SoulCycle Founder Julie Rice on What She’s Doing Differently in Her Next Business

0:00Hey, welcome back to the Female Founder World Podcast. It's Jasmine. I'm the host of the show and the creator of the Female Founder World Universe. Before we get into this episode with the founder of SoulCycle, Julie Rice, I want to let you know about Female Founder World Summit on Saturday 9th of December in New York. Tickets are on sale now and they're actually moving very, very quickly. We do have a handful left, but honestly, if this is on your vision board for 2023, make sure that you grab your spot now because it is moving quick. Female Founder World Summit is the end of year party for all the entrepreneurial girls who don't usually get that end of year office party because we're building businesses, we're self-employed, and maybe we don't even have an office.

0:45We have speakers and live mentorship sessions with the founders of SoulCycle like Julie, who you're hearing from today on the show. You're also going to hear from the founder of Poppy, which is one of the fastest growing beverage companies in the US and literally started from the founder's kitchen. Little Words Project, which was bootstrapped to$20 million in annual revenue, half days, and more incredible female founders. We're going to have a wine bar by Nomadica, brand activations, a little mini relaxation station from within, incredible gift bags that are worth more than what your ticket costs.

1:17So even if you just turn up and grab your gift bag, you've already made your money back. And of course, a room filled with your future business besties. There will be vibes, a DJ, and just a really good time. And honestly, if you've been listening to the podcast, if you're part of our group chat, or you've come to any of the workshops, I know that you have leveled up in some way this year. And I think that that really deserves celebrating. Head to femalefounderworld.com to get your ticket. Our events always sell out, so make sure you get onto this one today. You are now entering Female Founder World with your host, Jasmine Grinsworthy.

1:51Julie Rice, welcome to Female Founder World. It is so good to have you on the show. Thanks for having me. I am kind of pinching myself. I feel like you're one of those founders that everyone knows what you've built and everyone knows kind of who you are. You have created something that is so much bigger than just you. And I'm excited to get into it and to share all of these lessons that you've had over many years of building incredible companies for people who don't know you. What have you built? I'm Julie Rice. I'm the co-founder of SoulCycle. And after that, I did a brief stint at WeWork. I was a partner there for a few years.

2:28I didn't know that. I was. And now I have a new startup called Peoplehood. I'm going to get into the Peoplehood story in a second, but the first thing I just have to ask is, why start another company after you have already built something that has been so successful? What made you think, okay, I'm going to get on this train again and do this all over again? I'm tired thinking about it. Look, Elizabeth and I build things that we want to see in the world. We are really the users of the products that we build. I'm not somebody who, you know, looks at the landscape of what's trending in consumerism and thinks, oh, that's something that's trending.

3:10I should build that because, you know, there's an opportunity to make money. Elizabeth and I really build things that we need, that we want to use, that we feel like we can be part of a community of. And so I really do build these things for me. And, you know, success for me has always been a byproduct of building things that I wanted to go to. And so I really saw something that didn't exist in the world and I felt like I'd give it another try. And here we are. Like we said, I want to talk about peoplehood in a minute because I think what you're doing is very needed and very important. But we need to get to peoplehood, We need to understand the SoulCycle journey.

3:50And oh my God, what a story. What a story you guys have. I want to know how you met your co-founder, Elizabeth, and how things got off the ground. Yeah, absolutely. So before SoulCycle, I had an entirely different life. I lived in Los Angeles. I was a talent agent. I have loved actors since the entertainment business, theater. I was a real theater kid. I have just loved all and all of everything about production. And so after college, I moved to LA. I was fairly successful in the movie business. At about age 30, I decided I wanted to move home. And I came back to New York. And one thing that I noticed was that there was no exercise like what I had experienced in Los Angeles, which was, you know, exercise was social.

4:35I would go hiking with my friends. I would go biking by the beach. It was something that you did to make yourself feel better. It was a way to release stress. It was really just a part of a lifestyle that had not yet made its way to New York City. And I was taking a class at a gym in New York, and I was taking a class with a teacher, and I kept saying to her, this could be different, this could be better, it could be social, it could be fun, there could be a brand around it. And one day she said to me, you know, there's a woman that takes a class of mine at another gym. You should meet her. She said she wants to invest in starting a fitness business.

5:09And it was crazy. Elizabeth and I met for lunch. We met at the Soho house. It was January. and we have this amazing lunch. And the truth is, I'm sorry that Elizabeth isn't here, but if you met her, we're really very different. But we sat down and we started talking and we just had a very common vision. We were very passionate about the same thing. She had just moved from Colorado to the city in a very similar timeline as I had, also looking for hiking and the sociability of exercise. And I left lunch that day. and as I got into my cab, my cell phone rang, and she said, okay, here's what's gonna happen.

5:47I'm gonna research real estate, and you're gonna look for towels, and we're gonna meet on Thursday. And sure enough, on Thursday, she called me, and she had found an old dance studio on Craigslist. Does Craigslist even still exist? I didn't even know. I think so. It certainly is not a place that I would ever look for anything anymore. But she had found this old dance studio on Craigslist. It was in the rear lobby of a building. It was 1 ,300 square feet. I met her there. It looked fine to us. We went across the street to a Starbucks. We wrote our business model on the back of a napkin, and we thought if we saw 100 people a day at$27 a bike, we would be able to keep the lights on, we'd be able to pay for the bikes, which you rent.

6:26And we also both had young babies at the time, and we needed to pay for some childcare if we were gonna go try to start a new business. And that's what we did. What was the vision in the early days? Did you know that SoulCycle was going to become SoulCycle, or were you creating a studio? Oh, we were creating a studio. I just remember thinking, like, it was my job to make sure that at least 75 people got on mics a day and I just couldn't go home until that happened. And if I had to walk up and down Broadway or go hand out flyers to doormen, that is what I did. And one of the things that I, in retrospect, I really look at and I think it's actually hard as a second time founder is I really think that when you're building a business, thinking about how you make one customer an evangelist is the way you do it.

7:16It is that feeling of not just product market fit, but it's that feeling of really making somebody feel like not only is the product great, but that they matter to the business. And in retrospect, they really did. We were in the rear lobby of a building. We had no sign. Nobody could find us. There was no boutique fitness. There was no category. When people used to call the front desk and I would tell them that they had to pay$27 for a spin class, they would say to me, but that's included in my gym membership. And so we had to love people so much that they wanted to come back. And I really try to keep that in mind the second time around, just really thinking about just focusing on making one customer not just happy, but so happy that they have to tell a friend.

8:00I had no aspirations to create, you know, a hundred spin studios. It was really about how do I make this one place the best place. Okay, so how do you do that? I am interested in how you get those first people in the door. You did it with SoulCycle and now you're doing it again with this new business, Peoplehood. How do you get those first people through the door? Obviously, you have a bit more of an advantage now in that you have more resources, you have a name, you know, people want to hear from you and what you're building. But I think that there's a lot of lessons there for folks who are not just building bricks and mortar businesses, but trying to get their product in front of people.

8:36Like what's working? What works then and what works now? Look, I have always been a believer in community building and building relationships. I think that we can all see that we can spend a lot of money on customer acquisition, but that doesn't always translate to retention. And, you know, we can just continue to churn and churn and churn. But realistically, if we all doubled down and really invested in turning our customers into communities, I do believe that is the way that you get people to stay and you create a lifetime value of a customer because a customer feels valued. And that's really what we did in the beginning.

9:17In the beginning, we just became part of the community. We were at every street fair handing out flyers. We were at the local public school offering them, you know, free classes for all the moms, seeing if the PA wanted to organize a fundraiser and just use our space. We allowed everyone that walked through the door to use the space for whatever, you know, charities or philanthropies were important to them. And then a lot of it also really came down to training our employees to be hospitalitarians, right? Training and building community has always been such an important part of the ethos of everything that Elizabeth and I build.

9:58And really investing in teaching people how to treat each other like a community and how to treat customers like a community. I'm interested in what that turning point was for you at SoulCycle when you knew that this was going to be something that was a lot bigger than just this single studio. and that you kind of knew that you were onto something? Was it, you know, a second location? Was it a piece of feedback? Like, how do you know that you're at this inflection point, that things are gonna snowball? You know, I can actually tell you. I can think of each milestone along the way, and I can tell you a couple of them, because they're so memorable.

10:36And, you know, I remember sitting in the rear lobby with nobody coming in, with no sign. In fact, we actually bought a rickshaw on eBay, And we painted it yellow and silver, and we put a sign on the back of it that said, SoulCycle with an arrow this way. And every day, we would get a ticket from the community board for$65, so eventually, I learned the traffic patterns, because we didn't have$65 to spend, and so I would put it out there, like, on Saturday mornings, because a lot of people would see it. But I will say, I will never forget the day that our first class sold out. I remember closing the door to the studio, and there were 35 people on bikes, and I thought, wow.

11:15Like, the room is full. And I closed the door, and 35 people were on the bikes, and it was amazing. And I will say, you know, in the category of Charmed Life, we started to cash flow after six months. We became, you know, profitable. We started the business for$250 ,000. We built it out of Ikea, and we rented bikes. And so it was really, it was a different time. But then, you know, you start to sell out classes. and actually what wound up happening was, you know, the supply, you know, the supply became less than the demand. All of a sudden we started to sell out classes and sell out classes and we could not get another space.

11:55It was 2007, 2006, 2007. And at the time, remember, New York City wanted to rent retail space to Banana Republic, to Duane Reade, to Chase Bank, you know, two women with a business that was making a lot of cash was not exactly the most desirable thing. Anyway, we decided that we were gonna open a summer location in the Hamptons. And I had called Hamptons Magazine to see how much it would take to put an ad in the Fourth of July issue, and they told me the price, and I said to Elizabeth, listen, people don't understand this business one-dimensionally. Like, an ad isn't even gonna do anything. We should go out to the beach, See if we can find a space.

12:37And if we can run a summer studio just for break even, just for marketing, we should do it." And we did. And we went and we opened the barn, which has become, like, somewhat legendary out in Bridgehampton. And another milestone was we came back from that summer, and all of a sudden, there were town cars lined up and down the block outside the studio in the morning. And we knew we had gone from being, like, a great full neighborhood business to becoming like a citywide thing. People were coming from all over. It was like, it was a crazy thing. And then we started crashing servers on Monday for sign up.

13:14You know, we had one developer who built us this little, you know, sign up website, which by the way, at the time, nobody had digital signups. You used to go to your gym an hour before spin class, sign up on paper, wait the hour. So for us, like our online reservation system was revolutionary. Anyway, we started to crash servers on Monday. That was another milestone. The site could not take the traffic. And then the last milestone that I will tell you about was we had opened, you know, a bunch of studios in New York City, a couple in the suburbs around New York, but we had still only opened studios that Elizabeth and I could physically touch.

13:53You know, I would go and merchandise every studio. Elizabeth would go and, you know, stand behind the front desk. And I remember people always saying to me, you know, that's great as long as you can be there, but how are you gonna scale human experience? Oh, my gosh. Question of my life right now. Right. How are you gonna scale, you know, what people feel? And I will never forget, we opened our West Hollywood location, and Elizabeth and I went and we cut the ribbon, and then a year later, we went back. And we rode in the class, and afterwards, we went into the lobby. And just like in all of the New York studios, people started to pull me aside and say, you know, I came because I wanted to lose a couple of pounds, but you should see what this has done for my marriage.

14:35Or I came because my doctor said I needed better cardiovascular health, but this gave me the confidence to leave my job. And it was the exact same things that people were saying in the lobby, is in New York City, in Connecticut, in Scarsdale, all the places that I would go once a week and visit. And I hadn't really touched LA. I mean, we'd done a lot of training, of course. We'd sent out a home team to open it up. But it was all I knew then that if we invested in people, both in our community, our instructors and our front desk employees, that we were going to be able to scale human experience.

15:08That's incredible. I want to know how you do that. You say invest in people. What does that look like to equip someone to go and do the thing that you do? How do you outsource and externalize that? I think a lot of people, you get to an inflection point in any business where you're like, I need to hand over this thing, otherwise it can't grow. How do you do that? Yeah. So it's interesting because, you know, I would say that if I looked at the landscape of direct-to-consumer businesses out there, I have to say that I think people really underestimate the time and money that actually training human beings takes.

15:46You know, people would come to SoulCycle and say, this is so amazing. Everyone here is so great. I mean, that did not just happen. You know, every one of those people that was so great was really invested in, in a very real way, I would say the biggest cost that we had at SoulCycle was the money that we spent investing in people. And it was well worth it because people were our product. But ultimately, you know, a lot of the DNA of businesses, I always think, comes from the founders, right? You know, founders make instinctual choices. I think businesses are really reflections of the values and principles of their founders.

16:22Elizabeth and I, two female leaders in a time when, by the way, there were not that many female entrepreneurs or CEOs. We have four daughters between us. And our litmus test for the business, we used to say when we would make choices, is this a place we would want our daughters to work? And that's how we made every decision. Is this the way I would treat a friend? Is this the way I would want my daughter to be treated? And so first, I think you take that DNA. But then the question is, how do you scale the DNA of what decision I might make at the front desk? So we were lucky enough very early on to find a chief culture officer.

17:01She was actually a customer. She came to me one day after class and said, I'd like to work here. We said, we have no money. The only people that work here are me and Elizabeth. She said, maybe we can trade some classes. Anyway, I always say I never remember the day that Amy got her first paycheck, but we've been working together ever since. And Amy would run around with a notebook. And she would codify these decisions. And ultimately, after a decade, we had a hundred different, you know, units of education that we taught at SoulCycle University, which was the entire basement of our HQ. We had fake front desks.

17:34And everybody would learn everything from history of the brand, how to be a culture of yes. Every employee that started working at SoulCycle worked for at least two weeks at the front desk, whether you were the CFO or whether you were the bike maintenance person. because the truth is we all would say that you learn more by being in your business for two weeks than you do being at your desk for two months. And that is really the truth about it. And then on top of it, besides from just training people to be hospitalitarians, Elizabeth and I did a lot of work on our own partnership and relationship as the years progressed.

18:16Very early on, we found a coach. We started to work with her. And we really learned how to communicate with each other, how to lead. And as we would be learning these lessons, we would teach them to the rest of our employees. And so ultimately, we became a culture of, you know, transparent communication. We became a culture where giving each other feedback became the norm. And so because people were able to communicate with each other so well internally, and because they were so happy because of it, it was kind of like our internal culture was reflected in the way that the customers felt about the business, which I think is really true.

18:55I've interviewed honestly thousands of founders now and I see this pattern where the founders that seem to build these big businesses that expand so much beyond just their initial vision are the ones that have continued to invest in themselves and are really reflective and have up-leveled in that way. I'd love to know what some of those specific things are that you learned through that coach. How did you learn to have conversations with feedback? Totally. And actually, it's a great segue into Peoplehood because so much of what we're actually teaching at Peoplehood is what Elizabeth and I learned ourselves in those sessions.

19:32So the truth is, you know, the spoiler alert is the main skill that you learn in any sort of a coaching session or the ones that we did with each other with another person. I mean, two founders, two CEOs is a difficult thing. We really learned how to listen to each other. Mm. Elizabeth and I, when we have differences, when we have decisions to make, we usually do those meetings in two parts. We come to the table, usually our coach is there, and we each bring kind of the way that we feel about it. And one person talks and another person listens, and the other person talks and another person listens.

20:09And then we kind of wrap up for the day. Because especially when there's conflict or two points of view, it is very hard to pause and absorb somebody else's perspective in that moment. You know, to really understand somebody else's world, somebody else's story, why somebody else thinks, you know, something different than what you are thinking is correct. And then we usually come back the next day, or a few days later, and I have to tell you that, like, five out of six times, we come back to the table, and Elizabeth will say, you know what, I totally see it your way, that's the way we should do it.

20:45and then I'll come and say the exact same thing I see your way. But I actually think that's one of the things that's made us extremely successful because, you know, we are very different people and we do see things in very different ways. And when you are forced to absorb somebody else's opinion rather than create this whole insular world where you only see one thing one way, I do think it's a real recipe for success, especially if you have a partner or somebody that you respect in that way. I do the same thing in my marriage. My husband and I have really learned to communicate in this very same way.

21:20And I will say that it has been transformative for us because my husband and I are also different and we parent differently and we spend our time differently. And I do think that this ability to take in another human being's perspective and integrate it into your own, when you talk about leveling up or growing, You know, I would credit Elizabeth and my husband to being the two people that have created the most growth for me as an adult because of the way that I have sort of been forced to learn how to communicate and take in their worldviews. They've really expanded mine. That's such good advice.

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24:31Yeah. Well, okay, so, you know, Elizabeth and I were like two women who started this thing in the rear lobby of the building. We didn't know anything about it. I mean, neither of us ever taught a spin class in our whole life. But, you know, we understood brand. We understood people. We understood hospitality. And all of a sudden, you know, SoulCycle started to get, like, all this buzz in New York City. And so Equinox called us pretty early on. Their CEO called us. I guess he'd been hearing a lot. We'd been making a lot of noise in the space. And we started to have some initial conversations pretty early on, but we weren't quite ready to sell any of the business yet.

25:12And then after we had about seven locations, we began to see that we had created a marketplace and people were coming into that marketplace. We began to see, you know, competitors and, you know, it was just starting to feel like we wanted to grow quickly. We wanted to be first to market. We really felt like we had a right to own that market. it. And, you know, and I'm sure that a lot of people listening to this will, you know, completely identify with this. But one thing I will say as a founder, as a first time founder, and also as a female founder, I think there's a lot of times that you think that other people know how to do it the right way.