Jon Congdon and Carl Daikeler found a captive audience of people eager to get in shape and lead healthier lives when they launched Beachbody LLC in 1998. The business began as a marketing company producing fitness programs for TV, but soon started creating its own fitness products.
“At the same time, we were building out our website and getting more traffic there,” says Congdon, the company’s president. “We got pretty good at marketing our own products on the Internet.”
But in the mid 2000s, Congdon and Daikeler began to grow more skeptical of their continued reliance on TV.
“There was always going to be a demand for fitness and weight-loss products,” Congdon says. “But the television marketing business was tempestuous … you had to keep creating new ads. We wanted to stabilize the business by creating a new distribution model, a new way to distribute our products.”
That new model was going to be called Team Beachbody, a multi-level marketing company where customers could become representatives of Beachbody and sell products while earning a percentage from the sales.
“They can also find other people who would also like to do that and have them join as part of the organization,” Congdon says. “So some of them make very good money. They make money by selling and they make money by finding other people who understand the business opportunity and sign on as a Beachbody coach. A lot of other companies call them distributors. We call them coaches.”
It seemed like a sensible venture, but it took more time to get it up and running than Congdon and Daikeler expected.
“When you announce the idea, it all sounds great,” Congdon says. “It was when it was taking a while to get things going that some of the leaders in the company were concerned. It wasn’t profitable as quickly as we wanted it to be.
“One side of the company was generating tens of millions of dollars in profit and the other was taking a fifth of that profit and absorbing it. When that goes on two years longer than you anticipated it to, there are some people who will say, ‘Hey, do we really want to be in this thing? Is it worth it?’”
The response from Congdon was blunt: It has to work.
“We benefit by having a network of people who are helping other people succeed using our product,” Congdon says. “So if we’re going to give people these products and help people get fit, if we don’t generate a network that helps them get fit, we’re not going to achieve our core mission, which is to help people achieve their goals and lead healthy and fulfilling lives.”
Make sure you get it right
As Team Beachbody was being developed, Congdon and Daikeler knew the platform needed a “hero product,” something that would lure people to want to be part of the community that they couldn’t get anywhere else.
That hero product ultimately became Shakeology, a line of nutritious shakes in different flavors that would help users achieve a variety of fitness goals.
“The network markets that product and gets people on that as one of the core tenets of what it means to get healthy as a member of that network,” Congdon says.
The problem is the time it took to identify Shakeology as the hero product that Team Beachbody needed.
“You’re not going to find many entrepreneurial people who are pessimists,” Congdon says. “But it always serves you well to understand what the pitfalls might be. In all honesty, one of the pitfalls that we probably underestimated was our in-depth understanding of what it took to run a successful network marketing company.
“We did the analysis and we knew where we wanted to go and we knew we needed a hero product. But it took us longer to get that hero product ready for market than we thought. So in hindsight, we might have started that network a year later than we did, when we knew we had the hero product lined up. We certainly didn’t make it easy on ourselves not having an immediate source of sales for our coaches.”
All the while, as Congdon and Daikeler were working hard to get Team Beachbody on its feet, they still had the direct side of the business that required their attention.
“We needed, as one of our core initiatives, to maintain our excellence on the direct side of the business and to continue investing there,” Congdon says. “But that also meant we needed to almost incrementally grow another business, so the investment was large.”
The key goal to keep in mind, whether you’re launching a new product for a new business or a new product for an existing business, is the importance of building a product that you can proudly stand behind.
“You need to make sure you’ve created a product that does what you say it does,” Congdon says. “Have a brand that you can stand by. If you have any doubt, if it’s not the best it can be, you’re going to have trouble. You’re going to have trouble anyway, every business does. But if your product isn’t everything it’s supposed to be and more, then when you hit those rough times, you’re really dead because you can’t stand by your product.”
Keep the future in view
One way that Congdon and Daikeler try to stay ahead of the curve when it comes to dealing with challenges is their approach to strategic planning.
“We basically go in and create a new three- to five-year plan in the last cycle of every plan,” Congdon says. “So we’re always rolling into a new plan. We don’t wait for the current plan to end. We’re always working on the next plan during the last phase of the current plan.”
The key thing with any strategic plan is to understand your resources, both human and financial, to execute on that plan and to make sure you are ready to move forward.
“Luckily, we were the kind of company that was doing well enough, we have always been able to finance our growth and investments out of our own profits, which is a luxury a lot of companies don’t have,” Congdon says. “As part of the plan, it should also be within your reach strategically and financially.”
A consultant can be an effective resource in helping you make an honest appraisal of your company’s ability to tackle a new initiative.
“I’m not always a huge advocate for consultants,” Congdon says. “But in this case, it was very helpful to have somebody who was very smart and who took the time to research what our company was so they didn’t come in completely cold. They can come in and with a fresh set of eyes, walk us through the process of creating a strategic plan that actually makes sense for the company creating it.”
A consultant can take that objective approach and make sure the organization agrees on what it does well and what good opportunities out there it could pursue.
“That’s not something a couple of co-founders can just take on and do in their spare time because co-founders who are running a company don’t have spare time,” Congdon says.
One thing that a consultant should not be doing is critiquing your idea.
“It’s not their job to tell you the idea is stupid,” Congdon says. “It’s their job to help you get agreement on what the company’s strengths and weaknesses are so that you realize that an idea is stupid.”
Stay focused on goals
As the effort to build Team Beachbody continued to move forward, Congdon and Daikeler relied on weekly team meetings to make sure they were still filling in the gaps that needed to be filled.
“Everybody always includes a list of things that are concerning them or that are in the way of them achieving their objectives,” Congdon says. “Until those things are cleared out of the way, we call those blockers. They remain on the list so we have to talk about them every Monday morning. As they get cleared off, we know we’ve eliminated another blocker.”
Today, Team Beachbody is a network of thousands of independent distributors that have helped grow the Beachbody brand. The company’s other products also continue to thrive, including such well-known brand names as P90X, Insanity, Hip Hop Abs and Brazil Butt Lift.
But the multi-level marketing business that launched in 2007 now has a database of 14 million people, has recruited more than 100,000 distributors and leverages $100 million a year in advertising.
Even with that success, both Congdon and Daikeler still see room to grow.
“The idea of having an army of brand evangelists out there was Carl’s way to hedge against what might be at some point a fading TV audience that really only wants to buy on the recommendation of a friend or a neighbor,” Congdon says.
“We’re still looking to nail that. We’re doing well with it, but if we were really nailing it, the coach network would be growing even more quickly than it is.”
How to reach: Beachbody LLC, (800) 998-1681 or www.beachbody.com
The Beachbody File
Names: Jon Congdon, Carl Daikeler
Titles: President, chairman and CEO
Company: Beachbody LLC
Congdon on Daikeler’s belief in the network plan:
Carl was the champion of the network being the thing that needed to change the company. The real key was that at the end of the day, we both truly believed that the way to grow our business was to stabilize our revenue base in a way that would generate value for the company and make sure we were around for a long time to help our customers. While we had doubts in how fast it was going and doubts in certain aspects of the model, we never doubted it was the right thing for us to try to do.
Why the network system works:
We had customers who were champions of our product that were out there telling everybody that they knew that they lost weight using our products and were getting 20, 30 and 40 people to buy the product for us.
Carl really wanted to create a way for them to be rewarded for doing that. He also remembered that when we first started, we had both done one of our first products and had used our own testimonials very effectively to sell that product.
So he thought there could be hundreds of thousands of micro-versions of that around the country. If people were using our product and succeeding, they could use their own success as the reason to get their friend or neighbor to buy something from us.
Don’t skimp on your product.
Test your plan.
Keep issues in sight.