Fitness That Fits
Even before Michael Lannon and his wife, Mary Obana, had customers, they were serious about getting people's opinions. The couple knew they wanted to start a business helping the middle-aged stay fit, but that was all. To find the right niche, Obana spent most of 2002 interviewing about 1,000 potential customers. Next came three years of getting comments on the product the couple was developing. The result: the sleek, white Koko Smartrainer, which gives exercisers a 30-minute workout based on their goals, be it weight loss, building strength, or even improving their golf game. The workout is loaded onto a portable flash drive that plugs into the machine and plays on a computer touch screen.
Lannon's and Obana's company, Koko Fitness (the name is derived from a Japanese word meaning individual), has sold about 200 machines to gyms and hotel fitness clubs at $10,000 apiece, and revenues tripled to $1.5 million in 2007. In September, Koko signed a global distribution deal with Star Trac, a $200 million marketer of exercise machines. "What the fitness industry needs is something like TiVo," says Steven Nero, president and chief operating officer of Star Trac. "If you can make it that simple for the inexperienced user, you can change the game."
Obana, 42, and Lannon, 49, former advertising executives who married in 1995, started Koko after an Internet wine marketing business they ran tanked. Obana started interviewing people interested in improving their health, finding that many, particularly women, were looking for an easier way to build their strength. Using $100,000 of their savings, the pair worked with Kim Blair, a sports consultant affiliated with Massachusetts Institute of Technology, and consultants from technology development firm Cooper Perkins to create a prototype. Once it was clear "the monster could live," Lannon says, he and Obana raised $500,000 from angel investors and launched Koko Fitness. The company has raised a total of $10 million.
In 2005, Obana and Lannon asked two YMCAs to put the machine in their gyms so they could see how well it worked. Koko's team then made about 30 hardware changes and 80 software changes. "That degree of customer engagement all the way through the process is unique," says Patricia Seybold, CEO of an eponymous customer experience consulting firm in Boston.
Still, Koko is facing a battle. Life Fitness, the leader in commercial fitness equipment, is rolling out its own system for customized workouts. Laura Richardson, an analyst at BB&T Capital Markets, says because Life Fitness' new system can be retrofitted onto its large base of installed machines, Koko might have a tough time breaking into gyms. And with the average life span for commercial gym equipment running five to seven years, she says Koko "ought to be prepared for a slow adoption cycle."
Lannon and Obana aren't worried. After years of listening to customers, they believe they finally have the right answer.
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