How Flywheel upcycled boutique fitness and at-home classes

Repeat Customer podcast, Season 2, Episode 8

When SoulCycle co-founder Ruth Zukerman abruptly left her groundbreaking boutique-fitness company, the question became whether she could strike gold a second time with a similar spin-class concept called Flywheel Sports. But then the challenge doubled when Peloton entered the market with a radical new at-home fitness option.

Zukerman describes the early days of boutique fitness and how her continued emphasis on the customer experience paid off for Flywheel. Stacey Artandi Seldin explains the integral role technology played in that success. Matt O'Connor outlines Flywheel's adoption of the latest trend: at-home streaming fitness classes. And fitness industry analyst Dana Macke provides an overview of how fitness has moved from big box gyms, to boutique studios, to interactive classes in our homes, and what lies beyond.

Repeat Customer is an original podcast from Zendesk about great customer experience.

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Transcript

[Kyle Axman]
Here we go, Tushy Tuesday, tap that tushy, two back, two front.

[Mio Adilman]
Tushy Tuesday? Whoa, I don't know if I can do this.

[Kyle Axman]
Here we go. Three, two, one, tushy.

[Mio Adilman]
But Kyle Axman isn't letting up.

[Kyle Axman]
So your legs are tired? Alright, we'll sleep when we're dead. Third position.

[Mio Adilman]
You see, Kyle is a Flywheel sports spin instructor ...

[Kyle Axman]
Zero holding back here at Flywheel sports ...

[Mio Adilman]
...but I'm not taking this class in one of Flywheel's boutique-fitness studios. This is going down at my house in my living room. I'm on a bike in real time.

[Kyle Axman]
It's only 15 seconds of your life. The beat is one, two, six.

[Mio Adilman]
...It feels like the last 15 seconds of my life, Kyle.

[Kyle Axman]
How we feeling team? Good, good. Warm up.

[Mio Adilman]
That was just a warmup?

[Mio Adilman]
Welcome to Repeat Customer, an original podcast from Zendesk about great customer experiences, how companies create them and why their super fans love them so much. Zendesk is a customer service and engagement platform and I'm Mio Adilman, peddling away here on a stationary bike, my legs and tushy on fire, just so I can explore the ongoing evolution of physical fitness from gym, to boutique studio, to our homes.

[Kyle Axman]
Inhale, exhale. We go in five, four, three, two, let's go.
[Mio Adilman]
Oh, not again.

[Mio Adilman]
Over the last couple of decades, how we exercise and where we exercise, the choices available to us have really changed and a big part of this disruption is a focus on the customer.

[Ruth Zukerman]
Flywheel is a boutique-fitness business where we offer indoor-cycling classes as well as barre classes, so we have Flywheel and FlyBarre.

[Mio Adilman]
This is Ruth Zukerman.

[Ruth Zukerman]
I am co founder of both SoulCycle and Flywheel.

[Mio Adilman]
Boutique fitness refers to a fairly small studio at least compared to a traditional gym and it specializes in just one, maybe two kinds of exercise classes. Flywheel also offers barre, which is a ballet workout, but their main thing is spinning.

[Ruth Zukerman]
A spinning class is typically 45 minutes to an hour. You literally get up on a stationary bicycle, you are strengthening physically, but you're also kind of going through a bit of a catharsis mentally and emotionally.

[Mio Adilman]
These days, there are lots of boutique-fitness options, not just spinning. Orangetheory and F45 offer high-intensity interval training, there's Barry's Bootcamp and then a bunch of smaller weight training storefronts and of course yoga and pilates studios. And you could say they all sort of owe their existence to Ruth Zukerman. Her businesses have played a huge role in the rise of boutique fitness, but before we hear her story, let's back up a bit because 15, 20 years ago, none of this existed. Except for maybe a few local yoga studios most people just went to the gym.

[Dana Macke]
At a standard big-box gym, what you're getting is a little less personal. So you can come and do anything you want, right? You can get on that treadmill, you can get on the elliptical, you can lift weights, you can get in the pool. A lot of variety, but not a lot of guidance.

[Mio Adilman]
Dana Macke studies consumer lifestyles for a company called Mintel.

[Dana Macke]
Pretty much anything people do with their leisure time and their leisure money, I get to ask them questions about it.

[Mio Adilman]
I spend my leisure money on one of those big-box gym memberships, but Dana says that isn't always what people want or need.

[Dana Macke]
A lot of people need more information. I don't know when my workout is done, I don't know what a warmup should be, I don't even know what type of exercise really I should be doing.

[Mio Adilman]
At my gym and probably yours, there are classes for that. Many of the same kinds of classes offered by boutique-fitness studios.

[Dana Macke]
The challenge that they have with the big-box gyms of getting more dedicated class members, is the instructor. They're paid very low. They probably run multiple different classes, so your spin instructor might also be your aerobics instructor, might also be your weightlifting instructor, so they're not really experts in one particular field and thus they can't really translate that expertise onto their clients.

[Mio Adilman]
Would you call that a pain point?

[Dana Macke]
I think it was an opening in the market, I don't think it was a pain point. I don't think anyone was recognizing, gosh, I'm going to this spin class, my spin instructor also moonlights as a yoga instructor, I don't think people really knew what they were missing out on.

[Mio Adilman]
And this was the opening that Flywheel founder Ruth Zuckerman walked into, or rather rode her bike into.

[Mio Adilman]
Ruth grew up on Long Island and dreamt of becoming a professional dancer.

[Ruth Zukerman]
Got out of school and moved to New York City, started the life of a struggling artist/dancer and it wasn't easy. About a year and a half to two years in, after a few stints here and there, I came to the difficult decision of giving up what was my passion and my goal for so many years.

[Mio Adilman]
And then, after her marriage ended, Ruth was an out-of-work, single mom of twin six-year-old girls.

[Ruth Zukerman]
And the judge looked at me and said, “Honey, you're going to have to go out and get a job."

[Mio Adilman]
Divorce, two young kids, back in the workforce after several years, that's a lot of stress.

[Ruth Zukerman]
I knew one of the ways to take care of myself was to work out. I kept going to the gym and that was when I noticed a spin class going on and I was very intrigued by it, yet very intimidated. And then for whatever reason one day, I just walked in and it was literally from my first spin class that I got addicted to it.

[Mio Adilman]
Why did you become addicted?

[Ruth Zukerman]
Because there were actually a lot of parallels to dancing even though you're just spinning wheels on a bike. But the parallels came into the importance of the music, the importance of the playlist. We were also moving in sync to the music, so if you will, there was a choreography element and then that mental component hit me, where I got off the bike when it was finished, and I suddenly felt empowered as if I could tackle the challenges that were going to come at me that day.

[Mio Adilman]
Ruth discovered spinning at her local Reebok Gym in New York and soon became an instructor, and that's when she also discovered some of the limitations of traditional gym classes.

[Ruth Zukerman]
In a big-box gym, they're just not going to get the same personal attention.

[Ruth Zukerman]
During the five years that I taught at Reebok, that was my time to kind of hone my method, making a point of learning everyone's name, making a point of listening to them and talking to them after class, and sure enough, the lines just started getting longer and longer for my class because people want to be noticed and people want to be rewarded. There will always be a need for human connection and I think in this day and age, we just have to even make more of an effort to do it.

[Mio Adilman]
As she made deeper connections with her students, Ruth noticed something.

[Ruth Zukerman]
We were at Reebok, this beautiful full service gym that offered everything you can imagine, but spinners only came to spin class. I started to think about the possibility of having a boutique-fitness business dedicated only to spin.

[Mio Adilman]
A couple of her students felt the same way and decided to invest.

[Ruth Zukerman]
And that was the beginnings of SoulCycle.

[Mio Adilman]
In 2006, Ruth Zukerman opened the first SoulCycle on the upper west side in a small studio. Instead of a traditional gym membership, which went for 50, 60 bucks a month, SoulCycle charge people half of that per class, but people didn't mind paying.

[Ruth Zukerman]
The argument is, the community. It's as simple as that, and it's the attention—the personal attention—that the customer gets.

[Mio Adilman]
For the first time riders had their own dedicated space.

[Dana Macke]
There really is something tribal about that experience. You're sweating, you're breathing, you're all moving to the same beat, I mean, literally elbow-to-elbow with other people.

[Mio Adilman]
Dana Macke, the fitness-industry expert also describes a space unlike normal gyms designed for riders and their instructors.

[Dana Macke]
The lighting is dim, the candles are on, it's a time and a place. You know your instructor, the music is curated specially for that class, especially for that workout, especially for you. They have excellent customer service. It's more akin to a spa experience because you adjust your own resistance and your own cadence, what you're there for is the experience and a lot of that is the performance, even the instructors too. They're motivating you and there they're encouraging you. It's about you are an amazing person, you are here for a reason, we're all in this together.

[Mio Adilman]
Ruth was offering almost a spiritual connection on wheels.

[Ruth Zukerman]
More times than not, a rider would approach me, or two riders at the end of class and say, “Oh my God, I can't believe you were talking about such and such. I felt like you were speaking directly to me because I just went through that this week.” If I wasn't afraid to make myself vulnerable, that's how I resonated with people. They want to know at the end of the day that whatever they're going through, they're not alone.

[Kyle Axman]
...In three, two, one grab a little water. Woo!

[Mio Adilman]
SoulCycle became a cultural phenomenon, like really trendy, by introducing a new customer experience at exactly the right time.

[Dana Macke]
Wellness is a growing part of leisure every single year. We see it grow in terms of its importance in how consumers are framing everything they do, from the types of jobs they take, from the types of job perks they're looking for, but also how they spend their free time.

[Mio Adilman]
But there were other cultural factors at play too.

[Dana Macke]
When I'm on my social media, I'm actively looking for things to fill in my profile. What am I beyond this is my name, and this is what I do, and this is how old I am? I am also, I'm a SoulCycle person, or I'm a CrossFit person, or I'm a yoga person. And then also say culturally we've seen really with younger consumers under the age of 45 a decline in social experience, or religious affiliation, and so they're looking for something to fill that void and I think boutique fitness does a really good job of doing that.

[Mio Adilman]
It's kind of amazing, the broader experience a customer can get just from something like boutique fitness. But looking back, this was only the first step in what would be a more complex shift, because three years into SoulCycle, the brand still totally on fire, Ruth Zukerman left over a business disagreement with her co founders. All of a sudden that connection she had worked so hard to build evaporated.

[Kyle Axman]
In three, a two, a one, a go 20. 20 seconds of your life.

[Ruth Zukerman]
As challenging as it can be to be second in the market, which is what Flywheel was, it's also a huge advantage because I was able to learn from my first experience at SoulCycle, which parts of the business worked and which didn't.

[Mio Adilman]
In 2010, Ruth quickly launched Flywheel Sports with a couple of new partners. Man, you know, this is something we've never looked at before. A founder develops a winning customer experience but then moves on and tries to develop another winning experience in the same industry, not easy. In this case, Ruth started with the studio design. Flywheel put its bikes in a stadium layout.

[Ruth Zukerman]
By doing that, the instructor can see every single rider and every single rider can see the instructor. Typically, when everyone was on the same level, you couldn't. I can give shout outs, include everyone, see if someone's form is off and if it is, I can walk over to them and correct it.

[Mio Adilman]
SoulCycle had promoted a cult of personality around its instructors.

[Ruth Zukerman]
They kind of turned into this aura of the club you can't get into, but if you got in, you felt really good.

[Kyle Axman]
Three, two, saddle, you're not done yet.

[Mio Adilman]
The teachers basically became like rock stars, and the in-class focus stirred the shift them, the better riders sat up front hoping to get their attention.

[Ruth Zukerman]
And it worked, and people loved it and gravitated toward it. But there is a whole other set of riders out there that really benefited from having the attention put on them, and they didn't want that kind of experience. When I started Flywheel, I wanted it to be about inclusivity.

[Mio Adilman]
To encourage the less-experienced riders, Flywheel took it another step further.

[Ruth Zukerman]
We rode in the dark. There was a spotlight on the instructor, but it was pretty dark in the rest of the stadium. And we did that intentionally because spinning had a reputation of being intimidating.

[Logan Stewart]
It's cool because even when you're like in the back row and you're trying to hide because it's a dark studio, and they take that time in the middle of, like, a high-energy class to acknowledge you and get in front of class and say what a great job you're doing.

[Mio Adilman]
Logan Stewart followed her favorite teacher from the Y in Charlotte, North Carolina to Flywheel.

[Logan Stewart]
They may make suggestions like, you know, do this, you know, increase your pace, whatever. But it's always done in a very positive way.

[Mio Adilman]
So Flywheel created a homier alternative to the clubby SoulCycle, hoping to appeal to more people. But the next thing it did completely changed the boutique-fitness industry.

[Stacey Seldin]
The very core of the experience at Flywheel was, what happens on the bike, the workout itself. And so in that regard, Ruth was the mastermind. Where we started to enhance that was to say, how can we make that better?

[Mio Adilman]
That's Stacey Artandi Seldin.

[Stacey Seldin]
At Flywheel, we were the first ones to ever put the computer on the bike in a classroom setting and measure what was going on in class. We also created something called the torque board, which was effectively a big-screen TV that was a leaderboard.

[Mio Adilman]
Stacey is now CEO of Mariana Tech, a business-management platform for the boutique-fitness industry. But until 2014, she ran technology at Flywheel. Her team wired the bikes to help better gauge your resistance and speed.

[Stacey Seldin]
We created a proprietary measure called Power, which was a function of the tension and the RPMs over the course of the whole workout. And so people at the end would have a Power score, and that became the sort of linchpin for all of the metrics. You know, if you had three classes in a row, where your lower score got as high as 242, and you've got to choose where your next workout is—are you going to yoga class, or are you going to try to break 250 at Flywheel?

[Mio Adilman]
The metrics appear on your bike's display. And if you wish to compete with others, they appear on that torque board, which compares you to other riders in the class. The competitive element was extremely popular.

[Stacey Seldin]
Everybody has some goal, and they're not necessarily competing with that sort of, you know, super stud on the bike next to them, they're typically competing with themselves. And that was the magic I think, when we really kind of honed in on that, it's not about who's top of the torque board, it's really about however you define your goals, you can measure them at Flywheel.

[Mio Adilman]
Your stats also appear somewhere else.

[Stacey Seldin]
We captured all the data of every ride in every class, and so we would transmit that data to your own personal account, too. So every customer had all their stats in one place that they could track both on the website, but in particular on the app.

[Mio Adilman]
It's notable that Flywheel was first to market with a boutique-fitness app even before a lot of fitness tracking apps.

[Stacey Seldin]
Wherever you may be, you can just take out your phone, open that app and book a class in a couple, literally a couple of clicks.

[Mio Adilman]
At the time, fitness tech, especially on the business-management side, wasn't so great. Older digital systems treated each studio as a silo.

[Stacey Seldin]
As the franchising started and as the multiunit businesses like Flywheel, and SoulCycle and Barry's Bootcamp were growing, the technology need was changing dramatically. Can you imagine having to have 10 accounts to go to Starbucks?

[Mio Adilman]
This new frictionless customer experience totally established Flywheel as a major boutique-fitness brand.

[Stacey Seldin]
Within two weeks of releasing the app in the App Store, more than half the reservations were being made on the app itself. When we saw that, I remember our jaws really dropped. We saw that our best customers were coming back more often, they were making more reservations, they were happier about it and they were just taking more classes and making more transactions.

[Mio Adilman]
Flywheel grew to 42 studios with plans for more. But then a few years ago, a new trend hit the industry, one that posed a pretty serious threat to boutique fitness. And one you didn't have to leave your house for.

[Dana Macke]
I'm going to show my age here, but in the ‘80s, you know everyone worked out at home with their VHS tape. So you had Jane Fonda, which is best-selling workout I think of all time, up in the millions, so everyone was doing this at-home workout. And then a lot of the iterations that came since, Tae Bo in the ‘90s, for you ‘90s people out there, have been really a spin on that very basic premise is, where you're going to watch someone show you exercise instruction at home and you're going to follow along.

[Mio Adilman]
One of the biggest challenges for anyone who exercises is how to stay motivated and keep exercising. Resolutions go unmet, gym memberships go unused, equipment ends up on the curb, that's why fitness fads disappear so quickly, but the industry keeps churning out new systems, new gadgets as quickly as we can come up with excuses. The biggest excuse, the most convenient excuse is time, life gets busy. So a lot of the marketing is around at-home fitness, save time, workout at home with your Bowflex. But if I'm reading Ruth Zukerman's story right, exercise is harder to do in isolation, it benefits from community, connection.

[Dana Macke]
So the next step in this fitness evolution really is Peloton bringing that studio experience into the home with their Peloton bike and the streaming service that allowed you to connect to that studio experience from the comfort of your living room or even your basement.

[Mio Adilman]
In 2014, a company called Peloton started beaming classes into its web-connected bikes in people's homes.

[Dana Macke]
Is it that different from what we saw in the ‘80s?

[Mio Adilman]
Good question, because just like you weren't in the same room as Jane Fonda in the ‘80s, or doing Tae Bo in the same room as Billy Blanks in the ‘90s, you still aren't in the room with your Internet-enabled spin instructor and fellow classmates. But when Peloton really started to take off a couple of years ago, Flywheel followed them into people's homes, which was great for riders like Logan Stewart whose lives were getting in the way of getting to the studio.

[Logan Stewart]
I was so addicted to Flywheel and going to the studio. It was like a mourning period. Great that I'm having the baby, but I'm not going to be able to go to the studio, at least not for the first year, whatever, and I was honestly kind of depressed about it, so you know I didn't...I was excited they had the at-home bike, but I didn't know how that experience would compare to going into the studio.

[Mio Adilman]
The challenge became how to recreate everything amazing that Ruth Zukerman and Stacey Artandi Seldin had built. Remember, this is about connection, not just connectivity.

[Matt O'Connor]
I want to say that the Flywheel Home Bike brings the magic and the power of the Flywheel studio experience right to the comfort and convenience of the consumer's home.

[Mio Adilman]
That's Matt O'Connor, general manager of Flywheel's at-home bike business.

[Matt O'Connor]
The Bluetooth basically connects the bike's sensors to the software, to power the metrics on the home bike. Your metrics as a rider track across any class you take at home or in studio, and this is really a differentiator for Flywheel.

[Mio Adilman]
Flywheel is the only boutique-fitness business that offers both broad access to in-studio classes and at-home lessons. You can go back and forth. The bike costs in the $2,000 range and the at-home membership is by subscription, but one membership includes three family members, and they'll discount you if you go to an actual studio.

[Matt O'Connor]
We have a state-of-the-art production studio here in New York, where we film studio classes every day.

[Kyle Axman]
You got four, three, two, I love you guys. Take your speed ...

[Mio Adilman]
Like Peloton, at-home members can come to New York to ride during a film class for free.

[Matt O'Connor]
We make a couple different versions of our bike, one of which comes with an included tablet, included screen, that's where you access the Flywheel content library of all of our live and on-demand classes.

[Mio Adilman]
2,000 classes and counting with more class-length options than in studio. I mean, you can do a quick 20 minutes if that's all you have.

[Matt O'Connor]
One of the things that actually differentiates us from other people in the connected home bike space is that we also make a version of the bike where you can use your own device.

[Jay Lehman]
Let me just power up the TV real quick. Yeah, I'll just show you what it looks like.

[Mio Adilman]
Flywheel member Jay Lehman is showing me his at-home setup.

[Jay Lehman]
You bring your own device and stream from an Android phone or an IOS device, and then you can cast it up to your TV. I'll just go down and do my screen mirror.

[Mio Adilman]
Logan Stewart in North Carolina does something similar.

[Logan Stewart]
So I've put it in our rec room and I can turn the lights off in there. And it actually simulated like a studio. So all the lights are off except for the screen.

[Mio Adilman]
I got to tell you, I'm so old school when it comes to workouts, two dumbbells and no spandex for me. So this all looks like the Starship Enterprise, but at this point Jay and Logan are still alone on their bikes. Where's that sense of community?

[Jay Lehman]
If you're riding the live class, you're watching the coach live and they know who's riding live. So you'll get shout outs from the coach that's out there.

[Kyle Axman]
My girl Karen in Minneapolis is doubling up with me on our two-fer Tuesday.

[Mio Adilman]
Now we're getting somewhere. Because the bike is wired and tracking Jay's data, the teacher can see that Jay is riding the live class and can speak directly to him. That one way communication in those fitness cassettes in the ‘80s and ‘90s is now a streaming, two-way conversation.

[Jay Lehman]
And that's kind of cool. That's motivating in itself because here I am in Dallas, Texas and the coach is in New York City. My favorite is a guy named Kyle Axman.

[Mio Adilman]
Arg, my nemesis, Kyle Axman, that tushy Tuesday instructor.

[Kyle Axman]
Tap that tushy two back, two front.

[Jay Lehman]
He's really high energy, always positive, he'll actually shout my first and last name out because he knows that I ride him a lot. So ...

[Mio Adilman]
In between classes, the at-home riders talk to each other on another platform.

[Matt O'Connor]
We have a bunch of riders in our community who engage with each other in a Facebook group that actually was started by one of the riders on the platform.

[Jay Lehman]
You know, we discuss a lot of things on that Facebook community and it's kind of that virtual family at that point. We get together and we talk about, we'd love to see this type of themed ride, or how do I do this? If we've seen it before, we can help each other out versus having to go through and get official support. Especially if it's a class that there's somebody that I would compete against, I'd go out there and say, "That was a really good ride, thanks for pushing me."

[Matt O'Connor]
It's really awesome to see it happen organically outside of us even really touching it. We love to get those inputs because then we're able to make the product better. We're developing content offerings for example, based on the input of our riders, and our instructors are also active participants in the Facebook community.

[Mio Adilman]
The instructors will draw up personalized ride programs for interested at-home members and there are other at-home exclusives like a digital pacing guide, and you can create your own competitive packs with other riders. But I'm a long way from doing that. I'm just trying to get through this ride.

[Kyle Axman]
You have 15 seconds left to a big recovery, run to the bottom of our hill, run, run, run, run. Nice...

[Mio Adilman]
When we got into this fitness business, I honestly had no idea how diverse it was. I find Flywheel particularly fascinating because it has figured out how to combine the best of in-studio and at-home, and it has fused leading tech onto something as analog as a bicycle, through not one but two disruptions. I mean, there's a growing number of at-home options, other bike ones, and a full-body training, one called Tonal, streaming apps, but they don't have a bricks-and-mortar component. So I wonder how they're maintaining a good community vibe, or maybe that will become less important over time if the future materializes the way Dana Macke sees it.

[Dana Macke]
I'm kind of taking a long view here of what the future of at-home fitness looks like and this is my ideal future. The next step change in the streaming is going to be this virtual reality or augmented-reality perspective, that's going to be the next step. Getting you closer to that studio experience at home. What I would love to do is wake up in the morning and then put on my VR headset, which is becoming more and more affordable through oculus rift, and meet my friends who live in Los Angeles for our morning spin together. So really connecting people where I can see them and talk to them, and even have a private class with them without leaving my home.

[Kyle Axman]
...She's back for more with Avi and Liz, the trifecta.

[Mio Adilman]
Which brings me back to the class I'm taking at my house.

[Kyle Axman]
Tap that tushy, two back, two front...

[Mio Adilman]
That butt thing just kills me. It makes me so angry.

[Ruth Zukerman]
I understand.

[Mio Adilman]
It drives me crazy.

[Ruth Zukerman]
I remember the first spin class I ever took, and you're right. They started coming up off the saddle and I literally tried it and thought I was going to throw up and really questioned like, how are they doing that? But then it just happens.

[Mio Adilman]
All I know is, it better happen soon. I'm on this bike for another 20 minutes. Wish me luck and thanks for listening.