Webcast transcript
Willy Walker: Good afternoon, everyone, and thank you for joining us for another Walker webcast. I want to start by wishing every veteran and veteran family member, a very Happy Veterans Day. I must say that in doing my research on Admiral William McRaven even prior to the walker webcast two weeks ago, I gained an all new appreciation for the training, commitment, risk, and unfortunately sacrifices that members of the U.S. Armed Forces make for our country each and every day. From all of us at Walker & Dunlop, thank you for your service to protect our liberties and freedom.
My guest today is someone I've wanted to know for a long time. The company brand and focus on lifetime health and wellness that Braham Akradi has built at Life Time is something to marvel. As a lifelong athlete who to this day competes in endurance events, I have watched Brahms influence over all aspects of health and wellness grow exponentially over the years. Having him join me today to discuss how he built Life Time. How Life Time is helping support the physical and mental health of their members during this pandemic and where he sees the health and wellness industry going forward is a true pleasure. Welcome Bahram.
Bahram Akradi: Thank you Willy. Looking forward to today.
Willy Walker: So, as I look back on your life and career, which is so noteworthy. You've spoken many times about the difference between dreams and visions in building a business. That sort of everybody has dreams but very few people take those dreams and put a real action plan into place to create a vision for a business. But before we jump into the dreams and visions you created for Life Time, I want to go back to you growing up in Iran and was just curious as a boy in Iran, what were your dreams and visions growing up?
Bahram Akradi: That's a great question. And it's easy. My oldest brother joined Air Force right out of school and flew fighter jets and of course going to the air force basses and stand behind the chain link fence and watching the planes take off and hear that thunder in my chest all I wanted to do is get to the point where I could fly fighter jets. And so, that kind of remained. I never took my focus off and you know life changed. I had to come to us. I figured I’d study some form of engineering so I can design planes and fly them. That didn't work out. But I still fly. Today I fly, you know, a couple of different Falcons we have for the company.
Willy Walker: So, before we jump to flying the Falcons. Let me go to -- you came to the United States and 17 and enrolled at the University of Colorado, and as you just said to be an electrical engineer. Take me back to that. I mean, you've moved far far away from home. You've come to a completely new world, culture, what have you. What was it like to be kind of, if you will, starting a new life at that age and entering University in the United States?
Bahram Akradi: Well, it's a great, again another very fun thing to talk about. I like as many other immigrants, when you think about coming to United States what you have in mind is LA and New York. That's what you've seen on TV. So, you know, I was lucky enough to have an eligibility from the school in Colorado Springs, Colorado, so I came with the big idea. I'm going to be in a place like, you know, Manhattan or Hollywood and I, of course, ended up in Colorado Springs. And while I love that city, it seemed like it was at least 20 years back from, you know, leaving Teheran when I landed. It's really interesting when you come to this country there are opportunities to look at how you've lived your past.
Look at how people live their life in here. And if you give your mind. If you give yourself the chance to really think openly, you can pick and choose the best of all worlds and maybe even create some new ones. So, it was very, very different. And I think for the most part I, you know, went to a city that was not as big of a hustle and bustle, so I could get a lot more done in each given day, and it took a little time to adjust. But altogether have no complaints.
Willy Walker: So, you work to put yourself through college. And you said previously that you'd had these hopes and dreams to be an engineer and build fighter planes or be a fighter pilot. What was the class or the professor or job or life experience that made you shift your focus from flying jets to going into business?
Bahram Akradi: It's a great question. I basically had to work nonstop to pay for school. You know, shortly after I came here, there was a revolution in Iran. I didn't want my dad to keep working to try to send money. So, I got a job and started working two weeks after I was in U.S. I worked full time to pay for school and worked in restaurants and worked in health clubs eventually, the last couple years of school time. And person who was really, you know, really life changing moment for me was a gentleman by name Greg Olson, who was president of this small chain of four clubs in Colorado Springs. And he called me and said, hey, come and meet with me. And do you want to go to Minnesota open a club in Minnesota. I started to chuck and said, you know, I've gone to school for 16 years to be an engineer. And he made an offer to you know that was triple what I would make in engineering. When I thought about what that could possibly make, I went to a professor that I loved from University of Colorado, he actually taught at Air Force Academy and part time at the University Colorado Springs. And I said, Dr. Stevens, what do I do here. He said, Son, with an engineering degree you can do whatever you want. So, I came back accepted the offer. Went to Minnesota and started proceeding with another gentleman named Mark Zafes who traveled with me. I was 21 he was 23 and we started kind of doing everything we needed to do to open up this one club in Minnesota, and learned a lot. I mean literally being able to just have to go buy furniture, buy desks, set up phones. I mean we literally had to do everything to start up that first club. It was huge education.
Willy Walker: So it's my, you know, you just mentioned that you were working basically around the clock, you know, very long days, seven days a week, but you were so successful, that the actual owner of the club had to give you equity to pay you, because he couldn't pay you for all of your success in cash. That's kind of a I mean if there's anything that's reflective of your incredible success as a business person is, here you are in your first job out of college and they, they're not paying you commissions, they're paying commissions and equity. That was a significant event as it relates to not only showing you how successful you could be, but how good a salesperson you were, was it not now?
Bahram Akradi: It really was. I mean when we came to Minnesota, you know, that was a big Commission plan and you know I was now making more money than I could possibly imagine or needing to spend. None of the commissions I was cashing in and after about a year they owed me you know tens of thousands of dollars. But then the idea was, hey, you know, you can trade this in for ownership and I instantly said yes became an equal 1/8 owner for those clubs, executive vice president at age 22. And instead of proceeding by coming up with ideas on how to grow the business rapidly did pretty much all the initiative on growth, finding locations, negotiating, and then my partner Greg Olson, who was a lawyer would come in and help me finish the deals. I was only 21, 22, 23 years old so it was nice to have him with me.
Willy Walker: So one of the things I've heard you say before is that one of the reasons you felt you were so successful is that immediately, even before you became an owner, you thought like an owner. What's it mean to think like an owner, as someone who actually doesn't own a company?
Bahram Akradi: You know, it was simple. You know, I looked at the commission structure they had for us. I was making more money than I could imagine. Instead of saying, yep, give me this and give me more. I told the seven owners, this is ridiculous amount of money to be paid, we need to change the structure. So that would obviously work against myself, but it was thinking like an owner. I think that's the way you run any business. As an employee you need to think like an owner, as an owner you need to think like an employee, and you need to think like a customer. So, you need to basically move the shoes and look at things from a different perspective.
Willy Walker: So, Bally's came in to buy the company that you were a part owner of, and you had a five-year contract to go to Bally’s and keep working with Bally’s. But something was wrong. Something that either the way that they were operating or what you saw as an opportunity said to you, you know, this isn't for me. Can you describe a little bit, maybe less on what Bally's was doing wrong and more what you saw the opportunity to do right.
Bahram Akradi: Yeah, so, you know, the whole the industry at the time was focused on building you know 20-30,000 square feet club at the largest. They focused on selling contracts for as long as the state would allow to sell the contract. Tried to collect up front money and it was just, it was just all, and you know when the customer came in, it was, Hey, you better join right now, “It's good for you”. This is going to save your life. You know, it just didn't feel right. And it was like doing something that was good for you, but it wasn't fun doing. And as an engineer I started thinking, you know, even though we're treating the customer, really not first class, the customers keeps coming back. And I started thinking at age 24 what would it be like if we actually designed something and built something where the customer really wanted to go to. Not because it was just good for them, but they wanted to be there. More entertaining, more fun, more larger. So, I actually sat down and drew every section of the club as I wanted to be as a consumer. So everything that I sat down to sketch was designed from a customer point of view. And then I engineered it so that actually could make money on the backside. And then I took that to Bally's top Brass, and I said, this is where we need to take this company. The club's need to be 70-80,000 square feet. Not 30 they literally thought I was crazy. And I said, Okay, well then, if you're not going to do it I'm going to do it on my own. And so that's the Genesis. I took some time to leave and raise the money. But, but, you know, it really, that's how it all started.
Willy Walker: So, the two questions that you've said right there, which is what would I want? And how would I want to be treated? You know, really, the customer focus. That's something that is defined your vision for Life Time since the very beginning of thinking about it through the customers eyes. And you just talked about that you actually sketched out a larger footprint. But go a little bit deeper than that because a larger footprint of going to 80,000 square feet versus a typical club of 35 that that's one thing but there were certain elements to it that you had a vision for that was in no way what people would encounter when they walked into a club back then that you have clearly, created by staying focused on the customer experience at Life Time. How did you visualize that? How did you convey that to your potential investors at that time?
Bahram Akradi: That's a, that's a deep question. So, I actually drew. So, you know, I went to clubs where people would throw in a swimming pool, but it was like 50 feet. And I'm like, okay, if we're going to have a swimming pool, you need to either make it 25 meter or 25 yards. If you're not going to build a 50-meter pool. It needs to be some form of regulation. You know, running tracks in some of these clubs 25 laps to a mile. Well, it just makes you go dizzy. So, if you're going to put a running tracking it should be a sixth of a mile, a fourth of a mile. So the way I looked at it is if I was going to build it, it had to be right. And once I started putting all the right components together, the clubs of at least 70-80,000 square feet, it wasn't that I just chose to be 80,000 square feet. It literally got there, because if you wanted to have the collection of these programs and services for people where they really wanted to get those and they wanted to have it be all under one roof it ended up becoming 70, 80, 90 hundred thousand square feet. And then of course you know in business, we have all of us in business, have the luxury of really doing iterations. Nothing has to be like when you send a shuttle to the moon. You have to get it right because it's billions of dollars, you get one shot, you know, like lives at risk. With business you can try things and you iterate you iterate. As long as you stay true to your vision to your commitment you get a chance to do, you know, my business is so easy. I can watch you when you're in the club. I can watch your reaction. Not even ask focus groups> I can just watch our customers. They are showing us what they like, what they appreciate, what they want more of, what they want less of, and you just gotta adapt fast.
Willy Walker: I'm just curious. And this is something that you mentioned it to me yesterday that you are now the largest tennis club in the country you are now the largest swim Club in the country. Was that ever part of the original like Life Time business plan? I'm gonna have the largest tennis club and the largest swim Club in the entire country?
Bahram Akradi: It really wasn't. You know, I think when you look at all these things when it goes back to the idea of when we do it, we want to do it right. You know, I always use companies -- in our company the names that they're thrown out all the time is Disney, is Four Seasons, Ritz Carlton, its Lexus, its Mercedes Benz the companies who have literally understood that brand is everything. And they are committed to protecting the brand. And so, everything we've done has been focused on doing the right thing. And sometimes the right thing means you have a lot of options for people. Once you start doing tennis right then, people want it and you start building more tennis clubs. Today we operate the most number of indoor, outdoor tennis. You know, full-service spas, swim schools, you name it, anything that has to do with healthy living, healthy aging, healthy way of life. You know, we are we are very, very if we're not most everything we're the largest, but you know we're one of the largest in most everything.
Willy Walker: So, you just mentioned a number of iconic brands and yours is very much an iconic brand as well. But you started this company as an owner/operator/entrepreneur one site and then you started to scale it and you've always been maniacal about customer service and having everybody at Life Time focus on that service quality. Talk about as you started to scale it. Because you've done every single job at Life Time.
Bahram Akradi: That's correct.
Willy Walker: Therefore you know what it is like to both, you know, check in someone who's coming into work out, to clean the gym equipment, to run marketing, to run the entire enterprise. As you started to scale Bahram and go from state to state creating multiple facilities how did you keep or instill that customer service focus in all of the people you were hiring at Life Time?
Bahram Akradi: So I think it's the job of a CEO, you know, it's kind of we all like to call each other, you know, we would throw a name CEO, but it really doesn't mean anything. Because when I started the company One Club I was doing everything. I was selling memberships, cleaning the club, doing marketing, everything. As we went to the five clubs, my job changed, my title was the same, my job change. 25 clubs my title was the same my job had changed. And so it continually changes and we have to adapt as fast as necessary to be able to move on. The benefits for a Life Time today for almost any founder/operator who is willing to admit you know all the is his own or her own shortcomings, and is willing to adapt and change as necessary. Is that I do have not only understanding of what every position is in our, in our company, but also, I have a complete empathy for what that person is going through. I know what it's like for one of my sales people. If they have to come in on a Saturday night or Sunday night and work because it's happens to be the close out. So it's having that empathy, together with understanding, allows me to make sure the culture. As companies get bigger, the job of the CEO really becomes the vision and then making sure the position of the brand is understood, create alignment. And then, and then really, really create the culture for the company. And for Life Time it’s a culture of care, culture love. You know, in a week, we're going to treat everybody with love and care. Customers, team members, front desk. And you know, I came here in my first job was washed dishes, two weeks backup cook, two weeks later line cook. You know, I am no better than a dishwasher. I am no better than somebody who works as a line cook. I'm no better human being than someone who works at the front desk of my club or graveyard shift. I am one of them. I was them. I am them. And nothing changes.
Willy Walker: Was there ever a moment as you were scaling, whether it was a potential acquisition and expansion into a new business line—which we will get to—but where you felt like you might be losing that focus on the customer? Was there ever a moment where you all of sudden said, “Hold on a second. We need to slow down on this growth path, or on this, because I feel like the culture or the day to day focus is not as acute as it should be?
Bahram Akradi: You know what, it's an interesting thought. We know kind of balancing your sort of competitive nature—you want to go as fast as you can. I remember having a discussion in our boardroom just the last three, four years with my partners, John Danhakl from Leonard Green and Jonathan Coslet from TPG, and we talked about this. And both of them, with all the immense experience they have, they said that what they’ve seen is when a company is trying to grow more than roughly about 10% unit growth—so, if you have 150, more than 15—that you can see that the company starts losing the level of excellence in the delivery. I totally agree with that. I think there is a certain percentage of growth that you can deliver and not bastardize your brand. But we have been so focused on building our brand. And really, it started becoming very, very focused for me at the end at the end of 2008, when we had the financial crisis. I had the choice to decide if we want to go down in quality, lower the price because of the toughness of the market from a financial standpoint, or focus on, you know, raise the quality, raise the value, but don’t lower the price. Luckily we chose to do the latter and it paid off in spades.
Willy Walker: So, you talk about the brand you’ve built. One of the other things about your business model that I find very interesting is, the difference between how much you invest in your facilities versus how much you invest in client acquisition. Because my understanding of the wellness and fitness space is that it's all about client acquisition and client retention. And you've built such an incredible focus on the client, and such a strong brand, that you can continue to invest in the facilities to continuously improve them rather than going out and spending all of your money on marketing. Talk about that and how that has paid off for you over time.
Bahram Akradi: That's a great question. So, we spend $20 million a year—now, forget this year. But going back—we spend roughly $20+ million a year at Life Time University in casting, training, educating, and culturizing the people who come in, to indoctrinate them into the Life Time brand and execution. We spend $100 million a year in capital, for maintenance of the club, and remodeling and renewing the deal. Last year, almost $2 billion of revenue, we spent maybe $20 million buying leads for the clubs. So really what we're doing is, we're spending all the money on protecting the company, the brand, the team member, the member, and we get today about 23-24 billion impressions and most of that is done naturally, by the stories that are happening about Life Time. Stories about our trainers who have helped somebody lose, you know, a hundred pounds and changed their life, got off their diabetes drugs, it’s really amazing to me. It’s the most gratifying thing to me to see the whole culture is doing this. It's not buying ads on TV.
Willy Walker: So, you just mentioned, the amount that you invest in your coaches and trainers; you call them performers. That sounds more like Cirque du Soleil to me than a fitness club. Talk for a moment about that differentiation, because it's remarkable to me, a) how much you invest in them, and b) how much of a differentiator that is, just in the word of performer.
Bahram Akradi: Yeah. So that's a great perspective again. When we started laying out our strategy, our strategy is simple: to provide the best places, the best people, the best programs, and the best performers, and you can see I actually separate between the people and performers. I mean, you know, when you think about it, some of us are basically going to club, and I’m not a performer, except when I'm teaching a spin class, or, you know, ultra-fit class or something like that. But generally, I'm one of the people. But then when I'm teaching, I think of myself as a performer. And when you think of Hollywood, when that performer comes in, they are consumed by making sure to captivate the audience, and give them the experience they're looking for. And we are so blessed. We have so many of these people, they are, in their own right, celebrities. They are amazing. They're so focused and every single, every single class they teach is like the most important performance of their life. That's why they should be called performers.
Willy Walker: So, you started this company focused on a huge trend: fitness and wellness. And you've been following that broad macro trend since you founded the company. And yet fitness “fads” come all the time. Talk for a moment about the transition and how you and your team have to sit there and constantly move from step classes, to spin classes, to yoga classes, and watching, if you will, the fads that come and go, but then the broad macro trend of being a place where wellness and fitness happen.
Bahram Akradi: So again, I'm really lucky because I started kind of making my own bench doing some lifting, besides playing soccer in the street, when I was 14 years old. So, I've been doing this for so long. It's just something that—I mean, I do something every single day. So, I get it. And I know that it changes. So, I always knew that. So, when I designed the clubs, it was clear to me that whatever I was designing in 1988, 1989, 1992, it isn't going to be something that, you know, is going to be there forever. So, I made the clubs extremely large and flexible, and with the mindset that, yes, we're teaching step classes in 2000, but in 2008, the step classes were pretty much over. And now you have you know barbell strength and you have strike and you have—you know. So, we also spent almost $8-10 million a year in creating what we call branded programs. So, it's the next program like Alpha, and so you bring them, you test them, you roll them out, and then eventually some of these programs become sort of dated. People are done with that modality of exercise or that brand and they want something fresh. That's why people have always told me, “Hey, Bahram, why don’t you build studios? You have this great brand—why don’t you do studios?” Well, the issue with the studios, is that some time—I don't know when; I'm not smart enough to figure out when those brands go out and I don't want to be dependent on one modality of exercise. So, it's a broad “healthy living, healthy aging.” That is the macro trend. It's been growing for the last 40, 50 years, it's going to continue to grow, and Life Time plays in the macro trend of healthy living and healthy aging.
Willy Walker: So one final question on the business before we dive in a little bit to COVID and managing through the past nine months or so, which is that in 2015 you decided to take the company private after having been a very successful public company, and two big private equity firms—TPG and Leonard Green—took you private at a very significant premium to what you're trading at as a public company and for an overall valuation of around $4 billion. First of all, just incredible success of getting there. How's it been being private, and are you happy you’re private today—I mean, I'm assuming you're not going to say to me, “I wish I was public today”—but, “what's being private allowed you to do,” I guess, is really the question.
Bahram Akradi: Look, you know, timing is everything. The time we were public, fitness wasn't as crazy as it was the last couple of years in the public market. And the challenge with our company was that we had—you know, my commitment was long term, like I said, you know, brand and balance sheet. I wanted to own the real estate to give me flexibility. And the market was very, very, you know, kind of unclear on that strategy. There was maybe 10 or 20% of the public investors who, you know, kind of liked the idea of a company owning the real estate and owning the operations; 80-90% were like, “hey, you know, I want to, I want to buy a REIT or I want to buy an operating company, not both.” So, this stock wasn't really performing, and I tried and tried and tried; we hit 41 of the 44 quarters, we beat the estimate, and the other three—one was fourth quarter of 2008, which, we still made plenty of money, but not as much as we had said. And the other two were just off by a penny or two. Overall, we were one of the most—grew the revenue and EBITDA every single year during this period, never had a down year. So, the market just didn't appreciate Life Time. You know, I was blessed. We had, you know, many of the big firms, private equity firms coming in—John Danhakl, again, from Leonard Green, fantastic person, led the deal with TPG, Jonathan Coslet, and they have been amazing. I mean, I can honestly say, you hear stories—good stories, bad stories—about private equity. But in this case, these guys just gave me all the support I needed. They gave me whatever help I needed, but they let me create an event and run the business. And we transformed the company, in those years, from just running the “play” part of our business, the health clubs, the athletic resorts, to the “live, work, play,” and we were designing this just before COVID hit. So, it's been an amazing run. I have virtually nothing but being grateful for the course that took place.
Willy Walker: So COVID hits; our society shuts down; your gyms are forced to shut down—I should say, your fitness centers are forced to shut down; and they've been opening back up. I remember the day that I was allowed to go back to my Life Time in Centennial and hit the pool, and it was just a glorious day and…It does, by the way—I would say we didn’t really talk about this at the beginning, but you always had a vision of basically creating these facilities that would look like a country club, and I will tell you that my Life Time that my family goes to in Colorado is as close to any country club I've ever seen as you can imagine. But talk for a moment about, okay, you're forced to shut down, then the moment certain states start to open, you're able to open it back up. You put in these incredible protocols. And talk for a moment about how you've navigated through states opening back up, states staying closed, bunching fitness and gyms in with restaurants and hospitality, and where you stand today as it relates to moving forward, having everything back up and running.
Bahram Akradi: That’s a great question, again. So, let me first give credit to Jeff Zwiefel, our Chief Operating Officer. He's been a great partner of mine for 20-plus years. Again, I set the culture, I set the vision, these guys do an amazing job of executing. They put together, on their own, a 400-500 page COVID manual that honestly, Willy, has been hailed by every health department who have come and visited the clubs. They all say unequivocally, they haven't seen any company, any sector, do anything like this. So, you remember, the members are saying that—every member is thanking us up and down for being open and for what a great job the team is doing. So, I'm really, really proud of my team for that. The COVID is all over the place, and I can go through with both hands that a Company like mine, never had a down year in revenue and EBITDA, and our revenue will be half and EBITDA will be almost nonexistent this year. That's the bad part. The great part is showing the resiliency of our brand; the strength of our balance sheet; not having any sort of a default, any bad relationship with any landlord—reaching out to the landlords and seeing how we can help them with other places they have. My team has been working relentlessly and we are in a great position. And if I look at the positives, so many times in the companies when things are going well, a lot of important, really important objectives, never become urgent enough. And so they just kind of sit there. And during this time we have been able to assess the things that, you know, now they went from important to urgent, got done—you know, we have three million people who have done classes on video; our digital will be launched for our members on hold; you know, in a really cool way they can have just about every type of exercise they want by middle of next week. And then by the beginning of the year, you know, we're going to have the Commitment Day this year, virtually, and make it available to everybody in the world, to do a positive action, and the digital format will be ready for all the people worldwide with that. A lot of really good things are happening; a lot of reinventions have been expedited. So, I look at this really as an opportunity to really go to the places that you may have not gone to, to kind of create new inventions, new ways to do things. But overall, I think Life Time will prevail immensely as things come back. Clubs are about 60% trafficked right now, up and down, it looks very different in different parts of the states. We’re holding our own from the EBITDA standpoint; stabilized bottom is now growing, coming back up. You know, every week is getting better over the week before. And I just did the strategy with my marketing acquisition team, and we're actually going to work on a plan that we limit the number of memberships we sell each day, in each club, in the next couple of weeks to make sure that during the busy season—typical busy seasons—the clubs remain as safe as you're finding right now, as you go to the club. It's just important for us to protect the brand and protect our customer. Everything else is going to fall in place.
Willy Walker: So, I think just before we move off of that, I just want to give you the opportunity to underscore this piece as it relates to safety. Because I think that there are two industries that have, to a great degree, been unfairly characterized as unsafe during this COVID pandemic. The first is the fitness industry. The other is the airline industry. And you've got great data as it relates to that not a single case of COVID has emanated from one of your facilities and that you have the ability to contact trace to an incredible degree, and I just think it's so important right now for people to understand that, you know, you can get on an airplane and travel; millions and millions of people in the United States have traveled on airplanes. And the number of cases is less than 100, is my understanding of the number of actual COVID cases that have been transmitted on planes when millions of people have been up in planes. And airlines are doing an incredible job of cleaning and protecting their passengers, just as you have done an incredible job of cleaning your facilities and protecting your members. Do you want to just give a couple data points on that before we move on to the next topic?
Bahram Akradi: That's a great question, it's really important. So, thanks to the governor in the state of Oklahoma, we were able to open Oklahoma first—to reopen Oklahoma in May. Since then, we have had about 20+, 21 million, visits in all the clubs. The number of reported cases is roughly about 850—point zero-zero-something, you know, it's basically mathematically nil. Now the most important thing though is that when we've gone back, and contact traced, and, to your point, much like airlines, we have ability to contact trace like no other business. If you go to, and I'm not picking on any business. So, if you go to Costco, you go to Walmart, you go to Home Depot, you go to many places, if you don't buy something, they don't know you were there. But in Life Time, when you come in, I know when you came. I know when you left. I know who else was in the club when you were in the club. Furthermore, with our app that we launched right before we opened, if you're doing a spin class, if you're doing a yoga class, you pick the exact bike or mat and we know who else was around you. So, in every case that was reported we've gone back, and we have checked thoroughly with other people. And we have not found a single case where it was originated in the club. These people who report it, obviously, they must have gotten it elsewhere. So, the protocols that Life Time put in, checking temperature in the front, having the special, you know, filters in the HVAC system, the extra cleaning that we do, the social distancing, the masks, all the stuff we're doing, has totally and entirely created the results that we just shared. And yes, it's interesting because when this whole thing started it was sort of hypothesize that because people exercise, they're going to throw more droplets and the gyms are not going to be safe. And so, they threw bars, restaurants and gyms. The truth is, when you look from London to Louisiana to Norway, when you look at the studies that come in, either our data or the ____ data, it's abundantly clear that the clubs are on the bottom of the list. So, if you look at the highest coming down, retail, whatever, is in the middle. The clubs actually are the lowest of the places that are transmitting disease. Unfortunately, even though the facts are not supporting the hypotheses, people keep throwing gyms. In fact, just in Bloomberg, they threw in this thing with the bars, restaurants and gyms, they threw that in—you go read the whole article, and there is all the stuff about bars and restaurants. There is nothing about the gyms, but they threw it in the headline. So, it will pass. The facts will prevail, and we are able to work with a lot of states. And many, many states right now, even if they initially think about, they want to close down gyms, once we provide them all the data, all the facts, we've been able to convert most of the states to change their decision and let the club stay open.
Willy Walker: Is there any part… The services you provide Bahram are very broad. I mean, you have your core fitness, which has pools and tennis and weightlifting and cardio equipment. But then you also have Life Time Weight Loss, you have Life Time Nutrition you have Life Time Assessment and Lab Testing, you have rehab and chiropractic. As this has come back and people have reentered fitness centers and yours specifically, have there been any of the services that you've broadened your overall approach, that just haven't come back because someone doesn't want to go and get a spa treatment right now or doesn't want to go and do the nutrition or maybe weight loss has gone up significantly because everyone's been sort of trapped at home and want some help of keeping the pounds off. Is there anything there that you've seen over the last eight to nine months that has been distinct from pre-Covid?
Bahram Akradi: So you know the one I can tell you was the spas. We just reopened. This seems to be a pent up demand for people getting their hair done, and the spa services. But for the most part, pretty much all the business, all this stuff, spa café, personal training, weight loss, nutrition, they're all coming back, similarly, to the traffic of the club and they're building day by day. I mean as customers are talking to other customers, finding out the clubs are safe, they've come back and test it out. They said, can I come and take a look at the club. They look at the club, with your membership or hold, they are reactivating and re-enrolling. And membership sales in October, we sold as many memberships in October, as we sold last year October. So, it's and without spending any more money on advertising or any more money on sales commissions. It was pretty much the same. It's similar this month. I think Life Time will prevail significantly as time goes on.
Willy Walker: As it relates to future developments Bahram, you've moved into building some communities. Life Time Living Communities and you've got two being delivered in 2021 one in Coral Gables, Florida, and the other one in Green Valley, Nevada, and then a third one in Dallas, Texas coming online in 2022. Talk for a moment about moving into the community space and what a) you're looking to provide there, and b) what demographic are you going after? Are you going after the younger millennials who want to be in a community where they can both, you know, hop into the gym and live in their apartment? Or you going after the more of the retirement community that is focused on Life Time fitness and retiring in one of your communities?
Bahram Akradi: It's a great question. Let me answer it like this Willy. This is really important, particularly to your audience. My vision for this isn't Life Time owning every Life Time living project. It's more like a Four Seasons, Ritz Carlton sort of management model and doing some of our own. Like Henderson, it's our own. We own that building. We're building it and will be the fee owner of the Life Time Living there. In Coral Gables, it's MPI. It's a different group that owns that and Life Time is the brand to create the connected living between the apartments and the Beach Club and the sushi bar and the athletic resort and Life Time Work.
So, my vision is really creating healthy living, healthy aging villages, that is live work play stay all at the same time. I love this because it is naturally and intuitively environmentally friendly. Because if you had all those components truly together. I'm not talking about a 4000 square feet fitness center in an apartment building. I'm talking about the 80-90,000 square feet, 100,000 square feet athletic resort that is there with a Beach Club and then the apartment is right next to it. And the work is right next to it. Now, you really have the best of all worlds and you don't have to travel. You know, instead of making nine trips that a single-family home makes you maybe create four or five trips a day. So, it's naturally healthy for the planet. So, creating the Life Time Village concept in any sort of a, you know, combination with the developers. So, if you have one, you're planning to build the place in Atlanta, and you are close to one of our clubs or you want to do it with place we can work with you. We can work with developers. Just like you choose a hotel flag. If you want to own the hotel, but you may work with Four Seasons or Ritz Carlton, or one of those hotels, you can work with Life Time. We work with you. And it depends on the market, to answer your question initially. Huge market available for big, big market is available for the baby boomers, who have instead of having the second home or third home which takes a lot of effort to maintain and you barely get to use, you can have five amazing, you know, two-bedroom apartments in the key cities in the world. And then you travel, it's easy, and it doesn't cost that much. And when you don't want it. You just terminate your lease.
So, my vision in this, I thought there would be a lot of people thinking like me, and when we did the mailer for Henderson, 146 units in like 60 days, we had 1500 people on a waitlist for that. 900 of those were from outside of Las Vegas. So that's what Life Time can bring -- the brand, the execution, the management, the sales process, our sales machine. So we can partner with any developer to think about what they're doing, see if it makes sense, if it makes sense for them to be branded. In some location that may be like Coral Gables, it may be more for the younger crowd. There are units for the older, that's such a big project, such an amazing project in Coral Gables, but all together, you know, we are open minded to both of those sectors that you're asking for. It depends on the market.
Willy Walker: S.o it's really neat to watch you, and how you describe that, and how excited you are about these new communities because you're going to be touching these people 24 by seven. You know, up until now, the people who come in interface with Life Time come for a certain period of their day might obviously some people spend longer than others, but the point being is that they come, and they go, and now all of a sudden, they're going to sort of be wrapped with the Life Time experience. I've heard you talk a lot Bahram just generally speaking, love. You love fixing problems, you love building your business, but you love the general concept of love. Talk about that for a moment, as it relates to that concept of love underpinning everything that you do at Life Time
Bahram Akradi: Yeah, in fact, our slogan is Love Your Life. Right. So, look, it's our choice every day to think of things, love or hate, it is our choice to go to choose to trust or choose not to trust. And you know I guess I've been blessed, been wired to start thinking how I can. How I can stay positive and I'm happier to go in an environment where I trust people and I love people. So, it's just natural. It's just the way I'm wired.
Willy Walker: So, let's talk about corporate health for a moment because a lot of people on here both work for large corporations, they run their own companies, what have you. On your website, you've got a couple big stats that I just want to repeat and then get you to talk about how Life Time is focusing on corporate health. So $3.6 trillion in annual health care spend in the United States. The average savings on medical bills have employees who go to Life Time eight or more times a month is 33.6%. Let me repeat that. So, people who go to Life Time, eight or more times a month have cut down their health care costs by 33.6% and 70 to 90% of chronic conditions are preventable through lifestyle changes. I know you engage with, you know, if you think about those stats and the savings potential. If you take your 3.6 trillion, you could lower that by you know $1.2 trillion, if you had, you know, the entire population going to Life Time eight plus days a month. Who are you partnering with on the corporate side? And what's the most important piece to success as it relates to corporations working with Life Time? Is it leadership from the companies? Is it creating groups that go to the gym together? Or is it really just a location issue that if the Life Time is convenient to the office they go. And if it's a real hassle to get there for all the great leadership and ideas and teams, you might create, it's not going to fly.
Bahram Akradi: Willy be it starts with the CEO of the companies. The CEO of a company has to decide the best that they want to do, that's what they want to invest. My take away, what I've learned over the last 10-20 years is, you know, I want to work a deal with David Simon, I call David, he and I talk, we can get a deal done. You know when things start in the middle they take forever, and sometimes they get lost in the twilight zone. Now the, the facts are clear, you know, this country is bombarded by practices, you know the type of food people eat, preservatives, colors, sugar, and just a lot of things are lending to a population that is less healthy and less fit. And we know, we have a clinic called Life Time Proactive Clinic in St. Louis Park, Minnesota. I built it as a test. And our goal is the integrated kind of a holistic health, you know, that ties in, optimizes your exercise, your nutrition. If you need any medication your supplements, etc. all as one. And what we find is just like you said 60-70% of the time somebody can come in who is on diabetes drug and with the right exercises that can actually reduce or eliminate the amount of drug they take for diabetes. So now they don't have the side effects of that. Same thing for taking cholesterol drugs. Same thing for hypertension. So, if people choose on their own that they want to do the right thing -- you know the thing about Life Time customer is the customer who has chosen, they want it; they care about their health. They've taken a step. So then if they take that step, they come to us, we have everything available from coaching, teaching, nutrition, bloodwork, etc. So, for me, myself, you know, this is one of the questions I take my blood at the lab with Life Time twice a year, and then my nutrition guys come in, our doctor sits down and I change what I take for supplements. Luckily, I still don't take any medication, it’s just supplements. But I'll completely adjust my supplements once or twice a year, based on my blood work, and I feel great. I think everybody can have that.
Willy Walker: So, a final issue for you. So you define the American dream. You immigrated to the United States. You got educated here. You built a multi-billion dollar business that is having a huge impact on the lives of millions of Americans, millions. And, as we all think about the significant issues that America faces today. And this is not a Partisan list, this is just issues that we all know are out there -- immigration policy, racial justice, an increasingly sick and overweight population, as you just mentioned, climate change, which you mentioned previously in building your communities. What can we take from your own personal story and the focus of Life Time to help us all make a difference on these super important issues to our lives?
Bahram Akradi: So, I think I appreciate you giving me the opportunity to speak about this. I think our country needs to focus on positive, how we can, rather than attacks and pointing fingers. It’s time to unite in a, in a way, all of us. I'm not talking about the politicians and I’m not talking about the President's. I'm talking about all of us. All of the citizens. It's time for us to unite together and think about how we can move forward. Willy, this is important to me so, I'll take the time to explain.
I wrote an article and I will elaborate on this. I call it the table. The table has four legs and in order for a table to be functional it needs to be level. Which means the four legs needs to go up and down together. We have people who argue about economy versus sustainability. About education versus population. The reality is we have four major, major issues in the world. That they are so interconnected. You can solve any of them in a meaningful way unless you think about the four of them all together. That's education, population, its economy and sustainability. And if we really want to fix this we need to create a NASA like organization, give them a billion, give them 2 billion give them 5 billion when we issue trillions of dollars on a whim, so, what is a few billion dollars. Make sure they hire some of the best economists, some of the people in sustainability, population. We need to manage population because we're eating our earth away. We are creating problems. But if you cut the population radically then your economy doesn't work. So, we just what we need. We can do it. Let me just be positive. We can do it. It can be done. If we can send shuttle to the moon in 1968, we can do this in 2020 2021. We're just going to have to come together and figure out how we can rather than why we can't. And too much time spent on pointing fingers and attacking one another and that literally needs to stop in every dinner, amongst ourselves, in every place that we sit down and have a conversation. We just need to stop that sort of a deal. And our country, we should love, care, respect, everybody equally, black, white, Asian, male, female, homosexual, heterosexual. We're all the same. And we're all here together. And we have some massive challenges coming towards us if we don't pay attention on Earth. And I am absolutely confident humanity is resilient. We may not figure out the right answer right now, but sooner or later we come together with the harmony and find the right answer.
Willy Walker: So Bahram, I'm deeply thankful of you coming together with me today to have this discussion on the amazing business you built and your thoughts on where we stand today, managing through the pandemic and having built such an incredible brand at Life Time. I'm deeply thankful for it. To everyone who joined us today. Thank you for taking the time. I would reiterate my Happy Veterans Day to those who have served our country and I wish everyone a great Wednesday, and we'll see you again next week. Thanks again Bahram.
Bahram Akradi: Thank you so much.
Willy Walker: Take care
