Founded in Brazil, Wellhub (f.k.a. Gympass) created an entirely new business model by being the first company to introduce corporations as payers for employees’ wellness benefits. The company was able to quickly scale a three-sided marketplace of gyms, corporations, and employees in a highly-fragmented market of more than 35,000 Brazilian gyms. Since its founding, Wellhub has successfully exported its innovative model to 14 countries and is another example of a Brazilian company becoming a global leader. The company currently has more than 55,000 gyms in its global network, which reaches more than 11 million eligible employees, and aims to help more than 1.4 billion people worldwide stay active.
The Key Insights that Led to the Founding of Gympass
In 2012, Cesar Carvalho founded Gympass based on a double insight: gyms rarely operate at full capacity due to challenges in maximizing equipment utilization rates and customers face little flexibility in membership plans due to the hyperlocal business model of traditional gyms. Under the status quo, gyms could not fully monetize their fixed assets and customers were forced to commit to a single provider, often with limited geographic reach. The idea for the world’s largest network of gyms was born: Gympass would help gyms fill their extra capacity by aggregating gym-goers on its platform and offering flexible plans that allowed users to access any facility in the company’s network.
Successfully Scaling a Three-Sided Marketplace of Gyms, Corporations, and Employees
Cesar quickly learned that building a marketplace is no easy task. The savings and flexibility generated by Gympass were not initially evident to the Brazilian customer and the company had challenges in scaling the demand side of the network early on. Without a large base of engaged users, Gympass had no leverage in negotiating favorable plans with gyms.
When we met Cesar and Vini (co-founder and CTO) in 2013, the company was on the cusp of a breakthrough. In order to solve the dreaded chicken-and-egg dilemma of marketplaces, the founders had the game-changing idea of segregating the demand side of Gympass’ network into payors and users. Instead of following a B2C model in which individual gym-goers would be both users and payers, Gympass decided to sell to large corporations, which would then offer membership plans to their employee base. It turned out that companies, which already provided hefty benefits to employees, were increasingly interested in expanding their suite of health benefits to include true wellness solutions – beyond the simple emergency dental and health plans. By doing so, companies could not only boost workforce morale and performance during the day-to-day at the office, but also increase employee retention in an increasingly competitive market for talent.
With the shift towards a three-sided marketplace of gyms, corporations, and users, the foundations for sustained growth and monetization were finally in place. Cesar and Vini’s brilliant solution for aligning incentives in the Gympass network reassured us that they were the right team to create their own vertical within the Health & Wellness market. With a fragmented base of more than 18,000 gyms, of which 98% were independent, Brazil proved to be the ideal market for the company’s launch. We knew from the beginning, however, that Gympass was set to become a global company.
Rebranding from Gympass into Wellhub
Even though the platform initially focused on physical fitness, it soon evolved into a comprehensive corporate well-being solution by connecting millions of employees to a diverse network of partners for physical, emotional, and nutritional well-being. During the COVID pandemic, the company’s network expanded and partnered with other apps such as Headspace, SleepCycle, CorePower Yoga, that focused on mindfulness, sleep quality and remote workouts, among other areas. As the solution continues to evolve, it became clear to Cesar that the brand also needed to evolve. It all led to Wellhub, which connects companies and employees to the best fitness and wellness partners in one subscription designed to cost less than each individual partner.
Wellhub’s long-standing partnership with Valor
Valor invested in Gympass at the seed stage, led the company’s Series A in January 2014, and has since supported its impressive worldwide growth. Valor connected Cesar to key partners such as Atomico, General Atlantic, and SoftBank, which helped fuel the company’s growth from 1,000 to more than 50,000 gyms on its network. Gympass is now fully operational in LATAM, Europe, and in the United States and has ambitious plans of exporting its Brazil-native model to every single country in the world.
