The Process It Took to Build HUMN
“How did you do it?”
It’s a question I get all the time around how I got to this point with HUMN. Whether it’s around the planning, capital raise, commercial real estate, or partnerships. I even sometimes forget how much has gone into this thing to get to this point where we’re getting ready to sign a lease.
When I started working on HUMN there was a motto that I lived by… “I don’t know what I don’t know.” I remember my first phone call was to a commercial real estate broker asking the question, “How does someone rent a commercial real estate space?” She responded that I needed a business plan, financial model, a pitch deck, and capital. While one of these things I was familiar, I had no idea what a financial model was, how to build a pitch deck, and how raising capital even worked but I started with what I knew… a business plan.
But before jumping into a plan, I asked myself two questions:
What problem am I solving for?
What’s my why?
I knew when I left my corporate career that I didn’t want to just open a gym. There’s plenty of gyms out there let alone in Denver. So I started to think about the problems in my life I was solving for. I always wanted a high end facility that was clean, modern, but also had a space for me to work where I could build a community. As it related to downtown Denver, there was nothing. The closest thing was a Lifetime Fitness in Cherry Creek but it was old and not the vibe. There was a facility called Denver Athletic Club that had everything but was not the vibe and I want to double click into the word vibe.
I still remember this post like it was yesterday where on March 19th I talked about how anyone can get a space and put things in it and will still not work. I go back to college days in my business classes where we talked about PPT: people, process, and technology. The process and technology are things anyone can do and replicate but the people element is where your x-factor is. The way that you curate people from your leadership team, customer engagement, and strategic partnerships are what impact your brand and your brand is what you make people feel. It’s an emotional connection and that’s the different between a company and a brand. I wanted to build a brand. I wanted people to feel something when they walked into the doors of HUMN and that… is a vibe.
But why? Why was this problem so important to me? I think back to how I used to feel in my mid-20’s. I was heavy into substance abuse and really hated where I was at in life. I knew what it felt like to feel like you were not enough and the gym helped me get out of that. It built confidence and helped me build a community in Chicago. I wanted to take everything I learned from working with some of the biggest companies in the world in my corporate career and uplift not just the health industry in Denver but the community. This could be the centralized hub where people could not only better themselves but build their own communities. It was these two questions that were the foundational elements that kicked off the business plan.
A business plan has a ton of elements including your company description, market analysis, service offering, go to market strategy, operations plan, financial projects, and funding needs. For the purpose of this story, I want to focus on two elements:
Total addressable market (also known as TAM)
Competitive landscape
Which both fall under market analysis. These two components help identify the gap in the market you’re trying to fill (the problem you’re solving for). For TAM, you needed to first identify who your ideal customer profile (ICP) is and then find out how many of those profiles are within a certain radius of your location so you would have to start identifying a location at the same time. This is where multiple things start to happen at once and one of the elements that I needed to get comfortable with when I started which now… just feels normal. So you have an ideal spot, a customer profile, now you have to think through, how much does your service cost and how many of those profiles do you predict you can obtain? In what time frame? What’s that dollar amount on an annual basis? Who are you competing with?
This is where your competitive landscape comes into play. Identifying the established players in the market and finding the gaps you can fill. One thing to note is… this isn’t just about price. It rarely is about price. Think Apple… they’re one of the most expensive products on the market and yet, a lot of people buy the new one every time it comes out. It’s the ease of use (value) and the strong brand perception (think status, feeling, and vibe). So you ask yourself, what value am I providing my ICP that my competitors are not?
While the topic of a business plan could be an entire thing by itself, I want to pivot over to the financial model. My experience and background is not in finance, however, I spent the last 4 years of my corporate career supporting assurance leaders which included working with executives who lead audit, legal, compliance, and finance teams. So… when it came to the financial model, I leaned on my relationships with some of these executives to help answer the question, “What is a financial model? How do I build a financial model?” Going back to our motto of I don’t know what I don’t know, it’s important to remove emotion from this process as the ego will prevent growth. I always loved being the one who raised his hand in class and said, “I have a dumb question” because typically after I would ask the question, one or two people would say “Yeah I was wondering the same.” Without jumping into the details of each component, HUMN’s financial model included:
Summary
Revenue projections (that tied back to your market analysis discussed above)
Startup Cost
Operating expenses
Cost of good sold (also known as COGS)
Investor returns (this started the conversation with prospective investors of what do they get in return… like what do they get for their money)
The business plan and financial model are the core elements that build your pitch deck. An 8-10 page document that summarizes what you just built that’s easy to understand without getting too far into the details but I want to pause here as this is something that took me a very long time to learn. You can have the best plan, model, and deck in the world, however, I learned that most people (at least the investors I’m working with) focus more on the founder. The person behind the plan. Earlier we talked about how anyone could get a space and put things into it and it would still not work. It’s because it’s the person that makes the difference between a company you transact with… and a brand you believe in. This goes back to your why. Why do you care so much?
If you’re goal is just to make money, entrepreneurship probably isn’t the right route for you because money will take a long time to get and there’s going to be a lot of low times leading up to getting money. It’s those moments that you’re going to have to lean on your why to move forward so without a why, it can be a very tough period and that’s where most people bail on the project.
“So why you? Why do you think you can do this?” It’s a question I would get from prospective investors and I would summarize it into three categories:
My experience
Skill set
And most importantly, my network
My experience in corporate America is something you can’t teach in a classroom. You have to be in the trenches and live it. The experience of working in two companies with over 10,000 employees was amazing to study. The systems in place that make the machine go are what fall under the process bucket of PPT. But what came with this time were the skills you developed. Not just how to work within a system but with people. From engineers, advisors, customers, all at different levels. Different personalities on how to manage relationships. Studying people is something I’ve been doing since I was 18 years when I started working in door to door sales. The ability to read body language and manage energy frequencies. It’s a skill I feel lucky to have developed and continue to develop everyday. The ability to build deep relationships with individuals at the executive level is what built a network I am forever grateful for. It’s that network that has enabled me to continue to learn and grow as an executive myself. While many of these relationships are investors in HUMN, we have a relationship where I can go to them and ask questions around how to handle certain situations from proposals, partnerships, or even just personal growth. Again, I take the approach of being a brand and not just a transaction with my investors.
So how did I get here?
Through planning, patience, keeping an open mind, and I’m still doing it. There’s still so much work ahead. I still need to finish the capital raise. The best piece of advice I got was from the manager partner of a venture capital firm which was, “Don’t ask for money, ask for advice” and that changed everything. If you’re considering making the jump and pursuing building your dream, go for it. Just remember, everything will happen when it’s supposed to and most of the time it’s not when you want it to so be open to the timing. Whenever something isn’t going the way that I want it to I ask myself, “What is this moment trying to teach me?”
