Startup companies are often a work in progress, a fact well known to longtime entrepreneur Jan Horsfall. So he wasn’t surprised that the company he has now, Maxletics, actually began as something different.
Maxletics, which Horsfall calls “a new breed of sports marketing agency,” connects companies with Olympians and Olympic-hopefuls who extol the virtues of those brands on social media.
“It’s a beautiful thing, I think, for our city that we’re able to promote our Olympic athletes,” Horsfall said. “This is the perfect place for us to be, sitting at the doorway where these athletes come to live and train.”
Maxletics charges companies a monthly fee, which gets them a cluster of athletes — between three and 125, Horsfall said — who will talk about the brand’s product in social media settings.
“It’s influential marketing,” Horsfall said. “We have more than 1,100 athletes on our platform and expect to have 3,500 athletes by the end of 2018. We’ve added 15 million followers in the last 45 days to give us 45 million followers that sit in the social media networks like Twitter, Facebook and Instagram.”
That reach is paying off, both for the brand companies and the athletes.
“Since we started with Maxletics six months ago, we’ve doubled our revenue,” said Sheath Underwear CEO Robert Patton, a Colorado Springs resident, although the company is based in San Antonio. “Maxletics has been a valuable asset. We’re working with other companies also, but putting those six athletes on the front page of our website has been valuable.”
Horsfall said having a cluster of elite athletes endorse a product will sometimes be better than having a major star hawk the product.
“It adds credibility to your brand when you have multiple athletes endorsing you,” Patton said. “Jan and his team have a difficult task managing all these athletes, but they provide certified credible athletes to endorse a product at a fair price.”
This is Horsfall’s fifth startup company, and this one was originally aimed at congregating youth sports organizations.
“You can’t be rigid. You’ve got to be adaptive,” Horsfall said. “The pivot wasn’t a complete business change, but it did change the athletes we targeted, because we wanted to go international. The Olympic-type athletes are perfect for this, but we don’t use the Olympic logo. I’m not a specific agent. I don’t ask to negotiate all their deals. I just say, ‘Can I profile you, and if I have a deal, can I bring it to you? And we’ll stay out of the way of anything if you already have a deal.’”
Horsfall said he obtained private funding of $600,000 in 2015 after pivoting the company and will do another private round of funding, seeking $1 million, in the next 10 days or so.
Horsfall said he has a dozen employees and will move into a new office next week. He wouldn’t disclose revenue of the third-year company but said Maxletics “will do seven figures this year.”
Patton said Maxletics has tapped into a tidal wave.
“I’d say watch out for that type of marketing because it’s going to be more prevalent,” Patton said. “The influencer market is how it will be done going forward.
“I think Jan is sitting on a gold mine.”
ATHLETES ARE APPRECIATIVE
Patton said Horsfall is smart to go after Olympic-type athletes as influencers, partly because they need money. That was certainly the case for three-time world champion female wrestler Adeline Gray, who qualified for the 2016 Olympics in Rio de Janeiro and wanted her family at the Games.
She earned about $30,000 through Maxletics for using various products and talking about them on social media, Horsfall said, and “another $17,000 was raised through our crowd funding tool that’s like a GoFundMe page.”
Gray said that money not only padded her savings account but also paid for her fiancée, parents and three little sisters to go to the Games.
“Maxletics handles everything and they’ve been great to me,” Gray said. “They schedule when I should Tweet out certain products or [post] on Instagram. This has been big for me; those dollars really help.”
Horsfall said he has deals with a dozen companies and has three times that many in the pipeline, including one with a major car dealer in the Pikes Peak region that should be announced next week.
“It’ll probably be 90 percent national brands, but I like the local market,” Horsfall said. “It’ll be interesting to see how that arm develops for us.”
He recently signed on Ohana Kava Bar, a downtown Springs establishment owned by Matt Clark, as the first local business to join Maxletics. Olympic hopeful pentathlete Logan Storie and his wife, triathlete Erin Storie, have been linked to the Kava Bar as influencers.
The Federal Trade Commission showed its concern for the growing influencer market in social media back in April when it sent letters to 90 influencers — including athletes and entertainers — who had posted on Instagram. The FTC said, in part, in a press release “… that if there is a ‘material connection’ between an endorser and an advertiser — in other words, a connection that might affect the weight or credibility that consumers give the endorsement — that connection should be clearly and conspicuously disclosed, unless it is already clear from the context of the communication.”
Material connections might be monetary payment, free products or a business or family relationship. The rules apply to both marketers and endorsers.
The FTC noted that some posts might offer a disclosure but that it wasn’t clear enough, such as putting #partner in a string of hash tags. On Instragram posts, the disclosure must be included above the “more” button.
Horsfall said the average deal for an athlete is between $2,500 and $10,000 but that some have been as much as $50,000. He estimates that as much as a third of the United States’ Winter Olympic team will be with Maxletics.
“These athletes are recommenders because that’s how we buy things today,” Horsfall said. “Before you buy your phone, before you buy a coffee cup or a computer, 90 percent of us want a recommendation and over half of us actually use one to make the purchase. What’s also interesting about it is if a recommender helps you buy something, you’re almost 40 percent more apt to buy it again. So it has a major impact on the repurchase rates.
“Influential marketing is the fastest growing portion of the media spend inside of a brand,” he added. “It has an undue impact on how people are buying things. That’s one reason we’re really excited about where Maxletics is headed.”