Tracy Anderson left small town Indiana to study dance in New York. Sadly, Tracy struggled with weight problems and couldn’t make it professionally. She later married former New York Knick’s basketball player Eric Anderson. After meeting one of Eric’s doctors who focused on exercises that improved overall fitness, Tracy was inspired to spend years creating her own workout routines that incorporated dancing with light weights. Tracy began building a business when a client suggested that she open her own studio.
This studio would be located in California’s Studio City. More importantly, Tracy was able to open it with the help of investors; an early sign that she could become more than a generic personal trainer. In just a few weeks after opening Tracy had a significant number of clients – many of whom were celebrities. With celebrities now praising Tracy’s workouts she quickly became a star herself. Tracy would build off this success by creating additional gyms that were not only based on her unique approach to fitness, but they were also highly exclusive and charged members $900 a month. She also created a broad range of fitness products that expanded her brand. At this point in her life, Tracy was now a single mother, but she had a business worth millions.
Tracy is now working on expanding her brand by producing a meal replacement bar for Target. This opportunity will bring in millions but only if she can meet Target’s goal of producing a package of five bars that can sell for $6.99 while still staying true her to high standards for ingredients. As such, Farnoosh Torabi examines how Tracy navigates a major deal while upholding her brand’s integrity.
Meeting Tracy at her headquarters, Farnoosh is also introduced to the CEO of the Tracy Anderson business, Maria Baum. Tracy realized that as her company grew she needed someone who had business experience and felt that Maria, a graduate of Wharton’s business school and breast cancer survivor, had the intelligence and strength of character to help her. Talking to Tracy, Farnoosh is told that “by the year 2020 everyone in America will be obese”. It is a claim that Farnoosh finds shocking and alarming.
Farnoosh witnesses Maria tell Tracy that they still need to figure out how to complete the deal for Target. While Tracy felt that this was already done, Maria explains that the bars are still too expensive, and they are over budget by thirty-five cents a bar. Specifically, Target wants to sell five of Tracy’s bars in one box for $6.99. Though Maria and Tracy withhold how much they plan on making off these bars, Farnoosh explains that according to reasonable industry standards Tracy’s bars would be sold at Target at $3.50 a package. It becomes clear that they are over budget by $1.75 a package; an amount that can destroy any chance of Tracy Anderson making a profit on these bars.
Maria explains that they should switch from all organic ingredients to mostly organic. She also explains that the bars have to be much smaller than the originally planned 54 grams. Tracy is adamantly against this because a smaller bar will turn her product from a meal replacement into another snack food. It is adamantly expressed that Tracy is against this and does not want to produce snacks. She reveals that she feels snacks are causing much of America’s weight problems. What surprises Farnoosh is that while the retail value of these bars in Target are expected to be worth $6 million Tracy is willing to cancel the deal if she can’t adhere to here food standards. Tracy believes that if one doesn’t have the courage to walk away from something that they don’t believe in then a person will make bad decisions.
Though Tracy doesn’t have a formal business education, she has gained her work ethic her mother. Tracy shares with Farnoosh how she remembers her mother, even in the middle of a crumbling marriage, showing up for work with a smile on her face and in professional attire. And the work ethic that Tracy saw in her mother has become second nature to her. Farnoosh sees Tracy’s work ethic on full display by the intensity she brings while leading a workout class.
Currently, Farnoosh explains, Tracy has five fitness studios – two in California and three in New York. Each studio is limited to 250 members who pay $900 a month plus a $1,500 initiation fee. Even with this amount, Tracy’s studios have a long waiting list. More importantly, Tracy’s five studios bring in over $13 million a year. Tracy feels that the studios are the heart of her business and would never consider giving them up. Moreover, Tracy justifies the membership costs by explaining that she charges for commitment. Tracy doesn’t want to invest her time into someone who isn’t interested in actually improving their health. Farnoosh states that since Tracy is seen as one of the best fitness instructors in the world, she can charge a lot of money, but she has to provide an extremely high quality.
Meeting with Tracy and her team to finalize the packaging for the bars, Farnoosh is eager to see how Tracy works within the highly regulated world of organic food. One thing that takes her by surprise is that they can’t make any claims about what eating the bar can do. For example, the packaging can’t say that they help people lose weight or are healthy. Additionally, even though the bars are made largely of organic ingredients, the packaging can’t state that the bars are organic because of federal standards. Tracy’s team realizes that they can say the bar is made of ‘organic ingredients,’ and they are excited when an attorney confirms this for them.
While working to bring her bars to Target, Tracy is also working on increasing the number of studios she has. She plans to have five new studios by the end of 2016 including locations in New York, Miami, London, and Connecticut. In the following year, she plans on entering Dallas, Boston, Austin, Chicago, and San Francisco. To make sure these other studios offer the same level of quality that Tracy can personally offer, Tracy runs classes teaching people how to become trainers for her studios. These classes are intense because she focuses on every detail to make sure everyone is up to her level. Tracy explains that she is worried about a trainer representing the Tracy Anderson brand providing a low quality of service to members. Farnoosh concludes that Tracy’s obsession with quality permeates every aspect of her business.
Tracy has also launched a streaming service that broadcasts her workouts in real time. These classes have successfully generated over a million dollars for her in one year. Tracy is also meticulous about how her gyms look. As such, she takes Farnoosh to visit one of her upcoming gyms that are currently under construction. Tracy points out that while she wants her membership rates to remain high, she wants the new food and drink areas to be inviting to non-members.
Meeting at Maria’s home, Tracy and her team are working on new food products that they can sell at their gyms. Maria and Tracy realize that since each location has 250 new members, they have an audience that they can sell additional products to.
While at Maria’s home, Tracy and Maria talk to the company’s nutrition bar producer, Jack. Jack wants to reduce the size of the bar, but Tracy lets him know that she would rather walk away from the deal than reduce the size. Maria explains to him that she thinks he should bring down his costs so that they can get the bars into Target. Since they all know that the bar’s sales will only grow, Jack will eventually make the money he loses now back as Target orders more bars from them. Jack understands Maria’s point and agrees to bring his costs down. This will allow Tracy to create the meal replacement bars that are up to her standards and meet Target’s price point.
After spending these two days with Tracy, Farnoosh understands why she is such a commanding presence. Tracy took her personal challenges and turned them into a business. Tracy then used her commitment to quality to build an international brand and capitalized on exclusivity. She is willing to share control by bringing in a strong CEO, she isn’t willing to lower her standards at any cost. And it is this push to maintain high standards that make her a leader people want to follow.