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🏋🏻♀️ The business model that bankrupted WeFit
The more customers WeFit had, the more money it lost (the single membership that killed everything)
Admond Lee
January 12, 2025
Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
Today’s story is about how a Vietnamese startup failed because of a flawed business model. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → WeFit
⚠️ 2 Mistakes → Unsustainable business model
🧠 3 Lessons Learned → Find the right market
🔗 The Runway Insights → The 30 best pieces of company building advice
💰 Southeast Asia Funding Radar → Endowus raises additional $17.5M to improve their tech and expand to other wealth markets in Asia
☠️ 1 Failed Startup: WeFit
🚀 The Rise of WeFit
🇻🇳 Founded by Nguyen Khoi in 2016, WeFit wanted to revolutionise the fitness landscape in Vietnam by offering users access to many workout and beauty services across over 1,000 locations in Hanoi and Ho Chi Minh City.
Imagine having a single membership that lets you hop between gyms, yoga studios, and spas without the hassle of multiple subscriptions — that was WeFit's promise.
The Problem — 🔒 The fitness industry in Vietnam lacked flexibility for gym-goers and workout enthusiasts.
Traditional gym memberships often locked users into long-term contracts at a single location, which could be inconvenient and costly for those who wanted variety.
Many fitness enthusiasts felt trapped in long-term contracts with limited options, leading to dwindling motivation.
The Solution — 🏃🏻♂️ WeFit provided a subscription membership model that granted users access to various gyms, yoga studios, and beauty salons without being tied down to one place.
🏋🏻♀️ For fitness enthusiasts — People can choose where and when to go for their workouts based on their individual preferences and lifestyle.
💪🏻 For fitness facilities — Business owners could attract more customers and increase their sales.
🎫 In short, WeFit was like ClassPass in Vietnam.
 | 💃 And guess what? People loved it. In 2017, WeFit raked in revenues of $700,000 (5,000 monthly users) and secured a $155,000 investment from ESP Capital. The momentum didn't stop there. |
💰 In 2019, they attracted a whopping $1 million from Japan’s CyberAgent Capital and other investors.
🤯 At its peak, WeFit boasted over 150,000 bookings monthly and had partnered with around 600 fitness centres.
The game plan? WeFit wanted to have 1 million users signed up by 2020.
📉 The Fall of WeFit
🔪 However, the very business model that differentiated WeFit from others also became the silent murder of the company.
The business model was unsustainable because many customers “gamed” the system.
Our working capital is completely depleted. Therefore, we are unable to maintain our business and products.
📌 Here’s what happened to WeFit:
🏋🏻♀️ Single membership for everything
2016 — WeFit was founded by Nguyen Khoi.
2017 — 💰 Grew to revenues of $700,000 with 5,000 customers and secured a $155,000 investment from ESP Capital.
2018 — 🕺🏻 Nguyen Khoi was listed in the Forbes 30 Under 30.
Jan 2019 — 💰 Raised $1 million (Pre-Series A) from CyberAgent Capital, KBInvest and some other angel investors.
Hit 150,000 bookings per month.
Announced ambitious plans for expansion.
🚩Single membership killed everything
Late 2019 — ⚠️ Reports emerged about the unsustainable business model and account sharing issues.
Customers gamed the system by exploiting unlimited access to their membership.
Customers paid a fixed fee for unlimited sessions, while WeFit compensated partner gyms per visit.
This setup backfired when enthusiastic members maximised their memberships, leading to soaring costs for WeFit.
Many customers were sharing accounts and booking multiple sessions under one subscription, leading to financial strain on the company as they paid their partners per session used.
WeFit began delaying payments to partners, prompting several gyms and studios to sever ties.
Feb 2020 — 👋🏻 Founder Nguyen Khoi stepped down as CEO, with Deputy CEO Nguyen Hai Dang stepping in.
In a bid to curb losses, the new leadership scrapped the unlimited access model, capping user sessions.
However, this move sparked outrage among customers who were used to unlimited access.
With that, the company sent an apology letter to customers.
Mar 2020 — 🦠 COVID-19 lockdowns began. Gyms closed across Vietnam.
WeFit’s revenue plummeted as its operations were entirely halted.
29 Apr 2020 — 🚩 WeFit filed for bankruptcy.
Couldn’t sustain its business model + ran out of money.
Customers and partners were shocked and confused about their prepaid sessions and outstanding payments.
11 May 2020 — ☠️ WeFit’s parent company (Onaclover Technology Joint Stock Company or WeWow) officially announced WeFit’s bankruptcy due to lack of cash to operate, leading to widespread media coverage.
While WeFit initially captured the market with an innovative idea that solved real problems for consumers, it ultimately fell victim to its own business model flaws and external circumstances beyond its control.
Want to learn more about WeFit’s downfall?
⚠️ 2 Mistakes
Mistake 1: Unsustainable business model
WeFit’s "single membership for unlimited access" model was like an all-you-can-eat buffet for gym-goers. Customers paid a fixed fee but could visit as many gyms or studios as they wanted.
Sounds great, right? Not if you're the one footing the bill.
💵 Here’s how WeFit’s business model worked:
Customers paid a fixed membership fee every month (or quarterly) for unlimited sessions and access to all gyms, yoga studios, and beauty salons that partnered with WeFit.
WeFit compensated their partners per visit.
For example, WeFit hit $700,000 in revenue with 5,000 customers in 2017. So let’s assume WeFit charged $12 / month on a customer.
Assuming WeFit paid $1 to its partners for every visit from the customer.
Assuming the customer visited the same gym 10 times within a month, WeFit would then pay its gym partner $10 for that month.
In the end, WeFit made $2 in revenue for that month (from the customer).
🥕 Wrong business model → Wrong incentives → Wrong behaviour → Lost money
While the business model looked good on the surface, it had a crack that incentivised customers to maximise their unlimited access.
To make matters worse, some users exploited the system by sharing accounts, with certain accounts logging up to 200 sessions monthly.
With high acquisition costs and loss-making business, the more customers WeFit got, the more money it lost.
Mistake 2: Poor crisis management
When WeFit scrapped unlimited access to curb losses, they didn’t adequately manage customer and partner expectations or communicate clearly.
As a result:
😤 Customers were not happy as they felt cheated after signing up with the membership for unlimited access.
😡 Partners were not happy as WeFit basically capped their earnings (paid per session) and delayed their payments.
In the end, the outrage among loyal users and partners compounded their problems, alienating the very people they needed most.
🧠 3 Lessons Learned
Lesson 1: Build a sustainable business model that balances customer appeal with financial viability
Vietnam’s fitness market was ripe for disruption, but WeFit’s unlimited membership model was too generous and didn’t consider how deeply price-sensitive and resourceful Vietnamese consumers could be.
Users maximised their memberships or shared accounts, driving costs out of control.
🌟 Key Takeaways:
✌🏻 Tailor your business model to local preferences
Analyse local behaviour — Vietnamese customers often prioritise affordability. Structure plans to align with their spending habits, offering flexibility at a fair price.
Adopt usage caps — Instead of unlimited access, introduce tiered pricing or session limits (i.e. 8 sessions/month vs. unlimited) to balance user satisfaction with cost control.
💰 Monetise upsells
Sell add-ons like personal training or beauty services to boost revenue without overloading core resources.
For example, California Fitness & Yoga focuses on premium memberships with value-added services (i.e. personal trainers, nutrition advice) to target higher-income segments willing to pay for exclusivity.
Sometimes, it’s easier to make money from 10 rich people than making money from 1000 middle-income people.
Lesson 2: Find the right market
In fact, besides WeFit, recently Fit24 (a high-end gymnasium chain in HCMC) also shut down in October 2024 due to fierce competition in the fitness market.
A survey by VnExpress found that in the last 2 years most major gym chains have either downsized or stopped expanding due to growing competition.
The recent shutdowns have deterred many consumers from buying gym memberships, adding to the industry’s woes.
🌟 Key Takeaways:
🌟 Define your unique selling proposition (USP)
Entering a competitive market without a clear USP is a recipe for disaster.
WeFit promised flexibility, but so did other players who offered better execution. A laser-focused differentiation could have set them apart.
For example, competitors like California Fitness & Yoga and Elite Fitness have thrived by carefully analysing consumer behaviour.
They offer various membership options tailored to different segments, such as budget-friendly plans or premium services that cater to health-conscious individuals willing to invest in personalised training.
By aligning their offerings with customer expectations, these brands have successfully captured significant market share.
🤺 Go beyond price wars
Competing solely on price may attract customers initially, but it often leads to razor-thin margins and a race to the bottom.
Instead of racing to the bottom on pricing, focus on value differentiation — offer tailored services like personalised training plans, hybrid (online + offline) memberships, or exclusive wellness perks.
Build a strong brand identity with social media presence, influencer collaborations, and localised marketing (relevant themes in campaigns).
Lesson 3: Manage expectations with transparent communication
When WeFit capped unlimited memberships, they alienated customers who felt betrayed. The backlash was amplified because they didn’t handle the transition with care.
🌟 Key Takeaways:
🤝🏻 Set expectations from day 1
From the moment customers sign up, be upfront about the scope of your services, limitations, and terms of use. Surprises should be delightful, not upsetting.
Make membership conditions dead simple to understand. Avoid fine print and use plain language in Vietnamese and English.
Show exactly what customers get at each price tier. Include details like session caps, partner gym restrictions, or cancellation fees.
🙏🏻 Communicate changes early and clearly
When policy or pricing changes are inevitable, give customers enough time to adjust. Explain the reasons behind the changes to foster understanding and empathy.
Email Notifications — Announce changes 30–60 days in advance via email, clearly explaining what’s changing and why.
Social Media Transparency — Use platforms like Facebook or TikTok to post FAQs about the changes and address customer concerns publicly.
Customer Service Prep — Train support teams to handle queries and complaints with empathy and consistent messaging.
🔗 The Runway Insights
💰 Southeast Asia Funding Radar
Endowus raises additional $17.5M to improve their tech and expand to other wealth markets in Asia (Link)
Soul Parking raises Series A extension co-led by AC Ventures and AppWorks to transform traditional parking systems across Indonesia (Link)
Infinity Fincorp, a Mumbai-based non-banking financial company, raises $35M for MSME loans in India (Link)
HiFeed raises pre-seed funding led by Wavemaker Impact to reduce the carbon footprint of cattle farming (Link)
Kyna English, a Vietnam-based online English training platform, raises Series B funding led by Asia Business Builders (Link)
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That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
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