Randy Hetrick, Founder and Former CEO of TRX ® Systems, and Private Equity veteran Jack Daly of JXFD Capital are partnering to bring TRX into its next phase of success and growth
TRX Systems is ready for a change. Earlier this month, the company was acquired by JFXD Capital’s Jack Daly, ready to rebuild after voluntarily filing for Chapter 11 Protection in June 2022. Founder and Former CEO Randy Hetrick returned to lead TRX as Chairman in partnership with Daly, who will serve as Chief Executive Officer.
Hetrick, who earned his MBA from Stanford’s Graduate School of Business, founded the company in 2004 after a career as a Navy SEAL. The former TRX CEO sold a controlling interest in the company after leading it for 15 years. Daly, the new TRX CEO, is a former Partner and Investment Committee Member of Goldman Sachs’ Merchant Banking Division and TPG Capital, and serves as the Treasurer of the Navy SEAL Foundation.
Athletech News spoke to Hetrick and Daly about the future of the company and the industry.
ATN: Why do you think TRX 2.0 is well-positioned for success?
RH: One of the big tsunamis that came through the fitness industry in 2020 and frankly cleared out the businesses that shouldn’t be in business but go around eroding others’ margins. There’s been a reduction in competition. Ironically, the pandemic made people think about staying alive. With all that focus on sickness, people got really focused on staying healthy and being fit. At the same time there’s been a clearing out of unhealthy businesses, there’s been a resurgence in health and fitness of all kinds. There’s a huge opportunity in the consumer space. We’re seeing that in the return to health clubs, with record signups. There’s that opportunity at the macro level.
Within the company, we have a great opportunity. We have bigger and better assets than ever before. [We have a] digital content ecosystem, and we’re going to do this a bit differently than a Peloton, or other services, so we will make it a companion platform. We want it to enhance peoples’ experience and results. We have a big opportunity with digital content. The industry also got cleared out of a lot of trainers. TRX has the opportunity to go back to the basics, because my partner is going into this as a lifestyle investment. He wants to build this with the team for the next 10 years and beyond. There is no focus on artificial revenue growth. There sometimes are artificial timelines that aren’t good for the customers, brands, or long-term health of the business. We have the opportunity to focus on profitability and the best gear and content in the industry. I think that our company has huge potential.
JD: TRX has some of the most highly regarded products in the space. What’s interesting is that my 80-year-old friends know about TRX, and my 16-year-old’s son’s friends know of TRX. Everybody knows it. Everybody knows it is a very high-quality product. So, the way I think about it is that this is a great core business with a phenomenal product, terrific intellectual property: very well-protected and very unique. We can keep doing some of the things that the company has been doing since Randy started it, which means keep making the highest-quality products in the market. Then, we’ll improve upon other things they’ve been doing. I think there’s an opportunity here with the TTX, the TRX Training Center. We can focus on providing that service to the hundreds of thousands of certified trainers worldwide. Our user base is ten times that: millions of TRX users. So, we can bring out a set of services for them that I think will be fun, exciting, and engaging, and really start building that community. There are also ways to add technology to a biofeedback loop, as people like to measure their performance and customize their workouts, so there are all kinds of opportunities with a system like this. We are just really excited about the core product, and doing more to get suspension trainers out to more people. Obviously, millions have been sold. But we can sell a lot more.
ATN: Where are the growth opportunities for TRX and in the industry?
RH: Direct-to-consumer. We are going to keep working the way that we’re organized, which is with half the company focused on the verticals of commercial fitness, hospitality, government, municipalities. We have a significant chunk focused on direct-to-consumer. We also have an educational training group that focuses on end-user content for consumers and professional education for the verticals side of the business.
With the connected home fitness space, there are too many players in that space that have been artificially supported. They’re essentially on life support, in the form of private equity that has come in. There’s a huge opportunity in the focus on fitness, and it’s only been enhanced by COVID-19. The consumer landscape is big. The opportunity we are going after is going back to our roots.
The elements of our brand are high utility, low frills. There’s an opportunity for a brand to create products that have broad utility, are innovative, and lend themselves to supporting users of different fitness levels and abilities. We started that way and that’s what we’re going to be. We’re going to support our gear with great content. We are going to work closely with trainers.
JD: I think about the world in terms of health, wellness, and happiness. And fitness is an important part of that whole effort. But I do think our product category really fits into health and happiness. There’s that high-energy, high-octane fitness side of it, but this is the kind of workout that you can do with three generations of your family. And everybody can do the same workout, but one leans in a little bit more than the other. But as a community, everybody’s working together and having fun. I think the days of going into the gym and getting to the corner with the one machine and cranking out are over. I think the new era is the community-based programs where everybody’s doing it together, and that’s exciting. Now, maybe that’s not as sexy as the technology and the biofeedback, or some of the products that we could launch, but I actually think it’s a really important growth area because COVID caused us all to go into isolation, and everyone understands that the world is a much happier place when we’re all doing things together. Now, we have the technology to be able to do this at scale through apps and live classes, connecting with people all over the world.
ATN: What have you done with intellectual property?
RH: We were one of the most counterfeited businesses in the world for a time. One of the good decisions I made early on was that I spent a preposterously high amount of money on intellectual property. I had this weird strap and nobody had ever seen something like it. If I was going to spend so much time and money popularizing it, I wasn’t going to let anyone with a sewing machine rip it off. 2012 and 2013 were the zenith of the counterfeits. For a few years, it became my mission with litigation. Out of that, we changed the world in some ways. I bet the company on it, but we won big. Amazon then came to us and made a new program that they wanted to pilot called the neutral patent evaluation process, whereby they had third-party outside patent attorneys that they would hire. They’d bring in the plaintiff, who brings in the claim, and if the defendant shows up, they would go through arbitration. The attorney would render a decision: if the defendant lost, Amazon would remove them from the platform immediately. It’s helped Amazon clean up their platform–literally from TRX’s court battle. That’s why TRX has many fewer copycats than other brands.
ATN: How are you thinking about TRX’s business goals in this next chapter?
JD: We just have to continue to be the biggest, best at suspension training and then broadly, the other products that we offer. But we also very much recognize the ecosystem that we live in. We have the commercial gyms where you see a TRX training center system with our dumbbells, our kettlebells and slam balls, our suspension trainers. We’re part of their experience, and they’re as focused on the overall experience for their customers walking in the door as we are for those specific set of products. We’re in all the major gyms and smaller gyms, as well. We also have a very robust ecommerce business.
Look, I’m very fortunate to be in a position in life where I have a true friend who is fun and exciting, somebody you want to spend time with. And we happen to have this very noble goal of coming into a business that he created that means so much to everybody around the world. And to be able to really engage with business skills that I’ve honed over 30 years, and I can bring that to this business in this moment in time—we just think about all the people we can impact going forward. That’s just very exciting. So, I’m psyched.