How Alberto Perlman launched a $500m fitness craze

Alberto Perlman knew he was onto a winner when he came up with Zumba. He just had to find the business model to match.

If you haven't yet heard of Zumba, prepare for inundation. The Colombian exercise craze, which invites fans to "dance away the pounds" to a fusion of Latin American beats, has made it across the Atlantic. Clusters are springing up everywhere even Norwegian cruise liners are now offering sessions.

The great selling point, says The Sunday Times, is that you have "so much fun that you forget you're exercising". Zumba students are encouraged to scream out things like "Get it, girl", "Whoo whoo", and "Yeeeeeahhh". That's doubtless also the refrain of the trio of groovers behind the craze, who are now coining it in.

They're a singular bunch, says the Financial Times. They're all called Alberto, they were all raised in Colombia, and this month they were all in London opening the first Zumba office outside of America. The money brains of the outfit belong to Alberto Perlman (pictured), "the force behind the Zumba Fitness business model" (see bwelow).

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The dance-meister is Alberto Beto' Perez, a former aerobics instructor who created Zumba "almost by accident" when he forgot to bring his usual music tapes to class and promptly improvised. The third Alberto (Aghion) "looks after the operational side". They won't reveal financial details, but outline that around 14 million people attend Zumba classes weekly, in 140,000 locations worldwide. Inc magazine has estimated the value of the business at $500m.

Had it not been for Perlman's mother, the venture might never have come together, says Business Insider. She was such a fan of Beto Perez's original class in Colombia that she urged her son to look him up in Miami, where both were living. Perlman checked out the class and decided it was a winner.

A graduate of Babson College, the Massachusetts business school famous for its entrepreneurship MBA, Perlman "cut his teeth in the 1990s creating Spanish-language clones of US dotcom businesses, which he sold to the firms he was copying", notes the Financial Times. When the bubble burst, he needed a new idea. Zumba provided it.

Perlman's original plan was to make instruction video tapes. "We thought that maybe we'd start a company that does infomercials and Zumba could be our first project." But it got so much attention they decided to push the brand into gyms and health clubs.

The early years were tough. Having ploughed all their savings into the business, they were down to their last $14,000 by 2005, having failed to interest a single health-club chain. The turning-point was the decision to build a network of aspiring instructors who'd each pay $30 a month for training and support. A franchise model was born.

The three Albertos "share a strong personal bond", says the FT. There's a lot of "teasing" and prank playing. But they're deadly serious about spreading the Zumba gospel. The plan now is to target the Bric countries (Brazil, Russia, India, China). As Perlman says: "Everything is about driving people to classes."

The Zumbatic code': just freak out

The catalyst for Zumba's growth is an army of personal instructors who now typically pay $300-plus to undertake the official training and then make monthly payments of $30. Beyond that, the firm seems remarkably relaxed about what its franchisees get up to.

"We said, the ones that want to be entrepreneurs we will turn into entrepreneurs, and the ones that want to teach in gyms we will make the star of the gym," Perlman tells the FT. But although classes remain a core part of the business, about half its revenue now comes from the extension of the name to music collections, clothing and footwear.

In addition to an estimated 12 million Zumba DVD box sets, fans have bought eight million video games, in which they undertake a mixture of dance and exercise to score points.

Underpinning everything, says The Sunday Times, is the "Zumbatic code", which basically translates into an imperative to just freak out. As the advice site outlines: "The focus is not so much on the dance itself but on the hypnotic effect that the music has on participants you just can't help but move your body. You get to break free from any inhibition and just dance like no one is watching."

The chief lesson Perlman has gleaned from building up the business is perseverance, says Vivian Giang in Business Insider magazine. Once you're confident you've got the right product ("don't listen to corporate or big business people, listen to consumers", he advises), try different business models for it.

After being ignominiously turned down by the big fitness chains, Perlman targeted dance studios and smaller independent gyms, where Zumba was an instant hit. Within three years, the big fitness chains "that had told us no' so many times" were banging on his door.