Aarti Kapoor was an investment banking cliché in 2008. She was a study in stress, owing to the hours she was logging at Citigroup as the financial crisis deepened, along with a dash of existential crisis thrown in. She and her peers were scrambling to stay relevant and employed. Top executives at her bank and others were defending themselves to regulators, clients, and their own employees. The promise of a rewarding career on Wall Street seemed increasingly elusive.
Growing up in Princeton, New Jersey, Kapoor had been an especially active adolescent, wide-ranging in her extracurricular interests—ballet, voice and piano lessons, swimming, editor of the school newspaper, admissions tour guide. Tennis became her sport of choice and she ended up the captain of her high school varsity team. At Harvard, she stayed fit, then hit Wall Street, where an extra 10 pounds was practically guaranteed by the demands of a long-hours banking job, with ordered-in dinners and little sleep.
In a moment of quasi-panic about being out of shape, she joined the closest gym to the office, an Equinox gym in downtown Manhattan. She went all in, hell-bent on getting in shape. “I was militant about it,” she says. “And then I was addicted.” Exercise was a refuge and a release, a way to calm her mind while taking care of her body.
The exercise obsession followed her when she changed jobs after witnessing several rounds of job cuts at Citi. Landing at a boutique firm called Moelis & Co., she endured the same hours, but was generally happier, working for a firm a step removed from the aggressive anti-banking headlines.
With Equinox too far from her new office, she reluctantly gave up her membership there and joined a 24-Hour Fitness near Moelis, where she took full advantage of its always-open promise. Some nights she’d leave the office at 2 a.m., run on the treadmill for two hours, go home and sleep, and be back in the office by 9 a.m. “I didn’t like any days that didn’t have fitness in them,” she says, conceding she got addicted to the post-workout high. “I’d gotten out of shape once, and I didn’t want to be in that place again.”
Fully immersed, Kapoor reverted to her adolescent tendency to try lots of different things, an M.O. shared by many of her Millennial generation. Then a new concept landed in New York’s Flatiron district, a downtown hub of high-end apartments, technology start-ups, cool restaurants, and increasingly, fitness studios.
Flywheel, a then-new indoor cycling concept, opened its flagship location across the street from Kapoor’s apartment and, while intrigued, she balked at the price of $30 for a single, 45-minute class. “I thought, who in their right mind would spend that?” she says. Flywheel offered a promotion to building residents for their patience during construction of the studio. She showed up.
Flywheel was tailor-made for Kapoor. While indoor cycling isn’t new—Spinning was created in the early 1990s—Flywheel’s twist is to pump up the competitive element. In addition to the sinewy, barking instructor, Flywheel adds a way to keep score—called the TorqBoard—that ranks every member of the class, in real time. Riders watch while they pull ahead, or fall behind, their classmates. Members keep track of their progress.
As she had with the Equinox workouts, Kapoor went big. “Another class turned into a 5-pack of classes, then a 10-pack, then an unlimited monthly membership,” the last of which runs $375. Her weekday routine included a long run followed by a Flywheel class. Kapoor the banker watched Kapoor the consumer make radical changes to her spending. She asked her parents for Flywheel credits instead of handbags or shoes for Christmas.
At the studio each week, she watched classes fill up and waiting lists form. Over brunch with friends, she heard not just about Flywheel and Equinox, but SoulCycle, Pure Barre, Physique 57, as well as yoga, half marathons, marathons, and triathlons. At the Moelis office, she began to craft a pitch.
The first audience was her mentor, a senior banker named Roger Hoit who specializes in consumer and retail companies. The pitch included sending Hoit, an avid golfer, to a couple Flywheel workouts.
Hoit and his fellow Moelis senior managers gave Kapoor the go-ahead to test her thesis that health and fitness were bankable businesses—an industry comprising companies growing in a way that they’d be taking on investors, seeking investors, getting sold, and going public. In other words, all the things bankers earn money arranging and giving advice on.
Kapoor tacked it on to her regular job: “I did my normal work until 11 p.m. and then worked on my fitness research.” She cold-called companies to meet with their top executives, with Flywheel at the top of the list. It wasn’t long before Kapoor’s side project became her full-time gig. Within two years, she represented Flywheel in a sale of a majority stake, one in a series of companies drawing billions from PE, venture, and public investors. Kapoor now spends all her time banking health, wellness, and fitness companies; she is one of small handful of bankers making their living in the space. The happy collision of her banking and fitness lives included Kapoor’s ability to work out and call it work. “My diligence trips have gotten a lot more interesting,” she says.
Kapoor operates, personally and professionally, in a new sphere and a new economy—one revolving around the mind and body. She has a 94-page presentation (pitch book in banking parlance) stuffed with statistics and charts and graphs. Her bio within that book touts her fitness bona fides, including that she runs roughly 2,000 miles a year, is both gluten- and dairy-free, and is a “serial juicer.”
Her credibility resides not only in her informed view of the market dynamics but also from the fact that she’s the target audience for the companies she’s pitching to represent. Her age—30—is crucial to understanding the state of the fitness business and where it’s going. Like her peers, Kapoor lives in a place, geographically and demographically, where health and wellness are a given, where almost every choice throughout the day—when you get up, what you eat, what you wear, what you do, and who you hang out with—points back to that lifestyle.
That shift, from activity to lifestyle, makes Kapoor’s job possible. The breadth and depth of the need for products and services has created a new economy of mind and body, drawing investors to back the entrepreneurs and big, established companies clamoring to fill that need.
The market is massive. By one estimate, health and fitness—gyms and studios, clothes, and various equipment, comprise a market worth almost half a trillion dollars.1 Add in food you’re talking more than $1 trillion. Wellness overall —the spas, wellness tourism, workplace wellness, and the like—is pegged at $3.4 trillion.
How in the world did this happen?
To hear Kapoor and many others tell it, the birth of this economy came from a collision of elements including a multigenerational move to healthier living and an historical technology boom that enabled an entirely different lifestyle and changed our relationship to our family and our employers, as well as gave birth to an enormous swath of affluence. An increasing amount of that affluence is directed toward health and well-being.
Baby Boomers (born 1945 to 1964) helped kicked it off, becoming the first generation to favor sweating over smoking, opting for Jane Fonda workouts and Arnold Schwarzenegger movies. And while they held onto those habits into their retirement years, their influence on their children, and how those kids have lived those lessons, is what really accelerated the fitness boom. As Generation X came into the workforce, fitness manifested itself largely in the pursuit of slightly more extreme activities. A chunk of Generation X (born roughly between 1965 and 1979) took up running and cycling, pushing endurance sports from the fringe into popular culture. Marathons and triathlons especially have become a borderline-cliché badge of honor for forty- and fiftysomethings who came into adulthood in the 1990s.
Those generations especially helped propel running, which saw a surge in the past twenty years that moved running, notably in long-distance races, from the fringe to the mainstream. The number of people who finished races in 1990 quadrupled to more than 19 million in 2013. During that same period, the number of women increased more than nine-fold, to the point where there were about 30 percent more women finishers than men. Back in 1990, men had nearly a three-to-one advantage.2
What Baby Boomers created and Generation X accelerated, Millennials—especially Millennial women—have codified into their everyday work and social lives. This demographic, born in the two decades between 1980 and 2000, have pushed fitness into a defining personal characteristic, both through activities like running and especially in their enthusiasm for boutique fitness. And that’s where it gets really interesting for anyone who cares about business and economics. The massive social shift toward fitness has created a multifaceted, global, economic juggernaut, with entrepreneurs, investors, and the world’s biggest companies scrambling for a piece of the growing market worth hundreds of billions of dollars.
As both observer and participant (I’ve run more than a dozen marathons and numerous other races, and taken the odd yoga or fitness class along the way), I went in search of the people defining this new economy. I found entrepreneurs and investors who manage to make a living—and in some cases, millions or even billions of dollars—feeding our obsessions with races, classes, clothes, and equipment.
This book is a snapshot of sorts, a glimpse inside an ever-changing series of overlapping businesses. I emphasize “ever-changing” because some of these companies may flame out or slowly fade. Kapoor says she’s constantly on the lookout for what’s real and what’s fleeting, what will play for a few months among the maniacally fit cognoscenti in certain New York or Los Angeles neighborhoods, and what will translate into an actual business that can take root in places between the coasts, transcend a fad status, and be a sustainable activity for employees and consumers, and profitable.
Kapoor’s among those with a deep conviction that while the players are dynamic, the underlying fitness economy is solid, and growing. There’s a lot of money in sweat.