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Orangetheory’s X factor
Learn the secrets of Ellen Latham’s million-dollar fitness academy
Life-changing. Addicting. Intense. These are just a few words that have been used to describe Orangetheory, the million-dollar fitness academy that 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 Orangetheory? And what fueled its ability to scale in an industry that is so full of competition?
In this Peak Performance podcast, 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 asks Ellen a question toward the end.
What is Orangetheory?
Orangetheory is a fitness studio known for its science-backed, technology-tracked, coach-inspired workouts. Orangetheory provides heart rate-based workouts, built around the physiological concept of excess-post-exercise oxygen consumption, or EPOC, where the body continues to burn calories at a higher rate even after the workout is over.
At its core, Orangetheory is a one-hour, full-body workout that can be modified for any fitness level or restriction. It’s been hailed as a plateau-busting workout, and it was one of Forbes’ “Fastest Growing Woman-Owned Businesses” in 2017. But it is also a community. Orangetheory aims to personalize fitness, with attention, coaching and camaraderie you may not get at a bigger gym.
Who is Ellen Latham?
Ellen Latham is a physiologist, fitness trainer, entrepreneur – and a determined and focused businesswoman. Ellen started Orangetheory at age 43 during a tough time in her life. She was fired from her dream job. She was a single parent with a nine-year-old son. She felt panicked. But then she remembered a lesson she learned from her father, a phys ed teacher in Niagara Falls, New York: Focus on what you have, instead of what you don’t have.
Ellen focused on her Pilates certification. She began soliciting spinning clients at her gym to come to her Pilates class. Then she opened her own studio. She added a room to that studio that became the foundation for Orangetheory. And the rest is history.
Creating a massive breakthrough
While listening, you’ll quickly figure out that Ellen’s energy is absolutely 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. She tells Tony about her inner strength during that time and the sports psychology technique she used to turn what could have been a massive breakdown into the massive breakthrough that led her to create Orangetheory Fitness.
Ellen didn’t always believe she could do big things. She didn’t believe she deserved to have big things. Her limiting beliefs were holding her back, but a chance encounter helped her shift her mindset. She turned those beliefs into empowering thoughts, overcame her fear of failure and began to use a powerful mantra: “Why not me?”
Orangetheory’s X factor
One of the most essential pieces of every business is to find your X factor. Ellen knew hers: “The reason people didn’t stay with working out was because they didn’t feel successful. They didn’t feel that they got results.” She came up with a science-backed, measurable workout so that her clients could see their progress. But behind the science of Orangetheory is something far less measurable, but just as powerful: its raving fan culture.
Orangetheory’s small footprint allows staff to really know everyone and provide individualized attention, something that large gyms struggle to do. There’s a sense of community. There was even a member who donated a kidney to another girl she had class with. 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.
At the end of the day, Ellen strives for both raving fan customers and raving fan employees. She tells each employee, “Your sole role is to make people feel better about themselves using our product.” She knows that the importance of company culture extends beyond profits and must encompass people – that’s what has made Orangetheory so successful.
[00:58] Episode introduction
[03:28] The cluttered fitness industry
[03:52] Momentum shifting
[04:23] Starts business at age 43
[04:44] Fired from dream job
[05:11] Teaching spinning
[05:56] Ellen’s breakthrough
[06:25] The science based workout
[07:06] Importance of measurement
[07:40] Creating an oxygen deficit
[08:08] Funding the business
[08:41] The franchise model
[09:20] The perfect storm
[09:44] Differentiating the brand
[10:33] Words create action
[11:12] Actions represent attitude
[11:38] Words that describe Orangetheory
[12:03] Why technology is important
[12:32] The challenge tracker / OT Connect
[13:04] The coach inspired workout
[13:51] Creating raving fans
[14:22] OTF’s sense of community
[15:10] Members turn into friends
[15:40] Selecting team members
[16:05] Life company vs. fitness company
[16:29] OTF’s marketing strategy
[17:10] Challenges with franchising
[17:40] Importance of consistency
[18:12] Why OTF stopped franchising
[18:51] The decision to reboot
[19:24] OTF’s growing pains
[20:13] Hiring and firing
[20:45] Finding the right seat on the bus
[21:11] Defining the culture at OTF
[21:54] Events at OTF
[22:30] Orange University
[23:18] 3 types of motivation
[24:00] The sole role of an OTF employee
[24:31] Personal touches at OTF
[25:09] What’s not tolerated at OTF
[25:45] When it’s not a good culture fit
[26:13] Difference between OTF and Crossfit
[26:44] Absolute vs. functional strength
[27:13] What OTF delivers
[28:00] Question from Danny Meyers
[28:32] Reinventing leadership
[29:06] Ellen’s old beliefs about herself
[30:09] Overcoming fear and doubt
[30:33] Rewiring her brain
[31:02] Ellen’s mantra
[31:20] Advantage of being a woman in business
[32:16] Episode end