Ergatta's CEO reveals how the connected-fitness startup generated $2.5 million in monthly revenues within a year of launching

• Ergatta found a gap in the market by targeting fitness-minded people who don't like exercise classes.
• It conducted months of research before launching the product, and raised $5 million in funding.
• Sales have boomed during the pandemic, but its CEO says the at-home fitness trend is here to stay.
• Visit the Business section of Insider for more stories.

Ergatta only launched sales in March 2020, but the home-fitness startup has already reached $2.5 million in monthly revenues, it says. 

Business has been so good that the company has already sold out of its luxury rowers multiple times during the pandemic.

The waves of lockdowns and gym closures made 2020 the ideal time for Ergatta to launch sales, but the stay-at-home fitness trend is here to stay, Tom Aulet, the brand's CEO and co-founder, told Insider.

Ergatta was founded back in 2018, long before anyone knew that a pandemic would shake up the fitness industry. Two of the founders were marketers, Aulet told Insider, and they were outsiders to the fitness industry. This could have been pivotal to its success, Aulet said.

Because of their backgrounds in marketing, from the start, they focused on understanding the influences and resources that people consult when purchasing fitness equipment. Because rowing machines are such a major investment - Ergatta's model costs $2,200 - customers undertake a lot of research before deciding whether to buy one, Aulet explained.

As a result, Ergatta decided to focus on searchable channels that impact lower-funnel consideration, such as YouTube reviews, blog, and press coverage, rather than paid-for adverts, Aulet said.

"This is an expensive product, those people have never heard of it before, it's going in your home, likely in your living room or bedroom," he said. "You're not going to buy it after seeing an Instagram ad."

The company got $5 million in funding from two rounds. Its biggest backers are New York-based venture capital Greycroft, but it got pre-seed capital from angel investors including Mark Pincus, Scott Dorsey, and Rhode Island-based WaterRower, which it struck up a partnership with. WaterRower now manufactures Ergatta's machines.

Ergatta is just one player in a booming business. The fitness-equipment industry was valued at $11.5 billion in 2019 and is expected to reach $15.2 billion by 2027.

Peloton, which makes bikes and treadmills, has largely dominated the connected-fitness space during the pandemic. It doesn't yet make a rower, but other companies including Hydrow, CityRow, Nautilus, and NordicTrack all do.

Michael Farello, a managing partner at L Catterton, told Insider in July that rowing was "the fastest-growing modality in fitness."

Ergatta found a gap in the market. Around half of people don't enjoy fitness classes, its research found, and so the company decided to make a competitive, gamified alternative to target this currently under-served market. As well as pitting you against the machine for its goal-based plans and interval workouts, the rower while allows you to compete against other Ergatta users in simulated races. 

Because of this, Ergatta's customer base isn't centered around a specific demographic. The product instead attracts a certain personality type, Aulet said. Most consumers tend to be competitive and introverted, and it skews male. Its users include a lot of engineers, teachers, doctors, fire-fighters, lawyers, and finance people, he said.

WaterRower produces Ergatta's rowing machines in Rhode Island from sustainably harvested cherry wood. Aulet said the company is the only major connected fitness brand that manufactures in the US. This is a huge competitive advantage in the current environment, he said: Most other fitness companies make their hardware in China, and logistics have been under strain during the pandemic.

And, as well as performance, design is an important part of Ergatta's rowers.

"It's really easy to sell when a thing is beautiful," Aulet said.

The machine can fit into the space of a barstool when not in use, Ergatta says, and can be easily wheeled to a new room. The rowers come with a five-year warranty - but they're built to outlast this, the company says.

Customers who already own a WaterRower can pay to upgrade their existing rowing machine with Ergatta technology. For $550, Ergatta sells its hardware add-ons for WaterRower S4 owners to turn their machine into a connected-fitness device.

Though customers need the hardware to use Ergatta, the startup describes itself as a software company at its core. It sells its software through a subscription model where customers pay $29 each month. The company releases new software every one to two weeks, with the input of customer feedback, meaning that users' experiences constantly improve and evolve.

And this approach seems to be working. Ergatta's users work out on average 12 times a month, and 99.5% of users stick with Ergatta each month, Aulet told Insider.

The company could have sold more rowers it hadn't occasionally sold out, he added.

Ergatta is scaling up production to meet rising demand and is building up its workforce, too. It directly employs 18 full-time employees at the moment, and it has seven open roles, too. 

The home-fitness boom is here to stay, Aulet said.

Two-thirds of Americans prefer working out at home, and 59% don't expect to go back to the gym after the pandemic, he said.

"If you can deliver substantially the same or better experience much more conveniently, that will always win out."