Aug 1, 2007 12:00 PM

As former Home Depot executive Carl Liebert makes a home for himself as the new CEO at 24 Hour Fitness, he is moving the chain into new markets on the East Coast, in Asia and into the world of children’s programming.

Introduction: Hello. Welcome to the podcast of our interview with Carl Leibert, CEO of 24 Hour Fitness. I’m Pam Kufahl, editor of Club Industry’s Fitness Business Pro magazine, and we’re exited to have Mr. Leibert with us today. A transcript of this Q&A will appear on our Web site, and a shortened version of the Q&A will appear in our August 2007 issue.

Q: So, Mr. Leibert, thank you for joining us today. How are you?

A: I’m doing very well, Pam. Thank you very much.

Q: Great. Let’s go ahead and get started. I know that 24 Hour Fitness is celebrating an anniversary this year. And you also will be celebrating an anniversary of sorts yourself. You will be celebrating a full year with 24 Hour sometime this fall—I believe it’s in October. You have a background that’s not really from the club industry. You graduated from the Naval Academy and served in the Navy for five years. And then you worked for General Electric and Circuit City and most recently for Home Depot. So, maybe you can tell us what made you interested in the 24 Hour Fitness CEO position?

A: Well, first and foremost, I felt after my first initial meetings with Mark Mastrov and the time we spent together, I was incredibly inspired by what he had created with 24 Hour Fitness. And extremely humbled [by] the fact that he felt that it was the right time to bring in somebody from outside the industry to come in and take over his company. So, we hit it off together from a personal and professional relationship. And as I continued to do my due diligence about the space and about the industry, I became more and more excited just about the opportunity that was out there, specifically around changing people’s lives. I just really felt like this was a space that was going to be both fun, exciting and over the next five to 10 years very, very important to the members we serve but also the entire population as we fight epidemics like childhood obesity and some of the rising health care costs that exist in the space.

Q: So, with your past in the Navy and your work with Home Depot and General Electric, what in that past work experience do you think will help you with your new position? What can you bring to it from your past experience?

A: I’ve been privileged to work for some great leaders in my background. Certainly the Navy was a great leadership training ground for me and certainly working around organizations that you mentioned. One of the things you learn as a leader is [that] you’re very much dependent on the success of making sure you have the right people in your organization. Leadership comes down to selecting, hiring and motivating a team to [succeed]. And I felt like my background plays very well to our business. We have over 19,000 team members that want to serve our members everyday. And I think my job as a leader is to unleash that enthusiasm, potential and get people exited about taking care of members. And, certainly, I’ve been in some great organizations that have prepared me for that.

Q: Now that you’ve had almost a year working at 24 Hour and the fitness business, what has surprised you the most about the fitness business in general?

A: How difficult it is for me to get my body fat down to something that I’d be very proud of. That’s one of the things. I came in and got one of our personal trainers. I’m spending three days a week in our club getting trained by him. I’m amazed that once you get over 40, it’s more difficult than I ever imagined. So that’s the first thing on the personal side. 

One of the things I’m most excited about is I think this space of fitness and wellness and going after changing people’s lives is a space that’s certainly wide open and that plays well to my experience of being able to create markets, being able to look at what I would call potential add-on businesses, add-on services whether it be personal training or retail or personal training at home or being able to enable our consumers 360 degrees by enabling it through a Web site. One of the things that is important for us to remember is that 65 percent of Americans are obese or overweight. As you look at what is going on in our country right now, everyone is looking to reduce health care costs. If we are able to bring affordable fitness and wellness solutions to people, I can’t think of any more satisfying way to really make your mark both in your career and in your company. We have a special task as well as an opportunity in the industry to be what I’ll call that guiding light. With 400 clubs worldwide, we can certainly make a difference.

Q: I know you are part of the [NBC TV show] “The Biggest Loser.” Is that one way that you can do that and spread the message further than just your club?

A: One thing that “The Biggest Loser” has done for us is allowed us a way to get in front of consumers and to talk about at a national level that through eating right, through working out, through having a desire to want to improve and improve your health, that it’s difficult because you have to go to work, but it’s achievable. I think “The Biggest Loser,” what it does is it gives consumers who watch the show hope. It’s amazing to me. We are only in 16 states in the U.S. but how frequently I’ll travel on the East Coast or I’ll be in Georgia or I’ll be on various business trips where people identify with 24 Hour Fitness through “The Biggest Loser.” It’s amazing where people will say, “When are we getting a 24 Hour Fitness? When are we going to have a club?”

So it’s been a really good partnership for us. What it does is it brings the issues that surround how difficult it is to lose weight and to become healthy and it puts that in a form where a consumer can say, “Yes, I can do that.” That really falls in line with our corporate mission and really standing out in the fitness done right. It’s been a great ride for us and we value that partnership.

Q: With the items that you mentioned about what surprised you about the fitness industry and your partnership with “The Biggest Loser” in mind, what sort of changes do you plan on implementing at 24 Hour Fitness as CEO?

A: I think number one for us for changes is that I don’t want to disrupt some of the great past that we have. We have 24 years of what I call an incredible reputation for being laser focused on really improving people’s lives. Mastrov believed when he created the company that trainers and fitness were a valuable part of our success. We have over 3,000 trainers that are certified through NASM [National Academy of Sports Medicine] that are employees of 24 Hour Fitness. One of the things that is an important success factor and foundation builder for us is to continue to develop that aspect of personal training and showing people the right way to train and the right way to eat, the right way to diet, making sure that we leverage every capacity as a company.

One of the things that I see as a big opportunity is that we own a nutrition company by the name of APEX and the ability to partner with APEX and to bring affordable nutrition supplements to our members and make sure we are able to do that either online, to your door or in the club is a great opportunity.

We most recently launched what we think will be a terrific tool to help you manage your weight loss and that’s the BodyBugg. It’s available through our Web site, it’s available through our club and it’s available through our trainers. So we are going to continue to look at ways to enhance what has already been started as well as leverage new ways to bring fitness solutions to people.

What that means to me is that we see big opportunities in what I call the children/youth space. The youth space for us means being able to do classes that support the kids of our members to do training of children and kids that parents would like to add on services whether that’s basketball, soccer or swimming lessons. We see there is an incredible opportunity out there. Our members are asking for these things, and what we want to do is be able to respond to members in a way that enhances their overall club experience. So we are spending quite a bit of time in the business development side creating a model that allows us to replicate some of these kids programs throughout the country, and I think it’s going to be very, very exciting.

We’ve launched a youth basketball platform in several of our clubs under the brand Hoopology. It’s both basketball camps for kids and it’s private training sessions for kids. Parents can sign up if you want to enhance your skills, if you just want to learn the game. We have all sorts of kids from all sorts of walks of life that are coming into our club now and using our gyms at off-peak times that our members aren’t using them and taking advantage of the ability to use court space.

So we are very excited about those kinds of things. I always say in a retail, consumer-based business, you can really tell the success of your brand when you look around either your stores or clubs and you see kids in there. Because those kids grow up to be future members, and if they are comfortable being in there and training in there, they are going to be future members for us and advocates for the 24 Hour Fitness brand.

Q: I would say that’s a major change with 24 Hour because in the past I would not have associated 24 Hour Fitness with being a family-oriented facility with lots of children’s programs. I know you have childcare facilities in there. How do you make space for these children’s programs? With basketball you can use your basketball courts. Are there expansion plans for some of your facilities to make room for children and children’s areas that may include interactive gaming or other equipment specifically for children?

A: Yes. I think you’re touching on a fascinating subject for us. I’m a father of three boys and I have a 17-year-old, 15-year-old and a 12-year-old. They want to be in the gym with me. They want to be a part of where I’m going to spend time. And I think one of the things that we’re blessed with is over 300 of our facilities have basketball courts or gyms. One of the things that is important is we’ll have members who come in and play in the mornings and members who come in and play in the evenings, but usually during the day in the summer, those gyms aren’t occupied. Maybe one or two folks come in. So, what we’ve been able to do is put together some programs that don’t inconvenience our current members but also provide add-on services for stay-at-home parents to actually bring their kids and give them something to do in the summer. We’ve actually had a fun summer of incubating several of these ideas and bringing them to life.

In addition, we feel like our trainers play a very valuable role in this. Our trainers can talk to these kids about nutrition. They can talk to them about diet. Then, they can begin to introduce at what stage do you start personal training, at what stage in your growth and your maturity is it appropriate to start lifting weights and exercising and those kinds of things? We’ve found that our members—at least our members who are parents—are pretty excited about these programs.

In addition, just like every fitness club, we have group ex classrooms. We have scheduled classes that…quite frankly, we feel there are times that we have an empty classroom. Could we be doing something else inside that classroom that is fun for kids? Could we have a kids’ fit class that you can bring kids in to do aerobics, make working out fun for children? So we’re experimenting and playing with the concept of taking these rooms that at certain periods of times of the day don’t have a scheduled class, could we use it? Could we use it to bring additional classes, services, training, awareness to some of our members’ children? We think it’s a big idea and a big opportunity for us.

As you start to expand it, then we’ll have to look at our club format, the size of clubs, the amenities we offer inside our clubs. This is clearly not our core business, but we believe in order to better serve our core members, it’s something we’ve got to be open to as we continue to evolve as a company. Some of the pilot programs we’ve run this summer we’re pretty darn excited about what it means to us and what it will mean down the road. And we may change the size of our gyms, the size of our pools or change the workout space. I think it’s going to mean some great things for us because I think we’re going to continue to evolve.

Q: Well that sounds like a big initiative for you guys then. Are there other key initiatives that you specifically are interested in spearheading and getting implemented?

A: Yeah, I think what we’ve launched and one of the things that is important to me is to really stay grounded in consumer research and make sure we understand emerging trends. We’ve got several what I’ll call pilot programs around designing what the club of the future looks like for us. So we are testing various concepts that are out there from juice bars, to retail space, to Web kiosks to being able to leverage the members that we have but also to be able to reach what I call potential intenders to bring them into a club. What’s interesting for me and I’ve seen it so far in the industry is there is sometimes a little fear in joining a club that everybody who works out at a club has to be beautiful or has to be pretty or already has to be in shape. So we are working diligently with local communities and partnerships and high school and PE teachers to be able to say, hey, the reason you join a club is you want to live better and have a better life. You don’t have to be a movie star or a model or somebody who can run a 4-minute mile to join a club. So we’re working with our marketing department and our consumer insights group to actually begin to reach out to those consumers or what I call potential intenders to join our club and trying to provide a non-threatening way for them to want to be a part of our product offering.

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