How has Anytime Fitness CEO Chuck Runyon built the world’s largest fitness chain and America’s #1 franchise system? Through leadership that invests in the whole person, not just the “employee.” — BTB #17
Behind the Billboard
(0:00:01) KL: Do you have the grittiness it takes to be successful?
(0:00:03) Intro: Welcome to the Behind the Billboard Podcast, a living, breathing, interactive conversation about getting better as a leader, a team and as a person. We believe that success is all about people and we are on a mission to help you grow. Here is your host, Kris Lindahl.
(0:00:21) KL: Make sure you have time set aside. Get comfortable. You will want to listen to this entire episode. I learned so much from Chuck Runyon, the CEO of Self Esteem Brands and the co-founder of Anytime Fitness. He shared incredible takeaways. I promise you that you will become a better leader and a better person by listening to this episode in its entirety. I hope you get as much value as I did because he is awesome!
(0:00:50) KL: Welcome, Chuck.
(0:00:53) CR: Thanks, Kris.
(0:00:54) KL: I am super excited. There is so much that I want to cover with you because I think that we have a lot of similarities in the ways that we grew up. I am always interested in going back to the beginning. I think too often, as leaders we always compare ourselves to someone who is at the finish line or completing the marathon, but take me back to the early days of growing up in East Saint Paul.
(0:01:15) CR: Oh! East Saint Paul, baby. East side pride. I went to Johnson High School. Johnson Govey. You know, kind of a gritty, east side area. I had a wonderful childhood. I grew up near Phalen Beach if people know where that is. I think I was kind of the last generation where you could just roam free. Your parents were not helicopter parents so you could grab your bike and pedal around the lake. You could grab a bus or a bus transfer and go to downtown Saint Paul or Minneapolis. We would play outdoors and kick the can and tag. I had quite a bit of independence as a kid. I don’t think our kids have as much independence today. I came from a middle-class family. Maybe slightly lower than middle class. We would go to northern Minnesota to go camping every year and that gave me a great appreciation for the outdoors. I think it offered a balanced life, which is kind of reflected in the way we run the company today. At the end of the day, I have traveled to some gorgeous cities on some beautiful occasions, but at the end of it I am a Minnesota guy. I love the people here. I love the values. I love the four seasons. I could live anywhere but I still choose to live here.
(0:02:25) KL: I love that. The one thing that I was thinking about that you mentioned there is the outdoors piece. I think that too often, not even just as leaders, but as people, we don’t go out and appreciate mother nature as much as we can. For me, it is where I found some of the greatest ideas and the reflection on how I become better. It is in those environments. So where in Minnesota do you like to go?
(0:02:48) CR: So growing up we used to go to the Boundary Waters for like two weeks every year. It was back in the old days where would be at a campsite, and you had to get your water and wood and all of that. But now, we have a cabin up on the Whitefish Chain, which is about 25 minutes.
(0:02:59) KL: Beautiful there.
(0:03:00) CR: You know, on a bad year I will get up there about 30 to 40 days a year, but on a good year, it is about 60 days a year. Despite running a very thriving company that is growing, look, I can find time to get away. As you mentioned, life slows down a little bit. You put the digital stuff away. You are sitting around a campfire. You are on the water. You are bonding with family and friends and those are some of my favorite weekends of the year. I am energized by mother nature. I don’t care if it is raining, or if it is sunny or if it is snowing. I am happy to be alive and I am going to enjoy that day. Nature really, really kind of energizes me.
(0:03:38) KL: You have mentioned the technology piece of it, and I think that is one really important thing. There are so many people in this world that are so distracted by their devices. I had a guest on a few weeks ago. He’s a friend of mine. His name is Cesar, and he said, “Our souls are thirsty for so much more than that.” And it stuck with me since he made that comment. I think about it when I go places and I look around at everyone that is so distracted that they really don’t realize what is happening in front of them anymore.
(0:04:00) CR: I think there is a differentiator going on that we are not going to see for the next decade. Those that can use the digital for good versus those who are just mindlessly polluting their minds with high caloric nonsense. Can you put the digital away? Can you focus? And look, I am like everyone else. If I have my phone with me, I am going to check it. When I go to dinner or when I am with family and friends, I will leave it at home. When I am golfing with my buddies I will leave it in the car. If I don’t have it, it will force me to disconnect. I try to tell all of our workers, like, do not answer emails on Saturday or Sunday. If it is an emergency, I will text you if there is something I need but otherwise go enjoy your life and be present for those other moments.
(0:04:46) KL: Yeah. That is one of the big things that I have wrote down for the last two years is to be still and be present.
(0:04:50) CR: Again, I am trying. I am not always successful. You almost have to force yourself to disconnect and engage. It is okay to sometimes be bored and let your mind wander. I am not the best at that, so I am not preaching, but it is something I am always constantly aware of.
(0:05:08) KL: That is great advice.
(0:05:11) CR: By the way, we aren’t videotaping this right? So we can go a little Elon Musk and Joe Rogan? Maybe smoking some stuff?
(0:05:20) KL: Yeah, I mean I planned on doing a little Joe Rogan style. It will be about four hours that we are doing this.
(0:05:23) CR: Are there any rules? Can I swear?
(0:05:26) KL: You do whatever you want.
(0:05:29) CR: Okay. Cool.
(0:05:29) KL: Joe Rogan also has people workout ahead of the podcast so they are really ready for it. So for those listening, who don’t know what SEB or Self Esteem Brands is, maybe explain the background of SEB and Anytime Fitness.
(0:05:46) CR: I will take you back to May of 2002. We opened up the very first Anytime Fitness in Cambridge, Minnesota by a terrific gentleman named Eric Keller. He is the number one franchisee. He is still with our company working today in our international division. He is like helping other Eric Kellers around the world open up their Anytime Fitness. It is a super cool story. He grew up to five clubs and then he started selling them. So we started in 2002, and from 2002 to 2010, we were a fitness franchise company. Primarily we would wake up every single day and think about Anytime Fitness, but we kind of grew this competency around franchising. Around 2010 or 2011, we developed Self Esteem Brands, which is the parent company for Anytime Fitness today. We now have Waxing the City, which is body waxing studios and Basecamp Fitness which is a high-intensity interval training studio that is based out of California and we are actively looking for more companies today, but what we grew into was a franchising platform, so we can leverage our core competency and franchising to use them to grow other brands. Both domestically and internationally. So at some point we realized like, we are pretty darn good at selling, opening, and supporting franchises, let’s leverage these other brands, that’s how we developed Self Esteem Brands. That is now the parent company today.
(0:07:00) KL: That is really interesting that you figured that out. A lot of people don’t get to that point or entities don’t get to that point to figure out what they are really good at.
(0:07:06) CR: For everyone that is listening to this we had zero experience in franchising. I worked at McDonalds, if that counts, and my partner worked at Pizza Hut, but we really didn’t have any franchising experience so we were like, “Hey, let’s go figure this out and continue to learn.” Today, we are still a student of franchising. I never drive home from work thinking we have got this figured out. It never occurs to me because there are always opportunities to learn. There is always something to learn. We are still learning today to be a top-notch, multi-brand franchising company.
(0:07:37) KL: A commonality between everyone that I have interviewed is really that student first mentality. I think that is so important because the minute you have it all figured out, is really the day you are done. I mean, you think you have it figured out.
(0:07:50) CR: The more you travel, the more you realize you really know less.
(0:07:56) KL: Oh yeah.
(0:07:57) CR: So I am always trying to listen to people inside and outside of our industry. I am always asking questions. I am very curious.
(0:08:03) KL: When you look back to when you had that first franchise in Cambridge, Minnesota, what was that internal mechanism that really moved you and when you were like, “Wow, we can actually do something!”
(0:08:17) CR: Once we got to about 200 clubs, we were like, “Wow, this could be really something big.” Then we started to think in the thousands, but until then you are just trying to figure it out. You are not thinking about the big numbers but you are thinking about can we make the next club work. Franchising did create a leadership epiphany for me. Before we were franchising, my parent and I were involved in some other companies we have been entrepreneurs and leaders since the age of 20. But, when one of our franchisees signs a franchise agreement, and they sign the lease for a site and they sign on for the equipment loan, they are risking a big portion of their life savings. So when our franchisees did that, the epiphany for me was like this accountability and responsibility I have to help them be successful. If they do well, our company does well. If they don’t do well, our company doesn’t do well. But, it is actually bigger than that. We have created a model and convinced them to invest in it. If they do well, it has remarkable impacts on their life with their family and friends but if they fail imagine those consequences they are going to face. I think we just feel this gravity as a company because they are investing in us and in the brand to help them be successful. Every day I drive to work after that I was like it is my job to help them. It is selfless. I was always thinking about our franchisees and our employees. It was like how can I help them do their job better and how can I help them succeed? So it went to being less about me and far more about them, so I think selflessness is at the heart of every great leader, because all of you that are listening should be driving to work everyday and think, “How do I help my employees be rockstars?” Because if they are rockstars, the company is going to do well. How do I help my franchisees succeed? I am even thinking about how does this personal trainer in Florida build their book of business today? It is really refreshing to sit in meetings and we spend 97% of our time thinking about other people and their success. I am telling you that is very gratifying. We don’t talk about our company nearly as much as people think because if all of our stakeholders are successful, all of our shareholders will be too.
(0:10:22) KL: You have a unique model in that. I don’t know the terminology that you use at Self Esteem Brands, but you really you sort of have two types of consumers. You have the franchisees, which you said you have to really take care of. But you also have the members. How do you take care of both or do you take care of one and know if you take care of one that will take care of the other one? How do you guys look at that?
(0:10:41) CR: Well, it is actually more than that. Let’s say we have 3,000,000 members and 3,000 franchises and hundreds of employees, and then we also have vendors. If you think about the ecosystem it takes to be successful, every one of those stakeholders needs to be enriched within this franchising platform. I have to make sure it is a fair value proposition for our vendors. I have to make sure our employees are gratified and have the resources to win. I have to of course make sure our franchise owners are running successful businesses so they in turn can grow members and help their community and then you have to make sure you have a differentiated experience to recruit members. There are different people within our system that are just solely obsessed with members. They are B to C. Then there are people who are solely obsessed with franchisees. I think as a leader you have to balance and make sure all of those stakeholders are fulfilled and then have people that are dedicated and are just worried about one stakeholder. There is just a bit of a balance there. You can’t just say make it great for the member because you also have to think about how it impacts the business and the franchise owner. We really have to balance that out.
(0:11:49) KL: It’s a challenge.
(0:11:52) CR: If you put the member above everyone else, I really struggle with that because I am in the camp where you have really happy employees, you are going to have really happy franchisees. If you have happy franchisees, you are going to have happy members. It is not easy, but you really have to balance all of the stakeholders within your ecosystem. I don’t think you can skip one. I don’t think you can just say, “I am going to obsess about consumers” and then have unhappy employees.
(0:12:17) KL: I know you have had a really big impact on your leadership team and everyone in the organization like you just mentioned there. What is the biggest impact you have personally had on your leaders that has really filtered through to the community?
(0:12:31) CR: Well, I think we lead by example in the corporate office so when our franchise owners come there for training we have to make sure we exhibit the same values for the people. We are running the business for a return on investment, but let’s also talk about return on emotional investment. We can do more than just trade money back and fourth. When they come to training, we talk about investing in people and we talk about making a difference in their community, we talk about having fun so if they see that and they experience it they can then take it to their community and replicate it. They can do some charitable work. They can have a great deal of fun. They can enrich their community beyond just running more than just running on the treadmill and lifting some weights. I think what I am most proud of is when I get to travel around the country, and quite frankly, travel around the world, and I get to see our values coming to life in other areas of the world. Our franchisees do remarkable things. We are like, “Find a cause you are passionate about and put some resources towards it.” Maybe you fundraise. Maybe you volunteer time. Whatever it is. We share these stories and I am telling you man, it just fills me with pride to see franchisees around the world doing remarkable things that are way beyond just selling memberships. Most importantly, we need to walk the talk so they see it at the annual conferences and they see it at the office and then at turn they can do it.
(0:13:58) KL: Return on emotional investment is so critical in every organization.
(0:14:04) CR: I mean think about it. We spend over a third of our lives working. And for entrepreneurs, it is even more. They put so much energy into this. I can’t imagine only caring about getting paid. I don’t know, it just sounds way too simplistic and dull for me. It is not about the money. Now, we still have to worry about our shareholders and our stakeholders, but man, it has to be bigger than that. When you run into people who love their job and they are emotionally invested, they have this light in their eye and they have this passion about them that you just can’t pay them for. They are thinking about the business in the shower. That is what makes the team great. That is what makes them high performance.
(0:14:43) KL: We talked about this before we started recording about core values and about how complicated they can get and I was as guilty as you were as having this huge thing. I didn’t remember what we stood for. I am constantly trying to figure out how to simplify the message and figure out what are the commonalities in our organizations. One more time, what are the four P’s and what do they stand for?
(0:15:07) CR: Yeah, so it is funny. We are growing and we are getting 50, 75, 100 employees and you realize like, we really need some order around here. We actually need org charts and business cards and you know, as entrepreneurs, you know, you are kind of against that. But we said like we should actually do a mission statement and our DNA words. So like any company, we got a big group of our leadership together and we did it. We came up with our vision, mission, and 12 DNA words, and oh, these were good. They were so meaningful. None of us, including myself could remember all 12. You can’t. Therefore, if you remember them and you can’t really put them to work, they become meaningless. So over time we just simplified them to be people, purpose, profits and play. There is beauty in that simplicity. All of our team can remember them. It hasn’t just become values for our work; I am telling you it has become a compass for my life and probably for many lives within our Anytime Fitness and Self Esteem Brands. It is about surrounding yourself with good people who love you. You love them. You are looking out for each other’s best interests and you are investing time and money to make them better. At Self Esteem Brands, we invest money in the whole person development, which means we have subsidized guitar lessons or marathons or helping people learn about personal finance. It is not just about professional development. We want a culture of growth, which means we are growing as people, and not just employees. For us it starts with people. We are in the business of behavior change and therefore we need empathy and it starts with those soft skills, which are super critical. It is about people, and then it is about purpose and having an impact beyond just that paycheck and doing something that is bigger than yourself. It is devoting your energy to making a difference in the world. Profits. We make no mistakes. We make no apologies. We are in the business to run profitable businesses with our franchisees, so let’s make sure that is part of it. And then play. We work too much to not have a good time. We have a manta at the office that goes, look, let’s take the work seriously without taking ourselves seriously. In the hiring phase, we actually lean towards people with a good sense of humor that can be a little bit of self-deprecating because it gets tough and it gets stressful. I think a sense of humor reduces the friction within a company. Think about those four words. Surround yourself with great people. Have a purpose. Profits could also mean performance and then play. If you have those four elements, I think they are not only the ingredients for a high functioning and high preforming team, but also the ingredients to a great life. So when I am out of whack and I am not feeling like things are going the best, I look at what I am missing out of the four. And also, by the way, it is not 25% each. When your company is going through various phases of growth, you might say, “This quarter, let’s focus on more profits.” Or, this week, we are going to have to be more about play. As a leader you have to feel that out. When I am reflecting on my own life, I am like what am I missing here? Let me try to get back on track with the four pieces.
(0:17:56) KL: For the people that are listening, some are business owners that lead companies, and others work for companies that run a leadership department but I think of the exercise of we have 12 and we don’t remember them and we don’t know what they are. Who recognizes that? Who recognizes like this is a problem, we don’t know what we stand for and we can’t remember them. And then what is the exercise to transition to something as brilliant as the four P’s?
(0:18:21) CR: They are not just posted on the wall and forgotten about. In our all staff meetings. In our conferences. In our communications. We refer to them. This meeting is going to be a little bit more about purpose. This one is going to be more about process. We have weaved them into our daily communications as a leader and they have become imbedded in our behavior. It is really what culture is. Right? It is about your behavior as a company. It is what you stand for. We didn’t just put them on a wall and forget about them. We live it. We actively try to make sure we are investing in those works consciously.
(0:18:54) KL: When was the transition where you realized you needed to shift from the twelve to these four P’s?
(0:19:00) CR: It was probably about 2012 and I would say again we are about 150 people. We are growing. We are over a 1,000 clubs. We were probably over 1,500 clubs at the time. The culture was not where… it was good, but it was not as good as it could be. I needed a way to codify or galvanize our team around this is what we stand for and what we won’t stand for. By the way, it is really important to say what you do stand for any what you don’t stand for. I wanted to make sure that our team could remember it and more importantly put it in their behavior in the work place. You want them to execute with the values and not just talk about them.
(0:19:37) KL: Yeah. That is the power of everyone going in the right direction and that group thinking. You can do things that are far greater than if you have people that are marching to different beats and different drums all over the place, it is tough to accomplish what you have to accomplish. You have to have people going in the same direction that believe the same things.
(0:19:51) CR: You absolutely do. You have to get everyone aligned. So we do something at the office… communication, alignment, trust. C.A.T., right? So, as a leader, when there is something going wrong in the business, I am always falling back on somewhere, someway it was not communicated properly. So, how can I communicate better? How can I make sure our team is aligned with the strategical and cultural objectives? Did we trust each other to get the work done? And then going back to the people thing. We have always budgeted half a percent of our revenue and we put that towards that personal and professional growth, as I have mentioned. So if someone is listening and you have a small business that does maybe $500,000.00 a year. You can still budget for the personal and professional growth of your people, just take half a percent and put it on your annual budget and invest in your people to grow.
(0:20:34) KL: Great advice. There are so many people who don’t invest any money in trying to become a better person. Or time, for that matter.
(0:20:40) CR: There is that old adage that says the only thing worse than training your people and having them leave is to not train them and have them stay. Right? We are very diligent in investing in our team and whether it is their personal wellness or their professional career. We think it is an honor if they are with us for a few years and they grow and we stretch them. If they get a new opportunity with a new company, we celebrate that. We really do.
(0:21:07) KL: You mentioned a word that has kind of become cliché over the years and it is culture, but I know from the research that I have done about your company. I know people that are part of your organization and everyone says the same thing about the culture there but also these huge events that you host every year. Then you have this tattoo…
(0:21:28) CR: Yeah. Well, first I will talk about culture. Think about culture as this gravity that will pull in talented people and retain them. They don’t want to leave, so we have very little turnover. That adds consistency to the business. We are on a war for talent. Every single job our there wants the best team, so culture attracts people and keeps them there, so it is very critical. Then the tattoo phenomenon… so back in 2005 at our very first conference held if downtown Saint Paul. We had about 150 people there. I credit one of our franchise owners who got the first Anytime Fitness tattoo on his shoulder. I will tell you, since then I have heard of hundreds and maybe thousands of stories, and guess what? It actually is never about treadmills or personal wealth. It is always about I made this transformation within myself and I don’t want to go back to the old me. Or, it is that I helped other people make this transformation, and I am so proud of this. So because our brand is on their skin, it is really a reflection of self-love, self-respect… something they accomplished. Thousands of people have gotten tattooed. We reimburse this. At our annual conference, we have 5 tattoo artists that are fulltime, busy all three days. And then around the world, we get a letter once or twice a week from a member or an owner or someone having a tattoo party. They send us photos and they send us a receipt and we reimburse it. I bet you we have spent $3-400,000.00 dollars on tattoos over the years. Think about that as a company expense, right? It is always about the individual making a huge change in their life and it goes back to more about the four P’s and less about the business side of it.
(0:23:07) KL: Did you ever think Anytime Fitness would be paying hundreds of thousands of dollars for tattoos?
(0:23:11) CR: Never. Neither did our CFO and he hates it. But, the impact… there is no way back in 2002 there is so way my parent and I could have sat back and thought about the impact we would have on people. At that point you are just trying to get an idea to work. We are proud of the business but quite frankly, the stories of life-changing transformation… I mean it has been unbelievable. People saying look, if I hadn’t connected with this local trainer at my Anytime Fitness, I don’t know if I would have overcome my eating disorder and I don’t know if I would be here today. Or, depression had me in such a bad place that I had suicidal thoughts and thanks to this trainer, and thanks to working out and me gaining this self-confidence, I am a new person today. We celebrate these success stories at our conference and I am telling you, man. There is not a dry eye in the audience. It is so meaningful to what we do. It might start with a few steps on a treadmill, but it can radically change the trajectory of someone’s life. All of us have great power to change someone’s life. And you know what it starts with? Honestly? A trainer just taking the time to listen. It is not about what you know about weights, it is about what do you know about them. Are you willing to listening, have empathy and care? If you can unlock that in someone… what is greater than unlocking a person’s potential and helping them achieve something they never thought was possible? If you don’t get geeked out on that, I don’t know what you are doing on this planet, I really don’t. To this day, my partner and I get drunk on life-changing stories. We really do, man. We get to unlock people’s potentials. Employees, franchisee owners, and members. That is what we do every day.
(0:24:42) KL: That is what it is all about.
(0:24:45) CR: I mean think about it. A leader is trying to unlock the potential of their team. Ultimately it comes down to unlocking the potential of people. That is all it is. That is like my holy grail, man.
(0:24:58) KL: It is the most addicting thing, ever!
(0:25:00) CR: Yes. Selfishly, I have goals too and I want to get better, but I am telling you, in today’s narcissist world, it is super refreshing to think about others a lot.
(0:25:12) KL: You are right. Watching people achieve things that they never thought were possible… like I watch people who come into our organization and where they end up it is just so fun to watch.
(0:25:25) CR: Very few people can do this on their own. I know this in the fitness base, but I bet you less than 5% of people can reach this on their own. Everyone needs a coach. That is where we are going. We do this with Anytime Fitness, but we do this throughout our ecosystem with Waxing the City and Basecamp. Everyone needs a nudge. Everyone needs a pat on the back. Everyone needs a kick in the butt. Everyone just needs someone to hold them a bit more accountable and say like, “You are doing great but I know you can do better. Let’s dig a little bit deeper.” That is what leadership is about.
(0:25:56) KL: You are spot on. When I think about leadership and I think about a lot of the things you say I can see why the success of Self Esteem Brands and Anytime Fitness are so successful because that is what it is about. It is not about those other things. I think in the real estate space, it is less about the real estate. It is more about the people. It is exactly why I started this podcast. It is not about anything but the people. That’s it. If you don’t have the people piece of it figured out, you are going to struggle.
(0:26:20) CR: Yes. I assume that if you do a great job with a client and you understand them and their needs, they are going to continue to use you and refer you. We are in the same game.
(0:26:31) KL: It is. It is the same people. So, I read your book and I want to bring this up because it was a really, really, really good book. Love Work. There were so many great takeaways I had from it. It was really, really, really good.
(0:26:46) CR: It is really written to the small to medium size businesses owner. Especially those that are on a growth trajectory. They are adding headcount and they are building bigger teams. Remember, my partner and I, we have never managed hundreds of people before, so we are still today learning as an everyday leader. This is a lot of, “Hey, here is what we are doing along the way.” There are some stories about Anytime Fitness, but it is really more about a company growing at a rapid pace and trying to find a way to lead a high-performance team.
(0:27:13) KL: Another thing you have brought up several times is your partner. Partnerships can be a challenge for a lot of organizations. You had another partner and I read about this. What happened?
(0:27:26) CR: So, that is a very important part of the book. I have seen great partnerships where one plus one can equal four, and I have been through the other partnerships where one plus one plus one equals one, or two, or zero. So, first I want to be incredibly respectful. We did start Anytime Fitness and there were three of us and I don’t know if we would be here today if one of us was missing, so I want to be incredibly respectful to the founder that is not with us today. He was a great startup guys and was with us for the early years but as you are starting to get bigger you have to make some critical decisions and some alignment on are you willing to make some long term investments back into the business and back into people and do you have the same values? Are you willing to maybe make less today to grow the business long term? My current partner and I were. We were on the same page about being in this for the long haul. Let’s make some long term investments and really do value those four P’s. But, it just got to a point where our partner who is no longer with us just did not share the same values and did not want to make the same investments. We had different trajectories for the business so we did buy the partner out and it did get a little ugly there, and unfortunately, we are not friends anymore. That happens, but I guess I understand now why great rock bands break up, because here’s the scoop… we were making great music. We were opening a ton of clubs. We had 1,000 clubs open at the time and the runway ahead of us was huge, but when you really talk about great rock bands, it is never about the music, it is always about the petty stuff that is happening behind the scenes and that petty stuff was getting to us and we had to buy out the partner. Today, with my current partner, we always say that the music is more important than the musician. What that means is we don’t care who gets the guitar solo. We don’t care whose lyrics show up. It is about making great music. It is egoless. So, when I think about the great rock bands that last a long time, it just comes down to the music. We try to carry that mantra in our office. We do not care who is on stage, let’s just make great music together. So, in the book I describe that I have been through great partnerships and ones that have a great deal of friction and it is not easy. It is really not easy when you are trying to balance friendships, too. But, my partner and I today are great friends, and it is still not easy. There are egos involved, but at the end of the day it comes down it is not about us, it is about our members and franchisees, so we remind ourselves of that and I never leave the office angry. I really don’t. I know that he has the best interests in mind for those stakeholders and so do I, so we will end at the same page eventually.
(0:29:46) KL: I don’t want to give too much away about the book, but describe the feeling of when you actually had to buy out your partner and the interest payments, and the feelings of like, what do we do?
(0:29:54) CR: So we are going through this negotiation in 2008 by the way, and you remember, you are in the real estate business. We are in the worst economic period.
(0:30:03) KL: Yeah, you couldn’t have picked a worse time.
(0:30:05) CR: We actually signed the deal in December of 2009, but keep in mind we are going through this in ’08 and ’09, and every single bank out there is getting skittish and we couldn’t put together a good deal, so we had to take this mob like deal from some of these investment bankers.
(0:30:16) KL: Loan sharks.
(0:30:18) CR: Yeah. They took a sliver of equity and our interest rate was 16%! So, we signed that deal and the next day, we wake up, and then and ever day for the next year we had 13 grand of interest. Every single day. I did the math and it was 5 million bucks a year. We had to personally guarantee it, my partner and I. It was one of those moments in life where it was like risk or reward. If the company continues to grow then we are going to be okay and if it doesn’t, then we are screwed. He walked away with a big chunk of money and we for the next two years paid 13 grand every single day. That is was accumulated. 5 million bucks a year, and two years later we ended up refinancing for a better deal. It was a scary time. It is a hell of a lot of money for two kids from Saint Paul to sign their name to make this happen.
(0:31:09) KL: Those are pivotal moments in so many businesses. You know, you are in that moment, and I am sure there are people listening that are in situations like that where there is some pain going on, but those are the greatest moments actually when you look back on them.
(0:31:23) CR: You know, they are. I have become such a cheerleader for every single entrepreneur out there because I know how tough it is. Especially in the early days when you are working non-stop. You have sleepless nights and uncertainty. You are figuring stuff out. You have a small team and you just have to be scrappy and resourceful. I root so many people on. That is why I wrote the book. I just want to help other entrepreneurs figure this out. It has been a wild ride and it has been exhilarating. By the way, we would have to have a podcast for a month if I told you about the mistakes we made. Plenty of mistakes, but thankfully we are here today.
(0:31:57) KL: The failures and the failing every single day. That is how you learn.
(0:32:00) CR: The bad ideas. The bad execution. Frankly, the poor leadership. You name it, we have made all of those mistakes, you name it. We are just really, really good at course correcting and being adaptable and being nimble and as we get bigger we don’t want to lose that.
(0:32:15) KL: We were having a conversation right before we started and that is why I posed that question at the beginning of this episode about the grittiness. It really stuck with me, because with all of the success that your organization has had, it is critical to still keep that grittiness. Tell me a little bit about that, because, let’s be honest, you are financially step for life. You are in a really good position, yet you still have that grittiness. There are a lot of people that lose that. They take that money and become terrible human beings. I have seen both sides of this and I am not a fan of that side. I don’t want to be around people like that. But this grittiness that never goes away, how do you maintain that?
(0:32:52) CR: I guess when you grow up in a certain environment; I don’t know how it can ever go away. I will never take for granted our success or the money. It is like burned into you how you grew up. We always want to be gritty and we are okay with not knowing the answer but I want our team to just dive in and figure it out and be resourceful and do whatever the business demands. We still, at our company today, when we get into a meeting or talk about a topic, we say there are no titles and no tenure. Everyone here gets a point of view and everyone here should want to jump in and solve that problem. We are trying to cut down on the bureaucracy and get to the heart of the matter and get there quickly. Let’s just be gritty, man. Attack that problem with a velocity and a hunger to just solve it and don’t ever get complacent. As a leader, part of my job is I try to eradicate the complicity that grows in a successful organization. I don’t ever want people to feel like we have it figured out or their job is secure. You have to earn it. We use the term earned not given. You have to earn it.
(0:33:58) KL: Earned not given. That is really good.
(0:34:02) CR: It is up on our walls. Our franchise owners have to earn it. I tell our employees like you never signed a lease and you never put your name on the line for a million dollar investment so we better have a great deal of humility and respect for our franchise owners and we better come in every single day and earn it on their behalf.
(0:34:19) KL: One thing that has become really clear as I have listened to you today is the generosity that you have and your organization has and that is really fundamentally what I believe and what my organization believes in. We are totally about being generous and giving back our time, treasures, and talents. You have said it in a couple of different ways, but it is exactly the same thing. I did some research and I know that you have been active for Tee It Up for the Troops, and I think you started another 501(c)(3).
(0:34:44) CR: We just signed a two-year agreement with Special Olympics and it is going to be super cool for us because locally, our clubs can adopt an athlete or a family. We try to get hyper-local, but then we can also try to do some global stuff. We are very excited over the next two years with Special Olympics and Tee It Up for the Troops. Again our franchise owners can pick a cause and so if we were to aggregate that it would be millions and millions of dollars a year.
(0:35:01) KL: You have mentioned it several times to pick a cause and get behind it and that is so important.
(0:35:07) CR: We talk about that in the book. If you are struggling as a company or as a leader, how do you do this? Number one, you can pick any cause. We were on a show called Secret Millionaire back in 2012. It opened my eyes to the fact that every single community has these micro-charities that are operating on a budget of 25 to 50 grand a year. And guess what? They need in-kind services, so you might be able to provide them with some services to help grow their organization or volunteer time, or write them a check. There are so many ways to do it and there is simply no excuse for your company not to get behind a cause and rally your team around it and share the impact within your company so the book will walk you through that. Quite frankly, I would share some of the stories that are happening just within your team. How does this job impact their life? If you are investing in their personal and professional growth, then how does that change? If they just ran that first marathon, let’s tell that story. Let’s share how we are all stretching ourselves and growing. I think leaders just don’t pay enough attention to that and that is just part of your job now.
(0:36:06) KL: You are right. I just have to share this really quick. We have a phenomenal lady in our organization who climbed Kilimanjaro. She showed us photos of before, in the middle and then a video of her climbing, and she thought like literally, this isn’t going to happen… she thought she wasn’t going to make it.
(0:36:22) CR: Isn’t that cool?
(0:36:23) KL: It’s the best thing ever.
(0:36:24) CR: Sorry to reference the book again, but I think as a business brand I think we have had the most flags of our brands shown at the top of Kilimanjaro. We have had numerous franchisees do it and they bring the flag up. Now, why would someone… space is limited when you are climbing, and we never paid for this. Never once. Why would someone climb to the top of Kilimanjaro, multiple times, or even Mount Rainier and hold up the Anytime Fitness flag? If that does not return on emotional investment, right? It is not about the money. They care so much about it and they are so proud of what they and what we stand for they have been to the top and it is in the book, man. We have had this happen maybe a dozen times, probably. People have been to Machu Picchu and they have taken their Anytime Fitness running capes. They just showed it to us and we didn’t even know about it. It is just a great deal of pride for them to do that and that is what is meaningful.
(0:37:13) KL: Phenomenal culture.
(0:37:13) CR: And you are wearing a t-shirt today. You guys can’t see it, but it says Be Generous. And when we talk about generosity people instantly think about money or volunteering. But I would say you could be generous with your time everyday with your team. Sometimes just put everything away and just listen for the next 20 to 30 minutes about what is going on in their life and what is going on with their job. We do this with our franchise owners. Just be generous with your attention. Think about that. We are all pulled apart and we all want to stare at a digital device. Be generous with your attention. That is something I am constantly trying to tell myself with my kids, my family, and my friends and of course, the people I work with.
(0:37:48) KL: Something else that we share, and I know this because we have a mutual friend in Mark, who listens to every episode, so shout out to Mark, he is an incredible human being. It’s the gender balance and the female leadership. It is super important to my organization and I know you have some females that really do amazing things within Self Esteem Brands. Tell me a little bit about that.
(0:38:09) CR: First of all I think that it is sad that we even have to talk about it.
(0:38:12) KL: I know. You are right.
(0:38:13) CR: The secret ingredient for us is over half of the people in influential positions at our company are female. That wasn’t by design, but I think my partner and I… and I hate to even call it a gift, but when we hear someone talking or sharing a point of view or an idea, we don’t see gender and we don’t see race, we don’t even see tenure. You could be with us for three weeks and we don’t even see that. It is like we have a blindfold on and we are just listening to their mind and their heart if that makes sense so we have always just chosen the most talented person for the job and so it just happens to be female. We have never made a conscious choice like let’s go diversify. Both our brands are 50/50 male-female so I think it makes sense to have a very diversified leadership time. And if I were to generalize, I think women are better communicators. They have more empathy. They are more in touch with their soft skills than men are and based on our business and how important that is, I think it makes more sense so maybe intuitively Dave and I knew that so we chose the female for that reason, but at the end of the day, it is too bad that we are even talking about it. But I am telling you right now if you do not have a diverse leadership team… diverse in gender, diverse in race, diverse in mind set, you are making a big mistake. When we sit around our leadership table every month… when I talk about diverse mind sets, there are people there that are data driven. People there that are risk-intolerant. People who are creative. People who are pragmatic. We want their mindsets to share their points of view because we will get to the best decision.
(0:39:46) KL: To your point, that is exactly what I believe in. I believe that females in our organization are actually stronger than a lot of the males, including myself.
(0:39:54) CR: Look, I agree. Personally, I have zero tolerance for any type of discrimination at all. I just see people and I want to help them reach their potential. For those of you out there that are hiring and when someone comes to you and say they are 35 years of age and you are looking at their last two jobs to see what their experience is. I am thinking here is someone with 35 years of life experience that has shaped their mindset and has shaped their point of view on life and I want to harness all of that. The only way to really bring diversity to your team it to think of where have they come from in life? Are they male or female, what race are they? Are they sexual whatever? I want all of that. I really do. I want to hear it all.
(0:40:30) KL: Diversity is the best part. You want people that think differently than you and challenge you to think differently.
(0:40:37) CR: Amen to that. As a global organization, people from different cultures who have had different upbringings, that stuff is getting more and more critical the more global we get. And age as well. All ages. You name it.
(0:40:50) KL: All of it. That’s life.
(0:40:51) CR: It is. And frankly it is a hell of a lot more fun.
(0:40:55) KL: I have done a lot of research about Anytime and I have been a part of it and something that sticks out to me and it is something that really sticks out in any successful organization if differentiation. When I listen to you talk and I have seen you talk about Anytime Fitness it is different from anyone else I have heard talk about fitness. I have experienced fitness at different clubs and different organizations, which I won’t bring up, but there are so many different ways to run an organization like yours so when it comes down to the members and the equipment and the memberships and when you are open and what you do. Talk about the differentiators and not really how it operates, but how you think about it.
(0:41:36) CR: The basic overview is it is 24/7. You buy a membership and you get access to all 4,400 clubs around the world so it is incredibly convenient. It is a very comfortable environment. It has got all of the equipment and programming you would find in a big club, but in a neighborhood club that is more comfortable, and most importantly, our connection. If our owners and their team do it well, we understand and get to know our members better than our competitors, because we do not have as many members so we can understand Kris Lindahl and where you are today and where you want to get to and how we can help coach you to success. Remember Only one out of four or maybe one out of five people are members of a health club, so the majority of people walking around are not members of a club and they are either too busy or too scared or don’t know where to start, so what those people need more than treadmills is they need some empathy. They need someone who can educate them. They need someone to motivate. They need someone to start to unlock their potential. So, when our owners do it right, they take that time and they are generous with their attention and they are generous with listening, and they say, “Okay, you came here for a reason. Tell me about your life. Where do you work? What is your lifestyle?” From there, we will personalize a program to not only get you to your goals but we will be very aware of what is going to hold you back. If you are busy, we are going to help you be a little bit more active at work and be a little bit more active at home. We are trying to use digital tools to amplify our coaching and I will be honest, some of our clubs do that incredibly well, and others are not doing that as well. We have some inconsistencies that we have to fix. But when it is done right we can offer all of the equipment and programming that you need, but more importantly, the coaching and the motivation and the education a little bit of the empathy you need to unlock your potential. That is what coaching is all about.
(0:43:15) KL: You mentioned communicating and connecting with members. There is also generation communication. Generations communicate differently. You communicate with a younger person and you can call them and they won’t answer and they will respond with a text message right away like, “Hey, what is up?” From a company of your size, how do you look at communicating with these different generations?
(0:43:35) CR: That is a great point. We are arming our personal trainers with the ability for digital chat. We can broadcast from one to one or one to many. It is funny because it is actually a great opportunity because people will share more digitally than they will in person. It is amazing. We will talk to a client and ask how things are going, and they will say, “Oh, things are going great” and then an hour later they will send us this text about what is really going on in their life and you would be shocked at what people will share in a chat or text format that they won’t share in person. It has been a wonderful opportunity to get to know our members better and for them to divulge something that maybe they are not yet ready to share in person. We see it as a great opportunity. You know, Kris, I think it is funny because I think we both have something in common. You know when the internet was coming about in the 2000’s it was all about democratizing things and replacing real estate brokers. I could buy a house myself or replacing personal trainers… I can do it myself. But guess what? Here we are in 2019 and buying a house is not only still complex and time-consuming but it is such a major decision they want someone they can trust. They lean on your to validate and help them.
(0:44:39) KL: Yeah. It has actually gone to opposite way.
(0:44:41) CR: It’s the same thing with us. When it comes to health and wellness, our bodies are a bit complex for people and now we are so starving for time, they want someone who can make it easier and make it quicker and guess what? I can trust you with my health and you can motivate me. It has gone the opposite way. Digital now amplifies our ability to do our job better and more often. Probably like you do as well. At the end of the day, we are amplifying the relationship and the people and not displacing them.
(0:45:05) KL: How do you get the attention of some of your members. When I say you, I am talking about the organization and the franchisees. How do you get the attention of people that are so distracted and might not think they have the time to commit to this?
(0:45:18) CR: That is a great question and something we are working on. First, we want to understand them more so we are trying to collect as much as we can qualitatively and quantitatively on our members like who they are and what they want to accomplish and what they are going to need to accomplish some of their fitness goals and then of course things like a CRM program and artificial predictive intelligence so we can send them the content they are looking for but we have to find the right person with the right communication at the right time so when should our coach contact that person and then that personal relationship will grab their attention. It is kind of a work in progress, but you are right, we are all so distracted so how do we break through the clutter to make an impact and be really relevant. You know, the average person spends hours on their phone every day. Hours! Can we, or do we, throughout the week, have a message that is relevant enough to break through and create some stickiness? We are working on that. I think our really good trainers do and I think as a system we are trying to scale that.
(0:46:21) KL: You mentioned the amount of hours that people are on devices, including myself. I am as guilty as everyone else is. It is less about time management and more about choice management. You make these choices that I choose to have this phone in my hand but really, if everyone looks at their day, we have enough time if we make different choices.
(0:46:39) CR: I don’t think people understand this but those choices you make define who you are going to be and what you are going to be. It defines what you find valuable in your life. If you are spending hours a day in Instagram and Facebook, I guess that is what you value. I think that if people zoomed out and thought about the choices determining their priorities in life, I think they would think about their choices a little bit differently.
(0:46:56) KL: You are right. The choices are so important. You mentioned Facebook and Instagram and all of these different social platforms that are out there that can be very effective to running a business as a leader and as an entrepreneur. There are ways that can supplement exactly what you are doing. In Self Esteem Brands, how has social media made an impact on your organizations?
(0:47:18) CR: Oh, quite a bit. Like everyone else, those are the channels to communicate through. Those are the two primary platforms. Right? Both Facebook and Instagram. It is a way for our trainers to build a brand. It is a way for our clubs to hyper local and show that they care and what they stand for in their community. We we kind of have that parent child relationship with Anytime Fitness and the Self Esteem Brand, like how do we allow them to put a little bit of personality or a local spin on it. We always try to balance those two. At the end of the day, we celebrate our member’s successes. We can celebrate what we stand for and we what we do inside the club that is different and show the community that we recognize that working out is not easy but we are here for you and we are here to support you and it might be someone who could not do a plank before but now they can do it for 30 seconds. It is every bit as important to us as someone who is squatting 250 pounds. I love those stories. One of our favorite success stories is about this grandmother who set a world record for planking. She planked for like 37 minutes, dude. She was overweight her entire life and now she is like this planking champion and it just shows that all of us are walking around this planet with unlocked potential sitting inside. Our bodies and minds are so much stronger than we give ourselves credit for and we have to tap into that and we need help tapping into that.
(0:48:33) KL: That is why I asked about that moment or that internal mechanism that triggered you, and I think you mentioned that hitting 200 clubs is what got you to that. I think we all have it. It is just like some of us unlock it and some of us don’t.
(0:48:47) CR: Bingo. It is cool to help people unlock, it really is. There are far more people walking along this earth that will never unlock their potential. Isn’t that sad?
(0:48:57) KL: One of my favorite quotes of all time is “Hard work beats potential.” I always think about that. “Hard work beats potential when potential doesn’t work.”
(0:49:03) CR: You are so right. This is why I am such an advocate for working out because physical strength creates emotional stretch and it creates the will for when you are starting to unlock your potential. You are running, and you run into a sticking point and how do you get through it? That is what physical strength does for you. When people have made a change in their life physically, like they lose 10 pounds or they can do pushups, suddenly they are able to accomplish other things in their life. To me, that is at the core of why people should exercise. That physical strength will change the trajectory and enable you to do other things. It gives you a desire for adventure because it is like, man, I am more confident. I am stronger. I feel great. I can do this.
(0:49:46) KL: When I don’t work our or I miss that, I feel differently mentally.
(0:49:46) CR: If I go a few days, I feel cloudier. The number one reason I do it for mental acuity. Number two is for stress relief and number three, I don’t want to be an old guy.
(0:49:57) KL: Well, you look great!
(0:50:01) CR: Thanks, man. I am such a proponent of it because I have seen what it does to people. You can’t be your best unless you are exercising regularly and moving. Movement creates mental acuity. You have to take care of yourself too as a leader. I recognize that as an ambivert and I need a little bit of quiet every day. I need to read my papers and I need to work out every day. I should try to eat in moderation and eat healthy. If I am feeling great I know I can be a better leader for others. There is a little bit of selfishness that must go with being a great leader.
(0:50:32) KL: Tell me about the people you spend your time with and some of impacts they have on you. You don’t have to name names, but the type of impact from the people that you have been able to meet throughout the years that have changed your way of thinking or provided you with advice that has helped you.
(0:50:46) CR: Yeah, first of all, I think there is this fallacy out there that leadership is lonely at the time. That is bull, right? It just means that you haven’t surrounded yourself with smart people you can rely on and trust in. I am super proud of our leadership team. Quite frankly, at this moment in time, we have never had a more talented team at our company. We have expertise that just blows me away. First of all, we have great leaders and the romanticizing or idolizing the Elon Musk and Steve Jobs and these all knowing, all powerful leaders. I think that is bull too. If you talk to them they will brag about how great their team is. So first and foremost, surround yourself with talented people and you will never feel lonely. Then, outside of that, I try to purposely look outside of our industry at other industries and I try to look at what people are doing in hospitality industry, or the transportation industry or in education because number one, I think there is something I can learn about what the struggles they are going through and what they are doing to apply. I am just endlessly curious and the good news is I have kind of curated a great group of friends and family that I can disconnect from work with and I can just enjoy life. The four P’s starts with people and of course for me it is both work and personal. If someone is not providing some enrichment to our friendship or my life, I’m not going to hang out with that person anymore.
(0:52:09) KL: The curiosity piece of it is such a critical piece of being a great leader and reaching out the other industries is what I do the most of today because what happens and what happened to me is I start to live in this tunnel and I start to believe things only exist in the real estate industry, and like I had mentioned earlier, we are dealing with the same people. It is always interesting to talk to other organizations and industries and figure out we have the same challenges that we have and you start to really learn. One little thing can change the entire business and can change you. That is why I am always so interested about that circle piece of it. There is another piece, and you have mentioned it and you have hit on it a couple of different ways, but joy is also a huge part of being a leader. If you can’t find joy, you can’t bring joy, you really have to have things where people can play and the enjoyment of it. So what are some of the things that you do that bring you joy?
(0:53:06) CR: First of all, I think it is important for a leader to be an optimist. Everyday that I get up I think it is going to be a good day. I love to laugh. I love experiences. Those things bring me joy. It goes back to celebrating. What do we celebrate? What do we put a spotlight on? It is always about someone putting in the work to make a change in their life, right? There is so much joy to be had in this world. And guess what? We all want the same thing. We want to live a better quality of life tomorrow. We want to operate our own business or we want to be healthier or spend more time with loved ones. We are far more similar than we are different. I mean that. I was just China and we have far more similarities with those around the world than differences. I can find joy in just pure travel, too. The fact that I get to travel the world is really cool.
(0:53:52) KL: So let me ask you a question. What excites you, when you think about the future, what are the things you are most excited for today?
(0:53:57) CR: People always ask me what causes you to lose sleep at night, and for me it is the opportunity. I lose sleep over opportunity and not over stress. What excites me is between 2020 and 2030, this decade ahead of us, I hope it is the decade where we are trying to finally figure out healthcare. We have all of this money in reactive healthcare and fixing sick people. How about preventative care and keeping people healthy in the first place. How about more gyms and less hospitals. I would like to get to a point where we have democratized coaching where people are living a healthy life and they don’t have to go to the doctor more often. We are putting more money at play and putting resources towards prevention. Obesity is out of control, man. Diabetes and pre-diabetic people are out of control. I worry about the health of the country and I am very hopeful that in the next 10 to 15 years we can find a way to do it and I really think one of the solutions is the industry of fitness and nutrition and just personal wellness and I am hoping we can play our part in cracking the code and getting this country and the rest of the world to a healthier place. I will share a very quick story. My older brother was born with a heart defect and he wasn’t supposed to live past the age of 5 and he lived until the age of 18. I don’t take for granted my health and everything working correctly. There are far too many people around this world that are born with everything working correctly that have now let it go to waste. They are unhealthy and therefore they will never unlock their potential and it is because they are too sedentary or they are eating improperly or quite frankly it is a choice in their lifestyle. We have to find a way to fix that and turn that around. Unfortunately, there is so much money in the unhealthiness of this country, so we have to find a way to turn that around. I am inspired to say how can we do this individually with our members but also on a macro level? We have to get this country to a healthier place. Somehow and in someway I want to play a part in that.
(0:55:45) KL: If you could give some final advice to leaders of all different levels of things that you have learned that like, you know, I wish I could give this advice to a younger Chuck.
(0:55:57) CR: That is a great question. I would try to be more introspective. What are the values that I care about? How is that going to manifest itself into the company or into my day to day operations? I would try to tell people to be a bit for selfless earlier on. It is interesting because I worked in the fitness industry for 15 years prior to Anytime Fitness but I didn’t understand the purpose. I didn’t understand the power of purpose and how it motivates people and how it brings great results. I also didn’t understand the equation of the four P’s. I guess quite frankly I wish I would have discovered that sooner and really gotten closer with the people that work with me and really being generous with my attention and being more selfless. I used to drive to work thinking about how can I get the business to perform better, instead of thinking how do I get my people to perform better? If I would have done that and I would have drove to the health clubs we own and said how do I make this personal trainer a rockstar? I think my business would have been better. So, I guess quite frankly I didn’t put people first. I put the business first.
(0:56:55) KL: That is great advice for so many leaders. Thank you so much for being on the podcast. I learned a ton today. You are a great person and a phenomenal leader. I just want to say congratulations on all of your success. Quite honestly, there is no surprise after spending this time with you I am not surprised at all at what you have accomplished and what your organization has accomplished.
(0:57:15) KL: Thank you, Kris. I hope people enjoy the book, Love Work, and let’s keep kicking some butt!
(0:57:18) KL: Let’s go! Thank you!
(0:57:23) Exit: If you loved this episode give us a great review. Subscribe and share us socially so we can spread the word and build the community of difference makers. If there is a leader who inspires you, send your suggestions for future guests to Kris’s team at behindthebillboard.com so we can get better.
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