Interview with James Weaver, CEO, Gold’s Gym International, Irving, TX

When James Weaver took over as the new CEO of Gold’s Gym International last fall, the question on everybody’s mind was: Does he have a fitness background?

The answer is yes and no.

Weaver first caught the fitness bug as a young boy while watching his mother work out in front of the TV to Jack LaLanne. Mom is still going strong at 89, and so is her son, a 60-something, roll-up-the-sleeves worker who proudly says he’s been a fitness club member for more than 30 years.

“People ask me, ‘Do you feel like it hurts you that you don’t have gym experience?’” Weaver says. “No, it doesn’t. First of all, I don’t pre-judge what you can and cannot do. I come in here with an open slate. Secondly, I know very well what a gym member wants because I’ve been one for 30 years. That’s what it boils down to—giving the member what they want and what they deserve and what they need.”

As far as fitness and business go, the Gold’s CEO position is the first fitness-related job Weaver has held. After graduating from the University of Texas, Weaver spent the next 10 years working for Johnson & Johnson, where he led sales and marketing for the company’s hospitality business. Then, Weaver and a few friends founded Tecnol Medical Products, where he remained for
20 years.

“I’ve always been an entrepreneur at heart,” Weaver says. “Even as a kid, I would organize the kids in the neighborhood, and I’d have them working for me doing something.”

By the time Kimberly-Clark purchased Tecnol Medical Products about eight years ago, it had grown from five employees to 3,500 employees. Weaver spent the next few years as a consultant and helping his wife with her business. Then, Jim Caldwell, president and CEO of TRT Holdings, which owns Gold’s Gym, and Robert Rowling, TRT’s founder and owner, invited Weaver to lunch. They were considering a change in the Gold’s CEO position, and Caldwell asked if Weaver was interested.

“The main question I had for them was not how much would I make in this process, but what was their commitment to the ownership and the future of Gold’s Gym,” Weaver says. “I had basically two jobs in my whole career, and I wasn’t interested in a short-term turnaround. I’m a long-term player. They easily convinced me that they’re in this thing for the long haul.”

Weaver says that his whole career was preparing him for this job.

“The gym business is pretty simple, but it’s also very complicated,” Weaver says. “Operating one that’s worldwide is quite a chore, but I love business. I love growing things, and I love people. I developed pretty good leadership skills. To me, this is not work. I love doing what I do. This is just the perfect environment for me.”

At the time Weaver took over in November, Gold’s may not have seemed like a perfect environment. There had been some grumblings and disenchantment among Gold’s Gym franchisees about the direction of the company and about the support they were getting from the corporate office in Irving, TX. The president of the Gold’s Gym Franchisee Association, Blair McHaney, sent a letter to all Gold’s franchisees prior to the Gold’s convention last July. McHaney’s letter basically said that Gold’s did not see the value that franchisees brought to the Gold’s system.

TRT Holdings apparently heeded their call. On Nov. 1, David Schnabel resigned as CEO of Gold’s Gym. Schnabel had a Harvard background and came to Gold’s straight from the TRT board of directors. He was sometimes criticized, however, for not having a fitness industry background.

Enter Weaver, who knows Schnabel and has nothing but admiration for him.

“David Schnabel is one of the smartest men I’ve ever met,” he says. “I had lunch with him one time, and he’s brilliant. He’s a great analyst. If I were going to buy a company, I’d hire him to help me look at it.”

One of Weaver’s first orders of business was to reach out to the Gold’s franchisees. In the span of five days, he made personal visits to franchisees in Atlanta, New York, New Jersey and Washington, DC.

As Weaver talked about his first few months at the Gold’s helm, he referred to the time frame as his first 100 days, much like the president of the United States would. One day early in his tenure as CEO, Weaver says he had a 23-hour work day.

“I was kind of down and tired, and I said, ‘You know what? [President] Obama is doing this every day,’” Weaver says. “So it’s not so bad.”

Weaver is changing not just the culture of Gold’s, but he is transforming the company from a vertical organization—with a multitude of levels and layers—to a more flat organization, with more open lines of communication between, for instance, franchisees and the CEO. (The chief operating officer was one of the positions eliminated after Weaver’s hiring.) Customer service is paramount to Weaver, and he considers several groups—club members, franchisees, licensees, employees, vendors and the ownership group—his customers.

“I always say we operate gyms, but we’re in the people business,” Weaver says. “And if we take care of our people, then the gyms will take care of themselves. I believe in getting very close to the customer.

“I really am a manager that believes in managing by walking around,” Weaver adds. “I think Sam Walton was onto something. If you want to know how the customer feels or if you want to know how your operations are running, go out in the field and then talk to them. A major part of what Gold’s is all about is our franchise community. For whatever reason, we had totally disengaged our franchise community.”

McHaney says that he likes what he sees so far in Weaver and is confident that the franchisees have Gold’s attention.

“Here’s a guy that’s just been outstanding,” McHaney said in January. “James is a guy who likes to have as few degrees of separation as he possibly can between him and what’s happening with the customer. He’s unafraid of what the customer has to say. Our hope [since Weaver took over] was to be involved in decision-making processes and then together make smart decisions to help franchisees grow. All of those things are currently happening.”

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Before Weaver arrived, Gold’s ramped up its corporate club ownership. In the past four years, Gold’s expanded its corporate clubs by 60 percent, Weaver says. The focus on corporate clubs won’t go away entirely, but Gold’s plans to expand in all areas, including internationally, Weaver says. Gold’s has 475 U.S. franchise clubs, 61 corporate clubs and 125 international clubs.

“My vision for Gold’s is for us to be the very best solution to the world’s fitness needs,” Weaver says.

Without providing specific numbers, Weaver says that attrition has been stable, and that Gold’s finished strong in the fourth quarter of 2008. December 2008 was an improvement over December 2007, Weaver says, and the company met its 2008 expectations.

Weaver adds that Gold’s clubs enjoyed a healthy January, and that February had been performing well, too. Gold’s has an aggressive plan revolving around franchisees for 2009 that includes creating new concept clubs for them that center around a low-budget, low staff business model. In the next five to 10 years, Weaver says he hopes to double Gold’s revenue.

“You can’t do that without engaging our franchise community,” Weaver says. “Our relationship has improved dramatically with our franchise community and will continue to.”

To Weaver, business is business, and the same principles that make a successful business can be applied to the fitness business, too. For Gold’s, Weaver has three simple principles: be friendly, keep the club clean and make sure the equipment is working. If Gold’s can do that, then Gold’s can “close the back door,” as Weaver puts it, resulting in lower attrition levels.

“The attrition in our industry is just horrible,” Weaver says. “Depending on what study you look at, it’s somewhere between 40 and 45 percent of the members who leave. I talked to people in the industry, and they say you just simply can’t impact that, that’s just the way it is. I refuse to accept that. What I learned at Johnson and Johnson is listen to the customer and give them what they want. If you do that, then you can take price out of the issue, and you can maintain the longevity of that customer. I think that same thing works in the gym industry.”

Even in a tough economy, Weaver says that Gold’s can still grow.

“What really gets me up in the morning and gets my blood pumping is not the opportunity but the obligation that we have,” Weaver says. “I really feel like Gold’s has an obligation to do this. We’ve been given a great brand. We have wonderful, dedicated employees. We have a franchise community that’s second to none. And we owe it to the American public to go out and reach out to those people and make a difference in their lives. We have a chance to make people better husbands, better wives, better employees, better employers. We have a chance to help them enjoy quality of life. That’s what drives this company.”

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