Recently, I read a LinkedIn post by Wilfred Valenta the co-founder and former CEO of Silofit announcing that the company was shutting down its business and closing its 18 micro-gyms in Canada and the US. Silofit launched its first on-demand 54 square metre (580 square feet) fitness space in Montreal in January 2019.
From my research on the business, the primary hypothesis might be summarised as: Fitness professionals and consumers are seeking a flexible, private, and cost-effective alternative to traditional gyms. By transforming underutilised office spaces into on-demand micro-gyms, Silofit can cater to this demand.
I’ve illustrated the Silofit business model in the attached figure. This new business model enabled the company to secure approximately $14 million (USD) to expand across eastern Canada and subsequently into the US, opening four of its ‘silos’ in Florida in 2022. Whilst conceptualising the canvas, three questions came up for me:
1 To what extent do freelance trainers rely on larger membership gyms to attract clients?
2 How did this business manage to balance privacy and convenience when many trainers and end-users would be vying for peak-time slots? In other words, what do you do when 50 trainers all want to book Monday morning at 7:00am and you only have one slot available?
3 What occupancy level and average hourly pricing yield is necessary to generate an acceptable return on capital employed?
It might be tempting to attribute this to the Covid-19 pandemic. However, in a 2021 interview with a tech journal, the CEO mentioned that “overall, it was a net positive.” He added that the pandemic “allowed Silofit to expand its physical footprint within a depressed real estate environment.” Moreover, the team believed that with the permanent closure of a significant number of health clubs, numerous personal trainers would be seeking new exercise spaces to run their businesses.
It’s worth noting that Silofit was among the pioneers in introducing private on-demand gyms to the market. Naturally, this comes with the challenge of navigating uncharted waters, especially when trying to persuade trainers and fitness enthusiasts to alter their purchasing habits. It’s invariably more straightforward for subsequent businesses to learn from the trailblazers, thereby sidestepping expensive missteps.
From what I’ve gathered, the Silofit team has much to be proud of. Their innovative approach has paved the way for other teams globally to introduce similar concepts.