Lauren Glassman & Bryan Kelly: CrossFit vs. Anthos

Lauren Glassman and Anthos Managing Director Bryan Kelly have today posted a video where they chat publicly for the first time on the CrossFit vs Anthos debate.

The Rx Review has been trying to get an interview with Lauren for the last week to find out more about the proposed takeover by Anthos. We still hope to have one in the next week so we can have some of our own questions answered.

In the meantime, the above video details Lauren Glassman’s and Bryan Kelly’s views on the issue.

The two have also released two public letters to the community today. They read as follows:

LAUREN GLASSMAN:

Dear CrossFit Affiliates,

There have been many questions since staff from CrossFit HQ, on July 28, 2012, made public my decision, pending court approval, to sell my 50% interest in CrossFit, Inc. to Anthos Capital.  Unfortunately, Greg and CrossFit HQ declined my request to have a Q&A with Bryan Kelly of Anthos and myself during the CrossFit Tour in Montana.  While I would have preferred that Bryan Kelly and I answer your specific questions in more detail, face-to-face, in Montana, I would like to take this opportunity to provide you the following information, which responds to the most frequent concerns expressed to me and in various social media. 

My personal and professional pride and satisfaction starting CrossFit with Greg from a single box in Santa Cruz, California to the world-wide community it is today runs deep.  In fact, like you, I am an Affiliate and will continue to be an Affiliate along with my team in Prescott, Arizona.  Where I derive particular satisfaction is that like any strong family, while we don’t always see eye-to-eye, we are committed to understand another’s point of view and respect another’s ultimate decision.

As you may know, Greg and I decided to divorce more than two years ago.  And as much as I believe and continue to believe in Greg’s vision for CrossFit, we both came to the realization that it would be better for everyone if we no longer continued to work alongside one another on a day-to-day basis.  But, as Greg once told the community, CrossFit was “built from Lauren’s wisdom, perseverance, and understanding of [his] vision” as his “most trusted adviser and co-owner of CrossFit Inc.”  And I would like to continue to provide that wisdom, perseverance, and understanding.

Some have claimed that I made the decision to sell my 50% interest in CrossFit for personal, rather than business, reasons.  Some have said that I even rejected better offers from Greg. These claims are just not true It is true that I have a definitive agreement subject to court approval to sell my interest in CrossFit to Anthos for $20 million upfront.  After discussing the matter with advisors, and considering multiple factors, I came to the conclusion that the Anthos deal was a better offer.  While I would like to provide the details of Greg’s offers, this requires permission from Greg to provide those details, and I have not yet received that permission.

When I met with Bryan a few months ago, he gave me the confidence that he and Anthos would take CrossFit to the next level of success at an important point in time.  I ask that you take a few minutes and view the video, discussions by me and Bryan Kelly on many of the topics addressed by CrossFit HQ and the CrossFit community. 

Thank you for your time, your scrutiny, and your passion. 

Lauren

BRYAN KELLY:

Dear CrossFit Affiliates and Members,

My name is Bryan Kelly. As you may have heard, my firm, Anthos Capital, has entered into an agreement with Lauren Glassman to buy her 50% interest in CrossFit, subject to court approval. Given the false information that is circulating, Lauren and I offered to host a live Q&A session for you at Big Sky Montana this weekend so we could have an honest and balanced discussion, but HQ rejected us. Instead, I’m providing this letter and video (link below) to give you the facts, so that you have an accurate picture about me, my firm, and our intentions, and can make your own informed judgment.

I’m a committed CrossFitter who cares deeply about this community: I believe that it might be helpful if you know about me, since my desire to invest stems from my passion for CrossFit. I’ve always taken my fitness seriously: wrestling and playing football in high school and competing in triathlons after college. After a co-worker introduced me to CrossFit two years ago, my definition of fitness completely changed. I began training at Bay Area CrossFit affiliates, and currently work out with a CrossFit coach who trains other athletes and is opening his own affiliate. I’m nowhere near the level of the Games-caliber athletes I look up to, but I have torn hands and PRs to show my progress. I am incredibly proud of my accomplishments thus far – I’m in better shape at 34 than I was at 24.  My mile time has gone from 6:50 to 5:15, my max pull-up sets have increased from 8 to 24, my latest Fran time was 6:57, and my Helen time is 9:59. I’ve got a lot to work on. My current goals are to go sub 5:00 in both the mile and Fran, complete 30 or more pull-ups, and beat an 8:30 Helen. I know my performance isn’t overwhelming, but it is an example of the power of CrossFit to improve lives.

My experience has also given me a deep appreciation of the substantial commitment that affiliates make to help their members. Affiliate entrepreneurialism and freedom make CrossFit special, and it’s illogical for me (either as a member or an investor) to do anything that would reduce your motivation or happiness.

Anthos will own 50% of CrossFit, not a controlling interest: As a general point, Anthos will not be a majority investor or have any operational control over CrossFit. Our purchase of Lauren’s interest will merely allow us to step into her shoes as an equal owner. This means that Coach will continue to lead and manage CrossFit’s day-to-day operations, just as he has always done. We have no desire to change the Games, corporate partnerships, HQ staff, or cause Coach to take actions he does not believe in. We view our role as supporting HQ and helping the affiliates to achieve their own long-term objectives.

Anthos is a supportive, patient investment partner: Anthos’ philosophy is and always has been to play the role of a supportive investor in all of the companies in which we invest and, should the court approve this transaction, that would include CrossFit. I co-founded Anthos with my equal partner Paul Farr (Paul is also a CrossFitter) to support revolutionary businesses. We only invest in companies and teams whose missions and products we believe in. What makes us unique is that we have always been hands-off and only invest our founding and managing partners’ money. We have no outside interests, influences, pressures or conflicts. Our structure allows us to be committed owners, invest for the long-term, and support transformational businesses.

We want to invest for the simple reason that we strongly believe in CrossFit’s natural growth prospects: Our business is to support rapidly growing companies, and I believe that CrossFit’s ascent in the health and fitness industries has only just begun. CrossFit is on a path to having millions of members under the existing affiliate model. This trajectory will produce a company that is valuable, fun to be a part of, and impactful. 

Our only role will be on CrossFit’s Board of Directors: We intend to offer help to CrossFit and Coach at the board level with the guidance essential to long-term viability: strategic development, financial planning, and any other areas that would help the Company and affiliates.  Given the time, effort, and money affiliates have poured into building their boxes and servicing their members, they have a vested interest in knowing that HQ has the independence, skills, and systems to operate soundly well into the future. Other companies we have been involved with have welcomed our professional guidance – input that’s helped them strengthen their businesses and long-term prospects without changing their business models, values, or cultures.

We want affiliates to thrive, and we have no interest in the franchise model or other unwanted actions: There has been a lot of talk about franchising, and I want to be crystal clear that our proposed investment cannot and will not turn affiliates into franchises or force them to sell supplements, apparel, or any other products. Despite what has been said by some people on the message boards, we prefer the open market model that currently exists in which affiliates get to run their boxes as they see fit. This model syncs with my personal belief in autonomy, limited interference from big bureaucracy, healthy competition, and the special power of small-businesses. Thus, we intend to fully support affiliates continuing to run their boxes as they see fit. Any statements to the contrary on the message boards are simply wrong.

Lauren has a right to sell her 50% interest in CrossFit for a value she believes is fair: Lauren, along with Coach, played a significant role in CrossFit’s success, and she is now entitled to fair compensation for her hard work and ownership stake. It is understandable that in light of their divorce proceedings, Lauren would want to move on with her life and sell her ownership interest but continue as an affiliate. As Lauren has explained, Coach offered to buy her interest, but his offer was unsatisfactory to both her and her advisors. People have said that Coach’s offer was superior to ours and Lauren is spiteful. This is entirely false. Subject to court approval, we have agreed to pay Lauren $20 million cash upfront. Coach’s offer, as Lauren has explained, does not – in our view or the view of her advisors – come close to Anthos’ offer.

Coach is a visionary and important to this community: I believe that Coach is immensely talented, a rare visionary, and important to CrossFit’s future. We want Coach to continue leading CrossFit as CEO and will do what we can to support him. In fact, his vision, determination and creativity are a huge part of why we want to partner with him and invest in CrossFit. 

Our desire to invest in CrossFit is driven by a passion for the sport, the affiliate model, and the community, and a belief in a bright future. Hopefully, I have helped to better inform your opinions and address your concerns. We are committed to pursuing this investment, and welcome an open dialogue with you.

Sincerely,

Bryan Kelly

PS. There are other specific falsehoods that have been spread that I would like to clarify. Here are the facts:

- Anthos has NO affiliation with any apparel manufacturer, or any equipment, nutritional, or fitness companies. We have no investment in any such companies, and no such companies have any investment in Anthos.

- Just as I believe affiliates need to strive to serve their members well, CrossFit HQ needs to do whatever possible to serve its affiliates well. Certain comments I made on this issue have been severely distorted from their intended meaning. It is true that in May 2011 I met with Coach and suggested that HQ could create tools that better help affiliates run their boxes (I was envision website hosting, online member billing, online storefront to sell any 3rd party products that a particular affiliate owner might already be recommending, etc). I believe that these tools should be optional, not mandatory, and that everyone benefits from the sharing of ideas. My suggestions were made after hearing anecdotes from affiliates who wanted solutions to streamline their own offerings and from trainers who wanted to open new affiliates, but were intimidated by the business logistics involved. Again, my view is that boxes should have the choice whether or not to implement such tools. My style is to brainstorm and throw out ideas for management to implement as they see fit, it may very well be that such tools are unnecessary (or that third parties are already filling this need), which is fine – no need to do anything.

It’s worth noting that Coach actually reacted positively to me following our meeting saying via email:

“It was great meeting you and seeing Chris again. We’ll get together soon, we’re significantly in sync when looking at CF’s strategic and market potential. It would be a shame not to keep talking.” – Greg Glassman

- We had not been in contact with Lauren or any of her representatives prior to late April 2012. Coincidentally, at that time, our attorney informed me that Lauren had hired advisors to help her sell her CrossFit interest. I became convinced that Lauren would engage with buyers and because I believe Anthos is the best possible investment partner for CrossFit (I believe in Coach and his vision, I’m a CrossFitter and value the community, and we have the resources to move efficiently), I agreed to speak with Lauren. Rumors that I was introduced to Lauren in any other way are 100% false.

 

 
John Michael Bric
John is a newsreader, freelance writer and Level 1 CrossFit Trainer. A contributing writer for the CrossFit Games and CrossFit Community websites, he is the current Australia Regional Media Director for CrossFit Inc. When he's not CrossFitting, he can often be heard reading the morning news on the radio or trying to convince people that chicken burgers, french fries and beer are all Paleo.
John Michael Bric
  • Craig

    Can this sound any more scripted?

  • http://www.facebook.com/mattyrog Matt Rogers

    I can’t believe all of the CrossFit affiliates are caught up in a bitter divorce.

  • Charles Russell

    If CrossFit were a typical business and a typical model, than Anthos and it’s UnderArmour board members would make sense. However, they want into a business that has done better than any other investment they have ever dreamed of and want a big piece. Not do the work and run an affiliate, but buy into it cheap and apparently sit back and “advise” a board that has done fine without them? Where do they expect the returns to come from? What do they offer the community?

  • John

    “Heaven has no rage like love to hatred turned / Nor hell a fury like a woman scorned.” – William Congreve

  • Patrick Menasco

    Expecting a private equity shop to sit back and let cash flow trickle in is ludicrous. They’ll push to squeeze affiliates for more of their earnings for five years and then sell their interests to the highest bidder.
    If they buy, I’ll happily follow Coach to Crossfit 2.0

  • Rustypelican

    With the success of CrossFit, it is inevitable that it would eventually grow beyond its humble origins. True, it will not be the same. But nothing stays the same. Even Glassman would eventually sell out, at the right price. Private equity would certainly seek to maximize profit potential by branching out into othyer areas, such as food and exercise products. It was nice while it lasted.

  • http://www.facebook.com/russ.greene1 Russ Greene

    Rusty,
    “Even Glassman would eventually sell out, at the right price.”

    This is not true. Investors have offerred Greg more money, more frequently, than they ever have to Lauren, and he refused every time. Anthos approached him, too. Greg’s entire vision for CrossFit is based in NOT extracting maximal profit from the affiliates. He has affiliates signed up at ridiculously low yearly affiliates fees (500-3000.) Those affiliate’s rates will NEVER change. To accuse a man with that track record of being willing to sell out “at the right price” is both insane and insulting.

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