In case you’ve not hear, for the past 10 days there has been a tiff going on in the CrossFit corporate world. Let me start with a brief explanation:
Greg and Lauren Glassman co-founded CrossFit and have since gone through a divorce (a couple years ago). Greg is the managing partner and CEO with 50% ownership, while Lauren is the non-managing partner with the other 50%. Lauren recently decided she wants out.
“So what?”, right? Let Greg buy her out and let’s be on our way.
Well, turns out she has already struck a deal with Venture Capitalist firm Anthos to sell her share of CrossFit Inc. for $20 million. Why is this bad? Because Anthos, a corporate entity whose only goal is to make profit, wants to inject CFHQ with cash and push “franchise-type” rules on the Affiliates in order to beef up the value of the company so they can then, at a later date, sell it for profit.
Basically, they want to tell me how to run my business: Force me to sell certain supplements, certain clothes/designs, charge a certain rate, use a certain membership software, etc.
Not going to happen.
If the Anthos deal goes through and they start implementing some less-than-desirable changes, a lot of CrossFit gyms will simply de-affiliate from HQ. What does this mean for you?
Absolutely nothing. Nothing will change with how we conduct business, the results you get from the training, our community, or our pledge to you as coaches. The 250 some-odd athletes here at CFME are, and will always be, our “Number 1 Priority” no matter what banner we are flying.
You can find details of the whole situation here.
Or you can just watch this awesome video from Fitness Lonnie:
“We will not go quietly into the night! We will not vanish without a fight! We’re going to live on! We’re going to survive!”
(what movie??)
8/7/2012 CF WOD:
2 rounds for time:
30 db push press – 55/35
50m walking lunge w/ db’s
50m farmer’s carry w/ db’s
200m run
50m farmer’s carry w/ db’s
50m walking lunge w/ db’s
8/7/2012 Power Hour Movements:
bench press
db pullovers
Same movie that said “Or, as the good reverend would say, Why we are on this particular mission we’ll never know. But I do know here today that the Black Knights will emerge victorious once again.”
Great movie!
Amen Reverend
In the interest of fairness I’m going to post Greg Glassman’s response to the Anthos purchase as well as a response from Anthos. I’m also going to include some emails between Greg Glassman and Anthos and finally a word from Greg’s ex-wife. I’m sure you’re going to make me pay for this later Zach.
First up Greg’s post on the Crossfit HQ website
Friends,
The existential threat to affiliates resides in the $20,000,000 desire to control them. Bryan Kelly made the Anthos intent painfully clear to a room full of CF Staff Tuesday May 10, 2011, from 6:30-7:00 pm in the Tony Gwynn suite at the Omni Hotel in San Diego, California. Jeff and Miki Martin, Dave Castro, Brian Mulvaney, Karianne Dickson, Dale Saran, Tony Blauer, and I were present. There, Bryan Kelly explained in clear and concise terms that we were leaving billions of dollars on the table with our current affiliate relationship. We all remember lines like, “Every time I go into GNC, you are losing money”. The talk, and several of us have heard it several times and on two coasts, revolved around “money left on the table”. We are well acquainted with the Anthos plan and Bryan Kelly’s intent. We’ve been preparing for this for almost a year.
Make no mistake about it, Anthos wants an equity share of CF in order to gain control of the affiliates. I stand squarely in the way. From the start, our promise to the affiliates has been to minimize rent extraction while providing the best education, protection, and brand development possible. Bryan Kelly sees 4,000 independently owned and operated gyms as 4,000 potential points of sale. The Anthos approach is short-term, rapacious, dishonest, entirely destructive of our culture, and toxic to the affiliates.
Anthos will NOT end up with an equity share in CrossFit. They’re holding a losing hand and will eventually come to terms with that fact. I’m honored to fight this fight and consider the opportunity and responsibility to lead the affiliates as the most significant facet of my life. None of it is for sale – at any price. I don’t care what this costs or how long it takes, we will keep our affiliates free.
OK so now here is a response from an Anthos executive
“Dear CrossFitters:
My name is Bryan Kelly and I am a Managing Director at Anthos Capital. As you may have heard, we have entered into a definitive agreement to purchase Lauren Glassman’s ownership interest in CrossFit subject to court approval. I am writing to tell you about us, respond directly to misunderstandings about our objectives, and to tell you that we will be supportive, non-managing, value-add partners to CrossFit, the affiliates, and the community.
By way of personal background, I have been CrossFitting for the past two years and know and love the CrossFit community. Like many of you, CrossFit has had a profound positive impact on my wellness and life. Due to CrossFit, I’m in better shape at 34 than I was at 24 and I hope that I’ll be even healthier at 44 than I am now. Many of my colleagues are also active CrossFit participants, and feel the same way. I developed tremendous respect for Coach Glassman and the Affiliates in revolutionizing the fitness industry. This is what attracted our firm to consider investing in CrossFit.
We got to know the CrossFit team over several years, built a mutual respect, and became interested in the idea of investing. We learned of Lauren’s interest in selling her shares and reached an agreement with her that we believe will be beneficial to all. Our investment accomplishes several things: it provides Lauren with a fair and orderly transition out of CrossFit (consistent with her role of co-founder of CrossFit and her 50% ownership interest), it doesn’t create substantial financial obligations for CrossFit in connection with a buy out of Lauren’s interests, and it results in Greg having a partner who respects him and his vision and will support him in his efforts to further build the company.
Grossly inaccurate claims have been made about our intentions. For clarity, our plan is to help Coach Glassman professionally execute his vision by playing a supporting, hands off role. Greg will continue as CEO and we will be an investor with no managing responsibilities. We will own 50%, not a majority. We will be equal partners. We have absolutely no desire to change the affiliate model by turning them into Globo gyms. Our core philosophy as investors is to be supportive, non-control partners to the companies and teams we back.
I have met with Greg several times. It is my style to brainstorm and throw out a variety of ideas that the entrepreneur can take or leave as he/she pleases. After hearing feedback from several of you affiliates, my suggestion is that affiliates could benefit if CrossFit HQ (or a third party provider) offered optional technology services (website, member billing, member communication) to Affiliates that wanted them – those that wanted to could employ these initiatives, those that did not want to would conduct business as usual.
We raise ideas, but ultimately the decision is Greg’s and we view our role as one that helps, not directs. More broadly, the reason we are attracted to CrossFit is because of its important Affiliate model. We have absolutely no intention or desire to create a franchise model, tell you how to run your business, or force you to sell products you don’t believe in.
We know the affiliates are the lifeblood of the community and are critical to the long-term success of CrossFit – both as a fitness revolution and as a business. In short, why would an investor want to destroy the future of a company in which they invest? We want to do well in the future by you doing well in the future.
As we all know though, a core tenant of CrossFit is the relentless pursuit of betterment. We’re confident that our partnership can help do that.
Best Regards,
Bryan”
And here is an email exchange between Greg Glassman and Anthos financial
———- Forwarded message ———-
From: Bryan Kelly
Date: Sun, Jul 29, 2012 at 2:54 PM
Subject: Fwd: Thank you & we look forward to next steps
To: Greg Glassman Greg,
The message you just posted on CF’s board regarding your impression of our meeting in San Diego in May 2011 does not seem consistent with my recolletion of our time together or the email you sent me afterwards (see below email chain).
I reiterate, my goal is not to control you or the affiliates. I respect you as a visionary and recognize the affiliates are the lifeblood of this company and I would never do anything to intentionally hurt either you or the affiliates. My goal and intention is for you to continue to run the Company and for us to be a hands off investor.
I feel you and others have very much blown my comments about ways to change the affiliate model out of proportion. My suggestion to you was to offer affiliates a way to provide additional value to their members while making both themselves and CF HQ additional revenue (thought it could be a win-win) – affiliates that want to participate could, affiliates that do not want to participate could conduct business as usual.
We are committed to our deal with Lauren. Rather than all the back and forth with various CF HQ folks, why don’t you and I meet or at least have a quick phone call.
All the best,
Bryan
———- Forwarded message ———-
From: Greg Glassman
Date: Tue, May 10, 2011 at 9:10 AM
Subject: Re: Thank you & we look forward to next steps
To: Bryan Kelly
Cc: Chris Jacobson , Brian Mulvaney
Bryan,
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.
I’ve cc’d Brian Mulvaney in this as well.
Greg
Finally here is something that Lauren Glassman wrote to the affiliates of Crossfit
To the Affiliates of CrossFit, Inc.,
It was over two and a half years ago that I filed for divorce. When I first filed, I had hoped that, despite the pending divorce, I could continue to work alongside Greg.
Greg and I created CrossFit from its infancy. We are equal co-owners of the stock. We ran the company together. I felt and still feel I have a lot to offer CrossFit, but Greg made it clear that, with the divorce, he no longer wanted my involvement. I approached several alternatives for CrossFit, as it has long been my contention that CrossFit is in need of more professional management, corporate structure and accountability. I have heard from many of you that you feel the same.
About three months ago, I learned that there was interest from an outside party to purchase my 50% interest in CrossFit. While the thought of a clean buy-out, without leveraging the company was very intriguing to me, I wanted to make sure that the new-co-owner would not only pay me a fair price but was the right fit for the company and its affiliates. After meeting with the principals of Anthos Capital, I am confident that Anthos is the right choice for both of those reasons.
Contrary to what I have read on the CrossFit blog, I am not selling control of the company to Anthos. I don’t have control to sell. Anthos will be co-equal owners with Greg, just as I am.
Additionally, Anthos has emphatically told me, after reading the most recent postings on the blog that they will not “force all CrossFit affiliates to morph from professional training facilities into supplement and equipment peddlers.” Nor will affiliates report to “a domineering bureaucracy that seeks to extract maximal profit while micro-managing every significant facet of their business.” If you go to their website, you will see that Anthos clearly states that they take a hands-off approach with companies they invest in. They have also told me their intent is to continue to have Greg run the company.
Greg and I started and then grew CrossFit together, making a lot of sacrifices to get the company to where it is today. I know and recognize that our affiliates worked very hard and made many sacrifices themselves and that their efforts contributed to our growth. It is my hope that everyone understands that I did not come to this decision lightly. I came to this decision after reviewing several options and considering what is in the best interests for all.
Sincerely,
Lauren Jenai Glassman
I know its a lot of reading guys but there is so much more going on
What used to be known as my legs thanks you for today’s WOD
Your welcome, body-part-formerly-known-as-Todd’s-legs!