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The Honolulu Advertiser
Posted on: Tuesday, August 9, 2005

Case joins yoga, Pilates venture

By Annys Shin
Washington Post

Steve Case has been seeking deals in the health and wellness industry, and is investing in a yoga and Pilates video company.

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America Online Inc. founder Steve Case is investing $20 million in a producer and distributor of yoga and Pilates videos, part of his ongoing bet that activities once associated with a new age lifestyle are going mainstream.

Case is going into business with Jirka Rysavy, chief executive of Gaiam Inc., who lives in a cabin outside Boulder, Colo., with no running water and an outhouse for a master bath. Rysavy said he and Case had "an alignment in mission."

Gaiam, based in Broomfield, Colo., is pursuing a market defined as "lifestyles of health and sustainability," known as LOHAS. The Natural Marketing Institute says that market includes 50 million Americans, about a sixth of the population.

That shopper is more likely to be female, over 45, and highly educated, though not necessarily with a higher-than-average income, the NMI reports. According to the LOHAS Journal, which is owned by Gaiam, those buyers spend $226.8 billion a year on feel-good products such as organic produce, hybrid cars and acupuncture sessions.

Case, a Punahou graduate who is the largest shareholder in Maui Land & Pineapple, met Rysavy at the annual LOHAS conference in Marina Del Ray, Calif., in April, Rysavy said.

"We believe we're nearing a tipping point as more and more people seek healthier, more balanced lives," Case said in a press release, commenting on the deal with Gaiam.

Gaiam is the latest investment Case has made through his new investment vehicle Revolution LLC, which he launched earlier this year with $500 million of his own money. Since then, Case has looked for deals in the healthful lifestyle market. To date, Revolution has spent roughly $145 million in the health and wellness field, buying controlling stakes in Miraval — Life in Balance, a Tucson, Ariz., resort and spa company, and Wisdom Media Group Inc., a radio and television company that was relaunched under the name Lime: Healthy Living With a Twist.

Lime has 6.5 million cable subscribers, a Web site and a 24-hour channel on Sirius Satellite Radio. It plans to roll out wireless alerts consisting of reminders and daily inspirations. As part of Revolution's deal with Gaiam, Gaiam will provide programming to Lime and produce videos of Lime shows.

Rysavy said the company does not accept advertising and sells items online such as composting toilets, a bat conservatory made of western red cedar, and a zafu — a large beanbag-style seat designed to support the body while in the traditional lotus position.

Gaiam DVDs are distributed by major retailers such as Target and Wal-Mart, and Rysavy estimated that the company has more than 50 percent of the market share in yoga and Pilates videos. Last year, the company reported revenue of $96.7 million.

In addition to DVDs, the company sells its yoga bricks and balance balls through high-end retailers, but keeps them out of discount stores to avoid, as Rysavy puts it, "polluting the brand."