SoulCycle

David  Collis; Eric  Van den Steen; Ashley  Hartman

Case | HBS Case Collection | January 2017

SoulCycle

by David Collis, Eric Van den Steen and Ashley Hartman

Abstract

On the Upper East Side, fifty fit women and men cycled in unison to blaring music in an indoor cycling studio shrouded in darkness except for the grapefruit-scented candles lining the podium. A few who had proven their skills were selected to lead the pack in the coveted front row, next to Jake Gyllenhaal and Selena Gomez. The cyclists, clad in spandex and tank-tops featuring the SoulCycle logos, dripped sweat as they climbed hills and sprinted down flat roads while the instructor shouted inspirational slogans.
SoulCycle was a leading indoor cycling studio with a massive following. It had grown from a single, 31-bike studio in 2006 to a network of 38 studios in seven metropolitan areas in 2015 (Exhibit 1). Compared to the many other health clubs that existed, SoulCycle saw itself as a lifestyle brand that aimed to “empower riders in an immersive fitness experience."
CEO Melanie Whelan led SoulCycle’s growth since 2012 and was committed to expanding its footprint, opening 10-15 new studios per year. In July 2015, the company announced an IPO – which valued the company at $900 million – but it was ultimately postponed due to macroeconomic uncertainty. Although Whelan was confident about the company, she knew that the ride was getting more challenging and struggled with how to keep cyclists loyal to the high-priced brand.

Keywords: SoulCycle; Flywheel; spinning; indoor cycling; boutique fitness; fitness; health clubs; strategy; competitive advantage; community engagement; segmentation; corporate strategy; Expansion; Strategy; Business Strategy; Corporate Strategy; Expansion; Competitive Advantage; Competitive Strategy; Segmentation; Health Industry; Sports Industry;

Language: English

Format: Print

23 pages

Educators

Citation:

Collis, David, Eric Van den Steen, and Ashley Hartman. "SoulCycle." Harvard Business School Case 717-454, January 2017.

Case | HBS Case Collection | January 2015 (Revised May 2018)

$19B 4 txt app WhatsApp...omg!

David Collis, Ashley Hartman, Aakash Mehta, David Collis, Ashley Hartman and Aakash Mehta

In February 2014, Facebook announced the acquisition of WhatsApp for $19 billion. WhatsApp, founded in 2009, was a relatively young company that employed only 50 people and earned merely $10 million in revenue in 2013. It was one of many mobile messaging services that allowed users to contact each other without paying costly text message fees. However, its popularity and growth potential enticed Facebook, a company facing many challenges and looking for opportunities to expand its user base. Facebook, the social networking website that allowed users to share information with friends, believed WhatsApp was a logical next step that would help it achieve its mission of "making the world more open and connected."

When Facebook announced the acquisition, it vowed to keep WhatsApp operating independently, letting the founders control the direction of the company and allowing WhatsApp to stay true to its mission. Yet, many debated the logic behind paying so much for such a small company with limited revenue streams. Was Facebook correct to purchase WhatsApp? Even at $22 billion? How could it create value if it did not integrate WhatsApp with Facebook?

Keywords: WhatsApp; Facebook; Mobile Messaging; social network; Acquisitions; value added; strategy alignment; monetization; social platforms; technology; Strategy; Corporate Strategy; Acquisition; Communication Technology; Social and Collaborative Networks; Value Creation; Communications Industry; Information Technology Industry;

Citation:

Collis, David, Ashley Hartman, and Aakash Mehta. "$19B 4 txt app WhatsApp...omg!" Harvard Business School Case 715-441, January 2015. (Revised May 2018.) View Details

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Despite facing giants like Coke, Pepsi, and Budweiser—with obvious potential sources of competitive advantage—Red Bull had established itself as the U.S. market leader in energy drinks. By 2008, however, Red Bull's dominance was challenged as Monster drinks surpassed it in volume. The case considers judo strategy both from the perspective of a small player (when up-start Red Bull faces Coke, Pepsi, and Bud) and as a large player (when market leader Red Bull faces up-start Monster).

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