Online Education is the Gym Membership of the Mind

I’ve tried a few companies in a lot of different areas and I am always surprised to find out what business I am really in. For example, many entertainers are surprised to find out they are really in the business of advertising.

In 2016, I made an app for people to pop into various gyms around the country for a day. About 6 months in, after talking to dozens of gym owners, I finally realized why this extremely obvious idea would most likely never work. As a note, my company was fortunately acquired for a bit more than me and my friend put into it – a story for another time.

To understand what business a gym is in, you first have to look at which gyms are growing fast and which are struggling.

Picture a normal business with a normal business model. One where you are making something so awesome, that your customers love your product. They love it so much they come more frequently than others. Gyms are the opposite of this.

The best gym is the cheapest and worst gym.

Planet Fitness is the prime example. They make most of their money from their worst customers. The ones who don’t show up. People who get a membership and actually go to their gym cost them money in maintenance fees for the equipment. They make the most from those who occasionally go or simply forget.

Companies that want to make money have to align with this existing business model or they will constantly lose money. You can argue luxury gyms work the normal way, but they are a minority of most gym memberships.

Classpass is still around for now. But last I checked, they have continued to raise their prices and frequently lose money on every transaction trying to sell one off passes to gyms. If they are successful, it will only be because they similarly have enough members who buy their membership and forget to use it. A company like Mindbody has done a great job aligning with gyms existing incentives and makes money hand over fist.

Basically, gyms are selling the good feeling of a having a gym membership, not exercise and getting people healthy.

Online education is turning out to be no different.

When I say Online Education, I specifically mean Massive Open Online Courses or MOOCs.

The profitable MOOCs are making all their money from selling the good feeling of being in a class, not learning.

I wonder what other businesses could form from selling this good feeling. Could you sell the good feeling of scheduling a doctor or dentist appointment without going? Maybe seeing relatives on the holidays?