Zwift CEO Eric Min on Entrepreneurship, eSports and Reinventing Indoor Cycling
When Eric Min was thinking about starting the indoor cycling giant Zwift in 2013, he wasn’t sure his previous business success was enough to justify calling himself an entrepreneur. He turned to his co-founder from his last startup and asked, “did we just get lucky or are we entrepreneurs? Let’s test that. If we do it again and it works, then I’d say we’re entrepreneurs.”
Eric can safely call himself an entrepreneur. Zwift hit the cycling scene in 2014 and hasn’t looked back, raising $170 million and forever changing indoor cycling. And with the coronavirus pandemic and social distancing, Zwift is now one of a group of companies with a solution for both community and fitness, two things we will all need a lot of.
Eric talks a lot about Zwift’s quest to reimagine eSports and a bold vision to land the sport in the Olympics. If you’re like many who aren’t gamers, the concept of eSports is as foreign as the Fortnite craze. But Zwift has nothing to do with sitting on a couch. It’s people of all ages, all around the world, racing their bikes against real people through iconic mountains and cities. They just happen to be inside. Chasing a goal, avoiding traffic, and most certainly getting a lot more fit.
As Eric explains in this wide ranging interview with @prokit co-founder @swain on entrepreneurship and growing a community, Zwift has no plans to stop with cycling. Running, triathlon, rowing: all sports where you can make indoor training a game.
A New Cycling Community is Born
What did you have for breakfast?
I have oatmeal every morning. Yesterday, I did a Gran Fondo on Zwift and felt a little hungrier this morning, so I had some rice and meat.
Tell us the story of Zwift.
The idea was born in November 2013. I live in London and I’ve been a cyclist since I was a young teenager, so indoor cycling wasn’t foreign to me. It’s what I did when I couldn’t get outside. November is not a very nice month in London and I was spending a lot of time indoors, thinking about my next business venture. One idea that hit me was that after over 20 years, indoor cycling still sucks.
I thought, what if we made the proper investment to create a really nice indoor cycling experience and make it social. No other products out there were doing that. I wanted our product to be a game and not real video in order to be able to create an MMO (massively multiplayer online). A video game was the perfect platform to do that, but my partner and I built trading systems in our previous venture. We knew nothing about video games.
I started Googling and I came across a project developed by John Mayfield, who would eventually become one of our co-founders. He was into cycling, but didn’t have time to ride outdoors when he got home because of the lack of daylight. He was riding indoors and realizing the same thing I did, which was that everything sucks. He decided to build himself a game. It was a single user experience. When I saw it, I thought it was a beautiful product. I knew if we made it into an MMO, it would be a great place to start.
I reached out to him and around four weeks later, we connected in LA. Apparently, many people had contacted him. My partner, Scott Barger, and I were the only ones who showed up at his door, so he took us seriously. Soon there were four of us starting the company in January 2014. We did an offsite in Palisades Hills and put together a roadmap. It was a bunch of yellow stickies on a refrigerator. It took us six months to turn it into a product that we could show to investors. By September, when we launched our beta, we had raised $7 million from friends and family.
My partner and I made some money from our last venture, so we funded the initial development with five to eight people, and then from there, we went out and raised a reasonable amount of money. Originally, it was $3 million, but we were oversubscribed by a lot. I knew this product was going to cost a lot of money to build. We’ve raised $170 million and we’re not done.
Were friends and family investing in you and your founders or the vision? Or some combo?
It was a combination. Many of my early investors are friends in the cycling industry, either as independent brands or they have worked in this space. There are others who invested because we were successful in the last venture. Those people are not cyclists and were investing in us personally. I think all of our investors have a better understanding of this company compared to my last one. My parents still don’t know what I did with my last venture, but they totally understand Zwift. My dad is 86 years old, and he rides on Zwift every day.
So people thought, these guys have figured out how to make a startup successful and they probably could do it again. We didn’t know if we could do it again. I asked Alarik Myrin, my partner from my last venture, did we just get lucky or are we entrepreneurs? Let’s test that. If we do it again and it works, then I’d say we’re entrepreneurs.
What was the thought process of bringing the same group of founders back together to start Zwift?
My partner, Alarik Myrin, is not a cyclist, which is great because he keeps me grounded. I’m the guy who dreams big and he’s the one who checks my ideas. He actually liked this one. He had been encouraging me to look into opportunities within the cycling space, because he knew my network was pretty strong. Since I spent so much time cycling, competing and using the equipment, he thought I could probably come up with some idea that hadn’t surfaced yet. I had stayed away from cycling because it was too close to my hobby. Turns out this was something tens of thousands of people wanted.
How has the audience and customer base for Zwift changed over the years, and how are you thinking about that for the future?
I thought all of my hardcore cyclist friends would show up first, but they’re showing up last. I misread it. It turns out it’s much easier to convince those who have never ridden indoors to ride indoors. All my friends are middle-aged guys and they’re set in their ways. They have a terrible impression of indoor cycling. They just don’t know how much Zwift can change that experience because of the competition, the social connections you get, and the convenience. You don’t really understand that until you’ve tried it a few times. It’s been much easier to acquire customers who have very little experience riding indoors. I just didn’t expect that.
The smart trainer concept is still new to a lot of people. Zwift has training plans that are designed by coaches for different kinds of races. I can sign up for a plan and trust that a coach put real thought into it and that helps get me moving.
Many people show up on Zwift because of the training plans. They want to improve their performance, or they have a goal and want structured training. The community aspect on Zwift is super strong for those who are into that. Some people show up to Zwift just to race. That’s all they want to do. The remaining third of our audience are people who just want to ride like they do outdoors. They’re not competitors or in training. Those are the three cohorts: People who are training, hardcore competitive cyclists who want the competition, and people who are joy riding, being social and burning some calories.
In terms of the hardware, we don’t make our own hardware or smart trainers yet. We work with partners who’ve been making trainers for the last 25 years, but we do plan to introduce our own hardware in the future. The integration of software and hardware is something that I think we should do. We’re in the best position to innovate what that experience might be. Ideally, the rest of the industry would follow suit and invest alongside us. The best way to explain it is the way Google owns their Android platform and also makes their Google phones while allowing Samsung and Huawei and LG to make competing hardware. That model works really well for us.
On creating your own hardware, how much of that is a necessity for controlling the quality of the experience?
I’m glad we started our business without any hardware because it was just easier to work with existing hardware partners. We needed to establish our platform. Now, we’re in a position to lead on the innovation front with our own hardware. There’s no way we’re going to be able to supply the whole market of around 300,000 smart trainers-a-year ourselves. We want to make sure we work with the biggest partners and make sure that we’re creating great products for consumers. We also want to be in a position of leadership on the innovation side.
What’s been the hard part about scaling the company?
We raised $7 million initially, then an angel round of $10 million. We did a series A of $27 million, and a series B round of $125 million. We did that every two years or less. Now we have 330 employees. It’s a real pain in the ass growing that fast. We added around 150 people in the last 18 months. With that growth, you don’t double the productivity instantly. In fact, I feel like we slowed down. We’ve made changes to the way we’re organized, and all of this is just an investment in further scaling. We needed to do this to make sure we can keep up with what we want to do. We need to set ourselves up for another big growth spurt in another two years. We have four office projects. It’s a lot of infrastructure work behind the scenes just to make sure that we work productively.
Where are your people?
We’re headquartered in Long Beach, and we’re outfitting 60,000 square feet there for over 200 people. We’ve got about 60 people in London, and about 30 people in Rio de Janeiro. We have small teams in Melbourne, Tokyo, and New York. We do lots of traveling and lots of conference calls.
How has the company changed with so much rapid growth?
Internal communication has become super important. I never really appreciated it until we got to where we are today. In the past, we could shout across the entire office and everyone would be on top of what needed to be communicated. Now we do careful planning and scheduling because we need to make sure that all 330 people are sailing in the same direction. What I’ve learned is you need great managers. You need to trust that they can do their jobs. You need to trust that they can hire the best people. Of course, they will make mistakes, and that’s normal. The trick is to not keep making the same mistakes. I’ve also learned over the years to do fewer and bigger things. As a startup, you try to do a lot of little things, and you look back after 12 months and see that it’s usually one or two things that move the needle for the business. I’m trying to get ahead of that and pick the three things we need to work on. Everything else is secondary. You need to keep it simple. All 330 people should understand what our priorities are and make sure that they’re working on something that’s impacting one of those three things.
How do you choose those three things?
Well, it’s going to be different every year. I have a two-year vision for where I want to be and then I figure out what are the few things that are a stepping stone towards that. In the past, we tried to do lots of different things, and that’s the shotgun approach. If you’re laser focused on three things, you’re just taking bigger bets.
The risk of failure is also much higher when you bet on a few things.
So you better make sure those three things are really meaningful. One is not meant to replace any of the other two. None of them are meant to hedge each other. Those three things are intricately linked in the strategy. Our three things now are: one, we have to just make an awesome product; two, we have to successfully launch our hardware business; three, we have to make sure that we have a successful year unveiling esports world championships. The whole company is focused on those three areas.
For people who aren’t following esports, explain what it is. How does Zwift fit in?
Two years ago, I contacted David Lappartient from the UCI about this concept of a new discipline. For people not in the cycling community, UCI is the world governing body for cycling. It is an institution that’s 120 years old. It’s a very powerful agency within the International Olympic Committee. I talked to David about the idea of esports for cycling and how Zwift could potentially be the platform for it. He quickly wrote it into the constitution and got it ratified by his UCI Congress. The following year, 2019, we jointly announced our partnership. Zwift would be the platform and we would deliver the official 2020 esports cycling world championships sanctioned by the UCI. That speaks volumes of the innovation UCI wants to do.
David is also chairing the esports committee within the IOC. Thomas Bach, a former president of the IOC, is encouraging all the world governing bodies to think about esports. He has referenced Zwift often because we’re uniquely positioned to deliver an esport that has an athletic component to it. For most esports, you’re gaming while sitting in a chair or, if you’re drone racing, you might be standing up. To use Zwift, you have to be an athlete. The crossover between outdoor riding and indoor riding is pretty high because those outdoor athletes are well qualified to do esports.The physical qualities that you need are not that different. Zwift also supports the spirit and values of the Olympics. It is a sport that is super accessible. It’s not a shooting video game, and it requires that you work hard physically. I think it hit this sweet spot of a sport or discipline that helps to bridge the old world of the Olympics and this new world of video games.
The Zwift Audience
Talk about finding talent through Zwift Academy.
The notion that you can take part in a global sport from the comfort of your home is super innovative. There’s no other sport where you can do that. This year, you can take part in the US national qualifiers from the comfort of your home. The actual nationals will happen in the real world, but anyone at home can take part in the U.S. national qualifiers. You just need a qualified trainer and access to Zwift. We will take the top contestants and bring them into an arena for the further competition that will take place to crown the U.S. national champion.
Some countries can’t afford to have some of these events, but we can do it in such a cost-effective way. Anyone should be able to afford to host a national championship on Zwift, even if the finals happen in the real world. We’re super excited about it and that’s the model that we will use for the world championships. The national championships will be a feeder to the world championships.
Zwift is a great way to identify talent. When 70,000 people take part in Zwift Academy, you’re going to find some incredible athletes. When I do a race, I check my ego at the door because in the race, I realize my perception of my fitness or competition is so local. On Zwift, you’re riding with people from Belgium and Holland and some parts of Asia and Australia. Some people are incredible athletes, but not professional cyclists. They could be lawyers, doctors or plumbers, and they’re just gifted. They just happened to be really interested in cycling. We’re finding all these incredible athletes who chose a different path.
An increasing number of athletes are starting cycling after an injury from another sport. Are they producing big results because they have great endurance?
Yeah, absolutely. We see it with rowers and runners. You can’t assume that the best athletes in the world are cyclists. Think of incredibly talented soccer players, baseball players, American football players or NHL athletes. These athletes are everywhere. Evan Pole is a teen soccer player who made a transition to road cycling within one year. He went from playing soccer to becoming the best junior in the world in one year. That just goes to show that cycling does not have all the best athletes.
Where do Peloton and Zwift converge, if at all? Are you addressing the same audience?
We’re actually at the opposite ends of the spectrum. If you go from general fitness to highly competitive, Peloton is on the general fitness end and we’re all the way on the other end in terms of what inspires our audience. We are deliberately going after those people who identify themselves as cyclists or runners. They consider themselves potential athletes or aspire to be athletes.
Increasingly, we’re finding customers who are going to a bike shop to buy a bike and a smart trainer. They want to be a cyclist, but they’re starting with indoor cycling. From there, they’ll build a community, they’ll increase their fitness level, and they’ll eventually go outside to do a Gran Fondo or to meet those virtual people from Zwift in the real world.
At Zwift, we are not going after the general fitness crowd. We want to create the kind of behavior like when I watch Wimbledon and then I want to play tennis the next day, or I watch the Tour de France and I want to ride my bike the next day. We wanted to create the same thing with Zwift esports. We want people to watch the best cyclists compete on Zwift and then want to get on Zwift. That is a proven model. We’re doing it indoors in a virtual setting.
General fitness is a bigger market. What’s given you the confidence to stay true to the more competitive athlete?
We’ve got the credibility now. Most of the top professional cyclists, triathletes, and serious runners are on Zwift. These athletes give Zwift validation. They inspire the rest of us. We get to see what they’re trying to do and how hard they’re working. What I get from sport is clubs. I get a community, training plans, coaching, competition, and participation. It’s this whole infrastructure that exists in almost every sport, especially the mass participation sports. That is what we want to mirror virtually, and I think that will stick more than other fitness experiences that exist today.
What’s the baseline entry point to get into Zwift for people who want to get started.
You can get started for a few hundred dollars on a smart trainer (Wahoo Kickr, Tacx Neo 2T, or Elite Suito), and Zwift costs $14.99 a month. There’s no contract, so you can go month to month. We work on a variety of different displays, whether it’s a PC, Mac or iPad or Android tablet, mobile phones, and Apple TV. If you already have a power meter, you can use a classic trainer and spend less money. The amount of time you save by being on Zwift versus having to go outside is enormous. For me, I can get an incredible workout in one hour. Once you try it, you realize the value of the convenience and the effectiveness that you get from indoor training because you’re not coasting. One hour on Zwift is like an hour and a half outdoors because there’s no soft pedalling.
The Nuts and Bolts of Running a Company
How do you manage work while staying in shape and having a family?
I have three young teenagers, I have this job, and I travel. I still manage to workout five to six times a week because I can sneak in a workout at a hotel, my office, or at home. Do I feel like less of a cyclist because I do the bulk of my training indoors? Absolutely not, because when I go outside I’m reasonably fit. Once you know how to ride a bike, you don’t forget. Of course, if you’re completely new to cycling, you need to learn bike handling skills on a balanced bike. But otherwise, you can get nearly all the fitness you need indoors.
Talk about balancing kids and travel. Have you done that well?
It’s not easy. I try to be home for the weekends, so travel on Monday and come back on Friday. I probably travel half the time, so two of the four weeks each month. My wife is super supportive, which really helps, and my kids are not young anymore so they can take care of themselves. I’m trying my best to balance, but it’s tough because there’s so much to do at Zwift. Also, for me personally and many people at the company, the line between work and pleasure is really fine. We are all customers of our own product. I think it’s a good thing, but once in a while you need a break because it can be overwhelming.
The endurance sports world has not been great with diversity of race or gender, especially around pay. Thoughts on what role Zwift can play?
I would say that about 20% of our customers are women, 80% men. When it comes to the content programming we do, whether it’s with the Academy, the Twitter Zwift competition campaign we had recently, or esports prize money, it’s got to be equal. We’ve been true to this always. We see a huge opportunity for us to grow the women’s community because it is a safe environment.
There’s definitely work that everyone should be doing to promote parity. What we are doing is consistent with the UCI and what they’re trying to do for women’s professional racing. They’re trying to raise the pay levels and make women’s cycling more professional, which we’re starting to see with the world tour teams now. If we have a prize on Zwift, we’ll have equal prize money for men and women.
Building community is not something that comes naturally to many companies. How have you guys done it?
It would be wrong for us to take full credit for it. I think the community came together because of the product and then it just grew. We just created an environment for them and a product that they wanted to invest in. Then we just made sure we didn’t get in the way. If anything we’re holding the community back. Some features they’re asking for would only help us to grow the community.
The club functionality feature we’re coming out with is something that is entirely for the community. We’re making it easier for them to organize themselves on our platform. You can be a members-only or invitation-only club. Brands can be present on our platform as a club. This is something our customers have been asking for. It is strategic for us to have that core functionality which we’ve been working on for nine months now.
Does most of your funding go toward engineering?
I would say probably half goes to the product. A good chunk of the remaining half is marketing. The rest goes to esports, corporate functions, finance and people, et cetera. Half the company is definitely focused on product and tech.
Do you find talent from the world of game developers or across the board of software engineers?
We have software engineers across the board. The game team is probably the most difficult to recruit for because we’re competing with the AAA studios and publishers, Amazon, Tesla, Facebook, Google. Everyone wants game developers. It’s super competitive. We’re constantly looking for more people on that front. It’s definitely tough.
Growth and Zwift’s Future
Looking to the future, where are you going to be?
We’re growing pretty nicely. We grew 40% last year, but we’re not doubling anymore. That’s easier to do when your numbers are smaller. But we are still growing, and we think the total addressable market is very big. If you look at Strava as one reference, they have about 25 million cyclists. We’re still bringing on customers from the early cohort of Strava users. There’s a long way to go before we run out of cyclists. Then if you start widening the scope by changing the experience to running or rowing, you just go down to that next tranche of customers. It’s huge.
We’ve got a long way to go. We need to make sure our product proposition fits the specific market. We’re placing a bet on the future. We give away Zwift for kids. If you’re under 16, Zwift is free and parents love it. We have thousands of kids on and we’re betting that eventually they will become paying customers. Kids are going to find their fitness solution through video games, and I want to make sure Zwift is there to serve them.
What lessons do you have for an aspiring entrepreneur?
The investment that you put into the company has to match the ambitions. From the very beginning, we thought this was a big opportunity, so we invested accordingly. But you have to be right. If you’re not, it’s painful. I would say the other thing is having a mission worth fighting for. You need to sell people on it, the people you hire, your customers, your partners, your investors, the media. It has to be super authentic and credible.
At Zwift, everyone understands the mission of the company which is to get more people to be more active, more often. It’s very simple, and one that everyone could get behind. The mission is super important. Then you have to hire the most passionate people. They don’t have to be rock stars, but collectively they have to be an awesome team. Great people attract great people.
Any last thoughts?
I believe Zwift will carry on long after I’m gone. That’s the kind of lasting business we all want to create. It’s really special. I often tell the guys who work for me that this is the one that really matters. It’s not a stepping stone to the next thing. This is the ticket. The opportunity is huge for us, the community, and the space because it’s a brand new category for all of us. So live in the moment, enjoy what you do, and make this one count. That’s what I tell myself. I make this one count because there’s no guarantee the next one is going to be even remotely close. I’m living this opportunity as if it’s my last.