An interview with Karl Vihul, the founder of FitSphere and a master’s student in TalTech´s management and marketing programme. Comments are from Paavo Siimann (PhD), financial mentor and leading investor of FitSphere and a senior lecturer at TalTech School of Business and Governance.
Karl, about a year ago, you and Kristo Sõerd, the co-founder, created the app FitSphere, which rewards physical activity. What gave you the idea of creating the app?
Throughout my life, I have been involved in sports - playing tennis, riding a bicycle, and bodybuilding. My interest in bodybuilding grew so deep that I became a personal trainer already while I was still a secondary school student.
Entrepreneurship and marketing are my second passion. I earned a bachelor's degree in business in TalTech, and currently, I am pursuing a master's degree in management and marketing. For many years I have been involved in referral marketing, both in B2B and B2C sales. The sales and pitching skills acquired there built a solid foundation for setting up a start-up.
Please tell us more about the birth of your business idea.
Three years ago, my friend and I presented a similar idea in the entrepreneurship and business planning course, and it was quite harshly but fairly criticized. The problem was that we already had the idea that a person should be awarded for being physically active, but we did not know where the award would come from. A few years later, after joining a media agency, at lunch, we discussed the idea with Kristo Sõerd, the head of my department, who also had a marketing background. We came up with a business model, and after analysing the market, the company was established. It took us a few months to do the background research on the developers and costs, until we finally reached the right partner. Finding capital was another challenge, of course. As Enterprise Estonia does not support advertising and the creation of apps, our friends and family were the first ones to contribute to the establishment of the company. The investors who cared deeply about exercising and sports came along soon.
What problems does FitSphere tackle?
Physical inactivity is becoming a global issue. The resulting health problems develop at an early age, and the declining number of healthy life years is a sad reality. Having worked as a personal trainer for years, I know how easily people lose their motivation. Gyms are crowded in January and September, but a month later you are there alone again. It shows the complexity of cultivating intrinsic motivation. We realized that people first needed an external motivator to reach their internal motivation. Later on, physical activity will be motivated by the visible results, which serve as one of the sources of building intrinsic motivation.
We know that the statistics on the physical activity of Estonians are bleak: only one in five children reaches the recommended daily physical activity level. Due to physical inactivity, the overweight population is on the rise, and the problem has worsened during the COVID-19 pandemic. We need to start making small changes, for example aiming for 6,000 - 8,000 steps per day.
What distinguishes FitSphere from other similar apps?
Karl: "FitSphere can be distinguished by the fact that people are rewarded for being physically active, which supports their motivation. Already in a week you can receive prizes for your steps. We have given away holiday trips, Apple watches, Rally Estonia VIP tickets, etc. During the five months when the app has been available, more than 130 companies have already cooperated with us.”
Paavo: “My experience in the retail business has confirmed that people are enthusiastic about consumer games. A good marketing campaign can get the masses moving, therefore the founders' background in marketing and consumer behaviour was a crucial factor in making my investment decision.”
Why do companies like FitSphere?
Karl: “Companies see our app as a good marketing channel because it provides an easy way to raise the brand image. Companies have an opportunity to promote themselves while doing something good - contributing to people's health and quality of life and thereby reducing treatment costs. When a person struggles to earn a reward, (s)he develops an emotional connection with the company, which is more than just seeing an ad while scrolling social media content, and a cognitive community that includes app users and supporting companies will be built.”
Paavo: “Our goal is to make people use the app at least once a day. If the user participates in a competition, the involvement is even greater. Several companies have earned back their campaign fees in a few days.”
Please tell us more about the team. FitSphere´s financial mentor and leading investor is your lecturer. How did you get Paavo on board?
Karl: “Paavo Siimann taught us the course on business performance management and analysis. During the lecture break, I approached him to pitch the idea. I was unable to convince him right away, so after the lecture I e-mailed him. A few weeks later, on a Friday night, we met at the university. Instead of an hour that we had planned, we spent four hours talking. After lengthy analyses, meetings with a lawyer, and the signing of several contracts, Paavo invested in FitSphere and became our first "smart money".
Paavo: “In the beginning, I thought I would just hear the student and maybe give him a piece of advice. I have studied mentoring and I liked being a mentor. During the conversation, I saw Karl's willpower, ambition, and thorough preliminary work. At the university, he had acquired financial planning skills and other required basic competencies, which, in my experience, start-up entrepreneurs often lacked. Soon I met Kristo, the co-founder, who was very analytical and whose approach was primarily data-driven, which I also liked very much. By that time, I had already invested in a dozen of start-ups, but all of them later-stage companies. I was interested in being involved at an earlier stage. Having a 15-year background in working in large companies, I have a good understanding of how to run a business and how not to do it. Therefore, I hope I can offer Karl and Kristo several faster solutions and shortcuts to save time building up a business.”
Ott Kiivikas, a famous Estonian bodybuilder is the company's spokesperson. How did he join the team?
Almost a year ago, when I was training for a competition, I met Ott Kiivikas - we were the lucky ones to be allowed to continue working out in the gym during the lockdown. In the locker room, I took a chance and pitched my idea to Ott. We continued the conversation on the treadmill and while lifting heavy weights. Ott liked the simple idea of "train today, get a free lunch tomorrow" so much that we quickly agreed on the next meeting from which our collaboration began. Today, Ott is one of our noblest "tools" - a company spokesperson with a very wide contact base. Thanks to him, we have received much more media coverage than an average start-up, made a strong start, and opened doors that would otherwise have remained closed at first swing.
What have been the biggest challenges so far?
Involving enthusiastic developers in the team has been most complicated. Software developers are very expensive in Estonia, and in insanely high demand. We are unwilling to buy people over, we would like to find people interested in the field. Raising capital requires effort as well. Estonian business angels are not familiar with B2C business, although Bolt and Wolt have been very successful. However, in the first round, we engaged 36 investors and 240,000 euros within ten months.
What are the further goals of the start-up?
The app will have many new developments this year. Our goal is to make the app even more playful and bring in a variety of cool extras. In addition, we will be expanding to our first foreign market – Sweden, in 2022, thus our team will be growing by almost three times. Soon, we will start raising capital in Funderbeam. I encourage everybody to use all the apps and follow us on social media.