Rick Stollmeyer - Building a Wellness Business That Lasts

In the early 1980s, Mark Mastrov founded 24 Hour Fitness, Donohue Wildman founded Bally's Health Club, Louis Welch founded LA Fitness, and David Lloyd opened his first eponymous gym in Hertfordshire, England. A few years later, Doug Levine founded Crunch Fitness and Vito Errico founded Equinox. The First Wave of wellness also fueled an explosion of innovative workout equipment, including Precor, Stairmaster, Cybex, and Nautilus. It also planted the seeds of the boutique fitness movement that would dominate the Second and Third Waves to come, central among these being the emergence in the early 1990s of three distinctive types of independent group exercises: Pilates, yoga, and Spinning ®.

Joseph Pilates began teaching his method in New York City in the 1930s and 1940s. Designed initially to help professional dancers avoid and recover from injury, Pilates did not expand into the general population until innovative entrepreneurs began to expand the practice in the early 1990s. One of those early innovators was Mari Winsor, who opened her first Beverly Hills studio in 1990 and soon became known as “The Pilates Teacher to the Stars.” In the years that followed, Mari would introduce Pilates to millions of Americans through her TV infomercials and DVDs. Mari's innovative spirit and indomitable energy would later inspire thousands of future studio owners and hundreds of thousands of teachers who would change the lives of millions of people in the decades to come.

Similarly, the practice of yoga had been imported from India to the West decades prior. The teachings of this ancient practice were largely restricted to institutes, ashrams, and retreat centers. Yoga did not become accessible to the general public until a new wave of innovative neighborhood yoga studios opened their doors and began to accept drop-in students. Early yoga business innovators included Sharon Gannon and David Life, who founded Jivamukti Yoga in 1984; Maty Ezraty and Chuck Miller, who founded Yogaworks in 1987; and Gurmukh and Gurushabd Khalsa, who founded Golden Bridge Yoga in 1992. As with Pilates, these early yoga innovators and hundreds more like them would inspire thousands of yoga entrepreneurs and hundreds of thousands of teachers. Yoga would become a truly global phenomenon in the 2000s, and in the 2010s it would be imported back into India as wellness took hold in that rapidly advancing economy.

At the same time, an entirely new group exercise method in the 1990s would have a transformational impact on the boutique fitness movement in the decades to follow. In 1994, Johnny G and John Baudhin founded Mad Dogg Sports to accelerate the adoption of their invention—Spinning ®, which vastly improved on the stationary bikes of the day and lent itself to a group exercise delivery method. First implemented in health clubs and later in neighborhood studios, Spinning ®would inspire multiple offshoot indoor cycling brands and become the foundation of the first live streaming at-home delivery model—Peloton ®.

The First Wave of wellness is also when therapeutic massage and other spa treatments began to move outside of the luxury resorts and retreat centers where they had flourished for decades and into more accessible neighborhood day spas. The Day Spa Association was formed in 1988 and the International Spa Association (iSPA) in 1992 to serve that nascent industry. In addition, the first small studios offering the ancient wellness practices of acupuncture, Ayurveda, Chinese medicine, Tae Chi Qigong, and Reiki emerged during this time.

In short, the Boomer-led First Wave of wellness created a vibrant industry where none had existed before. First Wave entrepreneurs applied new thinking to age-old practices and leveraged the latest technologies—personal computers, videotapes, and DVDs—to reach millions of people and stimulate decades of massive growth. All of this laid the groundwork for the next wave, which would be even larger and more impactful.

In the mid-1990s, the first cohorts of Generation X reached their 30s and began to adopt wellness practices alongside their Boomer elders, and before long they began to reshape the industry with their decidedly different personalities.

The Gen-X personality is commonly characterized as more independent, individualistic, and pragmatic than Boomers. Blake Beltram and I are Gen-Xers, and we know their experiences and personalities well. We experienced the social upheavals of the 1960s and 1970s as children, and became adults in the time of the AIDS epidemic. Often called the “latchkey generation,” we were far more likely than Boomers to have divorced or dual-income-earning parents. We encountered drugs and alcohol at an earlier age and witnessed the excesses of our Boomer causes and ideologies first-hand. Growing up faster and harder than our Boomer elders, Gen-Xers are classically more skeptical and independent-minded. These characteristics make us more entrepreneurial as well.

Whereas the First Wave of wellness was characterized by homogenized brands and large, multi-purpose health clubs, the Gen-X-led Second Wave was driven by specialized practices and locally authentic independent studios. These smaller-footprint businesses had a key feature of much lower startup costs and significantly less financial risk than the Boomer-led health clubs. In the late 1990s, thousands of Gen-X-led yoga, Pilates, and indoor cycling studios began to spring up, providing their trailing-edge Boomer and Gen-X clientele with more personalized wellness experiences.

Due to their smaller scale, these smaller studio businesses could not afford the expensive client-server software that had been created for health clubs, and that software didn't meet their specialized scheduling, client, and staff management needs anyway. Therefore, for the first several years of the Second Wave, most of these early boutique wellness studios ran on pencil and paper, which restricted their ability to grow. That technology gap would become the opportunity that Blake Beltram and I founded Mindbody to address in 2000.

At first, the operators of large health clubs saw the boutique wellness movement with a blend of dismissiveness and curiosity. In 2005, the first year that Mindbody had a booth at the annual IHRSA conference, the preeminent fitness industry event of the day, there were no other boutique wellness brands represented in the exposition hall. We were such an oddity that the conference staff misunderstood the online nature of our software and misspelled our company name. Our badges and the trade show guide described us as “mind and body on the line.” We spent that first conference explaining to bemused health club operators that we were in fact a Cloud software company. Their ambivalence toward us and the boutique wellness movement would soon change.

A few years later, a successful health club operator approached me at our IHRSA booth and complained, “Thanks to you, dozens of these little fitness studios have popped up to steal all my members. I feel like Gulliver being surrounded by the Lilliputians!”

That club operator's experience and response reflected a transition happening all over the globe. Changing consumer tastes and a disruptive technology had fueled a shift in the wellness industry. Tens of thousands of boutique fitness studios had emerged, leveraging the latest technologies of the day to provide a more compelling customer experience at a fraction of the cost. It would be several more years before a significant number of club operators would begin to shift their business models, while many of them would linger in Elisabeth Kübler-Ross's first two stages of grief—denial and anger.

During the Second Wave of wellness our world was hit with multiple crises—the dot-com bust and recession of the early 2000s, the 9/11 attacks and War on Terror, the Financial Crisis of 2007 and 2008, and the long, slow recovery of 2009–2010. Rather than slowing the Second Wave down, each of these challenges actually stimulated wellness industry innovation and growth.