Last week Under Armour held an analyst day focused on its digital fitness strategy that included appearances by Under Armour founder and CEO Kevin Plank, MapMyFitness CEO Robin Thurston, MyFitnessPal CEO Mike Lee, and Endomondo CEO Mette Lykke. Under Armour acquired MapMyFitness in 2013, and it acquired both MyFitnessPal and Endomondo earlier this year.
Plank discussed the high level strategy behind his company's recent acquisition spree, which included a $475 million price tag for MyFitnessPal. He and his team also described how what Under Armour is doing is different from Apple HealthKit, noted they were no longer interested in building wearables themselves, shared additional adoption metrics, provided details on their HTC partnership, and much more.
Plank explained that because Under Armour's core consumer was "spending more and more time across different screens", the company had to meet them there. Plank said that "Facebook is social" and "LinkedIn is business", but asked "Who owns health and fitness?" Recognizing that "a lot happens between doctors visits", which typically are every 12 months, Under Armour wants to provide the link between them and fill in the data gap.
As we discussed in our in-depth report on the deals, Under Armour's big move into digital health is partially motivated by its rivalry with Nike, which has been a pioneer of fitness tracking with Nike+ and long time integrations with Apple devices. Like Nike, Under Armour has made a decision to focus on software and building a community, and not on building wearable devices.
Plank said his company's digital journey began in 2008 when his team developed a biometric sensing shirt, the Armour 39, that has been used to track athletes during the NFL Combine. Once it became clear that integrating the sensors into the fabric of the shirt was difficult to pull off, Plank said his team turned the device into a wearable strap. This was around 2012 when the wearables trend was beginning to take off. Plank said the device required parts from 13 different manufacturers spread across five continents.
"The value for us, Under Armour specifically, was not in the hardware..." Plank said. "There were enough people already doing that... That's not the role or place for us to play." Plank said Under Armour recognized that its opportunity was the digital fitness community, and that's what led Under Armour to acquire MapMyFitness.
Since that acquisition in 2013, Under Armour has helped grow MapMyFitness' user base from 20 million to 31 million today.
"What we recognized we didn't have with MapMyFitness was scale," Plank said. "... Most things that grow up in North America end up scaling here..." That led Under Armour to Endomondo, a Denmark-based digital fitness tracking app and community with 80 percent of its users living outside of the US.
Under Armour wanted to help its users synthesize more than just their workouts, but their activity, sleep, exercise and nutrition. From a nutritional standpoint, Plank said MyFitnessPal was more "complete" than MapMyFitness. But they were "loosely doing what MapMyFitness was doing", he said.
"This is not people sitting back and doing Weight Watchers," Plank said. "... On the whole this population is more fit than the United States population... They are younger and more active as a whole."
Plank said bringing these three communities together gives Under Armour the biggest community of digital fitness trackers in the world. Altogether they clocked 136,000 unique registrations a day in January. They had 40 million new user sign ups in 2014. Now one in five Americans has one of the four apps on their phone or desktop, Plank said. That includes 85 million under 40, 62 percent or 75 million are women, and 43 percent or 53 million live outside North America. Plank said that these apps have "skimmed the planet of 7 billion people" and found "the 120 million people who want to measure themselves in some way, shape or form".
With that set up it's clear why Plank believes these acquisitions will help Under Armour boost its core businesses: men's apparel, women's apparel, footwear, international, and direct-to-consumer. Plank said he does not consider digital to be a sixth growth driver for the company, but will be meaningful for each of the above.
Plank said that, for example, 300,000 people using MapMyFitness have opted to tell Under Armour when they buy a shoe. That data helps the company better understand what happens to running shoes at mile 300 or 400, he said. That kind of information can help it develop better shoes, help runners choose the best one, or remind them to buy one at the most effective time.
Plank also mentioned that the previously announced partnership between Under Armour and HTC will see UA "validating" a new fitness tracking device from HTC and putting its "stamp" of approval on it, but Under Armour's Record app will be the app that the HTC wearable feeds its data into. There will be no official companion app from HTC for it, Plank said.
"The only place this wearable device will launch into is UA Record..." Plank said. "Why would you want your data anywhere else? ... Whatever the flavor of the month wearable is... Where does your data go? Is it lost at Fitbit.com or is it lost on the Jawbone UP? These are all great partners of ours, but we want to be the destination for these partners and we want to take this backend off of their hands and make it simple and better for the consumer."
Under Armour plans to grow its digital team from the almost 400 it currently has on hand post acquisition to more than 500 next year. That's up from less than 60 people in 2013.
Thurston, who joined UA when it bought his company MapMyFitness and now runs its digital strategy, described Apple, Google, and Samsung as aggregators. The big difference between their recent platform launches (Apple HealthKit, Google Fit, etc.) and what MyFitnessPal, MapMyFitness, and Endomondo offer, is community.
"Think of HealthKit and Google Fit as the pipes, the data pipes that allow us access to all this data," Mike Lee of MyFitnessPal added. "What we are trying to do is build a community on top of that."
Notably, following a question from the audience, Lee confirmed that the MyFitnessPal acquisition did not include earnouts, but he did agree to re-invest some of his personal proceeds from the $475 million transaction by buying Under Armour stock. Endomondo's Lykke indicated she was looking to do the same.
Thurston, however, who sold his company to Under Armour a few years ago now, had perhaps the most interesting quote of the analyst day. In answer to another question from the audience, Thurston explained that MapMyFitness struggled with advertising and premium subscription services, but that he believed UA would be an ideal acquirer of his company because it was offering his users something they already wanted.
"UA has a product that actually helps you do what you are doing, better. To start at an authentic point that is about helping the person perform better, ... this is a perfect scenario for the consumer... Can you imagine an insurance company [buying MapMyFitness]? I can't imagine how I'd tell the user that."