After merging his software company with DraftKings, Shalom Meckenzie earned a fortune of $1.4 billion. Now, he believes his newly established fitness company, Amp, might even achieve greater success.
In October 2020, on a 192-foot yacht off the coast of Greece, Shalom Meckenzie was playing poker with his employees. A few months earlier, his Isle of Man-based gambling software company, SBTech, had merged with DraftKings through a special purpose acquisition company (SPAC), in a deal worth $975 million, and they were celebrating this.
As the largest shareholder of DraftKings, when the company's stock price broke $25 in May of that year, Meckenzie became a billionaire. During a poker game, he made a bet that ultimately cost him hundreds of thousands of dollars—but it also inspired his next entrepreneurial project.
His senior product manager in Bulgaria, Ian Bradley, weighed 280 pounds but lacked the motivation to lose weight. Immersed in the joy of success, Meckenzie made a big bet.
"I told him, if you can get your weight below 220 pounds by January 1st, I will rent a 300-foot yacht to the Caribbean, and you can decide who to invite for a week of the craziest, happiest time of your life," said the 48-year-old Meckenzie from his office at home outside Tel Aviv.
Bradley took the bet. Realizing that they could receive a vacation invite if their colleague won, other executives on the yacht decided to help him lose weight. Back in Bulgaria, they placed a fitness bike in Bradley's living room, threw away the junk food in his pantry, and hired a chef and a personal trainer. The trainer was told that if Bradley lost 60 pounds in the coming months, he would receive a substantial bonus. Bradley succeeded in losing the weight and won the bet.
"It was one of the most worthwhile bets I've ever lost in my life," Meckenzie said. Regardless of his age, he has always maintained a very good physique, not to mention that he is almost 50 years old. Meckenzie flew Bradley and ten others to Dubai on his private jet, where they stayed in a five-star hotel and partied for five days. "I think I ended up spending more money than if I had rented a yacht in the Caribbean," Meckenzie said with a laugh.
For Meckenzie's new company, Amp Fitness, based in New York City, that friendly bet became a proof of concept.
He is not the first to think that the home fitness industry holds great business potential: Amp's business model is almost identical to a long list of fitness companies that have either failed or are struggling (such as Tonal, Peloton, and Mirror): selling expensive fitness equipment to the wealthy, hiring a team of celebrity trainers, collecting "data," and then praying that they can profit by expanding into more lucrative ancillary markets (personalized nutrition solutions, subscription services, and sportswear) before customers get bored and leave.
This model has not worked for other companies, but that has not deterred Meckenzie. Currently, he is primarily funding the company with his own money.
Amp is a minimalist version of the cable crossover machines commonly found in gyms, mounted on the wall, priced at $2,000, and can be used with a coaching service through an app (including AI coaches and real coaches), but requires a monthly subscription fee of $23.
Since Amp has no screen (users log in through their own devices), its upfront cost is about half that of Tonal. Amp started selling in January this year and has hired a dozen fitness influencers and minor celebrities as coaches, the most famous of which is Terry Crews, the host of "America's Got Talent," who has 14 million followers on Instagram.
All this is not particularly novel, and it's hard to see it as a good idea.
The connected home fitness equipment market is extremely competitive and already highly saturated. This market thrived during the pandemic, but now, companies are falling like flies, with much more funding than Amp and having entered the market much earlier. Tonal, backed by LeBron James and Serena Williams, raised $250 million four years ago with a valuation of $1.6 billion.
Due to continuous capital depletion, it reportedly had to raise an additional $130 million in 2023, with a valuation of $600 million, a shrinkage of about 63%. The Boston-based rowing machine manufacturer Hydrow, endorsed by Justin Timberlake, has undergone at least two rounds of layoffs, but the company says it is now profitable. Lululemon acquired Mirror for $500 million in 2020 and shut it down three years later.
Peloton, a company that produces connected fitness bikes and treadmills, is the most successful among these companies, with 3 million monthly subscribers and an enviable monthly subscriber churn rate of only 1.4%. But it is mired in losses. Last year, Peloton lost $552 million on a revenue base of $2.7 billion.
In 2024, it did generate a modest $3.5 million in EBITDA, but this took over a decade, endured billions in losses, multiple product recalls, CEO changes, and the firing of hundreds of employees. Peloton's stock price has also fallen 96% from its peak during the pandemic in January 2021. Peloton's CEO, Peter Stern, admitted in last quarter's earnings call that the company "still has a mountain to climb."
Alex Alimanestianu, former CEO of Town Sports International, the parent company of New York Sports Clubs, and now an investor in the fitness sector, believes that the home fitness industry will continue to exist, but he says the market is flooded with too many unnecessary fitness devices.
"I wouldn't say doing these is completely a waste of effort, but from what I've seen so far, most people who want to do strength training at home are fine with traditional fitness equipment," he said. "I think smart strength training equipment is a bit like Sharper Image products—nicely designed, looks cool, but not really necessary."
Simeon Siegel, an analyst at BMO Capital Markets who covers Peloton, says the fitness industry is a "very tough field" filled with fleeting trends and fickle consumers. Designing and manufacturing a product, scaling up production, attracting customers, and retaining them all come at a very high cost.
"Peloton once thought they could grow indefinitely," Siegel said, believing that Peloton is getting back on track. "They believed that as long as they built the product, people would come to buy it. But the reality is, the potential market size of those watching Netflix is very different from those using fitness bikes or treadmills."
These doubts, however, motivate Meckenzie. "When I founded SBTech, many people came to me and said, 'Shalom, you're foolish, you're putting all your money, even money you haven't yet received, into it, you're going to cause trouble for yourself and your family,'" he said. "When others offend me, I'm even more motivated to move forward."
Meckenzie founded Amp in 2020.
According to Forbes, the company recently delivered the first 10,000 units to customers in California, Florida, New York, and New Jersey, generating about $20 million in revenue. Its goal is to sell 20,000 units this year and more than double that number by the end of 2026. Meckenzie says he is steadily growing the company to avoid the product recall issues Peloton encountered and to ensure that the company's first customers are satisfied and receive good service. "Demand is very strong, and my intuition tells me that we are building a very remarkable business—if it ends up being much more successful than DraftKings, I wouldn't be surprised," Meckenzie said seriously.
He personally invested about $50 million in Amp, and his family and friends contributed several million more. Meckenzie knows that this amount of funding is far from enough to scale a hardware company—but he does not agree that Amp is a hardware company.
He sees Amp as a data and health company and says he is considering a Series A funding round. Finding willing venture capitalists may be challenging: according to the data platform Crunchbase, total funding in the sector peaked at over $6 billion in 2021 but fell to less than $2 billion in 2023.
But Meckenzie, born in Tel Aviv in 1976, has a very compelling reason to bet heavily on the fitness sector. When he was 18, his father, a real estate developer born in Libya, died of a heart attack at the age of 59. "That completely changed my life," he said.
After serving three years in the logistics unit of the Israel Defense Forces, in 2001, he and a partner founded an online sports betting company, 10Bet. He realized that his company could not compete with the big companies in the industry, so he focused 10Bet on offering the most favorable odds to its customers. But this only attracted some savvy gamblers who nearly bankrupted the startup. (Meckenzie eventually sold 10Bet to his brother, who still runs the company today.)
In 2007, he switched to selling the software his company developed for setting odds, managing accounts, and integrating payments, and he named the new company SBTech. He sold the software to gambling companies around the world. In April 2020, the company merged with DraftKings through a special purpose acquisition company and went public.
Before that, SBTech's annual revenue was about $110 million, with nearly 1,300 employees, and clients included the Danish national lottery operator, Churchill Downs, Golden Nugget, and gray market operators around the world.
In his $50 million, 10,500-square-foot apartment on "Billionaires' Row" in Midtown Manhattan, Meckenzie showed a visitor a TV screen displaying a non-fungible token (NFT) he bought for about $12 million—CryptoPunk #7523 (known as Covid Alien). Then, he looked out the window, more than 50 floors above Central Park below.
His gamble in the sports betting software field allowed him to buy this apartment, which has a terrace overlooking Columbus Circle and a private swimming pool. As the sunset's afterglow spread over New York, Meckenzie made a new bet: he could create something as addictive as sports betting, but not as destructive.
"Those involved in gambling might lose a lot of money they can't afford to lose," he said, "but the worst that can happen to those addicted to fitness is probably just getting injured."
