How to scale a service business across borders: Steve Taylor of HipTrain

Anyone asking how to scale a service business runs into the same wall: the service is people, and people are the hardest supply to build. Steve Taylor has done it twice, first with drivers at Lyft and now with personal trainers spread across Latin America.

Taylor is co-founder and COO of HipTrain, an online fitness company. Before that he joined Lyft in 2015 while it was still private, running a P&L of more than $500 million in annual revenue across markets including New York City, and watching the company grow from 200 to 5,500 employees and through a $20 billion IPO. He then went to Fixd, which he helped sell to Assurant. He began his career flying E-2C Hawkeyes in the Navy.

Navy, White House, and the discovery that policy was not it

Taylor grew up in Orange County, California, with a father in advertising sales and a mother who taught school. Following a path his father, several uncles and grandparents had taken, he went to the Naval Academy, graduated in four years and became a naval flight officer, with a tour in Japan after flight school and a tour in Iraq.

His last posting was at the White House, coordinating military assets for continuity of operations. At the time he thought he wanted a career at the intersection of national security and public policy, so he enrolled at Georgetown's Walsh School of Foreign Service while working there. Three years of doing both taught him it was not what he wanted.

After the military he spent about a year in New York at a nonprofit helping veterans navigate the transition out of service, including mental health and education benefits. Then back to Washington and into consulting for roughly five years, first at a small firm called PRTM doing supply chain and continuity of operations work, where he productized his own military and White House experience into a service offering for private sector clients. Eighteen months in, the firm was acquired by PricewaterhouseCoopers, where he spent four more years on talent transformation and then venture capital strategy.

The realization came slowly and then clearly. He did not want to advise companies, or spend blood and weekends helping large corporations save a few million dollars. He wanted to put his mark on something and build from the ground up, which is what his father had eventually done after leaving employment, and what several of his uncles had done.

Angel investing as a career change strategy

The most useful career mechanic in this episode is how Taylor got from consulting into startups without an obvious bridge.

Between 2012 and 2015 he angel invested on nights and weekends, spending time with founders and founding teams and bringing his consulting skills to companies far too small to hire consultants. His phrase for it is that angel investing was his way into that door.

It worked in the most direct sense possible. Those relationships led to an introduction to Lyft's VP of operations, at a moment when the company had 150 to 200 people and was just beginning to shift from running everything out of San Francisco to standing up local markets.

Taylor was the third or fourth employee hired outside San Francisco, brought in to run Washington DC, which became the Mid-Atlantic.

Running a city is running a company

The reason that role matters to his story is what it contained. As a general manager for a market, Taylor was hiring a team from nothing, running local marketing and brand, owning a full P&L and handling public policy.

His summary is that the responsibilities of a chief operating officer at a large company were, at smaller scale, the responsibilities of his job in 2015. Four years of doing it is what convinced him that his next role had to be a COO seat, because nothing else offered the same combination of responsibility and autonomy.

That combination traces back to the Navy, and his explanation of why is worth reading if you manage anyone.

In a squadron in Japan, a 24 or 25 year old is handed the keys to a multimillion dollar aircraft. There is a directive to carry out a specific mission, but how it gets planned and executed is left to you and your crew. Taylor learned there that he thrives without prescription. Understand the mission, then work out the execution yourself.

Which explains why consulting chafed. The work was prescribed, and while there was some responsibility at his level, he did not feel agency or the ability to move anything. His conclusion is that early stage companies, and the COO role in particular, offer the agency and empowerment he needs, and that this is also how he prefers to lead.

Not talking about the competitor, on purpose

An audience question, a first for the show, asked what Taylor expected when he joined Lyft and how it tracked.

His answer was that he felt confident from the start the company would matter, in the specific sense of having an impact on riders' and drivers' lives. This was 2014 and 2015, when Uber had raised something like thirty times more and Lyft was a distant second.

What convinced him happened in the interview. He had spent an entire day of conversations and nobody had mentioned Uber once, so he asked John Zimmer, Lyft's co-founder and president, whether that was deliberate.

Zimmer's answer is the part to keep. It was not a rule. It was a belief that a company constantly discussing and predicting its competitor will always be a step behind, and that the opportunity to win comes from following your own playbook and leaning into your mission.

Michael's read is the same one, with the leadership implication attached. Pay attention to competitors, do not let them dominate your thinking, and model that focus so the team does not get pulled into every funding announcement.

The hardest year: New York

When the chance came to add New York on top of the Mid-Atlantic, Taylor took it. He describes New York as the largest, strategically most important and most complicated market from a policy standpoint.

The execution was brutal. He was on a train every week splitting time between two cities, with more than 200 people on his team, while the executive team was intensely focused on New York's regulatory challenges. He calls it by far the most difficult period of his time at Lyft.

His account of why it worked is notably free of self-credit. A strong team in New York, a strong team in the Mid-Atlantic that could run without him, and an executive team in San Francisco that gave him the feedback and support he needed.

An acquisition on day three

Taylor left after the 2019 IPO for a COO role at Fixd, a roughly 20 person company in Baltimore that had raised about $6 million.

He was impressed by how well Lyft had prepared him: retail operations, local partnerships, marketing, policy and a full P&L. Then, on his third day, the company received a letter of intent to be acquired by Assurant.

He had known it was possible. The founder had been transparent that a partner was interested, while noting it was not the first such conversation in six years and might come to nothing. The Wednesday after the Monday he started, it stopped being hypothetical.

What followed was six to nine months of due diligence, run while he was still learning the job and earning the team's trust, co-leading the process with the founder and the head of product. His description of facing a Fortune 300 acquirer is one every small company should read before entering a process. The volume of lawyers and actuaries in their books and spreadsheets was at times overwhelming, though he credits the acquirer as professional and accommodating about their limited resources.

Two lessons came out of it.

The first is that the acquisition is not the finish line. There are targets and milestones to hit after it closes, which means you have to sprint through it rather than to it. Fixd had to keep growing and retaining clients throughout diligence, because the post-close commitments depended on it. As Taylor puts it, just beyond the horizon where you think the finish line is, there are more milestones.

The second is about people. Founder Luke Cooper made retaining the whole team a top priority, precisely because acquisitions frequently produce talent redundancy and post-close layoffs. Finding a soft landing for everyone at Fixd was an explicit goal rather than a hope.

His verdict is honest: not the growth opportunity he expected, and a genuine education in M&A and post-acquisition integration.

The MAYA principle

Taylor has now worked on three businesses that move an analog experience online: Lyft, then Big Health in digital therapeutics, and now HipTrain. Asked about the challenge of changing behavior, he offers the most useful framework in the episode.

MAYA comes from industrial design and stands for most advanced yet acceptable. Give people enough of what they already recognize, with new elements they can adapt to easily.

Applied to ridesharing, the familiar parts existed. Taxis existed. A friend driving you to the airport existed. What was new was opening an app and having a stranger arrive in an unmarked car, drive you somewhere, and take payment invisibly inside the software.

This is why the pink mustache existed. It made something unfamiliar feel friendly and fun. It is also why early Lyft encouraged riders to sit in the front seat and fist bump the driver, a gesture that persisted long enough to become part of how the company's employees sign off.

His counter-examples make the point sharper. Google Glass and the Segway were genuinely advanced and society declined to adopt them.

With HipTrain the timing has done much of that work. Remote work, video meetings and telehealth have already normalized the idea of receiving a service through a screen, so the acceptability half of the equation was largely solved before launch. HipTrain launched in September, roughly 18 to 20 months into the pandemic, and Taylor's description of the result is unusual: there was no ramp. The demand arrived on day one and they have been keeping up with it since.

Building the supply side first

Marketplaces are famously hard to start and famously defensible once established, a point Michael attributes to Fred Wilson. Taylor's approach to the cold start problem is to attack supply, which he calls the most critical and most difficult element to build.

HipTrain sources trainers from the personal training labor market in Latin America, primarily Buenos Aires and now Mexico City. The tactics are the unglamorous ones: certification programs, the relevant Facebook groups, and then word of mouth.

He explicitly traces the playbook to Lyft. You use tried and true methods to acquire supply, then you pay them well, communicate proactively, and build a real community, and word of mouth takes over.

On the demand side he is candid that the work is not finished. Macro trends favor them, with people prioritizing physical and mental health and looking for ways to train without a gym or to supplement one. They are exploring business to business opportunities. His summary at the time of recording was that supply is solved and sustainable US demand is the focus, because a marketplace has to stay balanced.

Why Latin America, deliberately

The geography was a strategic choice, not an accident. Taylor's co-founder and CEO, Josh, spent most of his career operating in Latin America, including running partnerships for Uber while living in Mexico City, plus significant time in Argentina.

The thesis is straightforward arbitrage with both sides better off. Trainers in Latin America can earn roughly double what they would at home, while US members pay about a tenth of what personal training would cost domestically.

The company itself is distributed to match. Eleven employees at the time of recording, only three in the United States, with the rest across Argentina, Mexico, Guatemala, Costa Rica and Italy. Trainers in three countries with a new one in Germany, and growing inbound interest from US trainers, including one in Idaho who wanted to use the platform to find members. Taylor is explicit that they will not restrict themselves to Latin America.

Michael's framing, borrowed from Matt Mullenweg at Automattic, is not to discriminate based on geolocation. Take the best talent wherever it is.

The 5 things I took away from this conversation

1. Angel investing is an underrated career bridge. Taylor could not get from consulting to operating directly, so he bought his way into the room with small checks and free help on nights and weekends. Three years later that network produced the job. If you are trying to change industries and have some capital, this beats applying.

2. Running a city is a COO apprenticeship. Hiring, brand, P&L, policy, all in one geography with real accountability. Taylor came out of it prepared for a COO role at a company a fraction of the size. Anyone looking for the fastest route to general management should be looking at market GM roles.

3. Most advanced yet acceptable is the right filter for new behavior. The pink mustache and the fist bump were not whimsy, they were adoption engineering. When you are asking people to do something genuinely new, the design question is how much familiarity you can wrap around it.

4. The letter of intent is the start of the sprint, not the end. Post-close milestones mean the company has to keep growing through diligence, while the executives running the business are also running the deal. Anyone anticipating an acquisition should plan for that overlap explicitly rather than treating signature as the finish.

5. In a two sided service business, supply is the whole problem. Taylor solved it the same way twice: find the right labor market, pay well, communicate proactively, build a community, then let word of mouth compound. Demand generation is a marketing problem. Supply is an operating one, and it is the harder of the two.

FAQ

How do you scale a service business that depends on people? Start with supply, which Taylor calls the most difficult element. HipTrain built its trainer base through certification programs, community groups and word of mouth in specific Latin American cities, then focused on retention through good pay, proactive communication and community. That sequence mirrors how Lyft built its driver supply.

What is the MAYA principle and how does it apply to a new product? Most advanced yet acceptable, an industrial design idea. Give users enough of what they already understand alongside the genuinely new part, so the leap is small. Lyft applied it with the pink mustache and the front seat fist bump, making an unfamiliar transaction feel friendly. Google Glass and the Segway are the counter-examples of advanced but unacceptable.

What are the COO role responsibilities at a market level in a large company? At Lyft, a market general manager built and hired the team, ran local marketing and brand, owned a full P&L and handled public policy and regulation. Taylor's view is that these are the same responsibilities a COO holds at a large company, compressed into one geography, which makes the role strong preparation.

What should a new executive expect during an acquisition? That it does not end at signature. Taylor co-led diligence with the founder and head of product while learning a new job, faced a large acquirer's lawyers and actuaries, and still had to grow the business because post-close milestones depended on it. Retaining the team through redundancy risk was a separate deliberate effort.

Does building a distributed team across countries work for an early stage company? It did here, and by design. HipTrain had eleven employees across six countries with only three in the United States, and its trainer supply is deliberately international. The founding team chose those markets because a co-founder had operated there for years, which is the part that made it work rather than the arbitrage alone.

Also mentioned

• Lyft, its 2019 IPO, and the pink mustache as an adoption device
• Fixd, acquired by Assurant, and founder Luke Cooper's insistence on retaining the whole team
• Big Health, the digital therapeutics company where Taylor was COO
• The United States Naval Academy and Georgetown's Walsh School of Foreign Service
• The MAYA principle, Raymond Loewy's most advanced yet acceptable
• Google Glass and the Segway, Taylor's examples of advanced but unaccepted technology
• Fred Wilson's AVC, on the difficulty and durability of marketplaces
• Steve Taylor on LinkedIn and Twitter at @StephenHTaylor

Listen to the full episode

Steve Taylor on Between Two COO's

Between Two COO's is hosted by Michael Koenig. Subscribe on Apple Podcasts, Spotify, or wherever you listen.