Ed Buckley to early founders: "Do whatever it takes to survive"
The founder of Peerfit shares his decade-long journey, from zero to raising $50m+ in venture funding and doubling their revenue the past three years in a row.
Imagine a world where every employee has access to the yoga studio on the corner, the local mixed martial arts dojo and group fitness classes at the YMCA in town all included as part of their employer’s compensation package. That is the world Ed Buckley has been building since starting Peerfit in 2011. He shared the whole story on Florida Tech Talks with Bianca Peynado and myself.
”I always enjoyed group fitness. Even when I was barely old enough to go to the gym alone, I enjoyed going to group classes. That’s what Peerfit is about. Having other people be part of the experience has been scientifically proven to drive better retention rates and increase the level of engagement during the class… probably because you’re more glued to it since your friends are there or you just don’t want to let your friends down.
So I asked the simple question: ‘How can we use technology to drive retention as high as possible?’ And that’s how Peerfit was born. I was never trying to be an entrepreneur, I just love fixing problems.”
Peerfit is now a growth stage startup that has raised over $50m in venture capital and has contracts in place with some of the largest health insurance providers in the country, including Aetna and United Health. But it wasn’t smooth sailing to get to that point.
”Picture this: we’re a 10-20 person unknown startup from Florida, and the companies that we have to go get deals from are some of the largest, most bureaucratic and risk-averse organizations in the world. Health insurance companies are by design risk averse. That’s what they do for a living. Aetna has around 40-50k employees. United Health has around 100k employees. Just think of the layers of bureaucracy and here we are, just a small nimble company. Man, it was so difficult in the beginning. Where do you even begin to attack such a giant beast? Where do you have any leverage in negotiations at all?
We still fight these battles today, it’s not like we’re some huge company with hundreds of employees, but we’ve gotten a lot better at it, we’ve gotten enough reputation and we now have years of data to show we can be trusted, so the door doesn’t get slammed in our face.”
Arguably one of the most impressive things about Peerfit is how they’ve been able to sustain such a rapid pace of growth for so long.
”To give you some data behind this, our medicare business didn’t exist 3 years ago. Since then, we have doubled it every single year, and we always do annual contracts so we already have everything lined up for next year, and we’ve already doubled again from this year. Starting next year, Medicare will be 50% of all of our revenue, where it was 0% just 3 years ago."
A big challenge founders often face early on is raising capital, particularly that first round. In many cases, nobody’s heard of you, you don’t have an established brand and might have an insignificant level of traction to show investors when pitching. I asked Ed about that first round and this was his response:
”I suppose this is where I’m wired differently. Rejection never really bothered me. When I look back at the numbers, year we got rejected A LOT. We got rejected repeatedly, hundreds of times in a 6-month span. I suppose our inexperience in being a tech startup was also our biggest blessing. When I talk to people who have done this for a living, they would say “This is the only way you can structure deals and if you don’t do ‘x’ then it’s not worth raising.” We probably broke every rule in the rulebook. Our first $200k in seed funding that we raised was all friends and family and we took on many $5000-$10000 checks at a time. Our cap stack was a complete disaster, there was literally 20 people on it after raising that first round.
But the reality was we were in Gainesville, FL. There was no capital. We didn’t have any real connections. I don’t come from a trust fund family. We weren’t in Silicon Valley, or plugged into a network that would support us. So it was either do it this way to survive or go the traditional way, in which case we wouldn’t have been able to raise money. While you really shouldn’t be trying to reinvent the wheel (in this case, reinvent the fundraising process) as an early stage startup, ultimately, the only job of an early startup founder is to survive. Do whatever you need to do, within legal means, to survive. If that means having a really ugly cap stack, then so be it. I have no problem making that trade-off. I also had no problem going back to the same investor 10 times. I guess I wasn’t built with the embarrassment gene that other people get when they are told no a bunch of time. Out of the first million dollars we ever raised, approximately 80% of those dollars were from investors who had already turned us down multiple times. We had continued to come back to them and showed progress over and over again until we won them over.”
Ed also added one counter-intuitive yet important point for early founders. The speed at which founders execute in the early days is extremely important, and many investors will often ask questions to try to gage this.
”If you’re tackling a big problem, in the early days, you shouldn’t expect to be making huge strides. If your expectations for progress are too high, it can be really easy to get discouraged and quit.”
This is one of the reasons I believe that most big ideas tend to start as hobbies or “side-projects”, otherwise the founders would just give up after going months and often times years without seeing any revenue or significant traction. In Peerfit’s case, it was certainly years. So how much of what Peerfit is today was part of the original vision? This was Ed’s answer when Bianca asked that exact question:
”I think every company out there that is successful has some part of the original idea and some part that they never knew was going to happen. I suppose we 100% knew from the start that group fitness was the “glue” of fitness. We wanted to get people into as many group fitness settings as possible, regardless of whether they’re at the same gym, same studio, or have the same membership. We also knew that there needed to be flexibility. We knew that dollars needed to be portable throughout that experience. We knew it all had to be digital. One of the things we did not expect was that 100% of what we do today is health plan and employer dollars. We thought that would be just 1 component. At the start, we thought it would be mainly a DTC product. Today it’s all B2B2C. We negotiate that deal at the employer level and at the health plan level and then it just rolls down as a free benefit to the end user. We don’t even do deals where the health plans & employers are not fully funding it because that’s not the business we want to be in. There’s plenty of opportunity for a non-fully-funded product that puts the burden back on the end user. That’s great, but that’s not where we’re going to play because that’s just not where we think success is at and where we can drive most value to the marketplace.”
Another interesting thing about Peerfit is that they’ve received a number of accolades, including being ranked one of 'America’s Best Startup Employers’ by Forbes, ‘Top Company Cultures’ by Entrepreneur, and Ed Buckley has been named one of the ‘Best CEOs for Women’ by Comparably. Bianca asked Ed “Was this something you were intentional about from day one, or did it just happen?”
”We just did a little analysis the other day and around 70% of our executive team are female and something like 65% of our workforce are females. When you think of the tech space, that’s not common by any means. I certainly was not smart enough to set out on some roadmap from the start or say we’re going to hit this particular number. When you just let the best people in the room and you treat people fairly, we’ve ended up here. I wish there was a formula to it. I say often — I was raised by a single mom and all sisters growing up, so I was always comfortable being surrounded by very opinionated, direct women. That was never something that bothered me, we simply try to empower everyone to bring the best ideas, bring the best people forward, and be incredibly collaborative. So this is where we ended up and it’s a great spot. And if that can encourage other people, whether you’re an executive looking to consciously make the effort to broaden out your team. I will tell you where we were very conscious—I was very adamant that our board have much more diversity than when we were starting. Your board is generally made up of your investors - and most people who work at investment firms are older white males. That was the only thing that I consciously and verbally said that it was not going to be ok. The largest board we had was up to 9 seats, and at that time we had 3 people who were black or brown, 2 of which were females. Being mindful that the makeup of our company skews so heavily on the female side—it just didn’t make sense to have a board that was 100% male.”
I couldn’t close out the interview without asking one of my favorite questions. What are the key ingredients for a founder to be successful?
”I think it comes from an interesting combination at different times. Sometimes you have to be very resolute and disciplined. Some days you have to be incredibly adaptable and differential to those around you. But at the end of the day, as long as you are legally willing to do whatever it takes to survive, and making sure you are driving as much positive resources to your team around you—knowing that the direction will change, the product will change, and the people on your team will change… that’s the journey you’re on. That’s why I think startups are so difficult, because they demand completely opposite skills in a relatively short time span. And being able to hop between those skills and learn those skills in a really short amount of time is critical.”
To learn more about Peerfit, visit peerfit.com
Thank you to Ed Buckley for coming on the show, and being willing to speak for our Summer Founder’s Program as well!
Thank you to Maria Juan (VP of Marketing for Peerfit) for making it all happen and for joining us on the show as well!
Thank you to Jeff Weisbein for recording this episode for us on such short notice. You can check out Jeff’s website BestTechie to stay up to date with the latest tech news & startups in the south Florida ecosystem.
Thank you to my co-host Bianca Peynado for co-hosting this incredible episode of Florida Tech Talks with me. Tune in on Tuesday’s at 8pm EST to hear us interview startup founders based in Florida!
Email me at firstname.lastname@example.org with your thoughts, input or ideas for future posts.