Peloton is a hardware technology firm that makes and sells workout equipment, such as the Peloton Bike and Tread. Its devices are internet-connected, allowing users to participate in virtual group fitness sessions.
Peloton’s business model revolves around selling its devices. Additionally, the company generates revenue by charging consumers a monthly subscription fee and selling workout clothing.
Peloton, based in New York and started in 2012, has grown in popularity among sports fans all around the world. The company’s sustained expansion allowed it to go public in 2019.
Peloton’s Brief History
Peloton was introduced to Foley in 2011. He was the acting president of Barnes & Noble’s e-commerce department at the time. He was finding it more difficult to attend his fitness sessions due to his demanding job and two children.
Instructor-led fitness sessions were popular at this time. Customers get a lot more personal experience with companies like SoulCycle and Flywheel. Due to his limited availability, John was unable to attend many of these seminars and was forced to return to his home bike. In the How I Built This podcast, he described the experience as “completely disappointing.”
He knew he needed to fill a vacuum. He quickly sketched out his idea for an indoor bike with a monitor connected that would broadcast riding classes. Foley, a Harvard Business School graduate, and an accomplished executive used his enormous network to secure $350,000 in startup funding and $50,000 of his own money.
While Peloton’s COO, Tom Cortese, joined before the round, the other original members did not. Interestingly, the initial four employees did not get a salary but instead earned stock options.
The peloton was able to raise a $3.5 million Series A investment by the end of 2012. In addition, the company started a Kickstarter effort to generate extra funds and raise exposure for the product (adding $307.000 to the total).
In the years that followed, the fundraising continued. The startup received $10.5 million in Series B fundraising in April 2014. In April 2015, it raised $30 million in a Series C financing, followed by a $75 million fundraising round in December of the same year.
The peloton had also opened its first in-person studios as well as a few retail locations where its bikes will be displayed at the time. By 2017, the company has also begun selling its bikes to other businesses, such as gyms and hotels, allowing its customers to stay active while traveling.
In May, Peloton was able to attract another $325 million in a round valued at $1.25 billion, propelling the company to unicorn status less than five years after its founding. A year later, in August 2018, it raised another $550 million at a $4 billion valuation.
However, things did not always go as planned. A collection of music publishers sued the corporation for $300 million in March 2019 over the unlawful use of songs by Katy Perry, Drake, Rihanna, and others.
Despite its legal issues, the company went public in September at a valuation of roughly $8 billion, raising an additional $1.2 billion. Unfortunately, the company made headlines again in December when it released an ad that many deemed to be classist and misogynistic.
The company’s market cap has dropped by nearly $1 billion as a result of the negative reactions. To make matters worse, in a video promoting his own Aviation Gin, actor Ryan Reynolds hired the same lady from the ad and criticized the brand.
However, 2020 turned out to be a significantly better year. Peloton and the music publishers who sued it were able to settle their copyright infringement dispute in February. The coronavirus outbreak, which forced gyms all over the world to close, became Peloton’s biggest challenge.
The company’s market cap fell by almost $1 billion as a result of the negative reactions. To make matters worse, Reynolds recruited the same lady from the commercial and insulted the brand in a video promoting his own Aviation Gin.
2020, on the other hand, turned out to be a far better year. Peloton and the music publishers that sued the startup settled their copyright infringement dispute in February. The coronavirus outbreak, which forced gyms all over the world to close, was Peloton’s most significant setback.
Its treadmill, in particular, has caused numerous injuries and even the death of a kid. Consumer advocacy groups claimed that the company’s treadmill was designed differently than its competitors, making injuries more likely.
As a result, Peloton and the US Consumer Product Safety Commission (CPSC) stated that thousands of treadmills will be recalled and users would be reimbursed. Security researchers disclosed in June that a flaw in the company’s bike product may allow hackers to take control of a customer’s bike.
Peloton subscribers filed a class-action complaint against the firm in August, alleging that it charged sales tax on subscriptions in New York, Virginia, and Massachusetts without authorization. Peloton Cold Brew Makers sued the company for trademark infringement the same month.
The US Department of Justice (DOJ) even subpoenaed Peloton for the treadmill injuries it caused to cap off its ‘great’ August. Peloton’s shares plummeted after the release of Covid vaccines and the reopening of the world (and people returning to gyms).
In November 2021
Peloton announced the Peloton Guide, a camera product designed to stem the bleeding. To reach a larger audience, the company has reduced the price of its bikes and treadmills.
In addition, the corporation went on the attack by suing several of its competitors, including Lululemon, for allegedly stealing their class product. Lululemon retaliated by accusing Peloton of infringing on its clothes design.
To make matters worse, Peloton’s product was also included in HBO’s ‘Sex and the City’ revival. One of the main characters died of a heart attack while riding a Peloton cycle during the show. Peloton replied by utilizing the same actor (Chris Noth) in one of its advertisements. It also included Ryan Reynolds, who had insulted the firm the year before, lecturing about the benefits of exercise.
All of these difficulties, however, paled in contrast to the events of January 2022. Due to a “substantial decline” in consumer demand, CEO Foley declared on January 20th that the company will significantly reduce the production of its bikes and treadmills. Furthermore, the leaders discussed reducing their workforce (a hiring freeze had already been in place).
As a result, activist investor Blackwells Capital urged that Foley resigns from his position as CEO. Furthermore, it demanded that the corporation consider selling to a company like Apple, Nike, or Sony.
On February 8th, 2022, Foley stated that he would be stepping down as the company’s CEO, putting an end to his demands. He was replaced by Spotify CFO Barry McCarthy. Peloton also announced that it would be reducing 2,800 jobs globally, or around 20% of its staff, in conjunction with his decision to step down.
Mission and Vision of Peloton
Peloton’s purpose is to unite the globe through fitness by combining technology and beautiful design. Its mission is to assist individuals in becoming the best versions of themselves. The startup intends to help people inspire one another by connecting them through their smartphones.
Peloton’s mission is to create a fun and engaging exercise experience across all of its devices. Their goal is to establish a network of connected fitness devices that can accommodate any user’s needs.