Gympass' office in Brazil
Gympass' office in Brazil. Photo: Gympass
Business

Artificial Intelligence and the SMB strategy are the keys to Gympass growth in 2020

The company's CEO in Latin America, Gustavo Diament, stated that to consolidate the brand and reach small cities is the focus of the year in the region

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“I live in a tropical country blessed by God and beautiful by nature”, this was how the Brazilian singer Jorge Ben Jor described Brazil in one of its major hits. But what he couldn’t predict is that the country would be not only known by its natural beauties but would also carry another title: the fifth most sedentary country in the world and the leader in Latin America, according to the World Health Organization (WHO).

And like so many other startups that were born with the mission of solving a problem, Gympass turn the sedentary lifestyle into its ideal market. As a result, the company took just 8 years to be valued at more than $ 1 billion, is already present in 14 countries and has a portfolio of partnerships that includes more than 50,000 gyms and studios.

READ ALSO:2017 to 2019 – A chronology of Latin American Unicorns

Even after reaching a whole new level as a company and being challenged in a much more competitive market, Gustavo Diament, CEO of Gympass in Latin America, maintains the philosophy and purpose that have followed the company since its first steps: the battle against the couch. “More than being a unicorn or not, our purpose is to fight the sedentary lifestyle,” reveals Diamant in an exclusive interview for LABS. “In Latin America, the average number of people who do physical exercises guided by a professional is 5%, which is a very low rate. But if you take the average of Gympass end users, this reaches 35% or 40%, which means that we’re bringing a lot of new people into this active lifestyle, that’s our purpose.”

The big moment of the tech fitness market

Gympass’ headquarter in São Paulo. Photo: Gympass

Despite considering that Gympass is much more than just a tech fitness company, considering that the business has already evolved to the point of not only offering an activities through a technological platform but using technological resources as a tool to make easy to people have access to different types of exercises, Diament believes that there has never been a more promising time for the market, especially in Latin America.

However, the entrepreneur points out that living this great moment was only possible due to the relevant behavior change that happened in relation to how the business world is facing the well-being of employees. Reaching $ 94 billion in revenue in 2018, according to the HRSA 2019 Global annual report, the global health and wellness industry has achieved 12% growth in the past four years, with the Americas and Europe as protagonists in these results.

In Latin America alone, the revenue collected by the sector in 2018 was $ 5.8 billion and the growth potential is still classified by Diament as “gigantic”. In the Brazilian market, this reality could not be different and the businessman explains why by mentioning some data from a survey conducted by Deloitte and commissioned by Gympass on the opportunities in this segment in the country. “Just to show how company boards are putting an agenda on this, 78% of HR departments are planning to increase the investments in physical activity programs, it is a very high rate. When you look at places of health and fitness, 44% of them say that they are unable to make the most of the corporate wellness opportunity, meaning they need someone’s help to turn that opportunity into a reality. Also, 92% of these centers believe that corporate wellness is a way to increase revenue and 56% think it is a huge growth opportunity. So, you see that there is actually a very important chain aligned with our purpose and our business model”, he says.

And with the rise of the market, naturally more competitors are attracted to the segment, such as ClassPass, an American company that has partnered with technology giants like Google and Facebook in the USA and now arrived in Brazil at the end of 2019 promising that the country would just be the first on the list of expansion to Latin America.

With operations in Mexico, Chile, and Argentina, in addition to Brazil, the company’s headquarters, Gustavo Diament enhances the importance of strengthening the brand and consolidation of Gympass in the region, considering the different stages of each market, is one of the main goals of the company. “We want to greatly strengthen our presence in these markets, especially outside the large centers, where we are already very strong, through new channels and SMB sales. In other words, we want to remain strong in São Paulo and Rio but go much further. Being strong in DF, but go much further than that “, he says, revealing one of the company’s biggest bets to keep increasing its market share: partnerships with small and medium-sized companies, mainly in the small cities. For now, the platform focused on SMB are only available in Brazil.

“It’s still a relatively new channel for us, but we already have our pilot project taking off here in Brazil, making an expressive number of sales, and being totally self-service. The person from the company that visits the website is able to make the entire funnel alone, without any human help needed. There is no way for us to make our mission massive and spread it out without entering the SMBs market”, and he adds that the focus on this corporative segment is “one of the main pillars for our expansion in 2020”.

Even so, Diament considers the arrival of new competitors as a positive aspect for the segment in general. “Competition is always welcome and this is always better for end customers, so I think it is positive, but as I told you, the sedentary lifestyle is so popular that the big competitor is still the couch”.

Artificial intelligence as a secret weapon

With a well-established portfolio of partners and a consistent expansion plan, Gympass is now investing in improving users’ experience with the product every day, not only in terms of speed and usability but by applying artificial intelligence in favor of the business.

“We recently bought Flaner, an artificial intelligence startup in Portugal, and we are creating a technology hub in Lisbon, in addition, we have also created an artificial intelligence hub in New York,” says Diament. “Artificial intelligence is being used to build algorithms for people to find a physical activity that they really like. It is very normal to hear someone saying that don’t go to the gym, because don’t like weight training or swimming. We have more than 800 options for physical activities and the algorithms can help a lot so that this experience of interacting with the platform and quickly find an activity that the person likes became possible”.

The startup was created in 2018 by Brazilians in Portugal and its original mission was to create a tool that would help tourists better explore new cities. After the acquisition, the product aimed at the tourism market will be left aside so the team can focus on Gympass goals. The deal is classified as one of the main strategies for the global expansion of the Brazilian unicorn.

2020’s mission

To reach the $ 1 billion market value in 2019 was just the beginning of Gympass’ trajectory and the company now aims much higher. In addition to consolidating its position in Latin American countries, the company also invests in diversifying its portfolio of partner companies, with increasing its participation of government agencies among its customers. “In Brazil, we have already worked hard with the government, we recently won a tender for Petrobrás and we are working with AFPESP the Association of Public Servants of the State of São Paulo. In Mexico, there is rule 35 that establishes that not only the government but any company has general responsibility for the welfare of their workers. So the government in the position of a great employer and, more than that, as the body that sets the example and the ruler up there, is each more involved with this wellness agenda. Gympass is leveraging the wellness agenda at a fast pace. That’s why we have an increasingly stronger opening with governments in Latin America”, details Gustavo Diament.

In addition, the company’s expansion plans continue in full steam this year. “There is a study that we are doing about the expansion of the company to Asia, this expansion is very important”, reveals Gustavo Diament without forgetting that in Latin America the mission now is to consolidate itself in the four markets where the brand is already present.