• by Sarah Mahoney , Staff Writer @mahoney_sarah, February 27, 2023

Hydrow wants to improve America's mood. Even as people flock back to gyms and studios, the company is looking to carve out a bigger slice of the connected-fitness universe, facing competitors like Peloton, Mirror and Tonal.

Bruce Smith, founder and chief executive officer of the Boston-based company, updates D2C Insider and explains the company's new ads.

D2C Insider: Since you launched in 2017, there's been lots of upheaval in fitness. Which change has had the most impact?

Bruce Smith: We're a data and content company and know more about rowing than anybody else -- I'm a former coach for the U.S. National Team. When we started, every conversation was like, "Well, rowing's such a niche sport." That has changed. Many people now realize rowing is a very efficient workout. If you invest 20 to 30 minutes a day, rowing is the best modality.

D2C Insider: What's driven that awareness? Brands like CrossFit and Orangetheory?

Smith: Yes. The Concept Two rower was invented in the late 1980s and didn't change much for 40 years. Then it became popular with CrossFit, which now has 16,000 boxes worldwide. Orangetheory started in 2010, and now they have something like 1,700 stores. So they've prepared the soil for us.

Our special sauce is community rowing, and I spent ten years trying to figure out our "Rowing for all" mission. We worked with neighborhood kids, military vets, and people who were blind or had lost a limb. It made me realize rowing could be a mass-market phenomenon. And we wanted to make sure it included the experience of water and rhythm; we wanted to bring the natural world's benefits into people's homes.

The overall connected fitness market has been under pressure lately, but our part continues to grow.

D2C Insider: Peloton, struggling with many problems, launched a rowing machine a few months back. Have you felt an impact from that competitive move?

Smith: Christmas came early when Peloton launched its rower, because it's at a very high price point, and the machine is also big. It's flattering -- it's pretty much an exact copy of the Hydrow, minus some of the cool parts that we offer. And it used the same technology.

John Foley [the former CEO of Peloton], visited Hydrow in 2018, then went home and basically built a Hydrow for Peloton. People love its products, so that will be good for everyone. I don't believe there will only be one winner in connected fitness.

D2C Insider: How big will the connected fitness market will be?

Smith: Some studies, including our own, find that market penetration will reach the high 40s in terms of household penetration in the U.S., and it's now in the mid-20s. Worldwide, it's under 10. We believe we'll see increased market penetration through the next five years, then incremental gains.

D2C Insider: That would be spectacular growth. What do you think can drive that?

Smith: Digital resistance. People have been putting screens on old machines, delivering them to people's homes, and calling it connected fitness. That is a great first step, but it is not where we are going. Digital resistance is the huge unlock -- it allows for personalization.

Our next product will be a strength product and deliver exactly what you need. If you give us 30 minutes a day, we can provide a workout that turns on all the muscles, helps functional movement, analyzes travel schedules and looks at nutrition seamlessly. We're just at the very beginning of that journey.

D2C Insider: A hybrid work world makes that seem challenging. People are working outside more, so home workouts are less appealing. But they're perhaps not back at work enough days to justify a gym membership.

Smith: We are definitely in a trough after a giant wave. We're super happy with our sales. Managing profitability is the biggest thing for us. We're very close to that. We're more intelligent about our marketing spend and how to communicate. It's more of a long-term game. We're not using venture capital to communicate with customers.

D2C Insider: Your total funding so far is $288 million. Yet you've had layoffs recently?

Smith: Yes. It's always hard. Part of being a healthy company is controlling your destiny, so you don't have to go to the capital markets, and making smart choices. We're now very, very close to profitability.

D2C Insider: Tell us about the new campaign. You've got celebrity investors, including Lizzo, Kevin Hart and Justin Timberlake. And you're working with Khloe Kardashian as a brand ambassador. Why are no celebs in these ads?

Smith: People still don't know how rowing feels, and we wanted to communicate that Hydrow high. I couldn't be happier with how the campaign turned out, but I did think I might get fired when I presented it to the board. It's pretty out there.

D2C Insider: Mojo Supermarket is the agency. How much will you spend, and where will the ads run?

Smith: Our spending is proprietary, but the days of the big spend are over. We're using targeted ads and pushing them on our channels, using Facebook and Meta very judiciously. We want to find people when they are most and can click through to the website -- that's when D2C brands get the best conversion. People -- me included -- have been ripping on how Meta and Google's algorithms are broken, but they're performing very well for us right now.

D2C Insider: When will the strength product be introduced?

Smith: We hope within 12 months.

D2C Insider: Will it look like anything we've seen?

Smith: I have huge respect for Tonal. But it's bolted on the wall, and while that works well for people who can afford subzero refrigerators, I'm not sure it works for everybody. We are determined to deliver products that fit everybody's lives and budgets.