I get the impression they don't like the CEO very much. That was an impressively brutal attack on him, with probably the worst damage inflicted by the CEO's own statements.
Blackwells is obviously not a neutral party here, there's a reason they created this thing. But on first glance it looks like a pretty solid argument that the management at Peleton is seriously flawed. I don't really buy the arguments on why Peleton is a good business and comparable to Streaming somehow.
I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested. Doesn't mean they're wrong, but obviously this didn't stop Blackwells from investing in the first place.
Blackwell is engaged in activist investing. Their goal is to make profit by changing how the company is run. This deck is surely part of that campaign. Thus it may contain truths, but it also serves their agenda. Best to be understood in that light.
> I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested.
Likely they knew and saw an opportunity for their investment strategy.
they obviously want to get a good ROI on their stock holdings and try to convince potential buyers that the company is amazing and just held back by their CEO (which definitely is not the only problem that Peloton has)
Yeah. The problem is that the deck makes a more convincing case that the company is badly run than that Disney might get value from acquiring a loss making niche hardware company to distribute its content...
In my one of my MBA classes, we were discussing, whether Peloton's original super optimistic slides were reflective of reality ( most of the class agreed, it seemed more like a niche product rather than a gym replacement or even a $300 boutique training replacement as this presentation claims ) and were comparing it to AT&T Time Warner saga. We never touched on Peloton's management, but if we did, the quotes are pretty stunning.
You absolutely do have a point about streaming, but the presentation argues that Peloton's assets may be valuable to some streaming services ( they are dying and fighting for content now ).
Yes. The Peloton 'model' reminds me of the gym model, at least in the UK.
You always get a bunch of people sign up in 'fat' January for 12 months. They go to the the gym for a few weeks and stop. But continue paying £50pm or whatever for the next 11 months.
Peloton feels similar in that people are made to want the shiny thing in the TV adverts, find that they don't have a room with a view to put the bike unlike the adverts, use it for a few weeks, and then have to see out their subscription. I'm sure Peloton's insider numbers probably show a slower drop off, but I'd bet it's still there.
There's probably a big intersection of those that have bought a Peloton bike as well as joined a gym but rarely used it.
The free alternative of course, is go outside and cycle or run.
TBH the arguments are fairly compelling it should be a solid business. Maybe not valued what it is.
Particularly the lack of churn on subscribers rings true. Their customers are loyal, they feel more part of a community, etc than your random Netflix subscriber.
There's a large addressable market, as seen by Tonal and others coming into the fray.
The counterargument IMO is that fitness is increasingly a fractured market between these home workout things, boutique gyms, budget gyms (Planet Fitness), fancier gyms, country clubs, people that just want to workout on their own...
Matt Levine made the point that the CEO has enough shares to control the board, so the point of this deck was to convince _the CEO_ that he no longer wants his job. It worked: he stepped down, and PTON was up 5% on the news.
He's still the executive chairman, so the CEOs boss. The new CEO doesn't work for Pelotons employees or non-voting stock holders. He works to please John Foley and John Foley alone
I worked for a company in a similar situation a few years back. The new CEO was fired in less than year by the old ceo/new chairman
Oh, interesting plot twist! And it makes so much sense, because if the potential buyers listed were the intended audience, the tone would seem a little condescending: too much "they might fall for it" badly hidden between the lines of "that would be a good acquisition for them"
> I don't really buy the arguments on why Peleton is a good business and comparable to Streaming somehow.
The addressable market section is especially ridiculous. It looks at global wellbeing spending of $4.2T including $600B in fitness. That is not the addressable market for a device that is expensive, tied to a monthly subscription and takes up more floor space than a couch. That's not even the addressable market for running shoes, much less a fancy exercycle or treadmill.
I've got the impression that some big guys invested big money in Peloton, while its CEO with his buddies promptly sold off their shares while talking the talk about the bright future. The big guys are now trying to recover their investments.
The fact is. Not every company can be a $12B company. Peloton might be a super successful $1B company, who slowly tries to creep into new areas for growth.
And it sounds like Blackwell understand this, and instead of pushing for Peloton to focus internally on its product and get rid of the extra fat, they want a fast sale to a not-really-smart company. So they can at least get some ROI
People talk about monthly fees being high or fair, thats not it at all, Pelotons prices for hardware and membership or completely fine. What they did do is
* Pouring money into building their own factories (even Apple doesn't do this at their scale, they pay Foxconn)
* Building a full fledged apparel brand
* Hiring way too many engineers, FAANG level org size
* Having their own warehouses and delivery full time employees
No other company does this. I'm not sure what the long term plan was, maybe they become a white label manufacturer for other start ups? It failed, badly
You do not need 14,000, or 11,000, or 3,000 employees to do what Peloton currently does (again, maybe they had grandiose plans in the pipeline). If we want to compare proprietary hardware + Android + online streaming service. When MIRROR was bought out by Lululemon for $500M, they had 200 employees
I have a feeling no one has offered Foley more than $3B for the company, and i'm being generous
Their apparel brand is a joke. It’s run by Foley’s wife. Unless I messed something, what experience or qualification does she have in apparel?
Never mind the fact that I’ve maybe seen only 3 people in the real world wearing anything that is Peloton branded (no, the free Century t-shirt doesn’t count).
Personally, I find their apparel to be a little loud and obnoxious, but that’s just me. As a consumer, I don’t see what value they bring to the apparel market. Nothing new, just branding.
The HN crowd is always quick to point out that Peloton has no moat - its just a screen on a bike. Creating a lifestyle brand (ala in person fitness brands like Soulcycle or Barrys) is a way to address that moat, and apparel is a core part of that.
Whether or not they were successful is an execution issue.
Just for a counterpoint, as commented in a previous thread, my partner and her friends are obsessed with the culture of peloton and they all wear a considerable amount of peloton clothing. It’s been a predictable gift given among her friends over the last 2-3 years.
I just took a look at Peloton apparel and I don't see how you could class it as "loud and obnoxious". Most of it looks like pretty generic branded fitness gear. If anything it's especially understated compared to the competition.
Considering how strong the brand is I think apparel is a genius idea for growth. It has just been mismanaged due to nepotism.
It’s very high margin and the company is in a great position to market to fitness conscious people. But I don’t see it ever being more than a side business.
I don't think the "building their own factories" is as cut and dry.
Here in Australia, many of these small to medium sized businesses do their own manufacturing in house. I believe it depends on margin and volume.
The examples I'm referring to are Rode Microphones, Cochlear hearing aids, and ResMed CPAP machines, are all manufactured in Australia (though I'm not sure all of their world-wide manufacturing happens here, they could have other factories).
Would love to get the feedback from people who may have any idea in where and why it sometimes make sense to do your own manufacturing.
My issue with Peleton has always been that the cost for a stationary bike is more than the cost of my road bike, and about the same prices as my mountain bike. From my user name, you may be able to tell... I ride, but how many people want to spend the kind of money Peleton is charging to ride indoors?
They got the early adopters who were willing to pay the price, but they may have run out of consumers. I know of a few people who LOVE their Peleton, I don't know of anybody who doesn't have one that wants one.
They have virtually no experience on their C-suite in managing complex logistics problems. The people they hire from FAANG are mediocre middle managers who then get titles like VP or SVP. They are trying to scale too fast to keep up with their valuation, without a clear vision.
> In a sense, the pitch here is straightforward. Blackwells does not think that Foley is very good at running Peloton. The stock market does not think that Foley is very good at running Peloton, in that the stock is down 80% from its highs last year and spent last week below its 2019 initial public offering price of $29. (It’s up today.) And Foley does not think he’s particularly good at running Peloton, at least if you believe the quotes that Blackwells selected here. If someone else takes over the day-to-day running of Peloton, or the process of selling it to a better owner (and Blackwells is also pushing for a sale), then Foley will have more money (because he owns a lot of Peloton stock) and also more free time (because he’s not running Peloton). It is no fun to do a job that you’re not good at, particularly when doing that job costs you money. If you can get in a room with Foley, or just lob a PowerPoint deck at him, and explain “hey, everyone is mad at you, you’re not having fun and it’s making you poorer,” that’s fairly persuasive and maybe he’ll listen. He did!
Sidenote: I suggest subscribing to Money Stuff. It’s a free email newsletter, and Matt’s writing is stellar.
Why did any shareholder buy into the hype? When Peloton decided building their own personal factory in Ohio was a great use of money, their shareholders and fans cheered about how great idea it was. We're getting healthy and helping unemployment in the rust belt! Same for having a full time Peloton employee drive the bike to your home
Those decisions made absolutely no sense financially, and were immediately shut down once the CEO changed. But when they were decided Wall Street was cheering them on
> Hiring way too many engineers, FAANG level org size
Ahem... that's now FAAAN (facebook, apple, alphabet, amazon, netflix)
I'm sorry, I hated to write this, and for what it's worth I didn't know what you meant by FAANG... had to look it up only to find the term has fallen from use.
> Q: Is there anything about being CEO that you don’t like, that you like to delegate?
> A: Finance. Our CFO does 99% of finance. I engage because I want to know how we’re doing. But to say I don’t add value to her operation is an understatement. You can also say the same with technology. Our CTO doesn’t get any help from me. I’ll go sometimes months without talking to our CTO, which as a CEO of a technology company, that’s kind of rare.
As someone who's been a CTO at times in the past, I wish I'd worked with a CEO like that. There are few things worse than having a leadership team who don't trust you to deliver the tech that drives the company's ideas.
Of course overly managing the CTO is also bad, but would you really like to "go sometimes months" without talking to the CEO? Especially during a pandemic in which your product becomes the hot new thing?
I mean I get the sentiment but months? Which kind of company size are we talking? I'm not saying you should talk to your CEO every week, but twice a year sounds really weird to me.
Although I agree with the other child posts here, I also agree with your sentiment. As a CTO, an interfering CEO is worse than one who doesn’t engage at all. But ideally it’s a collegial relationship.
Having your CEO change course every two months is definitely worse - just let me finish something! (it was a hardware company so there's not really such thing as a pivot)
How do you make sure you are aligned and that you both see the problems, challenges and opportunities that one party sees?
This looks more like a traditional company than a tech company, which is not helped by it being based in NYC. The CEO and CFO are probably buddy-buddy while the CTO is an outsider "geek."
At the very least, it shows poor communication skills.
If you have a fantastic CFO, that's great. Just say that. "I'm very confident in person X." or "We have a great team who's been doing a great job." Things like that.
You don't say: "I don't add any value." That makes you sound like an empty suit.
Also the "I haven't talked to my CTO in months" sounds really bad. How the eff are you planning new product launches? Shouldn't the CEO at least be aware of any ongoing issues with current products? Talk about the plan to reduce hosting costs? Anything? WTF
"Well--well look. I already told you: I deal with the god damn customers so the engineers don't have to. I have people skills; I am good at dealing with people. Can't you understand that? What the hell is wrong with you people?"
In the startup I worked at in college, one of the most visible jobs our CEO did was talking with investors to get the next round of funding. He was also the top-level business strategy guy (for an example in a more mature company, look at the difference Nadella made to Microsoft's strategy relative to Ballmer), although implementation details were delegated to other roles (that he was responsible for hiring).
The main job of the CEO is to manage the board of directors (i.e. the shareholders). And the main job of the board of directors is to decide when to fire the CEO.
The deck also calls out another interview where he said he does very interviews (meaning hiring decisions). The deck also calls out that he gave an executive role to his wife.
I am not so sure why this sounds odd. All successful startup that I have seen, had a great builder and a great seller. A CFO/COO running internal operations and finance is great to have. So since he is not the builder and obviously not the CFO/COO, he could still be a very successful CEO by being the seller, who is advocating for the company on the market. Think Steve Jobs. Wasn't the CEO of Peloton not that kind of guy?
Steve Jobs was one of the most micromanaging CEOs I've read about. He overruled many CTO decisions during his time at Apple, both at the founding of the company and upon his return to the company years later, so I wouldn't use him as a comparable example. You'll rarely find a good CEO that isn't intimately aware of the current actions and goals of each other executive. What you're describing would be the role of a CMO, which Foley is not.
Is that similar to a video store masquerading as a tech company? Or a book store masquerading as a tech company? Or an apple masquerading ... Oh wait, that actually IS a tech company.
I kind of agree it's time to depedestalize "tech"founders. Every company is a tech company and their bosses can be just as scumbags. The religion that worships infotech as inherently unevil and idealistic needs to die.
I know plenty of people who argue about whether Netflix is a tech company - certainly their infrastructure is non-trivial but are they meaningfully different from HBO?
For Amazon though, it's incorrect to refer to them as a bookstore - AWS is a huge portion of their revenue.
On the other hand you have Google and Facebook that people call technology companies, but their core business is advertising.
I think at this point "tech" in "tech company" doesn't mean technology, because otherwise surely Lockheed Martin, Raytheon, etc would surely be tech companies?
The subscribers aren't subscribing for using the treadmill, they are subscribing for fitness courses and the likes.
Which... isn't a bad business model per se IMO. With the current trend of "self improvement", there are enough people willing to pay lots of money, for everything from gym memberships to individual personal trainers.
The issue is: this is not going to be an exponential-stock-growth-style business model, as many seem to expect. There is no hope for the usual "undercut the competition in pricing and establish a monopoly that can be used for rent-seeking afterwards" VC model, no hope for a make-everyone-filthy-rich acquisition by an established market player, at best this is going to be a steady, "boring" cash cow.
(Note, I don't hold any stakes in Peloton or competitors)
You don't need any of their hardware. A large portion of the courses are exercises that need nothing but a floor. The quality of the classes is very good. Its a SaaS media company with an optional hardware upsell.
I get that, but when a lot of what they sell is the subscription, and streaming content still takes some work, I think there's a non-trivial amount of tech that makes that happen.
Their stock dropped like 75% in a bull market. That's what gets the vultures circling. If the CEO was a weirdo who gave some bad interviews while the stock doubled we'd all be calling him an eccentric genius. It works for Elon Musk.
They are a realtime content company that just happens to use technology in the same way a tv station is not a theatre troupe. Did they ever try to give the impression of being a tech company?
Peloton does have a lot going for it. From everyone I've heard, their physical products are well made (with the exception of the treadmill issue..). They have extremely low churn which is hard to do in fitness.
The main problem is that they grew too fast. All the pandemic sales were probably just pulled forward from future sales, not a sign of sustainable growth. They overcommitted and now need to trim back again.
The treadmill incidents were absolutely terrible but without knowing Peloton's internal design process I don't want to assign blame. Any physical product with powerful motors and moving parts is inherently dangerous, and the best we can do as hardware engineers is to follow the standards as best we can and do a thorough hazard analysis and try to mitigate as much as possible.
Now, if it turns out Peloton did NOT do those things, then they absolutely deserve more blame for the accidents with their treadmills. I know they didn't have a shield behind the belt, but my treadmill doesn't have that either so I am not sure what the standard is without paying for it.
I think it was one kid. Mike Tyson's daughter was killed by a treadmill many years ago. I was kind of surprised that based on the CPSC's numbers, treadmills kill 8.5 people a year on avg.
That's part of the criticism. The investor group was upset that the CEO built up way too much production infrastructure for what should have been viewed as a temporary bump in demand. Peloton is very vertically integrated committed to a ton of capacity they don't need.
The way I learned it, decks are slideshows that are information-dense and can thus be read independent of a presentation. But Googling it just now reveals that they're interchangeable words.
"POOR DECISION MAKING: UNNECESSARY & EXPENSIVE OFFICE SPACE IN NYC"
This whole report is absolutely scathing, but this particularly stood out to me. I've actually been in a similar situation where a CEO decided he was going to rent extremely expensive office space, in one of the most over the top pricey areas of Los Angeles, simply because it was close to his residence.
This snowballed into other various stupid financial choices, and I was lucky enough to get out before the entire office got fired.
This serves as a very good argument for fully remote companies. Get a corporate we work account for the extremely rare case where you need a physical presence.
The brand is pretty damaged though. They had a short window where the Equinox crowd had nowhere to spend their exorbitant incomes. No shortage of cheaper alternatives exist. I suggest buying a used exercise bike and playing Eye of the Tiger on repeat for 30 minutes.
Infact if you don't have access to Eye of the Tiger you can just sing it to yourself.
Eye of the tiger it's the thrill of the fight, saving money on a used bikes.
> I've actually been in a similar situation where a CEO decided he was going to rent extremely expensive office space, in one of the most over the top pricey areas of Los Angeles, simply because it was close to his residence.
I've seen a CEO move an entire company's headquarters because he personally moved to a mansion on the beach, so now everyone needs to commute from the city across a single bridge onto a touristy beach peninsula every day just so CEO-man can walk to the office.
It's interesting but I think it's important to take it with a huge pinch of salt. It's obviously designed as a hit piece, pushing their opinion the CEO needs to go, and as such is chock full of selective quotes and figures designed to paint one picture.
Readit News
Blackwells is obviously not a neutral party here, there's a reason they created this thing. But on first glance it looks like a pretty solid argument that the management at Peleton is seriously flawed. I don't really buy the arguments on why Peleton is a good business and comparable to Streaming somehow.
I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested. Doesn't mean they're wrong, but obviously this didn't stop Blackwells from investing in the first place.
> I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested.
Likely they knew and saw an opportunity for their investment strategy.
A lot of really good talkers make it up the ranks and those are the ones you will speak to.
It takes a equally skilled but rarer archetype to navigate through the BS.
My point is: it’s a lot harder to find problems than you think. You find out the truth after close.
You absolutely do have a point about streaming, but the presentation argues that Peloton's assets may be valuable to some streaming services ( they are dying and fighting for content now ).
Yes. The Peloton 'model' reminds me of the gym model, at least in the UK.
You always get a bunch of people sign up in 'fat' January for 12 months. They go to the the gym for a few weeks and stop. But continue paying £50pm or whatever for the next 11 months.
Peloton feels similar in that people are made to want the shiny thing in the TV adverts, find that they don't have a room with a view to put the bike unlike the adverts, use it for a few weeks, and then have to see out their subscription. I'm sure Peloton's insider numbers probably show a slower drop off, but I'd bet it's still there.
There's probably a big intersection of those that have bought a Peloton bike as well as joined a gym but rarely used it.
The free alternative of course, is go outside and cycle or run.
I don't know, I have a peloton. I've never been in a gym in my life.
Particularly the lack of churn on subscribers rings true. Their customers are loyal, they feel more part of a community, etc than your random Netflix subscriber.
There's a large addressable market, as seen by Tonal and others coming into the fray.
The counterargument IMO is that fitness is increasingly a fractured market between these home workout things, boutique gyms, budget gyms (Planet Fitness), fancier gyms, country clubs, people that just want to workout on their own...
I worked for a company in a similar situation a few years back. The new CEO was fired in less than year by the old ceo/new chairman
The addressable market section is especially ridiculous. It looks at global wellbeing spending of $4.2T including $600B in fitness. That is not the addressable market for a device that is expensive, tied to a monthly subscription and takes up more floor space than a couch. That's not even the addressable market for running shoes, much less a fancy exercycle or treadmill.
And it sounds like Blackwell understand this, and instead of pushing for Peloton to focus internally on its product and get rid of the extra fat, they want a fast sale to a not-really-smart company. So they can at least get some ROI
People talk about monthly fees being high or fair, thats not it at all, Pelotons prices for hardware and membership or completely fine. What they did do is
* Pouring money into building their own factories (even Apple doesn't do this at their scale, they pay Foxconn)
* Building a full fledged apparel brand
* Hiring way too many engineers, FAANG level org size
* Having their own warehouses and delivery full time employees
No other company does this. I'm not sure what the long term plan was, maybe they become a white label manufacturer for other start ups? It failed, badly
You do not need 14,000, or 11,000, or 3,000 employees to do what Peloton currently does (again, maybe they had grandiose plans in the pipeline). If we want to compare proprietary hardware + Android + online streaming service. When MIRROR was bought out by Lululemon for $500M, they had 200 employees
I have a feeling no one has offered Foley more than $3B for the company, and i'm being generous
Never mind the fact that I’ve maybe seen only 3 people in the real world wearing anything that is Peloton branded (no, the free Century t-shirt doesn’t count).
Personally, I find their apparel to be a little loud and obnoxious, but that’s just me. As a consumer, I don’t see what value they bring to the apparel market. Nothing new, just branding.
Whether or not they were successful is an execution issue.
Considering how strong the brand is I think apparel is a genius idea for growth. It has just been mismanaged due to nepotism.
It’s very high margin and the company is in a great position to market to fitness conscious people. But I don’t see it ever being more than a side business.
The examples I'm referring to are Rode Microphones, Cochlear hearing aids, and ResMed CPAP machines, are all manufactured in Australia (though I'm not sure all of their world-wide manufacturing happens here, they could have other factories).
Would love to get the feedback from people who may have any idea in where and why it sometimes make sense to do your own manufacturing.
My issue with Peleton has always been that the cost for a stationary bike is more than the cost of my road bike, and about the same prices as my mountain bike. From my user name, you may be able to tell... I ride, but how many people want to spend the kind of money Peleton is charging to ride indoors?
They got the early adopters who were willing to pay the price, but they may have run out of consumers. I know of a few people who LOVE their Peleton, I don't know of anybody who doesn't have one that wants one.
Bingo. The growth opportunities at this price point seem to be close to zero. Move the price point by a factor of 5, and maybe (maybe) that changes.
Meanwhile, you can pry my Racermate Computrainer from my cold, dead hands :)
It might make peleton live longer but it would lose a lot of money for their LPs
> In a sense, the pitch here is straightforward. Blackwells does not think that Foley is very good at running Peloton. The stock market does not think that Foley is very good at running Peloton, in that the stock is down 80% from its highs last year and spent last week below its 2019 initial public offering price of $29. (It’s up today.) And Foley does not think he’s particularly good at running Peloton, at least if you believe the quotes that Blackwells selected here. If someone else takes over the day-to-day running of Peloton, or the process of selling it to a better owner (and Blackwells is also pushing for a sale), then Foley will have more money (because he owns a lot of Peloton stock) and also more free time (because he’s not running Peloton). It is no fun to do a job that you’re not good at, particularly when doing that job costs you money. If you can get in a room with Foley, or just lob a PowerPoint deck at him, and explain “hey, everyone is mad at you, you’re not having fun and it’s making you poorer,” that’s fairly persuasive and maybe he’ll listen. He did!
Sidenote: I suggest subscribing to Money Stuff. It’s a free email newsletter, and Matt’s writing is stellar.
Those decisions made absolutely no sense financially, and were immediately shut down once the CEO changed. But when they were decided Wall Street was cheering them on
Is it possible to run a manufacturing business in the US without slave labor somewhere?
Ahem... that's now FAAAN (facebook, apple, alphabet, amazon, netflix)
I'm sorry, I hated to write this, and for what it's worth I didn't know what you meant by FAANG... had to look it up only to find the term has fallen from use.
> A: Finance. Our CFO does 99% of finance. I engage because I want to know how we’re doing. But to say I don’t add value to her operation is an understatement. You can also say the same with technology. Our CTO doesn’t get any help from me. I’ll go sometimes months without talking to our CTO, which as a CEO of a technology company, that’s kind of rare.
Wow...
> ...leadership team who don't trust you ....
When did talking come to mean having trust issues!!?
This looks more like a traditional company than a tech company, which is not helped by it being based in NYC. The CEO and CFO are probably buddy-buddy while the CTO is an outsider "geek."
I also think it can be helpful to self-deprecate a bit as a leader but I'm not sure why all these statements got published in public.
If you have a fantastic CFO, that's great. Just say that. "I'm very confident in person X." or "We have a great team who's been doing a great job." Things like that.
You don't say: "I don't add any value." That makes you sound like an empty suit.
Also the "I haven't talked to my CTO in months" sounds really bad. How the eff are you planning new product launches? Shouldn't the CEO at least be aware of any ongoing issues with current products? Talk about the plan to reduce hosting costs? Anything? WTF
> Peloton has been horribly mismanaged, with unbridled enthusiasm taking the place of disciplined leadership
It could also show apathy and lack of concern because he wants to cash out.
https://www.bloomberg.com/opinion/articles/2022-02-08/peloto...
For Amazon though, it's incorrect to refer to them as a bookstore - AWS is a huge portion of their revenue.
On the other hand you have Google and Facebook that people call technology companies, but their core business is advertising.
I think at this point "tech" in "tech company" doesn't mean technology, because otherwise surely Lockheed Martin, Raytheon, etc would surely be tech companies?
The punch line "we are not a window blinds company; we are privacy company" takes the cake!
https://www.youtube.com/watch?v=Hv6EMd8dlQk
Which... isn't a bad business model per se IMO. With the current trend of "self improvement", there are enough people willing to pay lots of money, for everything from gym memberships to individual personal trainers.
The issue is: this is not going to be an exponential-stock-growth-style business model, as many seem to expect. There is no hope for the usual "undercut the competition in pricing and establish a monopoly that can be used for rent-seeking afterwards" VC model, no hope for a make-everyone-filthy-rich acquisition by an established market player, at best this is going to be a steady, "boring" cash cow.
(Note, I don't hold any stakes in Peloton or competitors)
Just have an ear what many employees talk about at the water cooler or coffee machine:
* technology (in the engineering sense): tech company
* software: software company
* something else: ... company (for example finance company)
In other words: Is producing software the actual goal of the company or a means to an end?
* If software is in the opinion of most employees the actual goal of the company: software company
* Is software a means to the end of producing engineering products: tech company
* Is software written for high-frequency trading: finance company or investment company
etc.
The loyalty of their customers is a result of the high-production value streamed and recorded classes and the celebrity appeal of their instructors.
> which as a CEO of a technology company
The main problem is that they grew too fast. All the pandemic sales were probably just pulled forward from future sales, not a sign of sustainable growth. They overcommitted and now need to trim back again.
Now, if it turns out Peloton did NOT do those things, then they absolutely deserve more blame for the accidents with their treadmills. I know they didn't have a shield behind the belt, but my treadmill doesn't have that either so I am not sure what the standard is without paying for it.
What is the reasoning behind them sharing this publicly, I wonder?
https://www.reuters.com/business/retail-consumer/activist-bl...
https://www.blackwellscap.com/pressrelease/blackwells-capita...
So... yes.
This whole report is absolutely scathing, but this particularly stood out to me. I've actually been in a similar situation where a CEO decided he was going to rent extremely expensive office space, in one of the most over the top pricey areas of Los Angeles, simply because it was close to his residence.
This snowballed into other various stupid financial choices, and I was lucky enough to get out before the entire office got fired.
This serves as a very good argument for fully remote companies. Get a corporate we work account for the extremely rare case where you need a physical presence.
The brand is pretty damaged though. They had a short window where the Equinox crowd had nowhere to spend their exorbitant incomes. No shortage of cheaper alternatives exist. I suggest buying a used exercise bike and playing Eye of the Tiger on repeat for 30 minutes.
Infact if you don't have access to Eye of the Tiger you can just sing it to yourself.
Eye of the tiger it's the thrill of the fight, saving money on a used bikes.
I've seen a CEO move an entire company's headquarters because he personally moved to a mansion on the beach, so now everyone needs to commute from the city across a single bridge onto a touristy beach peninsula every day just so CEO-man can walk to the office.
ed: the top comment from yesterday says it better https://news.ycombinator.com/item?id=30272154