Softbank leads $220M funding for Tempo

Moawia Eldeeb, Tempo Founder & CEO joins Yahoo Finance’s Melody Hahm and the Yahoo Finance Live panel to discuss home gym maker Tempo and their growth during the pandemic.

Video transcript

ZACK GUZMAN: We've been talking a lot about how at-home exercise has got a big boost in the pandemic as gyms closed down. It's obviously not just Peloton that's been benefiting from that. At-home exercise company Tempo is also benefiting here, with a big fundraising round being led by a SoftBank's Vision Fund 2-- $220 million in the round to expand on the company's tech that not only powers live personal classes, but also measures your form to perfect every rep.

And joining us now for more on that is Tempo founder and CEO Moawia Eldeeb, alongside Yahoo Finance's Melody Hahm as well. And, Moawia, congrats on the round. It's exciting to see all this stuff hit the home. You got a 42-inch touch screen, 3D sensors, adjustable weights, and a foldable squat rack as well-- the full suite here costing about almost $4 grand. But you had a lot of people that take you up on that offer. So how has the growth been in the pandemic?

MOAWIA ELDEEB: The growth has honestly been amazing. We've grown 10x this year. And Tempo-- hence why we've raised the largest series C in the category-- $220 million. People are taking us up, really, on the unique value that we're offering personal training at home, as well as a full gym.

In front of Tempo, if you're doing a workout, you'll get live feedback on your form. So if you're, like, swinging your back as you're doing your workout, it'll tell you, come on, keep that back straight-- just like a trainer would. And that's what resonated with people. Even though the space has a lot of competition, that unique value prop that we're the only ones offering really resonated with people.

MELODY HAHM: And, Moawia, I think you speak with some expertise here, not only as a computer science guy, but also as a personal trainer yourself. So that gives us some confidence, right, to believe that you're building a product that you understand and you would want other personal trainers to use. I do want to ask-- Zack mentioned that growth we've seen during the pandemic.

But you guys were in R&D mode for several years before actually launching the physical product right before the pandemic in February 2020. So a lot of those growth measures right now can be a little bit, you know, perhaps a one-off. How do you expect the next year and perhaps the rest of 2021 to go?

MOAWIA ELDEEB: Thank you. Absolutely. So I as a personal trainer when I started Tempo, I was like, I want to build a personal trainer that is 10 times better than I am. And with that, it meant we had to create all the tech that would allow the system to be able to understand exactly what you're doing.

And also, it needs to see a lot of people work out. So we spent four years-- we put the product in hundreds of gyms and collected thousands of workouts that were tagged by trainers. The average trainer has seen 170 hours. That's what it would be for a trainer to be charging $150 an hour. Tempo has trained on over 40,000 hours and 5 million workouts.

That's what makes this training product really unique on the market. What's going to make this resonate way after COVID is that we're offering a very unique value prop in that we're offering personal training at home as well as a full gym. And a personal training session alone costs $150 an hour. Tempo costs $39 a month-- but not just for you, for the whole family.

AKIKO FUJITA: I mean, even with that said, $4,000, if we're talking a rough estimate here, is a pretty steep price tag. Who are you targeting? Who's buying into your services?

MOAWIA ELDEEB: $4,000 is the full gym. That's the pro version of Tempo-- the one that comes with a squat rack, a bench, up to 225 pounds of weights. The starting price is actually $2,500. And we've seen that 30% of our customers actually make under $100,000, and 30% make between $100 and $150,000. And 50% of our customers are females, and 50% are males. So the product has a very broad appeal.

MELODY HAHM: Let's dive deeper into SoftBank. I know Jeffrey Housenbold is joining your board. I know he's leaving SoftBank soon, but he does represent the firm. He actually passed twice on investing in Peloton, and I think he said, quote, in a "Bloomberg" interview, "if you were wrong yesterday, you can be right tomorrow."

So give us a better sense of how much pressure SoftBank is giving you here. As you mentioned, this is the largest series C in the category. Are you afraid that this will be a growth at all costs sort of investment?

MOAWIA ELDEEB: Not at all, because, actually, Jeff and SoftBank are both really committed to tempo's differentiator, which is our investment in AI. And they want us to continue being the best AI personal training product on the market. And they want us to do it right. They see the home fitness space as something that is now here to stay forever, right?

You saw the latest consumer trends report that said over 80% of people under the age of 40 plan to continue working out at home and actually prefer it. So this is something that is here to stay. And they know how much has been invested already and will want this to continue-- they want us to continue investing and not just growing at all cost.

ZACK GUZMAN: Moawia, at the same time, I mean, $4 grand for the top of a model line here seems like it might be a steep price tag. I was looking at a firm-- or your website, saw you have a firm help make kind of monthly payments to fund this, also the partnership with Best Buy-- I mean, how difficult is it to get people to front-load and buy this out there if they haven't experienced it themselves? And what's that look like for you guys to drive, maybe, trials out there before that happens?

MOAWIA ELDEEB: Absolutely. So probably about 50% of our customers are financing the product. And they look at it as, like, you know, you're used to paying a gym membership and paying personal training a month. So a lot of customers just look at that as a natural continuation of what they were doing.

But honestly, to understand the magic here, you really have to try the product out. So so many customers call us in, and we do demos, and we would have people, like, show you, here's the product, here's how it works-- because, like, nobody understands, like, how could you just do a rep like that? And the product will just count it.

You could just be using any equipment. You don't have to just use the weights we have. It's tracking your body. It understands you. And that magic just really comes out when you're in-person and you just, like, try and do a squat in front of it.

ZACK GUZMAN: Yeah, a bit of a step up from those P90X VHS tapes I've been using all year long. But appreciate you coming on here to chat with us-- Moawia Eldeeb, Tempo founder and CEO alongside Yahoo Finance's Melody Hahm as well. Thanks to you both.