HomeSportsWhoop CEO Will Ahmed on guiding a sports tech unicorn, selling equity to athletes and making health monitoring cool – SportsPro Media
Whoop CEO Will Ahmed on guiding a sports tech unicorn, selling equity to athletes and making health monitoring cool – SportsPro Media
November 25, 2022
Keen observers of the connected fitness and wearable tech market will be well familiar with the Whoop story.
The tale of this particular sports tech unicorn has been well-told – and not simply because its founder and chief executive, Will Ahmed, a high-achieving Harvard graduate of Egyptian descent, has been profiled on just about every sports-focused media channel and business podcast going.
In many ways, Whoop embodies the current zeitgeist and the booming demand for performance tech. Born and based in Boston, the self-proclaimed ‘human performance company’ has spent much of its first decade in existence riding that wave of interest to raise US$400 million in venture capital and achieve a valuation of US$3.6 billion.
But it is not only the venture capitalists who have bought into Whoop’s vision.
High-profile athletes and business executives wear – and most importantly rave about – its wrist-worn strap, whose USP is providing actionable feedback and recommendations related to recovery, sleep, training and health. LeBron James and Michael Phelps were among Whoop’s first 100 users, and the company has since attracted investment from big-name stars like Patrick Mahomes, Eli Manning, Rory McIlroy, Justin Thomas, Kevin Durant and, most recently, Virgil van Dijk.
So where does the company stand today, what role do athletes play in building Whoop’s business, and where is all their cash being spent? SportsPro caught up with Ahmed to find out about all that and more.
Growing the business
In August 2021, Whoop secured an additional US$200 million in fresh capital as part of a Series F funding round led by SoftBank’s Vision Fund 2. According to Ahmed, Whoop is directing those funds towards three key priority areas: product and software development, global expansion, and membership services.
“We’ve focused on using the capital to really shore up our manufacturing and supply chain, which has become quite sophisticated,” he says. “We’ve developed additional accessory lines, we’ve really focused on building more product and software, continuing to release analytics that our members will value and will help them understand their bodies. There’s been some growth to the team.
“I think it’s also important to recognise that this is an uncertain time in the world and making sure that we’re investing in the business responsibly with an eye towards, you know, a future public offering. It just makes us think carefully about how we’re spending dollars, because I think the venture market has changed in the last 12 to 24 months.”
Of course, bringing on board new investors comes with its challenges. By definition, at least some control must be ceded to new board members who need to be integrated into the leadership team. Still, Ahmed insists he has managed to retain the purpose and identity of the company he founded in 2012 throughout its early growth, largely by virtue of partnering with people who share and support his vision.
“I think, fortunately, Whoop has always had a very clear purpose and mission around unlocking human performance and improving health,” he says. “And therefore it’s been, I think, easier for us as a business to stay true to that north star and therefore attract members of our team, board members, investors, who are all already bought into that as the vision and the focus.
“We really have avoided raising capital, for example, from someone who says, ‘I love the technology, but let’s go this direction with it’. And I think having a team and a board, and really a whole shareholder class, that’s aligned towards your mission is a pretty critical component to success.”
Whoop counts several top sports stars among its investors, including LeBron James and Rory McIlroy
Whoop initially built its business selling hardware but, at US$500, its product didn’t come cheap. That all changed in 2018 when the company moved away from hawking wrist straps to essentially give them away for free.
Now, Whoop’s membership-based subscription model requires users to part with just US$30 per month. On reflection, Ahmed describes that shift in business model as “probably one of the single most important decisions” he’s made since the company’s formation.
“The Whoop membership model has grown exponentially in the last four years since we launched it, which in turn has allowed us to manufacture more units, it’s allowed us to provide even better analytics because we have more data to learn from,” he explains. “I would say that it’s probably one of the single most important decisions I’ve made in building a company. So it’s impossible to understate the importance of that business decision.
“Whoop’s subscription model really stemmed from the fact that we saw people who bought Whoop enjoyed wearing it for a long time and were also pretty keen on this ongoing engagement. If you look at other wearables that came before Whoop, they had a big problem with ongoing engagement. In fact, they had these huge drop-off rates, where after three weeks, three months, people stopped wearing them. Whoop has never had that problem.
“But when we first launched to consumers, we had a different problem, which was that we weren’t selling all that many Whoop straps. And that was in large part because it was such a large amount of money to pay upfront; people had to pay US$500 to get started. And now today, you can sign up for Whoop for just US$30 and pay monthly. And it gives people the opportunity to really try and understand what it’s all about without necessarily coming way out of pocket on an expense.
“So we think it’s good for both Whoop and for our consumers. And it allows consumers to ultimately decide every month whether Whoop is right for them.”
When the world is uncertain, and you’re a high-growth business, it’s valuable to control your destiny and make sure that you’re growing responsibly.
Will Ahmed, Founder and Chief Executive, Whoop
Looking ahead, Ahmed predicts that Whoop will be a publicly listed company within the next five years. He says the health monitoring market is “an enormous enough category” that harbours high growth potential, even if the current economic climate has brought about challenges in the immediate term.
Like other connected fitness companies, such as Zwift, Tonal and Peloton, Whoop has not been immune to those challenges. Earlier this year, confronted by spiralling inflation and the rising cost of living, the firm took steps to reduce its headcount by 15 per cent, a move which mirrored the travails facing every operator within a sector that only boomed during the pandemic.
Some observers expect the connected fitness market to return to growth in the long term after a period of correction, but for now Ahmed is staying prudent as he steers Whoop through the current economic headwinds.
“When the world is uncertain, and you’re a high-growth business, it’s valuable to control your destiny and make sure that you’re growing responsibly, you’re not overspending in certain areas,” he says.
“I think the technology space in general had a lot of capital in it and so it made grow-at-all-costs seem like a reasonable strategy for many. I think Whoop was already on the more responsible end of that. But we recognise this is the time we want to preserve cash and give ourselves a longer runway, which is what we did. [It’s a] very challenging process, but I think clearly the right process for our shareholders and our employees.”
The power of athlete storytelling
Elite athletes across multiple sports have played an instrumental role in the growth of Whoop to date. Together, those athletes have helped amplify Whoop’s reach, deepen its involvement in professional sport, and expand its profile among mass-market consumers – and all without the company shelling out a penny.
From the outset, Ahmed vowed never to pay athletes directly to endorse Whoop’s product. That “stubborn point of view”, to use Ahmed’s own words, has manifested in a business philosophy that continues to serve the company well to this day. Not only does it underline the value of its technology for improving athletic performance, he says, but it also makes any promotional activity all the more authentic.
“At the end of the day,” he adds, “Whoop is clearly a great product for professional athletes, because they literally wear it 24/7 without receiving any form of endorsement. I mean, it is sort of a crazy thing when you think about that. If you go look into an athlete’s closet, or in a garage, you’ll see tens of thousands of dollars of free product that brands have sent to these athletes hoping to put the thing on, and then hoping that they can then pay the person to continue to wear it from time to time.
“Whoop flipped that upside down, where we said, ‘we’re not going to pay the athletes and, by the way, they’re going to like it so much, they’re going to wear it 24/7.’ So it was a stubborn point of view as our founding strategy, but I think it speaks to the technology that we’ve built and the value that the athletes are getting from it.”
The athletes that we’ve been able to tell stories with are athletes who also authentically love Whoop.
While Whoop does not pay sports stars for their endorsement, it does, of course, offload equity to its athlete investors. That equity-over-endorsement approach won’t change anytime soon, particularly given Ahmed’s belief that “authenticity is really the benchmark for all relationships in marketing”.
“You know, the athletes that we’ve been able to tell stories with are athletes who also authentically love Whoop, and whether Whoop had any formal relationship with them or not, they would still be wearing Whoop, right? That’s what we really look for.
“And then in terms of the equity, those were relationships where the athletes bought their equity, where they’re writing cheques into the company at a similar price as the other investors who are writing cheques. So I think it’s a credit to the athletes to recognise, if I really love this product, and I think the company is going to grow, I can put my own money into it. And, in turn, it can mean I make an investment and a positive return by virtue of supporting something that I’m already doing.
“You’ve seen other companies start to replicate that as a strategy, but it often can only be replicated when you have this really strong authenticity between the athlete and the product.”
That authentic connection is the main reason for why Whoop has opted to align with athletes rather than teams or leagues. While it does maintain partnerships with certain sports organisations, including the WTA, PGA Tour, LPGA and Nascar, those deals are primarily geared towards bringing real-time athlete biometric data to live broadcasts and social feeds via the company’s Whoop Live offering.
From a product development and pure marketing perspective, Ahmed is adamant athletes bring far more to the table.
“The core thing I think about is the storytelling piece and also the fact that the product is for an individual, first and foremost,” he says. “Teams and leagues tend to be good for giving you certain rights to things – the ability for a product to be worn during a game, for example. That’s something you might have to negotiate with a league or a team. But as a storytelling entity, I think that leagues and teams are overrated in comparison to the individual athlete, because the individual athlete, although a superstar, is still a human that you can relate to.
“I want to know how that human sleeps and recovers and exercises and how they deal with self-doubt, and how that shows up in their Whoop data. That, to me, is an interesting, authentic story. There is an emotional connection to that, and I think that’s why we’ve gravitated primarily to athletes.”
We always wanted to build Whoop as an aspirational brand and product. If you go back in time, health monitoring has historically been very not cool.
Will Ahmed, Founder and Chief Executive, Whoop
There are also lessons to be learnt from how other companies have approached athlete marketing, with Ahmed specifically citing “the world-class storytellers” at Nike as personal inspirations. He notes how a product emblazoned with the brand’s unmistakable Swoosh carries distinct appeal in the eyes of many consumers, largely thanks to its emphasis on performance and use of athlete ambassadors to portray an alluring sense of aspiration.
For Ahmed, much of Whoop’s early success comes down to its efforts to replicate that positioning.
“We always wanted to build Whoop as an aspirational brand and product. If you go back in time, health monitoring has historically been very not cool. You know, unfortunately, if you wear a health monitor, it almost signals something’s wrong with you.
“One of the reasons we started with professional athletes was to demonstrate that health monitoring is cool, it’s good for you, and make wearing Whoop actually something that would say something positive about you versus negative. So that’s probably the single most important thing that professional athletes have brought to Whoop: this notion of health monitoring for performance health monitoring, and better health is performance. And I think that’s an important association for people to make.”