After Stephen Ross, a key investor in Equinox and SoulCycle, outraged many customers by hosting a high-dollar fundraiser for President Donald Trump at his Hamptons home earlier this month, the companies have leaned heavily on their employees to urge customers to stay loyal. The message has been: Ross isn’t the face of the company, we are. SoulCycle instructors are hosting free rides, in which the company donates the forgone class fees to charities of the instructors’ choice. Equinox employees have even used a clunky Instagram hashtag, #WeAreEquinoxHeIsNot.
The businesses’ repeated claim that Ross is a mere passive investor is false — though he is not, contrary to popular impression, their majority owner, either. But their choice to put the employees out front is smart and not, I think, entirely cynical. Employees are important stakeholders of companies, even private ones. Many of these people have strong, positive emotional feelings about the place where they work. And, much like the owners, they stand to lose money if the companies lose business.
The workers are the most important allies Ross and his partners have right now. Only they can protect the brands, soothe displeased customers and retain business — by centering themselves, instead of him.
It’s a good time for them to ask for a raise.
Because the companies are private, we don’t have current details on the financial conditions of Equinox and SoulCycle. But back in 2015, SoulCycle filed documents in preparation for an initial public offering, which showed a healthy pre-tax profit margin of 23 percent. Since then, the company has matured while retaining its pricing advantage over competitors. It’s likely that SoulCycle is even more profitable today. And Equinox keeps expanding, a sign its owners see it as a lucrative concern.
So there’s reason to believe a substantial amount of profit is accruing to owners that employees could seek to access through collective bargaining, especially when the companies can little afford another damaging public controversy in which they fight back against demands from the very employees who are holding these brands together. A union could also help protect employees’ interests in a time of ownership-created uncertainty; that might be of interest, for example, to Equinox sales representatives who want to know what Ross’s choice to crap all over the brand will do to their incentive pay.
Of course, to the extent that Ross’s choice to host the fundraiser has made it harder to sell memberships and personal training and $42 Hamptons spin classes, that may give the company an opportunity to plead poverty and say it can’t afford to pay more right now. But that gets at another benefit of unionization: A union, even an organizing campaign for a union, could serve as a vehicle to strengthen the bond between the workers and their customers and therefore increase sales.
An organizing campaign would give disgruntled customers a way to feel they are sticking it to Ross without giving up his companies’ services. They can align themselves with the workers, whom they personally know anyway, and whose material interests in the long run will depend on customers continuing to patronize the companies. “We are Equinox, he is not” becomes a more credible message to the extent that Equinox employees are organizing in an effort to keep more of the companies’ revenues for themselves with a smaller fraction accruing to owners like Ross.
I think this is a key for understanding a benefit of organizing in a situation like this, in which employees might hesitate about doing so because they don’t wish to perceive themselves as being adversarial to their employer (even if they’re very angry with one of its owners). Obviously, the workers and their employer have a major adversarial interest over who gets to keep how much of the money generated from the business. But they also have a major collaborative interest in protecting the brands and the customer relationships. Forming a union could be a path to pursue both interests at the same time, not only strengthening workers’ hands but making the brands more appealing and successful in the long run. You unionize not because you’re mad at a company but because you’re a stakeholder and the union helps you protect it as a concern that works for you.
One thing we’ve learned in the past two weeks is that these companies wouldn’t be anywhere without their workers. SoulCycle especially isn’t the sort of business to which you could bring in replacement instructors during a strike and expect to retain the customer base. This is the perfect time to leverage that necessity.