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How a health nut created the world's biggest fitness trend

Crossfit CEO: We're a threat to the industry, not people's wellbeing
Crossfit CEO: We're a threat to the industry, not people's wellbeing

By the numbers, CrossFit is possibly the biggest fitness trend in the world.

CrossFit has 13,000 gyms in more than 120 countries. That's more than the 12,521 Starbucks locations in the United States. Its direct rival, Planet Fitness, has just 1,124 locations.

Over the years, CrossFit has been described as a fitness cult, something that its CEO and founder, Greg Glassman, laughs at now.

"I'm a single-issue guy, and that's fitness," Glassman said in an interview with CNBC. He has previously described his company as a religion run by a biker gang.

"Call it whatever you want. We're making a difference — a profound difference," Glassman said.

With 4 million CrossFit devotees, roughly the population of Los Angeles, Glassman's program has tapped into something that was missing in the fitness industry.

Source: CrossFit, Inc.

In many ways, CrossFit was designed to combat Glassman's frustrations with practices in traditional gyms. "I mean you sit on this thing, you put the pin in the hole, there's only one way you can move it, and that's not really what people need," he said.

CrossFit workouts change daily and contain variety to keep its membership on its toes. The regimen consists of functional movements that aim to increase individual work capacity and is applicable to other sports activities. CrossFit also encourages its members to follow a Paleo diet.

Billionaire muscle

When Glassman first started as a trainer, his unorthodox training program got him thrown out of a lot of commercial facilities.

"It was always the odd thing in the corner going on with Glassman at the Gold's. I had a healthy clientele, as busy as a trainer can be, but it wasn't until I got thrown out of my last commercial facility that I opened my own gym, launched the website, started a newsletter," he said.

A likely source of Glassman's business savvy is his experience working as a trainer in Santa Cruz, California, which is a short 45-minute drive from the heart of Silicon Valley.

"I've had the really neat experience of being a trainer in Santa Cruz in the shadow of the Silicon Valley. I've had a handful of billionaire clientele, famous name-brand people out of Silicon Valley," he said. Glassman adds that his clients also funded his first private gym.

Despite the access to successful entrepreneurs, CrossFit's business model is a little odd. Part of it is that Glassman didn't really have a business plan when he opened his first gym.

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Today the affiliates pay a fee to use the name CrossFit, but then that's basically it. Affiliates are also locked in at the fee they paid when they joined the network. Glassman said he has some early affiliates who still only pay $500 a year. The current licensing fee sits at $3,000, and Glassman doesn't plan on raising it anytime soon.

The Reebok CrossFit Games aren't a major source of income, even though the event draws 15,000 people through its gates daily. The Games attract sponsorships from fitness companies, but the vast majority of those deals fund the prize money. Last year the Games doled out $2 million in prizes.

Justin Bergh, general manager of the CrossFit Games, said that CrossFit is able to offer its sponsors branded content to an engaged audience but that the primary business of the company remains licensing and trainer certification.

Source: Crossfit, Inc.

For Glassman, a self-professed libertarian, its important that his affiliates maintain the ability to cater to local demographics.

"I wanted to preserve as much of the entrepreneurial spirit as I could. I let people project as much of their own taste and style and values into this thing as possible," he said. "To not be told what to wear, what to speak, what music to play, what time to unlock the doors … We leave that alone, because that's not the things that are important to the brand," Glassman explained.

"What's important to the brand is the physiology, the methodology. ... We control the method, but the rest is up to them," he added.

CrossFit doesn't take an additional cut of its affiliates profits.

"I've got 13,000 gyms that are operated by their owners, getting in there doing the training, and they get to keep all the money," he boasted.

No stranger to controversy

While he lets CrossFit owners run their own show, Glassman's bold approach to business can stir up controversy for the brand.

He has been particularly vocal about big soda. CrossFit manages a site CrushBigSoda.com that advocates for putting health warning labels on sugary drinks in California. Glassman came under fire last summer when the official CrossFit Twitter account shared an edited version of Coke's "open happiness" ad so that it read "open diabetes."

Glassman said he's encouraged by the fact that millennials don't seem as keen on sugary beverages. Last week, a Beverage Digest report found that per capita soda consumption in the United States fell to a 30-year low. "I think long term; people aren't going to be consuming this stuff for much longer," he said.

I don't know how the [expletive] you compete against me.
Greg Glassman at the Iconic conference in Seattle, April 5, 2016.
David A. Grogan | CNBC

His attacks on soda also play into his belief that between diet and exercise, CrossFit can be a solution to chronic disease.

The Centers for Disease Control and Prevention describes chronic diseases and conditions that can lead to death as among the most common and preventable group of health issues. The CDC has identified lack of exercise, poor nutrition, tobacco use and high alcohol intake as health-risk behaviors that "cause much of the illness, suffering, and early death related to chronic diseases."

CrossFit targets two of the four health-risk behaviors. Prescribing drugs for conditions like high blood pressure or steroids for low muscle mass doesn't make sense to Glassman. "The problem is being inactive and poor nutrition. It's a lifestyle issue. The solution isn't going to come from medicine. It's gotta come from elsewhere," the CrossFit founder said.

While many scientific studies demonstrate the importance of diet and exercise to health, to date there are no scientific studies that have evaluated CrossFit, specifically, as a "non-medical health care company" that can prevent chronic disease, which is how Glassman describes it.

"Business is art and science of providing uniquely attractive opportunities for other people," he said. "You can't name a chain that does more for its constituent membership and takes less."

Glassman is not shy about ranking CrossFit against rivals, either, saying it has "broken the back of the fitness industry."

And he repeated a conclusion he made during a lecture at Harvard Business School last week: "I don't know how the [expletive] you compete against me."

Glassman, Kevin O'Leary of "Shark Tank" and Robin Chase, co-founder of ZipCar, are among the business leaders appearing in person at iCONIC in Seattle on April 5, 2016. Join more of America's most influential entrepreneurs at the next iCONIC stop, in Denver, on June 15.