SoulCycle: Julie Rice & Elizabeth Cutler (2019)

So, really quick, we're running a super fun episode from the archive this week. It's a story of Julie Rice and Elizabeth Cutler of SoulCycle. And like many fitness companies during the pandemic, SoulCycle has moved lots of its classes outdoors to rooftops and parking lots, you name it. But of course, SoulCycle started as just one indoor space. with IKEA furniture and a rickshaw out front for advertising. And how Julie and Elizabet grew it from there? It's a pretty great story.

And I hope you enjoy it. I'll never forget. The first time I took my parents t they came to the studio, my my dad looked around and and my mom sort of opened doors and and peeked under desks, and my dad looks around, he says to me, No showers. Who is gonna come here? Uh

I thought this this is not a battle worth fighting. From NPR is how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. Guy Raz and on the show today How two women with no background in fitness set up some stationary bikes? Dim the lights, boosted the music.

And built a multi milion dollar business? Called Soul Cycle. Okay, so imagine going to an electronic dance show, right? The music's throbbing, the lights are flashing, the DJ is twisting the knobs on his computer. Everyone is moving to the music, turning and swaying and sweating and

Oh yeah, you are doing all of this? On a stationary bicycle. That Basically. His soul cycle.

an indoor cycling business that grew from one little studio in New York in 2006 to nearly ninety today. And when it sold to a larger company about 10 years after it started, the founders walked away with$90 million. Each.

And if you haven't heard of Soul Cycle, well It's one of those fitness companies that people get super excited about. Like, if you have a friend who happens to be a devotee, Be careful because once they get started, they can go on and on about the celebrity style instructors, the scente candles in the studio, the merch, the music. And that sense of loyalty, of near tribal devotion

is kind of what the founders of SoulCycle envisioned when they set out to build it. Julie Rice and Elizabeth Cutler met in New York in 2005. At the time, Julie was working as a talent agent and Elizabeth was doing acupuncture and real estate on the side. They were both in their thirties, and both of them married with young children at home.

but they were also hungry to start something new in their lives. Here's Elizabeth. After our second daughter was born. I started to really have this strong an entrepreneurial urge. And I w I really wanted to dig into something. And I kept on thinking about

the the struggles that I had gone through in having the kids and how much weight I had gained and how difficult it was for me to l to lose it and And I joined gyms. I went everywhere. I begged friends of mine who belonged to other gyms to take me as their guest so I could try the classes. I really wanted to find my class. And I couldn't find it. What was w what was wrong with them? For me. what was going on in there. It just wasn't inspiring. People would play the same pl playlist over and over, they would phone it in, it was super boring. It was I remember somebody yelling at me, Pretend there's an eight hundred pound gorilla on your chest. And I thought to myself, Are you really kidding me right now? Techno music and people that looked at themselves in the mirror. Oh my God. Yeah. You know the bright

Bright lights and bad smells and people walking in and out of class. Exactly. So uh J Julie, did I guess you kinda found yourself in in kind of a similar situation'cause you had moved to New York from from California Um, I guess in in two thousand two. Wha wh what was going on in in your life at the time when you guys met? Well I I really missed what I had had in Los Angeles in terms of an exercise community

Exercise for me, it was social. It was a huge part of the way that I connected with people. It was a big part of the way that I spent my time bonding with my friends. We would go hiking. I can think about some of the most important moments that we had together, having really deep talks, going up a mountain and then solving the problems coming down the other side of that mountain. And I got to New York and All I could really find were uh gym classes and boot camps where you were definitely gonna burn some calories but not get much more out of it than that. And Julie, when you um I mean you were a town agent.

At this time, before you long before you meet Elizabeth. Do you remember starting to think I think I want to start a business. I I I definitely didn't think oh I want to start a business. But what I did think was that

In Los Angeles There was b some boutique fitness that was starting to happen. In New York nothing like that existed. And I had been I had taken some indoor cycling classes in Los Angeles and I had been I I really actually loved it and I had found a community in a small studio there. And because I had been in a business where

you know, I built businesses out of people, I kept thinking about how this could be different and how could this could be marketed differently and positioned differently and what would make this unique. And it could be about empowerment rather than about putting pressure on yourself. And so it wasn't that I just had this need to start a business. I had a need for a very particular business. It was really more about a need for a product than it was oh, I just want to be an entrepreneur. But Julie, a lot of people have ideas, right? Like like I I I've walked into like kombucha shops and thought, I could do a better kombucha shop than this, you know I and then I might talk to a friend and say, you know, I I just I kinda wanna do a kombucha shop. But then I just move on and I keep doing my shows. Like did you start to say to people I I'm really intrigued about Like doing a cycling studio. They have these in LA and I think

Would is that what happened? Did you start to talk to people? I did. I started to say it first to my husband, who told me I was insane, and then to my parents who told me that I had good health insurance. And then to a couple of friends who told me that, you know, they love the gyms that they belonged to, and why would anybody ever do something like that? Um but it was one of those things that just would not go away from me. It was one of those things, especially because exercise was such a daily ritual of mine. That every day I would wake up and try some sort of an exercise, leave feeling unfulfilled, and go back to thinking about this idea again.

Mm And remember, what made it one uh you know one notch even more difficult was that I was talking about charging people to pay per class for this, whereas gyms already offered cycling classes. They were on the buffet, they were included in memberships. Exactly. There were plenty of them around. Exactly. And Elizabeth, in parallel, a parallel universe you were living in, also in New York City, not knowing Julie. Were you thinking

Hey. we could I I wanna do a cycling studio, or was it much more sort of Abstract than that. No, I was I was thinking that I wanted to start an indoor cycling studio because what I felt like I could find on that bike wasn't out there.

and I started researching what it would take to open one and I I started talking to a couple of friends. And one of my friends said, You know, I really don't have the heart to tell you this, but you know spinning is over. Over. It's over two thousand five. It was over. It was over. It had it had been really popular in the nineteen nineties for outdoor cyclists, um, but had not and it had mainstreamed in gyms for sure.

But that trend had kind of fallen off and he just said there you'll never make anything happen out of this. Were either of you guys like I don't know. A little bit embarrassed when when you would talk about it and people kind of sort of Say uh

Make sense to me. I I was not embarrassed. I was for sure doing this. This was a calling. This was definitely happening. My husband told me I was gonna ruin my life and I was gonna work twenty four seven and I said, I I I'm gonna handle this. It's gonna be fine. I was I was also not embarrassed. I had such conviction in this idea that this was something that was definitely gonna work. My husband was definitely embarrassed, and I can remember several times before we went out to dinner, he would say, Please don't talk to my friends about it. Don't talk about this weird thing. But I think for me, you know, it was meeting Elizabeth that really allowed me to take the leap. I'm not a hun I'm not I'm not as quite I'm not quite as convinced that if I had just been on my own that I wouldn't have been, you know, l like you at the kombucha shop. But but the two of you ended up meeting. How did that happen? How did you even

Get connected. Well, I had been taking this woman's class, an indoor cycling class out in East Hampton. And I tried to find one in the city. And eventually I ended up uh as a guest at uh class at at uh one of the clubs uptown in New York, which is near Julie's apartment and I met this teacher that I liked and I talked to her after class. I said, Listen, I'm thinking about starting into recycling studio and she said it's really funny. There's another woman who takes my class on Saturday and she's been talking to me about the same thing. You two we should go to lunch.

That way so she said you should contact her and and and what happened? Like She gave you her number or We went to lunch. All three of us. Uh and my husband. So the four of us had lunch. Yeah. And Julie and I started talking and we just Clicked. Why? What do you like about her? We

We You know, we very quickly discussed we both had uh babies that were the same age and we made some small talk and then I think we quickly got to a conversation that was that was even more philosophical than just what we wanted to open. I think that we fundamentally saw two different things. I think we both felt that exercise did not have to be torture. That it could be joyful.

And that by creating a place that was chic and that was aspirational. And turning our instructors into more like spiritual gurus than being drill camp. Sargent. uh we felt that we could really create something that people would value. and then at the same time we could create a new product. I mean there was no marketplace in New York at the time. There was no opportunity to take pay per class fitness. At the time we were talking about two thousand and five. There were some yoga studios, but other than that,

You know, the model for gyms, and this is a lot of what we talked about. We talked about how the traditional gym model was. Take your credit card, charge you for a monthly membership, hope that you don't show up. So that then you can, you know, add more people's memberships, you know, trying to understand what the utilization rate of your gym was. We said, you know what, we're so confident that we can make people feel good, that we are gonna challenge ourselves every time. Every time you come, you'll have a great experience because you'll have to pay all over again to come back. So you're at this lunch and and And what you say?

Hey, let's do it. You just like leave the lunch and you're like, let's do this. Yes, that's exactly right. Yes, so so we leave so we leave the lunch. And you know, I leave, I get in the cab, my cell phone rings. And Elizabeth says to me, Okay, here was here's what's gonna happen. I'm gonna look for real estate and you research towels and I'm gonna call you on Thursday.

And true to her word, Thursday the phone rang, and she said, I found something on Craigslist. It's on West 72nd Street. You should meet me there tomorrow. And on Thursday we met at the studio at what would become our first Soul Cycle studio. It was an old dance studio that they were subletting for five years we could take a sublease on it. The entire thing was about twelve hundred square feet. And we walked through and we looked at each other and we said, It's perfect.

You signed a five year lease like Pretty soon after? Yes. Within three weeks we had s had the lease signed. How f okay, let's just pause for a second.

'Cause I wanna break this down a little bit. Like did you do formal partnership agreement, did you do all that stuff, or was it still pretty much handshake, like You and me are partners and we're just gonna figure it out. So At lunch that day, the woman that introduced us.

The uh Ruth, our f the fitness instructor, our third partner and I were friends. And so we decided at the end of the lunch that we each brought a really particular skill set to the business. And she was going to be the fitness instructor and she was gonna help us to find other teachers and help us to create the program because neither of us had ever created anything in fitness before. And Elizabeth was going to work on all of our design. and all of our business and all of our technology. We were gonna work on the branding together, Elizabeth and I, since we had such a similar vision, and I was gonna work on the people. I was gonna do the PR, I was gonna train the studio staff. And so that's the way that we were gonna divide the business. And Julie did you have any Money at that time? Did you have like

wealth or personal and you know, like a huge stash of cash? So ironically, I I had actually no cash at all. Um one of my very close girlfriends had just gotten married and she had one of the great last the the last great rent control apartments left in New York City. It was a first floor walk up Over Harry's burrito on the corner of West Seventy First Street and Columbus Avenue. And she was nice enough to say, you know what, for for as long as we can keep the lease, why don't you take the sublet? And so it was nine hundred and something dollars a month. Wow. And um that apartment really allowed

me to take that kind of a risk. We had a five month old baby at the time. So you quit your job? I did. Well I worked. I worked while we planned Soul Cycle. We met in January. We met in January and we opened SoulCycle in April. And and did your husband, Julie, did he continue did he have a job at the time? It was actually perfect timing because he had just gotten a new job. He had just figured out a way to switch careers. We had this$900 a month apartment. And I remember at the time. Uh we cut up our credit cards. And on every Sunday night Spencer would hand me an envelope with two hundred dollars in cash.

And he would say, Here's your money for the week. And so I you know, I remember you know, with my baby folding up the the the stroller and taking it on the crosstown bus and you know, Starbucks wasn't really an option. I drank a lot of coffee at home and all of those things, it's it's amazing. It's it's it's it's amazing how quickly two hundred dollars can go in New York City when you're walking down the street every day. But but we did it. We really We we we did it because it was something that we really had well, I really had conviction of and he and he's always been really supportive. Two hundred bucks a week. And uh Elizabeth, did you did you guys have any money?

Um I had ha I had bought a little uh studio apartment and I had recently sold it, so I had about a hundred thousand dollars. And then Alan, my husband, had a great job working at this investment bank called Lehman Brothers. Um and so I said to him, I said, I really want to start this business. And he said, I d I get it. If you wanna do it, I you know Let's we can do it. So we took two hundred and fifty thousand dollars um and and started and started SoulCycle with that. And we built the studio out inexpensively. Uh we built a uh a website, you know, reasonably inexpensively, I feel like we got a lot done for two hundred and fifty thousand dollars. And the worst thing that could happen was that In five years, Julie and I could look at each other and say, You know what, we tried it and it didn't work.

But we would give it, we would we would commit to that period of time. So in that way it didn't really feel like a huge risk. Yeah, that's I'm curious. Y when you sign a five year lease, what do you what do they want from you? How much do they want like six months rent? Like how does that work? I think we gave them three months security. Uh and the rent on the on the studio was five thousand dollars a month. Oh, so that's p s upper west side of New York, that's not bad. Well, it was hidden in the rear lobby of a former mortuary, so it was not a very fancy location.

You wait and and then what? Like how? I mean you had to start of Get the bicycles and get furniture and like that must have taken Some time, right?

It w took a little time, but it really didn't take that much time. There wasn't a huge build out to do, which one is one of the things that we liked about the space. And our front desk, our original front desk, had no access to it. So you either had to climb over it to get behind the front desk, or vice versa. Or you had to walk through the studio to get behind the front desk. It was it was very uh We built f we built from Ikea. You know, and we we um and we had a we had a huge mural on the back wall that was reflected in the mirror that was of a a road probably Texas, like one of those roads that just goes straight into the horizon. And we thought that that was like a metaphor for the journey of getting on the bike.

Oh, and we planted some bamboo outside the window so that in the press release we could write that we had a Zen garden. Oh I see, I got you. Okay. Forgot about the bamboo. And how did you come up with the name Soul Cycle? It was neither of us. We had been thinking for a long time, we had a lot of really bad names. And then we had been thinking for some of the names. Cycle M Y C. They were not good. They were not good at all. And I kept on saying to my husband, I really I kept on describing that the f the feeling that I wanted to have when I was on the bike and when I got off the bike. And he got out of the shower one day and he's like, What about Soul Cycle? It was like that? What about Soul Cycle? Yes. Yes. It was like that. You could have paid a branding company hundreds of thousands of dollars. He was just like shaving in the mirror and it's like what about Soul Cycle?

That's what happened. before you even open the doors, like in this period of time where you're like between when you sign the lease and when you're building it out and building the Akita furniture and Did the three of you like sit around and say This is gonna be huge. We are gonna French do it, it's gonna be all over the country. It's gonna be massive. Like was that your ambition, or was your ambition to just make this one studio and see what happens? All three of us were ambitious. I don't think you can ever say we weren't ambitious, but when Elizabeth and I first saw the space, we went across the street to Starbucks and we wrote our business plan. And our business plan was that if we could see between seventy five and a hundred people a day. Julie, it's always been a hundred. I always thought it was seventy five, or really. No, but so you know, we wrote on the back of this napkin, which Elizabeth has framed in her office, and it it it shows that if if we can see a hundred riders a day

you know, that we would have enough money to, you know, pay our rent, to pay the minimal staff that we had, to keep the lights on, and have a little bit of money left over to pay for, you know, people that were helping us raise our children. And that was really our goal. Yeah. So explain something to me because of course SoulCycle was not the first spin c cycle studio in in the world. They they exist it. Not not But What I mean, what was it that was going to make it different? I mean I know

you talk about community and and and I I get that, but but specifically like was the music gonna be different? Was the were the lights gonna be different? Was the the f the the the design, the like the experience going to be so different that people would have to go to SoulCycle because they just needed it. Yeah. Well, the first thing was that we were gonna have technology so that people could

It was two thousand six. So this sounds crazy to talk about now, but there were n very few booking apps out there, if any. And we felt that in order to become part of someone's life, we had to help them plan their weeks. So we worked on this booking app. You could get on your computer at noon on Monday and you could sign up for your classes for the week. And in that way you would know what you had to look forward to. And the second part was the people who worked at the front desk were trained to remember your name, to ask about your vacation, to remember if you liked your water, room temperature, or cold. We wanted people to cross the threshold of of uh the studio and feel like they had gone from the crazy, you know, world of hustle that is New York City and that they had walked into a place that was fun, that was a sanctuary, and that was a place that welcomed everyone.

Before you even opened up. How how did you determine what you would charge? Did you look at like Like w y did you look at like how many people you needed per day and rent and like how did you come up with the number and then what what initially were you were you charging? We started at twenty seven dollars a class. Uh, we thought about it as two cocktails or inexpensive personal training.

Because we w we thought it was actually important for people to pay for the class because people value what they pay for. And if they pay for something, then when they walk in the front door and they participate, they're gonna bring something different than if they aren't paying for it. And Julie, w was the idea that just like open the doors and put some balloons out and hope people come in or or did you how did you get even get people to n to know that this was gonna be there? So We did a few things. We we made postcards and we went door to door. I remember pushing my baby carriage around the upper west side and sort of you know making friends with doormen, hoping they would let me in and put flyers in mailrooms and asking other business owners if it would be okay if I left some postcards near their counters. But then we had one other plan, which was when we were all done building

the front desk and we'd s saved enough money so that we had enough of a run rate for a year. Elizabeth looked at me and said, Okay, we have twenty five hundred dollars left over, what do you want to do for marketing? And so we we decided that we were gonna make a T shirt. At the time people were just starting to come around to the concept of swag. And we printed this yellow camouflage T shirt with the logo of the wheel on it. And I rem and it said Soul Cycle Over it. And I remember Taking the first T shirt out of the that batch and I looked at Elizabeth and I said,

You know, one day it's not even gonna need to say soul cycle. It's just gonna be like the Nike swoosh. People are just gonna know what it stands for. And we were like, Yeah, yeah, it is. That's definitely gonna happen. And so we decided we decided that we would make two hundred and fifty T shirts and we would try to get, you know, the two hundred and fifty, you know, coolest people in New York City to wear them so that there could become some sort of brand recognition. And looking back on it, it's kind of funny to think that 250 of anything could make an impact on. And so we put on cute outfits and we thought, oh great, today's the day that we're gonna deliver the package to the editor of Glamour, thinking that somebody was gonna let us upstairs to hand deliver a package. Sure. I mean, little did we know that we would now spend the next two weeks in cars getting, you know, re-rooted from front mail desks to back alleyways where you're allowed to actually drop off packages that may or So then uh you g I guess you you finally Get ready to to to open. That's right. A yeah, April twenty sixth, two thousand six.

And I'll never forget, uh the first time I took my parents they came to the studio, my my dad looked around and and my mom sort of, you know open doors and and peek under desks and my dad looks around he says to me, No showers. Who is gonna come here? I thought this this is not a battle worth fighting.

When we come back. Julie Rice and Elizabeth Cutler grew that No Shower Bike Studio into a big business. Why they sold it. and what it was like to leave it all behind them. Stay with us.

I'm Guy Raz and you're listening to How I Built This. From NPR. Welcome back to how I built this from NPR. So it's 2006, and Elizabeth Cutler and Julie Rice have just opened their first SoulCycle Studio in New York. and they're facing a problem that many brick and mortar businesses face.

Getting people on the street to actually take notice. And come in. So Julie Elizabeth They had to get creative. Elizabeth bought a rickshaw on eBay.

And she spray painted the rickshaw yellow and silver. And we put a sign on it that said Soul Cycle with an arrow pointing to the front door because you put this on the on the sidewalk. On the sidewalk because you know we didn't have a sign and so if if you know starting a business in New York City Um without the ability to use the density of the passer buyers on the street as sort of a disadvantage. And you did not have a sign because why? Because when we had signed our lease, we had sort of our landlord had pulled a bait and switch. When he told us he had a sign, he meant that it would be on an interior door in the rear body.

And so you took a rickshaw and said Soul Cycle this way and you just parked it on the sidewalk. So we chained it up to a parking meter. chain lock like that you would put a around a motorcycle. We did. And unfortunately the community board did not really like the rickshaw in the middle of the street. So we would get a ticket for$65 a day for each day that the rickshaw was chained up to that parking meter. But what we w what we quickly did was we we studied the traffic patterns outside because$65 a day was actually lot to us. You know, some of our classes had nobody in them and some of them had two people. That could be, you know, the whole price of the earnings of what we made on on running a whole class. And so We learned that you know Saturdays it might make sense to put the Rickshaw out there because there would be a lot of traffic walking by, foot traffic to and from Central Park. But maybe Wednesdays around lunchtime on the Upper West Side, not so busy, not worth the$65 ticket. And so we w we would put out our marketing vehicle on days that we thought the returns would be good.

And uh that was that. So so this is a slow burn. People are coming in Um and I don't know, was like uh Julie, was your husband like, Hey, you know I'm nervous. We got this apartment and I got this job, I'm not making that much and You know, you quit your job like

Are you sure about this? Did he ever say that? Well in in fairness, it was a slow burn, but the truth is in you know, in business years we started to cash flow pretty quickly. Like how fast? We started cash flowing by the m fifth month. So we're positive cash flow by month five. And we stayed lean and you know, we d we did all the jobs ourselves and we certainly weren't out there, you know

Buying expensive dinners, but we definitely began to make money. And we we also like keeping it lean because it allowed us to learn every job. So we put ourselves in the position of understanding how the website worked, you know, what could work better there, how the what was the uh functionality of somebody checking in, um, how was it for some what what were our clean cleanliness standards? Like how what did the bathroom need to look like? You know, we just had to make sure we started doing checklists to make sure that when there was downtime of people were always doing things and because we were always doing things. So you were cash flow positive Five months.

Yeah, which is amazing. So after you know, you start to see people come into the classes and the class is filling up It becomes apparent you gotta open up a second studio, so what'd you do? Well, we weren't quite ready to open up a second studio, but Julie had the idea to open a studio up in the Hamptons in the summer, which was a great idea. All the way at the tip of Long Island. Well, because we had a lot of we were concerned about the summer business. The studio is located in a residential area and we as you listen to your customers, you hear them talking about what their summer plans are.

And we realized a lot of people were gonna be leaving and we wanted to captivate keep them captivated with the brand. We didn't want them to get distracted and get interested in something else. In New York City, a lot of people do migrate out to the east end for the summer. And Simultaneously, Elizabeth got a phone call. Um, from friends of ours who had said that they had heard that there was this old barn

that had housed an exercise studio before and it was coming up for rent that summer. It was a legendary with Lottie Burke. People had gone there for twenty years and then somebody was doing pole dancing there one summer and that didn't really work out and it was gonna be available. And Elizabeth and I looked at it and we said, you know what? This is a three-dimensional marketing experiment. You know, we had to rent houses out in out in the Hamptons to house our instructors and our staff. We had to but on top of our rent for the for the actual fitness studio to operate this thing with our New York City organization, we needed to take houses and rent cars. And people lived illegally on the second floor for the first summer. And they had bikes. So we didn't get to the cars and the and the houses until the second summer. Yes, that's true. I forgot about that. We were housing employees in the upstairs. But how did you guys manage that? When you're trying to run your Soul Cycle Studio In the Upper West Side and you decide that the next summer, summer of two thousand seven, we're gonna open up in the Hamptons. Like, did both of you just like constantly go back and forth and back and forth? We did. We made a decision that, you know, Elizabeth would spend a little bit more time out and run the studio out in in Bridge Hampton, and I was gonna come back and forth.

Uh, we w we were actually talking today about how um our retail operation actually exploded that summer and we had this This older gentleman on the upper west side who basically printed, you know Let's say you had a friend's birthday party and you wanted to print ten T-shirts that said, you know, Happy Birthday. That's the kind of printing he did, but somehow we made him our printer because our quantities were very small in the beginning. And then slowly but surely people started to get fanatical about the Soul Cycle clothing. And so we would design one collection a month. And I remember I would go to Harvey's office on east on West 83rd Street. He had a cat that sat on his desk. And I would say, Harvey, you know, I know that I only needed fifty, but now I need 250. Can you get them to me by, you know, Friday? And ev every couple of weeks I would go back, the quantities would increase, and I would load up my car on Friday nights and bring them out to the barn at Bridgehampton with all the new merch.

And we would we'd stay up late on Friday nights and we'd set up the merchandise and I would stay for the weekend. And then during the week, Elizabeth would run the Hampton Studio and I would run New York and then we'd get back together on the weekends. I need to take like a I need to take like a break from this interview just'cause I'm exhausted by the descriptions of this. I mean you had the studio in New York, the studio in the Hamptons, you were making a line of clothing. By the way, who was designing the the clothing? We were Like shirts, just shirts or like No. So first it started with t shirts and then it went to T shirts and sweatshirts, and then it went to t shirts and sweatshirts and hats and tote bags and then it went. And the leggings. Don't forget about the leggings. Correct. And then we um we branded leggings. And then we went to um to sports bras. And then after sports bras, we went to athletic shirts. And I would say by the time the collections really got into full swing, which was probably about three, four years into the business, we were designing about sixty five to a hundred and twenty five SKUs a month. Wow. Which is unbelievable because Essentially people were paying you money.

To advertise Soul Cycle. I I always say that the the merchandise at SoulCycle is almost like having to buy the t shirt from the best vacation that you've just been on. My mom still calls me when she sees somebody in the Soul Cycle shirt. So I don't I don't have I don't have the heart to explain to her the tens of thousands of people come to SoulCycle a day. Um but yes, my mother still calls me. I saw somebody in a Soul Cycle shirt. Yeah. And so when and so when you opened up in Bridgehampton in the summer of two thousand seven Was it also a slow burn or or did people know about it and w yeah what happened? That that studio was a game changer for us in every way. There wasn't much to do out in the Hamptons. People think you know, the all the kids were at camp and you know, people would come out and as if people are on vacation and the adults needed something to do besides drink. And so people would do what they did all day, but in the morning

Everybody was at Soul Cycle. It started at seven thirty in the morning and it had ended at two o'clock in the afternoon and on the hour everybody was there. And and and that was profitable probably from day one. Day one. And then after that we came back from that summer and We had gone from being a neighborhood business to being a full city wide location. Uh people were taking the subways up from downtown several times a week. People were really coming across the park. Um we we were like, wow, what what is going on? And then We would walk out because our studio was in the rear lobby, we would walk out and we would see the town cars and the SUVs lined up like back to back to back to back and this is before Uber. So you know, f fancy people would have their have their cars and drivers and all the cars and drivers were lined up in front of Solcycle and the neighbors were wondering what was going on.

And everybody was there riding and it was so fun. A certain point I don't know if it was at this point, but at a certain point Um your original third partner, Ruth, leaves. Um why? Why did she go?

You know There's not much we can really say about it, but what I can say about partnerships is that Um It's just really important that everybody has the same vision and the same work ethic and If if you have those two things, you you fight a lot of battles and then you know, your struggle is not internal, your struggle is more external. And that's really where

uh you know, the f the focus Needs to be. Um, and you know, Ruth was an amazing teacher and she continued to teach for us for years and Um Was that was that har was that hard for for the two of you when when when it happened? I mean, Julie, she was your friend. Um was it

Like Like emotionally was it? Yeah, I look I think it was it was it was very early on in the business. It was we'd only we'd only been open for um

About a year. And um so it didn't it didn't feel so dramatic at the time. The business was the business was very small and also she she stayed on for several years and continued to teach You know, the really interesting thing is that, you know, after that happened, um, Elizabeth and I kind of decided that we were going to really invest in our partnership because we had we had seen partnership not work out and I think that we really felt like the success of Soul Cycle was a real combination of the two of us. And so

Elizabeth found us um a business therapist coach. Um, and I remember she called me one morning, I didn't even know her that well. We'd been in business together for a little over a year and she said, you know, I I Googled in the middle of the night last night and I Googled NYC life coach and I found somebody that we're gonna start seeing. And uh she was like, I'm not gonna see anybody that you meant on the met on the internet. And I was like Let me explain to you. I um a very relaxed person and at eleven fifty five on a Sunday night I'm having a full panic attack. I need some help. So I'm gonna talk to her. Let me see how it goes. And then if she's good, maybe you'll be up for meeting her.

And so and so that started us down this journey of um we have an amazing coach that we still work with today. And the person that we met on the internet. Wow. And it what was amazing was, you know, we really made a commitment at that time to saying you know, there are gonna be moments in this business when you see it one way and I see it another way, or, you know, you wanna grow another five studios and I don't want to, or whatever whatever it is, but we are going to make those decisions together. We're gonna really communicate about them and I think that that was ultimately one of one of the things that I think made the business most successful was our dedication to our partnership. Mm.

Okay, so it it's I guess around two thousand eight. And You guys decide to open up a another studio in New York in in Trebeka. But I mean I mean this was two thousand eight. This is the start of the recession. So w w where did you get that money to expand? Yeah, it was it was interesting timing. So a couple of things happened. One, um I checked the bank account after Lehman collapsed and I was

I mean Alan and I share funds and I was so proud of him because he had He had sold, you know, when stuff had vested, he had sold it. And so I was like, Oh my God, there's money in the bank account. It's so awesome because Julie and I need some cash to open Tribeca and uh I want to borrow six hundred thousand dollars. And he was like, What are you talking about? I've had like the worst month of my life. Are you kidding me? And I said, No, I'm super not kidding you. I'm gonna pay you huge interest rate and you are gonna lend me that money. I try to be honest with you, I tried to get money from other places. I had a friend that I grew up with that ran a private bank at one of the big big banks in New York and it was after the collapse and the feds are funding these banks and I said, I need a credit line of three million dollars. I can start with a million but I need three

And they looked at me and they said, Okay, well if you put up for collateral Your apartment Mm. and equities that equal the same value as the amount of the credit line, then we will lend it to you. And

I was so furious. I said, How dare you do that? My taxes are funding you right now. I am not asking for that much money. We are running ten million dollars of cash From our our all of our transactions through your bank and y that you that is your message to me. And they said, that is our message to you. Once you have sixty million dollars of revenue, we can help you. I'm like I said, By the time we have sixty million dollars of revenue, I will not need you. I got up and left the room I've never forgotten that.

It was really stressful and I was so mad. Um But that's when I that's actually when I called Alan and said, Hey I checked the bank account and I I realized that there's some cash in there and and we can probably do it for that. But it was tight. I mean we when we opened Tribeca we almost didn't make payroll. We didn't have my we somebody called up to the office and said Oh my gosh, Elizabeth, do you know we need to buy some toilet paper and and the credit cards aren't working and I said, Uh how much toilet paper do we have? And they said, Well, we've got about twenty rolls I'm like, That's great. We better wait till tomorrow to buy the toilet paper. But we never missed payroll and we always had toilet paper and you know, that part that part really worked out well.

Alright, so you guys um in you know, you managed to open up a couple Locations in New York. Around two thousand ten. uh competitors start to come up, including one called Flywheel.

And this was started by your former partner, Ruth. D w was were you shocked by this? Did it w did it make you nervous? Did it upset you that that happened? Well when Flywheel opened and they were gonna become a competitor in the fitness space I think rather than sort of freak out about it, which of of course we did for, you know, the first year or so kind of monitoring the scene and what was going on and there were some new bikes that were coming out. There was a bunch of stuff coming out on the scene. Yeah, it wasn't just them at the time. I think that, you know

Look, we we started a I'm uh boutique fitness marketplace and a lot of things were now coming into the market. People had You know, beyond just flywheel people had other choices that they could do per per pay per class. So we were no longer the only option in that marketplace. And

But we really t we really took the opportunity, but we talked to our coach, um of course. Um and we really took the opportunity to say to each other, you know, who do we wanna be? You know, let's not react. You know, we always did things and Many times people thought we were nuts to do them, but we always made the choices that felt good for us and I think we really just tried to keep our heads down. Yeah. I I'm I'm really curious about the relationship between the two of you because uh uh trying to grow businesses is f f fraught and filled with tension and But it strikes me that

That getting a coach? that you forced yourself to go and talk to together was kinda the key that that that that really Helped you guys.

Develop your relationship. There's no question that it did. There I mean I I think that We also um lived by this this one saying we always said to each other, High Road Longview. High road long view. We would never allow ourselves to get down in the mud and get dirty. We would We w we would do that if something needed if something was f was broken and needed

to be fixed, but once we did that, uh we really kept our eye on what was most important. So I I think that that that's the that's the piece that um You know, both of us decided mattered. And you have to remember You know, we actually weren't even the stars of this business. We haven't really talked about our instructors yet. The instructors were the stars. They were the face of of the company. Correct. So we were sort of we sort of thought, let's build the stadium. Let's put these rock stars on this stage. Let's let them sort of, you know, be the faces of and bask in the glory of and change these people's lives.

lives, that was really what we were doing. We were building a brand. We weren't, you know, we weren't in it for either of our egos and you know, to the point where we really turned other people into the faces of the brand. So I I think it was around two thousand eleven Uh when when you sold a pretty big stake to uh Equinox, to to the this huge sort of high end fitness company. Um why? I I mean you you had this great thing going. You were running it. Did you uh did you need like need that money to to further scale the business?

Yeah, we felt like To have someone to have a strategic s playbook. would be really valuable. We wanted to expand to the West Coast. And we felt that uh by being able to work with these guys that it would it would allow us to do that. And so we we did do uh a partnership with them in two thousand eleven. Леч би франк, а деспон.

Both of you are rich. You know that you are going to have money and Julie, for you, you you didn't have a whole lot of money, was it? I mean That must have been amazing to to know that you were gonna be financially secure at that point. Yeah, that that first part of our sale. to Equinox was really

That that was life changing. obviously for me and for my family and you know, be beyond what we could have ever imagined. And I I I remember thinking, you know, the day that we actually got that wire to come through. Um my my kids are good and I I I'll I'll remember the the time that I was able to put them each in their own bedrooms. I mean each child having a bedroom in New York City is a monumental it's a monumental task, you know. Sure. And so yeah, it was it was truly life changing uh when when that happened.

How many Soul Cycle Studios are there today? Eighty eight. Could could that have happened without Outside investment, do you think? It gave us the confidence to do it.

Uh the truth is looking back Yes, we could have done it. Uh you could have done. Yes, we could have done it. Um but it really gave us the confidence to do it. And sometimes that's what you need. I mean I think that

Listen, people always say entrepreneurs are such good risk takers, and and the truth is sometimes you do take a risk, but a lot of times it's really terrifying. Um and we had a lot on the line. So Soul Cycle did expand. Um But they're not going to be a

But I guess there was some tension after Equinox took over And eventually you both divested. You you left the company Uh and today neither you neither of you are owners of of SoulCycle, right? Correct. You own n you own not a piece of it. That's right. That's correct.

Is it weird? And Uh I don't know. No that it's not yours. For me, I every time I see a soul cycle, I still feel like it's a love child and I feel proud of

I feel proud of the of the energy that I know is contained in those rooms and what it what it does for the people who opt into that experience. I will say that That there are those who said to me when we were getting ready to to do our original deal in two thousand eleven, um

You know, selling a business is not like selling a child. I mean You have children. This is your business. Uh in a very detached way. And I will say that that is super not true. I obviously did no fact checking. uh as to whether or not the person who said that to me or the people who said that to me had ever started a business because it is a child. Uh in fact

I when we were when it's funny story, we were um pe people somebody was coming to us uh early on in the business and saying, You should franchise And I looked at Julie and I thought, Oh my God, we already have four children between us. How many children do we need So we just kinda felt like soul cycle, each one of the studios was like a child and and and when we left, we you know, we left a piece of our heart there because That's what you do. I think Elizabeth's right. Look, I think that

Somebody should write a book. for for founders about what it is like to to sell their businesses, you know, I I I think that there's You know, there's there's definitely a mourning period. There's definitely a p there's definitely, you know, a period where you spend some money. And then there's definitely a period where you begin to think about, you know, what am I gonna do next? Yeah.

For me Um it still is a really significant part of my day and my life, you know. More so as a customer than it is as as somebody who founded the business. You know, I I'm able to go there and sort of enjoy the product that we created for ourselves. I'm curious because a lot of A lot of uh very experienced and entrepreneurs listen to the show, famous entrepreneurs, but most people who listen are are starting out, you know. Or they're

They're in the middle of it. Um they're kinda grinding away. And I'm curious if you had to go back. to two thousand ten. And you had a crystal ball, would you have said

Let's try to just do this on our own and not bring in any outside investors. Let's let's keep bootstrapping this thing. I mean if there were two alternate universes I would certainly play that out. But on the other hand, you know, we never forgot why we started the business. And like we said, we we really started the business to create an environment for people that was like a secular sanctuary where people could feel safe coming in there and they could burn their cheesecake from the night before, or they could tap into something tribal on that bike, and that was why we did it. We never ever forgot why we did that. Sure it would have been interesting to kinda play that out. But the thing is, on the other hand, the way that it did work out, we

We still got to do all those things. I I'm I mean it m it must be weird to go from this like fast paced, like really, you know, especially when you were co CEOs, you had a staff, you had people around, you probably every second of your day was scheduled, there was a team, there was energy, and then like one day you wake up and you're like having coffee in the kitchen and you're like, Okay. What am I gonna do today? Like is it w was it like that?

Well, we're busy still. I mean, you know, we tried to catch our breath a bit and We we actually have member saying to Elizabeth on the on the day that we made the decision to leave, I said, okay, but you have to make sure that we get an office together. So at least I know that we're gonna have two computers sticky notes and we're gonna have a place to meet in the morning. Like I can do this as long as we know that somewhere there's an office where we have two desks that are side by side, and we did it. We took an office. And there was definitely something psychological about sort of knowing that there was a place where that we could touch base with with with each other every day. And I think I think we're kind of just coming up for air right now. I think, you know, it's for for the first time, it's like the two of us can look at each other and kind of You know, it's it's like your your eyes adjust to the light a little bit differently. We were just having conversation this morning about how how much the world has changed and you know, what what do you think the world needs now.

Uh of everyone who comes on the show. How much of of what happened With Soul Cycle, do you think it's because of Your intelligence and your skill and how much? Because you you just got lucky. It's interesting, you know, in thinking about the next time around, now that you know so much, it turns out that, you know, the lesson that I would tell people is that ignorance is actually bliss, right? We made so many decisions, we made so many mistakes, but we just kept going because we didn't know any better.

Now you know how to look at all those Excel spreadsheets and PL and all that stuff, and you can make yourself crazy, but I think at the time You know, what we didn't know helped us and we just trusted our gut and we went. And I don't think anything about it was lucky. I think the only lucky thing was that Elizabeth and I bumped into each other. Hm. Elizabeth?

I mean, how do you top that? Not that I'm topping and something this is not a competition. Um I think it was lucky that I got to meet that we got to meet each other, that I got to meet Julie and then she got to meet me. I think it was lucky that we got to have these incredible writers who inspired us every day and get to work with people that we loved and it was extremely high touch. Um we always had our our our office attached to a studio. We never stopped using the product and um and I think, you know, that kinda effort um that we what that we brought to it created I guess you could call it like a certain kind of cumulative magic that happened over the years that everybody participated in and created.

Elizabeth Cutler and Julie Rice. Co-founders of SoulCycle. And by the way Do you remember how Elizabeth says that her husband used to give her a hard time about opening a cycling studio? Well, even a soul cycle really started to take off? He still had his doubts.

I could tell he was getting mocked at work because one day he comes home and he's like If you guys ever make Ten million dollars. I will run naked through the streets of East Hampton, New York on a Saturday in July. He's lucky he didn't make the bet.

Uh he made the bet? Well we never we ne we never made him uh make good on the bet. You never made him do it? No. Okay, let's do it next summer. Alan is we we're gonna have him run naked through the streets of the Hampis. It's gonna be a video podcast. You're such a visionary guy like this. Thanks so much for listening to the show this week. If you're not a subscriber to the podcast, please do subscribe wherever you get your podcasts. If you want to write to us, our email address is hibtnpr.org. If you want to follow us on Twitter, we're at how I built this or at guyraz. Our Instagram is at how I built this NPR and mine is at guy.ros. This episode was produced by James Delahouse with music composed by Ramtina Erabloui.

Thanks also to Liz Metzger, Faris Safari, Dereth Gales, JC Howard, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Janet U Jung Li. I'm Guy Raz, and you've been listening. This

is NPR. Yeah.

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