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- [00:00]
A
Ladies and gentlemen, welcome back to Uncensored cmo. Now, in this episode, we're going to be talking about an incredible tech startup that has transformed the world of sport, Zwift and the cmo. Joining me today, Steve Beckett was employee number five on that journey. Now, they've gone on to achieve incredible things, creating a unicorn out of the brand. And Steve is sharing his experience of being early on that journey, but also seeing it through many stages of its development. And how do you balance brand with performance, with when you're on the hook for financial results, as well as trying to establish a brand in the long term? We talk about lots of sponsorship, product innovation, marketing, branding, everything that's involved in that. Steve's got amazing experience, having previously worked at sky as well, so he brings that across with him. This is a fascinating conversation. I know you get a lot from it. Here it is. Steve, welcome to the show.
- [00:55]
B
Thank you. Nice to be here.
- [00:57]
A
Good to have you. And it's. Well, it's nice to see out of your Lycra for once.
- [01:00]
B
Yes. Yeah. Last time I saw you was on top of a mountain.
- [01:03]
A
We were. Yeah, I know. It was rather cold, wasn't it? And wet. Yes, indeed. But I was very pleased to have made it up the mountain in time. Well, what people might not know about these things is we were doing La Tape de Tour Femmes Avic Zwift, of course, your headline sponsor. And it gets opened up, doesn't it, on one day of the calendar where amateurs like me can actually go and actually ride the course ahead of the pros. But you have to finish in a certain time before the pros come through, of course, which is the little twist on the.
- [01:33]
B
Yes, because this year the. The pros rode on the. Or raced on the very same day. It's the first time it happened.
- [01:39]
A
Is that not how. Oh, that's not happened before. I mean, thank you, by the way, for inviting James and I to do it. I mean, one. One of the things I reflected on that is I'd probably never climbed more than 1200 meters in a ride before. This was three times the amount of climbing I've ever done on a bike in a day. But it just shows that if you stick at it, do the training, have got good people around, you can do it.
- [02:00]
B
Yeah, it's quite amazing, really. I mean, we'll talk about startup successes, but, you know, you've got to believe it to achieve it. And in the day when you look over your shoulder in the startup, there's not many people behind you. And I think it's very much the same when you're training for an event, so. And like a startup success, it can be quite a defining moment in your life. And you did amazingly well. You should be incredibly proud.
- [02:23]
A
Thanks, man. I genuinely look back on one of the proudest moments of the year for me, for sure, given the work required to achieve it. And the insight into the world of cycling was amazing. But look, I'm dying to get into Zwift and the business and how you've done what you've done. But for everyone listening, you had a really fascinating job just prior to this, working for Team Sky. And many people will have probably known about the success of Team sky, obviously winning the Tour de France, the first British team to do that, the golden generation of cyclists that won at the Olympics and so on. So what were you doing with Team Sky?
- [02:58]
B
I had a rather silly job title called Head of Cycling. So I managed the project on behalf of the corporate entity that is sky, and the project itself, we kind of owned outright. So I got great insight into the world of sport and how people like Sir Dave Brailsford operated. And, you know, for me it's a real right angle moment in my career because before then I was in marketing and advertising, but I was known as a cyclist. And I think in July 2005, when London was awarded the Olympic Games, Guy said, look, how can we get involved in the Olympics? We can't broadcast it because it's got to be free to wear. We don't want to just badge or sponsor. Lots of other people can do that, but let's do it our way. And so we thought, we'll invest in a sport. So when it meddled at the Olympics, consumers at large would play back Sky's investment. And that's where Team sky came from, the partnership with British cycling, the Olympic success. And so when they said, we want to go build a cycling team to go win the Tour de France, had this big, hairy, audacious goal, then like, oh, we could ask Steve to have a look at this. He cycles to work. It's a bit of an odd one, but I just so happened to be in there.
- [04:06]
A
Did you get picked or did you volunteer because you thought, oh, I like cycling, I fancy the job. How's it come around?
- [04:11]
B
Kind of got asked. So, like I said, it was Sir Jeremy Derrick in 2005 said, look, how can we get involved the Olympic Games? And we ended up investing in the sport. We looked at other sports like swimming, athletics, triathlon. We chose cycling. They already had this kind of metal factory in Manchester. The team did incredibly well at Beijing in 2008. We did a deal shortly before then, and then between that and London, we came up with the idea of Team Skywalker. David Brailford did. That's where it all started. And I was working in the brand marketing division of sky and so I just so happened to be helping sky, who were trying to become carbon neutral as a business. James Murdoch, very green thinker, wanted sky to really take on cycling in terms of a transport function, coming to work. So I was busy, like helping him out with showers and bike storage. And then all of a sudden, a year later, I'm managing this project called Team sky, which was pretty incredible.
- [05:06]
A
Incredible. It's obviously one of the big success stories. Dave Braul was famous for his marginal gains. What did you learn, being inside of that, about what contributed to their success, what the sort of big lessons you took from that period in your career?
- [05:20]
B
Well, I guess everyone talks about the aggregation and marginal gains. That philosophy is widespread now. I think lots of people apply it. But in terms of what I took into, we'll talk about Zwift, inevitably. But what I took into Zwift, it really was. I think this is more of a prominent theme at Zwift. We just want to just own what we do. So people think of it as a sponsorship. It wasn't. We decided, if we're going to do this, we're going to do it ourselves. We'll build a team, we'll buy the buses, we'll build the brand, which is the blue line. And when we think about how the startup Zwift was built and all the foundational elements of the brand and ultimately what drives the marketing function, we do so much of it ourselves. So in housing, owning the challenge, I think, is something that I also took amongst a few other things, like with Dave Brailsford, I think he's a really good orchestrator. So when it comes to nutrition, when it comes to training, when it comes to all the technical aspects of what equipment Team sky were using and ultimately the athletes, he identified the leaders he needed to go do the best job. So when it came to Swift and creating our iconic logo, Big Z, the person I got was the person who rebranded Netflix.
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A
No way. Oh, didn't realize that.
- [06:38]
B
So we didn't mess around when we were building the Zwift brand and that schooling came from Sky. They just never used to miss the mark when it came to marketing.
- [06:49]
A
So you went from this incredible world very well funded. I don't think Team sky at the time had the biggest investment in cycling, didn't it? To achieve what it did, you had experts in every position, well known for your marginal gains and all that with it. Sky obviously is a big brand. We had celebrity, Bradley Wiggins, Cav, obviously superstar lineup. You went from there to be. Am I right in saying employee number five at a startup? That's quite a jump. How did the transition from one to the other happen?
- [07:20]
B
Well, I actually knew this project was happening and people were telling me, steve, you should check out this startup that's happening. One of the founders is based in London. I was like, nah, it doesn't sound like, for me, indoor training. I often still think now, if I didn't work as Zwift, would I be a customer? I think that's a great piece of psychology to have. But lo and behold, Zwift, Eric Min, he found me. He really wanted someone with a brand and marketing background. And Team sky was very demonstrative in the sport of cycling. And it was there to build an emotional bond between a nation at large, specifically Zwift customers, and a corporate entity. And the corporate entity, if you strip it right back, is Rupert Murdoch. It's the Premier League. And we wanted to put some warmth between the consumers, the country and Sky. And that's what he did. It taught me an awful lot about building a brand from scratch, because at sky, it's one of the largest brands in the uk. I'd learned so much around brand and marketing, but the team sky was a real schooling.
- [08:29]
A
Yeah, yeah. In fact, you can actually see that translate across in terms of confidence, your branding, the boldness, the simplicity of design, all the work you've done. But again, being kind of in so early, how do you go about effectively creating a category that didn't exist? I mean, you bet you invented pretty much indoor, well, indoor cycling in terms of connecting to the virtual world in the way that you did. I mean, maybe describe for anyone who doesn't know Zwift, like, what it is and how it works.
- [08:55]
B
Yes, a good place to start. So Zwift is a massive multiplayer online training platform for cyclists and also runners. And if you heard the term mmo, massive multiplayer online platform before, you think of gaming. And Zwift is a video games engine. And what it does, though, it connects to people who are riding bikes in their houses and they ride together in 3D generated computer game worlds. And I guess at our peak period in January, you might find well over 50,000 people at any given time. It just so happened that we hit upon product market fit with this idea because that's the first step of building a category. If a category has not been built, there's no consumer demand there. So the marketing team are really on the hook, you know, because sales are a function of awareness. And then awareness needs to translate through to demand, which is about building a value proposition. It's building that emotional connection, it's building that I need it. In cycling, like a lot of other sporting activities, you kind of want the latest and greatest because there's a big herding mentality that goes on there. So I don't think it's a bit like Sky. Like no one was saying we want high definition television. We invented it and then we had to drive demand behind it. And so you need a very clear value proposition. And that's really the basics of who you are. Zwift is a fitness company born from gaming. Who you for, people who ride bikes outdoor regularly for exercise. What you do, we make reaching your fitness goals fun and rewarding. But critically, what makes us different, and I think this is the magic with the Zwift is we really believe that fun powers performance. And therein is the whole creative DNA of Zwift. It's a tool and a toy. If you go into Zwift, there's people who are geeky, lovable gamers and then you've got sports jocks. Tension is at the heart of everything we do. You need a go to market strategy as well. I think the thing at Zwift, I wouldn't say building a category is like there's a book that works for everybody or a playbook, but we're a platform at heart. And so if you think about onboarding people and building social density, then all of a sudden you can think, actually there are people in real life who have pre existing relationships with brands. So the bike manufacturer, the bike brand they own, the apparel brand, the events that they take part in. In real life, you can really create a go to market strategy around partnerships. That was a big part of how we built Zwift because it was recognizing we need to facilitate community growth, be community first. So really identify. I mean every cmo, every marketing function needs to obsess about knowing the customer. But before they're a customer, they're a prospect. And it's really bringing all those experiences in the outside world into the real world. So you could do, you could ride, ride London on Zwift. You know, you can ride the virtual Tap d'Etor on Zwift. You can own, I know you own A canyon bike. You can. You can work hard to unlock a canyon bike in Zwift. So what that does is build a network effect in a kind of B2B to C capacity.
- [12:20]
A
Yeah.
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B
And, you know, that was a big part of how we built demand, not just from consumers, but also from our. From our industry. The industry really sees Zwift as a bit of a media house and a media platform. And so that's what I think of. Obviously, these big elements are like the brand DNA and how then everything that we deliver with the rigor, the polish and consistency becomes quintessentially swift, like our. You often talk about distinct brand assets. I think we've done a pretty good job there. We've got our core creative DNA. So I mentioned earlier that embrace attention is one of them. We've got some other ones that we really believe in. So make it fun. If it's not fun, it's not Zwift. We always believe in making bold moves. You need to do that as a startup. Team sky, let's go win the Tour de France within five years. We set out at Zwift to not just build a brand, not just build a business, but to build a category. And then on top of that, make Zwift the colloquial term for riding a bike indoors. You know, it's called Zwifting. Yeah. We've. We've really invested so much in integrating and aggregating what happens in cycling in the real world and bringing that into our product experience for the customer.
- [13:38]
A
Yeah, it's pretty cool, the gamification elements, isn't it, that you can. The more kilometers you do, the more kit you can kind of, you know, do I love as well the sort of behavioral science of it all the little nudges. I mean. I mean, I got into Zwift first in about 2016. I was a very, very early adopter because I was working away from home, so I was using it to kind of stay fit and then got into it last year a lot more thanks to you. And it's just all the encouragements and nudges you get and like the ride on thank yous from other riders, there's a lot of sort of psychology, isn't there, to how you kind of encourage people to engage with the platform and exercise more.
- [14:16]
B
Yeah. I think when we talk about fun powers, performance, the core insight I take in the human truth is when I reminded myself when I was a kid and my mum was shouting up the stairs and saying, you in bed yet? And I'd be Like, yeah, I'll be in bed in half an hour and then three hours later I'm still playing a computer game. And that was in the context of the joystick being what I was controlling the game with. Well, the joystick now is you riding on a bike with game controllers and the level of immersion, you just get lost, but you work harder, you work for longer, you get fitter, you know, and that's how we've managed to build this. I guess it's the world's largest training community for cyclists. So yeah.
- [14:53]
A
And how seriously do people take it? Because one of the questions I had was has anyone ever turned pro having like started out on Zwift, got really good and then ended up kind of in the real world, translating that performance on the bike indoors into, into real life.
- [15:07]
B
So yeah, I mean one of the things that Zwift's really famous for is a program called the Zwift Academy. And we really took, we really took all the learnings we could see from the Nissan GT Academy, which took spotty kids from bedrooms to racing in Le Mans and thought actually how can Zwift be a talent ID platform for cycling? And next year will be our 10th year. But we've delivered many pro cyclists into the pro peloton. We partner with a very well known team called Canyon Sram, a women's World Tour team, and Alpacinda Kern, men's World Tour team. And yeah, once a year there's a talent contest and really it's like a TV show and you know, one lucky contestant has his life changing experience and becomes a pro cyclist. Having never really thought of that. There's one very well known cyclist called Jay vine who actually he won the Zwift Academy in lockdown. So actually the Zwift Academy was hell from home. We normally go to an in real life event. This was at home. And he subsequently went on to, he rides for Team UAE now, won multiple stages of Grand Tours, the famous three week races and there's many other riders as well. So that really builds the credibility in the brand that really consumers believe in. Because at the end of the day, you know, Zwift's a sport. If your participation sport, it's a bit like a pyramid, you know, for if you're into cycling, if you're into football, triathlon, running, you're often looking up to the elite crowd and you know, you want to adopt what they use and what they advocate. And obviously this is, you know, very, very authentic in terms of the use case. And we've had pro Cyclists been injured, recovered on Zwift, discovered Zwift very famously in 2015 Australia and just trained on Zwift for six weeks and then won the biggest one day race in the world. It was all down to training on Zwift really. And so there are great, credible stories that built a lot of trust and ultimately translated to consumer demand. That's grown up business.
- [17:20]
A
You mentioned lockdown and J Vine. What did you Covid do to the business? Because was that a good thing in terms of getting everyone to train indoors?
- [17:29]
B
So it was probably the largest help and the largest hindrance. So obviously people talk about the COVID whiplash effect and when you speak about like how do you build a new category and how do you build consumer demand? One of the first parts of it is for Zwift is like, how do you build an engine of growth, paid engine of growth. And the fundamentals there is how do you price your product? And it's just got a recurring revenue model. So we get a pretty good view on LTV when we get acquired customers in terms of having a view on retention. And then from there you can look at the lifetime value of a customer and decide how much you can spend on marketing. And that's your CAC function. And prior to Covid, we had a really good view. So when you're raising money and investors are saying, how does your paid engineer growth work? You go, great question. This is how it works. And we knew it pretty well because every year we'd be cranking up the spend and it was translating very well in a kind of linear, measurable, manageable way to customer growth. And so what happened in Covid is the product market fit that Zwift had just got pulled forward. So we doubled our business in a year. And that was great because many people knew of Zwift. But it just goes to show that given the preference, people still probably want to ride outdoors. Who wouldn't? But then you couldn't ride outdoors. So this huge tsunami of customers came to Zwift and that was great. We did some amazing things. We talked about the creative DNA DNA of Zwift and taking big swings and making bold moves. We built a France world on Zwift and we held the Tour de France virtually on Zwift. In July, when the Tour de France was cancelled.
- [19:05]
A
Oh wow.
- [19:05]
B
Amazing. It was organized with their full broadcast infrastructure. It was broadcast into 180 countries. All the world Tour teams, all their riders beamed live into people's homes and critically. And we'll talk about this in a bit Longer. We said, if we're going to do this deal, then we need to have a woman's race as well, because we think that's driving equity and equality in the world of sport is also really important. But we grew a lot and inevitably investors came knocking on the door. And I think it was a good time to raise money. Anytime you can raise money, raise it, and you can always just keep it in the bank. But we'd done a series C raise in January 2019 and we did another one in August 2020. And when you think about what is Zwift, it is an endemic fairly, you would say cycling is fairly niche, but you'll probably raise a few eyebrows when you say, actually we raised $450 million that year and that was building on 125 million the year before because we had product market fit, we knew our target addressable market. We were a vertical. So you can mine a vertical audience really well compared to likes of Peloton, which will be compared to Zwift. You know, it's a very wide, angled, broad field. When you look at fitness, you know, even if you've got lots of money, when you're spending money on marketing, you're kind of. You're still pissing in the wind, you know, part of my French. But for Zwift, you know, we were really able to cost effectively target and acquire customers. However, we like a lot of other businesses spent into Covid and you know, I look back at Covid and I think, you know, what would I change? I think one of the things that would have been really beneficial is not spending on marketing. And the reason, the reason why I say that is we really lost our feelings a measurement around our CAC function. So the marginal cost of acquiring a customer, we're still struggling now to understand that. And that's really critical when you're talking to an investor. And it becomes a very uncomfortable conversation for me when I'm saying we don't know what the marginal cost is of acquiring a customer. At the moment, this is a Covid whiplash. Also, we spend so much of our money away from the point of purchase because the customer journey for getting Zwift is so long. You've got to think about where can I put this thing in my room? Can my loved one give me permission to change a living space? What equipment should I buy? And then the availability of audience who we market to cyclists. Well, interest in cycling is at its peak in the summer. And so we have this kind of brand to demand marketing strategy, which means Spending a lot of money in the summer away from the point of purchase, but we believe it works. And the cost of acquiring a customer we still feel good about. But also we didn't just spend on marketing, we spent all areas of the business. So the investment world, like the world of marketing, is very trend driven. And we were being told to spend money, hire, spend more money on marketing, and we did. And fast forward to today. We're the same size as we were pre Covid, 300 people. We got to 750. And like a lot of tech companies, a lot of VC backed companies, we had a couple of episodes where we, we hired people and we let them go. And you know that's awful as a leader and you know that that really starts and stops with leadership in terms of the accountability, the accountability to hire, the accountability to fire. You know, and I've, I've did many zoom calls. I told people they didn't have a job any longer. And so you know that, you know, that's the COVID whiplash, just part of it. But there is a silver lining that those people have options, have equity. And you know, what really motivates me to go to work is to, to grow the business so we all share in a financial outcome that people who don't just work at Zwift can benefit from. So that's, that's really great. But I think the big one, you know, in terms of your audience getting insights into the startup world is I think most people are familiar with the big startup stories. Uber is probably a great example. And the way things worked is you get product, market fit, you pour fuel on the fire in terms of VC capital and then it's all about capturing the market as quickly as possible. And in doing so, you could afford to lose a load of money. You monetize that audience further down the line, you generally become an earnings business and become profitable when things like public offerings happen. And what happened during COVID was obviously the cost of capital prior to Covid was pretty low. But I think you've probably heard the phrase like free money banded around in the context of startups. The money's never free, but the interest rates were so low that there was so much capital swirling around the market. And so that promoted the grow all costs kind of mentality. And startup businesses now need to be earnings businesses, they need to make profit. So you've gone from growing the market at a rapid rate by spending all costs and not worrying about losing money so much to investors demanding that you're an earnings business. And that's really what drove the need to reduce operating costs. And at a company like Zwift, the single biggest operating cost is the marketing budget. And I think for CMOs in startups, the thing that's different in a startup world to working a big corporate company is that you're the person with a number on the back of your head. So when it comes to how do you build demand? My job at Zwift originally was VP and customer acquisition. I needed to determine who we're going after, how we'd go after them, how many we would acquire. You do need to be a lot closer to the customer you are in a startup. It's a smaller business. The leadership are generally more visible, especially founders. You definitely have more product input. I wasn't at sky commissioning programming. At Zwift, we do develop a lot of product through synthesizing feedback from marketing and very focused on the market. Obviously, you get very close to investors, which is great when you're raising money. And then in the sticky times, it could be quite difficult. But I think ultimately you have to be prepared to own the number as a CMO within a startup. And that's what's really exciting.
- [25:40]
A
I mean, interesting, actually. Just listening to you talk about it is the closeness to the business model as you talk about what's the lifetime value of a customer, what's the return, what's the cost of acquisition. So few CMOs would think like that, would they? Because they'd be. My job is to create demand, but I'm not accountable for the money on the other side. So it's really powerful to see that. That you're constantly thinking about the return on investment.
- [26:05]
B
Yeah, I kind of had a bit of a schooling at sky because I had privilege of being on the exec floor quite a lot because I was a person who planned and bought media. So we're often in fights with competitors. I'll be pulled in to cost out media that we hadn't planned for, but we were going to put into market. And so sky itself is a recurring revenue business. The unit economics the same as Zwift. So it was marketing, it was content, it was knowing a CAC function and be familiar with that and cycling. That's the way it all combined at Zwift. And so far, so good.
- [26:39]
A
All right, all right. Sorry to interrupt this conversation. I promise you it's for a good cause. So I've just put a rather large deposit down on a very big venue in central London called the Outernet that can hold 400 people, it's an amazing venue. Now we're going to be doing the very first uncensored cmo, the Calling. Now what is the calling? The calling is your opportunity to join us live and be inspired by the world's best founders, the most inspirational CMOs and the best thought leaders. This is one day that will completely transform your career. I promise it will be well worth it. I'm so excited to be doing this and if you want to find out more details, please go to the Show Notes and check it out. And I really look forward to seeing you there. It's on the 21st of April, do not miss it. Now back to the show. Well, let me ask you this. What's it like working for a founder
- [27:34]
B
compared to working for a corporation with founders in startups? When you've got lots of money and no shortage of ideas like all kinds of chaos can issue. And Eric, our founder at MIN is an incredible visionary and he's an ideas machine. It's very hard to say no to your boss, especially when you've got lots of money in your bank account. And so I really think about the learnings that everybody should take is that you need rocks that hold down the kites and so the rigor that comes from having a very good FP and a function, the financial planning, accounting function, having a very good CMO where you really focus on roadmap, roadmapping and you're very focused on delivering roadmapping, good program management chops within the business. That's what everybody needs. When you're in a founder led company and that allows the founder to flourish, you've got the yin and the yang and the yin and the yang is what a CMO's job is. You spoke about, you've got to talk to investors about the numbers and a CAC function. And at the other end though, what else does a CMO do? Well, I think there's three things that a CMO has and I don't think any CMO is good at all of them. The first one is really, really good sound conceptual thinking and creative thinking and you need a big idea to take to market. Like what is the big idea? Obviously that needs all running through a system in terms of how your brand proposition flows through all your creative DNA and, and all your DBAs that we talk about. But yeah, you need good conceptual chops and then rather like a funnel, you need to really articulate the value proposition in terms of how you solve them for customer problems. How are people making lives, people's lives better through technology and products like Zwift. And that's the product marketing chops at the bottom it's about driving short term sales and the, the dragnet which is performance media. And I think no CMOs are good at all three, I think I'm middle and upper. But when it comes to the numbers game, the macro bit around the CAC function and how brand drives a business, I really love that and how we raise money was always a brand story. I guess in the first instance we had a founder who did a friends and family round and they invested in him because he was very successful in a prior life. But then you get to series A, Series B, Series C. So series A was we've got product market fit, we've got a good view on cac, we can spend more. This channel mix is working how scalable it is. Well, it will get us to the next step. We'll do series B. Series B is a brand story. We're going to get into esports. We are going to bring competitive sport, professional sports as Zwift. And we did it. And that was a brand story. The last chapter. Series C it was, we did esports because we created a brand that gave us a license to go and do that. That's why the Tour de France on Zwift happened, because we earned the right to do that, because our brand was so powerful. And then seriously, we got into hardware. For people listening at home, the customer journey for Zwift means you've got to figure out how you Zwift at home. Okay, you have a computing device, but you're either on a stationary bike or a bike on what we call a trainer. Hardware is really the enabling force. We talk about Zwiftiness at work and swiftiness is really about bringing a real consumer centricity to how we develop products. Often in the startup world you have founders who are engineers and they're building products in their vision and, and they're engineers by trade, but they're often like over speccing things. And as Zwift we really want to try and simplify everything for the customer. The cost, the cost and really like how to get on Zwift. And so that series C was getting into hardware and so that, you know, the frontline role of a CMO is selling the dream, selling the vision. It's the same thing that you're trying to do to a customer because you're, you're promising something, you're promising great value and a great time. And so a good CMO at a startup needs to Be really good at raising money, albeit with all the help and rigor that the CFO brings, because they're the magicians when it does come to raising money, really.
- [32:09]
A
And what's it like making that pivot from. Cause you're going from a Software subscription at 1199 or 1499, whatever it is, a month, to selling a 1,500 pound, 1,500 full bike. That's quite a different thing to sell, isn't it? So what was it like marketing the full bike rather than.
- [32:26]
B
Well, it's interesting, yeah. We retail a bike to get on Zwift, bit like a peloton bike. But when we originally wanted to design, manufacturing, retail, all the hardware that currently exists in market, the bikes existed, we want to make a better bike and then trainers as well. And. But what was really apparent is that we built our business by people buying hardware from other people. And what we thought wouldn't be the right thing to do ultimately, was to deliver competition into a market that already exists, Manufacture our own hardware that is very capital intensive. That's a really big bet. So you look at Peloton and where they struggle, they put huge down payments on making hardware. There was a bet on how many customers they were going to acquire. So we decided, actually, we're not going to get into the engine of how you Zwift, which is the trainer. What we did was we built a bike which is a modular frame that sits on top of a trainer. And then we really elevated the experience in terms of how the bike looks. And I think. I'm not sure how familiar people are with the Zwift ride, I think, but it looks like it's made to be in the home. It's really proved to be the catalyst for growth for Zwift, because it does come down to hardware is the enabler. So this bike on itself has sold in one year more than all bikes sold before it from all manufacturers. But also it's been a growth catalyst for more people riding trainers. And so what Zwift's always trying to do is integrate and aggregate the industry around it, take everybody on the journey. So I think we got a bit confident when we originally raised money, so we're going to make our own first party hardware. I think we got over our skis a bit too much, but we've ended up in a really great position.
- [34:17]
A
Now, earlier on, you meant you dropped into conversation the Tour de France femme avec Zwift, of course, and that's you very kindly invited producer James and I out to Experience it, which was incredible, I have to say. And big thank you. One thing that struck me, apart from obviously the seven hours it took to get up the Col de Madeleine at the end in the rain, we was getting a front seat, really, to see what the women's Tour de France was like, actually, and the crowds and the organization. And I was amazed that, like, there's no compromise with the men's event, is there? You know, it struck me just how far women's cycling has come in the last few years, which is amazing. And you've been a core part of that journey, haven't you, because you took a big investment in the sport.
- [35:00]
B
Yeah. So we talk about making bold moves and also as if we want to create our own weather. So by creating our own weather, it means creating moments around our brand that are very noticeable in the consumer demand because everyone's fighting for attention. And I think the Tour de France, femovex Zwift combines both of those things. But critically, yes, we're a title sponsor, but we founded that event and again, as a brand, we earned the right to do that. We did the Tour de France on Zwift. And then we said, hang on, the last bastion of male sport is probably the Tour de France. Let's found together the women's Tour de France. And it's been an incredible success. When you look at the average budget of a women's World Tour team, it's doubled in the last three years. If you look at the amount of viewing that it generates, it's like 150 million hours of TV for the event last summer, the number of days has increased over the four years. What's really interesting is that we founded the event because it costs a lot of money. Right. It's our biggest single marketing expense. Very, very super duper upper funnel. But we founded it in a year where our marketing budget was three times greater than it is now. So when we came to. Renewing this year is a really sensitive topic and we've got to be head over heart when we're making these decisions. And so. But we do know it's working. I think startups do think of it more long term. Last week I was reading the Steve Job, the Phil Knight book Shoe Dog, and he wanted Knight to be a multi generational brand. And that's what we believe at Zwift and that's why we make these investments. So investments, not costs. Right. And I saw at sky, one of the KPIs for Team sky was creating a million more cyclists in the uk. We did it. You know, this inspiration to participation. And this year, women account creations on Zwift are up 23% year on year.
- [37:02]
A
I was going to ask you that. Can you see the investment in the femmes and then more people participating?
- [37:08]
B
Yeah. So we need to, we look at it right the way through the funnel, so we try to measure the media value, the marketing value, and then people come to the front door, they create an account, then they get into a trial, then they hopefully become a member, they subscribe and then hopefully we retain them. So we look at this right the way through the funnel and the customer onboarding needs to be mindful it's a female audience, it's not this one size fits all mammal audience. But we believe we can grow the sport of women's cycling to grow our business. That's the strategy. Grow the sport, grow our business. And that's what's happening. And it's a big bet. And you talk about being strategy first in approach and what those behavioral traits are that you take from Sky. You've got to make bold moves, you've got to have big targets, you've got to believe it to achieve it. They're all the things this thing was never going to fail. Never going to fail. And so that's something that everyone at Zwift is incredibly proud of and really, really close to emotionally.
- [38:11]
A
That's amazing. Very exciting and huge kudos to what you've done, maybe to round up. Then if someone's starting out, they've got an idea like Eric and the founders had, they want to do what you've done. Because you're in a very rare category of kind of tech startup unicorns, and ones that have survived through a major structural change like Covid. It's quite a rare position to be in. What would be your advice to somebody starting out today wanting to do what you've done?
- [38:39]
B
I think I looked on Google a few years ago. How many unicorn businesses are there? Like businesses that are valued at more than a billion dollars? And it was like 1300. Also Google, how many billionaires in the world are there? I think it was three and a half thousand. So I was like, holy shit. You can't expect you're going to become a unicorn. You just can't do because it'll be a recipe for failure. And then also, as I said, the financial playing field has changed so much now with startups, so you don't have the opportunity to spend money so freely in the past. But I think it comes down to surrounding yourself with the Right people. And I was quite fortunate because someone found me. If you're starting off in marketing, I think it's great that you can get a foundation from the likes of Unilever or Procter and Gamble. You really learn a methodology and a system that you can really take elsewhere. But the opportunity to work in the startup world is incredible. So I think if you've got an idea, you've really got to look to seed investors. There are many of them, but it's really the nuts and bolts through a marketing lens are knowing your target, addressable market, your serviceable, addressable market, having a really good view on the competitive picture. The competitive picture informs your value proposition, your brand positioning and then you need a go to market strategy that has a very firm point of view on the cost of acquiring a customer that then you build an economic model around. Like I don't think anyone's really going to fund a big idea without the hypothesis that goes into that work and the rigor that says actually I've got an idea, but I think it's going to be a successful business. You just got to get on the road in traveling salesman mode. You'll have heard from so many successful startup founders who beg, stole and borrow from many different places. So many people said no in the early days, but you've just got to, you've really got to persevere. And yeah, I think every, unless you've got bone deep belief in what you're doing, you're probably not going to make it because you put everything on the line. When you, when you're part of a startup, you just commit everything. It's very personal to you. You know, it's your friends and family, it's your identity. Right. And then, yeah, and then you've got to also think about passion and profession. For me, it started at Team sky, actually started at Sky. I can't believe I worked at Sky. I thought it was the best job in the world, you know, and, and at Zwift it's just those, you just can't pull apart those two things. So you've got to be able to acknowledge and embrace. There's going to be tension by the passion and profession colliding, but if you can find it, if you can moderate yourself, it's pretty bloody amazing.
- [41:38]
A
I was reading something from Sam Altman actually, who was asked like, what's the common characteristics of the billionaires that he's met. And one of the points I remember stuck out was, I can't remember quite what the description was. It's something like unreasonable levels of self belief beyond all logic, you know that it's gonna work. And the ability to kind of take the knocks and have unshakable beliefs.
- [42:02]
B
Yeah, you gotta walk through many walls.
- [42:04]
A
You do, don't you?
- [42:04]
B
You've gotta think that what you're building is gonna go on forever as well. You know, talk about the multi generational brands and companies, but also I think a lot of those Charlie big chip billionaires, they just don't know when to stop either. Like how much money do you really want to make? But yeah, it's pretty crazy. The people that I've been exposed to and met on the VC side of the investor side and been born in Grimsby in the northeast of England and then hanging out around Silicon Valley, it's pretty amazing.
- [42:35]
A
That's a wild journey, isn't it?
- [42:36]
B
I encourage anyone to go for it. In the startup world, if you fail, you're always going to learn from failing. It's full of competition and competition's healthy. We got to disrupt or you'll be disrupted. You look at the likes of Nike and running and Lululemon and Athleisure, you've constantly got to be disrupting or you will be disrupted. And what goes hand in hand with that is being maniacal about your core customer. So Zwift wants to go broader and broader, but I always talk about you can't afford to chase them all if you're ignoring your core. And so those things are really, really important for a startup because startups become starter ups and then they become bigger companies and it's all about going broader. In the middle is the brand and the brand's got to stretch really far. So when it came to designing the Zwift brand, we were looking many years into the future because this big, lovable, fat Z doesn't look very performance minded. But that's the whole point. It's a pop brand. It's got this big fat, lovable Z but with a performance edge and it's very expressive, very iconic and yeah, that was built for the future.
- [43:46]
A
So Steve, I think you're probably the most performance orientated marketer there's ever been on this show. Apart from my good self actually, because I won Performance market of the year last year. But anyway, we'll put that to one side. You really, really understand all the metrics. You know, you talked about CAC and LTV and you're really close to the performance end in the model. Right. But I know at Zwift you spend a lot of money on brand and you can't always attribute that back to those performance measures. So how do you make the case for investing? Well, firstly, how much do you spend on brand as a percentage and how do you make the case for that?
- [44:18]
B
Okay, well, I think the starting point for how much you invest in upper versus lower funnel, you normally advise us look at 60, 40 as a starting point and then go from there. So we have to actually invest more than that in upper funnel media. And I think let's start with lower funnel media. I would say when we think about the three pillars of a CMO and performance marketing being one of them, I don't obsess over that. I'm responsible for that. And performance media will drive probably 30, 35, 40% of our hardware sales in a given week. But like I said, it's a dragnet. You know, marketing is about creating demand, not just harvesting demand. You know, I fiercely believe that when investors come through the door and say, look, your brand's amazing, it's bigger than the business, they feel a bit gooey and excited about, you know, talking to Zwift because they think it can make lots of money. And you do spend money to make money in marketing. And so you've got to believe in upper funnel investments. In terms of we talked about Tour de France, fx, Zwift, we talked about Team Sky. We know our customers feel incredibly proud about Zwift making those investments. Investments, not costs. We know at Zwift that claimed acquisition 50% or more comes from word of mouth. But what we can do with those brand investments is activate them. Zwift is a content platform. So we bring all of those outside investments in sports marketing, the relationships we have with celebrities or creator partners, and we bake it into the product experience as well. So also the product team really believe in those things. We activate the Tour de France on Zwift, for instance, we work with lots of high profile people in the public domain and it's not often you could go ride a bike with Gordon Ramsay or ride a bike with the world's best cyclist. We can do that on Zwift and it costs money. We can't see directly how many people acquires, but we really look at how we can grow owned and earned media. And we can look at consumer sentiment, we can look at share of brand search. Share of brand search is people kicking their tires on Zwift. And we can also measure how many other people they're kicking their tires on. And we can look at the measure around brand, how many people watching Tour de France? How many people have participated in an event? Split that by country. We can look at all kinds of metrics and begin to, I think, tie that to upper funnel metrics like brand search, for instance.
- [46:58]
A
Steve, thank you so much mate. It's been an amazing ride you've been on. It's exciting to be a bit part of it. And thank you for sharing all your hard earned wisdom along the way.
- [47:08]
B
Thank you very much. It's been great.
- [47:09]
A
Thanks, mate. So I hope you enjoyed that episode of Uncensored CMO as much as I enjoyed making it. Now, by the way, I've got a new newsletter, so if you'd like to get my thoughts on the One Thing that I take out from each episode every week, then do subscribe to the One Thing newsletter. I'd really appreciate it. Also, I have another podcast just launched, Uncensored Renegades, with the fabulous Corey Marchisoto. Shout. She is one of the world's best CMOS. She's an absolute rock star. Every week we pick one topic, spend 20 minutes trying to fix it. So check out that it's in your feed. Uncensored Renegades. And finally, I want to give a huge thank you to my sponsor, System One. They generously provide so much support for this podcast, it would not happen without them. So big thanks and lots of love to System One. I'll see you next time.