From the Corner Office: 24 Hours Fitness’s Mark Mastrov
Recognizing, understanding and capitalizing on trends before flighty consumers move on to the next big thing is a priceless business skill. While some might say this requires vision or intuition, Mark Mastrov’s experience shows there’s also something more tangible at work.
The founder of 24 Hour Fitness Worldwide Inc. and co-founder of New Evolution Ventures (NeV), Mastrov has earned an international reputation as an innovator in business and fitness. He was the first to give gym goers 24-hour access to facilities, introduced electronic customer bill payment in the 1980s, partnered with reality television show The Biggest Loser to market his brand, and formed multimillion-dollar partnerships with Magic Johnson, Lance Armstrong and Madonna.
Mastrov had a newly minted bachelor’s degree in business administration from California State University Hayward when he got his start in the fitness industry. He was recovering from an injury and needed a gym membership. The gym needed a part-time employee, so they worked out a deal. Soon, Mastrov was running the gym. He quickly became a partner.
For a while, he tried getting other employees to open or close the gym but they would often show up late, forget their keys or not show up at all so Mastrov did it himself, spending long hours at the gym. At night, when Mastrov wasn’t there, his cleaning crew was. Since the gym was open to someone at all times, Mastrov went ahead and opened it to his clients 24 hours a day.
Keeping the gym open around the clock “got good traction. I started seeing more people join and the next thing you know the brand changed to 24 hours. All of a sudden it was a 24-hour club,” he says.
Mastrov says there’s no special formula to trend-spotting. But it’s clear that his habits contribute to his success—primarily in being curious, paying attention to what people are doing and what ideas are catching on, and in soliciting information from others he trusts. Whether it’s how women are exercising in India, what types of mom-and-pop fitness centers are taking off in Korea, or the new fitness equipment popular among men in cold, dark, basement gyms in Russia, Mastrov is interested. And, when his information network makes a suggestion, he listens and looks for business collaborations.
“A big part of it is just keeping your finger on the pulse, whether you’re Googling information about it, seeing articles that have been written or are getting feedback from the people on the ground,” Mastrov says. “All points eventually start to align, and when your team starts telling you they’re pretty excited and you’re pretty excited, you start to feel good that it’s the right time.” Traveling the world also has made Mastrov smarter, he says. “You start to see the things that are adaptable to different markets. You might see a program in Russia that’s amazing and yoga in Asia that’s amazing and you can deploy it to other markets.”
Having the confidence to act upon his intuition is another skill Mastrov has honed. In 1983, after attending a conference where automatic bill pay was discussed, he integrated it into 24 Hour Fitness not only because it would benefit the consumer but also because he wanted to “get out of the collections business.”
Not every investment Mastrov makes works, however. During 24 Hour Fitness’ international expansion, the company opened several gyms in South Korea. Although consumers there were enthusiastic, retaining loyal employees proved difficult.
“In our second week all the employees came out in the morning and said ‘unless you give us an additional four weeks’ vacation a year plus four weeks of training in the United States, we’re all going to quit.’ ”
Mastrov declined to comply and instead hired a new workforce. He eventually sold the Korean gyms.
While South Korea proved problematic, another difficult market ended up being a huge success. In 1996, separate from 24 Hour Fitness, Mastrov started looking to open facilities in Russia. “It was a great opportunity and a great market, but it was very young and very green,” Mastrov says.
“It was a very tough market to find space, to find contractors who knew how to build in Russia and to find people who could sell memberships. That’s something we started from scratch. We eventually found our way and it performed extremely well,” he says.
By the time Mastrov sold 24 Hour Fitness Worldwide Inc. in 2005 for $1.68 billion, the company was operating more than 400 clubs in the United States and Asia.
Three years after the sale, he co-founded NeV with longtime business associate Jim Rowley. NeV, a private equity firm, works with fitness- and well-being-based businesses to further develop branding, raise capital and expand markets.
NeV has continued developing celebrity partnerships, including one with Madonna to develop a chain of Hard Candy Fitness Centers around the world.
The company recently partnered with the Ultimate Fighting Championship (UFC) to develop global mixed martial arts gyms. Mastrov says mixed martial arts—which is like cross-training for those interested in everything from karate to taekwondo—is the next fitness trend.
“I think you’re seeing a lot more people now move back toward what we call boutique fitness,” Mastrov says. “We used to be a specialized industry but in the early ’90s we went into these big boxes like Costco and Walmart, where everything was under one roof. Now, whether it’s mixed martial arts or cross-training or Pilates or yoga, these specialty centers are opening up again and people are flocking back to those.”
No matter which trend Mastrov’s pushing, he’s adamant about the importance of relationships—making, fostering and building them. Many 24 Hour Fitness employees are among the 5,000 to 7,000 people on NeV’s payroll, including Rowley, who has worked with Mastrov for more than 15 years.
“You need to find good people, develop good relationships, hold onto those relationships and have a lot of fun along the way,” Mastrov says.
Mastrov’s relationships often mature into lucrative business collaborations. In the ’90s, Magic Johnson gave him a call and said he’d like to collaborate with 24 Hour Fitness. Magic Johnson Sport Clubs soon operated in California and Texas. Mastrov agreed and soon celebrity-sponsored gyms became part of the 24 Hour Fitness brand.
“All of a sudden it wasn’t just 24 Hour Fitness, it was Lance Armstrong and 24 Hour Fitness or Andre Agassi and 24 Hour Fitness. So you had double the power you once had, which performed very, very well for us,” Mastrov says.
While he is a proponent of seeking and listening to others’ advice, Mastrov doesn’t always heed it. Such was the case with The Biggest Loser. Producers of the reality show wanted 24 Hour Fitness to help create the gyms and provide fitness guidance. The 24 Hour Fitness team decided to pass on the grounds that targeting the morbidly obese fell out of line with brand image.
“I said, ‘I think this is a great opportunity, I’m going to overrule them,’ which I had the power to do,” Mastrov says. “I said I really think this is a great opportunity and I want you to support us and see what we can do with this because I think it’s going to reach the entire weight-loss audience.” Mastrov’s instincts were right and 24 Hour Fitness continues supporting the show.
With those decisions that don’t work out, Mastrov is philosophical. “There’s always some disappointment but I never harbor it,” he says. “I try not to make the same mistake twice, but I kind of put it behind me and move forward.”
See how entrepreneur Magic Johnson has taken his brand of 24 Hour Fitness centers to success.
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