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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