Business

FitnessTV to Disrupt the Croatian Fitness Industry?

June 14, 2021 - TCN meets Sime Lisica, the director of Audio Visual Group d.o.o. who is shaking up the Croatian fitness industry with a new product - FitnessTV.

I was born and bred in Sydney Australia, a city of 5 million people, with an extremely fast pace of life. In my early 30s, I had realized that my calling, my higher purpose in life was coming from Croatia, so I decided to do something about it. I had come to the conclusion that Australia had dramatically changed from the country that I once knew, the country that I grew up in would never be the same again. That’s not to say that I am not internally grateful for my time in Australia, it taught me everything that I know, I transferred my skills over to Croatia, although believe me nothing can prepare you correctly for this country.

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I have been lucky enough to have worked all over the world, I have seen and experienced all sorts of different realities but the truth of the matter is that today I consider myself a digital nomad who has transitioned, although I still thoroughly enjoy working remotely, especially from my current “office” location at Harbor Cookhouse & Club in Zadar. In business, it’s important to have structure. I have so much OCD that in my attempts to remain structured I will sit/rotate between the same three tables and use the same power outlets, drink the same amount of coffees and do the same things every day to continue in an effort to repeat the same success rate. 

I realized a long time ago that the Croatian Audio-Visual industry was nonexistent and quality products were hard to come by let alone a quality workforce that knows what to do – every week people are leaving the country because they are under the impression that life is better outside Croatia’s borders, I find that to be far from the truth.

I set out to probe the market, completed my due diligence, and came up with a plan. I am extremely brand loyal and I absolutely refuse to use sub-standard products, because of my brand stubbornness, this meant that I lost projects as I was too expensive. Of course, I was ok with that, where I came from, we do things right the first time, it makes no sense to continuously return to a project because you used a sub-standard product from the very beginning.

In 2015 I formed Audio Visual Group (AVG for short). We are a company that focuses on delivering large scale Audio, Visual and Lighting projects, for some time now we have been working internationally both in Fitness audio/visual/lighting & digital advertisement, whereas on cruise ship drydocks we mostly focused on ship-wide integrated audio and lighting projects, both in Australia and Singapore although our reach has also been on board superyachts in the EU. The corona crisis hit us hard, we had already booked in two drydocks that were cancelled, another major project in Croatia hit the wall so we had to come up with something new, something that didn’t exist in Croatia, this was FitnessTV.

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In 2020, I started to expand this rapidly, I bought Ivan Kutija into the company, he is our CTO, I have known Ivan for a long time, from the first time I met him I immediately knew that this was one extremely talented individual, I also knew that I would never find anyone with his caliber, I harassed Ivan (much to the displeasure of his wife, the minister for war and finance – sorry Daria! I have firm reasoning behind my decisions) to join me in my venture and here we are today. Next to come onboard was Ana Kašelić, I was introduced to Ana in early 2020. Ana was also born in Australia and that suited me perfectly. Ana is PA to the management team. After some time I had realized in her previous employment that she was in a toxic working environment, I never understood why employees in Croatia are treated like crap, it is almost as if they try to strike the fear of God into the employee, that is not the formula for productivity or the key to success. I assured Ana that would not be the case in AVG and here she is today, a positive life changer.

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Now that we have grown significantly, I have made offers to fill another two positions to round out our upper management team, as much as I want to, I am unable to comment on who these individuals are as they are still currently employed, one position is CXO, the individual who will fill this position was personally picked by Ivan Kutija. They are another amazing talent who is perfectly suited to this company, while the CFO position has been offered, I don’t think it will be easy to pull this individual away from the position they currently hold. I’m extremely confident that this highly competent individual is both the right fit for AVG and key to steering the finances in the right direction. I have the utmost respect for this person, just like when I met Ivan for the first time, internally I knew! It would give me great pleasure to have them on board.

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The last 18 months

Our first attempt to resolve the corona issue within the company was to secure a tender for a large scale DOOH (digital out of home) project in the Zadarska Zupanija, this involved the installation of 110sqm of external digital signage, this, unfortunately, dragged out with a large number of public institutions requiring us to seek approval (it’s ridiculous that even Vodovod has to give us permission, what does Vodovod have to do with Digital Signage?) the public institution that rejected us was Hrvatske Ceste who took no less than 4 months to provide us with a 4-page report of outdated laws why we cannot proceed with this project. To this day I believe that outside influence has played a major role in AVG not being able to proceed with this tender. You only need to look at any number of other countries where you will find amazing DOOH projects that are completely in the public interest.

I should draw on the disparity of the above, all over Croatia, you will find static signage “posađeno u divljini”  that would translate to planted on the wild ground. Some of this signage is less than 1m away from the road, Zadar is absolutely littered with the crap! I’m certain that more than 50% of these static signage operators don’t pay the city what they are owed. Croatia is like the wild west of static signage. When you come forth with a solid plan to transition into the digital future, your immediately shut down by the bureaucratic process. This is not the free market, this is a closed market only available to nepotists.

Inadvertently the public institution that issued the original tender (who also has communication issues, they are not the only ones, no public institution is capable of communicating between themselves or externally for that matter) has now lost out on a significant amount of rent money that they desperately needed. They can thank Hrvatske Ceste for that.

In parallel with this, we won and then lost a tender issued by Općina Bibinje for three more DOOH locations on the Adriatic highway. This would have amounted to 136sqm of digital signage, Hrvatske Ceste quoted outdated laws from the time of Josip Broz Tito. In fact, if you examine the law closely, you will find that two of these locations fall within the guidelines, this time around Općina Bibinje losses out on the rent money – what a joke. Hrvatske Ceste appears to be a law of their own or perhaps again some sort of outside influence has affected these decisions.

It’s difficult to ascertain who is telling the truth in a country full of uhljebs and interlopers. I now possess a uhljeb radar that has recently been equipped with an interloper upgrade which is active 24/7/365. For anyone who is not clear on what is a “Uhljeb” or “Interloper” then I encourage you to look it up, you will find it rather entertaining.

The above is an absolute failure, an embarrassment, a complete waste of time, money, and resources, it did nothing but place my business in the red zone, on top of losing two cruise ship projects severely damaged us, that is why we turned back to the fitness industry. Only forward-thinking, healthy-minded, active gym owners would understand what we can do for them and I am ever grateful for this.

 

What is FitnessTV, how did we enter an investment round with an American VC fund and who are our German Technology partners?

I think it's first important to briefly describe Fitness 1.0/2.0 & 3.0

Fitness 1.0: The potential new member first tried to do some jogging, recreational activities, bought weights for home, kept a fitness diary, tried eating the right foods. This was proving ineffective and non-motivational so this person joined a gym, worked out, paid for a personal trainer, used in some cases substandard equipment, this was somewhat improving this member's life. The member remained committed and it was working. I do not disagree that this model works but it’s the model that Croatia is operating on, this model has existed since the 1800s, it was the one and the only model until roughly 2010-2012.

Fitness 2.0: The explosion of fitness apps and new ways to track your progress was a huge benefit to both the fit & unfit individual, it meant that they didn’t need to go to the gym, your mobile would tell you what to do! In retrospect, it’s also had a major positive influence on the fitness industry as it grew the industry at a phenomenal pace. Over the last few years, the number of wearable fitness devices, smart clothing, and the like has also exploded, creating with it sub-industries and new fitness models.

The Croatian fitness industry missed out on bridging the gap between Fitness 1.0 and Fitness 2.0. International operators were the early adopters of the new tech and they aligned the fitness venue with this new form of fitness digitalization.

Fitness 3.0: This is where we are today, worldwide, fitness companies are finding ways to integrate and adopt new technologies, especially with fitness equipment such as treadmills bikes, and finding ways to combine them with wearables. An explosion in wearable devices, smart clothing, and fitness applications still exists and is increasing exponentially year-in-year-out, this continues to create fitness sub-industries, one of these being Gym Digitization. Although the problem still remains, how will the Croatian Fitness Industry bridge the digitization gap? This is where FitnessTV and our products come into play.

One thing is for sure - sound, vision, and lighting play a pivotal role in the member experience. Not just in fitness, you can extend that across a vast range of industries.

FitnessTV is Croatia’s Premiere Interactive Fitness & Lifestyle Network. I have had these ideas floating around my head for some time now, especially after having an extremely negative experience with one of the gym operators way back in 2019. I knew what was available and in use at an international level, given that I had previously worked for the Tier One fitness brands, I decided that this was what I had to do. Over the Christmas/New Year break 2020/2021 I locked myself in the house for two weeks and began typing up the business case. On the 26th of January, I had the final cut and on the 29th of January at 14:00 we released the concept to our first gym partners.

We had instant success, by 16:00 we had already started to receive positive feedback and the gym owners started to book us in for consultations. The influx of gyms came in over the next few days and we set out on the road to visit our new potential partners. Success continued and over the next 6-8 weeks all we did was travel across Croatia and visit the gyms that wanted to see us. We have a 100% strike rate with all the gyms that we visited. The Minimal Viable Product was born!

The offer to our gym partners was that we would supply all new Audio-Visual products, free-of-charge, everything was at our cost. This involved new professional TVs, new audio, and an infrastructure network required to pull the Croatian Fitness Industry out of the Fitness 1.0 loop. Further, we would supply a music entertainment channel and a digital signage network, we would also pay the costs of HDS-ZAMP who are also another useless department that do nothing but collect money by imposing a “thin-air-tax” on playing music in the public domain, I would compare this to the tax on cubic meter volume when you build or legalize a property. It’s always been beyond me that “air” is a taxable commodity, soon we will be paying tax on the air we breathe, we already pay tax on rainwater, so in theory, the clouds are also a taxable commodity. Which team of uhljebs come up with this shit?

Of course, nothing is completely free to the gym operators, somehow we have to pay for this, we have covered the costs by playing appropriate non-intrusive advertisements for products/services that lean towards fitness, health, and lifestyle. This was the only way to keep this product free-of-charge to gym operators, pay for HDS-ZAMP and cover the high equipment/infrastructure costs that we would need to make this project a reality.

I had realized while travelling around Croatia and visiting our new gym partners that this was getting out of control, it felt like overnight we had accumulated more than 250 individual TV locations with enough audio equipment to put on a rock concert, I needed to do something quickly to mitigate this.

I had approached my “so-called loyal bank” who did nothing but waste my time. I wish I could share the generic email the CEO of this bank sent to all his “loyal clients” – total bullshit and a total troglodyte! Unfortunately, Croatian banks are geared so that they make it near impossible for you to operate in a free market (give me an Australian bank any day of the week, I would have been pre-approved in 15 minutes!) The vulture practices of Croatian banks have a completely negative impact on business, this is another Croatian industry full of uhljebs, full of individuals who have purchased diplomas and are absolutely unfit to hold positions of authority. This is an industry where complete reform is required should Croatian business move in a positive direction. What is more embarrassing is that in the last month the banks have received a significant amount of funding from the European Union, instead of passing this onto business, they have lifted the guidelines required by the business to obtain these funds – Welcome to Croatia, where the disparity is first and foremost!

Now I claim to be a highly intelligent individual so I decided to give up on the banks and looked towards private equity. I decided that I would first approach the handful of Croatian VC funds and try my luck, we more or less immediately had success with one VC fund who were initially hot on us, only to be turned down by them without any feedback other than the claim that they are not obliged to provide feedback and that we are the wrong fit, I thought what a rude generic response, what a total disappointment.

I had approached more than one VC fund, I knew that Croatian & EU VC funds are extremely allergic to large-scale hardware projects, the rejections kept rolling in, my disappointment grew on a daily basis. I must comment that one Croatian fund provided positive feedback and gave me the space to provide my rebuttals. Following our conversations, I was told to return for consideration in Series A funding. Where I came from, the absolute minimum requirement is an explanation, that how you engage respect, for example; imagine while working on a cruise ship in drydock where you have deadlines and a whole system of higher achy at our 10:00 am meetings. Imagine if I said that we are not obliged to provide feedback, I would walk the plank for that!

After regaining my thoughts, I decided that I must look outside of Croatia and the EU, I must find the VC fund that would understand who we are and what is our MVP. I made contact with Jonathan Miller from Fitness Ventures, a US-based fund full of Fitness Industry professionals who have successfully backed multiple fitness brands such as Peloton IPO, Fitmob acquired by Classpass, Fitstar acquired by Fitbit who were acquired by Google, Endomondo acquired by Under Armour Connected Fitness, Massive Health acquired by Jawbone, Virtual Active acquired by Netpulse then further acquired by eGYM.

I was so sick to death of writing pages and pages of information for all the previous VC funds, so when I initially made contact with Jonathan, I wrote him no less than one sentence, I didn’t even attach any information about our product, that’s how over it I was. I expected that our initial screening would last for 10 minutes and that he would reject our MVP. Well, I was completely wrong about that, our conversation lasted 45+ minutes and we went off on a number of tangents. It was by far one of the most amazing conversations I have ever had in my life. To quote Patrick Jane “being understood is an underrated pleasure” a pleasure that I am not accustomed to the entire time I have lived in Croatia. Jonathan and I have amazing rapport and I thought, finally I am talking to someone who understands me! After an exchange of information, in late April I signed the contract and we have now entered the Fitness Syndicate.

Given that we adopt lean practices and after a brief conversation with Jonathan, I had an extreme brain wave. I realized that we are able to take this to the next level, engage interactivity and offer a FitnessTV app, where all our gym partners and their members could be a part. Of course, this is no regular app, each gym partner will have a segregated space, while we must provide the standards such as exercise programs, we have to take this to the next level, given the explosion in wearable devices, I knew it was possible to link this back to the app.

We can use technology to help us, for example, wearables can give us fairly accurate information on our work-out. What if outside of the gym the personal trainer can use aspects of telehealth where they remotely use this information to monitor the health and fitness of their client? What if they can then create meal & training plans and use this app to communicate with the member? What if this member upon arrival in the gym, uses this wearable device to log in to pre-programmed exercise programs? What if we can use gamification by creating competitions where partner gyms compete against each other remotely and of course the member can watch & listen to FitnessTV remotely away from the gym.

What if right! The possibilities are endless! We will be actively working to refine this application with our gym partners.

One thing is very clear, you must keep the member engaged with the club, without Gym Digitization, then this is not possible.

While this was all fantastic news for us, I knew I had to bring in a technology partner who we required to back us so that we could roll out this network. As we are completely IPTV based, I knew who the solution should be, GSS Grundig Systems is a global market leader and key to turn this into an independent Fitness and Lifestyle network, available exclusively to our gym partners while providing us with the correct backbone infrastructure for expansion into other markets. I have worked with GSS Grundig products from my time in Australia, in 2019 I made contact with and was invited to Nuremberg to visit the facility where I meet the team behind the brand. I was immediately impressed and comfortable with the decision I had made. The corona crisis also put a hold on business plans we had made for Croatia in 2020 so in 2021 when I presented the idea of FitnessTV, GSS was immediately prepared to enter into negotiations. I always liked working with the Germans, they are very straight forward and we see eye-to-eye when it comes to delivering projects.

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We are about to embark on our first FitnessTV installations in the coming weeks, due to this ridiculous corona crisis, there is a shortage of electronic components, we have had major issues obtaining all the equipment that we need so there has been a slight delay in delivering this product. It hasn’t phased our commitment and we continue to work daily progressing the Croatian Fitness Industry into the 21st century.

In conclusion, I must give thanks and praise, first of all, our gym partners where in the very near future you will find FitnessTV and our associated products. In Zadar, we have La Palestra and Popaj, Balboa Gym Biograd, in Šibenik we have Life Gym, in Rijeka we have Spartacus, Top Form, Fitness Zagrad and Fit For Life, Erny’s Pula, Gen Fitness Center Poreč while in Zagreb we have both locations for Gladiator Gym, Sparta Gym, Vita Fitness, Elite Fit, First Fitness & Squash Tower, Fitness Facility, MT Taekwondo, and Dynamic Fitness Centar.

Of course, we have room to expand the network. To the Split gyms we have made contact with, it’s not clear to us what the problem is? We wouldn’t be calling you for no reason! You know we also want you onboard. If you’re a gym operator, please don’t hesitate to contact our team, we speak fitness!

Finally, a special shoutout goes to Harbor Cookhouse & Club located on the Zadarska Riva, as I am truly a digital nomad at heart, I had to revert back to my roots to make this a reality. I have been working from this location for the last 6-8 months, this is a class property perfectly suited to the digital nomad. If I didn’t have this facility available to me, then there is no way I would have been able to correctly refine this product. In the time I have been here, I have estimated it to be in the vicinity of 700 man-hours split between a number of projects. Amazing the amount of work you can get done when you have the right facility. If you are a Digital Nomad reading this, then don’t hesitate to explore the Zadarska Zupanija, we need more nomads here to teach people that tourism should not and cannot be relied upon, connect with the Croatian Digital Nomad Association (DNA) alternatively I highly recommend Saltwater Nomads and follow the dedicated Digital Nomad section of Total Croatia News.

If you're living in the diaspora and you're giving heavy consideration to returning to Croatia, then I highly recommend that you take the bull by the horns, take control of your life and DO IT! This country is crying out for talented individuals, this country needs us and our international ideas to progress in a forward direction. Don’t give up on your dreams, don’t give up on what you believe in, turn them into realities! Don’t be phased by all the negativity, I assure you there is light at the end of the tunnel, Don’t allow Uhljebs, Interlopers, or “Troglodytes” for that matter into your life. Don’t take shit from anyone, be proud of who you are, hold your head up high. Watch our interview on Startup Rant for a more informal discussion on the above topics! In Croatia, there is an ecosystem of positive individuals who are operating in parallel with this outdated system. Connect with them and you will find that your world will change for the better!

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