How I Built This with Guy Raz - SoulCycle: Julie Rice & Elizabeth Cutler (2019)

Episode Date: April 19, 2021

Before Elizabeth Cutler and Julie Rice met, they shared a common belief: New York City gyms didn't have the kind of exercise classes they craved, and each of them wanted to change that. A fitness instructor introduced them over lunch in 2005, and before the meal was done they were set on opening a stationary bike studio, with a chic and aspirational vibe. A few months later, the first SoulCycle opened in upper Manhattan. Since then, SoulCycle has cultivated a near-tribal devotion among its clients, with studios across the United States and Canada.How I Built This Summit - information and tickets at:http://summit.npr.orgSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. 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 Elizabeth 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, they came to the studio. My dad looked around and my mom sort of opened doors and peaked under desks. And my dad looks around.

He says to me, no showers. Who is going to come here? I thought this is not a battle worth fighting. BrahminPR, it's how I built this. A show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm 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-million dollar business called SoulCycle. 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 is SoulCycle, an indoor cycling business that grew from one little studio in New York in 2006 to nearly 90 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 SoulCycle, 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 scented candles in the studio, the merch, the music. And that sense of loyalty of near tribal devotion is kind of what the founders of Soul Cycle 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 would be able to be. doing acupuncture and real estate on the side.

They were both in their 30s, 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 entrepreneurial urge. And I really wanted to dig into something. And I kept on thinking about the struggles that I had gone through and having the kids and how much weight I had gained and how difficult it was for me to lose it. 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 wrong with them? For me, what was going on in there, it just wasn't inspiring. People would play the same 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 800-pound gorilla on your chest. And I thought to myself, are you really kidding me? right now. Techno music and instructors that looked at themselves in the mirror. Oh, my God. Yeah. You know, bright lights and bad smells and people walking in and out of class.

Exactly. So, Julie, I guess you kind of found yourself in kind of a similar situation as you had moved to New York from California, I guess, in 2002. What was going on in your life at the time when you guys met? Well, I really missed what I had had in Los Angeles in terms of. 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 gym classes and boot camps, where you were definitely going to burn some calories but not get much more out of it than that. And Julie, when you were a talent agent at this time, long before you meet Elizabeth, do you remember starting to think, I think I want to start a business? I definitely didn't think, oh, I want to start a business. But what I did think was in Los Angeles, there was 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 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 position 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 I've walked into like kombucha shops and thought, I could do a better kombucha shop than this. And then I might talk to a friend and say, you know, I just kind of want to 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'm really intrigued about like doing a cycling studio. They had these in L.A. And I think I kind of want to do one. 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 loved the gyms that they belong to. And why would anybody ever do something like that? But it was one of those things that just would not go away for 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.

And remember, what made it 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 membership. Exactly. There were plenty of them around. Hey, I got my cycling class into my gym. 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 can, I want to do a cycling studio. Or was it much more sort of abstract than that? No, 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 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. In 2005, it was over. It was over. It had been really popular in the 1990s for outdoor cyclists, but it had not, and it had mainstreamed in gyms for sure. But that trend had kind of fallen off. And he just said, you'll never make anything happen out of that. Were either of you guys like, I don't know, a little bit embarrassed when you would talk about it and people kind of sort of say, eh, that concept just doesn't make sense to me.

I was not embarrassed. I was for sure doing this. This was a calling. This was definitely happening. My husband told me I was going to ruin my life and I was going to work 24-7 and I said, I'm going to handle this. It's going to be fine. I was also not embarrassed. I had such conviction in this idea that this was something that was definitely going to 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 spying again. Don't talk about this weird thing. Yeah. But I think for me, you know, it was meeting Elizabeth that really allowed me to take the leap. 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, like you with the kombucha shop. 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 intercycling class out in East Hampton, and I tried to find one in the city. And eventually, I ended up as a guest at class at 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 indoor cycling student. 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. We should go to lunch. So she said you should contact her, and what happened? Like, she gave you her number? We went to lunch. All three of us. And my husband, so the four of us had lunch. Yeah.

And Julie and I started talking, and we just clicked. Why? What did you like about her? We very quickly discussed. We both had babies that were the same age, and we made some small talk. And then I think we quickly got to a conversation 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 sergeants, 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 2005, 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 going to 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 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. My head. Yes. So we leave the lunch and, you know, I leave. I get in a cab. My cell phone rings. And Elizabeth says to me, okay, here's what's going to happen. I'm going to look for real estate and you research towels. And I'm going to 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 Seventh-second 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 sub lease on it. The entire thing was about 1,200 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 the lease signed. Okay, let's just pause for a second. Because I want to break this down a little bit.

Like, did you do formal partnership agreement? Did you do all that stuff? Was this still pretty much handshake like you and me are partners and we're just going to figure it out? So at lunch that day, the woman that introduced us, the Ruth, 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 going to help us to find other teachers and help us to create the program because neither of us had ever created any. 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 going to work on the branding together, Elizabeth and I, since we had such a similar vision. And I was going to work on the people. I was going to do the PR. I was going to train the studio staff. And so that's the way that we were going to divide the business. And Julie, did you have any money at that time? Did you have, like, wealth or personal, you know, like a huge stash of cash? So, ironically, I had actually no cash at all. One of my very close girlfriends had just gotten married, and she had one of the great last, 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 71st Street and Columbus Avenue. And she was nice enough to say, you know what, for as long as we can keep the lease, why don't you take the sublet? And so it was $900-something dollars a month. Wow. And 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 while we planned Soul Cycle. We met in January, and we opened Soul Cycle in April. 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, once we made the decision to start SoulCycle, we cut up our credit cards.

And on every Sunday night, Spencer would hand me an envelope with $200 in cash. And he would say, here's your money for the week. And so, you know, I remember, you know, with my baby folding up the stroller and taking it on the cross-town 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 amazing. It's amazing how quickly $200 can go in New York City when you're walking down the street every day. But we did it.

We did it because it was something that I really had conviction of, and he's always been really supportive. Okay, so Julie, you were at 200 bucks a week. And Elizabeth, did you guys have any money? I had bought a little studio apartment, and I had recently sold it, so I had about $100,000. And then Alan, my husband, had a great job working at this investment bank called Lehman Brothers. And so I said to him, I said, I really want to start this business. And he said, I get it. If you want to do it, you know, we can do it.

So we took $250,000 and started SoulCycle with that. And we built the studio out inexpensively. We built a website, you know, reasonably and expensively. I feel like we got a lot done for $250,000. 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 commit to that period of time. So in that way, it didn't really feel like a huge risk. Yeah, that's what I'm curious.

When you sign a five-year lease, what do they want for me? How much do they want, like, six months rent? Like, how does that work? I think we gave them three months security. and the rent on the studio was $5,000 a month. Oh, so that's the Upper West Side, 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, 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 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 we 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 very... We built from IKEA. You know, we... And we had a huge mural on the back wall that was reflected in the mirror that was of 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 then the press release we could write that we had a Zen garden. Oh, I see. I got you. Okay.

I forgot about the bamboo. And how did you come up with a name SoulCycle? It was neither of us. We had been thinking for a long time. We had a lot of really bad names. Like what? What were some of the names? Cycle, NYC.

They were not good. They were not good at all. And I kept on saying to my husband, And I kept on describing that 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. He was like, what about SoulCycle? What was like that? 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 was like, what about SoulCycle? 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 IKEA furniture and And did the three of you, like, sit around and say, this is going to be huge. We are going to French.

It's going to be all over the country. It's going to 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 75 and 100 people a day. It's 100, Julie. It's always been 100. I always thought it was 75. I really do. A hundred people. No, but so, you know, we wrote on the back of the snapkin, which Elizabeth has framed in her office, and it shows that if we can see 100 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 cycle studio. in the world. They existed, not quite like they do today. But what, I mean, what was it that was going to make it different? I mean, I know you talk about community and I get that, but specifically like, was the music going to be different? Was the, were the lights going to be different? Was the, the, the, the, the, the, the, the, the, how was the experience going to be so different that people would have to go to Soul Cycle because they just needed it? Well, the first thing was that we were going to have technology so that people could, it was 2006. So this sounds crazy to talk about now, but there were 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. 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 the studio and feel like they had gone from the crazy 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 did you determine what you would charge? Did you look at like, 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 initially were you charging? We started at $27 a class. We thought about it as two cocktails or inexpensive personal training because we thought it was actually important for people to pay for the class because people. 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 going to bring something different than if they aren't paying for it. And Julie, was the idea that just like open the doors and put some balloons out and hope people come in? Or how did you get even get people to know that this was going to be there? So we did a few things. 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 doorman, hoping that would let me in and put flyers and mail rooms 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 saved enough money so that we had enough of a run rate for a year, Elizabeth looked at me and said, okay, we have $2,500 left over. What do you want to do for marketing? And so we decided that we were going to 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 it said SoulCycle over it. And I remember taking the first t-shirt out of that batch. And I looked at Elizabeth and I said, you know, one day, it's not even going to need to say SoulCycle. It's just going to be like the Nike swish. People

are just going to know what it stands for. And we were like, yeah, yeah, it is. That's definitely going to happen. And so we decided that we would make 250 T-shirts and we would try to get, you know, the 250, you know, coolest people in New York City to wear them so that there could become some sort of brand recognition. 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 going to deliver the package to the editor of glamour, thinking that somebody was going to 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, rerouted from front mail desks to back alleyways where you're allowed to actually drop off packages that may or may not ever make it upstairs. So then I guess you finally get ready to open. That's right. April 26, 2006. And I'll never forget.

The first time I took my parents, they came to the studio, my dad looked around and my mom sort of opened doors and peaked under desks. And my dad looks around, he says to me, no showers, who is going to come here? I thought this is not a battle worth fighting. When we come back, how 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. Hey, welcome back to How I Built This from NPR. So it's 2006, and Elizabeth Cutler and Julie Rice have just opened their first Soul Cycle 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 and 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 SoulCycle with an arrow pointing to the front door because... You put this on the sidewalk. On the sidewalk, because, you know, we didn't have a sign and... And so if you know, starting a business in New York City without the ability to use the density of the passer buyers on the street is 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 lobby of this building. You could not have an exterior sign on the building because the building would not allow it? Correct. It was landmarked. So we had no exterior signage. And so you took a rickshaw and said sole cycle this way and you just parked it on the sidewalk? So we chained it up to a parking meter. Oh, I see, right. Like a big chain lock like that you would put 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 quickly did was we studied the traffic patterns outside. because $65 a day was actually a 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 running a whole class. And so we learned that, you know, Saturdays it might make sense to put the Rikshah 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 a $65 ticket. And so we would put out our marketing vehicle on days that we thought the returns would be good. and that was that. So this is a slow burn. People are coming in. And I don't know.

It was like, Julie, was your husband like, hey, you know, I'm all 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 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 fifth month. So we're positive cash flow by month five. And we stayed lean and, you know, 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 also liked 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 functionality of somebody checking in? How was it for something? What were our cleanliness standards? Like, how 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, when people were always doing things. And because we were always doing things. So you were cash flow positive five months in, which is amazing.

So after, you know, you start to see people come into the classes and the classes filling up, it becomes apparent. You got to open up a second studio. So what did 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. Like 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 going to 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 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.

It was Lottie Burke. People had gone there for 20 years and then somebody was doing pole dancing there one summer and that didn't really work out. And it was going to 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 the Hamptons to house our instructors and our staff. We had to, on top of our rent for the actual fitness studio to operate this thing with our New York City organization. We need to take houses and rent cars.

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 houses until the second summer. Yes, that's true. I forgot about that. We were housing employees in the upstate. We were very scrappy. 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 2007, we're going to 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 Bridge Hampton, and I was going to come back and forth. We were actually talking today about how our retail operation actually exploded that summer

and we had 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 10 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 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 50, but now I need 250. Can you get them to me by, you know, Friday? And 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 Bridge Hampton with all the new merch. And 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 break from this interview just because 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 clothing? We were. Like shirts, just shirts? No, 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 hats and tote bags. And then it went to... And the leggings. Don't forget about the leggings. Correct. And then we branded leggings. And then we went 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 65 to 125 skews a month. Which is unbelievable because essentially people were paying you money to advertise SoulCycle. I always say that 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 a SoulCycle shirt. I don't have the heart to explain to her the tens of thousands of people come to SoulCycle a day. But yes, my mother still calls me. I saw somebody in a SoulCycle shirt.

Yeah. And so when you opened up in Bridge Hampton the summer of 2007, was it also a slow burn? Or did people know about it? Yeah, what happened? That studio was a game changer for us in every way. There wasn't much to do out in the Hamptons. People, you know, all the kids were at camp and, you know, people would come out. And people were 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 7.30 in the morning and it ended at 2 o'clock in the afternoon. And on the hour, everybody was there. 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 citywide location.

People were taking the subways up from downtown. Several times a week, people were really coming across the park. We were like, 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. back to back to back and this is before Uber. So fancy people would have their cars and drivers and all the cars and drivers were lined up in front of Soul Cycle

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, your original third partner, Ruth, leaves. 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 it's just really important that everybody

has the same vision and the same work ethic. And if you have those two things, 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, you know, the focus needs to be. And, you know, Ruth's an amazing teacher and she continued to teach for us for years. And was that, was that hard, was that hard for the two? of you when it happened. I mean, Julie, she was your friend. Was it like, like emotionally, was it difficult at all for that split? Yeah. 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 about a year. And 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, Elizabeth and I kind of decided that we were going to really invest in our partnership because 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 a business therapist coach. 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 googled in the middle of the night last night. And I googled NYC Life Coach. And I found somebody that we're going to start seeing. And she was like, I'm not going to see anybody that you met on the internet.

And I was like, let me explain to you. I am a very relaxed person. And at 1155 on a Sunday night, I'm having a full panic attack. I need some help. So I'm going to 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 that started us down this journey of we have an amazing coach that we still work with today.

And the person that we met on the internet. The person that we met on the internet. Wow. And what was amazing was, you know, we really made a commitment at that time to saying, you know, there are going to be moments in this business when you see it one way and I see it another way or, you know, you want to grow in other five studios and I don't want to or whatever it is. But we are going to make those decisions together. We're going to really communicate about them. And I think that that was ultimately one of the things that I think made the business most successful was our dedication to our partnership. Okay. So it's, I guess, around 2008, and you guys decide to open up another studio in New York in Tribeca.

But, I mean, this was 2008. This is the start of the recession. So where did you get that money to expand? Yeah, it was interesting timing. So a couple things happened. One, 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 sold, you know, when stuff invested, 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 I want to borrow $600,000.

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 going to pay you a huge interest rate. And you were going to lend me that money. I, 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 of 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 $3 million. 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 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 $10 million of cash from all of our transactions through your bank. And that is your message to me. And they said, that is our message to you. Once you have $60 million

of revenue, we can help you. I said, by the time we have $60 million of revenue, we can help you. I said, by the time we have $60 million of revenue, I will not need you. I got up and left the room. I've never forgotten. It was really stressful and I was so mad. But that's actually when I called Alan and said, hey, I checked the bank account and I realized that there's some cash in there and we can probably do it for that. But it was tight. I mean, 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 the credit cards aren't working. And I said, how much toilet paper do they have?

And they said, well, we've got about 20 rolls. I'm like, that's great. We better wait until tomorrow to buy the toilet paper. But we never miss payroll and we always had toilet paper. And, you know, that part really worked out well. All right. So you guys, you know, you managed to open up a couple locations in New York. You're doing well.

Around 2010, competitors start to come up, including one called flywheel. And this was started by your former partner, Ruth. Was you shocked by this? Did it make you nervous? Did it upset you? That happened? Well, when Flywheel opened and they were going to become a competitor in the fitness space, I think rather than sort of freak out about it, which 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 in. scene. Yeah, it wasn't just them at the time. I think that, you know, look, we we started a 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 pay per class. So we were no longer the only option in that marketplace. But we really took the opportunity. We talked to our coach, of course. And we really took the opportunity to say to each other,

you know, who do we want to 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'm really curious about the relationship between the two of you. Because trying to grow a business is fraught and filled with tension. But it strikes me that getting a coach to like a kind of like a thing. therapist that you forced yourself to go and talk to together was kind of the key, that that really helped you guys develop your relationship. There's no question that it did. I mean, I think that we also lived by this one saying, we always said to each other, high road long view, high road long view. We would never allow ourselves to get down in the mud and get dirty. We would we would do that if something needed, if something was. was broken and needed to be fixed, but once we did that, we really kept our eye on what was

most important. So I think that that's the piece that, 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 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. 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, you know, to the point

where we really turned other people into the faces of the brand. So I think it was around 2011 when you sold a pretty big stake to Equinox to this huge sort of high-end fitness company. why? I mean, you had this great thing going. You were running it. Did you need, like, need that money to further scale the business? Yeah, we felt like to have someone, to have a strategic playbook would be really valuable. We wanted to expand to the West Coast. And we felt that by being able to work with these guys, that it would allow us to do that. And so we did do a partnership with them. in 2011. Let's just be frank. At this point, both of you are rich. You know that you are going to have money.

And Julie, for you, you didn't have a whole lot of money. Was it, I mean, that must have been amazing to know that you were going to be financially secure at that point. Yeah, that first part of our sale to Equinox was really, that was life changing, obviously, for me and for my family and, you know, beyond what we could have ever imagined. Sure. I remember thinking, you know, the day that we actually got that wire to come through.

My kids are good. And I'll remember 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 truly life-changing when that happened. How many Soul Cycle Studios are there today? 88. Could that have happened without outside investment, do you think?

It gave us the confidence to do it. The truth is, looking back, yes, we could have done it. You could have done it. Yes, we could have done it. 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 the truth is sometimes you do take a risk, but a lot of times it's really terrifying.

And we had a lot on the line. So SoulCycle did expand. But I guess there was some tension after Equinox took over. And eventually you both divested. You left the company. And today, neither of you are owners of SoulCycle, right? Correct. You own not a piece of it.

That's right. That's correct. Is it weird to walk down the street in some city and see a SoulCycle? And I don't know. know that it's not yours? For me, 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 there are those who said to me when we were getting ready to, to do our original deal in

2011, you know, selling a business is not like selling a child. I mean, you have, you have children, this is your business in a very detached way. And I will say that that is super not true. I obviously did no fact checking 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. In fact, when we were, it's a funny story, we were people, somebody was coming to us early on in the business and saying, you should franchise. And I looked at Julian. I thought, oh my God, we already have four children between us. How many children do we need? So we just kind of felt like Soul Cycle, each one of the studios was like a child. 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 founders about what it is like to sell their businesses. You know, I think that there's, you know, there's definitely a mourning period. There's definitely 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 going to do next? Yeah. For me, it still is a really significant part of my day and my life, you know, more so as a customer than it is as somebody who founded the business. You know, I'm able to go there and sort of enjoy the product that we created for ourselves.

I'm curious because a lot of very experienced and entrepreneurs listen to this show, famous entrepreneurs, but most people who listen are starting out, you know, or they're in the middle of it. They're kind of grinding away. And I'm curious, if you had to go back to 2010 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 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 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, ever forgot why we did that. Sure, it would have been interesting to kind of play that out. But the thing is, on the other hand, the way that it did work out, we still got to do all those things. I mean, 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 going to do today? Like, is it like that? Well, we're busy still. I mean, you know, we tried to catch our breath a bit. And we actually, I remember saying to Elizabeth 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 going to have two computers and sticky notes and we're going to 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 it was definitely something psychological about sort of knowing that there was a place that we could touch base with with each other every day. And I think we're kind of just coming up for air right now. I think, you know, for the first time, it's like the two of us can look at each other and kind of, you know, it's like your eyes adjust to the light a little bit differently. We were just having conversation this morning about how much the world has changed and, you know, what do you think the world needs now? As you may know, I ask this question of everyone who comes in the show. And I want to start with you, Julie.

How much of what happened with SoulCycle do you think is because of your intelligence and your skill and how much because 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 P&L 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.

Elizabeth? I mean, how do you top that? Not that I'm topping, it's not a competition. I think it was lucky 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 riders who inspired us every day and get to work with people that we loved. And it was extremely high touch. We always had our office attached to a studio.

We never stopped using the product. And I think, you know, that kind of effort 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? So, 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 $10 million, I will run naked through the streets of East Hampton, New York, on a Saturday in July.

He was lucky he didn't make the bet. He made the bet. We never made him make good on the bet. You never made him do it? No. Okay, let's do it next summer. Alan is, we're going to have him run naked through the streets of the Hantons. It's going to 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 hibt at npr.org. If you want to follow us on Twitter, we're at How I Built This or at Guy Raz. Our Instagram is at How I Built This NPR, and mine is at guy.org. This episode was produced by James Delahousie with music composed by Rumtine Arablewee. Thanks also to Liz Metzker, Ferris Safari, Darith Gales, J.C. Howard, Julia Carney, Neva Grant, and Jeff Rogers.

Our intern is Janet Ujung Lee. I'm Guy Raz, and you've been listening to How I Built This. This is NPR.