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This founder got the CEO of HEIGHTS to invest | EP02: Varun Bhanot, Magic AI

Varun Bhanot is the Co-Founder & CEO of MAGIC AI, a connected fitness product that combines physical hardware with fitness technology to provide tailored workouts - just like your very own, at-home personal trainer.

Watch the full episode here, subscribe on Spotify, Apple Podcasts, Google Podcasts, Amazon Music, or keep reading for the full interview of the founder who has recently secured 2.5 million in funding during one of the hardest times ever to raise venture capital.

SM: Let's rewind the clock a bit. You initially came from a more traditional background, starting off in corporate law before realising it wasn't the right path for you.

VB: Yeah, it's crazy, right? Ridiculous. It was a real journey. Initially, I thought I would go down a very traditional route, you know, get a degree, enter a corporate role. In my first year, I remember going into this office at an investment bank, sitting in this box office, thinking, "I've spent my whole life leading up to this moment. Is this all my life's going to be - sitting here, pushing paper, looking at spreadsheets and numbers?" Within about a year, I realised it was time to decide if I wanted to be there for the next 40 years. So, that's ultimately what happened.

SM: Good for you. It's funny that you made that decision even while working in New York, such a cool part of the world, but it was like, "No, this is not the one."

VB: It was not the one. Actually, the one good thing I remember about being in New York, where I was originally working in a bank, was seeing the tech scene. It wasn't quite formed but bubbling beneath the surface. I started wandering into tech events, meet-ups, and startup weekends. There was nothing like that in London. I didn't even know what a startup was. I don't think there was a single success story out of the UK at that time. I leaned into my curiosity and started wandering into these events, literally on my own, trying to figure out what was going on. That's where I got inspired by all the innovation. When I came back to London, I saw there was something bubbling here, and I wanted a piece of it. I wanted to get in on the action.

"When I came back to London, I saw there was something bubbling here, and I wanted a piece of it. I wanted to get in on the action."

SM: That's a great point. You were lucky in that respect, being in New York where it's a bit ahead of the curve. We'll touch back on that because I know your business has a much larger entity stateside in a similar field. So, you came back to London, entered startup land, and then decided to study entrepreneurship. I find that really fascinating. I haven't met anyone who founded a startup and felt the need to study entrepreneurship.

VB: Stupid enough to study it as well, yeah. You're right. I didn't know many people who had done it at that point.

SM: What made you feel the need to study?

VB: Very honestly, I had no idea what I was doing. I managed to hustle an unpaid internship at this startup called Hubble in 2014. I was the first employee, just three of us. I didn't know anything about the world of business, entrepreneurship, or tech. I thought, "Well, I never learned anything about this at uni, but maybe now I have the opportunity." I saw a postgraduate course in entrepreneurship. I did it part-time over two years and graduated in the end, which was a great experience. Looking back, I do have some views on whether I would recommend others to do that. The truth is, you don't need to do these things to start a business or get into entrepreneurship. There are many online courses nowadays, but honestly, the best way to learn is by jumping in. There will be mistakes, and the learning curve will be steep, but there's no substitution for actually doing it. On that point, most people in business schools and MBAs are not really entrepreneurs; they know a lot about management and have studied finance. They might not be the ones to help you if you want to start a new brand.

SM: Subject matter experts in their respective fields - it's like the saying goes, "Plan is great until you get punched in the face." Comparing that to studying courses, yeah, I guess it's all theory. I'm sure you learn a lot, and perhaps the connections are one of the best things you got from that too. But the reality of actually getting stuck in, there are so many variables in the real world. You've got to put it into action. So, you went into startup land back here in London, did a part-time postgrad in entrepreneurship, and alongside this, you had your own kind of fitness journey. I heard that, I don't know if I've got the timelines completely correct, but you took your body fat down from 27% to 7%. You went from this diet of kebabs and whiskey. I'm just curious about that as well before we get into, you know, building up to Magic AI. What was the impetus, first and foremost?

"A plan is great until you get punched in the face."

VB: Yeah, coming out of university and diving into the startup scene, particularly at Hubble, was quite stressful. Although I wasn't the founder, I was part of the founding team, experiencing all the typical frustrations of an early-stage company. Unfortunately, my health took a backseat during that period. I had developed some unhealthy habits back in university that lingered, and my lifestyle wasn't helping. Whiskey and kebabs were pretty much my daily menu, and I ended up gaining weight in my 20s.

A health professional warned me about potential issues down the line, considering my family's hereditary health issues. Realising the direction I was heading, one day, I decided to make a significant change. I reached out to a personal training studio nearby, here in Shoreditch, London. Over about four months, I managed to shed a substantial amount of weight. If memory serves me right, I went from 27 or 30% body fat down to about 7%. I even did a photoshoot, somewhat similar to this setup with all these cameras. It felt quite surreal to be that person because I had always seen those cover models on Men's Health, never imagining I would ever do something like that.

SM: So, you're like a before and after?

VB: Yeah exactly, not in a magazine or anything though!

SM: Just their own promotional?

VB: Yeah yeah just their own promotional. You know, as I said, I'd never been that type of person to ever walk into a gym. I didn't know how to lift weights; I was too scared, too intimidated. Going through that journey in the evenings while working at a tech company in the daytime made me think, 'Well, maybe there's a way we could use technology to automate and democratise this experience for people at scale.' Personal training is pretty expensive anywhere you go; around here, it could be up to 100 an hour. In other places, maybe the cheapest you get is like 40 or 50 pounds. It's pretty expensive for anyone. We started to think, 'Can we use technology to automate this experience for people at scale?' That was really the seed of the idea, which led us to start building what we're building now in Magic.

Magic AI Founder - Varun Bhanot

SM: So, did you find a co-founder? How did things start to get going as we delve into the realm of Magic AI?

VB: Yeah, so my co-founder is Sunil, whom I met during my time at Hubble. He was heading up the product there, and although it was an entirely different product unrelated to wellness and fitness, he demonstrated a clear, analytical, and really smart product mindset—much smarter than I'll ever be. I thought, 'This is the exact kind of person that would be great.' He didn't join on day zero; I believe we already had a very rough prototype by then. He came on board, and the rest, as they say, was history, which was great.

SM: Did you secure any external fundraising or was it bootstrapped? How did you get this off the ground, especially for something involving physical hardware?

VB: Great question! It's really tough to bootstrap hardware, especially something complex, large, and heavy, particularly if it involves AI, adding another layer of challenge and complexity. The first thing we did was fund it. I knew we wouldn't attract any investment without at least a prototype to showcase. We bootstrapped as much as possible. Firstly, we took out a startup loan from Virgin Startup, an incredible organisation supporting startups with no track record. That initial capital got the wheels turning. I secured a small desk in a co-working space on this road, where I could start moving things along and put the prototype there.

The second thing we did was bootstrap during COVID in 2020 and 2021. We realised there was a demand for fitness equipment. Although unrelated to Magic, we imported a batch of folding treadmills, sold them on Amazon and our website, raising about 50k. We used these funds to finance the first prototype. In hindsight, we inadvertently built our own supply chain for what Magic is now. We learned about factories, freights, import duties, VATs, warehousing in the UK, and fulfilment for heavy products weighing 20-30 kilos. It goes back to what I said earlier about learning by doing. There's no textbook for this stuff; you have to take the risk. Fortunately, it worked out, and we made a bit of profit to fund the first prototype.

"There's no textbook for this stuff; you have to take the risk."

SM: Amazing! For those unfamiliar with Magic AI, is it for personal use or more B2B for gyms, or perhaps both?

VB: Yeah, they're not too heavy, around 18 kilos, slightly heavier than a standard mirror due to the embedded computer. However, when you see it, it doesn't appear any different. When off, it looks like a beautiful piece of furniture. The product itself is a stunning mirror that you can either hang on your wall or lean against it. Turning it on via a touch screen, a hologram personal trainer appears, guiding you through various workout programs and classes they've curated. You can follow their movements while seeing yourself in the mirrored reflection, similar to checking your form in a gym studio.

What gets intriguing is the embedded camera, providing live feedback on your form, correcting mistakes, counting reps, guiding you on weights, and offering a form quality score at the end. Our goal from the start was to replicate the one-to-one personal training experience and bring that hyper-personalised touch into homes. Utilising the AI we've developed, that's how we achieve it, and so far, it's been successful.

SM: It sounds a lot like, as I mentioned at the start, talking about your early days in New York and earlier career days. MIRROR is the competitor, and I'm sure you have some kind of edge over them, which I'd love to hear about. They were acquired by Lululemon a few years ago for around $500 million, a huge acquisition that made the news. Founded by an ex-ballerina, it sounds extremely similar. Do you look to them as a proof point of validation? They were acquired by this bigger public business for a significant amount of money. On the flip side, I'm not sure about their market penetration, and while it's a great concept, it's not in everyone's homes, not super affordable. Thoughts on what you're building with Magic AI and how you compare to the US competitor?

"Peloton gave us validation that connected fitness is something people are willing to spend money on at home."

VB: Sure, we took inspiration not just from MIRROR but also from other companies like Peloton, a huge success story. When we were developing and thinking about ideas, Peloton gave us validation that connected fitness is something people are willing to spend money on at home. We could see a version of the future where people might prefer having a one-to-one personal training experience at home rather than going to a gym or boutique studio. Where MIRROR fell short is the absence of AI in their products; it's just a TV inside a mirror. They've done well, with subscriber numbers in the six figures, justifying their half-billion acquisition. However, our customers choose us because of the AI's capabilities – live feedback, form correction, rep counting – creating a more personalised experience.

While they've done well with a simpler product, their hardware isn't set up for AI processing and camera imaging like ours. We have a second-mover advantage, understanding what they lack and what customers want that they don't provide. Additionally, we ship to the UK and Europe, while they are a US-based company selling only in the US. It's an interesting dynamic, and we've positioned ourselves for success, learning from their model.

Magic AI Home Gym

SM: Kudos to you guys; it sounds amazing. I want one, so I'm heading straight over to Selfridges. It's fantastic; I mentioned at the start that you have fantastic accolades, stocks in Selfridges, and considerable press coverage. Congratulations on that. What I love is what you mentioned before – overnight success takes a thousand nights, or something along those lines. Despite the highs and the glitz, it's not all been plain sailing. The theme of strategy and tragedies involves highs and lows, and you've faced obstacles with your products along the way. What have been some of the real challenges?

VB: Great question. The very first one was convincing investors that we were a product worth investing in. In the UK, there's some aversion to hardware products and a lack of a substantial track record in connected fitness. Convincing investors that not only is this a good idea but that we are the ones who can execute it was difficult. We had no significant experience in connected fitness, except for my personal journey, and my co-founder's expertise in AI was necessary but not at the level needed to build the entire thing. The big game-changer was getting that initial prototype out there.

"The big game-changer was getting that initial prototype out there."

SM: Actually having something real. On that note, I want to get into your fundraising. Congratulations! Anyone who's raised venture capital investment during these times has achieved a significant feat.

VB: (Laughs) We have lots of grey hair or no hair (laughs).

SM: Yeah, it's going through, and part of your investor board now includes some individual angel investors, including the Chief Product Officer at Spotify and the CEO of Heights. How did you get those individual profiles, those amazing people to invest? You say it's hard enough to secure fundraising, so talk us through practically how you got to know those guys. Did you have to schmooze some mutual connections? How did you go about that?

VB: (Laughs) There is definitely a lot of schmoozing with any fundraising; you've got to really play the game, that's for sure. Yeah, in fact, that's a good postgraduate to go into, schmoozing, if there's a course out there.

SM: University of Cambridge, you heard it here first.

VB: It's funny because I was the guy who used to always read those TechCrunch articles and be like, "How the hell do they get those people on board?" Wow, they got those angels involved. Initially, we didn't go out specifically to win this particular angel; it was more like we just need some money so we don't die. We won a few initial angels, no one high profile, who were willing to put in a bit of money – when I say a bit, I mean maybe a thousand pounds, very little money. But we were able to take that and go to other people, saying, "Look, we've already got some people on board, and here's how much they invested." Eventually, one became two, two became four, four became eight.

"It was more like we just need some money so we don't die."

One of the investors was a guy I pitched to cold, named Dan Murray-Serter. He's quite big on LinkedIn and Instagram, and he runs Heights, a brain supplement brand. I was a customer of Heights; I bought the product and subscribed. In fact, I'm still a subscriber. After a few months, I saw that he was investing in companies and talking about it. I wrote him an email, not mentioning anything about our investment or fundraise, just giving feedback about his product, Heights. I suggested increasing the bottle size to fit through the letterbox and other random ideas. He replied, thanked me, and passed it to the product team. About a week or two later, I emailed him again, saying, "By the way, we're doing a raise, and I heard you angel invest." He was completely on board, pretty much saying yes. Within about a week, he not only said yes but also took our deck and sent it to all his pals, some of whom were very high-profile people. Some didn't invest, and we received some negative feedback, which was helpful to improve the pitch before approaching venture capital funds. That's basically how it happened. If you want to get high-profile angels involved, getting the buy-in of one, even if you have to become a customer, is a way to foster and nurture the relationship.

SM: Fantastic, that's so interesting. Thank you for breaking that down because what we can take away from that, I think, is leverage the social proof. So, get the ball rolling with whoever you can, even if they're putting in a grand. Yes, they don't need to know that, right? So, leverage the social proof, and then strategically, with those bigger bets, get on their radar in a way that isn't straight up like asking for money first, exactly.

VB: I think adding value is just the most important thing, in general, even adding value to people from whom you have nothing to gain is always important, and that's what propels this community, really.

SM: Yeah, amazing. Well, congratulations again. I know that the whole process is so gruelling of raising capital.

VB: Yeah.

SM: That, yeah, is like full of pain! (laughs) How did you kind of balance, because I heard about, you know, you really keep strict with yourself in terms of priorities, you know, for the team. You make sure that, you know, you're not too thinly spread. These are our milestones, this is our roadmap. How do you balance that when you've got fundraising going on at the same time? How do you make sure that you're staying true to those priorities?

VB: Yeah, I think one of the debates about having a co-founder and not having a co-founder, and I think this is one of the clear examples of where having a co-founder is so important. Because if one of you has to focus on fundraising and keeping the company alive, the other one focuses also on keeping the company alive internally. That's where my co-founder, Sunil, came in. He helped a lot. Honestly, I have a lot of respect for solo founders who go out there because I don't know how they do it. And at the same time, they're probably working 25 hours a day or whatever. I don't know. But the best thing to do is just find someone you can lean on who can help you along.

SM: Yeah, fantastic, amazing. Well, again, kudos. It's great that you've got a good co-founder relationship and a team that you can kind of build things up along with. What I'm curious about as well is, again, you've achieved these different things. I remember listening to you talk about how in startup land, being an entrepreneur is so stressful that you, I think the way you phrased it was, you acclimatised yourself to that constant sense of uncertainty, to the stress, which doesn't sound healthy, but it is the reality of startup life, obviously. So, you know, what are some of those, you mentioned some really unexpected issues have arisen over the years. What were some real kind of like, you know, the shit's hit the fan? You mentioned about, you know, manufacturing batches that didn't arrive.

VB: Yeah, so a huge one was we had just closed our round of funding, and all these investors are there, holding their breath ready for this big success that we've promised. I think the Ukraine war hit that month, I think it was like March or April 2022, and that had a knock-on effect with, first of all, the pricing of products around the world, and also the shipping length of time. Shipping lengths were already still quite long because of COVID. There was still pretty expensive and long. So, suddenly, there's this war we've got to contend with where suddenly the cost of our goods were so high, and even if we did get them here, it would be so much more expensive. So, we had to just be really, really smart with how we managed our finances and also customers and making sure we managed their expectations right. And it was just this random thing that happened overnight, and you just kind of, like, of all the things that you would think would affect our business, you didn't think it would be something, you know, something going on the other side of the world. But that was something we dealt with.

I think just dealing with that uncertainty of, you know, are we going to be able to afford this? Is it going to happen? Are we going to lose loads of money straight away? Because each of our shipments is very expensive, and the product costs a lot to make each one. And so it's not like we can just fly them on the plane or whatever. And so it was a very, very uncertain period, and there have been many, many periods like that where we've just not been sure about, is this the right thing to do? Is this the right technology that we should be using? And fortunately, we seem to have just sort of come out and made it work, but it's been a very slow process of R&D and just getting there. But I think if it's worth it, if it's going to be difficult, it's probably worth doing, and yeah, get there in the end.

Magic AI Founder - Varun Bhanot

SM: I can imagine there's another level of nervousness, not only with a hardware business but when you're exposed with an international supply chain. I don't know where your products are manufactured or whether there's a whole link in the chain of some parts coming from here, other parts are assembled there, and then they will need to be shipped in a container. So is that how it works? Are you kind of so exposed across all these different elements?

VB: Yeah, I can't think of too many businesses that are probably on when it comes to making anything in electronics and screens and cameras, you would have a supply chain. It would be great to make things in the UK, and maybe one day soon, we’ll be able to do that, but yeah, unfortunately, that is the reality, and it's something which I think perhaps when people jump into physical product-type businesses, it's something that maybe they don't always realise is maybe even if your product is made in the UK, I don't know if you make a food and drink business and your drink is made in the UK, you might still need to get the packaging from abroad or the bits and parts, and that could affect the entire thing if you can't package it up. So there's lots of considerations I think people should always kind of think about right from the start.

SM: Yeah, we're all part of this wider, and I guess this is where like Brexit and Ukraine and, as you say, like things going on in other parts of the world there's still affecting you here at home, sat in London, so it's all part of that. So, you know, you did your course in entrepreneurship, but are there also like any books or entrepreneurs that you look up to? Anything that you look towards elsewhere to help guide you through those tough times or know how to navigate some of those?

VB: Yeah, I've read a few of the big ones, the classics like "Shoe Dog," which is a great—I had a feeling you'd say that—you know, this is when I asked you the question, sort of had "Shoe Dog" in my mind because it's funny, my co-founder and I went out to the Far East just two months ago, and it was literally was a bit like we're sitting in a tiny room at the back of some factory when it's like 40 degrees and we're trying to like whip out our notepad and hash some deal with these guys, and we have like a translator with us. So it was very much like the Nike story, yeah. But I'll be honest, I tell you where I get a lot of value is actually in working with, so I've had a coach. I've got a therapist at the moment as well who I speak with actually meet once a week in person, which makes a huge difference. And I think I'd recommend to any founders is if you can have like a crutch to lean on, especially if they're someone who's somewhat been there before and, you know, walked the journey before that adds so much value beyond whatever you're paying them to, you know, just being able to sleep a little bit better and not be as stressed and deal with family things better. So I think having a coach for, you know, your personal life as well as business.

SM: That's such a great piece of advice, and I am totally converted as well. I'm totally with you. I very, very naively used to think, you know, when I was first starting out in business—I hate to say it—I've totally changed my mind on it, but I used to always look quite disparagingly at people who needed a coach and whatever kind of coach. I used to be like, "Well, did you not go into business because you're a business person?" And I used to think it was a bit of a Pyramid Scheme sort of scam to it until I met an amazing one about who I've been working for a few years, and I've really opened my eyes up. And like anything, you know, mentioned "Shoe Dog," and I can use always got the sports and the entrepreneurship analogy, and it's like, well, the best athletes need coaches, yeah. So I love that you mentioned that you use a great one as well, so well done.

Varun, it has been fantastic to have you. My final question, which I always end our episodes on, is the best lessons I think often come from the biggest mistakes, again, strategy and tragedy, very much the highs and lows of business. What's one tragedy, if you will, that's happened to you that's really taught you the biggest lesson?

VB: It kind of goes back to when I was starting off when I was talking about how I was sitting in this bank and just pushing paper and just felt like a cog in the wheel. And one of the things I realised is that you can fail. Like when I was trying to decide am I going to take a leap of faith and quit this corporate thing, or am I going to actually take a leap of faith in starting a business, and I remember hearing this quote, which was, "You can fail at doing something that you don't like to do very much, so you might as well take a chance in doing what you love." And what I realised is I could have failed at just, you know, being in a comfortable environment where you just get paid, and, you know, you bumble along. You can be happy - you can actually fail doing that. And so what I realised is you might as well take a chance in doing what you love because you just don't know. It may end up working out, and that was a big, big lesson I learned from that experience.

"You can fail at doing something that you don't like to do very much, so you might as well take a chance in doing what you love."

SM: Fantastic. That actually, you know, the risk is worth the reward, especially if you know you're just kind of giving up the comfort, the safety.

VB: Yeah, you know.

SM: You might fly, you know. Yes. Fantastic, Varun. Thank you so much again for joining us. It's been a pleasure to hear some of your story. Congratulations again.

VB: Thank you for having me. Yeah, thanks so much.

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Strategy & Tragedy: CEO Stories with Steph Melodia is the fresh business podcast that showcases authentic founder stories - including the ups & downs!

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