Octane Fitness: A closer look at Nautilus’ new acquisition

Octane Fitness founders Dennis Lee and Tim Porth have maintained a long-term focus on creating both exercise equipment and a workplace that operate smoothly.

The fitness industry veterans, who launched Brooklyn Park, Minn.-based Octane Fitness in 2001, have invested in product development to make the smoothest-running “zero-impact” cardiovascular training machines they can, earning more than 90 “best buy” awards over the years. They’ve also committed to innovation within the company, instituting a rigorous hiring process that includes assessing a candidate’s passion for the job and cultural fit.

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Tim Porth, Dennis Lee (submitted photo)

The approach that Lee and Porth have taken apparently grabbed the attention of Nautilus Inc., the Vancouver, Wash.-based global fitness products company that bought Octane Fitness on Monday for $115 million, as the companies stated and the Star Tribune reported. In addition to making Nautilus equipment, the company also makes Bowflex, TreadClimber, Schwinn and Universal brand products.

Additional background on Octane Fitness is available in the profile I wrote for the Star Tribune business section.

Lee, the company’s CEO, and Porth, executive vice president for marketing and product development, discussed developments at Octane Fitness in a recent conversation that took place before the acquisition announcement. They also looked back on how they grew from having just one elliptical machine to their growing lineup of standing, seated, lateral and cross-circuit elliptical machines.

In December, Octane Fitness introduced the Zero Runner ZR8, a high-performance model of the Zero Runner machine that debuted in 2014 and, according to the company, replicates natural running while protecting the body from stressful, repetitive impact that typically accompanies it.images

Late last year Octane Fitness also began shipping the XT-One cross-trainer, which enables exercisers to walk, run, hike or climb on one machine. In the Twin Cities, Octane Fitness products are at 2nd Wind Exercise Equipment locations and in use at commercial partners at Life Time Fitness, Snap Fitness and Anytime Fitness gyms.

Here is more from that conversation:

Q: What has been the response to the Zero Runner?

Lee: The response has been fantastic. It’s a whole new category of exercise, this idea of zero-impact running. People are running again who haven’t run in a long time. People are running smarter because they’re able to get the same amount of miles with less impact on their body. It’s a solution for people who want to run again or run smarter by training with less impact.

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Zero Runner (submitted photo)

Our only challenge is getting the word out and helping people understand there’s a solution to their issue that they may not know about. We have more designs on the board for the future, so it’s a category we’re going to continue to invest in.

Q: Why differentiates the XT-One, the new cross-training machine?

Lee: When you look at the console, there’s four green buttons: walk, run, hike climb. We’ve put them into one machine and made it easy for the customer to access them. Those four modalities have been around but the ability to do them all in one product is a big change.

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XT-One (submitted photo)

What we love here and one of the training methods that’s popular is interval training. On this one product, I can do intervals from walking to climbing or running to hiking and really take my workout to the next level. If I go to a club and go to use the XT-One, I’m going to be able to get the modality I want and not have to wait for somebody else or get off a machine and get on another machine.

Q: How are your existing machines doing?

Lee: It’s going well. We have a handful of different solutions, whether it’s an elliptical or a lateral product, a seated product or a running product. All have that thread of zero-impact knit into them. The company’s growth is coming through all of those things in combination.

Q: What is new with the SmartLink app (a free app that enables users to control their Octane fitness machine from a tablet or iPhone and includes goal-based programs, workout tracking and virtual trainer videos)?

Porth: We’ve done a bunch of things with it so that it’s super easy to use. Our No. 1 key is to make it so that people don’t have to push a lot of buttons or type a bunch of stuff in each time. We continue to develop it and it’s going on the commercial side as well. It keeps the cost of the product down by not burdening it with expensive electronics that get dated, allowing you to use what you have an already know how to use, your iPad, your iPhone or an Android tablet.

We have over 200 videos built into it for different strength exercises that you do in combination with the machine. There’s a lot of variety in a really easy-to-use format. The goal is to keep people motivated and get the most out of that time that you’re there, and I think it really achieves it.

Q: What’s a critical decision or a smart move that has helped Octane Fitness get where it is today?

Lee: The first thing that came to mind is that Tim and I really spent a lot of time thinking and planning in the beginning before we produced a product. You think about where we are now and I’m really proud to say that that strategy has stood the test of time. We’re still focused on zero-impact products. We still do the things that we feel are most important to the customer, and that’s innovate products at the highest level and provide unbelievable sales and service supports. Those have been tenets of the business since day one and they’re still here. We’ve been true to that strategy and it’s been good to us.

When we started the company, within the specialty realm we were a mid-priced consumer elliptical business. Today we are in consumer, consumer direct, the vertical commercial market, the club commercial market and in all of those channels internationally. And now we’re premium priced. I think we’re the first consumer company to become a substantial club product, at least relative to the big boys we compete against today. Everybody went the other way, they were commercial first then consumer. We swam upstream rather than the other way around.

Q: Was going from consumer to commercial part of the plan from the start?

Lee: It really was. We still have copies of the original five-year plan. Commercial was part of the strategy. We went into consumer first because of the speed to market and we had more experience there and more relationships there.

Porth: And it was an opening.

Lee: It just screamed out to us. It was the right place to start but there was more out there.

Q: What’s been one of the greatest challenges or lessons through the years?

Lee: Going back to the first couple of years, we talked like we wanted great people but we did not put in the work and the effort that’s required to find and keep great people. We went to the school of hard knocks and had a bit of a revolving door early. It was volatile, a start-up, and a lot of different issues in why people left early on. But we got very serious about how we were going to handle the process of prospecting and bringing in new hires, making sure that we had somebody who was right for the position and was going to be passionate about the job. We also put steps in to make sure they fit with the culture that we were trying to build. You bring in people who are performers, who want to win and you want to bring in more of those kind of people, so it kind of builds on itself.

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Movers Extra: CohenTaylor Executive Search Services

(Movers Extra presents additional insights from business people featured in Movers & Shakers, which I write for the Star Tribune’s business section).

A past recruiting success helped lead to creation of CohenTaylor Executive Search Services, a boutique Minneapolis firm specializing in placements in nonprofit and public organizations.

That winning effort occurred in 2011, when executive recruiter Chris Cohen persuaded nonprofit executive Don Taylor to make the move to her industry.

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Chris Cohen, Don Taylor (submitted photo)

Cohen, a recruiter since 1997, had often sought input on nonprofit recruiting from Taylor, whose 30-year nonprofit career included serving as vice president of development and client services at the Minneapolis Foundation.

“Chris would lean in to me once in awhile,” Taylor said. “To be an effective recruiter she wanted to understand the space totally and completely.

“Eventually she tapped me on the shoulder and said, ‘What about you? Would you be interested in working in search?’ ”

He was, and they worked together at a Twin Cities executive search firm for four years before forming CohenTaylor in 2015.

Cohen and Taylor launched their retained search firm to help address disruption in the nonprofit and public sectors and in the search industry itself, as they explained in a recent Star Tribune Movers & Shakers feature, which you can read here.

Here’s more from that interview:

Q: What differentiates CohenTaylor from other recruiting firms?

Cohen: Our inside-outside approach. We came into this with this history, my experience in the for-profit side, in the recruiting side, and Don, the insider, where he’s been inside the nonprofit space for almost 30 years.

What we continue to hear from our clients is that combination of insider-outsider status, insider-outsider knowledge feels very helpful to them in getting to the outcomes they’re looking for.

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Q: How did you identify the opportunity to start a new search firm?

 Taylor: If you think about the way search might have been done in an old-school way, our outcome was to get a slate of four to six candidates who could present the competencies that our clients were looking for. While that’s still part of what we do, what our clients are looking for is more the “so what” on the other side of that.

While that’s still part of what we do, what our clients are looking for is more what have they done, what kind of impact have they had had in organizations where they’ve served in leadership. Our search model is changing to understand that better for clients.

Cohen: We’re going to get behind measuring outcomes. It’s a lot more emphasis on outcomes, deliverables and our placed candidates, how successful they are.

Q: How has finding talent changed and how are you responding to that?

Taylor: It used to be, let’s go back to that little black book and that doesn’t work anymore. Chris and I like to think about our success in cross-sector recruiting. There are a number of folks who want to be engaged in mission-focused work that’s so big in the nonprofit sector and want to transfer what they can in terms of their business skills across to that sector that will help nonprofits work more effectively or efficiently. A second part of that is the use of social media. Most folks now that are actively looking for new roles are using their phones and going to various websites. LinkedIn is huge.

Cohen: LinkedIn’s “2015 Nonprofit Talent Trends” reported that 57 percent of individuals go to social networks when they go to find a job. In the same report, 70 percent said they would consider working in the nonprofit space. On top of that, the majority of people are not sitting with a resume on the corner of their desk.

We joke that we disrupt other people’s lives. What you’re getting with this retained search firm is we’re going after that passive candidate. And how you get to that passive candidate is really different today than it used to be.

We work in partnership with our clients to figure out with them and the board what they’re looking for. Once you can get your arms around what the core leadership’s needs are for the outcomes they’re looking for, that inform where we’re going to go.

Q: Can you describe the Intercultural Development Inventory (IDI) tool that you’re using to recruit diverse, culturally competent candidates and your emphasis on understanding intergenerational differences in today’s workforce?

 Taylor: The IDI is a self-assessment in terms of cultural competency. We want to understand where we are individually as search professionals, our own cultural competency, and from that develop what are some key questions or conversations we can have with candidates to help understand what their cultural competency is.

Because of the changing demographics in the community, a lot of the nonprofit sector wants their leadership to look like their client base, so they’re looking for culturally diverse folks who can take leadership roles.

In terms of intergenerational, the workforce in terms of how a baby boomer might work in the workplace vs. how a millennial might work or not even bee in the workplace to do their work is very, very different. Leadership needs to understand that because they can’t afford not to understand that in terms of how the workplace is changing.

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Movers Extra: Bill Kirkpatrick, Cameron’s Coffee

(Note: Movers & Shakers, which I’ve been writing since its inception in 2011, features recently hired, promoted and otherwise news-making executives, entrepreneurs and business owners each Monday in the Star Tribune’s business section. Here, Movers Extra includes additional insights and wisdom from these smart, accomplished people).

Bill Kirkpatrick once thought his future might be in cranberries. That changed the moment his wife, Lisa, asked a question that stirred his entrepreneurial instincts and led him to pursue his passion for coffee.kirkpatrick

The result has worked out well for Kirkpatrick both professionally and at home. He soon will mark 20 years as CEO of Cameron’s Coffee, a growing Minnesota-based regional coffee roaster with national ambitions. Kirkpatrick and his wife, meanwhile, celebrated their 21st wedding anniversary earlier this month.

Kirkpatrick described his plans for Cameron’s future growth when we spoke for my most recent Movers & Shakers feature for the Star Tribune, which you can read here. In this Movers Extra, he explains how he got into the coffee business and more.

In his life before coffee, Kirkpatrick was a category manager for Campbell Soup Co. He had worked for the company 15 years when it announced it would close its Minnesota-Dakota office.

Having proposed just 10 days earlier, he suggested putting off the wedding. Lisa said no, they would be fine.

As he considered his options, she asked him what he wanted to do.

Kirkpatrick said he could try getting a job at Ocean Spray, because he knew some people at the giant cranberry cooperative.

“That’s not what I asked you,” she said. “I asked you, ‘What do you want to do?’ ”

“It stopped me in my tracks,” Kirkpatrick recalled. “What do I want to do? I love coffee. I love travel. I love the food business. I said, ‘If I could be in any business I’d pick, it’d be coffee.’ “

“Then find a way,” she told him.

Wisely, he did.

Kirkpatrick’s first step was running a coffee shop. Driven to share his love of coffee on a larger scale, he invested in Cameron’s Coffee and began leading the company in 1996.

images-1Under his watch, Cameron’s moved into a new headquarters and roasting plant in 2008, introduced its single-serve coffee in 2012 and is looking for space to expand.

Throughout, Kirkpatrick has stood by his mission to “democratize specialty coffee” by offering only specialty grade coffee at affordable prices.

“The reason I’m in the specialty coffee business is because I love specialty coffee,” Kirkpatrick said. “I’m from Seattle and I think it’s kind of in your blood when you’re raised in Seattle.”

Here’s more from the interview:

Q: What’s new at Cameron’s?

A: We’re looking at what in the coffee industry is being called third-wave coffee. Coffee consumers are becoming much more knowledgeable. People now know that they like coffee from Kenya or Sumatra but even deeper than that they look at coffees from certain growing regions within those countries or even certain fincas (large farms) within those regions.

We’re trying to answer that with different products through time. As the world changes, growing conditions and availability, that plays a part. We just got done doing a special run of some coffee I found in Costa Rica, fantastic quality coffee. Those are the things we’re looking at.

Q: What does your roasting plant contribute to your products?

A: It’s not just the coffee we buy but our processes in this facility are the best in the industry. We make every decision on three basic premises.

The first is it has to be best practice. It has to produce the best quality coffee in the cup and there’s no exception there at all. We’ll never make an exception there.

The next thing is it has to be green. This is one of the greenest coffee roasting facilities in the world.

The third is it has to be fast and efficient because we have a high-capacity plant. We want to make sure that we can continue to produce more and more coffee out of this plant.

Q: How much do you travel for work?

A: I travel a lot, last year about 40 weeks. Sometimes they’re short trips, sometimes they’re 10, 12 days. The type of travel is different. When somebody tells me they’ve been to Honduras, they mean they’ve been to Roatan (island) and the all-inclusive resorts, where I’ve been up in the mountains staying in hotels that have two-by-fours for beds.

It’s not an easy way to travel but it’s a great way to see how coffee is really made, how the people really live. When I go and meet with the farmers and the miller and I cup coffee with them side by side, it’s a great experience. It’s been fun. Over the last 20 years, I’ve been able to travel around the world.

Q: How many cups of coffee do you drink a day?

A: A lot, I do. I used to drink over 20 cups of coffee. Now I’m down to about five or six.

One thing I really enjoy is spending time on the cupping table, which is where our grader analyzes our coffees. I spend as much time as I can there. We cupped yesterday. We cupped about eight different coffees there plus I had my normal consumption. I just try and cut it off by 2 in the afternoon or I don’t sleep.

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Movers Extra: Mia Schillace Nelson, Outhouse Exhibit Services

(Note: Movers & Shakers, which I’ve been writing since its inception in 2011, features recently hired, promoted and otherwise news-making executives, entrepreneurs and business owners each Monday in the Star Tribune’s business section. Here, Movers Extra includes additional insights and wisdom from these smart, accomplished people.)

Mia Schillace Nelson, creative director at Outhouse Exhibit Services, has what many would consider a dream job — Mia Schillace Nelsoncreating permanent and traveling exhibits for museums and other attractions in the Twin Cities and across the country. (Read the original Movers & Shakers piece here).

The company’s exhibits include Dr. Entomo’s Traveling Insect Circus, which this winter will bring tarantulas, scorpions and giant millipedes to St. Paul’s Como Zoo, and BUGS: Outside the Box, which consists of Italian sculptor and naturalist Lorenzo Possenti’s greatly enlarge insect sculptures, including such wonders as a dragonfly with a six-foot wingspan. Nelson’s latest effort is serving as project manager for the museum in the Masonic Center Heritage Center, which is to open next year in Bloomington.

One of the keys to keeping a small, specialty business like this going since 2003, as Nelson and her husband, Paul, have done is bringing out the best in the members of their team and finding individuals who will be “the heart of any project.”

How does Nelson go about getting the best of the people she works with?

“In every instance, you need someone who has that passion and drive and in-depth knowledge of the subject matter to make it sparkle and shine. It’s a lot of quiet observation and it’s a matter of figuring out how people tick and what makes the connection for them with the project, where their interests and drive lie in developing the project. The president and CEO are going to have a different point of view than a volunteer or a project manager or marketing director. All of these individuals bring their own unique viewpoints and it’s really important that you have that global view to have a successful project. And allow people to do the job they’re meant to do.”

How did Nelson get in to the exhibit business?

“I have a bachelor of science degree in merchandise management from Michigan State University. I started my career working in high-end jewelry. I was drawn to the creative process of creating unique pieces with pretty spectacular raw materials. And through that I have always had a passion for natural history. It was through a colleague that I found my way to the Field Museum and my first job there. It all came together for me when I started working in the exhibits department. It has that creative process but it also had a little meat to it in terms of an educational message. That’s very important to us, that our work has an educational message.

“It culminated for me, my career at the Field Museum, when I was the project manager for a temporary installation, “Cartier: 1900-1939,” which were the formative years of the company, where they were drawing their inspiration from global exploration and discoveries. Some of the jewelry was heavily Egyptian themed and some of it heavily Asian theme. That was the culmination of my early passions and my early career, that exhibit. I was fortunate enough to travel to the collections in Geneva and work with the curator for the British Museum and with the collection manager in Paris. It was a very exciting exhibit to work on.”

 

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Friends & Neighbors and the ‘New Shmoo’

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Mark Bubula was earnestly describing the nimbleness and productivity of Friends & Neighbors, the Minneapolis marketing consultancy he co-founded in 2012.

Bubula, the firm’s president, and a small core of other ad agency veterans lead Friends & Neighbors. But they routinely draw on outside creative and other free-agent talent to assemble custom-built teams that deliver work designed, as he said, to connect brands to their believers.

“It allows us to do a broad variety of things and go really, really deep,” Bubula said. “You’d be surprised at how much work this little office is able to put out.”

Without missing a beat, co-founder and co-creative lead Tom Fugleberg seemed ready to offer his own equally earnest follow-up. Instead, the office erupted in laughter when he inexplicably asked a visitor, “Do you remember the ‘Shmoo’?”

I didn’t. I had no idea who or what a Shmoo was.

“I want to show you something,” Fugleberg said, “because this actually drives to the point. This is our business model.”

What Fugleberg showed, on his laptop, was a video of the opening theme of “The New Shmoo,” a short-lived 1970s cartoon featuring the Shmoo, a shape-shifting blob that accompanied a group of mystery-solving teens.

“He’s protean, he’s a shape shifter,” Fugleberg said, narrating the Shmoo’s exploits in the video. “He can be a pogo stick, he can be like a bridge, a hot-air balloon, whatever you need. And the Shmoo solves problems. He’s this really user-friendly experience, really nimble.

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“We’re making a Shmoo,” Fugleberg continued, referring Friends & Neighbors. “Because the world needs a Shmoo.”

The Shmoo model — “to be a lot of things to a lot of people, very quickly” — enables Friends & Neighbors to carry out its philosophy, Bubula said. That is the belief, Bubula said, that “the brands that can create the closest connections to their stakeholders on a level of shared values, more than as a consumer, are the ones that are going to have the greatest long-term success.”

Bubula and Fugleberg left Minneapolis ad agency Olson, which they helped build to prominence, to launch what would become Friends & Neighbors. The idea was to reinvigorate their entrepreneurial spirit and apply their philosophy to “a model that is perhaps a little more structured for the places that type of thinking can take you,” Bubula said.

The small business column on Friends & Neighbors that I wrote for the Star Tribune unfortunately didn’t have room for the Shmoo anecdote. But it stands as one of the more unexpected turns an interview has taken. It also serves as fitting metaphor for the value of adapting in what we do and how we do it.

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Fugleberg was kind enough recently to answer some questions about what’s been happening at Friends & Neighbors since we spoke last year. The firm’s core has grown from four to 10 full-time equivalents with two openings two fill in a junior art director/designer and a senior human resources/operations role.

Here’s a summary of our recent Q&A:

Q: What have been the biggest developments or changes at Friends & Neighbors since we met last year?

A: We are, indeed, “on the grow.” We’ve added a deliberate handful of incredible new clients since last we spoke, two of which are/operate within Fortune 100 companies we have yet to announce. The work is only getting stronger. And revenue is up 25 percent.

Q: How has the rebranding the Friends & Neighbors, from Human Brand Strategy, worked out?

A: Our goal was to have a name that reflected both our philosophy and model, and “Friends & Neighbors” has really resonated well. We also believe that as warm and fuzzy at it may sound at first, F&N is far from a provincial idea. The world is, at its heart, a great big village. Friends & Neighbors is a global idea. The fact that we find ourselves working with global brands more and more seems to provide further reassurance that we’re on to something big. Still, we’re committed growing in smart, thoughtful way.

Q: What’s the smartest move Friends & Neighbors has made since its founding?

A: Sticking with our guns. Staying true our beliefs. Remaining wildly optimistic through what is inevitably going to be a wild ride.

Q: What’s been the biggest learning experience?

A: Big companies will always be attracted to big agencies, on some level. Rightly so. There are some remarkable large agencies out there; we’re blessed to have played key roles in helping build one of the more impressive ones. However, what we see time and again — in companies of all sizes – is that truly progressive marketing minds just want great thinkers at the table. They don’t necessarily need, or want departments/levels/process-driven thinking. They want to connect with, and stay connected with, the people and ideas that will most add value to their business. So for me, the greatest learning experience is that market is more than ready for the way that F&N rolls. More than we even anticipated.

Q: Is the Shmoo model still in place? How has it changed, evolved as the firm has matured? Do you discuss the New Shmoo with clients or is that just an internal reference?

A: It is very much alive. And here’s why.

The Shmoo (or at least the 1970s Shmoo) was a shape shifter. He could take any form, at any time, and help you win the day. What drives us at Friends & Neighbors everyday is a simple question: “How can we help?”

More and more, the answers we’re hearing range from, “We need to transform from being a product company to a problem solving company” to “We need to become a sophisticated 1:1 marketer” to “We need to connect marketing to sales at the synapses.” Occasionally, we still hear ,“We need a new TV campaign/web site/collateral system, etc.”

That reality, combined with our own curiosity/eagerness to just “help,” demands a more protean approach. We need to first and foremost set the strategic creative idea that will best drive success based on the challenge at hand but then have the mindset (and yes, the model) to shape shift into whatever form that the proverbial big idea demands. That’s when we reach into that great big village mentioned earlier and align the best, pedigreed thinkers from whatever disciplines need to be at the table at that moment and activate them around the thing we need go make. On any given day, F&N is a 1:1 agency, a product naming/brand identity company, an ad agency, a new innovations think tank, etc.

We’re a Shmoo. And I don’t care who knows it.

Q: You referred helping clients find a soul before giving them “stuff” in so many words.

A: We believe brand humanity is the key to long-term, sustained business prosperity. Nowhere is that more evident in brands that truly understand their defining purpose. They’re reason for being. Their purpose. Their soul.

Call us Simon Sinek diehards, but it’s something we’ve been espousing – and architecting – since 1999. The brands that make a soulful connection based on a shared reason to be/believe are the ones that ultimately win the day.

I’ll spare you the deep details, but it is the place where we start for each and every client we work with. And usually it helps our clients finally state what it is they’ve believed since their inception – they just never found the right words/right expression. It’s also what guides us no matter what form the ultimate strategic creative platform demands we grow into.

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