Now They're Taking On Saudı Arabia
Inc.|March - April 2019

Paint fumes lingered inside the airy new studio, where my thighs were burning from the endless squats.

Maria Aspan

Around me, Lululemon-clad women with bare arms and lustrous hair gripped the wooden ballet barre and assessed themselves in the mirrors, while our instructor cheered us on. “Put on your brake lights,” Rihanna chanted over the sound system. “You’re in the city of wonder.”

Outside the windowless room, this city of wonder was shining. Palm trees waved gently near the outdoor plaza, at a picturesque remove from midafternoon traffic. Fountains gurgled next to a large Shake Shack, while the patrons at two adjacent Starbucks sat basking in the sunlight of a large patio.

That is, the men basked. They were the ones allowed to occupy most of the patio, and the front Starbucks. The women, some fully veiled and all covered in flowing black abayas, were restricted to a few tables in the back corner.

These women were the potential future customers of the upstairs fitness studio, where our spandex-clad bodies had moved on to pelvic thrusts. It was the inaugural friends-and-family class at the newest location of Physique 57, a 13-year-old New York City–based chain that specializes in ballet-style barre workouts and caters largely to wealthy, well-traveled women. And two of the women in this particular class, Physique 57 co-founders Jennifer Vaughan Maanavi and Tanya Becker, had traveled far indeed—from New York to Riyadh, the capital of the Kingdom of Saudi Arabia.

“We’ve opened 13 studios, and nothing is more exciting than this moment,” Maanavi, a former banker with a quick laugh and a quiet steeliness, said the next evening, at a lavish launch party for the new studio. “I have wanted to be in Riyadh for so long.”

Yet the culmination of her ambition—one that involved partnering with one of her Saudi customers and waiting years for the government to allow women to work out in licensed gyms—came at an awkward time. Maanavi, Physique 57’s CEO, and Becker, its chief creative officer, had already spent months dealing with the mundane and not-so-mundane headaches of expanding into a distant and relatively unknown market with fast-changing regulations.

Then they found themselves traveling to Riyadh in early November—a month after Saudi assassins with government ties had gruesomely murdered Washington Post columnist Jamal Khashoggi, and a couple of weeks after the top executives of Uber, SoftBank, Ford, Goldman Sachs, and many other prominent businesses had publicly if temporarily distanced themselves from Saudi crown prince and de facto ruler Mohammed bin Salman, or MBS.

Suddenly, for most Western businesses, talking about Saudi Arabia was PR kryptonite. Yet the country and its money remain deeply embedded in American businesses, from oil companies and financial giants to Hollywood conglomerates and Silicon Valley unicorns. Saudi Arabia imported $25.5 billion in U.S. goods and services in 2017, including $2.6 billion worth of cars from the likes of Ford and GM. Meanwhile, between its own direct investments and the $45 billion it’s contributed to SoftBank’s tech-focused Vision Fund, the Saudi sovereign wealth fund is one of the biggest backers of Uber, WeWork, Slack, and many other high-profile U.S. startups.

Saudi Arabia’s population of 33 million hits the consumer trifecta of young, wealthy, and tech-savvy. Almost 70 percent of the population is under the age of 30, with a heavy reliance on Snapchat, Instagram, Uber, and other local and Western apps. The country’s average GDP per capita is an oil-juiced $55,000 by purchasing-power parity. But with global oil demand expected to eventually reach its peak and a high Saudi unemployment rate, bin Salman is trying to make Saudi Arabia less dependent on fossil fuel revenue and to create new types of jobs for his citizens. His Vision 2030 economic and social reforms have included finally allowing women to drive, as of June 2018; reopening movie theaters; and hosting WWE matches and other Western sports events, along with pop-music concerts by the Black Eyed Peas and Mariah Carey.

Now, many beloved U.S. consumer brands—Shake Shack! Apple! Nike! Coach!—have opened outposts in Riyadh or the more liberal, coastal city of Jeddah. Physique 57 is following in the fitness footsteps of Curves, Gold’s Gym, and CrossFit, while Starbucks has 166 stores in the country. AMC Theatres has announced plans to open up to 100 new cinemas there by 2030, while Netflix is making concessions to keep Saudis watching its content at home. “There are some really, really key advantages for American businesses in Saudi Arabia right now, despite all the risks,” says Emily Hawthorne, a Middle East analyst with geopolitical consulting firm Stratfor.

But for all of these American companies, doing business in Saudi Arabia means celebrating the crown prince’s reforms while staying silent about the devastating, U.S.- backed war in Yemen; the jailing and reported torture of women activists who fought for the right to drive; and a draconian “male guardianship” system that prevents Saudi women from attending university, traveling, marrying, or doing practically much else without the permission of a father, husband, brother, or son. In recent months, Saudi women fleeing their families have drawn new attention to these restrictions, heightening the reputational calculus for businesses that decide to expand into Saudi Arabia.

Which includes Physique 57, a luxury brand with a celebrity following, an empower-women mantra, and a cosmopolitan list of franchises in Dubai, Bangkok, and Mumbai. In March 2018, when Maanavi and Becker committed to Riyadh, the social change sweeping the country seemed full of promise.

That’s changed, brutally, in recent months. So as Physique 57’s founders continued with their expansion plans this fall, the way in which they discussed—and carefully dismissed—Saudi Arabia’s darkening global reputation illuminates how complicated it can be to bring your business there. “I’m not political,” says Maanavi. “Whatever is happening with them politically, it must remain separate from our mission to help empower women.”

But can any company today really separate its mission from politics?

This is crazy, this is crazy, this is crazy!” Weeks earlier, in Physique 57’s Wall Street co-working space, Maanavi is laughing about some of the wackier problems she and Becker have confronted in their quest to open a Riyadh licensee. It happens to be October 2—the day that, in Istanbul, Khashoggi walks into the Saudi consulate for the last time.

It will take a few days for the drumbeat of awful headlines to start. At this point, Maanavi and Becker and their Saudi partners seem to have already navigated plenty of challenges, including: recruiting experienced dancers and fitness instructors who want to work in Riyadh, when, as Physique 57 head of global training Antonietta Vicario puts it, “young dancers want to go to New York, not Saudi Arabia”; getting them visas for multiple countries; and finding a country to which Physique 57’s “master trainers” can regularly travel to get the new hires up to speed.

“Really, nothing’s worked out, except that we will get there. We. Will. Get. There,” Maanavi chants in October. Once more: “We will get there.”

It’s exactly the sort of determination that started her company, and ultimately wooed her co-founder. In 2005, with a young child and working long hours at Morgan Stanley, Maanavi wanted a more flexible schedule. Then, her favorite fitness studio—the Lotte Berk Method Studio, an Upper East Side mecca for devotees of the O.G. barre workout—closed. Maanavi, a Columbia MBA who reads the Harvard Business Review for fun, saw an opening to start her own thing. But she had her heart set on doing it with Tanya Becker, one of Lotte Berk’s top instructors. And Becker, at first, wanted nothing to do with her.

“This woman is just another crazy client from the Upper East Side,” Becker thought, after hanging up on Maanavi’s first cold call. And her second. And her third. That should have been the end of it. Becker, a dancer and choreographer with a riot of tawny hair, was in Michigan, ensconced in another barre-related project. Undaunted, Maanavi flew out, uninvited, from New York, and finally persuaded Becker to meet her in a strip mall to hear her out.

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