Podcast with Eric Min, Co-founder of Zwift

Hey Eric, it's been a while. Thanks for doing this podcast - I'm one of the biggest Zwift fans. I wanted to start by asking - how did you begin with cycling?

First of all, thanks for having me - it's great to reconnect. I started cycling when I was a young teenager. I had a 14-year-old friend who began touring on a bike. And this was before I had a driver's license. So I thought, wow, what a fascinating way to get around town and explore new places as a kid. So I started touring just locally and bought a bike. And the funny story is, my friend is much taller than me.

And I insisted when I went to the bike shop to get the same bike, the same size. It was a 56-centimeter bike. Kotobuki - I remember I was the name of the Japanese bike. Well, I can tell you I'm 56 years old this year, and I ride a 49-centimeter bike, haha. Over time, my bike has gotten smaller and smaller. Of course, this has a lot to do with just understanding sizing, but that's how I got started with cycling.

I got to a point where I needed more from cycling than just touring around. And then I happened to bump into a local cycling club called the Sleepy Hollow Cycling Club in North Terrytown - just outside New York City in Westchester County. And I came across these three brothers. We call them triplets. And they took me under their wings. They worked at a bike shop. I worked at the bike shop with them and learned about racing, training, and European racing.

I learned about Greg LeMond. This was back in 1981 - that's how old I am. So this is before the Internet. We had to wait for the magazines to arrive, and it was like a month old - but that's when I fell into a passion for cycling racing. I traveled to the races in the northeast of the US. And then, I started to do well in junior races. And I caught the bug - I was a dreamer. I thought, oh, wow, this is something I could do for a living - but back then, you really couldn't survive as a professional cyclist.

But I had those aspirations. I had aspirations of racing nationally and eventually internationally. I never got that far, but I took it seriously for about 4 years. I gave up after one year as a senior, and I went to the Olympic Training Center because I got invited there to get tested and compete with others my age. And I realized back then that, wow, I am just not good enough to be a serious professional athlete.

And this is precisely when my parents were worried about me and my future. And I started to think, okay, I've got to get my act together. I'm not going to be a professional cyclist. I've got to figure out how to become a professional and sustain myself beyond just riding my bike for a living. So, yeah, that was how I got started. And many years later, cycling is still really rooted in my DNA and the person I am, and it's not something that I became passionate about recently.

Since I was a little kid, I've been passionate about the sport, the activity, the history, and the training - it's a big part of who I am today.

Regarding starting a business, what made you an entrepreneur?

Yeah, this is a funny story. I started my career at JP Morgan. I landed a few different jobs in finance and technology, so I learned all my craft at JP Morgan. I got introduced to technology there and was fascinated by that, and this was during the big internet boom, so there were a lot of changes, and this was the right field to be in.

After eight years at JP Morgan, I asked myself: "Do I want to be my manager - my boss?" And it was evident to me that I didn't want to be him. I didn't want to have his responsibility. And I thought my path forward was to be independent. So this is when I was about 30 years old, and I felt I had nothing to lose. I didn't have children; I didn't have a mortgage. I was married, living in New York City.

So I thought, if I'm ever going to do something entrepreneurial, it's now. It's not ten years from now. So I had the opportunity with my partner at JP Morgan to start a technology business. We built trading systems for hedge funds, banks and insurance companies, and energy companies. So that was my first foray into being an entrepreneur and learning everything about, well, I have to write a business plan.

I have to convince investors to give us money. We have to build a team. Well, first, you have to know what you want to develop in terms of a business. So that was my training ground. My first business was called Sakonnet Technology, which we did for over a decade, and that was a great learning experience for me.

I'm interested in the first steps after you came up with the idea because Zwift is not the classic business that you can make the Iterative approach at the beginning and say, I'm going to raise a little bit of money, see if there is validation, and proceed with that and listen to users.

From the beginning, from what I was following, it was much, much bigger. It required a lot of capital, a lot of people, and a lot of content. You needed to build many parts - how did you approach that?

One of my co-founders, John Mayfield, had already started building this video game for himself. He made that because he had a problem in that he was too busy working, and when he got home - it was too dark. So he wanted a game to keep him motivated to train indoors. And there were other indoor training products at the time in a video game setting. But what I saw in his product was the beginnings of something much more attractive and sophisticated.

However, it was a single-user experience. And what I had in mind was that it had to have a social aspect. Like when you go there, you go there because there are other people there. That's the magic of what Zwift is today. So my partner and I made some money from our last venture. So we could write checks to fund this business from the beginning. And, of course that helps from an entrepreneurial standpoint that allows us to build something before actually going out, raising money.

If we had, in this case, only a concept, no product, and go and raise money, we would have lost so much equity even if people were excited about the idea.

So funding it ourselves, in the beginning, was a considerable way to get this thing off the ground and build a small team. We had a team of roughly eight people that took us to the summer. My partner and I funded the original seed capital. And then in the summer, so like six or seven months later, we had a product that we could show to prospective investors. And I remember this because that same summer, I had a party for my last venture.

I brought all the investors together to celebrate the success of the previous business. But I used that meeting to pitch my new idea, to get them to reinvest the money they made from Sakonnet Technology into Zwift. And they got like seven or eight returns on their capital. And so many of them, a number of them, wrote another check into the Zwift business. But we had something much more exciting, and it was a bigger story. And we had a great pitch deck with video to back it up.

People generally got excited, and we had credibility because we had already built something successful. We can leverage that experience and credibility to launch something new, which was closer to my passion. It was a much bigger idea, and we were willing to put significant amounts of our own money into it - I think my partner and I each put a million dollars into this business. Not many entrepreneurs can afford to do that if you're starting from scratch. But we were in a very luxurious position to be able to do that. So we had a lot of support from the investors.

I pitched to 200 friends and family, and 100 of them invested. So the initial round was, let's go and raise $3 million from our friends and family. And we ended up raising; I think, $7 million from friends and family. I also told my partners - and this is a funny story - I told my partners, "Hey, I'm going to set the price at $20 million, pre-money valuation, because I think it's a huge idea."

I think they all thought I was on drugs, haha! Anyone who thought I was crazy, I said, okay, you're not coming to the investor meeting. And so, yeah, we managed to pull off the valuation again.

Why was that important? It helped protect us against dilution for us. And we sold a third of the company for $7 million, and off we went. We had a grand launch. And I remember even the launch event, which was in 2014, we did it with Rafa and many big brands. Team Sky, we did it with Pinarello, Wahoo Sports, and a few others. We decided to have a launch party at the end of September in London, New York, and San Francisco at the same time, with media in all three locations where they can all ride together.

We pulled it off, but it was just like, what the hell were we thinking? Because many things could have gone wrong, one of the superpowers we had was to bring all the industry partners together because, in that respect, we're a platform. We're a platform where brands like Pinarello and Team Sky, and Rapha could all be activating on our platform.

That's a lot of people - especially at the very beginning. Wow.

So from there, we started to say, okay, we only support Mac and PC, and then we worked our way down and opened it up because we needed the customers to give us feedback about the product. We launched with a small map called Jarvis Island, which was a small airfield. It's a small island in the South Pacific. It was an airfield last used during World War II, and we used it because it didn't conflict with any Strava segments...

There were no Strava segments on that island until we arrived. And I remember when people started to ride on it and then post Strava because we had integration from day one.

People asked me "You're in the South Pacific; what are you doing in Jarvis?" This is how people started to hear about Zwift because it was coming through their Strava fee. "Why are you in the South Pacific again?" - This is like word of mouth, right? So this was in many ways, a growth hack for us early on.

Another growth hack that is looking back was quite brilliant was that we kept the map to 3 miles. It was 5 km - that's it. Our thesis for this was that whenever you show up on Jarvis, you want people to see each other. So when you don't have much population, if you have a big map and they don't see each other, it doesn't feel communal, right? It doesn't feel social. It's fun to bump into someone with a flag from Denmark, China, or Australia. That's what makes it so interesting. These are people you would never meet in the real world, right? And they were doing that on Jarvis.

We needed more functionality. When we launched, we only had this simple circuit, and the only thing on offer was three jerseys. One jersey was the king of the mountain. There was a little hill so that you could get a Kom jersey. Another one was the green jersey, which is the fastest sprint segment. And the third one was the orange jersey, which is the fastest lap time.

That's all we offered. And you could only hold it for 1 hour, and then after 1 hour, it gets reset to someone else. So it allowed you to go in there and chase something. That was our only reward gamification, and we didn't have this concept of events. We didn't have the idea of racing; we didn't have the concept of training - nothing. It was just those three jerseys. And people showed up and loved chasing these things.

So that was the beginning of Zwift. Fast forward to today, nine years later, it's progressed from there. But that was the early days. Boy, I remember getting so excited when we saw 100 people riding together simultaneously. We went to New York City, and we celebrated. It was a big moment for us.

I hear you're investing a lot in reducing the time-to-value. If I want to start using Zwift today for the first time, it isn't easy because I need to have my bike, I need to have my setup, and I need to get everything there. What are you building to improve this process?

Well, there are just so many layers of friction that we need to combat. What we learn over time is that consumers need to be more active. And if you give them three clicks to complete a process - they may not buy something. So you've got to get rid of those clicks as just an example. So the reality is that we're not just an app. You need the kit; you need the hardware to have the experience. So like it or not, even if we don't manufacture our hardware, our customers need the hardware to get onto Zwift.

So breaking down the barriers simplifies. For example, we're the only ones in the market that allows consumers to pick the cassette they want. The worst thing that can happen is you buy this trainer, and then you realize it doesn't come with a cassette and doesn't work with my bike.

What did you do to enhance referrals and word of mouth?

Yeah, I mean, it all comes down to the product experience, right? And every step of the way, from learning about Zwift to onboarding to purchasing to the first ride, to the second, third, and tenth ride - we need to continue to delight the customers along the entire journey. That is how you can ensure the flywheel that comes with word of mouth.

So you keep investing in the customer experience; you keep investing in the product. That's what we do, and we plan to do more of. Advertising can only go so far - the advertising has to match the experience. You can't over-advertise, and then the experience doesn't meet expectations. So it's really important to focus on the customer experience. I ride on Zwift almost every day, and I am the customer.

I see the challenges; I see the opportunities. I also see the incredible experience I get after 1 hour of Zwift-ing. It's amazing. I feel fantastic, and it's super convenient, but it takes a while to get to that state. And anything we can do to ease the friction and the burden for the consumer is what we're focused on.

One of the things that I've seen friends posting a lot is whenever they are riding with a famous athlete. So, for example, someone would post, oh, I'm riding now, and Lance is with me. Oh, I'm riding now. And I saw this very often. How did you get so many famous athletes to participate? Was it a deliberate effort, or did they come because it was a great product?

A lot of it was authentic. The pros enjoy not riding in the rain and riding on Zwift. It all started with pros because of weather or because they're injured, and then they come on Zwift. And then, of course, during the lockdown of COVID, they all came because it's a very effective tool. Riding indoors, indoor training. It's proven that it's super effective and super efficient. It was never fun, and even for pros, they appreciate being around other people.

They're social creatures, like all of us. So, yes, we give free accounts. If you're a pro, you confirm you're a professional, and we give you a free account. We're happy to do that. But that's not why they show up. They show up because they want to train. They want to be around other people - they're lonely. Training is a very lonely experience for many professionals, I would say. It's the casual ride they do with other professionals or on Zwift.

Some people live in parts like Andorra, where the only training you can do is to go uphill. So if you want to do an easy ride in Andorra - you go on Zwift; it's been exciting, and it's great to see celebrities and professional cyclists.

What values do you look for when someone is going to join?

Swift, yeah, well, the kind of folks I love working with. You have to be passionate about what you do, right? Life is too short to do something that's not your passion, so marrying love with your super-important professional skills. It should always be more than just a job. So I look for someone who wants to go all in on this business because they believe in the mission, the business, and how big this could be.

It would be best if you had someone willing to follow you through all the great times, but also the tough times to get there, and someone who is committed. And then, of course, they must bring skills you don't have. And I would say always hire someone you think is better than you. It's not always easy for people to accept this, but it's always better to hire someone who has better skills than you, has more experience than you, and brings something you don't have. It's scary for some entrepreneurs, but I embrace that because this is how you grow as a business.

What can we expect from Zwift in the next year and within the next five years?

Well, these are challenging times - just market-wise, but our focus is to continue to optimize the customer experience. There's so much for us to do, and I'm super excited about our strategy around doing more for the customer and the experience. Once you're in the game, there's a ton of gamification that we can add and tools we can offer each user to create their content.

I'm super excited about mobilizing our customers to help build the communities that they want. Lastly, of course, I can't end this podcast without mentioning the Metaverse, but we have been living in the Metaverse since we started, right? Every day, people take an hour and go into the Metaverse called Zwift. And this is how they spend an hour of fitness in this virtual world. And they have an identity there, friends there, and then when they're done, they come out into the real world and do other things.

And I think that is just a slice of what the Metaverse will be like going forward, where people dip in and out for different experiences.

One could be centered around gaming, another one around learning, or it could be centered around work and Zoom. People already see this as accurate, and we certainly are embracing the concept of virtual worlds and the Metaverse. I think Zwift is well-positioned to be the category leader, and I think, by default - we are. But how do we turn this into a much bigger universe? How do we get more non-cyclists, who are not cyclists today or runners today, and get them to join this community, inspire them, and motivate them to want to train and become part of a new sport?