the industry and where we see them going compared to TR Outside. Obviously it’s hard to predict exactly what our competition will do, but we know enough about them to make reasonable guesses right now. Starting with Zwift… they have nailed the indoor training market with their interactive app. We don’t see this translating into real-world outdoor use, so we think their feature set gradually gets better, but doesn’t change the overall effectiveness of year-round training. Training Peaks will most likely continue to partner with third party hardware solutions like Garmin and Wahoo to implement training workouts outside. Strava is the biggest unknown and honestly they scare me the most. They have by far the largest customer base, they have workouts, they have an app for recording GPS data… really the only thing missing is real-time power based workouts like TR. It would not take them long to develop a solution as good as TR Outside 1.2, and if they did it would be really stiff competition for us. On the flip side, if Strava doesn’t react to the market need for structured outdoor training, TrainerRoad Outside has the chance to blow away the competition, and this should get us as a team very excited! We’ll measure our success through engagement and revenue. Specifically for engagement, we’ll measure Daily Active Users to see how much customers are using our app and well as conversion rate… that is specifically how many are purchasing a dedicated cycling phone. We’ll also measure how much more our workouts are being used and this is easy to measure. If engagement increases, it means we’re on the right track and offering something our customers want. Increased revenue should follow, and we’ll measure Average Revenue per User and really importantly, Customer Lifetime Value. By understanding the project lifetime value, we may see significant gains. Imagine… you are a racer and use trainer road. You decide to stop racing for whatever reason (it happens all of the time). Obviously you’d quit the TR subscription. But if TR offered a year-round solution to training and recording data, you might reconsider and just keep your subscription, even if you aren’t racing. This could be huge!!!! Lastly, we’ll monitor the overall market and try to grow our share. For our GTM plan, we’ll have a different strategy for our MVP vs the first version that can completely replace a head unit. But let’s talk about our first unit that will be able to replace head units. Internal discussion is needed before deciding on HW options to offer, but I’m throwing our an iphone7 and Galazy s7. These are older generation phones, but get us to the price point we need. We could also go with a phone offered in 2019, but it couldn’t be a flagship phone. The mount we’d offer with it is from Quad-Lock. Users could purchase directly from TR or fro Amazon 3PSellers. Obviously this scenario means a team to manage HW, and this is new for TR. The MVP would allow us to experiment with how to manage HW internally as well, before going full-on live. Promotionally, we’d follow what we normally do… talk about it on our podcast, website and all social media. We’d also try to get this in the hands of product reviewers and bloggers.
