This was just the CEO pulling the rip-cord on his Golden Parachute while the company can still make the payout.
He knew the company was screwed, and it's entirely the fault of top leadership. they chose to make their own performance bonuses a priority over long-term business survival, by recklessly expanding during Covid; a strategy that literally everyone could have told them would not be sustainable.
I think the leadership has done an amazing job. They made something out of nothing. Selling exercise bikes for 100's of percent of markups, and then charging the clowns that buy them a subscription fee.
> they chose to make their own performance bonuses a priority over long-term business survival, by recklessly expanding during Covid
There was never going to be long term survival. Peloton was the latest 'as seen on TV' level of product, and once their 15 minutes of fame burns out, the name will be sold off to license cheap products.
As a peloton owner, I strongly disagree. I have a peloton and went from not working out regularly, despite many attempts and gym memberships, to working out 4x a week (45 min or longer), going on 3 years now. I lost 15 lbs and in the best shape of my life. A $1,500 bike + $49/month subscription fee is a small price to pay for dramatically improved health and well being.
Bluntly, this sounds exactly like a "as seen on tv" testimonial. No one denies the product was compelling / successful. It's just that fitness products are an incredibly fad-ish market. Something else will come along and be the new bright shiny thing.
Your first statement is bizarrely dismissive and a little condescending. The posters experience was their own. The fact it is positive and made for tv commercials pay actors to pretend to have an experience akin to the posters doesn’t impeach the posters experience in any way. I’d note the fact they’ve been engaged with the product and maintained fitness for years makes it not sound fad-ish at all. Their experience maps to what I hear from peloton owners as well. The level of long term engagement in the product seems very high and has a high stickiness, which for fitness products is very rare - and frankly a very good thing for the human beings whose life is positively changed by it. That’s not something to dismiss, that’s something to cheer. Good for the poster. I wish him years of continued fitness.
On is peloton a fad - it’s definitely not going to be what they thought it was. That was a lockdown induced hallucination. But it seems like with a steadier hand in management it’s a long term viable enterprise. But it won’t be replacing Apple or something like they probably thought they would.
You can say what you want but from my vantage point there’s nothing “fad-ish” about the peloton. Do people buy it like the latest kitchen gizmo and then store it away and let it gather dust? Sure. But that’s not at all my experience.
Note, before the peloton I bought a Concept 2 rower. I used it routinely for a few months, then periodically, and then not at all. I still have it and going to try to use it again in conjunction with the peloton rowing classes now that they’re available in the app.
Fad has this very negative connotation but certain types of activities do rise in popularity, stay popular for a bit, and then decline a long way. Inline skating/rollerblading in the US is a great example.
It grew from nothing to be a super-popular recreational activity for a numbber of years, and now you rarely see someone on inline skates.
Right. No one is keeping you from putting on a pair and taking a skate on the bike path. And, once in a great while, you see someone doing just that. But there's probably no skate rental place on the bike path any longer, people don't organize group trips, and there are no mass urban Friday night skates.
I assume while frisbees are still around, they're also seemingly much less ubiquitous than they were.
Never seen it locally--not that I really have much in the way of public parks where I live. I was mostly referring to the fact that it seems you just see fewer people playing frisbee casually than you used to. (I did and I've never played frisbee golf in my life.)
In fairness, I'm not really sure frisbees are a fad. They've gone through peaks and valleys of popularity but they've generally stayed around in some form.
That may be, but I live in SoCal and I seldom come across disc golf parks, too, let alone anyone playing it. And I know someone who plays on a team, though he lives hundreds of miles away, in Santa Cruz, where I understand it's more popular.
The difference is, there was no SV startup unicorn with an insane valuation making roller blades. They were basic consumer products for like $20.
The executives made 100's of millions in profits off of a fad. They did an amazing job. Some of it's just dumb luck with the lockdowns, but either way, they made something out of nothing.
Maybe they would have been if they had been the big thing 20 years later. But I think their heyday probably also predated a lot of the X-sports stuff etc. so it was mostly a recreational activity that was popular with fairly ordinary people. Skates could easily be more like $100+. They're basically hockey skates after all. (Construction details are different but level of support is the same.) Individuals made something out of nothing in the space but they didn't make $100s of millions of dollars.
Was the pandemic a fad? Yes certain segments did grow wildly during the pandemic due to in person restrictions. That growth is certainly unsustainable. If it weren't for the corresponding stock price explosion and then costs explosion to attempt to grow even more, they would have a very profitable company. As far as fitness trends they do manage to hold on to a lot of subscribers.
I'm not sure how to put a natural event as a fad... but masking surely was. It was a way to project how much of a good citizen you are. Yes it had social benefits, but it also was a badge of honor during the fad times.
We bought one back in 2020 and I’d say it’s the single best purchase I have made in the last 10+ years. My wife and I use it or the app to work out almost every day and I’ll log 700+ hours this year which will be about 10% more than last year. 75% of which will be off bike in the other classes which you can pay a lower membership for.
Despite some really bad decisions by the management team on letting expenses get out of control, it’s an absolutely incredible product.
Let me offer a counterpoint: I got one as a gift, used it a few times, realized I like biking outside way more, and it was an easy way to get out of the house, and found that paying a subscription for something I can do, for free, is absolutely silly.
It only makes sense if you're a FinanceBro trapped in your mid-town NYC appt and can't get out, etc. There are bike clubs near me for big group rides -- that cost me $0 -- and my local gym offers spin classes when it rains.
I mean you could say the anti peloton (mirror lol?) shill bots are out hard based on your post. Just because lots of people find a system that works for them you have to tear it down and make fun of it?
The privilege of this is ridiculous. Not everyone has a safe place they can ride around outside for free at. I live in a big city in California and wouldn’t be caught dead riding outside from the terrible air quality to the horrible drivers that could kill me at seconds notice because the bike infrastructure around here is terrible. And if I wanted to get somewhere in the city where it’s better I need to pay for transit or drive, so not free.
I’m a software engineer who loves using it to get a workout in during my day that would otherwise require me as you say travel 15 min each way to closest gym, pay for a gym membership that’s way more than 44 bucks and includes a shitty spin bike that isn’t maintained well unless it’s in a class that I have follow their schedule for. Then head back home 15 min. Yessss so much easer then picking a class to start when I want to and not wasting 30 min driving.
It only makes sense if you're a FinanceBro trapped in your mid-town NYC appt and can't get out
This is a bit of a limited take, I'm an avid mountain biker and hit the trails 2-3 times a week. But I also want to exercise for fitness every day. Doing a ride on a bike is a 2-3 hour process and is fairly weather dependent. Doing a Peloton Ride is 45-60 minutes.
I do the Peloton "Power Zone" workouts they're great, I get slammed burn around 800 calories, maintain 230 Watts for that time and I don't "cheat" because of the power meter. It's a very different thing from an outdoor ride on road or trail. I'm a stronger rider on my bike because of these rides done on the Peloton. Heck most high-level road riders still do indoor rides for this reason - it's why things like the Wahoo Kickr and other trainers and spin setups exist for road bikes.
Finally there also a lot of people who because of their current physical condition or body image or a myriad of other reasons aren’t comfortable getting on a bike or working out in a group. A Peloton at home is a fantastic way for these people to start a fitness regimen.
Everyone's tackles fitness differently and it's odd to see anyone be so dismissive of something that is working for someone else.
I'm a self-admitted cardio addict. But stationary exercise equipment is something I find mind-numbingly boring. What is the peloton doing differently than others? Are the online classes really that motivating? Or is it something about the machine itself?
Two things can be true at the same time: Peloton is a great product that customers love, and the true value of the company is a fraction of what was imagined just a few years ago.
Or maybe because of a decisive amount of extra convenience a good, at-home setup provides to some.
Sure, we could all do fit without any trainers, groups, studios, videos or even any equipment – why maintain a bike when you can just run or walk quickly? – but for mysterious reasons, that's just not how all people and their motivation work.
(Sidenote, from what I gleaned lately, and while I would never use this reasoning to claim a Peloton is remotely cheap, it does not even seem laughably expensive next to bikes in a comparable percentile).
At the beginning of the pandemic (3 years ago) I took up running. I'm now running 3-4 times a week going on 3 years now. I was sold no perfect product but I was still able to pick it up and stick with it. Why? I personally think the pandemic was the perfect time to pick up a new habit and the enforced change in lifestyle lasted long enough that it stuck.
Some places are arguably worse for running due to smog (unless running with an N95). Biking indoors with clean air is a much better option during fire season.
Well, sure, in some areas it might be the case (I've actually been running with a N95 the last week due to forest fire smoke here in Edmonton), but that wasn't really my point and the potential for smog doesn't make Peleton (as opposed to another stationary bike or treadmill) more appealing.
This equates to ~$90/mo gym membership with a one-time registration cost around $100, for scale.
This is the going rate for most climbing/bouldering gyms with full freeweight sets, treadmills, spin bikes, showers, saunas, etc.
I personally value cross-training and weightlifting because those are the ways to see real long-term benefits to your health. Bone density, testosterone, flexibility, good posture, will all pay dividends down the line. You can get cardio any number of ways, including commuting and running groceries by bike.
As mentioned elsewhere, this was basically what I ran into. Total cost of ownership for the bike was on par with a nice gym, and the gym offers spin classes... on top of weights, rowing machines, steam rooms, etc.
Maybe that happened because it was so expensive? If you’d bought a $200 exercise bike that was functionally the same, would you have achieved the same thing?
I've owned the bike for 3 years and IMO Peloton's value is the class content, not the device. I've mentioned it before on HN and having tried many services over the years, I don't think anyone but Apple has even come close to providing the same kind of consistent value for general fitness instruction, and they had Peloton's product to draw from when they created it.
I don't think I'm alone in finding the task of designing workout plans challenging, and often demotivating. Obviously it's not the same as paying for coaching or personal training, but being able to open up the app and just have a workout ready to go is valuable to me. I understand some being miffed that the subscription cost is higher for those who own Peloton hardware, but the price point is still much lower than what I would be paying (and was paying) for local classes.
I don't know if this is valuable enough to sustain the business, but I hope it is.
"from not working out regularly... to working out 4x a week"
I understand where you are from, and there is definitely a segment of people whose access to gym is hindered by other factors (convenience, time spent on transportation etc) and Peloton is a better solution for them, but I doubt that is representative of the general Peloton users. And even for that segment, there are alternatives that work well enough -- just get a bike trainer, and there are so many options to choose from. (I don't see myself ever getting a Peloton when I already have a bike)
Not to mention that Peloton does not replace gym. For working out/losing weight etc sure, but you get a lot more different equipment and programs from a "real" gym.
It the "better integration" worth the premium of $1000+ and a subscription fee? To many people, including rich & athletic people, that is a firm no, which is why the company is failing.
Diet is more effective for losing weight than exercise, but exercise & general activity are going to keep you from having a lot of health issues in late middle age.
That is an infomercial script right there. Great that it worked for you, but most people don’t become health nuts after buying a Ronco or a bow flex. Plus, it’s actively unhelpful advice for the majority of people who could never afford such an expensive way to stay fit when it could be trivially replicated with a free Craigslist exercise bike and a phone playing YouTube.
I don’t think the peloton is at all equivalent to the ronco(?) or bow flex. It’s an integrated experience with hardware, classes/instructors, and an active community.
I've read some of the comments here and it sounds like people are being exceedingly unfair towards the position you presented. I'm not entirely sure why.
Personally, I think the cost of the bike + the subscription is untenable, but I understand how it could benefit people who want that experience.
I think there was no chance to survive at the scale they expanded to.
Not an owner, but I've used one.
Also - yes, the bike is expensive, but a comparable exercise bike is similar cost.
Yes there are cheaper exercise bikes, they are not as well built generally.
They actually lose money on the bikes but make it back on the subscription.
For city people living in HCOL areas, Peloton is a steal compared to gym membership/class rates if you like spinning.
Similar for some of the other workout-from-home services that expanded rapidly during COVID.
The problem is, the TAM for that is not 330M Americans / 1B people worldwide.
It's more like ~20M Americans / 50M worldwide, best case.
I think its one of those NYC/SF bubble creature mind traps that actually - gyms don't cost $350/mo everywhere.
My parents pay $99/year to use a gym and they share a membership, lol.
So for a small subset of people $40/mo from home is a steal. For a lot of people it looks like a luxury.
The COVID bump was always going to be temporary, but the genre in general makes some sense for WFH white collar people who don't want to get a HCOL area gym membership.
Comparing a Peloton to a gym is a bit of apples to oranges from a cost perspective.
A more apt comp is a Peloton compared to a Spinning Studio. Most Spinning studios (Soulcycle seems to be the most popular) charges not by membership but per class. Soulcycle is $30 per class - the biggest competitor (Cyclebar) I think gets down near to $20 per class depending on how many you buy. Compare that to Peloton's monthly fee and the fact that you can get the same workout at home and Peloton's monthly subscription is peanuts.
Some gym memberships also include spinning - Equinox is one but you get a limited line up of classes.
It is a price that would get you a basic home gym, and a gym membership. So not cheap at all. But that said it depends what you value and not needing to go to a gym if you are just cycling is valuable.
The key thing included in the Peloton price is a built in group of workout buddies and cheerleaders who keep you exercising. It's fascinating how many people don't get this - perhaps their marketing could have done a better job of communicating.
This really depends on where you live.
I think its a HCOL coastal city bubble product - if you live in an area where a nice clean gym is like $300/mo, then these home workout service for $40/mo is a steal.
If you can get a good gym membership in your area for ~$50/mo then I can see how the product is not cheap at all.
Many people have a home gym they don't use, in large part because it is boring. Groups and/or classes are often a good way to motivate people and the subscription provides that group. some people need to go to the gym, others find the online classes enough motivation.
Yeah most of the replies here don't know what they're talking about. A gym membership at the YMCA here is $92/month and the spin class my girlfriend takes is about in line with the pilates price. The $50/month Peloton subscription with the purchase of bike hits breakeven after about a year or so
I pay $17/mo for my local gym, they have weights, machines, and cardio equipment. I paid around $900 for my actual bike.
Exercise bikes have been overpriced for a long while, and Peloton moved that price point to the moon when they first came out. Around $2k depending on how early and what model you bought one. That's more than a riding lawn mower. You're trying to tell me that the material costs and complexity and warranty work on a Peloton costs more than a riding lawn mower? Come on.
I didn't say anything about the costs of the materials or anything like that regarding the Peloton and I surely didn't say anything about lawnmowers. $17/month is a steal but that is an outlier and likely doesn't have the same benefits to a person buying the Peloton would be looking for. Does your gym have on demand programs or live classes you can join and compete with friends and others? Probably not.
Pelotons now are about $1500 and the membership is $50 a month. After a calendar year, that's $2100 total spent. At the spin studio here (in a relatively LCOL area), the classes are $22 each with their best deal being unlimited rides at $195/month for a six month contract. Two of those contracts is $2,340 in a calendar year. After the first year, it's more cost effective to have a Peloton and the membership
Value is in the eye of the consumer for sure. It's true that all of this likely overpriced but that's the market
That's a great deal for sure and the only value it seems the Peloton would give you would be that you're able to do it from home vs having to go to the gym. That is quite a premium to pay for that luxury
The subscription is what gives a lot of people issues. The price is in line with other high-end exercise equipment (and, as you say, things like road bikes).
(I use my Concept 2 off and on. I've gotten pretty good value from it over the years but I'm not paying $49/mo for the periods when it's gathering dust.)
I have no doubt many people like their Peleton though and find the subscription a reasonable value. That said, the company was pretty much pre-ordained to crater post-pandemic relative to during unless you believe that a lot of gym going people were going to decide this gym thing is for the birds relative to my Peleton at home.
Yeah, someone else mentioned that. Couldn't see getting a subscription though. Apple does have rowing as part of Fitness+ but I've never tried that either.
Though at that price, a number of workouts are very limited. The step up is $24 which is still cheaper but I can see the company calculating that if someone has spent $1500 for a bike they'll spring for the full on-bike subscription as opposed to sticking an iPad somewhere.
In the case of rowing workouts, you only get like 4 a month with the lower subscription; I looked it up. My old rowing machine monitor wouldn't be compatible anyway; I'd have to upgrade and not really interested.
Yes. It’s an tablet on a bike connected to a VOD workout service. Apple was always just about to eat their lunch. The day they announced Fitness+ was probably the day everyone in the C-Suite started looking for the exit.
I don't know, I think there is a long term market in social exercise at home that they can tap into and keep going. However it isn't nearly as large as their current market. Enough to be profitable by having a few trained staff (people with actual exercise degrees using the latest research to run a good class as opposed to your typical gym personal trainer who doesn't have formal training in that) so that a class is starting every 15 minutes. (and some classes can be re-runs so long as they don't fall into the trap of stale content because it is all reruns).
However the above is enough to support a small company with about a dozen full-time staff who are doing well for themselves, and a few part time staff. That is one CEO who also does basic HR and a few other tasks, 2 IT support people, 6 personal trainers (some who always work nights/weekends), a few other staff because other functions are needed, and part time is seniors at the local college who are getting a relevant degree. Once in a while they will need to outsource design of a new bike as parts on the old model go obsolete, or some new software feature (every two years at most - partially so they still remember how to get this done). Nobody will get rich doing this, but all will have a nice middle class life. And of course all the venture capitalists who funded the wild ride up will be disappointed.
Amazing how little respect the leaders of a company seem to have about their workforce. It looks like leaders can never be honest towards their employees.
"It is not easy to say goodbye to valued colleagues and friends, each of whom have made important contributions to helping build Peloton into the company it is today. Decisions like these were not taken lightly, and we will work hard to assist impacted teammates with their transitions."
It was probably a lot easier than their valued golden parachute.
What people are looking for is "CEO lays people off and does resign without a golden parachute for fucking up". Maybe even a clawback for past years' bonuses if stuff like accounting shenanigans were used to earn them.
CEO lays people off, forfeits their bonus [because they failed their responsibility to the employees] and then perhaps also resigns [because they failed their responsibility to the shareholders]
Who’s asking anyone to run opinion poles? People are just offering their own opinions of the CEO’s actions. If that’s somehow not ok then it seems like you’re saying that people shouldn’t criticize CEOs.
I think you might have lost context. The comment sub thread starts with ‘[CEO lays people off but does not resign]
“You’re not taking responsibility!”
[CEO lays people off and does resign]
“You’re shirking responsibility in order to get your bonus!”’
And the reply was similar.
My comments seem entirely appropriate in the context - which is none of this makes any difference to any CEO that is doing their job.
Someone responded basically saying that the CEO would be criticized whatever he did. That may be true, but it obviously doesn’t entail that all such criticism is invalid. For example, Joe Biden will be criticized by someone whatever he does, but that doesn’t mean that all criticisms of Joe Biden are equally valid or that no-one should criticize him.
The attitude here does seem to be that public scrutiny of CEOs’ actions is just ‘hot air’. This is a political issue, not simply a case of back seat driving.
IMO, it’s mostly hot air because it’s confusing causes and effects and is usually blaming someone for something without taking into account the persons job/structural reasons why the decision needed to be made.
‘Boo, CEO laid off 2500 people, that’s terrible’ is pretty useless without looking at the companies TAM, market penetration, margins, etc. because laying off 2500 people may literally be less layoffs than they might need to be doing based on those factors. A company is, generally, a machine for making money as efficiently as possible, and ignoring all those factors before deciding if a decision was valid or not means someone is just complaining/blowing hot air. No one is being hired (almost anywhere I can think of) that could have a reasonable belief of keeping a job that isn’t needed, or doesn’t make sense to the company.
Which is valid. Just not necessarily useful for anyone.
If someone joins a fishing crew and then when the seasonal catch is bad complains that the captain is terrible because they got laid off/kicked off, all they’re doing is venting. Not providing anything anyone should take seriously, IMO.
Clearly you’ve never met anyone with NPD. There is nothing they can’t find a way to twist.
It’s really the fundamental issue - a captain who takes direction from his crew (instead of looking at what is happening and forming their own opinions, and leading from there) is not only not a captain, but dangerous to himself and the crew.
It doesn’t mean they don’t listen! Listening is important.
But they have to act on their own judgement, or everyone is screwed.
And then they take the pros and cons after that, including whatever hate or adoration or whatever results.
Deal. Make me a CEO with a nice monthly salary. I don't need bonuses or golden parachutes, just a very nice stable income for the work i will be doing.
What are the long term prospects of a company like peloton? It's a bike + an iPad. Both components are commodities, and the price-insensitive segment of the market is too small to sustain a big business.
It's easy to hate on management, but the business doesn't make sense and management can't fix that. Peleton was going to crash from the covid-fueled mania, and it was going to crash hard. Inevitable.
The hardest thing to realize starting a company is realizing when you are no longer sufficient to run the company. It's a big difference from starting something small to running something huge. It took Steve Jobs 10 years from being forced out from Apple to returning wiser. Some people can adapt and learn but from what I have seen, most people can only be good at small or large, but not both.
Didn't Jobs bring in Sculley himself before getting ousted? It's not as though he was removed for any particular disaster, it was a coup.
He returned and continued doing exactly what he had done before. Investing tons of resources into new products that have cutting edge features bundled into an aesthetic package.
Apple was a disaster, riding on the coattails of the Apple II, prior to the ousting of Jobs. The Apple III was both an engineering and market failure. The Lisa was an engineering and market failure. The future of the Macintosh was by no means guaranteed. Whether he was the cause of the problems within Apple or a symptom of it is open for debate, but he certainly wasn't helping matters. Just consider how the Macintosh the world grew to love came to be.
I don't know the story of Jobs well enough to pinpoint what had changed over the intervening years, but something clearly did change. He had and maintained the confidence of the company. He was able to restore confidence of the consumer. There was a clear succession plan when he passed away, avoiding the turmoil that Apple saw after his ousting in the 1980's. This was not the same man, even if he maintained his abrasive edge.
The thing that saved Apple was the retirement of Classic Mac OS in favor of the NeXT OS (OS X and now MacOS).
In the early 2000s, developers were building for the Internet and there were only two options for hosting: Windows NT and Solaris. The licensing for both was prohibitive (and just annoying) and so Linux/FreeBSD started getting traction on the server side. FreeBSD didn't have the hardware adoption so faded (but is still loved). Linux had enough hardware support to run serious servers but the desktop never was usable (the year of the Linux desktop!).
Having OS X being a UNIX-variant was 'close enough' to develop on Mac (a very usable desktop) and deploy on Linux.
Then, Windows released Vista which was so broken that developers simply had to move to Mac in order to be able to function.
That progression is why Mac went from almost dying to being the most valuable company on Earth.
"The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life." - Steve Jobs on being fired from Apple.
I'd assume also a godlike human being like Steve Jobs evolved within the 12 years he was gone from Apple, so I doubt the person who returned was the same as the one that left.
While I would not compare any human to a god, Steve jobs is among entrepreneurs the most obvious and justifiable candidate to be worshipped. Under his leadership he converted a company that was relatively a small player in tech to the worlds most profitable company, flowing with more cash than the oil filled Saudi Aramco. Apple’s valuation has crossed the GDP of UK (lol), truly something phenomenal that this generation has got to witness.
It's a point that people often forget. Going from 0->1 is a very different skill than 1->100 or bigger. Anyone who has started a company or been part of a small company then acquired by a larger company has felt this. It's also one of the reasons why so many acquisitions fail.
And at Pixar ot seems he learned a lot. As someone else pointed out, Jobs did more or less the same thing after his return he did before. The crucial difference being, he did it successful after, while before he almost killed Apple. That difference is hard to learn.
When there are layoffs and the CEO keeps his job people complain, when there are layoffs and the CEO leaves people complain. I think the takeaway is that people just like to complain
People complain because they were paid like employees but they were treated like contractors. The rest doesn't change their situation: the jobs are not back just because the CEO left.
The downside of at-will employment. Personnaly, I don't see any upsides, but I lost count of how often the employee protection in, e.g., Europe were brought up as, besides taxes, the main reason why start-ups and tech companies outside the US just aren't competitive. How things change, right?
I one worked at a publicly traded company that did furloughs; we got emails from the CEO along the lines of "I feel your pain, I'm taking one too".
Six months later the execs got bonuses for successful cost-cutting. Those bonuses were roughly equal to the amount the two-week furloughs saved across the company.
> TOKYO – Nintendo CEO Satoru Iwata is to take a 50 percent pay cut for five months to atone for losses at the game giant, while other senior executives, including Mario creator Shigeru Miyamoto, will forego 20 to 30 percent of their salaries.
People (the workforce) complain about the total lack of respect and honesty. They couldn't care less if the CEO was on or off the company after such disasters, because the CEO usually has plenty of money to sustain his family for a decade without worrying too much. The workforce usually does not have that luxury.
I think when the CEO keeps his job people complain, when he leaves with a golden parachute people complain because they want him to be be punished/have skin in the game if he's going to lay off lots of people.
It is genuinely difficult to suddenly lose your job and reallocate all your time and energy on new projects, I don't see anyone wouldn't complain about that.
> Foley never seemed to fully understand the responsibility that comes with leading people. He never seemed to understand what it means to be accountable.
What does accountability even mean? You can drive a company into the ground, destroy the livelihoods of thousands, and make off with tens of millions of dollars. With no consequences whatsoever. What would accountability even look like under the system we have?
Well, the Japanese (at least at the “old-fashioned” company I worked for) are big on making sure that every action item has a person responsible, along with dates of milestones.
Their basic philosophy is “QCD,” which stands for “Quality, Cost, Delivery.”
I think it actually was popularized by W. Edwards Deming, but it is likely older. Much of the stuff he introduced was regurgitated older techniques.
“Quality” isn’t just about “is it good?”.
It’s about how is the result measured? What are the measurement points? What are the units? What is the required bar? Etc.
“Cost” is not just dollars (or Yen). It’s also man-hours, resources required, impact on/coordination with other projects, legal liability, risk assessment, etc.
“Delivery” is what is to be delivered, and when? Accepting the delivery requires that it conform to the goals in “Quality.”
Every action item has a person assigned, and they always need to be able to do a QCD report of their charge, at any time.
They leave you alone, but the flip side of that, is that you are expected to be self-sufficient, and personally invested in/accountable for the task. If you drop the ball, you will be replaced.
Frankly, it’s a pain in the ass, but stuff doesn’t fall through the cracks.
My understanding of Peloton is they have very solid user retention numbers. 92% year over year [1]
Where they struggle is growth. They are seen as a premium product. They're expensive. That's why they have tried creating new tiers, new products that aren't just the bike, and ways to get a subscription from just a streaming device.
IMO they would have done better to stay a slower growing, niche, premium product but focusing on quality and profitability instead of growth. The price elasticity in the premium user base is pretty high, they probably would have paid more / bought other products. Then they can keep their cool, and create more organic demand, but not obsess over always filling that demand. Scarcity is a good thing for a premium product.
I think, however, now they are stuck. They need growth.
As n=1, I'm a long term peloton subscriber, and find it a really invaluable way to exercise. Not for everyone, but I get a lot out of it.
People bought them in droves, and those that did broadly seem to enjoy it. I certainly have a few mega fans in my circle. The execution though was just terrible. They just kept pumping the things out after it was clear they saturated the market. They could have had an excellent business with a smaller market but instead didn’t know when to tap the brakes on their growth and built a bloated mess that may be impossible to unravel.
There’s no way silicon valley would have realized the importance of the content in the equation. The talent is absolutely a huge part of the success. There are multiple huge facebook and ig groups for some of the most popular instructors. It’s a moat.
I started out with a different bike but eventually bought a peloton because the community and integration was so much better than bike + tablet.
Plus I love stretching, yoga, pilates, meditation.
During cancer I couldn’t ride. But those chair and standing yoga classes made an enormous difference in my state of mind and health.
I wish it wasn’t so hard for a few folks here to see that passion and emotion for a brand has value.
That said, there are enormous opportunities in front of Peloton. It’s time to get some Silicon Valley leadership in there to apply product led growth initiatives.
> Foley never seemed to fully understand the responsibility that comes with leading people. He never seemed to understand what it means to be accountable. As a result, he's out of a job.
> The problem is, a business is more than just an idea.
> Sure, every business starts with an idea, but a business is a product, and manufacturing, and supply chains, and financial reports, and customer service.
> Once you involve other stakeholders, you become accountable. You become accountable to your customers, shareholders, and employees. That's a difficult thing for a founder who is used to exerting complete control over the thing they're building.
That's something I've said for a long time, after an argument with a "startup founder" who wanted me to code their entire website (from scratch!) with no help for a grand total of 2% equity (they got the remaining 98%, obviously) within basically no outside pay.
I tried to get a bit more equity before I signed [1], explaining that it seemed like I would be doing the lion's share of the work, so I felt I deserved at least 10-15% equity. The "founder" then told me that they deserve most of the equity because they had the "idea" for this startup, and I told them that everyone has ideas! Ideas are useful and necessary but also extremely cheap and unspectacular. No one gives a shit about your "idea", at least not until you've actually done some actual work to objectively prove that the idea is good.
[1] I was still somewhat young in my career and the red flags that I have now had not been fully developed.
You know, I was dumb enough at the time, it's possible I signed a non-disclosure or non-compete before even having the meeting with this "founder". I genuinely don't remember, but it's possible, in which case if I had tried doing that I might have been sued. I don't know how successful they would have been.
That's understandable. Some people lie, and pretend they "have connections" and "know the right people" and "can get funding" and "are good at getting the customers and marketing", and people with the right charm can pull off the deceit. I could have fallen for this when young if someone offered me this. Luckily for me they didn't!
Right, and if someone else thinks they can do a better job they're free to start their own company or acquire a stake in one.
Also, why are stakeholders being infantalized like they're some completely naive and innocent bystanders? Customers presumably are not forced to buy what you're selling, shareholders know their capital is at risk, and employees get paid every month. Are we supposed to be everyone's psychologist and finance advisor as well? Everyone's making their own decisions.
Although you may not have been implying it, saying the capital is being "lit on fire" makes it sound like the money vanishes into thin air, when that's not technically the outcome.
Even if the capital is given to/spent by a failing company, that money is at least still mostly spent on either materials or labor, which means it ends up back in the economy but somewhere else.
Obviously not the most efficient use of that capital if its being invested in poor companies, but it's not vanishing into thin air.
But it is a waste of resources if they have to chuck stock in a landfill.
Probably not what is happening here. More like some winners and losers at the craps table.
As long as they don't brick the devices it might not be so bad. The spend was likely not optimal. But there probably has been worse cases see the likes of Juicero.
Is this like one level of abstraction from the broken window fallacy? Investing money in window breaking companies rather than just windows (to be broken).
Peloton has always struck me as being the latest in a long line of fitness gadgets, from Nordic Track through Tae Bo DVDs and Bowflex. It was inevitable that the fad would end. The CEO rationally followed his incentives: lean into the fad, boost short-term profit at the expense of sustainability, and get that stock price up. Then quit and go buy an island somewhere. HIS plan worked perfectly.
I was hoping for more from the article. It lacks pretty much any detail that might actually prove to be a lesson.
It cites a layoff, a change in the stock price, and a few assumptions about how Foley generally isn't good at their business operations. Then it goes into vague platitudes about how a business is more than an idea. It doesn't mention anything of substance.
How do these golden parachutes (including the Wikimedia ones) make any sense in terms of incentives? Why would you want people to get a bonus for leaving? Fine, there's a negotiation with the high level employees and they ask for these things, but why not just give them more of something else instead? Like the usual things that reward tenure.
Because if you want someone with skill to enter and run (or recover) your company, he won't do it for the sake of an adventure. He usually gets offered a big reward for achieving a goal he cannot fully judge yet, and a small compensation in case he fails (and ultimately leaves).
If such a person chooses the "golden parachute", the "golden rocket" he had to commit on hiring was maybe unachievable in first place...
This cuts both ways. Are there /really/ so few 'someone with skill' people that can run your company, often into the ground? Or it's more of an incestuous network of very connected people that sign fat checks to each other, because shareholders are divided and remote, so nobody is paying close attention anyways?
Surely alot of the latter. But it's not a matter of being few, it's also a matter of who has the support of the board / shareholders / owners to actually steer the company.
Even if you're the best for the job, if you don't have the backing of the board you won't get anything drastic done.
Whether those who have the support of the board are really the best ones for the job, that's another question...
From my experience the additional aspect is also that shareholders and/or the management board often have unrealistic expectations on what the company is capable of, and are unhappy when facing reality.
So such a parachute can also be useful to force the company to work through tough decisions, because firing the person who insists on them will not be cheap either.
The pieces of compensation can all be negotiated. The board could make an offer that trades an element with a sensible incentive for staying (or even just more cash) for an element that is an incentive for leaving.
This is what happens when you people are too young to have seen the Rocky movies. Rocky doesn't need an expensive bike + subscription. He uses his body and public parks to grind himself into fitness.
This is a company that wouldn't have existed on this scale without the pandemic events and i don't think that leadership has done business-wise anything wrong except from a moral/ethical standpoint.
He knew the company was screwed, and it's entirely the fault of top leadership. they chose to make their own performance bonuses a priority over long-term business survival, by recklessly expanding during Covid; a strategy that literally everyone could have told them would not be sustainable.