Tribe Vibes: The Cult of SoulCycle
The most prevalent criticism of SoulCycle is that it is a cult, but this is perhaps the highest compliment for a business built on network effects.
Clad in $150 worth of Lululemon gear emblazoned with the word “WARRIOR” and a yellow spoked wheel, you enter a dark room full of stationary bikes and clip your $3 rented cycling shoes into the pedals. You place your $2 SmartWater in the cupholder, inhale the invigorating grapefruit scent from the $42 Jonathan Adler candles at the front of the room, and start pedaling. This moment has been days in the making: last Monday at exactly 12pm, you frantically signed online and handed over $30 to reserve this very bike you’re sitting on. What made you devote all of this time and money for the opportunity to ride a bike that goes nowhere for the next 45 minutes? The answer is scrawled across the wall in bright yellow text: TRIBE. Each of the 59 bikes surrounding you are occupied by similarly dressed riders, all moving their bodies in perfect sync to the beats pumping through the stereo system. As the resistance increases and the pace gets faster, the pack of riders around you motivates you to push harder. The inspirational monologue from the instructor at the front of the room creates a meditative calm, but it’s the collective energy of each person in the room that creates the value. It’s also the reason SoulCycle had over $100M in revenue last year, 72,000 rides per week, and 30% of the weekly rides reserved within the first 15 minutes of availability in the frenzied “Monday at noon” weekly reservation experience. The most prevalent criticism of SoulCycle is that it is a cult, but this is perhaps the highest compliment for a business built on network effects.
According to the Prospectus from SoulCycle’s impending IPO,
“The experience is tribal. It is primal. And it is fun… Our riders feed off the group’s shared energy and motivation to push themselves to their greatest potential. In becoming part of our community, our riders are instilled with greater awareness of not only their bodies but also their emotions. We believe this awareness leads to healthier decisions, relationships and lives. We are not a business that values only transactions, rather we create a community that cultivates and sustains relationships. Our immersive culture of inspiration and empowerment contributes to the engaged and connected rider base in each of our studios.”
Because the class community is so critical to the experience, ensuring classes are filled is immensely important. In popular locations and with popular instructors, this is a boon – classes sell out immediately and this perceived demand makes the experience very compelling for new customers. In some locations, customers pay thousands of dollars for early access to classes. Instructors build relationships with the customers and encourage customers to build relationships with each other. However, the inverse consequence of these strong direct network effects is more concerning. Participating in a class with only a handful of fellow riders truly feels like a subpar experience and the studios employ many creative promotions to fill the less popular classes. For example, they offer discounts if you “double-dip” and ride again right after finishing class, provide free breakfast burritos, and provide a free class if you fill up a Soul Bingo card by riding with several of the less popular instructors.
The business implications of this run from their growth and retention strategies to their merchandising and technology strategies. First, since their value proposition is directly tied to the number of customers in a given location, is it important to only open new locations and offer new classes where there is enough demand to fill the class. One way to create this demand is to advertise, which they manage to do cheaply and effectively with their merchandise. In addition to their spinning classes, SoulCycle also sells trendy branded apparel and accessories, which their loyal customers gladly purchase for obscenely high prices to show off their exercise obsession, which in turn drives new customers to the studio. They have built a sleek booking platform via their website and an app that reminds riders to reserve their classes for the week every Monday at 12pm. Lastly, SoulCycle has built a solid presence via their instructors on social media including Twitter, Instagram, and Spotify which serves to attract and retain customers. As long as SoulCycle can continue to control these direct and indirect network effects, their cult should continue to grow.
This is really interesting! I had not thought of Soul Cycle as being prone to network effects since it is such a offline experiences; however, what you said about the improved experience as a result of more participants makes sense. To some extent, I think Soul Cycle could suffer from some sort of negative network effects: since it’s so popular/expensive and frequently overbooked, it might diminish people’s willingness to participate or might decrease their ability to find a steady community (if they’re attending different classes with different instructors and therefore not receiving the same “tribal” experience). I think until the demand is met, Soul Cycle will continue to be incredibly profitable for themselves and other copycat models.
I love SoulCycle! I agree that there might be negative network effects due to over-demand during peak hours. My greatest concern about SoulCycle is the high capex requirement / studio and the significant amount of time the studios are empty during the middle of the day. It seems like right now, the demand for the 6am-9am classes and the evening classes subsidize or cover the underutilized studio cost during the day.
Thanks for sharing this. I had not heard of Soul Cycle until I worked in New York this summer and saw the crazy cult following it had. I think the most intriguing thing about Soul Cycle is all the extra value it captures through other products: apparel, water bottles, smoothies, etc. The problem with Soul Cycle, though, is that it is relying solely (pun intended) on its brand name. There is nothing proprietary (that I know of) about it, and it is very easy for competitors to enter the market. Soul Cycle definitely takes advantage of network effects, but I am still not convinced that is is more than just a fad. Great post!
Great post! The network effects present in SoulCycle’s model made me think of two things:
1) Like most workout crazes, SoulCycle is probably nothing more than a fad that is popular right now. The tribal element to SoulCyle (reminiscent of CrossFit) helped the company experience massive customer growth, in turn providing it with strong direct network effects. However, when the fad starts to wane, which it inevitably will, that positive direct network effect can quickly turn negative: as less people participate, classes become less full making even less people participate. It will be interesting to see how SoulCyle attempts to maintain its strong cult following.
2) The indirect network effects in play of connecting customers with skilled trainers may hurt SoulCycle in the long run as trainers (who have developed strong followings of their own through SoulCyce) can start their own cycling studios as there are very low barriers to entry (such as Handlebar). I am curious to see how SoulCycle reacts to the growing power of trainers within their model.
As a member of the SoulCycle cult, I loved reading this post! They have done very well but I am concerned with two things. First, I’m concerned that their growth potential is limited because there are only so many wealthy regions across the US where riders are willing to pay $30 for a class. I think there is opportunity to expand into other areas like merchandising as you mentioned but I wonder how many more studios they can really open. Second, we’ve seen so many waives of fitness fads and particularly for trendy ones like SoulCycle. I think interest will eventually wane and SoulCycle will be left with a smaller group of committed riders. I’m curious to see if SoulCycle has created a sustained interest in cycling or if they’ll have to reinvent themselves at some point in the future.
This is really interesting. I’m definitely guilty of calling SoulCycle a cult but hadn’t put in enough thought to recognize that its cult status leads to both positive and negative direct network effects.
I’ve been an avid indoor cycler for years (3x / week since 2008… obviously there was no soul back then), and what makes me confident in the company’s long-term staying power is the overall quality of class that the are able to offer. It basically ruins every other spin class for you. I find that I am pushed harder and feed off the atmosphere more so than in any other class I’ve taken. As stated, the emphasis on music and community make me look forward to my next class. And in addition to the network effects that you mentioned, their high class prices allow them to pay their instructors incredibly generously, which attracts and retains the highest quality talent, which attracts more dedicated riders, and so on.