Second Acts: Spinning a Business Out of Nothing

When Julie Rice couldn’t find a place to exercise, she and a friend opened their own studio. Then SoulCycle took off 

by Michelle Stacey
soul cycle image
Photograph: Andrew Hetherington

One Thursday evening in March 2007, Julie Rice stood in the small indoor-cycling studio she had started just 11 months earlier on New York City’s Upper West Side. She watched in amazement as Bill Clinton worked the room. The only one dressed in a business suit rather than spandex shorts, the former president weaved among the tightly packed bikes greeting Hillary Clinton supporters who’d all donned T-shirts that read EXERCISE YOUR VOTE. Smiling and shaking hands, he assured them that his wife would make a great presidential candidate in 2008.

Rice marveled at how, in less than a year, SoulCycle had morphed from a start-up that sometimes gave away classes to a citywide phenomenon boasting such fans as Kyra Sedgwick and Katie Couric. Now, with the visit from Clinton, it was getting the best publicity hit of all. The event had been dreamed up by a SoulCycle client, the daughter-in-law of U.S. Congresswoman Nita Lowey, who was casting about for an innovative fund-raising concept. “It was a slow media day, so we got tons of press,” Rice remembers. “And the Clinton appearance coincided with the opening of our second studio. All of a sudden the city was buzzing about SoulCycle. It went viral.”

Rice, who spent 15 years as a Hollywood talent agent, working with stars such as Jennifer Lopez and Sean Combs, knows a thing or two about helping a brand reach fever pitch. “I was in the talent-management business right at the time when actors were becoming small businesses, with extensions like clothing lines and recording deals,” she says. So it felt perfectly natural that she conceived of her own business not only as a place to ride a bike but also as a philosophy, a fund-raising force and in some ways a source of entertainment.

Today, SoulCycle has expanded to six studios across the New York metropolitan area, plus one in the Hamptons and another in Los Angeles. And now the company is poised to once again get bigger: In May 2011, Rice and her cofounder, Elizabeth Cutler, entered into a strategic partnership with Equinox, the giant sports-club company, to open 50 to 60 locations by 2015. Celebrities like Kelly Ripa, Lady Gaga, Katie Holmes, Tom Cruise and Brooke Shields all swear by the brand’s rigorous workouts. SoulCycle also raises about $500,000 for charity every year.

And it’s all because Rice couldn’t find a place to work out.

In 2005, Rice and her now-husband, Spencer Rice, also a talent agent, moved from Los Angeles to New York, where she’d grown up. They were looking for a fresh start, and the promise of a friend’s rent-controlled apartment sealed the deal. “I loved working in the entertainment business; I had a great job and a wonderful experience from my early twenties into my thirties,” says Rice. “But I’m an all-or-nothing type of person, and I could not picture doing that job for 25 more years.” So she took an interim step, agreeing to open a New York office for her L.A. agency and hoping the pace would be less hectic than in Hollywood.

The genesis of SoulCycle was one of those “if you build it” epiphanies: If you can’t find the exercise studio you want, build it yourself, and like-minded people will show up. “I had no intention of quitting my job and starting a Spinning studio,” Rice recalls. But she had every intention of doing a lot of Spinning, a sport she had fallen in love with in L.A.

Spinning is a high-intensity form of group indoor cycling, invented in the late 1980s by an endurance cyclist named Johnny Goldberg, who later trademarked the term. Participants ride bikes equipped with a flywheel to control resistance and mimic real-world terrain; riders use specialized shoes that hook into the pedals, and follow an instructor through a challenging routine that typically includes sprints, intervals and hill climbs.

The daughter of a gym teacher, Rice had always made time for exercise, but more as something she diligently executed than as a source of joy. Then one day she walked into a little exercise studio in L.A. called Train West Hollywood and took an indoor-cycling class taught by Janet Fitzgerald. The bike soon became the only place where Rice could unwind from the nonstop pressure of working with “talent,” turn off her brain and enter into another activity with the same urgency she brought to her job. After cycling, she emerged energized instead of exhausted. “Those workouts became the anchor of my emotional life,” says Rice. “I could lose myself in them, in almost a trance-like way.”

When she moved east, Rice went looking for that same inspiring, spiritual hit and came up empty. For Rice, indoor cycling in New York felt like yet another hard-driving, goal-oriented item on the day’s checklist of chores. “I think I tried every class and gym in New York,” she says. The only experience that came close was a class taught by Ruth Zukerman at Reebok Sports Club, in which riders were guided rather than bullied and taught to use yoga breathing rather than compete to outride the other people. When Rice described her dilemma, Zukerman said, “You need to meet this woman who takes my class in East Hampton. She keeps talking about opening her own place.” Which is how Rice ended up sitting down to lunch at Soho House with Elizabeth Cutler—one of those epic, life-changing lunches where everything clicks, where you bond over having five-month-old daughters and having recently moved from the West (Cutler spent 10 years in Colorado), where by the time you leave, you’ve practically launched a business together.

“For both of us, it was the best blind date we’ve ever had,” Cutler says now. “It was like the lunch never ended,” adds Rice. “I got in the cab afterward and the phone rang, and it was Elizabeth saying, ‘Why don’t you look into towels, and I’ll look into spaces, and we’ll have coffee in a couple of days and see where we are.’ ” Their complementary styles were clear from the start: Rice is enthusiastic, creative, better at ideas than follow-through and a lifelong athlete; Cutler is organized, practical, tenacious and a latecomer to exercise who had been intimidated by fitness classes. “Early on we made a commitment that we’d never allow things to get swept under the carpet, that we’d keep our relationship clean,” says Cutler. “So we worked with an executive counselor to help us navigate big decisions or figure out problems.” Their personal lives are also interwoven. “Our kids are buddies,” Cutler says. “Our daughters are super into the clubs—they tell stories about who’s going to have which job at SoulCycle when they grow up.”

The first studio came together with a relative ease that astonished both of them and that was difficult to duplicate in later openings. Cutler, a former real estate broker, scouted locations. The first major requirement was soundproofing. One characteristic SoulCycle shares with other cycling studios is the use of pulsating music to help invigorate riders (the company now hires sound engineers from Lincoln Center). It also needed a gym permit and a site that would encourage walk-ins and publicity from street traffic. When real estate brokers weren’t helpful, Cutler got creative and checked Craigslist, where she found a move-in-ready spot on West 72nd Street. A former ballet studio with a personal-training facility upstairs, it was perfect—almost.

While moving equipment into the space, Rice and Cutler discovered they wouldn’t be allowed to post the studio’s name on the exterior of the building. “There went our idea of using the density of New York City to lure in passersby,” says Rice. The solution: a rickshaw purchased on eBay for $250, spray-painted yellow and chained to a parking meter in front of the building, pointing the way to the studio. (The almost-daily $65 parking ticket from the community board was added to their business plan as a cost of advertising.) The pair built the front desk from kitchen-counter components they’d picked up at Ikea; bought 37 bikes from Schwinn ($1,200 each), about 50 pairs of specialized clip-in cycling shoes ($75 each) and a sound system ($20,000); and hired a towel service (“It’s one of our biggest expenditures,” says Rice. “It costs between 40 and 60 cents per towel per use”).

Start-up money came in the form of loans and investments from family and friends—until another stroke of fate. On the cusp of opening, Cutler received a payout from an investment she had made in a friend’s start-up, a beverage company called Izze, which was sold to PepsiCo. In what Rice calls “a nice entrepreneur-to-entrepreneur story,” Cutler used her Izze profits to repay SoulCycle’s investors and seed the company herself. “That allowed us the freedom of not having to answer to anybody,” says Cutler. Within a year, Cutler had recouped her investment.

The two have always made a point of focusing on the experience of the classes. At SoulCycle the rooms are darkened, lit with candles. Sessions begin with a meditation as the instructor asks bikers to tune in to their bodies and their minds and let go of other thoughts. Then the workout builds to a push-the-limits climax: Riders lift hand weights to work the upper body, alternating with a few punishing rounds of jumps and uphill sprints. (Special-event classes have included “Blonde Ambition,” featuring Madonna’s greatest hits, and a Whitney Houston tribute ride.) The workout ends as participants gradually slow their pace, cool down and spend a few moments in personal reflection. A class costs $32—not cheap, but clients continue to pack the studios. “We felt people value what they pay for,” says Rice, “and that’s the kind of energy people bring to it: ‘This is something I’ve treated myself to.’ It also pushed us to think of each class as a mini theater production—each time you get a whole new show.”

There have been two bumps on the road to success, one all business and one painfully personal. The business snafu came at the beginning of the second year, right after the Clinton event. Suddenly the company couldn’t keep up with demand. Although that sounds like a good problem to have, Rice points out that it means you’re leaving money on the table—and turning away the very people who helped build the business.

She and Cutler shopped the city for new locations, but landlords hesitated to sign a lease with them, insisting they were too small to go up against big national brands for gym space and didn’t have enough investor dollars behind them. “We were spending so much time and money negotiating leases that didn’t work out,” Rice recalls. Then came the market meltdown in 2008—and all at once this small, self-funded, low-overhead business looked a lot more attractive. By the summer of 2010, SoulCycle had gone through a frenzy of openings over eight months.

The personal stumbling block came in 2009, and even Rice’s PR acumen wasn’t enough to control the fallout. Although you wouldn’t know it to look at the company’s press materials today, Ruth Zukerman, the instructor from Reebok Sports Club, was a third partner—as well as the lead instructor—when SoulCycle opened. But in November 2009 she bowed out of the company, a development that Rice is not comfortable discussing except to insist that “there was nothing very dramatic about it. When we decided to part ways, we wished her the best.”

In February 2010, Zukerman opened her own New York City indoor-cycling studio, Flywheel Sports (the master-trainer spot at SoulCycle is now filled by Rice’s teacher from L.A., Janet Fitzgerald), prompting media speculation about bad blood between the brands. News stories mentioned defections from SoulCycle, quoting regulars as saying, “Team Flywheel and team SoulCycle—it’s like team Angelina and team Jennifer.” Rice denies any tension between the two clubs; Zukerman declined to comment. One year later, in February 2011, a SoulCycle location opened just three blocks from Flywheel’s flagship. Exercise blogs and consumer-rating websites like Yelp have been packed with comments championing one studio or the other.

But now Rice and Cutler are both focused on more distant horizons: Los Angeles, London and beyond, courtesy of the Equinox deal. While the press spoke of the partnership as an “acquisition” of SoulCycle by Equinox, for a reputed $15 million to $25 million, Rice and Cutler have retained substantial ownership of the company. “You won’t see SoulCycle within Equinox clubs,” Rice explains. “We’ll still be a stand-alone boutique studio.” The partnership will lead to the opening of 10 to 12 new SoulCycle studios around the country in the next year alone. “Knowing Julie as I do now, I’m not surprised at how successful they’ve been,” says Melanie Whelan, vice president of business development at Equinox. “Her mind works tirelessly on SoulCycle, always looking to evolve the whole platform. They’re cultivating a culture there, so we were buying into something much bigger than a studio. Basically, they punch way above their weight.”

And they keep punching. When it comes to building on the SoulCycle ethos, classes are just the beginning. In 2009, Rice and Cutler started a line of fresh-pressed juices, SoulCooler. In 2010 they launched their own in-studio workout-clothing line. And in March 2011, Rice managed to fit in yet another new project: She gave birth to her second daughter, Parker.

MICHELLE STACEY’s last story for More was “Reinventing After a Family Crisis.”

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First Published Tue, 2012-08-07 10:25

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