Stop Anthos from Taking over CrossFit

[Chris Mason]

Originally Posted by Katherine Derbyshire

I don't know enough about any of the parties to form an opinion.

I would say that Anthos probably has the clearest motivation of any of the parties: they want to make lots of money, and will pursue whichever plan seems (to them) most likely to achieve that. They probably couldn't care less about whatever personal animus exists between the Glassmans, except as it affects the value of the Crossfit brand.

For most venture funds, the ultimate goal is not to actually run the companies they invest in, but to take them public. Preparing a company to go public typically involves, at a minimum, establishing good governance practices, clear lines of control, and a sound business model.

Reasonable people can disagree about just exactly what that might entail in the case of Crossfit Inc., and whether those changes would be good for current CF management or current affiliates. If I were an affiliate owner, though, I would be very careful to disentangle the relevant business issues from the relationship-driven drama.

Katherine

I agree. The question about whom you might support if you were one to actually take a side is whether or not you feel providing a 3rd party source with no stake other than making money the ability to exert significant control over CrossFit, a community driven place with an owner who has heretofore exhibited both a desire to make money (which is normal as a business owner), but also the desire to create a whole culture around his business, a culture that is loved by many, is a sound idea?

[Chris Mason]

Originally Posted by Joseph Vaughn

Maybe I am in the minority here... but as an affiliate owner I don't understand why everyone is getting bent out of shape over this.

I don't have any experience with Anthos, but you must consider everyone's motive.

Has anyone questioned why CFHQ went on the offensive first to try and prevent this buyout? If I was a CF shareholder, I would be very upset that Lauren sold her shares for such a cheap price. 20,000,000 for 50% is damn near robbery. This places a $40m value on CF, likely 2ish times annual revenue.... which, in my opinion, is a very low valuation. Low valuations tarnish shareholder equity (at least on paper). I think there is much more to the story than we are getting.

If you disregard all of hq's correspondence regarding Anthos and read's Bryan Kelly's message with fresh eyes, his message seems pretty reasonable to me.

"Forcing" affiliate to franchise would be a logistical and legal nightmare, and counterproductive to their goal.

I don't trust anyone's word and question everyone's motive. But having a business background and some VC exposure..... I wouldn't be so fast make judgements without understand all the facts.

JV

JV,

People are upset because they feel this move can end in a major change in the those controlling CrossFit and therefore the culture.

[Katherine Derbyshire]

Originally Posted by Chris Mason

I agree. The question about whom you might support if you were one to actually take a side is whether or not you feel providing a 3rd party source with no stake other than making money the ability to exert significant control over CrossFit, a community driven place with an owner who has heretofore exhibited both a desire to make money (which is normal as a business owner), but also the desire to create a whole culture around his business, a culture that is loved by many, is a sound idea?

On the other hand, plenty of businesses find their unique culture to be an important asset and go out of their way to preserve it. While a new equity partner certainly *could* influence the corporate culture, it is not a given that they *would.*

There have also been plenty of debates on this very board about various actions taken by HQ. Especially as Crossfit grows and the number of affiliate owners with personal relationships with HQ shrinks, there's something to be said for clarifying the rights and responsibilities of both sides.

Katherine

[Jason B Cox]

Originally Posted by Chris Mason

I think in the end this is like civil court. We have to decide who we believe. I don't think telling people to contact Mr. Kelly makes ANY sense as he obviously has an agenda to protect and it would be in his best interest for the community to feel his company is going to be helpful etc.

For me personally, whom I believe has mostly to do with potential motive. Shall I believe the business owner that wishes to remain so, or the party that chooses to sell their half equity in the business? Beyond cashing out and moving on with one's life, which I can understand, what is the motive? If the motive was simply to cash out why not do so with a party or group the other owner is comfortable with? Why not allow the other owner to buy at least a percentage so that they could remain the majority stock holder? And so on...

So, I choose to believe, or at least side with Mr. Glassman and his group. With that said, I sure wish, and I bet the CF community as a whole does, that you and your ex could work out something that was for the benefit of CF as a whole and would allow you to receive what is rightfully yours.

Well said, Chris. Helpful as usual.

[Jamie Gowens]

Originally Posted by Joseph Vaughn

Maybe I am in the minority here... but as an affiliate owner I don't understand why everyone is getting bent out of shape over this.

I don't have any experience with Anthos, but you must consider everyone's motive.

Has anyone questioned why CFHQ went on the offensive first to try and prevent this buyout? If I was a CF shareholder, I would be very upset that Lauren sold her shares for such a cheap price. 20,000,000 for 50% is damn near robbery. This places a $40m value on CF, likely 2ish times annual revenue.... which, in my opinion, is a very low valuation. Low valuations tarnish shareholder equity (at least on paper). I think there is much more to the story than we are getting.

If you disregard all of hq's correspondence regarding Anthos and read's Bryan Kelly's message with fresh eyes, his message seems pretty reasonable to me.

"Forcing" affiliate to franchise would be a logistical and legal nightmare, and counterproductive to their goal.

I don't trust anyone's word and question everyone's motive. But having a business background and some VC exposure..... I wouldn't be so fast make judgements without understand all the facts.

JV

You stop being reasonable right this instant. You're going to ruin the chicken littling of the thread.

I kid. Sort of. But the Glassmans have both said that the only thing we can do right now is nothing.

[David Alexander]

Bottom line is who do you believe?

-the guy who created and has been part of CF since it's inception, long before big money sponsors
-or the woman scorned backed by the big money VC who's sole purpose is profits and profits only and will ship Affiliates out to China if it means a bigger profit

edit: ok they probably won't ship affiliates out to China, but I wouldn't rule it out

[Levi Noecker]

[With regards to Joey Powell's essay on his previous dealings with Lauren G.] If even a fraction of Joey's story is true, then I am left with little reason to trust Lauren Glassman's reassurances or intentions. I accept that Joey's story is most likely embellished and biased to some extend, but even at a base level it appears that Glassman's previous actions have shown her to conduct business in a selfish and unprincipled way.

I know HQ employs a competent legal team, and so I highly doubt Greg Glassman's specific retelling of public interactions with Mr. Kelly is anything but accurate. Considering his previous pitches to HQ, and having seen VC interactions elsewhere, I don't personally believe Mr. Kelly's more recent statements of wanting to have a hands off approach.

Many years ago the BMEZine website (NOT wfs by any means) went through a similar episode to this. In that instance, the popular website and very vibrant community that supported it were devastated beyond repair. I really hope we can avoid that fate.

Originally Posted by David Alexander

Bottom line is who do you believe?

-the guy who created and has been part of CF since it's inception, long before big money sponsors
-or the woman scorned backed by the big money VC who's sole purpose is profits and profits only and will ship Affiliates out to China if it means a bigger profit

edit: ok they probably won't ship affiliates out to China, but I wouldn't rule it out

It's difficult to know.

On the one hand, you have a VC, who obviously has a profit motive and some ideas about how to increase HQ revenue. Whether that is really a benefit to affiliates and/or members is obviously highly in doubt. We know affiliates are on yearly contracts, so someone could come in and, theretically, change the rules of the game in a manner adverse to affiliates. We also know that if the VC acquires 50% of the shares, it has a right to cause a dissolution of the company and pick up the pieces with its presumably greater access to capital.

On the other hand, you have HQ which has: (a) already misled the Community as to the situation, having had at least two of its spokespersons refer to the ex-wife and co-owner of the shares merely as a "non-managing equity owner" (using that exact phraseology in each instance); and, (b) made the unsubstantiated claim that it has offered Mrs. Glassman more money than the VC firm has. At the same time, you are correct to point out that Mr. Glassman created this concept and and has been there every step of the way.

On balance, affiliates probably should be concerned, but until all the facts are on the table it doesn't seem fair to condemn HQ, the VC, or the "non-managing equity owner".

[Ted Toal]

Private Equity firms rarely use their own capital in these transaction but rather, the capital of investors in the private equity fund itself. The investors in private equity invest for one reason and one reason only; to achieve an above average rate of return within a five-year period or less. The last thing investors in a private equity firm want is to be stuck running a business.

In my opinion, Anthos, should the transaction close, will do what they need to do to position their 50% stake in CF for future sale at a profit. It's not unheard of for a PE firm to retain control and run a company, but it is very rare.

I don't know if CF is a C-Corp but, if so, they must have a board of directors whose job it is to oversee policies and make business decisions. Anthos would hope to at least get a few people on the board of directors in order to make any changes.

[Russell Greene]

We're hearing from a lot of people concerned that the sell of 50% of CrossFit to Anthos is a done deal. It's not.

In Arizona, when a couple files for divorce, both parties are issued a "preliminary injunction" which restrains them from selling assets during the course of the divorce divorce.

Here's some more information on what that means:

"A. In all actions for dissolution of marriage, for legal separation or for annulment, the clerk of the court shall pursuant to order of the superior court issue a preliminary injunction in the following manner:
1. The preliminary injunction shall be directed to each party to the action and contain the following orders:
(a) That both parties are enjoined from transferring, encumbering, concealing, selling or otherwise disposing of any of the joint, common or community property of the parties except if related to the usual course of business, the necessities of life or court fees and reasonable attorney fees associated with an action filed under this article, without the written consent of the parties or the permission of the court."

Source: http://www.azleg.state.az.us/FormatD...25&DocType=ARS (link is work/family safe)

So, while the selling party has signed papers with Anthos, the deal is not official and Anthos does not own half of CrossFit.

Please pass this information to anyone who believes otherwise.