How getting sweaty turned into a big business

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Wellness is now a $3.4 trillion global market, making it bigger than the pharma business. Take that, Prozac—exercise is outpacing you.

Sweat Equity by Jason Kelly
Photo: Bloomberg

Bloomberg’s New York bureau chief, and serial marathoner, Jason Kelly understands the bankability of sweat better than anyone. His new business book, Sweat Equity: Inside the New Economy of Mind and Body, chronicles the fertile landscape of fitness studios, running races, the Tough Mudders of the world, the ascent of New York Road Runners, and the apparel we wear during it all.

It’s a terrific, spellbinding read filled with fascinating characters and success stories of luck and business acumen that will forever change the way you look at the studios you frequent, the races you run, and the leggings you buy.

Alexia Brue, Well+Good’s publisher, recently sat down for coffee with Kelly to talk about the struggles of mid-market gyms, the future of SoulCycle, the power of mindfulness, and more.

Can’t wait to pick up the book? We’re sharing four excerpts from Sweat Equity, starting with this one on the role gyms play in the fitness economy.

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Jason Kelly and Sweat Equity
Photo: Jason Kelly

After The New Tycoons, your book on the corridors of private equity, how’d you get interested in this sweaty, less formal topic?

This book was very much about worlds colliding. I’d been running marathons since 1999, when a friend convinced me to run a race with him. I’d been a dormant runner in college, an ex-cross country and track guy in high school who ended up spending more time at the newspaper than anywhere else. Journalists are not, as a rule, the most athletically inclined.

A decade into running marathons, I realized how much money I was spending—not just shoes and shorts, but all sorts of accessories, not to mention loads on entry fees, plus traveling to races.

And then I saw the “professional money,” the PE [private equity] guys I’d been following closely since 2007, starting to invest more heavily. Business writing is basically about following the money. Happily it led me to something I was already really interested in.

And it was so much more than running. It was triathlons and cycling and the “alternative” races like Tough Mudders and The Color Run. And then boutique fitness exploded. It was all happening right in front of me.

Sweat Equity is the first book detailing the now massive fitness economy. What were the biggest challenges in reporting it?

Picking my spots and identifying the right characters through which to tell the story. There are so many examples out there of this trend. And it’s always changing. So I had to be content trying to capture this moment in time, knowing that there were things that I wouldn’t get to, or would end up on the cutting room floor.

I found the chapter about gyms and studios fascinating. You write that it’s especially tough for the middle-market for gyms. So, in other words, it’s good to be Planet Fitness and it’s good to be Equinox, but it’s not so good to be Town Sports International, for example. Are these caught-in-the-middle gyms headed for extinction—and what, if anything, can they do to save themselves?

Some are likely headed for extinction. But the overall rising tide may keep some afloat, especially in markets where it’s less competitive —say, in some suburbs or less populated areas where you don’t have as many options.

In terms of saving themselves, creating community seems to be the key. Many people are showing up at gyms for more than a treadmill or elliptical these days. They love classes and they also want to feel like the gym is a place where they can go with their partner and even their family. Lifetime Fitness has really leaned into this idea of the gym being sort of a post-modern country club, where the whole gang can go on a weekend and do lots of activities, separately and together.

In your book, SoulCycle, Barry’s Bootcamp, and Flywheel are the big business success stories so far. What do you predict will be the next $100 million dollar boutique fitness concept?

Great question. I’ve heard some rumblings around boxing lately, which strikes me as a place with potential. Those classes seem to garner a following, and there’s certainly a desire for a “stronger” look that emphasizes toned arms and torso.

I’m also fascinated by the amount of money moving toward mindfulness. You look at something like Unplug, the meditation studio. I feel like a lot of the zeitgeist right now is around feeling better on a mental and emotional level. I’m reading a book called The Urban Monk at the moment, and another book, now out of print, called The Spiritual Tourist. Even watching the show Billions, where the two main characters use meditation apps amid their high-octane jobs.

You write about the explosion of things like Tough Mudder and Spartan, and now it’s looking like these mud races might be flattening out in terms of interest at least in the US. Do you think these races can sustain their levels of growth?

Certainly feels like we may have passed the peak there. Anecdotally, I feel like fewer people are telling me about their Tough Mudder or Spartan experiences—and these days everyone wants to tell me about their races or workout routines.

Having said that, one of my sons was watching Spartan: Ultimate Team Challenge the other day and was really into it. But that’s from a spectators’ perspective, and is more akin to American Ninja Warrior. The obstacles in that case seem so difficult, I’m not convinced a lot of folks will sign up for races owing to that. But I could be wrong.

There were so many fascinating entrepreneurs detailed in the story: Barry Jay, the founder of Barry’s; Travis Snyder, creator of The Color Run; Mary Wittenberg, the CEO who grew NYRR to what it is today. Who was the most interesting to report?

It’s tough to choose! I loved that the stories of the companies and organizations were so deeply personal. These truly are people who are eating what they cook, as it were. Not to take anything away from someone who runs a gravel company, but I’m not sure you do that job because you grew up loving gravel. The fitness entrepreneurs are driven in a deep way.

To that end, I loved getting to know Steve Feinberg and Lillian So [of SOfit], who are at the beginning stages of their empire-building. Their ability to use social media, to cultivate a community and a brand associated with that community is fascinating to me. And there’s real live entrepreneurial risk there.

What white space do you see in the fitness landscape for a would-be entrepreneur?

Broadly speaking, I’d say experience and food. While there are lots of events out there already, all evidence points to the notion that millennials especially are choosing doing things rather than buying things. And I think it’s not just races, but vacations and retreats and festivals. A lot of private equity and venture capital money is headed toward experiences, in general.

And I think the movement toward healthier eating as an adjunct to healthier lifestyle is still in its early stages. We are more and more conscious about what we’re putting in our bodies, and that is going deeper into the mainstream.

What was the most interesting cautionary tale from the book?

Well, Lululemon certainly has some cautionary elements to it, given it’s wild ride as a publicly traded company, with a, shall we say, vocal founder and majority shareholder whose comments and actions have directly impacted the stock price. The company effectively invented a new fashion in “athleisure,” but its execution has not always been sharp.

Let’s end with the $1 billion question: What’s going to happen with the SoulCycle IPO?

I think it will eventually get out, but they don’t seem to be in much of a hurry. Nor do they need to be. Oddly, the rest of the market needs SoulCycle to go public more than the company itself does. What I mean by that is, SoulCycle makes a lot of money and has a very supportive ownership structure with Equinox and ultimately Related, neither of which are public themselves. The owners have already cashed out the majority of their positions—and done very well. So they can be patient.

But if I’m an investment banker or a private equity guy, I’d love to have a good comp out there to help me determine how to value a high-end boutique fitness company. There’s really nothing out there now.

This Q&A kicks off Alexia’s new column, Fit for Business. Each week she’ll take you behind-the-scenes with the most successful healthy-living entrepreneurs around the world, so you can learn what inspires them, what challenges them, and what it’s like to work in the world of wellness. Stay tuned for more!

Here’s why gyms are key to the fitness economy, according to Jason Kelly. And if you’re in need of more healthy reads, these are more of our favorite wellness-related summer releases

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