Fireside Chat w/ My Fitness Pal | Albert and Mike Lee, Hosted by Dylan Tweney

Good afternoon, everyone.

Good afternoon. Good afternoon, everyone. Good afternoon, everyone.

Good afternoon.

Good.

All right, it is my honor to introduce you guys to our moderator of today. He was the senior editor at Wired, editor-in-chief at VentureBeat, founder now of Tweeny Media.

And while he worked for Wired, he increased the traffic of Wired Gadget Lab by 1,000%.

The traffic at VentureBeat by 433% and is best described as entrepreneurial journalist, content strategist, and editorial leader. Give a warm welcome to Dylan Tweeney.

All right, are we going to share a mic here or do I just leave that sitting Just leave it?

Okay, awesome.

Okay, take it away. No, just don't touch that, right? Okay. Good afternoon.

So what we talk about when we talk about health, George Eliot said it's never too late to To be what you might have been. So this is exactly what MyFitnessPal's been doing. MyFitnessPal is one of the top health apps in over 72 countries around the world. It is a free, comprehensive nutrition and fitness system that makes it easier for you to attain your fitness goals and live healthier. So let's welcome Michael and Albert. Thank you.

I wish someone would do that everywhere that we go.

You guys give the warmest welcomes of any audience I know.

Thank you.

Ever. So we got Mike on your right, correct?

Yes.

And Al on your left, just so you know. And you guys are in fact brothers?

We are.

Yep.

Okay.

We are.

Awesome. Which one of us is older? Does anyone know?

Yeah, which one is older? Left or right?

Left.

That seemed like a harder question That's the answer that I was hoping. Mike's the older one.

Mike's the older one. Okay.

All right.

Well, actually, I have some numbers I want to start with. So start by telling us how many years older you are than Al.

3 years older.

Okay. That's good, because my next number is 5. 5 million, actually. And that is according to the latest— the last thing I could find, the number of foods that you have in your database that you have nutrition information on. The next number is 18 million. That is the quantity of venture capital that you guys raised. Is that correct?

That's correct.

Okay, in a single round. Um, and we can get into the details of this. 80 million is the number of users of MyFitnessPal that they were claiming when Under Armour acquired them almost exactly a year to the day, February 4th, 2015. So, like, it's, you know, 2, 3 more days until the anniversary of the announcement, at least. So, congratulations. 100 million is how many users you're saying you have now, correct?

Mm-hmm.

And 120 million is the number they were targeting at the time of the acquisition. I don't know if that meant— intended the combined number of users or what you're going to hit in the next year. It was a little unclear from the And then a number you guys are probably interested in is $475 million, which is the acquisition price reported.

That's correct.

That is the correct number. Okay. So that's a pretty remarkable arc, actually, for a company that raised a single round of VC. You actually got started long before you raised any money. So do you— why don't you tell us the story about how you got started? How MyFitnessPal got started and what it was like in the early days.

Yeah, I'll take that one. So, you know, when we started the company, it wasn't like we had some grand vision, this world-changing company that we were going to build. It all started because of my wedding, actually. So my wife and I were engaged, we were going to have a beach wedding, and we wanted to lose weight before the And so, you know, we went to see a trainer, and the trainer said, oh, if you want to lose weight, you got to track what you eat, you got to count your calories. And he gave us a little book. It was literally about this big. I think it had 3,000 foods in it. And, you know, we were supposed to write everything down that we were eating. And, you know, I'm a tech guy. I've worked in the Valley forever. I love technology. And so there's no way I was going to do this on pen and paper. So I literally took the book. I think— I don't think it I don't think it even made it out of the gym. I'm pretty sure I threw it in the trash.

The recycling bin.

Yeah. And then I looked for a website to help me do this. And at the time— so this will give you an idea of how old I am— Palm was mobile. So this was pre-iPhone. And I looked for a Palm OS app. And there were dozens of websites and apps that tried to help you do this. But they were all terrible. It was actually— there were They were hard to use. The UIs were terrible. They were— it was actually easier to just write it down on pen and paper. And so I was just looking for something to build really for fun. You know, my background's actually in sales and marketing, but I've been programming since I was 10 years old. I was just looking for something to build. And I thought, I'll build this. And that's how MyFitnessPal got started. It was just my own need. I ended up— you know, so I built this site.

Wait. What year was this?

This was in 2005, was when the site launched. So I built it myself. It had been a long time since I had programmed, so I was literally Googling everything. Like, how do you even list files in a directory? I was Googling that.

What did you build it in?

I built it in PHP.

Good. Everybody does that.

Yeah, yeah.

First time.

And so I finally got the site. I built it. I sent it out to a few friends and family, and I did a tiny bit of marketing around it. I think I was spending $20 a month on AdWords. And, you know, they— I got my first few users, and they loved it. You know, it's just simpler, it was cleaner to use. We did a lot of really simple things that even today people aren't doing. I don't understand why our competitors don't do this stuff. But like, you know, people eat the same things over and over again, right? So that was one feature that we launched. We just made it easy. We remembered what you ate most often and made it easy for you to re-add those. It was a great feature.

People loved it.

And still nobody's doing that. I don't know why. And so, you know, we started getting all these emails from our customers that they loved our product. And most importantly, they were losing— they were having success with it. I mean, I'd get these emails and they were amazing. They're amazing. There are people that have lost 50 pounds, 100 pounds. I think somebody on the site— we've had people, a lot of people actually have lost more than 200 pounds.

Wow.

And, you know, these emails are incredible. And that's really been the heart of the success of the company from day one, is people who have success with MyFitnessPal, love it, and tell other people about it. That's kind of, you know, even today that's still the core of what we do.

Now, I have a question. Did you get it done in time for your wedding?

I did not.

I did not. And how did you look in the beach photos?

I did lose 20 pounds for my wedding. So, like, look, if you track what you eat, it works. It definitely works. The hard part is sticking to it and making all those changes.

So tell us a little more about those early days. Like, you chose to build it in PHP. You had the skills. You were able to Google Did you Google what you needed? Where did you get the data for nutrition information?

Yeah, so when, you know, we have 5 million foods today, but we started with the USDA database, which had 7,000, I think. And, you know, we pretty quickly realized that that wasn't enough. And so that was one of the core innovations that we had, was we just started crowdsourcing the data. And we just, you know, everything that people were putting in, you know, my wife, My wife is the one that I credit with that suggestion, because I was debating it. Well, you know, if we let all these other people just submit this in, how are we going to quality control it? You know, what are we going to do there? And she said, well, I'd rather just have it than not have it as a user. And so I thought, huh, well, that's a pretty good way to look at it. And so we just decided to go for it. And, you know, that's definitely one of the real strengths of the company, is that we have so much food data. And now we do all kinds of cleaning and all kinds of deduplication, all those techniques. But back then, we didn't have any of that. And we still went for it. And it was a really key decision.

And it's still primarily crowdsourced?

That's right.

OK.

Well, the good thing is that you actually have a lot of time to work that out, right? Because when you first put that in place, the number of users that we actually had contributing was really small. You know, and now that you have 100 million people around the world who could potentially contribute to it, you need a lot more advanced, robust systems to handle that stuff. So the good news is you can put it out there, and like many things, you have enough time to actually work through what the issues are live with real customers.

Right. So you said at the beginning you were doing a very small amount of AdWords marketing. I mean, $25 a month?

$20 a month, you said?

Yeah, $20 a month, I think. $20? Okay. At what point— and then you started getting emails from people saying they loved it. At what point did you realize, like, oh my God, I've actually got something here that might be a business? Yeah.

So it was just a labor of love. I would work on it at nights and weekends. And one day, I was actually— I was working at a different startup at the time. And on a whim, I just said, ah, maybe I'll I wonder how much traffic MyFitnessPal is getting. I'll just check Google Analytics. And I looked, and I was totally surprised. MyFitnessPal was actually getting more traffic than the startup that I was working at. That's when I thought, you know, maybe we should actually spend some time on this. And so I called Al, and I said, Al, you gotta quit your job and start working on this with me. And that's when we decided to work on it full-time.

And how— Well, like, how old was the site at that point?

I think it was like 2 years old, something like that.

OK. So around 2007.

Yeah, 2008, I think, was the year that we both quit.

OK. And so it was still just a website at that point, is that right?

No mobile?

It was.

I mean, 2008, I don't think there were even any mobile apps until later in the year, right? There were.

There were.

But it was really early in the iPhone store, the App Store. So yeah, it was web only. But we knew that mobile would be big. So I used to work at Palm. And at Palm, always diet trackers were some of the most popular apps that were out there. And it's the perfect mobile use case. You want to track when you're eating. You don't want to have to remember everything that you ate, go sit back down at your computer and do that. And so when we started working on it full time, the first thing we focused on was building an iPhone app.

It was actually the first Apple commercial that featured an app was one of our primary competitors who had launched earlier than us on mobile. So they were actually the first diet and nutrition tracking product in the App Store.

Did you feel like you had missed the boat at that point? Or— because, I mean, that would be a big blow, right? Apple singles out a major competitor, and you sort of feel like they maybe Maybe they're going to win the land grab. Yeah.

I don't know if we felt like we missed the boat. I mean, like I said, we weren't even really aspiring at that point to build this massive company. We were just happy to kind of be in the game. And I remember we had a conversation with this friend of ours. We launched— we had the benefit of having this web install base. And so we had about 200,000 members by the time we launched our iPhone app on the web. And so we just emailed them. And instantly, our app shot up the charts. So we were, I think, top 10 in health and fitness, literally day one. And then we just sort of stuck from there and kept climbing. And I remember one time we said to Al, we said, man, if we could just get to number 5, that would be awesome. And then this friend of ours was like, number 5? Why don't you try to be number one? And honestly, it was such a stupid realization, but it was really powerful. We're like, of course, we should be number one. And that's when we started really going after it. And we just started— that was kind of the first time we started thinking bigger about what MyFitnessPal could really be.

Yeah.

And that's why eventually we ended up taking venture money. It took a while, I think, before we really saw the opportunity.

So years ago, I was talking to Bob Metcalfe, the inventor of Ethernet. He was a columnist at the time, technology pundit. And I got a chance to ask him how he got to where he was. And he said, well, what do you want to do? His goal at the time was to be the world's top technology pundit. And I was like, oh, I'd be happy to be the world's number 2 technology pundit. And he was like, that's your mistake right there. You have to aim for number one. That was a big thing for us at first.

They were ahead of us for a long time. It was actually from the time we ended up launching, which was in 2009, on the App Store, to the time that we eclipsed them for the number one position was probably over 2 years, right?

Yep. Cool. That takes some patience.

You really had to hang in there.

There are some points where you're like, man, can we really take these guys. But I think a lot of times for us, it always comes back to how— what do we think about the product?

Yeah.

And how do we look at the things that we expected we would be able to do versus what we were actually doing? And what was our confidence level that we could execute those things? And I think we always felt really good about our prospects as we were continuing to make the product better. And I think that, at least gave us a little faith that, like, hey, if we just keep doing this stuff, we'll get there.

Yeah. What was that— can I ask, what was that competitor that you were—

It's an app called Lose It.

Lose It? OK. And where are they now?

I don't know. Honestly, we don't really pay that— they're still pretty popular, but pretty far— they're probably growing 4 or 5 times slower than we are.

Way down the list. OK. Well, congratulations.

Thank you.

On getting to number 1. Had you guys worked together before?

No.

So what's the thought? I mean, your brother calls you up and says this crazy web—

We've worked together.

Yeah, OK.

Our mom's projects.

Yeah, cleaning, mowing the lawn. Right. So your brother calls you up and says, I think I might have something here with this website. Do you want to quit your job and come work with me? What's the—

You know, it's funny because I always tell people that, you know, the way that you just phrased that, it sounds so polite. You actually phrased it in the form of a question, which is not how it actually came through on the phone.

Oh, okay.

It was basically like, I've decided that I'm going to do this, and I don't want to do it by myself, so you are going to do it with me. So you need to just talk to your wife and make sure that she knows that you're going to be doing Big brother knows best. We'll start together on Monday.

And did that— you were convinced immediately?

Yeah, I mean, I think we'd obviously been talking about the product for many years before that. So I was really familiar with what it was and some of the challenges ahead of us. So I think it was— from that standpoint, it was easy to kind of wrap your head around, like, OK, do I really want to work on this thing? I think there was probably a little bit of apprehension about us being brothers and working together, but we've been really close for a lot of years.

I think it was really, really great to have a co-founder that you completely trust. That's one thing I know you guys are thinking about, some of the dilemmas that you'll face as entrepreneurs. It's definitely a hard road, right? There's a lot of things where it's really stressful. There were a lot of big decisions that we really struggled with, and it was so great to have a co-founder in the room with you that you could work through these problems with, that you respected, that you trusted. Being brothers, there was never for a single second any doubt about misalignments.

Right.

We never fought over equity or pay or whatever. There was no worry like, is this guy working hard enough or not? Like, we were really lucky that we had none of that. It was all about what is the best thing for the company. And, you know, so I think like, you know, in retrospect, man, that was really, really valuable to have.

Yeah, it's really enviable. How do your responsibilities break down? Like, what were you— Al, you're the— The chief— the CTO? Was that your—

I actually run a couple different groups in the company. Product, typical product management, analytics, design, and actually QA. But I think originally, when we first started out, the line was not so cleanly divided. One of the first things I actually came on board to do was to launch the mobile app.

OK.

So Mike was still doing a lot of development on the website. And we ended up— and this is kind of an interesting story, too. We ended up hiring a guy to help us do mobile development. And we could only afford to pay him 2 days a week. So we were making just enough money to pay him 2 days a week. So he actually had another job that he worked at 3 days a week. And then for 2 days a week, he was working with me on building Wow. And then we made a little bit more money, and we're like, can you work for us one more day? And then, you know—

3 days a week.

Yeah, we're like, 3 days a week. We just— our capacity increased by 50%. And so that was really how— where I was focused in the beginning. But I think it was a little bit of either one of us would just take whatever task was out there, depending on— You had bandwidth. I think you were lucky that—

In the beginning, you do everything, right?

Yeah.

You take out the trash.

Yeah.

So I was doing all the finance stuff. And luckily, I had a little bit of a background in that. We would split any other stuff. If we were doing any really minor marketing or PR. I remember, I think I took the first interview for the company. It was with Florida Senior Living. Which has a circulation of— a declining circulation, probably, which is kind of sad.

Probably not big to begin with.

Yeah, maybe 10,000 people. But we would just each do whatever was necessary in the beginning. But I think then it formalized, and Mike really became the CEO of the business. And we started to bring other people in, in executive roles over time.

Yeah. So fast forward a bit to when you, when you took that first and only VC round. Yeah. What was it that made you think, after all these years of bootstrapping and running on growth, right, that you needed to take outside money?

Yeah. Well, you know, it was a really big decision for us. So just to give you guys some perspective, we had been self-financed for 8 years at that point, growing like crazy, like millions and millions of dollars in revenue. And, and, and frankly, we had been chased by VCs. So we have like a really weird fundraising story where, you know, we weren't going out and trying to ask people for money, they were coming to us. I mean, we literally had VCs who would like knock on our door and just show up. And, you know, which is obviously like a great position to be in, but that was happening for years, and we kept saying no. We were really stressed about it, frankly, because, you know, we had a great thing going. We were making plenty of money, and we were worried that getting a VC involved would actually screw things up. And so, you know, but we got to know a lot of the firms, and, you know, the thing that I think really, you know, made us switch Our decision is that A, we really liked a lot of the VCs that we were working with, and we also realized that the opportunity was really, really big. You know, the more we thought about it, the more we saw how MyFitnessPal could really become the health platform, right? Which is a massive, massive, you know, $100 billion opportunity. If you're going after something like that, then you've got to have— you want to— if you're kind of trying to compete in the Olympics, you want to have like an Olympic-class coach, you want to have an Olympic-class team. And that's where— and you need resources to do all that. And that's really what swayed our decision. And, you know, in hindsight, I mean, it was one of the best decisions we ever made was actually going and doing that. You know, our partners, the funds we worked with were great. They added a ton of value. You know, they helped us recruit, they helped us with strategy. We got BD deals because of them. I mean, like, it was, it was a giant inflection point for us.

So just to back up a second, what was the business that you— you were making tons of money. How— like, what was the— what's the revenue engine in MyFitnessPal?

Yeah, we were, we were making money in the absolute dumbest and worst way possible, which was we were— it was all from banner ads, and it was all essentially AdSense. So we didn't have a direct sales team. We just didn't care about any of that stuff, because we knew that what we wanted— what we knew we had to do was build the best product and grow as fast as possible. But because we were self-financed, we needed to make money somehow. So we just did it in the easiest and simplest way possible.

Just slapped an AdSense code on the footer or header.

We just put stuff on the page and checks started rolling in. Yeah, I mean, the way we made it work was, you know, we just had massive scale with very low costs. I think at one point we had something north of 20 million users and we had 4 employees. And we just did the whole thing by ourselves.

Wow.

You know, it takes obviously the right team to do that. We had a couple guys that were just amazing. They could do everything from iOS development all the way to the backend. And you can also work really, really fast if you have people like that because literally there's no inter-team communication. It's all one person. Right?

And so, yeah.

So, I mean, really— well, it was really eye-opening. Today we have 100 people, and I don't know if we're going That much faster than when we were actually just 4 people.

Mm-hmm.

You know, that's one thing I think that was a little bit of a hard lesson to learn. I mean, we are definitely going faster. Don't get me wrong. We have an amazing team now. But it actually took a lot of— there was a lot of pain points along the way as we were scaling that team about how to actually work together. And, you know, we learned the hard way, I think, for a while what that took to be efficient.

It might not be 25 times faster than you were with 4 people, right?

Oh, definitely not.

So that's diminishing returns a bit. I kind of feel like what you said, massive scale with very low costs, like, you guys should put that on a sign and put it up here, because that is such a mantra of, like, that's such a great crystallization of a really successful internet business.

Yeah.

I think there's a really strong predisposition to want to answer problems by adding people.

Mm-hmm.

And so it's something you actually have to struggle with, particularly, I think— and this is the flip side of the fundraising— is, you know, for many years we're sitting here, it's like we've got our bank account that we're building through the revenue that we're, you know, we're kind of scratching to earn. And then you all of a sudden have $18 million in the bank. And, you know, I think there's a little bit of a freedom with that, which is great, which means you can think big about the opportunities you want to chase. But at the same time, I think it also starts to feel like, well, I can just spend money because I have it.

Yeah.

And so I think that's a really— that's something that I think was also a lesson. And it's funny, because I think when we talked to a lot of VCs beforehand, a lot of them were warning us of that effect. Going like, hey, you know, I think one thing that a lot of people love about this business is that you guys have been bootstrapping it for 8 years. And so it seems— it feels like there's a lot of operational discipline to how you think about spending money. But every single person that we know that's gotten money is like, the first thing they do is like, they just go out and start spending it right away.

Yeah.

And that's gonna happen to you. They said that.

And I remember we were like, no, no, that'll never happen.

We're immune to that. And I think when we looked at it, probably 6 to 9 months later, you're like, whoa, wait a second. All of a sudden, we had a lot more people.

And you're not talking about gold-plated ping pong tables. I mean, you're talking about hiring people that you think you need to solve a particular problem, right?

That's right. We just got really loose operationally. The first 6 months after we raised, we were going crazy. We went crazy hiring people. We weren't doing all the gold-plated stuff, but we were— and we wanted to be aggressive. So we probably spent the first 6 to 9 months overspending, and then the next 6 to 9 months kind of trying to unwind that, actually, and get back into the zone that we wanted to be in.

Who are your VCs?

Accel and Kleiner Perkins.

OK. So kind of blue ribbon.

Yeah.

You were able to pick the ones you wanted.

Yeah, we were really lucky.

OK, so then that was what, 2014 when you took that round?

2013.

2013. End of 2013, I think.

OK. And then at some point, you started talking to Under Armour, right? How did that come about?

They called us. We weren't looking to sell the company. You know, we were—we had a great business still. We were still growing like crazy, and they got—they connected to us through Kleiner Perkins. So Kleiner introduced us, and you know, they got on the phone with us and they said, "Hey, you know, would you guys think about, you know, selling the company to us?" And we said, "No." You know, we don't want to sell. We're—we're having fun. We love what we're doing.

We think.

It's a really big business.

And they said, well, you know, why don't you just come out and meet our CEO? You know, like, come out and just check out Under Armour. And I talked to Al about it. I'm like, okay, we'll go check it out, right? And, you know, we figured, like, worst case we'd get, like, some kind of business development, some kind of partnership deal. So we flew out there, and I got to say, we were actually blown away. Under Armour was a huge company. Under Armour is a really fascinating— it's like a 10,000-person startup, right? Like, it's super fast, super aggressive. The brand is amazing. It's just the more we learned about the company, the more we thought, you know, this actually might be a lot more interesting than we thought it would be. So they kind of— they know how to wine and dine you, I guess. So slowly, as we kept talking, they kind of convinced us that it would be a good fit. And then we just had to get to— once we thought that, OK, this is actually something that we would want to do, that our team would be happy with, et cetera, then it was just about the price.

So what's it like now that you're inside this 10,000-person company? How are things? How have things changed?

Well, as a CEO and entrepreneur, it's a really interesting learning experience. You know, first, I definitely understand why most acquisitions fail. It's really hard. It's really hard to take a team, you know, you have your own culture, your way of doing things, and then all of a sudden be part of another organization, right? Like most of you, you know, when you have a job, you get to pick what company you're working at. So you spend a lot of time thinking about, are these the people I want to work with? Is this the place I want to work with? You know, when you get acquired, all of a sudden, like, you're at a new place, and they have new culture, new processes. You know, that's really hard. Like, it's all the people issues that are really tricky. In our case, it's actually worked really well. You know, Under Armour— part of the reason we even did the deal is because we thought the cultures were similar. And, you know, it's been like we've had very little attrition. You know, it's It's been actually, we've been really happy with how things are going. It's just a fun place to work. Like if you like sports at all, I don't know how many of you guys are sports fans, but like you're constantly hanging out with like Cam Newton and, you know, all these Tom Brady or whatever, right? Steph Curry is like an Under Armour athlete. And so it makes it kind of, you know, and the people are really, they're smart, they're aggressive, they're motivated. You know, it's a good fit for us. us. You know, we wanted to go— another thing we thought about was like we didn't want to sell to like Google or Apple, mainly because we wanted to go to a place where we would matter, right? Not that— there's nothing wrong with Google and Apple, like they're obviously amazing companies, but we would just be one small part of what they're trying to do. You know, we wanted to go to a place where we mattered, and, you know, we definitely matter at Under Armour. You know, the CEO really is like a huge believe in connected fitness, really cares about what we're doing, you know, we can have an impact there. That's what, that's what we get excited about.

That's really interesting. Under Armour has a huge brand too. It seems like it's really come up in the last couple years. Yeah, it's a really, really strong brand in a very interesting way. Athletics and lifestyle. Yeah, that logo is everywhere.

Yeah, yeah, right. Yeah, I think that's actually been all also a pretty interesting learning experience. Because I think if you look at a typical Silicon Valley company, the amount of energy they're spending and mindshare they're spending thinking about brand as a piece of the company is a lot smaller versus Under Armour, where a lot of what we do is about our brand and how we continue to build it. And so just seeing all of the small things that go into that, and the level of detail, and how much attention they spend thinking about every aspect, everything that touches the brand, it's actually been kind of eye-opening to us. Because we're guys that were using the first logo that was designed in 2005 for $100. We have a name that was the domain that was available when we wanted it. In comparison to them, it's pretty amazing.

Wow. OK, so are you guys going to have a Super Bowl ad this coming Sunday?

I don't think so, actually. So that's another thing about Under Armour, too, is they're really scrappy. So you think Under Armour is this multibillion-dollar company. But our marketing budget compared to Nike is tiny. All these guys, these athletes that we have, It was kind of a buy-low strategy. We signed Steph Curry way before he became a hot star. Jordan Spieth, same thing, way long before he won the Masters. So in the same way, when we spend dollars on TV advertising, it's not Super Bowl ads. It's kind of very strategic. One of the things that Under Armour does is they sign catchers in baseball, because if you watch television, Broadcasts, where who's the player on the field that you look at the most? It's the catcher, right? And the catcher that that Under Armour logo is on TV, you know, quite a long time.

I bet they're relatively affordable too because catchers don't tend to be big heroes, big stars. Okay, Draper, do you guys have questions for these gentlemen? There's one in back right there.

I've got a question about your brand like internationally.

So you're quite well known in the UK. But Under Armour is like a very sort of small, not very well-known brand. Yeah. So I was wondering how— obviously Under Armour is very prominent in the US. Yep. Internationally, how is that working out? Yeah. So Under Armour is growing incredibly fast internationally. But you're right. It's certainly a lot less well-known than in the US. And one of the, I think, ideas behind the connected fitness strategy is that MyFitnessPal is probably more well-known in the UK than Under Armour is. And so part of what we're trying to figure out is how do we introduce our community to Under Armour? Again, with everything that we've learned about brand, that's actually not a simple thing. It's not like just sticking a logo on your app. You want to do it in a really thoughtful way so that the customer has these really positive associations with Under Armour. Under Armour is not the company that ruined the app. It's got to be the company that is bringing you a lot more value. How do we introduce the brand in the right way? So yeah, that's part of the strategy.

I think that's actually a lot of why— when you look at the acquisition and how it makes sense for Under Armour, one of the things that Kevin talks about all the time is, in Under Armour's future, they believe that their first contact with a lot of future customers is going to be a digital contact, not a physical contact. And so, you know, companies like MyFitnessPal or our product is a way to really extend our ability to have that first kind of digital handshake with customers.

More questions? Right there.

Over your time since 2005, can you tell us about your time at Yahoo?

Make a decision and really challenge your values.

Challenge our values, yeah. So business model, I think, is one of the biggest, right? So look, especially as a self-financed company, there is a lot of pressure to make money, and there's a lot of ways that we can make money that would not be very well aligned with our customer, right? So one example is selling data. Man, we had so many people that wanted to buy our data, and we kept saying no. I think one of the things that I think we did right was we really tried to make sure, especially as the team scales, it's really important for the company to know what your values are. And values are actually— they're not— the way I think that we try to think about it, they're actually like these are are strategic for your business. Like, we chose values that we think help our business succeed, right? One of them is when our customers succeed, we succeed, right? So like, what we really want— wanted the whole team to focus on was how do we help our customers become more successful at reaching their health and fitness goals, right? If you do that, then if you have a product that works and that people love, Then everything else is easier, right? It's easier to grow, it's easier to make money, it's easier to do all those things if people love your product, right? And so, you know, when we created that value, you know, that really helped us along with a lot of these decisions because something like, you know, hey, we can make money this way. Well, you know what? Like, that doesn't align with that value. It's actually like bad for the customer because then they don't trust us with their data, then they won't give it to us. Yeah. Then we can't help them succeed. So, you know, I think like finding that alignment is really powerful. If you can do that, everything gets a lot simpler and a lot easier. Simplicity is another thing that is like really, really helpful. You know, another thing that we've found is like the less complex our business is, right, the more focus we had. You know, things like you ideally want one revenue You don't want like 10 revenue streams. You want one revenue stream that you think could be really, really big, right? And, you know, like when we set goals for the company, you know, we've struggled with this too. Like, we would really like to have one goal, right? We have 100 people and we want one goal that the entire team is thinking about. That would be ideal to us. We got it down to 3 and we're unhappy, right? You know, you would think like 100 people, you can do all these things, but you can't, right? Like, you— and especially as a small startup, like, you guys definitely should have one goal, like, and know what that is. What's the most important thing in your business right now to help you succeed? And do only that and nothing else. That focus is really, really powerful.

Is your business model still advertising?

Based? So I said that you would love to have one business model, and that's, I think, from pain that we are feeling because we have a lot more than one business model. You know, like, we— so we have a subscription business where— and that's actually the way that we would really like to make the bulk of our revenue, right? It's where people are paying us because they love our product and it's providing value to them. But we still have a really big ads business. We're also looking at how we can drive conversion, shirts and shoes sales for Under Armour. So unfortunately, with the reality of our business, there's a lot of things that we're having to tackle. But we keep looking at, well, how can we get really this down to one?

I think if you identify the right kind of business model, the benefit you get is that you have this It's really tight alignment between the things that you're doing to grow and the things that you're doing to make money. I think there are actually a lot of circumstances where those things are actually different, which means that essentially you need twice as much effort, because you're doing one thing to grow and you're doing another thing to actually make money from that growth.

Yeah.

That's something I think is another thing that you have to really examine as you think about business models for the company. What is that thing where once that's in place, all I have to do is keep trying to get people to use my product, and the money's going to come in?

I would also challenge you on that a little bit, because advertising is a tricky business model, because it creates 2 divergent sets of customers. You have the people who are using your app, and then you have the people who are actually paying you to run ads in your app. Or on your site. And very often, those have very different interests. Like, the advertisers want data. They want tracking pixels. They want as many ads as possible. They want to say whatever they want. You don't necessarily want that for your customers, right?

That's right. That's right. No, that's been a struggle for us. As an example, a lot of the advertisers that want to advertise in our app are companies where their foods are not really that healthy, but they kind of want to be associated with a healthy brand. Yeah. And, you know, how do you decide? We don't do it, right? Um, that's another— it's hard. Like, the hardest— there's definitely ones that are clear nos, right? Um, then there are others where, like, it starts to get a little fuzzy. And so we're like, okay, some of their stuff is healthy, some of it is not. So we actually have, like, guidelines that we've set where in certain parts of the app where the relationship is much more at arm's length, then we'll allow those advertisers in. In other places where we're endorsing them, so something like sponsored content or something like that, we won't allow those advertisers in there.

Mm-hmm.

But to your point, it's got to stay aligned with the customer. Ultimately, everything depends on your customer. If your customer isn't happy using your product, then you're only making short-term gains. In the long run, your business is going to fail if customers don't love your product.

Yeah. Yes?

What's the plan for My Business Mall after being acquired by Under Armour? Are you going to keep working on developing the app, or are you going to just quickly jump onto another one similar to Nike Plus or Nike Fitness?

So I can't talk too much about our product plans, but I can tell you that, you know, one of the things that we really liked about Under Armour is they had actually a very clear mission too, which is to make athletes better, which actually is really close. And they think of athletes very broadly, like everybody in this room is an athlete to Under Armour, right? And so, you know, that mission is very well aligned with ours. So we have a lot of, again, product ideas around how we can do that. And that's how we try to start every conversation, right, or every strategic direction. It's about first start with the customer. What does the customer need? What can we build to help serve the customer? Once you have that, then you can figure out business model, you can figure out marketing strategy, all that kind of stuff. But like, again, at the end of the day, if the customer doesn't like your product, it's really hard to sell it, grow, whatever, right? So that's— I think that's a great point. That's kind of everything. Everything comes from that.

Hi, I'm Thabang from Johannesburg, South Africa.

And I just wanted to find out, when you are looking for ambassadors for your company, or when you did, what is it that you are looking for them to add value to your company outside obviously having a large audience? Ambassadors for a company. You mean like employees that we would have? Well, people in the— like professional athletes who are endorsing your company. So obviously they must have a great reach, but what value are they adding to your company? What exactly are you looking for?

So put it another way, if they were to send a proposal to you, what would you be expecting to see inside of that proposal?

Yeah, you know, that's where I think the burden brand really comes in, right? So like, if you look at all the athletes that Under Armour has signed, they're really good people. They actually have like a personality that is the right fit. You know, like Jordan Spieth, I don't know how much— how many of you guys are golfers, but like this guy is like one of the most down-to-earth, like just super hardworking, super focused, not arrogant, right?

And like maybe Misty is even a better example.

Yeah, Misty Copeland is another one, the ballerina. Every one of these guys, Steph Curry, same way, right? You know, I think, I think, you know, obviously there's, you know, how popular the athlete is. Is it in a sport that we care about? Not that we care about, that's like a priority for us, right? You know, their skill set on the field. But then, you know, at the end of the day, that's That, that, are they a good fit with our brand, you know, really matters. There's an image that Under Armour really wants to portray, that Under Armour is about, and they have to align with that.

Yes.

I'm Jason. I'm going to ask some more fundamental questions. I think that you guys really nailed it when you guys launched the product, and that's like just building a great product. But nevertheless, there's going to be some types of flaws in your product, and I'm really curious of how you guys like how you guys have found out like some of those flaws that you can make your product better that you use like call your customers that you because they don't your product don't mix paddleball didn't exist back then right yeah so it's probably harder for you guys to like know what exactly you're missing like from some of the features that you guys are missing yeah. Yeah, there's a lot of things. So I think what Mike was saying earlier about really understanding, from a value standpoint, what drives your business, and that idea that, for us, since we did no paid marketing, essentially, for the first— I don't know— forever.

I don't think we— After that $20 a month in AdWords, we stopped. And we literally have done $0 in marketing since.

But this idea of customer success being the real driver of the business, it actually changed how we thought about, well, how do we understand what that means and how do we make sure that we are attentive to what the customers need? One of the things that we did early on is we actually hired a customer support person as one of the first 7 people or 6 people in the entire company. I don't think that would have been something that other companies would have invested into at that point, but primarily because we wanted someone great who was obviously out there listening to customers. And we certainly wanted someone who could turn customers who may or may not be having problems with our product into advocates for the product. And customer support can really do that if it's done well.

Yeah.

The other thing is we actually spent a lot of time ourselves. Like, I'll be honest, I probably answered— I used to spend 2 to 3 hours day answering customer email myself. For probably 3 years I did that.

Yeah.

It was one of the first things I would do in the mornings. I would just sit there and I'd go through all the things that customers would write us about. But it gives you a ton of insight into what are the challenges they have, what are the problems that they're seeing. And I think the big advice from a product perspective is to always think of it that way, because a lot of times customers will actually write in And they will try to provide solutions, but what you're really trying to understand is the problem, and it's your job to think about, like, well, how do I effectively solve that problem in the product?

Yeah. They're really good at telling you what the problems are. They really suck at telling you what the solutions are. That's your job, right, is to come up with the right solution. But yeah, even today, we still have everybody at the company answer customer service emails, at least At least once or twice a year, they have to do that. You've got to stay in touch with your customer.

We have another thing that we did that was actually really awesome is we created these— essentially, we would have every quarter maybe 3 or 4 of our customers come in. And they'd actually talk to our whole company about their experiences using the product. And we might actually, from Each session, we might actually focus in on a particular area. So one was people who had lost more than 100 pounds. What were the ways they were using the product? What were the things they found hard about it? How did they even feel as they were using it? To people who were once top-level college athletes, and what is their experience like? And it's funny, because part of it is getting feedback about the product, but a lot of it is just making sure that everyone in the company feels really connected to the customer. So it's less about the specifics of that dialogue, because you're only talking to 3 or 4 customers at that point, of many millions of them that are out there. But just really galvanizing the fact that there are real people using the product, and you always need to be thinking about them.

We spend a lot of effort trying to bring the team close to the customer. So every single conference room that we have has an actual customer quote is on the wall, right, in big letters. We have— we do these user panels. We're actually doing one this week. So we have, like, a bunch of users coming in to talk to us. When we make decisions, we think about— and we make sure the team knows that we're thinking about the customer, what's best for the customer, right? And we have, like, these pillows with before and after pictures from all our customers. Like, everything— I don't know, again, if you—

I pick think that's a great point.

your values right, they're things that you live and breathe every day. They have to be things that matter to you as a founder, that you want to matter to your team, and then you have to make them matter.

Totally.

And so that's a lot of what we did. There's stuff like we thought in the beginning, when we were trying to figure out values, people were suggesting honesty and integrity, and we were like, oh my God, if we have to put those as values down, like, we're screwed, right? Like, your company is screwed if you have to tell people that they have to be honest, right? Like, that should be obvious, right? You know, so we just cut all that crap, right? And we figured out, like, what are the only things that we want people to think about? Like, you know, we had, like, a list of, like, 20 things or something like that. We ended up with 3. So those 3 things are, we're in a customer success business. If they succeed, we succeed. And, you know, speed— our team is everything. That's another value for us. And then we go fast. That's another one, right?

That sounds like the same thing.

Yeah. Yeah. Cool. But like, you know, speed is another one. Like, you got to go fast. A lot of these markets that people are going— you guys are all going to go after, they're winner-take-all.

So if you're not first, if you're not I think some good advice that we got around thinking about values, there was 2 things that I thought were really good. One is, like, I think to the question that was asked earlier, you want to think really hard about what you would not do if this was something that you valued. And that's actually like a way to test if you actually have selected a good value is to figure out if there's a hard choice and what the decision would actually be.

Mm-hmm.

And so I thought that was actually a really helpful piece of advice that someone had given us. I think the other thing to really think about here is, like— and this is really important to the people in this room— is, like, as the founders of these companies, no matter what you choose, like, a lot of what's going to happen is, like, people are going to follow your lead. So it doesn't really matter what you say, right? It's not like words you put in a frame and you stick on the wall. It's really about, like, well, how do you act? Are you somebody that, like, emphasizes speed in what you're doing? Like, are you always being— thinking about the team above the individual?

Yeah.

And, you know, if you're not actually able to really be an example of those values in the business, then, like, they're the wrong values for you, for sure.

Sure, right.

There was another question over here, I think.

Yeah, what's the biggest challenge that you're facing right now? Our biggest challenge right now is actually focus. So the— one of the things that we, you know, when we were thinking about doing the deal is, oh, you know, it'll be great, we won't have to raise money anymore, we'll have all these resources from a big company. And that's been true. We don't have to raise money anymore. And they have put a lot of resources into the company. But what we didn't realize is that we've probably got like 30%, 40% bigger team already. But we have twice as much work. Because we have all these projects now that we have to do that we didn't have to do before. We didn't have to think about how we built the brand on Under Armour brand inside of our communities. We didn't have to think about how we were going to sell shirts and shoes. We didn't have to think about how we're going to integrate our systems with Under Armour systems. And so there's just a lot that has to get done, which has really again forced us, and this actually we welcome, to really prioritize. You know, a lot of what we've been doing, so we set up like all these goals and we thought, well, we need projects that achieve all 3 goals. It can't achieve just one. We need all the things that actually do everything. But it's just hard. It means that you have to be really good. We're trying, but it's a challenge.

We also basically went public. That's the thing that happens when you're a little private company, but you get absorbed into a public company. You have to work on that company's cadence, so the results that that they're looking at from us, it's like we have to deliver those quarter to quarter, just like the rest of the company. And from an operational perspective, it's a really big difference.

Sure.

Because as entrepreneurs, you're just concerned about cash in the bank, for example, being a very important thing that you're looking at. But that doesn't matter necessarily in the scope of Under Armour. It's how are we affecting revenue? How are we affecting the metrics that we talk to the Street about? So I think that's actually been a lot of work to figure out how to be a part of a public company.

There's a question right there. You.

On a day-to-day basis, what do you enjoy most about the work that you do?

What do you enjoy most?

Well, I think when people ask me about what I was excited about when Mike and I first started doing this, and I don't know if this speaks like the experiences of people in this room and wanting to be an entrepreneur is it wasn't about like, oh man, someday I'm gonna be— we're gonna make it, we're gonna be just flying around in private jets, just living the life and hanging out with Richard Branson on Necker Island.

No doubt.

But I think the one thing, and I think this is something that's really easy to take for granted when you're starting a company. You have this amazing ability to shape this thing, to actually choose the people that you want to work with. I think to this day, it's still the thing that I just love. I look at our company and I know that we played a part in all of the hundreds of people that are actually working there today. The values we chose, the culture that we decided to build, and how that shaped who actually entered in here. And so something that's like you feel super proud about. It's a really big privilege, I think, as an entrepreneur to have that ability to do that.

Mm-hmm.

So taking that seriously is actually something that I think you really need to do. But for me, I feel like that's still the thing. Like, even more than the 100 million users or whatever, it's like, man, this company, sometimes stuff happens where you're just like— like we were going through a recruiting process for a person, and we like— I hadn't been involved directly, like I hadn't recruited anyone specifically to work for me for a little while. And seeing like how the process worked and how amazing it was and how much effort had gone into it and how thoughtful the people were about like, how do we make sure this person is the right fit for our culture? Like, how do we know that they have the right skill set? It just like fills you with pride because you're like, man, I had nothing to do with this. Like, I literally didn't do a thing and this thing is amazing.

Yeah. Like, it's really hard to get a job at MyFitnessPal, which is exactly how we want it.

This actually leads to a question that I wanted to ask because, Mike, you talked earlier about how amazing that team was, especially the early days when you had just 4 people. They were just incredibly productive. Can you say a little bit about how you recruit and how you make sure you guys get really excellent people?

Sure. Well, along those lines, when you choose your values, like we were saying, they can't be just things that you write down. You have to live them. And so one of our values is our team is everything. And so we really blew that out and said, well, what does that mean? Right? So we put a lot of thought in the recruiting process. So we have very— we decide— we run a very rigorous recruiting process where we know exactly what we're screening for. Each person in the interview loop has an assignment on which area that they're supposed to explore. We make everybody go through a simulation. That's another thing that we do. So like what we found when we're trying to assess people is there's nothing like actually doing the work. So like I just hired an admin, for example. And so the team came up with a simulation for that position where they had to actually plan a trip for me. Here's the— they gave her like a sample itinerary, like very light, and like an actual work case where— and then they had to go out and figure out. And if they didn't ask questions like, well, where do they want to sit, or, you know, You know, like prefer window or aisle. I don't know, it's like, it seems like small things, but like that, it actually was incredibly revealing, right, of how somebody would think about this. You think for like any position at the company we do that— business development, product management, all that stuff, right?

All the way up to the executive level too. Yep, exactly, exactly.

When we hired our VPs, we had them do simulations. It was really, really revealing. Then, you know, we took We continue to carry that through. So the interview process, we you know we try to run even things like are they welcomed at the door when candidates come in? Is everybody on time, right? So that do we get offers out quickly? Are we competitive on comp? And then even more important is once that once you find these people who are incredibly hard to find, right? It's ridiculously competitive out in the market, right? So and we're trying to hire the best of the best. Everybody wants to hire those people, right? So we have to compete against Airbnb and Dropbox and Google and all these guys, right? So, you know, once we finally find those people, like, how do we make sure they're happy? Because the last thing you want when you hire somebody great like that is to have them leave, right? So we think about onboarding. Like, day one, we script out that whole experience. Like, you know, make sure that the first hour they have a meeting with their manager, that their manager knows, like, has laid out for them, like, a welcome, walks them around the office. We have a welcome lunch. We have a card that everybody signs. We have, like, a welcome basket of UA gear, right? Like, thinking about all that. And then, you know, of course, ongoing, are we developing people? Are they happy? Do we have a great culture? Like, everything. We think about all of that beginning to end, right? Because that is one of the— The most important thing. the 3 things that we care about and we want to be great at. That's kind of how we thought about it. Another way we thought about our values too is like, can we choose things where we could never be good enough? We can never have a good enough team. We knew that. And so we can always be better at it. We want to be infinitely good at having the best team. Amazon kind of does this. They have price, Price, selection, and convenience. You can never have low enough prices. You can never have enough selection. You can never be convenient enough, right? But they just keep pushing, right? That's why these friggin' drones might be delivering things, right? Yeah, but it's like a really interesting way to think about your business, right? Like, we could never— our customers can never be successful enough. Like, we can never be good enough at helping our customers succeed.

Yeah.

And we can never go fast enough. We always want to go faster.

One small thing I would add about recruiting is like— and this is another thing that I think as a founder is really important to keep in mind— is like sometimes it doesn't take that much to be the difference between really showing somebody that you want them on your team. Maybe it's like a note from Mike, or maybe it's Maybe it's like a note, or maybe it's like an offer to just like take them out to dinner, spend some time with them. Like, one thing that I think I have seen, especially being a part of Under Armour now, is like, man, when we want someone, like, we do not let them go. Like, when we— if we want Steph Curry, we're gonna make sure that like every little i is dotted and every t is crossed and that we have done everything possible And so I think that's something within your control as the founder. It's like a lot of things, how much money you can offer and all those, that's like there's going to be a market for that and they're going to figure it out. But all these other little things, are you doing that stuff? I think that can be the difference maker. I know that we spent a lot of time with people in the early days.

Yeah.

And it was something that we had to really invest in and think about. I think, you know, I just wouldn't take it for granted that you could get an edge by doing those things when you're recruiting, especially when you're small.

I think we have time for like 2 more questions.

I would like to ask you about the fitness industry trends. So if somebody were to start a new fitness company that takes advantage of great technology, smart textiles, and really strong branding, what would be the one thing What is one thing that you would recommend them to focus on the most? What would be the one consumer trend that you think needs a lot of attention in the next 5 years?

Oh man, that's a hard question. I mean, there's, there's some stuff that like we can't really talk about, right? Because obviously like we're thinking pretty hard about that question, right? I'm trying to think like what we can Well, I would just say, like—

and I think this is really where it all starts, whether it's Under Armour or at MyFitnessPal. And one of the reasons why I think, once again, we felt like we could be a part of Under Armour and would be happy is, like, are you delivering the right product? So if you look at the future of whether it's wearable technology or anything, the big gripe about the stuff today is, what value does it actually deliver to me as a customer. And so even at Under Armour, it's like, whatever we care about with the brand, if we can't fulfill that with the product that we actually put in the stores, then it's not worth whatever we're saying and however much money we're spending on it. And so I think, to me, when I look at the future of some of this stuff, if you want to have smart apparel, it's like, be focused. Make sure that you're actually delivering something singular of value first. Because it's also really easy to think about, well, it does X, Y, Z, A, B, and C. It's like, well, does it do any of those things really well? And so that would be my advice, is be really focused on product. I think that's another thing that we've learned from dealing with Kevin Plank, who's 20 years in, CEO of this giant business. He thinks a lot about product. He talks a lot about, like, hey, you know what we do? We spend a lot of time trying to find the right fabrics, like, trying to figure out what the problems that our customers are having, like, coming up with the right design, thinking about all of that stuff. And at the end, when we know it's right, that's when we put our logo on it. That's when we know it's ready. So, you know, we think about that a lot.

Yeah. I would definitely think, like, another piece of advice for you guys would be. Find— you got to start with a customer problem, right? And you're trying to build something that, even if it's just a few people, they love, right? It can't be something where, like, it's pretty good for a lot of people. Like, you need something that people love, right? Even if it's just a small group. So, like, when we're thinking about fabrics and all that kind of stuff, it's like, what's the problem that the customer has? And like, how can we solve it? And we don't actually go in with an idea in mind around like, it has to be a fabric. Like, we don't— if it's not a fabric, fine, right? Like, the most important thing is solve the customer problem. So like, you really gotta understand that problem and then, you know, nail it on the solution. If they love it, then you got something.

Well, that's a great note to end on. And I just— somebody was waving a sign at me saying that We need to wrap it up, so I'm— I think we'll need to wrap it up there. I just want to thank you both for taking the time to come and speak with us. It's been a really interesting, insightful discussion, I think, and a privilege to be able to speak with you. And congratulations on all your success and good luck.

Thank you.