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MGT311 Final Exam 202130B Page 1 of 8
Part A Case Study
Read the following case study and answer all three (3) questions.
Each question is worth 10 marks.
Each answer should be one (1) page typed or more in length.
CASE STUDY:
On March 13, as New York prepared to move indoors to slow the spread of the coronavirus,
Mirror founder Brynn Putnam closed the offices of her high‐tech fitness startup and sent her
nearly 100 employees home. The former ballerina now hunkers down in her Greenwich
Village apartment with her husband, Lowell, also an entrepreneur. The couple alternates
who gets to be on Zoom from the bedroom and who watches their 3‐year‐old son, George,
in the living room.
The only thing that’s easy: working out. Putnam brought home two of her fitness company’s
eponymous interactive Mirrors. One is in the bedroom, the other in the guest bedroom. “If
[Lowell] wants to box and I want to do yoga, we can,” says Putnam, 36.
With a market capitalization above $13 billion and a product and marketing campaign that
have become a meme, Peloton has emerged as the buzziest fitness company of the
coronavirus era. But privately owned Mirror is hot on its heels, with a single advantage
Peloton can’t match: compactness. At 22 inches wide, 52 inches high and 1.4 inches deep,
Putnam’s product looks and acts like a regular mirror. Turn it on, though, and users see an
instructor teaching the class (as well as their own reflection so they can work on form);
software provides personalized modifications in the corner of the screen and helps track
fitness goals. Members pay $1,495 for the Mirror and an additional $39 a month for access
to an array of livestreamed classes including cardio, barre, strength training and yoga in 15‐,
30‐ and 60‐minute increments.
“No one had thought about putting a screen into a mirror and having it be a workout
platform,” says Kevin Thau, general partner at Spark Capital, one of Putnam’s early
investors. “It seems obvious in hindsight, but it wasn’t before.”
Brick‐and‐mortar gyms and fitness studios are an almost $100 billion business, according to
the International Health Racquet and Sportsclub Association. When Putnam launched the
product in September 2018, five years after Peloton first started connecting bikes, she was
betting on a gradual, continuing shift toward home fitness. Now with millions of people
stuck in their homes and desperate for exercise, she’s riding high, with sales surpassing her
already aggressive projections—and a spot on our Next Billion‐Dollar Startups list, one of 25
MGT311 Final Exam 202130B Page 2 of 8
private companies Forbes bets will become unicorns. “We’re seeing Christmas in April,”
Putnam says, noting that Mirror’s tens of thousands of members are now working out an
average of 15 times a month, up from 10.
Upon Reflection: Brynn Putnam missed the moment to expand her boutique fitness studio
beyond three locations— a mistake she’s determined not to repeat with Mirror. “I had a bit
of a chip on my shoulder from Refine,” she says.
While Putnam and the company zealously guard their numbers, Forbes estimates that
revenue reached $45 million in 2019 and will surge past $100 million this year, which
Putnam confirms. While the obvious focus is growth, Putnam now says she expects Mirror
to turn profitable by early next year.
“It’s definitely one of the most exciting highfliers in the portfolio,” says Ben Lerer, managing
partner of venture firm Lerer Hippeau, which had previously backed Warby Parker, Allbirds
and Glossier. “This can be a very big business, as big as Peloton, over a shorter period of
time.” To date, Putnam has raised $72 million from Lerer Hippeau, Spark Capital and
Point72 Ventures, the VC firm of hedge fund billionaire Steve Cohen. Its last raise, in
October, brought in $34 million and valued the company at just under $300 million. Putnam,
the sole founder, is worth at least $80 million—and after the Covid‐19 boost, probably much
more. Her challenge going forward: ensuring that Mirror becomes the new normal, versus a
fleeting pandemic trend.
Brynn Jinnett Putnam grew up on Manhattan’s Upper East Side, the daughter of a lawyer
and a stay‐at‐home mom. At age 3, she started dance lessons. “One of their earliest stories
of me was that they took me to a restaurant where someone was singing and playing live
music onstage,” she says. “I had found my way to the stage and was dancing with the
singer.”
At age 7, she joined the School of American Ballet, cofounded by George Balanchine. Her
debut with the New York City Ballet was noted in the New York Times with a photograph of
her and two friends. That year, she played the Bunny in The Nutcracker.
Some dancers only dance; others have additional interests. Putnam was in the latter
category. “My dad said to me, ‘It would be great if you could learn some actual skills,’ ” she
recalls. She studied Russian literature and culture at Harvard.
"Dance is an unusual sport in that you don't win or lose, but everyday you wake up and you
try to be just a little bit better than the day before," says Mirror's Brynn Putnam.
After college, she went on the road with the Pennsylvania Ballet and Les Grands Ballets
Canadiens de Montréal. During the off months in New York, she taught ballet and toning
classes. Boutique fitness studios were booming, and it was an easy way to bring in cash.
When she retired from ballet a decade ago, she sought to open her own boutique studio.
At the time, she had just $15,000 in personal savings, so she wandered the streets of
Manhattan searching for whatever strange off‐market space she could find. Walking past an
Orthodox church on the Upper East Side, she heard people speaking Russian and struck up a
MGT311 Final Exam 202130B Page 3 of 8
conversation, in Russian, with the minister and some parishioners. The chat soon switched
to English, and she learned they had a space available. In 2010, Refine Method was born.
“The catch was that every Sunday we had to turn it back into a church,” she says.
Another catch: There wasn’t enough space for standard equipment. So she jerry‐rigged a
solution with the help of her husband, who, aside from having cofounded fintech startup
Quovo (acquired by Plaid), grew up sailing as a member of one of Boston’s blueblood
families (his great‐grandfather founded Putnam Investments). The device they built was a
series of sailing pulleys and resistance bands that could serve as a wall‐mounted weight
machine, enabling each person to do strength training exercises with just two feet of space.
“It looked kind of like an S&M den,” she recalls.
Clients raved about Refine, and Putnam expanded the studio into a mini‐chain. By 2016,
though, newly pregnant and suffering from severe morning sickness, working out in a club
no longer appealed to her. Peloton was booming, but Putnam didn’t want a bike in her
apartment. Nor did she like the content and interactivity of the streaming apps she tried.
Her aha! moment came when she upgraded Refine, adding more mirrors, and got rave
reviews from her clientele. “I realized a lot of the technology I had been thinking about
could be put in a mirror,” she says.
Putnam built a crude prototype in her kitchen with a cheap tablet from Amazon, a piece of
glass and a Raspberry Pi, a small, low‐cost computer often used by do‐it‐yourself hobbyists.
By the time she had a prototype viable enough to raise funding, she was seven months
pregnant, and as she sought guidance from entrepreneurs and investors, many told her to
hold off. “I met with a lot of other founders who said, ‘It’s great you’re doing this, but I think
you’re going to meet resistance. They don’t like backing solo founders, they don’t like
backing solo female founders and they certainly don’t like backing solo female founders
who are seven months pregnant,” Putnam says.
But she didn’t want to wait. She had seen boutique fitness chains like SoulCycle and Barry’s
Bootcamp turn into behemoths, while Refine, which she still owns, was stuck at three
outlets.
She ultimately closed her seed funding with Lerer Hippeau from the hospital on November
15, 2016, the day her son was born. “Don’t mess with Brynn,” says Lerer, who agreed to
invest after seeing her janky prototype. “She is extraordinary at getting people to believe in
her vision and follow her.”
Putnam and a small team figured out the fitness regimens from her kitchen table. Then
came the engineers, whom Putnam parked at a WeWork. “There was always stuff
everywhere, attachments and mirrors and different prototypes and ideas,” says Abby Bales,
a personal trainer who now serves as Mirror’s scientific advisor. Product testing? Early on,
Putnam dragged a Mirror prototype to the Refine studio to see what loyal customers would
think. “It was very large, like huge, with a lot of metal, and it was not the easiest thing to
move around,” says Kailee Combs, who was then an instructor and director of programming
at Refine and is now Mirror’s VP of fitness content. “My fiancé was driving the U‐Haul, and I
MGT311 Final Exam 202130B Page 4 of 8
was in the back of the van with Brynn, and we were literally holding this hunk of a mirror
that was wrapped in an old blanket.”
Putnam says her lack of technical expertise was an advantage because it enabled her to
focus on the few things customers cared about rather than trying to build a perfect product.
For her, what mattered was that the Mirror be an inch deep or less, look frameless and have
the right balance between transmission and reflection. “The member doesn’t care what the
back of the mirror looks like because it’s hanging on the wall, and the member doesn’t care
if it weighs 50 pounds versus 60 pounds,” she says. “I was ruthless, and we were able to
make good decisions on time, cost and quality.”
“We’re seeing Christmas in April,” says Brynn Putnam, noting that Mirror’s tens of
thousands of members are now working out an average of 15 times a month, up from 10.
After two years of design work, Putnam launched the product, now made in Mexico, in
September 2018. Though that was six months later than she hoped, it went off without any
major flaws, a big win for a complex piece of electronic equipment.
Three months later, she was at her in‐laws’ house for Christmas, hoping sales would be
strong. “I heard my cousin scream from the other room—Alicia Keys had posted on
Instagram her family gifting her a Mirror,” Putnam recalls. In the video, Keys’ children lead
her to a closed door and tell her not to yell out, but as soon as she sees the Mirror mounted
to the wall, she begins to shriek and dance with excitement.
Soon, Mirror was attracting other celebrity clients, and Putnam was promoting their names
as a seal of approval: Reese Witherspoon, Ellen DeGeneres, Gwyneth Paltrow and Kate
Hudson, among others. “It was this funny network effect that started to happen,” she says.
“In the early days, orders would come in and your jaw would drop because there were so
many celebrities.”
Pandemic Workouts: Mirror’s eight instructors, dressed in bright colors (never black,
because they’re filmed against a black backdrop), teach 50 types of classes that thousands
stuck inside can stream whenever they want.
The mix of fitness, glitz and technology turned out to be the perfect combination for
Putnam, who signed on influencers and put up billboards, rather than first building a
following with targeted Facebook and Instagram ads, as most direct‐to‐consumer startups
do. “We knew from the early days we were launching not just a new product, but a new
category,” she says. “I knew we had to have a launch where the brand seemed bigger than it
was.”
People have posited that fitness was destined to move to the home since Jane Fonda
released her first workout tapes in 1982, and the cycles of home versus gym have ebbed
and flowed since then. The difference this time? Technological advances that offer a more
personalized experience and a way to track your own results. “This is here to stay. It’s not a
fad,” says Jed Katz, managing director at Javelin Venture Partners, who personally invested
in Peloton but is not invested in Mirror. “It’s addicting, it’s convenient and the content has
gotten so good.”
MGT311 Final Exam 202130B Page 5 of 8
For Joe Popson, a 32‐year‐old IT support manager in New York, that’s been the case.
Although he previously struggled to go to the gym, since he bought a Mirror last May he’s
been working out five times a week, generally starting his day with 15 minutes of dance
cardio, and has lost 20 pounds. With Mirror, he says, he loves that he can see both the
instructor and himself as he works out, and that afterward he can interact with the
instructor on Instagram. “They’ll send you a fire emoji or a ‘100’ emoji or put you in their
story,” he says. “It goes back to making you feel incredibly connected, especially at a time
like this.”
Putnam incentivized her talent, making eight founding trainers full‐time staffers with stock
options. They’re encouraged to focus on teaching the class and delivering an entertaining
experience, as software handles the music and any necessary modifications based on
customer input.
Then came the coronavirus and social‐distancing mandates, which Alex Alimanestianu,
former CEO of Town Sports International (parent of New York Sports Clubs) and an advisor
to Mirror, terms “an existential threat to a lot of gyms.” In May, Gold’s Gym, with 700
locations worldwide and minimal digital strategy, filed for Chapter 11 bankruptcy. There
have been reports that Town Sports or 24 Hour Fitness could well be next. Publicly traded
Town Sports is now worth just $12 million and has nearly $200 million in debt coming due in
November. It issued a “going concern” warning in a regulatory filing this spring but did not
respond to requests for further comment. 24 Hour Fitness said in a statement that it is
“considering a broad range of options.”
Brynn Putnam has big plans to expand beyond fitness. Mirror already added meditation
classes in partnership with Lululemon. Next up: physical therapy, rehabilitation and maybe
even telehealth.
Unfortunately for Putnam, others have also done the math. Beyond Peloton, there’s now
Tonal, which offers a smart home gym powered by 3D modeling and artificial intelligence;
Hydrow, which sells smart rowing machines; and FightCamp, which sells interactive home
boxing and kickboxing classes. Meanwhile, the big gyms are turning to digital home fitness
to help salvage their businesses. This spring, Equinox, the gym chain with nearly 100 clubs
across the U.S., began offering its members Variis, a streaming platform from its sister
company that includes free digital classes and also pairs its SoulCycle workouts with an at‐
home bike (priced at $2,500). There’s even a competing interactive mirror from startup
Echelon, which it calls Reflect.
Putnam’s plan to stay ahead: Position Mirror as a third screen for the home. “I think of a
Mirror as the next iPhone,” she says, without irony. She has already added meditation
classes in partnership with Lululemon, the yoga clothing brand, and launched personal
training sessions at $40 a pop, which are now happening remotely from trainers’ homes.
Next up: physical therapy and rehabilitation sessions, though it’s not clear if insurance
companies would cover them. Long‐term, she thinks Mirror could ultimately be used for
telehealth, therapy and a host of other interactive applications, conjuring answers with the
ease of Snow White’s Evil Queen.
MGT311 Final Exam 202130B Page 6 of 8
In fact, Putnam has been getting calls nonstop from people who want to talk about
partnering to use the screen for chat, scrapbooking, education and a million other things.
It’s a bit overwhelming. “In a business that is growing so fast and that has so much potential,
how do you stay disciplined about saying no?” she says. “That has been the hardest but
most important lesson of the past 18 months.”
SOURCE:
Feldman, A (2020, 28 May), Forbes Magazine, “How a former ballerina turned Mirror into a $300
million exercise phenomenon”. https://www.forbes.com/sites/amyfeldman/2020/05/28/how‐a‐
former‐ballerina‐turned‐mirror‐into‐a‐buzzy‐300‐million‐exercise‐phenomenon/?sh=52255b264566
Question 1.
Using information from the case study and your own knowledge, assess the feasibility of this
business based on:
(a) Product/service desirability and demand (5 MARKS)
(b) Industry attractiveness AND target market attractiveness (5 MARKS)
Question 2.
(a) Perform a Five Forces Model Analysis on this industry (5 MARKS)
(b) Advise the company on the greatest threats and opportunities they should be prepared for
in the future (5 MARKS)
Question 3.
(a) Explain what marketing methods this business has used to grow its brand awareness? (5
MARKS)
(b) How has this company crafted a unique market position? (5 MARKS)
MGT311 Final Exam 202130B Page 7 of 8
Part B Short Answer Questions
Each answer should be at least half page typed or more in length.
Answer any four (4) of six (6) questions. Each question is worth 5 marks.
1. Give an example of a company that introduced a disruptive business model, and explain
what made it disruptive to existing business practices (5 MARKS)
2. Explain how an entrepreneur could determine the best source of funding for a new
business venture? Provide examples to help illustrate your response (5 MARKS)
3. How would you evaluate the choice between internal and external growth strategies?
Provide examples to help illustrate your response (5 MARKS)
4. Explain the 3 steps to a successful business alliance relationship (according to “strategies
for firm growth”) Provide examples to help illustrate your response (5 MARKS)
5. In your own words, explain what “Salesforce crosses the chasm” means (using the
Salesforce Case Study in Chapter 13 of the course textbook) (5 MARKS)
6. How would you validate the difference between ideas and opportunities in
entrepreneurship? Provide examples to help illustrate your response (5 MARKS)
END OF EXAM
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