Peter Jones Reveals Major Flaw In Entrepreneurs Business Model | Dragons’ Den

Next up An exercise app that promises to shake Up the way we work out Good luck Getting investment from any other Dragons would be huge for us because it Would validate the business and it would Mean that we can then take it to the Next level which is what we're keen to Do But will the dragons be keen to sign up To this innovative business Hello dragons i'm dom and this is matt And we're from wireless fitness where Our aim is to become the world's biggest Brand in outdoor exercise Using wireless technology and our unique Wireless fitness app we've created the Concept of doing outdoor exercise Classes to music We're here today to try and raise a Hundred thousand pounds in return for a 15 share in our company Now with the help of our fabulous Instructor tanya we'd like to demo the Equipment but we'd like your help to do So would you guys mind wearing a pair of Headphones each Uh put it around that way there's a Volume control on the bottom if that's Too loud kenya's got yours The music's on so do we hello you're Dragging listening I'd love to get you up for a quick and

Easy workout if you'd love to join us Fantastic stretching out ready All right can we all hear my voice good All right now bring those feet wide Good weight in the heels hands up sit Back Nice looking good but now we're gonna Add a little twist just reach opposite Hand to foot warming up through the back Hips knees and ankles Well done thank you very much you can Take a seat and your headphones off Thank you very much [Laughter] Thank you very much The wireless fitness system allows Fitness instructors to deliver Everyone's favorite music-based exercise Classes in any location without Disturbing other local residents The result a portable exercise studio We've been trading using the existing System we've just demonstrated for two Years now however we've taken things one Step further by developing the wireless Fitness app The app streams the music and the voice Of the instructor to the phones of the Participants who listen in using their Own headphones The app also processes class payments Allows the instructor to organize their Fitness programs and drives traffic to Their classes

We charge an eight percent transaction Fee on this and on an average class cost Of six pounds this equates to 48 pence Per transaction With this in mind We calculate a year three turnover of 4.8 million pounds We'd like to thank tanya for her help we Welcome any questions you may have very Much thank you thank you A pitch to get the blood pumping from Dom thorpe and matt boyle who are Seeking 100 000 pounds for a 15 share of Their outdoor exercise app But will any of the dragons think their Business is in a good enough shape to Invest Sarah willingham is first with the Questions Dom matt hi sarah hi sarah um when you First walked in you said we've created The concept of doing outdoor exercise to Music i thought hey up They haven't done that but i kind of as It progressed i get the fact that this Is all about It just all happens within your ears Absolutely so what are we investing in Are we investing in the future of the App or the future of the headphone Business in theory the future of the app Well not in theory because actually you Are stood here pitching so In reality

Yes so we're asking you to invest in the App so for further development because That's where we see the business going For the future the very the raison D'etre from being posh is to make Fitness instructors more successful We've had people running 50 60 people on Clapham common in london 50 had seen a Class taken place Come up taking a flyer and then come Back the next week instructors can say About marketing costs and the exposure For brands is potentially massive We are actually in the process of Developing a deal with zumba a billion Dollar business i'm sure you know The beauty of it is that working with us They instantly have infinitely more Locations they can also have happier Instructors who are making more money Working fewer hours and having bigger Classes [Music] Talk of a potential partnership with a Global fitness phenomenon could elevate Matt and dom's business to the big time But something's not working out for nick Jenkins Why would zumba do business with you When in fact they could develop an app That does this because they're limited By their own pool of uh part instructors Which is sorry sorry and how big is that How many how many different it's

Estimated more than a hundred thousand About a hundred thousand okay and how Many instructors have you got well well There's a hundred thousand potential Instructors uh No no no no no no sorry you said zumba Is limited to it to his limited pool of Only a hundred thousand instructors That's peanuts compared with how many Instructors you've got on your books Isn't it yes i mean they're going to be There i can be chomping at the So What do you offer zumba More exposure opportunities you don't Offer more exposure there are massive Multi-million pound business How many zumba classes did you see on The way to work this morning Um I didn't notice and it was raining The traffic that drives to our wireless Fitness pilot all came from people Seeing classes take place and an outdoor Class is exposed infinitely more than an Indoor class Despite intense interrogation the Entrepreneurial personal trainers are Convinced their outdoor model will Attract attention and therefore reap Rewards But can its technology stand up to peter Jones's scrutiny Where are you with the app at the moment

So what we've got is a skeleton Framework which will combine or merge my Voice and the music that i'm playing and Then stream that Via the cloud or 3g to a user's phone And what happens if i'm not in an area Where i've got full 3g coverage yeah That's absolutely a consideration so The instructors will have to research Not only 3g strength or 4g strength but Also surface location things like that i Think this is a major major flaw for Your concept okay You're going to have in some areas and There are it's very well known some People will be on an o2 network and it Works some people will have ee and it Doesn't Some people will be on vodafone and it Works some people be on three and it Doesn't and they're in the same location While we're talking about the prototype Launching the app this year the full Launch of that probably wouldn't be Until 2016. yes there are black spots at The moment but that will be worked on to Improve coverage The entrepreneurs have kept their cool So far But they're now forced to admit that the Success of their business hangs on the Uk's sometimes patchy network coverage Getting significantly better Does deborah meaden think it's a risk

Worth taking [Music] I don't pretend to be an expert in in in This field at all But i completely understand how this Would work What's put me off is i'm not Particularly technically savvy Peter is concerned about it if peter's Concerned about it i'm concerned about It because he's technologically he knows A lot more than i do I just won't be investing so i'm out [Music] There are parts of this that i really Like What i really like is you offering uh an Independent trainer A mechanism whether anybody turning up Within the vicinity Of their class uh can press a button and They pay so you have to pay to play what Do you think to you Is the lifetime value of a customer i Someone attending that class Good question i don't know the answer to That but we expect it would be the Lifetime value of any customer attending An ordinary aerobics class no no because You're only making 48 p So What's your 12 month value what's the 12 Month value of a customer to you Yeah

I don't know the answer to that i'm Afraid because we've focused on the Revenue out from the instructor's Perspective Can i tell you where i am Um I think the platform for personal Trainers is very interesting But i'm afraid You haven't demonstrated that you can Make the most of this opportunity yet But i hope you do something with it Thank you Tom matt hello hi guys i'm tuca You guys look great you're very Presentable you're probably great Trainers However i think you should definitely Stay with your day job There's a lot of I don't know the answer to that As far as Myself invested in this You've got more chance Of seeing me do the marathon Then you've got me invested in that So guys i'm terribly sorry i'm not gonna Invest i'm out thank you thanks Rejection from a third dragon But sarah willingham And peter jones are still in the game It's a bit disappointing you didn't come Here with The right tech and the understanding of

How you're going to implement it because I might have been interested in this I don't want to risk 100 000 pounds of My capital i think you're going to make A lot of mistakes along the way Um so i'm not going to invest and say That i'm out thank you thank you Appreciate your feedback [Music] Only sarah willingham now remains Can she see pastor concerns and invest In the [Music] App i think it's a really neat idea [Music] Well actually what i should say is i Think there's a really neat idea in There okay This is about Trying to get people outside to do Classes that doesn't You can do it with specific people in Specific locations at the moment but There's not a hub so i completely get That and i actually think It's going to take a lot of marketing And a lot of spend to get that awareness Out there but there is a model in there Unfortunately What you've come here and presented is It's way too much of a pond It's not for me guys i'm out thank you Thank you bye-bye No deal for dom and matt as all the

Dragons agreed their exercise app has a Long way to go before it's ready for Investment Do you think that went What do you think it could have been Worse Could have been worse The the amount you'd have to throw in to Grow the customer base is colossal You could throw millions at it You

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