WEBVTT - Affirm CEO on Investing, ClassPass CEO on Live Streaming 0:00:00.160 --> 0:00:03.760 This is Bloomberg Business Week with Carol Masser and Jason 0:00:03.840 --> 0:00:07.120 Kelly on Bloomberg Radio. We've been looking forward to this 0:00:07.160 --> 0:00:09.879 conversation because when it comes to understanding the startup world, 0:00:09.920 --> 0:00:12.280 how online and tech are reinventing so much of what 0:00:12.280 --> 0:00:14.200 we do and how we do it, this next guest 0:00:14.280 --> 0:00:17.599 definitely comes to mind. Co founder of PayPal, was CTO 0:00:17.680 --> 0:00:19.800 of the company, was chairman of Yell for about eleven 0:00:19.920 --> 0:00:22.360 years from its founding days. Was on Ya, who's board 0:00:22.680 --> 0:00:25.120 founder and CEO of Slide, which was sold to Google. 0:00:25.120 --> 0:00:27.880 We're talking about Max Levchin, who today is founder and 0:00:27.920 --> 0:00:30.880 CEO of a firm. He joins us on the phone 0:00:30.880 --> 0:00:33.760 from San Francisco. Max, delighted to have you here with us. 0:00:33.800 --> 0:00:35.760 First of all, tell us a little bit about how 0:00:35.800 --> 0:00:41.640 you're doing, your family, your employees. How's everything going? Great? 0:00:41.760 --> 0:00:44.279 Great to be with you. Thank you. You know, I 0:00:44.280 --> 0:00:47.560 have to say, knocking on woods, we've been extremely lucky 0:00:48.120 --> 0:00:53.240 a firm transitioning to our from home seamlessly, almost almost perfectly, really, 0:00:53.320 --> 0:00:57.279 and we've been able to support our partners and our 0:00:57.280 --> 0:01:02.280 customers and our employees throughout this fross us generally without 0:01:02.360 --> 0:01:05.399 too many crazy fire drills. So I'll then I feel 0:01:05.480 --> 0:01:08.440 very lucky and certainly aware of companies where those sorts 0:01:08.440 --> 0:01:10.640 of people already took place, And you know, I think 0:01:10.680 --> 0:01:13.600 some of this is just getting started too well. And Max, 0:01:13.600 --> 0:01:15.920 it's interesting. I mean, it comes at a fascinating time 0:01:15.920 --> 0:01:19.000 for you where there's so much momentum around what you're 0:01:19.040 --> 0:01:22.600 doing at a firm and you have this pretty incredible 0:01:23.200 --> 0:01:27.920 window into consumer spending. First of all, remind us exactly 0:01:27.959 --> 0:01:30.479 how a firm works, and then we'll get into sort 0:01:30.520 --> 0:01:34.199 of what you're seeing through some of that data. Sure, 0:01:34.680 --> 0:01:38.280 a firm serves primarily a young, younger audience, as in 0:01:38.319 --> 0:01:41.360 our customers are primarily millennials and Gen xtas and so forth, 0:01:41.680 --> 0:01:44.600 and we're really a credit card alternative. You would find 0:01:44.600 --> 0:01:47.240 this if you're buying a Peloton or shopping at Walmart 0:01:47.240 --> 0:01:51.200 dot com and really every fortuna between. We are there 0:01:51.200 --> 0:01:54.600 in the checkout page, sometimes on the product age where 0:01:55.160 --> 0:01:57.680 if you don't use your credit card and would like 0:01:57.760 --> 0:02:01.640 to pay for an item or I am time with 0:02:01.760 --> 0:02:06.080 a great degree of simplicity. Everything is clearly priced, there 0:02:06.120 --> 0:02:07.680 are no feed of any kind. They're not even a 0:02:07.760 --> 0:02:09.760 late fees. So it's a product that really built on 0:02:09.800 --> 0:02:12.720 this idea that if we communicate very clearly to our 0:02:12.720 --> 0:02:15.840 customers what it takes to pay something over time, they 0:02:15.840 --> 0:02:18.160 would choose us over credit cards and work at it 0:02:18.200 --> 0:02:20.600 for eight years. At this point, we have many thousands 0:02:20.639 --> 0:02:22.519 of merchants that work with us, and many, many, many 0:02:22.520 --> 0:02:26.040 millions of customers billable dollars these transactions that we processed, 0:02:26.120 --> 0:02:30.639 and so we do see demand in retail, primarily online, 0:02:30.639 --> 0:02:32.800 although we have a meaningful presence of offline as well, 0:02:33.400 --> 0:02:36.600 And so you're right, we have some some fascinating status 0:02:36.600 --> 0:02:40.080 for reserving. Well, let's get into that. Tell us about 0:02:40.080 --> 0:02:41.800 because you know, Jason and I have talked about just 0:02:42.000 --> 0:02:44.160 kind of on our own world what we're spending money 0:02:44.200 --> 0:02:46.600 on right now, and earlier we talked about, you know 0:02:46.720 --> 0:02:50.360 that millennials in particular might stop with all the experiences 0:02:50.400 --> 0:02:52.080 and they're gonna be spending on their home and other 0:02:52.120 --> 0:02:54.280 things because that's going to be the world we're living 0:02:54.280 --> 0:02:56.200 with and and you're not gonna be able to travel easily. 0:02:56.440 --> 0:02:57.880 What are some of the data points that you guys 0:02:57.880 --> 0:03:01.000 are seeing about where people are spending their money, right Yeah, 0:03:01.480 --> 0:03:03.040 so you pretty much nabled it to have to say 0:03:03.040 --> 0:03:07.079 I think that the headline is exactly right, millennials, and 0:03:07.160 --> 0:03:09.040 we're not just starting monials like many of our customers 0:03:09.080 --> 0:03:11.320 are so on the younger side. But everyone has sort 0:03:11.320 --> 0:03:14.240 of turned inwards. So if you are setting up your 0:03:14.280 --> 0:03:17.960 home office, your home jim, your home restaurants, or your 0:03:18.000 --> 0:03:20.320 at least the kitchens part of your home restaurant, that 0:03:20.760 --> 0:03:23.000 is growing off the charts. So just give you some 0:03:23.120 --> 0:03:26.320 stats of office sales that we are processing. Is up 0:03:27.480 --> 0:03:31.640 um overall homewears from mattressists, furniture to the decoration, you know, 0:03:31.919 --> 0:03:34.240 everything that you might have once you have to make 0:03:34.280 --> 0:03:37.760 your home nicer, you ab, but there's some segments that 0:03:37.800 --> 0:03:41.600 are just incredibly high demand right now. So the kitchen supplies, 0:03:41.640 --> 0:03:45.680 for example, are up. Apparently everyone has to baker and 0:03:45.720 --> 0:03:49.640 make their photo starters, and so sure enough, there's lots 0:03:49.640 --> 0:03:51.520 and lots of things that you need for that, including breadmakers, 0:03:51.560 --> 0:03:55.320 which is one of the top categories apparently, uh of fitness. 0:03:55.360 --> 0:03:56.800 You know, as you bake you need to burn the 0:03:56.880 --> 0:04:00.520 calorie suit, so across the board, you know. Obviously, Peloton 0:04:00.800 --> 0:04:03.640 is a one of the policy traded companies that that's 0:04:03.680 --> 0:04:06.720 not extordinarly well in that category with Mirror an tonal 0:04:06.800 --> 0:04:09.000 and all these other merchant partners of ours are all 0:04:09.120 --> 0:04:12.040 reporting huge growth the overall categories of the hundred and six, 0:04:12.960 --> 0:04:15.320 which is you know that that's an incredible growth. Give 0:04:15.360 --> 0:04:18.680 then how big it already is? Um. I can sort 0:04:18.720 --> 0:04:21.320 of go on on on the sort of the losers 0:04:21.320 --> 0:04:26.560 on the other side, or portioned ones are also quite predictable. Um, clothing, 0:04:26.720 --> 0:04:28.280 you know that we need to wear pants on zoom, 0:04:28.279 --> 0:04:32.160 and so most you know what most people seem to 0:04:32.160 --> 0:04:36.920 be not shopping for for fashion? Um Uh, there's actually 0:04:36.960 --> 0:04:38.559 just footnotes. I'll come back to that in a second. 0:04:38.560 --> 0:04:42.279 But clothing is down, travel decimated, really a decimating sense. 0:04:42.279 --> 0:04:46.160 But let's jump back into our conversation now with Max 0:04:46.480 --> 0:04:49.080 leve Chind. He is the CEO of a firm, co 0:04:49.200 --> 0:04:53.320 founder of PayPal, a stalwart of Silicon Valley. We want 0:04:53.360 --> 0:04:56.120 to talk with him more expansively about some of his 0:04:56.320 --> 0:04:59.480 experience and what happens next. But Max, before we leave 0:04:59.520 --> 0:05:02.240 a firm, I do want to ask you. This has 0:05:02.320 --> 0:05:06.920 brought into sharp relief a lot of trends within buying 0:05:07.040 --> 0:05:11.000 and retail and merchants, so many things. I do wonder 0:05:11.000 --> 0:05:14.880 from your perspective, what does this accelerate or what does 0:05:14.920 --> 0:05:18.480 it accentuate. I guess when it comes to the future 0:05:18.640 --> 0:05:23.520 of buying from the merchant side of things, lots of 0:05:23.560 --> 0:05:27.560 different things. It could be a multi hour at this point, 0:05:27.600 --> 0:05:31.280 because what's the most important thing? Then I didn't just 0:05:31.400 --> 0:05:34.440 be the the your your conversation about the Olympics. I 0:05:34.480 --> 0:05:38.240 think every major retailer with a significant presence offline is 0:05:38.240 --> 0:05:42.080 going to have to reinvent themselves from both logistical and 0:05:42.320 --> 0:05:46.000 reusef management perspective, where showers are gonna become warehouses and 0:05:46.360 --> 0:05:48.479 front of the house is going to become film into 0:05:48.480 --> 0:05:50.480 the house, and so there's just lots and lots of 0:05:51.200 --> 0:05:53.400 major movement that I take with especially for folks with 0:05:53.520 --> 0:05:56.480 large real estate holdings. And then while they're doing this, 0:05:56.560 --> 0:05:59.600 they're gonna have to retool themselves for existence that involves 0:05:59.720 --> 0:06:02.680 by line, pick up and store, by over mail of 0:06:02.760 --> 0:06:05.400 return and store. There all these new problemies that used 0:06:05.400 --> 0:06:07.520 to be exceptions are now going to be front and 0:06:07.560 --> 0:06:09.880 center because people are not going to be comfortable walking 0:06:09.920 --> 0:06:12.400 around a large store with a salesperson in their face. 0:06:12.800 --> 0:06:14.640 And so as this takes place, I think it's going 0:06:14.680 --> 0:06:18.560 to create massive opportunities for people that create software that 0:06:18.640 --> 0:06:20.839 run the service systems and connect the dots between different 0:06:20.839 --> 0:06:23.039 warehouses and fulfilling pipelines and things like that. So I 0:06:23.040 --> 0:06:25.800 think that's probably the thing that I'm hearing about more 0:06:25.800 --> 0:06:27.880 and more in just the last couple weeks. Yeah, that 0:06:27.920 --> 0:06:30.520 makes a lot of sense, right. Crisis creates, you know, 0:06:30.640 --> 0:06:34.560 certainly disruption and innovation and because you kind of have 0:06:34.560 --> 0:06:35.680 to figure out a new way to do it, and 0:06:35.720 --> 0:06:37.440 you have to do it fast if you're going to survive. 0:06:37.720 --> 0:06:40.039 I do wonder to max when you look at specific 0:06:40.120 --> 0:06:44.760 retail categories, like I look at big department stores, are 0:06:44.839 --> 0:06:47.800 people going to want to go back? And I know 0:06:47.880 --> 0:06:49.479 that's easy for me to say because I live in 0:06:49.480 --> 0:06:51.880 an urban environment and I have lots of options, but 0:06:51.960 --> 0:06:54.760 I do wonder. And you know, if you're out in suburbia, 0:06:54.920 --> 0:06:56.640 that's where you go to, you know, if you want 0:06:56.640 --> 0:06:58.120 to go to a brick and mortar. But I do 0:06:58.240 --> 0:07:02.279 wonder what your thoughts on about, you know, like department 0:07:02.320 --> 0:07:04.040 stores on the other side of this, who are already 0:07:04.279 --> 0:07:08.320 in a beaten down state. I think the we C 0:07:08.400 --> 0:07:10.320 will absolutely go out of business. I don't I don't 0:07:10.320 --> 0:07:12.240 think that's a that's a question at this point, the 0:07:12.320 --> 0:07:15.400 strong ones will innovate. I think it's an opportunity for 0:07:15.440 --> 0:07:17.640 those that want to double down on if it's good 0:07:17.640 --> 0:07:20.920 retail and create the impression, hopefully the reality of safety. 0:07:21.000 --> 0:07:23.600 You know, maybe instead of having a physical sales person, 0:07:23.680 --> 0:07:26.320 you'll have an you know, iPad on wheels, rolling around 0:07:26.320 --> 0:07:27.960 whether you're in a store and telling you where to look. 0:07:28.280 --> 0:07:30.760 You know, I think the physical distancing and concern for 0:07:30.920 --> 0:07:33.840 just personal safety is going to prevail. But it's not 0:07:34.000 --> 0:07:36.040 as though we aren't going to get out of the house, 0:07:36.120 --> 0:07:37.720 especially as soon as we're allowed to do so. It's 0:07:37.720 --> 0:07:39.720 just we're going to take places where we feel safer, 0:07:39.960 --> 0:07:42.360 we feel like we aren't likely to get what we 0:07:42.400 --> 0:07:46.560 need fulfilled, and not expose ourselves anymore than we absolutely must. 0:07:46.560 --> 0:07:48.480 It's just, you know, trips to the grocery stores have 0:07:48.560 --> 0:07:50.800 never really ended because people need to eat. People are 0:07:50.840 --> 0:07:53.200 going to go buy pants again. They're just going to 0:07:53.240 --> 0:07:55.200 be true stores where they feel the safest and that 0:07:55.760 --> 0:07:57.840 they're going to get in an out and get things 0:07:57.880 --> 0:08:00.800 done right. Max, I do want to. I mean, especially 0:08:00.800 --> 0:08:04.880 given your experience and history, and you know you're there 0:08:04.920 --> 0:08:08.280 on the front lines of Silicon Valley, You've watched, I'm 0:08:08.320 --> 0:08:11.680 sure with great interest. Is we have all of us 0:08:11.760 --> 0:08:14.440 as a society sort of wrestle with technology over the 0:08:14.520 --> 0:08:17.520 last few years and the role that it plays and 0:08:17.600 --> 0:08:20.280 the good and the bad. I do wonder how this, 0:08:20.400 --> 0:08:25.840 in your estimation, this pandemic has changed our relationship with technology. 0:08:25.880 --> 0:08:28.320 What do we know more about, what do we think 0:08:28.360 --> 0:08:31.080 more about as we go forward, especially given what you 0:08:31.200 --> 0:08:33.840 just said as it relates to brick and mortar and 0:08:33.880 --> 0:08:39.000 sort of that physical experience. I think everything, all the 0:08:39.080 --> 0:08:41.280 choices we have to make are brought into sharper relief, 0:08:41.320 --> 0:08:43.800 and I think right now we are in this extreme 0:08:43.840 --> 0:08:47.120 triage mode where you know, give have a video conference 0:08:47.160 --> 0:08:50.720 and company that has a well known, retly significant security bug, 0:08:50.760 --> 0:08:52.600 and everybody says, well, that's a real problem. But I'm 0:08:52.640 --> 0:08:54.160 still going to get on my call right now because 0:08:54.160 --> 0:08:55.880 I have to run my business started to do this 0:08:56.000 --> 0:08:58.839 or that, and so many choices that we make are 0:08:58.840 --> 0:09:02.640 going to be extremely utilitarian and far less theoretical. Yes, 0:09:02.679 --> 0:09:04.760 I care about my privacy. No, I'm not going to 0:09:04.800 --> 0:09:07.320 hang up because I need to finish this negotiation or 0:09:07.360 --> 0:09:10.480 this contract. As we sort of get into a little 0:09:10.480 --> 0:09:12.480 bit more normalcy or get used to the new normal. 0:09:12.840 --> 0:09:14.240 We are going to get back to sort of a 0:09:14.240 --> 0:09:17.040 little bit more navel gazing and questioning. You know, are 0:09:17.040 --> 0:09:19.600 we making the right trade offs? That said, I think, 0:09:19.720 --> 0:09:22.480 you know, even the conversation around will Google an Apple, 0:09:22.720 --> 0:09:25.840 there's a property working on to trace contact. They're gonna 0:09:25.840 --> 0:09:28.560 be a major privacy violation or not. I think in 0:09:28.600 --> 0:09:31.520 the world where we're canceling Olympics, which to me is 0:09:31.520 --> 0:09:35.480 a sort of cornerstone events that defined society because we 0:09:35.559 --> 0:09:39.640 just can't guarantee safety, I think we should double down 0:09:39.679 --> 0:09:42.080 and leading to technology that will allow us to enable 0:09:42.360 --> 0:09:44.920 such events again. So I think in that sense, I'm 0:09:44.960 --> 0:09:48.120 a big technology bowl. That said, I think over time, 0:09:48.120 --> 0:09:50.360 as we get used to things, we will probably start 0:09:50.440 --> 0:09:53.200 questioning some of the decisions we're making. Well. And that's interesting. 0:09:53.280 --> 0:09:56.120 So what are some of the big technology things that 0:09:56.160 --> 0:09:58.240 you think will be kind of part of our normal 0:09:58.320 --> 0:10:00.760 world that allows us to get back to normal, I know, 0:10:01.760 --> 0:10:05.360 you know, beyond masks and social distancing. Um, what do 0:10:05.440 --> 0:10:08.720 you anticipate. I think it's could be all kinds of 0:10:08.720 --> 0:10:13.160 really amazing innovation. I think things like contactless ways of 0:10:13.240 --> 0:10:16.880 opening doors, ways of clearing security, ways of not having 0:10:16.920 --> 0:10:19.960 to take your mask off to identify yourself. Ways to 0:10:20.120 --> 0:10:23.480 make sure that your privacy is in fact preserved when 0:10:23.600 --> 0:10:25.960 you are being alerted about being too close to someone 0:10:26.000 --> 0:10:31.560 who's later on been diagnosed, Things like tracing locations to 0:10:31.559 --> 0:10:34.360 make sure that you're actually honest about your quarantine. There 0:10:34.360 --> 0:10:36.640 are all sorts of things that are going to make 0:10:36.720 --> 0:10:38.800 us uncomfortable from the privacy point of view, but are 0:10:38.840 --> 0:10:41.160 going to be very very powerful as far as alant 0:10:41.240 --> 0:10:44.160 of society too. Feel that things are a little bit 0:10:44.160 --> 0:10:46.240 safer in a sort of different side of the spectrum. 0:10:46.320 --> 0:10:50.480 I think news and radio and all the content that 0:10:50.520 --> 0:10:53.679 we have to consume, even the notion of truth in 0:10:54.400 --> 0:10:56.680 the content we received from the various forms of ways 0:10:57.000 --> 0:10:59.880 is going to really matter. People are hungry for you know, 0:11:00.000 --> 0:11:01.880 it is a vaccine story that I just heard about 0:11:02.040 --> 0:11:04.320 real or does that be the first? So there's a 0:11:04.360 --> 0:11:07.720 lot of societal impact that I'm seeing that technology I 0:11:07.720 --> 0:11:10.199 think has an important responsibility, let alone the right to 0:11:10.280 --> 0:11:12.800 play it. I have to say I just talked talked 0:11:12.800 --> 0:11:16.240 with a major PR executive who said facts need to 0:11:16.280 --> 0:11:19.480 be put into the bloodstream because we've just gotten to 0:11:19.520 --> 0:11:22.080 a point where there is a lot of misinformation and 0:11:22.200 --> 0:11:24.600 I think it just you know, pivots well off of 0:11:24.640 --> 0:11:29.640 what you just said. I think we are extremely extremely 0:11:29.720 --> 0:11:35.040 hungry for honesty and clarity, and epidemiologist's job is to 0:11:35.160 --> 0:11:37.840 tell you very uncomfortable things that you really really have 0:11:37.920 --> 0:11:40.800 to believe when you can't see them. Right. I think 0:11:40.840 --> 0:11:44.040 that's that that status that is what we have to 0:11:44.160 --> 0:11:46.640 enable at this point. Right, all right, Well, we've really 0:11:46.720 --> 0:11:48.520 enjoyed this. Thank you so much for spending some time 0:11:48.559 --> 0:11:52.240 with us. Matt ledged left Chin excuse me. Max Levchin 0:11:52.520 --> 0:11:55.040 is the chief executive officer of a firm co founder 0:11:55.080 --> 0:11:58.360 of PayPal. He joined us on the phone from San Francisco. Uh, 0:11:58.559 --> 0:12:00.400 you can see why he's been so success in all 0:12:00.440 --> 0:12:02.920 of these technology companies because he's always thinking around the 0:12:02.920 --> 0:12:07.800 corner in many ways, Carol, and understand the implications of 0:12:07.840 --> 0:12:09.920 where we are. And I think the one of the 0:12:09.960 --> 0:12:12.959 most important things he said was sort of differentiating between 0:12:13.040 --> 0:12:15.480 this triage moment and then when we get on the 0:12:15.520 --> 0:12:18.400 other side, are able to take a breath and figure out, 0:12:18.600 --> 0:12:20.560 you know, what are we doing, what are we comfortable with, 0:12:20.600 --> 0:12:22.319 what are we not comfortable with? That's going to be 0:12:22.720 --> 0:12:25.839 critical here, well, in technology as simple as opening doors 0:12:25.880 --> 0:12:28.280 and things like that. So I love it. You're listening 0:12:28.360 --> 0:12:32.239 to Bloomberg Business Week with Carol Masser and Jason Kelly 0:12:32.360 --> 0:12:37.199 on Bloomberg Radio. All right, you are listening to Bloomberg 0:12:37.320 --> 0:12:39.839 Business Week. Well, our previous conversation. I love it when 0:12:39.840 --> 0:12:41.320 it happens like this sort of tease us up for 0:12:41.320 --> 0:12:45.800 our next conversation in many ways. Um, another guest, very 0:12:45.840 --> 0:12:49.760 familiar in the tech world and now in the fitness world. 0:12:49.800 --> 0:12:51.800 We're talking about Fritz Landman. He is the CEO of 0:12:51.880 --> 0:12:54.920 class Pass. Jonius on the phone from Montana and Carol. 0:12:54.960 --> 0:12:57.559 In our conversation with Max left and he talked about 0:12:57.640 --> 0:13:02.640 at home fitness booming. He mentioned Peloton and obviously fitness 0:13:02.800 --> 0:13:05.439 very close to the heart for you and me, both 0:13:05.480 --> 0:13:08.720 on the boutique side and on the in home side. Fritz, 0:13:08.960 --> 0:13:11.520 great to have you with us, such a timely conversation. 0:13:11.559 --> 0:13:14.680 We really appreciate it. Great to be here. Thanks for 0:13:14.679 --> 0:13:17.200 having me. First of all, I gotta ask you, what's 0:13:17.200 --> 0:13:20.320 it like in Montana. I trust your well, your family's well. 0:13:20.800 --> 0:13:22.520 Give us a sense of it because you are in 0:13:22.559 --> 0:13:24.160 a very different place than we are here in the 0:13:24.200 --> 0:13:28.480 Tri State area. Yeah, class Pass has distributed across New York, 0:13:28.480 --> 0:13:31.920 San Francisco, and Montana here in the United States, as 0:13:31.960 --> 0:13:35.160 well as London, Singapore, embarrassed international cities. We have a 0:13:35.160 --> 0:13:37.439 big office here. It's been a great place to be honest, 0:13:37.520 --> 0:13:42.200 to be experiencing this catastrophe and this this pandemic because 0:13:42.600 --> 0:13:48.120 first there's natural social distancing, and second the governor, Governor 0:13:48.160 --> 0:13:53.440 Bullocks was extremely proactive in shutting down schools uh and 0:13:53.480 --> 0:13:56.960 then eventually shutting down the state, you know, even including 0:13:56.960 --> 0:14:00.480 our our partner gyms and fitness studios and restaurant on twitch. 0:14:01.200 --> 0:14:04.120 Has led to this Montana having the lowest per capita 0:14:05.000 --> 0:14:07.800 rate of infection of any state in America. So it's 0:14:07.840 --> 0:14:09.839 been a good place to ride, ride things out to 0:14:10.040 --> 0:14:12.480 able to go hiking and fly fishing and stuff like 0:14:12.559 --> 0:14:15.360 that on the weekend. Yeah, right, So kind of a 0:14:15.840 --> 0:14:19.280 much more normal life than what some of us have 0:14:19.360 --> 0:14:22.640 been living through. What you call it normal, I mean 0:14:22.680 --> 0:14:25.080 my my wife, you know, as our four year old 0:14:25.120 --> 0:14:27.920 toddler here, and I don't think you would call it normal, 0:14:28.720 --> 0:14:31.880 but uh, And certainly running a fitness company during a 0:14:31.920 --> 0:14:35.080 pandemic is right now, anything but normal. But it's as 0:14:35.160 --> 0:14:37.760 good as one could hope for's we'll talk to us 0:14:37.760 --> 0:14:40.240 to about the usage rates and what you're seeing on 0:14:40.280 --> 0:14:43.320 your platform as more folks. We've talked Jason and I've 0:14:43.320 --> 0:14:45.960 talked a lot about it. I've done yoga classes online 0:14:46.200 --> 0:14:48.760 um through Zoom and you know, we're all figuring out 0:14:48.840 --> 0:14:53.840 how to stay fit while at home and sheltering in place. Yeah. Yeah, 0:14:53.840 --> 0:14:57.960 well it's been you know, extremely disruptive obviously. We you know, 0:14:58.000 --> 0:15:00.640 for those listeners who don't know what class passes, it's 0:15:00.640 --> 0:15:03.040 it's basically the Netflix of fitness. So you pay a 0:15:03.040 --> 0:15:07.000 monthly subscription and you can access our entire network of 0:15:07.240 --> 0:15:10.760 you know, thirty thousand different gyms and fitness studios across 0:15:10.840 --> 0:15:13.480 hundreds of cities, across thirty countries anywhere in the world. 0:15:13.840 --> 0:15:17.520 So it really unlocks access to variety. But all of 0:15:17.560 --> 0:15:21.240 those classes historically were these offline classes, right, you go 0:15:21.320 --> 0:15:23.560 to the studio, you go to the gym, uh and 0:15:23.600 --> 0:15:27.120 you go to a different places. With these shutdowns, you know, 0:15:27.160 --> 0:15:32.280 it's been devastating for our our business because over of 0:15:32.320 --> 0:15:35.560 our partners, you know, we went from having the fastest growth, 0:15:35.880 --> 0:15:38.800 you know, really robust momentum. We raised the big financing 0:15:38.800 --> 0:15:41.840 in December two suddenly we started to see the outbreaks 0:15:41.880 --> 0:15:46.560 happened to our Asia markets UM in February, and it 0:15:46.720 --> 0:15:49.080 just you know, rolled through then through Western Europe, then 0:15:49.080 --> 0:15:52.000 emerged in Seattle, in San Francisco, and then rolled through 0:15:52.600 --> 0:15:57.520 the US. Of our studio and gym partners have been 0:15:57.560 --> 0:16:00.160 forced by the government, you know, to close and and 0:16:00.200 --> 0:16:02.880 to shutter their operations for the time being. So you know, 0:16:02.920 --> 0:16:06.520 obviously it's been devastating for the fitness industry and and 0:16:06.600 --> 0:16:09.320 really all of us have had to scramble to try 0:16:09.360 --> 0:16:11.720 to pivot and try to help each other get through it. 0:16:11.760 --> 0:16:14.760 And that's why we pivoted to launching a live stream 0:16:15.200 --> 0:16:19.840 video fitness platform, and also why we launched a donation system, 0:16:20.040 --> 0:16:21.920 you know, with with matching of up to a million 0:16:21.920 --> 0:16:24.960 dollars for our customers to just donate to these studios 0:16:24.960 --> 0:16:26.840 and gyms to help them get to the other side 0:16:26.840 --> 0:16:29.320 of this disruption. So hopefully they you know, a lot 0:16:29.360 --> 0:16:32.840 of them are now monetizing video workout through class paths 0:16:32.840 --> 0:16:35.200 to our customers who are using Zoom or Instagram Live 0:16:35.320 --> 0:16:37.760 or YouTube lives um and a lot of our customers, 0:16:37.840 --> 0:16:39.640 you know, are just donating to these studios to help 0:16:39.680 --> 0:16:41.840 them get through it, right, Because I mean, I think 0:16:41.880 --> 0:16:44.120 it's it's easy to forget for its to to some 0:16:44.240 --> 0:16:46.560 extent for a lot of folks out there, that many 0:16:46.600 --> 0:16:49.480 of these are just straight up small businesses. They gotta 0:16:49.480 --> 0:16:52.480 pay rent, they've got a small uh staff, you know, 0:16:52.600 --> 0:16:56.600 often contractors or you know a small number of full 0:16:56.640 --> 0:17:00.280 time employees. What are you hearing at least at this point, 0:17:00.360 --> 0:17:03.120 you know, six seven, eight weeks in, depending on on 0:17:03.200 --> 0:17:08.119 where you are about how generally people's ability to to 0:17:08.200 --> 0:17:10.800 sort of hang on it at least to now what 0:17:10.920 --> 0:17:12.840 sort of rates are you seeing and people just saying, 0:17:12.880 --> 0:17:16.840 you know what, I'm out? Great question. You know, that's 0:17:16.840 --> 0:17:19.960 probably the single biggest question for our business. You know, 0:17:20.160 --> 0:17:23.640 Question one is probably how how many of our customers 0:17:23.720 --> 0:17:26.360 will move to these video workouts and then stay there 0:17:26.520 --> 0:17:28.800 once these markets come back. And question two is really 0:17:29.040 --> 0:17:32.160 how many of our partner Jim's and fitness studios can 0:17:32.240 --> 0:17:34.960 get through these periods of shutdowns given that you know, 0:17:34.960 --> 0:17:38.520 I saw report saying the average retail business only has 0:17:38.640 --> 0:17:42.120 a month of cash you know, on the balance sheet. Um, 0:17:42.440 --> 0:17:45.200 and you know, really we've been encouraged to be honest, 0:17:45.320 --> 0:17:47.560 now it's too early for us to celebrate, but we 0:17:47.640 --> 0:17:50.760 have been encouraged by the fact that here we are 0:17:50.880 --> 0:17:53.600 between you know, five and eight weeks into the shutdown, 0:17:53.760 --> 0:17:56.240 and you know, out of our thirty thousand partners, it's 0:17:56.280 --> 0:17:59.320 been in the tens of digits, not the hundreds or 0:17:59.520 --> 0:18:01.960 even thousands, which is or tens of thousands, which is 0:18:02.000 --> 0:18:05.920 what we were worried about. That shoe could drop any day, 0:18:06.160 --> 0:18:08.879 and so you know, it's too relate to declare victory 0:18:09.040 --> 0:18:13.240 and success there. But we've been encouraged by you know, one, 0:18:13.400 --> 0:18:17.080 our partners have moved very aggressively, including on some really 0:18:17.080 --> 0:18:20.399 painful cost cutting measures, right, so they've moved aggressively in 0:18:20.480 --> 0:18:23.520 terms of launching these live streams and now class passes, 0:18:23.520 --> 0:18:26.440 sending out material revenue to these to these partners, and 0:18:26.440 --> 0:18:30.560 they're having their instructors give these classes from home or 0:18:30.560 --> 0:18:33.639 from their apartment or uh, you know wherever um and 0:18:33.680 --> 0:18:35.720 we've been able to get a pretty big audience. You know, 0:18:35.760 --> 0:18:37.840 over two thirds of the thousands of partners who have 0:18:37.920 --> 0:18:41.120 launched these have started seeing reservations and revenue from from 0:18:41.200 --> 0:18:43.919 live streaming. So we think that's helping. We think you know, 0:18:44.040 --> 0:18:47.240 obviously our donation program and also asking our customers and 0:18:47.280 --> 0:18:49.719 their own customers to buy gift cards and advantage. You've 0:18:49.720 --> 0:18:52.520 seen many people do that for the restaurant industry. And 0:18:52.520 --> 0:18:55.800 then you combine that with UH, with with the stimulus, 0:18:55.960 --> 0:18:59.320 and you know, internationally it's a Western Europe. The stimulus 0:18:59.320 --> 0:19:03.080 packages have been very strong UH and in the US 0:19:03.160 --> 0:19:06.520 they've been very aggressive and fast. We've been pleasantly surprised there. 0:19:06.560 --> 0:19:09.280 I think globally there's still they're still waiting to shake 0:19:09.320 --> 0:19:11.239 out to see how big of an impact is that 0:19:11.280 --> 0:19:13.640 many have UM. A lot of our partners have had 0:19:13.720 --> 0:19:17.159 problems accessing the stimulus, figuring out how do you even 0:19:17.200 --> 0:19:19.320 apply for it? You know, don't know where they are. 0:19:19.359 --> 0:19:22.560 But but so far, so good, you know, knock on 0:19:22.600 --> 0:19:25.680 wood work, cautiously optimistic that most of them will survive 0:19:26.200 --> 0:19:28.800 as the federal government step up and say to these folks, 0:19:28.960 --> 0:19:31.679 hey basically put your business in the mode. You are 0:19:31.760 --> 0:19:34.959 listening to Bloomberg Business Weeks to with us. Fritz Lanman, 0:19:35.320 --> 0:19:39.919 CEO of Class Pass, on the phone from Montana. So, Fritz, 0:19:39.960 --> 0:19:42.080 I do wonder, you know, on the other side of 0:19:42.119 --> 0:19:46.520 this wherever that maybe what does this look like to 0:19:46.520 --> 0:19:49.880 to some extent, especially as people get used to working 0:19:49.880 --> 0:19:52.359 out at home, maybe more so than they did before. 0:19:52.840 --> 0:19:54.920 Carol and I are, as I said at the top, 0:19:54.960 --> 0:19:57.639 like big fans of boutique, but also big fans of 0:19:58.200 --> 0:20:01.119 working out at home. A minute, and I do wonder 0:20:01.560 --> 0:20:05.000 what's sort of permanently different or at least different in 0:20:05.040 --> 0:20:07.920 the short to mid term once once new normal sets in. 0:20:09.400 --> 0:20:12.040 It's a great question. And uh, you know one that 0:20:12.080 --> 0:20:15.199 the team and I are are asking each other, you know, constantly. 0:20:15.760 --> 0:20:18.880 I think, I think our expectation is that the future 0:20:19.080 --> 0:20:22.720 is heterogeneous. Right, you have both digital options and you 0:20:22.760 --> 0:20:26.639 have real world options. From the real world standpoint, you 0:20:26.720 --> 0:20:31.080 just you cannot be the immersiveness, the sense of community, 0:20:31.640 --> 0:20:35.920 the sense of accountability of being in that studio, having 0:20:35.960 --> 0:20:39.399