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.

Julie Rice and Elizabeth Cutler founded SoulCycle, an indoor cycling studio chain, in 2006 as more than a health club; they wanted it to become a lifestyle brand that would “empower riders in an immersive fitness experience.” By early 2015, SoulCycle had grown to 38 studios in seven metropolitan areas. In March 2015, Equinox, a luxury fitness company that had financed SoulCycle’s expansion in 2011, approached the co-founders with an offer to buy them out for $90 million each. It was an attractive offer but it would also likely circumscribe their responsibilities. Rice and Cutler had to decide whether to accept the Equinox offer as a prelude to smaller roles at the firm (even potential exit), or continue investing time, energy, and financial resources in growing the business.

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SoulCycle

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