Supported by Greenhaven Road Capital, finding value off the beaten path.
Melanie Whelan is the CEO of Soulcycle and she spoke wth Tony Robbins about the company she leads.
First, a theory. Fitness is a fashion. In the same way pleats, patterns, and pants come and go as popular, so do forms of fitness. Soulcycle – et al. – is the current thing, but how long will they last? Not long ago people criticized cycling because there was too much body weight support. Was that valid? Does it matter?
Threads will be tweaked, dyed, and spun in new ways but it’s still just a material stitched together. Exercise is much the same, movements sold in new ways. We won’t predict the future of Soulcycle, only that trends come and go. But, there’s still much to learn. Branding is a moat, and if Whelan builds a strong one at Soulcycle then like the Nike or Coca-Cola, the company will persist.
Here are 4 questions that businesses must ask and that Soulcycle has answered.
- Is there a market?
- What is your MIT?
- Do you hire right?
- Do you have WOMM?
1/ Do people need what you’re selling? Soulcycle began because founders “Julie and Elizabeth had moved to New York from Colorado and Los Angeles where fitness was part of their lifestyle – they’d go to spinning or yoga or hiking and they couldn’t find anything in New York.” Scratching your own itch is a great way to solve a problem, but it doesn’t solve the Iron Law of the Market.
Tony Hsieh wrote that after his startup he wanted to run a new business, but not one selling “seven fingered gloves.” They might be the best gloves every made, Hsieh wrote, but if there’s no one to buy them then they aren’t really worth anything.
The Instagram founders thought there might be a market as phone cameras got better and social media grew.
In The New New Thing Michael Lewis chased Jim Clark around Silicon Valley through the 1990’s. Of two of Clark’s grander ambitions, one died and one survived all because of the market. Netscape was a smashing success while ITV failed. Even though the later was a larger investment in time, money, and talent, there was no market for an internet connected television.
2/ What is your Most Important Things? The MIT is the foundation of your business. Soulcycle, says Whelan, is “a hospitality company first.” Much like what Danny Meyer aims for in restaurants, Whelan tries for fitness. At Soulcycle this means “a yes in every interaction.” If you don’t get into class today, you’re placed at the top of a waitlist for tomorrow. If you want one bike but it’s taken, you get it next. Meyer suggests that any business owners can “write the last chapter for their guests.”
To get people that act with a hospitality first mindset, you need to find the 51% solution (another Meyer term). This means getting people who solve problems, take initiative, and act rather than react. “We believe you hire for attitude and aptitude and not experience,” said Whelan, “We will teach you everything you need to know…we want someone who naturally looks at the glass as half full.” This is also the reason there are no Soulcycle franchises. “We don’t franchise because we’re in the experience business,” says Whelan.
Details are easy to teach, attitude is not.
When Ray Kroc opened his first McDonald’s he hired a hardware salesman with no food service experience. He was “fastidious with great endurance” wrote Kroc.
3/ Do you hire right? Whelan said that there is a format for each class, but instructors are “free to lead it however you’re inspired. What’s meaningful in Seattle is different from what’s meaningful in Coral Gables.”
Good organizations have a decentralized command. Hire the best people you can, then get out of their way.
During the Apollo 11 moon landing, there was a lot of pressure. The Mission Control Flight Director Chris Kraft told Gerry Griffin “Young man, we don’t have to go to the moon today. It’s your call.” That was important, wrote Gene Kranz, “The impact of Kraft immediately removed all political pressure from the decision. Griffin knew all he had to do was make the right technical call.”
Pete Carroll does this too:
“When I help guys in our organization I’ll give them guidelines. ‘When we’re in a situation, it’s okay to do this, if it doesn’t work out I’m fine with that.’ I try to instill in them a risk-taking mentality when then need it…If I’m not making the call, they’re making the call for me and I’m going to try to bolster their confidence to go for it…If you called it on my team, I’m the one that ultimately takes responsibility for it. So go for it.”
Fellow coach Phil Jackson wrote that the most effective approach to coaching “is to delegate authority as much as possible and to nurture everyone else’s leadership skills as well.” At the coaching level he implemented this too, “each coach had a high level of autonomy, but when we talked to the players we spoke as one.”
Leaders lead, they don’t micromanage.
4/ Is your marketing good? The best marketing is word of mouth marketing. It’s how Whelan ended up in her first Soulcycle class. “I have this rule in my life where if I hear about something three times from three different people I have to go and try it.” So she went, saw the culture, and liked it.
Jason Calacanis said that if you haven’t hit WOM you haven’t made a great product. Reed Hastings said the Canadian Netflix streaming experience was “a rocket ship” because of WOM. Jeremy Liew looks for WOM for his VC investments.
WOM is how lots of people get started and Whelan admits that it’s part of the reason classes are predominately men. She says this is “an opportunity we’re trying to solve.”
It’s this last line – “an opportunity we’re trying to solve” – that might sum up a business. Have a growth mindset and be willing to wrestle with a problem each day, knowing it won’t go away but will be back at your door tomorrow.
There’s this great scene in Billion Dollar Ball, at an early season practice for a woman’s rowing club where each athlete must test themselves against the machine. Each person rows for as long as she can and her results are recorded. It’s a game you can’t win. One senior notes, “the machine always wins.” That’s true at Soulcycle too. No one ever beats the bike, but that’s not the point. The point is to get back on the bike again tomorrow. It’s to be back at your business the next day.
Thank you for reading, Mike. I’ve got a new thing, it’s a (paid) monthly newsletter for people who like these blog posts. You can see a sample here.