Builder of Community and Creator of Value Through Customer File Growth; Solver of Complex Business Problems
Say it ain’t so, Peloton Interactive. Another 3 bite the dust. On May 2, 2024, Barry McCarthy announced his “resignation” as CEO of Peloton. Less than two months later, three long-tenured instructors will leave. After failing to correct the Foley sins of the past and recreate the Spotify “magic” McCarthy bottled during his stint as CFO (read sarcasm here), the public markets had had enough. Exit stage left, Barry. Beloved instructors Ross Rayburn, Kendall Toole (and her 988K IG followers), and Kristin McGee are all heading for greener pastures. So, what happened to Peloton that led to the fracturing of its community? Here’s what: -In December 2020, fueled by a world of trapped fitness enthusiasts, Peloton’s stock was at its all-time high,$162.72. It is currently at $3.95 -Intoxicated by the pandemic demand, Peloton, a content provider masquerading as a fitness app, bets big on hardware and misses. -Peloton had $1.1B of inventory OH at the end of fiscal 2022 (June 22). Um, Houston, we have a problem. Assuming Peloton makes a little margin on its hardware, that is ~425,000 units OH. That’s a lot of working capital tied up. Opportunity cost, anyone? Bad planning, everyone! -Peloton hit a high watermark of 7M subscribers in March 2022. By December 2023, that number is 6.4 M. Who will convert all those bikes to cash? Oh boy. Now, back to the instructors leaving the platform. Peloton released a statement about the departures. “During our most recent round of contract discussions, three of our beloved Instructors have chosen to leave to explore new opportunities.” I wrote a post a while back imploring Nike, Apple, or lululemon to acquire Peloton. I would love to see one of them, or anyone at this point, breathe life into the world-class content provider's sails. But as the days go on, hope fades. I do not pretend to know why they are leaving, but one thing is certain: Peloton is about to undergo significant, much-needed changes. The Peloton fiscal year ends on 6/30. Is it a coincidence that they all leave at the end of June? No. The lessons to learn: -Create and measure Demand. Never manage Supply. There is a symbiosis, people! Inventory is the killer of businesses. -Change and evolve when you don’t have to. It is OK to fly and build a plane at the same time. -Businesses outgrow their founders. Having an idea and executing it beyond Series A requires different skills. Do not be afraid to face reality (trust me. I know) -When you play defense, you’re probably already dead.
Paul Walker
1mo
Why do you refer to them as a content provider rather than a fitness app?
Ethan Kimmel
1mo
Kaplan wisdom always hits 🧠
Brad Borman
1mo
Noooooo! Kendall is the best!
Bill Pavone
1mo
True words spoken from experience. Their entry level pricepoint is very high and the market became saturated. They became the IBM model where hardware is expensive but margin low, and software makes all the profit. With PTon, the subscription model needs to drive revenue and without growth, the model breaks down. Maybe AI generated content will replace human trainers because High End trainers mean high end salaries. Work it baby, just 2 more miles !!
Ian Schneider
1mo
Great writeup - love the line "when you play defense, you're probably already dead"!!
What could be done to turn it around? Divest hardware, focus on the community?
Adam Rose
1mo
I was crushed when Jennifer Jacobs left 😅
General Manager @ ByHeart | Commercial Leader | Digital & Omnichannel Strategist | Growth + Scale Driver | Digital Product Owner | Digital Innovation, Transformation, and Leadership | Board Director | Angel Investor
1mo"when you play defense, you're probably already dead" 🔥🔥