As more and more of us spend money on fitness, Sweat Equity: Inside the New Economy of Mind and Body explores the investors and entrepreneurs making money from this booming market. While she would have welcomed more reflection on how this lucrative world is tied in with the rise of the ‘quantified self’, Jason Kelly shines a fascinating light on the US fitness industry in this well-researched, informative and eye-opening book, writes Ella Hafermalz

Hafermalz, Ella

LSE Research Online

9/15/2016Book Review: Sweat Equity: Inside the New Economy of Mindand Body by Jason Kellyblogs.lse.ac.uk/lsereviewofbooks/2016/09/15/book-review-sweat-equity-inside-the-new-economy-of-mind-and-body-by-jason-kelly/As more and more of us spend money on fitness, Sweat Equity: Inside the New Economy of Mind and Bodyexplores the investors and entrepreneurs making money from this booming market. While she would havewelcomed more reflection on how this lucrative world is tied in with the rise of the ‘quantified self’, Jason Kellyshines a fascinating light on the US fitness industry in this well-researched, informative and eye-opening book,writes Ella Hafermalz.Sweat Equity: Inside the New Economy of Mind and Body. Jason Kelly. Wiley/Bloomberg Press. 2016.Find this book: How much do you spend each month on getting sweaty? Most of us have somekind of financial relationship to exercise. Maybe your gym membership fee cyclesout of your bank account (with or without trips to the treadmill). Perhaps yourdesigner yoga pants double as café wear. Whatever your workout routine, you arebound to have noticed the voracity with which people are throwing money atfitness. In Sweat Equity: Inside the New Economy of Mind and Body, Jason Kellydelves into the subcultures fuelling this lucrative industry, using his financialexpertise and fitness world connections to introduce us to investors andentrepreneurs who are making their fortunes in the ‘new economy of mind andbody’.Kelly is an accomplished author and the New York Bureau Chief for Bloomberg. Heis also an avid runner who has completed over a dozen marathons. Havingpreviously uncovered the illusive world of private equity in the well-received bookThe New Tycoons: Inside the Trillion Dollar Private Equity Industry That OwnsEverything, Kelly here brings his own hobby and the wider industry of fitness underthe magnifying glass, exploring all things sweaty from a business and investmentperspective.Why focus on the fitness industry? Kelly has plenty of figures to back up his interest in the sector. For example,fitness clubs in 2015 were estimated to pull in approximately $27 billion in revenues, with growth of roughly threeper cent per year. Kelly calculates that with about 55 million members, this means that people are spending around$500 a year just on club memberships. That doesn’t even touch the premium going towards specialist gear –clothing, shoes, nutrition – or the events that the dedicated are signing up to, whether it’s serious US marathons orthe more social-media-friendly Color Runs and Tough Mudders. Fitness is increasingly a part of our social identities– and we’re paying a significant amount to keep up.1/3Image Credit: (Fit Approach CC BY SA 2.0)A fascinating aspect of all this is the level of differentiation and strategy behind fitness industry business models. Inthe chapter ‘On Location’, Kelly demonstrates his impressive research and informed industry insights, outlining howhigh-end and low-end clubs are positioning themselves and competing for the fitness dollar. For example, Equinoxis highlighted as an upper-end fitness club that attracts its affluent clientele by securing prime real estate in majorUS cities. Their advertisements, Kelly tells us, feature ‘Gorgeous, fit people in states of undress, confessing“Equinox made me do it”.’This glamorous company, a hit with the Manhattan elite, was purchased in 2006 by a forward-thinking real estatedeveloper, Related Companies. Buying the gym chain for $505 million, Related saw ‘an ability to marry their propertyexpertise with the fitness megatrend’ (21). The affluent market being targeted by both companies overlapped – asynergy that Related is set to further capitalise on when they build a line of branded hotels, due to open in New Yorkin 2019. The hotels will offer restaurants and rooms that suit the gym’s clientele as they travel (in luxury) forbusiness. Kelly skilfully shows how this ecosystem is evolving, and how savvy investors are capitalising on theloyalty that fitness clubs engender.By ‘following the money’, Kelly brings these complex investment relationships to light. He skilfully draws out thetwists and turns of business strategy in a manner akin to a detective novel. For example, if you keep spotting‘SoulCycle’ studios near Equinox gyms, it’s not a coincidence. The real estate developer Related owns both brandsand chooses to run them adjacently, but separately, in order to benefit both from membership and pay-per-userevenue models. The world we wander through makes much more sense when these financial relationships arebrought into the daylight. Revealing these connections and the reasoning behind them is where Kelly’s writing is atits best.In the subsequent chapter ‘Barry and the Art of Boutique Fitness’, Kelly explores broader sociological and societaltrends that inform the boutique fitness craze. We are told that members show up to smaller fitness classes, run byenigmatic instructors, because they long for a sense of belonging. Particularly effective, it seems, is the power ofpeer pressure: Kelly relays anecdotes of missing classmates being tracked down and dragged into class. Thesestories, amusing and tinged with the nostalgia of start-up mythology, are in Sweat Equity highlighted for theirrelevance to business success. While Kelly clearly respects the strategic nous of big business, it is his recollections2/3of conversations with eccentric entrepreneurs that really convey his genuine interest in this diverse industry.Exercise clothing and nutrition are also discussed. This chapter, entitled ‘Dress the Part’, does not share thecompelling sense of story conjured in the earlier chapters. A lack of focus spills into the second half of the book,which reads like mostly disconnected news features on an array of topics, such as charity and executive trainingprogrammes. Perhaps surprisingly given Kelly’s personal experiences, the chapters that dissect aspects of themarathon industry were the least engaging. Fellow long-distance runners might relate better to these sections;however, the details did not give me a good sense of why people do this to themselves nor how business modelsare evolving around them. In particular, I wanted to know more about how technology is increasingly being used toconnect lone runners. Are these developments embraced or rejected by the community? Less emphasis on historyand event management and more on what’s new in this area could have helped pique interest.Technology is of course becoming intimately entwined with fitness. Fitbit, Strava and Apple Watch are given briefattention towards the end of the book. These devices, the platforms they fuel and the datasets they generate are,however, surely where the money is, or at least will be in the near future. The habit of running straight to yourcomputer after exercising is, as Kelly says, already common. I would have liked to learn more about how and whereequity is being funnelled in this space and the strategic moves that are being made. The ‘new economy of mind andbody’ is now so tied to the selfie, the segment, the social media feed – while these elements were referred to inSweat Equity, the extent of their impact wasn’t explored in detail. Perhaps a sequel will delve into the financial worldof the quantified self?I recommend this book to those who are interested in business strategy and investment and to fitness fanatics whoare ready to reflect on the industry they are consuming. The more sociologically-minded can also find insights intohow and why we like to pay to sweat in groups. Kelly has interviewed an impressive range of influential players andthe material he presents offers a window onto subcultural worlds that are truly fascinating, and which give a signal ofthings to come.Sweat Equity is digestible in chapters and readers can choose the topics that interest them as each chapter standslargely alone. Kelly shines a light into the nooks and crannies of the US fitness industry. Overall, the journey is well-researched, informative and eye-opening. It is fascinating to learn about the origins of popular brands like CrossFitand SoulCycle. Understanding how these companies make their money sheds light on why we will continue toencounter these entities in our weekly routines and raises the question of ‘what’s next?’Ella Hafermalz is a postdoctoral researcher at the University of Sydney Business School. Her primary researchfocus is the future of work: specifically, how technology is involved in the ‘work of belonging’. Ella is conductingresearch on the use of Strava in running practice. She has published conceptual and empirical research ongamification in the context of social media and graduate recruitment. Ella is currently involved in industry-partneredresearch on Fintech and emerging business models in the sharing economy in Australia.Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of theLondon School of Economics.Copyright 2013 LSE Review of Books3/3

Book review: sweat equity: inside the new economy of mind and body by Jason Kelly

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