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From home-business to billion-dollar fitness empire | Orangetheory Fitness’ meteoric rise to the top

2019-03-19 | 🔗

Life-changing. Addicting. Intense. These are just a few words that have been used to describe Orangetheory – the fitness studio known for its science-backed, technology-tracked, coach-inspired workouts. The franchise has taken the world by storm – in just eight years, it has amassed a million members, expanded to over 1,100 locations around the world, and has crossed a threshold that very few businesses manage to reach: exceeding $1 billion in revenue in a single year. But what is it that fueled Orangetheory’s rise to the top of an industry that is so full of competition?

In this episode of the peak performance season, we are bringing you to Business Mastery – where you have a front-row seat at the Masters of Disruption panel. At this panel, Tony spoke with Ellen Latham, the creator and co-founder of Orangetheory Fitness. You’ll also hear a bit from Danny Meyer, founder of Union Square Hospitality Group and creator of Shake Shack, as he participates in the panel, and even asks Ellen a question toward the end.

As you'll soon find out, Ellen’s energy is boundless, and certainly infectious. And it was this very energy, in combination with her creativity, determination and pure grit, that got her through the most difficult time of her life – a time when she was laid off her job, out of work and a single mother to her 9-year old son. She tells Tony about her bulletproof mindset during that time, and the sports psychology technique she used to turn what could have been a massive break-down – into the massive break-through that led her to create Orangetheory fitness.

Orangetheory offers heart rate-based workouts, built around the physiological concept of excess-post-exercise oxygen consumption, or E.P.O.C., where the body continues to burn calories at a higher rate even after the workout is over. But behind the science of Orangetheory is something far less measurable, but just as powerful: its raving fan culture. Ellen reveals to Tony how she and her partners have strategically built an army of fiercely loyal clients – and what they’ve done to scale this culture across the globe.


This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
If you're listening to this path cast, it means you're ready, no more than ready to have a major breakthrough in your business, your hungry for change and your hungry. For growth and that's why you're feeding her mind right now with all this valuable information, but to drive those changes to be really smart about what you're doing and to make the right choices before you take massive action, you need help from someone who's been there. Someone isn't a coach you through
even just someone to get. You started on your journey. That's why twenty robins is offering free one to one business strategy session from one of his top business coaches. Six hundred dollar value completely free, no strings attached! That's right! If you're listening right now, you can go to Tony Robin Stockholm, Slash CEO and signed up for a free session with a member of trains team whose help business owners like yourself, overcome their obstacles and set them on the path of success. Life. Changing addicting intense These are just a few words that have been used to describe orange theory. The finnish studio known for its science, backed technology, tracked cushion spired work out. The franchise has taken the world by storm in just eight years. It is amassed a million members expenditure over eleven hundred locations around the world and has crossed the threshold that very few businesses manage to reach
seating, one billion dollars in revenue in a single year. But what is it that fuelled orange theories rise to the top? of an industry that so full of competition here guys it's any org and its rural director of her robins research. Welcome back to the tuna robins pot cast in this episode of the pig performance season, we're bringing to business mastery where you have a front receipt at the masters of disruption. Panel at this penalty spoke with Ellen lethal. The creator and co founder of Orange Theory, fitness you'll. Also here a little bit from Dini Meyer, the founder of unions were hospitality, group and creator of Shake shack as he participates in the panel, and even asks Elinor question toward the end now. Since this is audio, only you can't see her on stage but you're going to quickly figure out from what here that islands, energy is absolutely boundless, and certainly infectious- and it was this very energy
in combination with her creativity, determination and pure great that got her through the most difficult time of her life a time when she was laid off from her job out of work and a single mother to her nine year old son. She tells Tony about her bulletproof mindset during that time and the sports psychology technique. She used to turn what could have been a massive break down into the massive breakthrough that led her to create. In theory, fitness orange theory offers heart rate based workout built around the physiological concept of excess host exercise, oxygen, consumption or epoch, where the body can news to burn calories at a higher rate, even after the work out is over, but behind Science of orange theory is something far less measurable, but just as powerful its reading fan, culture
Ellen reveals to Tony how she and her partners have strategically built an army of fiercely loyal clients and what they ve done to scan. This culture across the globe. So great to have you here, wonderful thing, I ve been doing this for years. You started when you were to allow tell us, took you took in an industry, that's cluttered where, well done. A million different types work out. I know my train or Billy back members when you were working at same facility is before you start in eight years. You do know what a billion dollars and revenue your changing people's lives, how they How do you go from work? for somebody else: the building, an entire new yeah segment of the industry yeah. Well, Trusting story there export psychologists theory, called momentum, shifting is and momentum shifting.
Is focusing on what you have instead of sets obsessing over. What you don't have. My father was a facade teacher. Football coach of my local high school in Niagara, falls New York, a mere fact. My father since passed today is his birthday. Ah, I am still a world, so excited he lived is like very much and momentum. Shifting up focusing on what you had at forty three years of age and sixty two now when I was forty humility to lose no bill it up or lump believable off, but you what people know. You started this during a really tough time for exactly I had my dream job I call it, and my boss call me into his own This and told me they had go their day and I was a single of a nine year old Son and, quite frankly, I didn't know what I mean going to do. I was in a panic, but this Madame shipped up various focusing and building on what you have at that time. I hear
Politely certification. I was a great group- acts instructor So I went down to my gold and I talk the owner into buying some bikes, and this was before spinning was in every Jim. There was- and I said well split at fifty fifty ok, then I started soliciting, though spinning clients to come and take pilates with me use a spare room out of my house to start doing what out one blottings and I got building until pretty soon I had to women some days from six, a dot m in the morning to nine p dot m. At night I had two women pulling in my driveway to him, pulling out of my driveway and their ex I myself, I always joke. I have no idea what the neighbors, so, what kind of business going and I kept meant him shifting brought a little money to open up and eleven hundred square foot studio in the next phase of that was big on or room that was the foundation of the oars theory, fitness worker and tell us what was the breakthrough. What was the point you at the breakthrough? It actually developing orange theory
But what will our due to separate out from so many different other types of a programme? Rather well, I've been teaching group, it is for us for two years, and I know the reason why people then stay with working out is because they didn't feel successful. They didn't feel like they got results, and so they didn't, you know, stay with that. They don't want to keep flogging through weeks of working out. Maybe it it'll work, so I came up with a science backed work out no other ministers agree and exercise physiology. So I based work on the science of E park, which is access, post exercise, oxygen, consumption, a big word, All it means is you create an oxygen deficit in your body, in your body, has to repay it. Twenty four where's after it's like money in the bank, you created deficit in your bank account you have to go work harder to replace those funds in the underground and terrorism have earning. I Alaric a higher rate for twenty four hours after so I sit on their tyres Ivan, create decide. It was created and we back and ninety four
when they realise this was a great way to do. Interval trading with athletes in the Olympics. I just took that science and then we again, what's very important is measurement. You know I've been taking the last five days with your while Tony while wow right, she's, been here with your damn. I'm with you guys. So the portance of measurement just in like in business girl, is very important and exercise. So we have techniques gee do in real time. You could measure how your heart is performing, so you don't under exert in you, don't over exert and the goal is to get your heart rate over eighty four percent. That's what I'm creed! there oxygen deficit for only twelve minutes by the end of the hour. You don't do all the twelve minutes in one one bout of twelve minutes.
Bite size sections sixty seconds here. Ninety seconds there and all you have to do- is get that twelve minutes at the end, and I could produce about a twenty percent additional after burn in your body. It's working for a lot of people will tell us you jus, regionally fundamentalism in your starting out what mumbling at the plant go either what pointed to decide to go at franchising. Were you concerned about their got some of the largest franchises other models that suits, and unfortunately is tat? Tells you although I have my small little studio, polarities pilates in this work that are created. One of my members April current comes into me one day, listen Ellen. I think you should talk to my husband. He does chasing, and I think that one of these should be on every corner. People love this work out. They can't get into clear,
results so eventually I did speak to her husband, so he had worked in the franchising world before with the massage envy franchise. So Heavens partner met with me and we just kind of sad Let's see what we got here. We are, you know, what's so funny sitting in the last five days with you when you talked about the artist you talked about the leader in you talked about the entrepreneur, I'd even think about this, because I did no names for them, but that's exactly what the three of us, our, Lastly, what the three of us, our I am, the artist and then the ceo of our company Dave Long is the leader in Jerome. Kern is definitely the entrepreneurs so interest. Finally, I do not see a K. I always talk about. We were the perfect storm and I think you know that really made a difference in our growth, but you further define those names was all be going back and letting them know exactly who they are.
Tell us. Who is your idea of when you started a market? Who did you proceed? and who is your ideal quiet and how? you really get across what you are and how different your? How do you market that yeah? That's very challenging people thought we were orange therapy. We thought there were a therapy programme, we're Orange Julia's they came in for a drink yeah. You create a whole name, that's a whole mother think so you know the we're. The name came from the theory is a twelve minutes of yellow E park, and then we went with the color and because it represents colors, vibrate energy, that type of thing so yeah it would slow. You please work on your energy little because I have the energy come and others womanly lives its gas, so yeah, so you know in the beginning, absolutely it's something that we have to spend on
lot of time in you know, building up who we were so. What was very important is the words that, even in the coaching of the work out, how that was described is very and, in those words, have even how we described the work on the outside. Now, what that does is words creates actions. So then what happens? Is because of the words of how? We were going to get a coach people in the work at which all levels can come there. Three categories of Walker, category jogger category run or get it were so it doesn't matter how the condition you are. You could do the work of. We had a walk next to try ethylene the other day in class and everyone in the same class. Because of the categories Words represent actions. Now actions represent an attitude, so words, actions. Attitude really is what we talked about. We on about we worked on and what is an attitude? Will you know they are totally cassettes. What you got its contagious? What
show in the very beginning, essentially something you both about the power of words shut up shape your culture. What were some of the work? that describe orange there'll. Be then there are the same today yeah. So what a science back technology trip, coach, inspired, work out. That's how we describe our work Science is what I just to block two about epoch: the technology, is everyone's hooked into our own proprietary heart rate system, so you wouldn't really. Time know how Your body is responding in that work out. You know if you're under training over training are yours on and you get a slam. Those twelve minutes technologies very important today, and we realise that so we ve got things like we ve got our challenge, trackers and our studio. So what is that you would? We have benchmarks was because again we like to measure things, so we are not interested in you just coming in doing a work out and fading away. Five years from now, we're gonna be around forever in this
as one of the reasons why, because we know how to progress your physical body, so they are channel tracker, you would do the one mile walked, jogger run and then you're gonna. Do it a couple times, here and you're, going to see that you shave some time off of that, which means you got a stronger heart, which means that you have a strong physiology. I'm really excited about the new technology coming on board by the end of the year, which is called o t connect. So you walk studio in the treadmill in the lower recognize you welcome Tony, and it has all your data within that platform, and then it's gonna collect that as well as what you did in that work out, and we have all kinds of exciting things were going to do with that The coach inspired aspect and description of the work out is all the work out are designed in a light
that I have here, a bulk retarded. Our corporate office, so we have a whole team that designs the work out tests them for heart rate response then send them to the over thousand studios. We have open right now, so everyone on a given day is doing the same work out so on Monday in Japan, because we're in Japan there doing the same or alone of at least Monday, though I'd have you know what I've been so somebody in California and someone in Oklahoma Monday are doing the exact same work out that works out really well, because our connecting with each other there talking on social media in Austria, Stirs our comparing the same work out results that type of thing. But when you talk about how do you get people to know who you are and what you are you ve been talking about it all week, it's totally about ravings ants and what makes them such raving Vance warrants there. Aren't you think it is what is the unique selling properly?
in our experience that you're giving people that so different begin. Now again, I think our small footprint of about thirty three thousand thirty five hundred square foot facility- it's really no bigger than that. Studios allows, are staff to really know everyone's nay know about your dog know: you're goin on occasional hospital lily does it which Jim's have struggled to do because you ve got two thousand members or whatever the case may be. So these small communities is kind of back in the neighborhoods or will you stuff? You know have that come robbery with our neighbours and so on. As many people don't even know, their neighbours will live next door. It's brought them back in the sense of community is over well, meaning people. When we say raving fans, people have got tattoos shave, the splat is our logo. They ve shake their heads.
Splay outside them out there really unbelievable story is two girls befriended themselves. I think it was in the MID West and one needed a kidney believe one donated her kidney him, this other girl there lay us with, because she was not a match with any relative. Anyone that she put out there- and this kind of stuff is blows me away of the kind of community and cultural assets, creative. How much is the role that you know who I'm talking to Danny? He really works hard to find the nature of the right nature for that job. That's got to be critical for you as well. Are you gonna be able to scale? Tell us? How do you make the selection of these instructors and the people within your organization yeah? We really look for that kind of. I jokingly say that orange gleamed in the eye and basically what that means as a really get who we are and they
Wanna be a part of this movement mission. We don't see that we, we don't call ourselves a fitness company, what we call ourselves as a more life company that we give people more life. We give you more effervescent more energy, hopefully a few more years on at the end. That's how we see ourselves, so we're looking for people who want to commit themselves to work with other individuals, all different levels, all different sizes and give them more life or real clear of what we're here too,
What does your marketing strategy is an all word of mouth? Is it ever? I dont know I apologise, but what does your strategy what's work best for you and helping it to get a gap? It has been very organic word of mouth. Many of our franchisees were members before they decided to buy a franchise and they just again became raving fans and said I gotta get on this path. I I need in order to become a franchise ie, so we built this whole Yeddo conglomerate of individuals from raving Vance. When told us about two major challenges, based on the business at some stage that baby shook you up or sugar team up and how to turn around the first year of franchising. So there's myself and our two partners Guenaud franchising or duplicating any business Indiana. You know this is about
both the processes and, of course, the programme or the product. So we started franchising and we didn't select the right people who would be partners with us as franchisees. They weren't the right individuals and we then, how did you know the cottage and allow were well we as we urge we only had a few open and as we are going and look for consistency in the product in you know, in a franchise, you can't start you're selling random things. So all of a sudden there's, you know milkshakes environments, unlike loser these my vote, and we can do that. So the inconsistency is very, very important.
The processes with you know started very, very small and we didn't really have a lot of staff to put a lot of their together. The three of us started putting their together and we realized. You know we have defined experts in each one of those areas and so that we stop franchising. You stop. We decided after a year, We're not gonna. Take people's money. We're not going to do this without any just franchise to say, or we have five hundred franchises. We want five hundred one thousand profitable franchises That's what the three of us decided and we said we be good if they we had thirty, we beat cited. If we had thirty we're very excited in the beginning, we set of weaken it thirty and their profitable franchising. You know: franchises we'd, be very, very x, so that was challenging. We stopped, and we said, let's reboot, let's not take any one
money until we really feel like we have a legit product tear, you know that's what I'm so proud about the partners that I do here that we were all on the same wavelength of taking care of doing the right thing. So much has told me another example, because when people see you they see a rocket ship. So it's really important for them to realise rocket ships have their starts. As well and also to your how you solve it yeah. I think that you know we're in the people business. So, what's tough in growing pains in a company is when you start small, ok and you ve got certain people that are managing certain areas in we're only or eight years old we have eleven hundred stood.
Those we have four hundred and fifty studios in the works of yellow, getting LISA sign so on and so forth, and were in twenty three different countries: the work outdone in eight different languages, so that very quick growth. In eight years you may have certain people heading certain areas, our departments in your company, that it's kind of a groan who they are and that's you know I take it very much to heart with few people here who are who have committed with us from the big sitting in the company and we try. You know frantically to find the what's the right seat on the bus for them. You know, but sometimes it is not the one that they came in in the beginning and sometimes it's a little stressful.
How do you deal with out because you others there are people person now when the desert or someone else now, it's you now in that, when we were small yeah, it was more than the manager, the partner who did that, but we're out where our very involved in the company you are. We try relentlessly to find the best seat in the bus for them, and we have individuals who are still with us who may be shifted the sea, no one over back and readjusted, and those that just resisted and was like. No, I could take this where it needs to go. You know we support them and every which way, but sometimes you have to change to see. What is your culture? How do you keep that scaled across fifteen hundred centres? Almost now yeah, you know. The culture is really a, and how do you define culture? Your definition of well, I think for us,
it really was. You know we came from a small footprint and really making sure that we Knighton it's funny. When I hear you over, extend over produce scoring, remember coming in their coming in four fitness product were giving them all this individualise attention all this technology. So you know we have a lot of events that we pull together, to keep the group very, very tight. We you know social media that are more like work out of it, so we have like a dry try. So it's a triathlon, that's dry land. What's in our studios, and then all the other studios or where everyone across all of the state we are doing it at the same time. So then everyone comes together and routes for each other. In this type of thing, we have a in its coming up in about four weeks and educational summit. That is very important for us to edge
Kate are coaches. Are managers are sale stuff, you know many times, people yeah they want to make the best money they can, but you know what they really appreciate. You developing numb and that's become very important to us and we actually created what we call Orange University and it is a whole section of different training modules for individuals who stay with us to develop them. So you ve got someone who's, a college that comes in as a manager, and we want it. If you're gonna stay with us or not. We want to developing a coach whose working with individuals on the floor many of our cultures- you know, that's fitness people, we do fitness because we're artists we're just passionate about working with people physically, but you know we want to keep growing them, so we have found, that's been just
huge for creating such a culture amongst our professionals hat. While look what you get with this product, but I've found to betray you know, there's only three cups and motivation. I really believe their sphere, which never last you can see that despots they eventually get kicked out, certainly happens and businesses. While countries there is the idea of an plenty of incentives are wonderful, but you can really. That is why so, much as to how the margin- and if you only reward people for what they do and pretty soon they don't. You feel good about themselves, because there are doing to get something very much like the Tipp description that UK Annie and then there's personal development? There is a sense of autonomy, the sense that are growing, I'm expanding and that I found to be extraordinary bible. What won't you stand for? You know you have to haul standard and industry weird You say this. A first gotta go began many people with all her the phrase. If not to pursue hired person. You fail the fire that messes up your culture. Well. What won't you tolerate? How do you deal with that were very clear in our job descriptions to everyone
said Asturias, your soul role is to make people feel better about themselves using our product, so when they come in and use our fitness product, the ultimate goal is to make you, after a work out after several workers, to feel better about who you are from using our products. And how did you do that? What are some of the ways you trained people, We have a personal touches that we really encourage are individuals to you. So when a member comes in for the work out for that day, our coaches on the floor wanna make sure you have used their name in youth, correct ghetto, you're, really degraded increasing your base. Today, you ve really got find way,
he's too compliment down. Specifically, my German, however, encouragement you give them, there's nothing more powerful than encouragement. So you know by doing that, people do feel better about themselves. So, what's not tolerated is when someone wants to come in just for a job, the Orange theory, fitness is not your place of employment, that, if you just our passing through- and you just want to work and make a few box- and that's not a ghetto- are employ very hard to sometimes assess that in the interview in the beginning, I've gotta get rolling, and then you realize that you try to work with them. First off. You know that
what's going on Tony, let let me help you. It will be resolved by the way and then, if it's not where the person really sits or feels I've, even things of said not Tony but Joe, you know I'll help. You find something else. I will do whatever we gotta do. Maybe this is in a great fit, but in explain clearly why? But you know, let me see whatever I do whatever I can do to help you but I have to make sure there's a fit with everyone in those studios crossing. It became very popular and up what do we get injured and crossword? What how do you do
it is, of course, but you blog is irrefutable job about. How do you do that? Yeah? So again, I spoke about the science bear. The heart rate response work out. We look at the other aspects of the work out being based on what I call usable strength, usable functional movement, that we do as opposed to absolute strength of absolute what you really don't use interlocutors right this you know absolute streets, I'm in the Let me see the heavier stuck a badge press, it's not usable functional straight for most people here they want to age. Well, they want to fight cellular decline, they wanna get down and up off the round through the fifty sixty seventy eighties you're. So we are very clear of what our form of fitness is and we want you to be able to do it a lot of years. We have seventy an eighty year old them. What is your greatest desire?
farmers for this organisation of yours. What is it really delivering the people in your heart and your soul? Now you know I got into this Phineas over four, three years ago, cuz I'm passionate about exercise, but the fact they are and we're going to have a million members soon. I don't even know what you feel like with the millions of people that you have hatched, but I know just thinking that there is a million numbers that I've effect with this workout and they've got stronger hearts and they've got cellular decline and then we're going to maybe age a little bit better and they're, more vibrant and their life. Then alone. I'm done! Listen! It's great! That the company and its you know.
It had a billion dollar company. I have to say that is a great thing, but I want to tell you that is what I live for dynamic militarism question you'd like to ask one or two: just rocard for hours is thank you. We should really going to business together because we feed them and then you work at off up the area about the Spirit of the initial says. I call the spirit of the endeavours, the same thing with yes, that, whatever you are feeling when you come into one of our places, I want to make sure you feel a little bit better when you leave and that's exactly what.
Doing, Jesus lit up as you are about seeing people get the results from a broader galloping. You talked about what question which you have for her daddy. If you might have one, I would say how have you had to reinvent your leadership style as you ve grown grind? Personally, yes, yeah regression. Well interesting story. I'm gonna, give you a real quick. When April came, Endymion told me about her husband. I actually looked up at April and I said April. I know nothing about franchising and she laughed what a missed opportunity that could have been for me and when I think back of why I didn't maybe believe that I can do
things. So I was a woman. I was a so I didn't have a bunch of women mentors of big business. I was a single parent, so I invested some money. Who would support me if it didn't work? I was fifty four years old when April came in to as symbols that we talk about so dont people start there about retirement at that time. So when I think back about that- and they I urge you came in a week later in my brain- was in a different place in rewired with believe thing, and I think this is a woman taken. I do a lot of keynote speaking now to a lot of organization,
men's and women's organisations they bring man, because, as was very interesting that I didn't believe in my potential, even with everything I had not the same thing them that I have now. I didn't believe in my potential I didn't believe. Maybe I deserved to have big things out. You're doing a woman and I well like I said I think that that second time she came in, I took some of that fear and doubt- and I said I looked around my small little studio- there was very successful what is doing, and I said you gotta give this a shot. You gotta give this a shot, so you know there's all thing called Neuro plasticity. I'm sure you should, as are very aware of where you rewire your brain. This is your wire. Your brain might have got certain messages I might go. Certain messages growing up in the fifties and Sixtys as a woman, not seeing a lot of great women, mentors and big business, I might even so, whatever the case may be, there was slightly rewiring going off that second week she came in
but I'll tell you what, after I started with this not what you want you committed in my potential, and I believed I deserved it now use, The mantra from that moment that I partnered with those two gentlemen: two way I am today, which is why not me? That's all what's the able, via a little bit about that, you know others such a moment worldwide now for women to really acknowledge, are powered strength and reclaim net How do you look at the advantage of being a woman to that? Goes with it so exciting for me, because again, I'm a woman with the Euro intersects tease You know there's a lot going on with that thought process. So I love love. Just we are working with other women talking to other women. Especially one young girls, who, maybe you don't. We have doubt and just really encouraging them. You know to give it a shot and to believe in yourself, and sometimes you have to fine,
their individuals. To you know, assistant were your weaknesses and strengths are look at. I didn't have all they had experienced, enfranchising and so forth, but luckily I found partners that were very respectful of me. Knowledge. What I do bring to the table as earnest your hand, it helped me grow tremendously. In others, Got the artist witten got what you needed right. You got the manager later. She got the entrepreneur and scale this thing given the attorney weapons, podcast is directed and hosted by twenty robins. Any org is our editorial director. An occasional host. Our executive producer is Hollis tumor Jimmy carve a home, an Adrian dilatory, our digital editors, copyright, robins, research, international.
Transcript generated on 2020-04-04.