1 00:00:04,400 --> 00:00:07,800 Speaker 1: Welcome to tex Stuff, a production from I Heart Radio. 2 00:00:12,119 --> 00:00:14,840 Speaker 1: Hey there, and welcome to tech Stuff. I'm your host, 3 00:00:15,040 --> 00:00:18,200 Speaker 1: Jonathan Strickland. I'm an executive producer with iHeart Radio and 4 00:00:18,280 --> 00:00:22,639 Speaker 1: how the tech are you? And just like that, Peloton 5 00:00:23,040 --> 00:00:27,920 Speaker 1: has halted making treadmills and bikes, at least temporarily. I 6 00:00:28,040 --> 00:00:31,120 Speaker 1: felt I needed to lead with that sort of phrasing 7 00:00:31,160 --> 00:00:34,000 Speaker 1: before getting into the actual episode. I actually hope you 8 00:00:34,080 --> 00:00:37,800 Speaker 1: don't get that reference, and don't worry, because one it's 9 00:00:37,840 --> 00:00:40,760 Speaker 1: not important, and too, I will explain it before the 10 00:00:40,840 --> 00:00:43,400 Speaker 1: end of the episode. It's nothing to get hung about. 11 00:00:43,600 --> 00:00:47,680 Speaker 1: It's just me trying and failing to be cute and clever. 12 00:00:48,479 --> 00:00:51,559 Speaker 1: But I did want to talk about Peloton, a company 13 00:00:51,640 --> 00:00:54,520 Speaker 1: that was all the buzz just a couple of years ago, 14 00:00:55,320 --> 00:00:59,280 Speaker 1: and now a decade after it launched, is currently in 15 00:00:59,720 --> 00:01:04,080 Speaker 1: her moil. Big issues at Peloton right now. By the 16 00:01:04,120 --> 00:01:07,360 Speaker 1: time you hear this episode, maybe that will have changed, 17 00:01:07,400 --> 00:01:10,840 Speaker 1: because things are changing that quickly. I also thought it 18 00:01:10,840 --> 00:01:13,000 Speaker 1: would be good to use Peloton to talk about a 19 00:01:13,040 --> 00:01:17,360 Speaker 1: business model that tons of different tech companies have really 20 00:01:17,400 --> 00:01:21,560 Speaker 1: been trying to leverage, uh namely that of finding the 21 00:01:21,640 --> 00:01:26,360 Speaker 1: way to continuously generate revenue from your customers. Um. There 22 00:01:26,360 --> 00:01:28,040 Speaker 1: are a lot of different ways of doing that, which 23 00:01:28,040 --> 00:01:30,160 Speaker 1: I will touch on later in this episode. But that's 24 00:01:30,160 --> 00:01:32,880 Speaker 1: what we're seeing throughout the text sphere, and it has 25 00:01:32,920 --> 00:01:35,360 Speaker 1: been for some time now. It's not brand new. However, 26 00:01:35,720 --> 00:01:39,000 Speaker 1: Let's first start with the history stuff of the company itself, 27 00:01:39,560 --> 00:01:44,520 Speaker 1: and Peloton's history is actually pretty fascinating, particularly if you 28 00:01:44,560 --> 00:01:48,640 Speaker 1: do a little digging. But the oversimplified version, the one 29 00:01:48,680 --> 00:01:51,639 Speaker 1: that I actually saw in a lot of i'll be honest, 30 00:01:51,720 --> 00:01:55,680 Speaker 1: not very well written articles, is that a guy named 31 00:01:55,720 --> 00:01:58,400 Speaker 1: John Foley wanted to find a way to help people 32 00:01:58,560 --> 00:02:02,559 Speaker 1: like himself and his wife Jill, pursue their passion for 33 00:02:02,720 --> 00:02:06,120 Speaker 1: fitness and indoor cycling without having to go through all 34 00:02:06,160 --> 00:02:09,920 Speaker 1: the hassle and expense of finding the right place that 35 00:02:09,960 --> 00:02:13,679 Speaker 1: has the right classes and the right instructors. And that 36 00:02:13,840 --> 00:02:17,040 Speaker 1: all this led to the idea of connected fitness devices 37 00:02:17,080 --> 00:02:20,960 Speaker 1: in the home that could stream workouts and allow you 38 00:02:21,160 --> 00:02:26,120 Speaker 1: the benefit of having that really great instructor without having 39 00:02:26,160 --> 00:02:29,520 Speaker 1: to you know, seek them out, set your schedule to theirs, 40 00:02:29,560 --> 00:02:32,680 Speaker 1: and pay on a prayer class basis. But that's just 41 00:02:33,040 --> 00:02:37,320 Speaker 1: part of the overall story. See, there were five co 42 00:02:37,560 --> 00:02:41,880 Speaker 1: founders of Peloton. John Foley was just one of them, 43 00:02:41,919 --> 00:02:45,000 Speaker 1: although by all accounts I come across, Foley was the 44 00:02:45,040 --> 00:02:47,960 Speaker 1: guy with the idea and the one who sort of 45 00:02:48,000 --> 00:02:52,519 Speaker 1: brought everything together. So he is critical crucial to Peloton. 46 00:02:52,639 --> 00:02:54,440 Speaker 1: But there are four others. We should talk about two, 47 00:02:55,000 --> 00:02:59,079 Speaker 1: and Peloton's history is also one about networking, and I'm 48 00:02:59,080 --> 00:03:02,919 Speaker 1: not talking about the Internet or WiFi or anything like that, 49 00:03:03,040 --> 00:03:06,840 Speaker 1: rather the concept of knowing the right people at the 50 00:03:06,960 --> 00:03:11,160 Speaker 1: right time to make stuff happen. So the five co 51 00:03:11,320 --> 00:03:16,480 Speaker 1: founders of Peloton are John Foley and Tom Cortiz, Hassao Kushi, 52 00:03:16,960 --> 00:03:22,520 Speaker 1: Graham Stanton, and Yonnie Thing. And this group has a 53 00:03:22,520 --> 00:03:27,160 Speaker 1: lot of collective experience in different fields over the course 54 00:03:27,200 --> 00:03:30,840 Speaker 1: of their respective careers, both in tech and in leadership. 55 00:03:31,240 --> 00:03:34,560 Speaker 1: So let's do it quick and totally unfair glimpse at 56 00:03:34,600 --> 00:03:38,280 Speaker 1: each of them. Keeping in mind this is sort of 57 00:03:38,320 --> 00:03:41,840 Speaker 1: like the cliffs notes of cliffs Notes about each of 58 00:03:41,840 --> 00:03:45,160 Speaker 1: the founders. So John Foley, according to what I've read, 59 00:03:45,800 --> 00:03:48,920 Speaker 1: was a gifted student in school, one of those people 60 00:03:48,960 --> 00:03:51,000 Speaker 1: who never really had to put forth a ton of 61 00:03:51,040 --> 00:03:54,640 Speaker 1: effort in their school work. I was that way for 62 00:03:54,720 --> 00:03:56,920 Speaker 1: a couple of subjects, but not all of them. He 63 00:03:57,000 --> 00:04:00,600 Speaker 1: also became enthusiastic about fitness as a teenage or. He 64 00:04:00,680 --> 00:04:04,960 Speaker 1: particularly got fond of cycling. He attended Georgia Tech, so 65 00:04:05,120 --> 00:04:07,240 Speaker 1: just down the street from me, and he got a 66 00:04:07,240 --> 00:04:10,640 Speaker 1: degree in industrial engineering and then later he earned an 67 00:04:10,760 --> 00:04:14,360 Speaker 1: m b A at Harvard Business School. Among his various 68 00:04:14,360 --> 00:04:17,600 Speaker 1: positions that he's held over his career, he served as 69 00:04:17,640 --> 00:04:21,600 Speaker 1: a production shift manager for eminem and Mars Candy Uh. 70 00:04:21,760 --> 00:04:25,159 Speaker 1: He served as president and CEO of Evite dot com, 71 00:04:25,680 --> 00:04:28,919 Speaker 1: and later became founder and CEO of a company called 72 00:04:28,960 --> 00:04:33,039 Speaker 1: Pronto dot com while also heading up Evite and Gifts 73 00:04:33,080 --> 00:04:36,159 Speaker 1: dot com. And he would become the CEO of Peloton 74 00:04:36,760 --> 00:04:40,440 Speaker 1: once we get to that point. Tom Cortiz went to 75 00:04:40,520 --> 00:04:43,919 Speaker 1: George Washington University, where he earned a bachelor's degree in 76 00:04:44,000 --> 00:04:48,080 Speaker 1: fine arts, which is not a credential you expect to 77 00:04:48,160 --> 00:04:51,719 Speaker 1: find in a tech entrepreneurs resume. He worked for a 78 00:04:51,760 --> 00:04:55,039 Speaker 1: company called a show Cub, which he describes on his 79 00:04:55,160 --> 00:04:58,560 Speaker 1: LinkedIn page as a business that quote connects the most 80 00:04:58,640 --> 00:05:03,839 Speaker 1: innovative social entrepreneurs around the world, offering critical access to funding, 81 00:05:04,200 --> 00:05:08,240 Speaker 1: knowledge sharing, and a host of other value added services 82 00:05:08,360 --> 00:05:12,120 Speaker 1: end quote, which kind of sounds like it's a networking company. 83 00:05:12,480 --> 00:05:16,000 Speaker 1: Later he became the VP of Product Management at Toronto, 84 00:05:16,480 --> 00:05:20,880 Speaker 1: which remember John Foley was head of and he you know, 85 00:05:21,080 --> 00:05:25,560 Speaker 1: also he points out in his LinkedIn profile that Pronto 86 00:05:25,960 --> 00:05:30,960 Speaker 1: is an I a C slash Interactive Core company. Uh. Now, 87 00:05:31,080 --> 00:05:35,360 Speaker 1: quick aside here, Interactive Core c O r P is 88 00:05:35,480 --> 00:05:40,160 Speaker 1: one of those companies that gobbles up other companies. Right, 89 00:05:40,200 --> 00:05:42,920 Speaker 1: it's a conglomerate. And it all started off as a 90 00:05:42,960 --> 00:05:45,640 Speaker 1: business that was actually dedicated to expanding the reach of 91 00:05:45,680 --> 00:05:48,000 Speaker 1: the home shopping network of all things, and it went 92 00:05:48,040 --> 00:05:50,159 Speaker 1: by a totally different name back then. Now I'm going 93 00:05:50,240 --> 00:05:52,240 Speaker 1: to have to do a full episode about the history 94 00:05:52,279 --> 00:05:56,359 Speaker 1: of I a C. Because it gets pretty complicated and 95 00:05:56,520 --> 00:05:59,880 Speaker 1: bonkers a lot of companies that are related to media. 96 00:06:00,040 --> 00:06:06,159 Speaker 1: But he's have truly you know, gargantine and confusing histories. 97 00:06:06,839 --> 00:06:09,440 Speaker 1: Some of the businesses that I a C Has owned 98 00:06:09,440 --> 00:06:13,320 Speaker 1: over the years include Ticketmaster, uh, the television assets of 99 00:06:13,440 --> 00:06:19,240 Speaker 1: Universal Studios, Expedia, Lending Tree, asked Jeeves was an I 100 00:06:19,360 --> 00:06:22,880 Speaker 1: a C company and anymore? And as we'll see, I 101 00:06:23,040 --> 00:06:26,680 Speaker 1: a C is sort of a lynch pen for uh 102 00:06:27,440 --> 00:06:30,760 Speaker 1: of the co founders. Okay, so that's fully and Cortiz. 103 00:06:30,839 --> 00:06:33,880 Speaker 1: Next we have Hissao Kushi. He earned a degree in 104 00:06:33,920 --> 00:06:37,080 Speaker 1: English at the University of Amherst. And you might wonder, 105 00:06:37,400 --> 00:06:40,440 Speaker 1: what do you do with a b A in English? 106 00:06:40,680 --> 00:06:43,599 Speaker 1: And if your princeton in the musical Avenue Q, you 107 00:06:43,680 --> 00:06:46,680 Speaker 1: kind of wandered through life aimlessly. But Kushi didn't do that. 108 00:06:46,760 --> 00:06:50,480 Speaker 1: He pursued a law degree at the Boston College Law School, 109 00:06:50,760 --> 00:06:53,760 Speaker 1: and he became a lawyer and served as a lawyer 110 00:06:53,760 --> 00:06:55,479 Speaker 1: for a couple of years in a law firm. And 111 00:06:55,520 --> 00:06:58,159 Speaker 1: then and I love this part, he then turned his 112 00:06:58,240 --> 00:07:01,360 Speaker 1: hand at being a screen right or for five years. 113 00:07:02,200 --> 00:07:04,960 Speaker 1: I'm not sure if any of his work ever made 114 00:07:05,000 --> 00:07:08,159 Speaker 1: it to an actual screen. I did a search on 115 00:07:08,200 --> 00:07:11,559 Speaker 1: IMDb and came up blank. Doesn't mean this work didn't 116 00:07:11,600 --> 00:07:14,760 Speaker 1: make It may mean that he's uncredited because of you know, 117 00:07:14,840 --> 00:07:18,560 Speaker 1: rewrites and things like that. But anyway, he then went 118 00:07:18,600 --> 00:07:21,480 Speaker 1: on to work for companies like Ticketmaster, and then I 119 00:07:21,600 --> 00:07:24,640 Speaker 1: A C in general and Evite in particular, so there's 120 00:07:24,640 --> 00:07:29,440 Speaker 1: another connection through I A C. Next, we have Graham Stanton. 121 00:07:29,880 --> 00:07:35,040 Speaker 1: He earned degrees and applied mathematics and economics from Harvard University. 122 00:07:35,160 --> 00:07:38,040 Speaker 1: He worked as a developer for a company called Zero Degrees, 123 00:07:38,080 --> 00:07:40,640 Speaker 1: which is kind of a was a competitor to LinkedIn. 124 00:07:41,400 --> 00:07:45,160 Speaker 1: Then he went on to work for drumroll Please Pronto, 125 00:07:45,520 --> 00:07:48,440 Speaker 1: you know, one of those I A C companies, and 126 00:07:48,480 --> 00:07:51,280 Speaker 1: then he held various roles within I A C before 127 00:07:51,440 --> 00:07:54,880 Speaker 1: being named president of Gifts dot Com, also under I 128 00:07:55,040 --> 00:07:58,520 Speaker 1: A C. And rounding out the co founders, we have 129 00:07:58,840 --> 00:08:03,600 Speaker 1: Yoni Thing, who received an undergraduate degree in computer engineering 130 00:08:03,680 --> 00:08:07,160 Speaker 1: and a master's degree in electrical and computer engineering from 131 00:08:07,200 --> 00:08:10,120 Speaker 1: Georgia Tech, again just down the road. Much younger than 132 00:08:10,280 --> 00:08:14,600 Speaker 1: John Foley. However, he worked for companies like Cisco and Skype, 133 00:08:14,640 --> 00:08:17,400 Speaker 1: and then had just taken a job with ticket Fly 134 00:08:17,960 --> 00:08:21,960 Speaker 1: before he would become a Peloton co founder. So he 135 00:08:22,080 --> 00:08:26,240 Speaker 1: was the one co founder who did not work for 136 00:08:26,280 --> 00:08:28,520 Speaker 1: I A C. At some point in his career. However, 137 00:08:29,080 --> 00:08:32,079 Speaker 1: his former college roommate had worked for I A C. 138 00:08:32,640 --> 00:08:34,920 Speaker 1: That's where the connection to the others came from, and 139 00:08:34,960 --> 00:08:37,760 Speaker 1: it's how Thing was was kind of tapped to come 140 00:08:37,760 --> 00:08:40,840 Speaker 1: on board with the other co founders. So out of 141 00:08:40,840 --> 00:08:43,560 Speaker 1: the five co founders, four worked for various companies that 142 00:08:43,600 --> 00:08:47,120 Speaker 1: were under the IO A C domain. H And also 143 00:08:47,200 --> 00:08:50,640 Speaker 1: all but Feng had served as an executive at a company. 144 00:08:50,800 --> 00:08:54,000 Speaker 1: Three of them had served as c suite executives, like 145 00:08:54,480 --> 00:08:58,320 Speaker 1: chief executive officer or chief operating officer. So, in other words, 146 00:08:58,679 --> 00:09:01,679 Speaker 1: by the time Foley was making his pitch, he was 147 00:09:01,760 --> 00:09:05,720 Speaker 1: buddy buddy with several experienced and influential veterans in the 148 00:09:05,800 --> 00:09:10,319 Speaker 1: business world. Now, that kind of situation does not, by 149 00:09:10,320 --> 00:09:12,840 Speaker 1: any means guarantee that a venture is going to be 150 00:09:12,880 --> 00:09:16,800 Speaker 1: a success. However, it does mean you've got a pretty 151 00:09:16,880 --> 00:09:20,480 Speaker 1: good foundation to work from. You've got folks who have 152 00:09:20,800 --> 00:09:25,840 Speaker 1: actual experience, particularly in leadership positions. However, and this is important, 153 00:09:26,320 --> 00:09:30,360 Speaker 1: none of them in the fields that Peloton was really 154 00:09:30,440 --> 00:09:34,760 Speaker 1: focusing on. So while they definitely had experience and knowledge, 155 00:09:35,080 --> 00:09:39,800 Speaker 1: it wasn't necessarily in the specific industry that Peloton was 156 00:09:39,840 --> 00:09:43,440 Speaker 1: getting into. But anyway, the story goes that fully came 157 00:09:43,520 --> 00:09:46,840 Speaker 1: up with the idea for Peloton that indoor cycling, gems 158 00:09:46,840 --> 00:09:49,760 Speaker 1: and studios those were not a new thing. The Soul 159 00:09:49,840 --> 00:09:53,480 Speaker 1: Cycle brand had launched in two thousand six, and we 160 00:09:53,520 --> 00:09:56,720 Speaker 1: wouldn't get the beginnings of Peloton until two thousand twelve. 161 00:09:57,760 --> 00:10:01,960 Speaker 1: So uh, there's also a Flywheel Sports that had launched 162 00:10:02,120 --> 00:10:05,439 Speaker 1: before Foley had ever pitched the idea of Peloton. Fly 163 00:10:05,520 --> 00:10:10,160 Speaker 1: Will Sports had also pioneered gamifying indoor cycling workouts by 164 00:10:10,160 --> 00:10:14,120 Speaker 1: incorporating scoreboards that would show a writer's performance compared to 165 00:10:14,160 --> 00:10:19,560 Speaker 1: others within that same class, but these were all centralized models. 166 00:10:19,880 --> 00:10:23,600 Speaker 1: They required customers to go to a physical location a 167 00:10:23,720 --> 00:10:27,760 Speaker 1: gym or a studio, and obviously that limits the number 168 00:10:27,760 --> 00:10:30,520 Speaker 1: of people who can actually participate at any given time, 169 00:10:30,559 --> 00:10:34,120 Speaker 1: because rooms have a top capacity and classes can fill 170 00:10:34,240 --> 00:10:39,200 Speaker 1: up quickly, specifically for popular instructors, so there was a 171 00:10:39,240 --> 00:10:42,199 Speaker 1: limit to where that business model could go. You could 172 00:10:42,240 --> 00:10:45,439 Speaker 1: open up more locations, but you couldn't magically make a 173 00:10:45,520 --> 00:10:49,319 Speaker 1: room larger than what it was. Foley's idea was that 174 00:10:49,400 --> 00:10:52,559 Speaker 1: you could have the exercise equipment, in this case a 175 00:10:52,640 --> 00:10:56,840 Speaker 1: stationary bike, and you could incorporate a screen into the 176 00:10:56,920 --> 00:10:59,920 Speaker 1: design of that bike itself, and the screen would be 177 00:11:00,000 --> 00:11:03,560 Speaker 1: connected to a home network, and that would allow the 178 00:11:03,679 --> 00:11:06,959 Speaker 1: user to stream classes, so that you know, the writer 179 00:11:07,200 --> 00:11:09,560 Speaker 1: could get the same benefits as if they were attending 180 00:11:09,559 --> 00:11:12,720 Speaker 1: a spinning class in person, without ever actually having to 181 00:11:12,800 --> 00:11:16,720 Speaker 1: leave their own home. Classes would not be limited by 182 00:11:16,760 --> 00:11:19,400 Speaker 1: the physical size of a studio. You probably would still 183 00:11:19,480 --> 00:11:22,319 Speaker 1: limit the size of classes, but there could be hundreds 184 00:11:22,320 --> 00:11:24,680 Speaker 1: of people as opposed to maybe a couple of dozen. 185 00:11:24,760 --> 00:11:27,920 Speaker 1: And you could also record classes, which would give writers 186 00:11:27,920 --> 00:11:31,160 Speaker 1: the chance to pararticipate in in a class that's led 187 00:11:31,160 --> 00:11:35,760 Speaker 1: by their favorite instructor, even if the writer's personal schedule 188 00:11:35,880 --> 00:11:38,840 Speaker 1: wasn't matching up with the instructors schedule, so you didn't 189 00:11:38,880 --> 00:11:43,560 Speaker 1: have to, you know, reshape your life around the the 190 00:11:43,559 --> 00:11:47,839 Speaker 1: schedule for workouts. Foley says that he first called up 191 00:11:47,920 --> 00:11:51,000 Speaker 1: his zow Kushi, whom he referred to as his very 192 00:11:51,000 --> 00:11:54,000 Speaker 1: close friend, and Kushi was living in Los Angeles at 193 00:11:54,000 --> 00:11:57,640 Speaker 1: the time with his family, and initially, Kushi says he 194 00:11:57,679 --> 00:12:02,360 Speaker 1: thought Foley's idea was ludicrous, that no one would want 195 00:12:02,400 --> 00:12:05,680 Speaker 1: to take classes over a video screen in the basement 196 00:12:05,720 --> 00:12:08,760 Speaker 1: of their house on a stationary bike all by themselves. 197 00:12:09,520 --> 00:12:12,880 Speaker 1: But then he says, he thought about the quality of 198 00:12:12,920 --> 00:12:15,679 Speaker 1: the media and how that could define the quality of 199 00:12:15,720 --> 00:12:20,280 Speaker 1: the experience. That if you were able to recruit, say, 200 00:12:20,320 --> 00:12:25,679 Speaker 1: the most charismatic and effective instructors to serve on your team, 201 00:12:25,760 --> 00:12:28,760 Speaker 1: well then the product sells itself because that's the thing 202 00:12:28,840 --> 00:12:31,040 Speaker 1: that people are going to latch onto. So he saw 203 00:12:31,120 --> 00:12:34,920 Speaker 1: Peloton not as an exercise company, but more like a 204 00:12:35,000 --> 00:12:38,760 Speaker 1: media software company, and that made him more willing to 205 00:12:38,800 --> 00:12:41,600 Speaker 1: come on board, though he would do so from the 206 00:12:41,600 --> 00:12:45,240 Speaker 1: comforts of Los Angeles. He didn't move across the United 207 00:12:45,280 --> 00:12:50,160 Speaker 1: States for this and worked almost as more of a 208 00:12:50,200 --> 00:12:54,040 Speaker 1: consultant in the early days. Foley then pitched his idea 209 00:12:54,120 --> 00:12:56,959 Speaker 1: to Tom Cortez, who was living in New York City. 210 00:12:57,200 --> 00:13:02,200 Speaker 1: Cortez had also recently become a fitness enthusiast and was 211 00:13:02,320 --> 00:13:06,280 Speaker 1: training for triathlons, among other things, and he came on 212 00:13:06,320 --> 00:13:09,360 Speaker 1: board right away, although he was planning a trip with 213 00:13:09,440 --> 00:13:13,760 Speaker 1: his his fiancee or maybe they had just gotten married. Anyway, 214 00:13:13,800 --> 00:13:15,640 Speaker 1: he was playing a trip which put him on hold 215 00:13:15,679 --> 00:13:17,880 Speaker 1: for a couple of weeks, and there was a very 216 00:13:17,920 --> 00:13:20,880 Speaker 1: close call that Fully almost hired somebody else to take 217 00:13:21,240 --> 00:13:23,840 Speaker 1: Cortiz's place, but that all got strained out once he 218 00:13:23,920 --> 00:13:27,720 Speaker 1: came back. Soon the other co founders joined in, and 219 00:13:27,760 --> 00:13:30,880 Speaker 1: Fully's main job would be to seek out investors in 220 00:13:30,880 --> 00:13:33,640 Speaker 1: the company, and they got to work putting the pieces 221 00:13:33,640 --> 00:13:37,760 Speaker 1: together to create the value proposition of Peloton. Now. Early on, 222 00:13:38,320 --> 00:13:41,880 Speaker 1: Folly had thought about creating the service side and not 223 00:13:42,080 --> 00:13:45,680 Speaker 1: getting so much into the hardware side at all, because 224 00:13:45,720 --> 00:13:50,120 Speaker 1: hardware is hard. You have to you know, design it, 225 00:13:50,559 --> 00:13:53,440 Speaker 1: you have to engineer it, you have to manufacture it 226 00:13:53,600 --> 00:13:58,400 Speaker 1: and then ship it to customers. These are all huge expenses, 227 00:13:58,440 --> 00:14:01,280 Speaker 1: not just in money, but in resources and and and 228 00:14:01,400 --> 00:14:05,000 Speaker 1: you know time, and it takes a lot of time 229 00:14:05,040 --> 00:14:08,800 Speaker 1: to go from creating a few bikes to scaling up 230 00:14:08,800 --> 00:14:12,760 Speaker 1: to mass manufacturing. And that's when you hit the point 231 00:14:12,760 --> 00:14:15,800 Speaker 1: where the cost of individual components starts to come down. 232 00:14:16,280 --> 00:14:19,400 Speaker 1: Early on when you're manufacturing, if you're doing small batches, 233 00:14:20,240 --> 00:14:24,360 Speaker 1: it's more expensive. It costs more per component than it 234 00:14:24,400 --> 00:14:28,280 Speaker 1: will once you get to manufacturing at scale, when costs 235 00:14:28,360 --> 00:14:32,920 Speaker 1: typically come down and you have a better profit margin 236 00:14:33,040 --> 00:14:36,920 Speaker 1: on a per unit basis. So at first, Fully was 237 00:14:36,920 --> 00:14:39,840 Speaker 1: actually considering finding a way to partner with existing hardware 238 00:14:39,880 --> 00:14:44,680 Speaker 1: manufacturers and he would end up, you know, providing the 239 00:14:44,800 --> 00:14:49,200 Speaker 1: virtual class side of Peloton's business model, and the other 240 00:14:49,600 --> 00:14:53,880 Speaker 1: partners would supply the hardware. However, being a plucky young 241 00:14:53,960 --> 00:14:56,400 Speaker 1: company with no name in the space meant Fully was 242 00:14:56,440 --> 00:14:59,760 Speaker 1: hitting a lot of brick walls. Among the established companies 243 00:14:59,800 --> 00:15:02,600 Speaker 1: out there, nothing was really fitting his vision. He also 244 00:15:02,760 --> 00:15:07,200 Speaker 1: felt that the prevailing stationary bike designs in the industry 245 00:15:07,800 --> 00:15:11,000 Speaker 1: didn't have the aesthetics they felt were needed to sell 246 00:15:11,200 --> 00:15:14,840 Speaker 1: his Peloton idea. So the group decided that making a 247 00:15:14,880 --> 00:15:19,440 Speaker 1: bike would be a necessary component to Peloton's approach. I'll 248 00:15:19,480 --> 00:15:21,840 Speaker 1: talk more about the early days of Peloton in just 249 00:15:21,920 --> 00:15:32,000 Speaker 1: a second, but first let's take a quick break. The 250 00:15:32,080 --> 00:15:36,200 Speaker 1: decision to make their own bicycle, their own stationary bike, 251 00:15:36,200 --> 00:15:38,760 Speaker 1: would make things a bazillion times harder in the short 252 00:15:38,840 --> 00:15:42,120 Speaker 1: run for Peloton, largely because a lot of investors were 253 00:15:42,160 --> 00:15:45,680 Speaker 1: not interested in backing an unproven company aiming at a 254 00:15:46,800 --> 00:15:49,800 Speaker 1: yet non existent market, because no one had done this yet, 255 00:15:50,120 --> 00:15:52,400 Speaker 1: so you couldn't prove that there was a market out 256 00:15:52,400 --> 00:15:55,720 Speaker 1: there for it, and that this Furthermore, this company was 257 00:15:55,760 --> 00:15:57,840 Speaker 1: going to be building its own equipment, which again had 258 00:15:57,880 --> 00:16:00,360 Speaker 1: no proven success in the marketplace, that they had never 259 00:16:00,400 --> 00:16:03,480 Speaker 1: made an exercise bike. Fully said that he had. He 260 00:16:03,520 --> 00:16:05,480 Speaker 1: got a lot of nose in those days, but then 261 00:16:05,480 --> 00:16:07,200 Speaker 1: he also got a lot of people saying, Hey, if 262 00:16:07,240 --> 00:16:11,200 Speaker 1: this ever does become a thing, I want to buy one. 263 00:16:12,000 --> 00:16:14,400 Speaker 1: I imagine that had to be a pretty frustrating experience 264 00:16:14,440 --> 00:16:16,480 Speaker 1: to be told I'm not going to invest in your 265 00:16:16,520 --> 00:16:19,760 Speaker 1: company idea, but when you finish making it, I want one. 266 00:16:20,560 --> 00:16:24,000 Speaker 1: Fully was convinced that the bike itself wasn't really as 267 00:16:24,040 --> 00:16:26,760 Speaker 1: important as the experience was, so he was drawing from 268 00:16:26,760 --> 00:16:30,440 Speaker 1: his own history of attending spinning classes and gems. He 269 00:16:30,480 --> 00:16:33,880 Speaker 1: said that people would talk about the playlist that was 270 00:16:34,000 --> 00:16:37,520 Speaker 1: used during the workout, or the instructors approach and attitude, 271 00:16:38,280 --> 00:16:42,560 Speaker 1: and how those things motivated the attendees while they were 272 00:16:42,600 --> 00:16:45,640 Speaker 1: taking the class, and that was what fully saw as 273 00:16:45,680 --> 00:16:48,200 Speaker 1: being the truly valuable component in what he wanted to 274 00:16:48,240 --> 00:16:51,120 Speaker 1: bring to Peloton. That that meant that they would have 275 00:16:51,120 --> 00:16:53,120 Speaker 1: to find trainers who would be a good fit for 276 00:16:53,160 --> 00:16:56,880 Speaker 1: the service. Now, all of this was happening before they 277 00:16:56,880 --> 00:17:00,840 Speaker 1: had their first actual prototype bike, and it sounds to 278 00:17:00,840 --> 00:17:03,200 Speaker 1: me like they were really laying the track down as 279 00:17:03,240 --> 00:17:06,640 Speaker 1: the train was rushing toward them. That really comes through 280 00:17:06,640 --> 00:17:08,920 Speaker 1: if you read stories about the first auditions they held 281 00:17:08,920 --> 00:17:12,240 Speaker 1: for trainers. They put out notices on platforms like Facebook 282 00:17:12,280 --> 00:17:14,240 Speaker 1: to look for people who would be willing to be 283 00:17:14,320 --> 00:17:17,800 Speaker 1: part of this great experiment. Apparently, they leased a small 284 00:17:17,880 --> 00:17:20,639 Speaker 1: office space in New York City and they hung up 285 00:17:20,800 --> 00:17:24,879 Speaker 1: a black curtain to section off part of the office space. 286 00:17:25,200 --> 00:17:29,879 Speaker 1: The curtains purchased from Walmart. According to Foley and behind 287 00:17:29,920 --> 00:17:32,880 Speaker 1: the curtain. You had the team, or at least part 288 00:17:32,880 --> 00:17:35,480 Speaker 1: of the team, with cameras poking through the curtain to 289 00:17:35,560 --> 00:17:39,399 Speaker 1: capture the audition of trainers who would actually kind of 290 00:17:39,480 --> 00:17:44,600 Speaker 1: lead a few of the staff in a session. They 291 00:17:44,640 --> 00:17:47,760 Speaker 1: did not have a working Peloton bike prototype at this point, 292 00:17:48,200 --> 00:17:51,480 Speaker 1: and according to every account I've seen, the auditioning trainers 293 00:17:51,560 --> 00:17:56,920 Speaker 1: had to use a broken stationary bike. They frequently called 294 00:17:56,960 --> 00:18:01,560 Speaker 1: it broken or rusted or jan kie uh. The trainers 295 00:18:01,560 --> 00:18:04,200 Speaker 1: were told that they had to put together a playlist 296 00:18:04,200 --> 00:18:06,560 Speaker 1: of music and show off how they would conduct an 297 00:18:06,600 --> 00:18:10,919 Speaker 1: online spinning class and work to the camera right to 298 00:18:11,040 --> 00:18:15,520 Speaker 1: show that they could actually motivate people through a streaming 299 00:18:15,640 --> 00:18:19,080 Speaker 1: video kind of feed. The first trainer that the company 300 00:18:19,119 --> 00:18:23,359 Speaker 1: hired was Jen Sherman, who really became a celebrity in 301 00:18:23,400 --> 00:18:27,600 Speaker 1: the Peloton group, and in an interview with Fortune magazine, 302 00:18:27,840 --> 00:18:31,280 Speaker 1: Sherman said that they had this little tiny corner of 303 00:18:31,280 --> 00:18:34,040 Speaker 1: the office that was sectioned off by black velvet curtains, 304 00:18:34,280 --> 00:18:40,119 Speaker 1: so frigging shady. That's actually Sherman's quote. However, she soldiered on. 305 00:18:40,280 --> 00:18:43,200 Speaker 1: She put together a routine and she led John Foley, 306 00:18:43,320 --> 00:18:47,360 Speaker 1: Tom Cortiz and Yoni Fan through a workout, and according 307 00:18:47,400 --> 00:18:50,560 Speaker 1: to Foley, Sherman was able to get through all the 308 00:18:50,640 --> 00:18:54,720 Speaker 1: strange limitations of the setting and the audition and show 309 00:18:54,960 --> 00:18:59,280 Speaker 1: that this idea was not just possible, that it could 310 00:18:59,520 --> 00:19:04,120 Speaker 1: really take off, and that possibility was really the important 311 00:19:04,119 --> 00:19:08,280 Speaker 1: component of Peloton's sales pitch to investors. A stationary bikes 312 00:19:08,280 --> 00:19:11,880 Speaker 1: were by no means new. In fact, bikes that incorporated, 313 00:19:12,240 --> 00:19:16,359 Speaker 1: you know, sensors weren't new. There were bikes on the 314 00:19:16,400 --> 00:19:19,840 Speaker 1: market that had screens that could give writers feedback on 315 00:19:19,880 --> 00:19:22,440 Speaker 1: stuff like their heart rate or the level of resistance 316 00:19:22,480 --> 00:19:26,000 Speaker 1: they were currently using, or that could display images of 317 00:19:26,119 --> 00:19:29,639 Speaker 1: landscapes that the writer was virtually moving through where the 318 00:19:29,680 --> 00:19:32,240 Speaker 1: resistance of the bike could change as you encounter a 319 00:19:32,320 --> 00:19:35,080 Speaker 1: virtual hill and that kind of thing. But creating an 320 00:19:35,080 --> 00:19:39,280 Speaker 1: interactive media platform that was the new thing, and to 321 00:19:39,359 --> 00:19:44,119 Speaker 1: sell that, the trainers were absolutely a pivotal component. And 322 00:19:44,200 --> 00:19:46,200 Speaker 1: then you have the name of the company. The group 323 00:19:46,320 --> 00:19:49,679 Speaker 1: chose or fully really chose Peloton because it is a 324 00:19:49,720 --> 00:19:52,720 Speaker 1: French term meaning a group of cyclists in a race. 325 00:19:53,480 --> 00:19:56,520 Speaker 1: This also reflected the company's gold to create a community 326 00:19:56,640 --> 00:20:00,760 Speaker 1: of users who would become enthusiastic evangelists for the brand 327 00:20:01,200 --> 00:20:04,480 Speaker 1: Fully recognize that spin classes work really well in part 328 00:20:04,920 --> 00:20:07,520 Speaker 1: because you you can feed off the energy not just 329 00:20:07,600 --> 00:20:10,560 Speaker 1: of the trainer, but your fellow cyclists who are in 330 00:20:10,560 --> 00:20:13,239 Speaker 1: the class, and he wanted to make sure that the 331 00:20:13,280 --> 00:20:18,120 Speaker 1: Peloton product would support community, knowing that if it did, 332 00:20:18,640 --> 00:20:21,000 Speaker 1: users would do a whole lot of the marketing work 333 00:20:21,359 --> 00:20:23,960 Speaker 1: for the company on their own. It would just be 334 00:20:24,040 --> 00:20:27,960 Speaker 1: great word of mouth. The co founders started off with 335 00:20:28,000 --> 00:20:31,399 Speaker 1: around four hundred thousand dollars of seed money. Fifty thousand 336 00:20:31,440 --> 00:20:34,679 Speaker 1: of that was Fully's own cash, and that's when they 337 00:20:34,720 --> 00:20:37,840 Speaker 1: first launched the company back in twelve. At the end 338 00:20:37,840 --> 00:20:40,320 Speaker 1: of that first year, Fully and team had managed to 339 00:20:40,400 --> 00:20:44,280 Speaker 1: raise three point five million dollars in Series A funding. 340 00:20:45,040 --> 00:20:48,120 Speaker 1: Now that's a pretty nice chunk of change, but when 341 00:20:48,119 --> 00:20:51,280 Speaker 1: you're talking about a company that's going to produce hardware 342 00:20:51,840 --> 00:20:57,440 Speaker 1: and software and provide an ongoing stream of produced media content, 343 00:20:58,280 --> 00:21:01,440 Speaker 1: it's not really that much money. The costs of developing 344 00:21:01,440 --> 00:21:05,080 Speaker 1: the bike and then manufacturing the bike would be considerable. 345 00:21:05,480 --> 00:21:08,280 Speaker 1: Early on, the co founders took their compensation in the 346 00:21:08,359 --> 00:21:10,800 Speaker 1: form of equity in the company. They didn't draw a 347 00:21:10,840 --> 00:21:14,080 Speaker 1: salary because they wanted to stretch that money as far 348 00:21:14,119 --> 00:21:18,120 Speaker 1: as they possibly could. They tapped a designer named Eric 349 00:21:18,280 --> 00:21:21,399 Speaker 1: Valency to come up with a three D model for 350 00:21:21,480 --> 00:21:25,440 Speaker 1: their bike. Design Ynni Thing worked on creating a back 351 00:21:25,520 --> 00:21:27,639 Speaker 1: end system for the bike that would do stuff like 352 00:21:27,720 --> 00:21:32,520 Speaker 1: track metrics and also allow streaming media content to go 353 00:21:32,640 --> 00:21:34,800 Speaker 1: to a touch screen display. So it had to do 354 00:21:34,840 --> 00:21:36,600 Speaker 1: all this right. He had to make sure that he 355 00:21:36,640 --> 00:21:38,840 Speaker 1: created got a you know, a processor that would be 356 00:21:38,840 --> 00:21:45,040 Speaker 1: capable of handling these different tasks simultaneously without being overloaded. 357 00:21:45,480 --> 00:21:48,040 Speaker 1: And then they worked towards building a bike for real 358 00:21:48,119 --> 00:21:54,080 Speaker 1: zs In the team launched a Kickstarter campaign and this 359 00:21:54,160 --> 00:21:58,040 Speaker 1: served many purposes. It was, of course a crowdfunded campaign, 360 00:21:58,320 --> 00:22:02,200 Speaker 1: and it was partly there are just to raise more money, 361 00:22:02,240 --> 00:22:05,359 Speaker 1: but it was also a means to advertise the concept 362 00:22:05,440 --> 00:22:08,720 Speaker 1: of the Peloton bike to a wider audience and to 363 00:22:08,760 --> 00:22:12,800 Speaker 1: get buy in from customers to create that core group 364 00:22:13,000 --> 00:22:15,680 Speaker 1: of fans. And you've got to remember the word fan 365 00:22:15,840 --> 00:22:19,439 Speaker 1: is a shortened word for fanatic, and a lot of 366 00:22:19,440 --> 00:22:23,080 Speaker 1: writers will use words like fanatic or cult when they're 367 00:22:23,119 --> 00:22:27,879 Speaker 1: describing the Peloton user base. Anyway, the video for the 368 00:22:27,960 --> 00:22:30,399 Speaker 1: kick started campaign showed off the prototype version of the 369 00:22:30,440 --> 00:22:33,760 Speaker 1: Peloton bike and It turns out that the actual prototype 370 00:22:33,800 --> 00:22:37,399 Speaker 1: that was shown in the video had some pretty serious problems. Namely, 371 00:22:37,960 --> 00:22:42,760 Speaker 1: it was unstable and wobbly, like really wobbly, So they 372 00:22:42,800 --> 00:22:45,960 Speaker 1: made sure to avoid showing it wobble in the video. 373 00:22:46,000 --> 00:22:49,640 Speaker 1: They showed it stationary, like truly stationary, no one using 374 00:22:49,640 --> 00:22:52,639 Speaker 1: it or anything. Uh. And this was a marketing effort, 375 00:22:52,720 --> 00:22:54,479 Speaker 1: right Like. They had to do that because if they 376 00:22:54,520 --> 00:22:59,200 Speaker 1: showed it wobble then that would never work. Uh. They 377 00:22:59,240 --> 00:23:03,320 Speaker 1: also were able to get their manufacturer to change their 378 00:23:03,440 --> 00:23:07,480 Speaker 1: approach and reinforce the legs on the bike so that 379 00:23:07,520 --> 00:23:11,040 Speaker 1: it would no longer wobble. And it was a pretty 380 00:23:11,119 --> 00:23:16,400 Speaker 1: simple stationary bike design. It wasn't super you know, complicated. 381 00:23:16,800 --> 00:23:19,800 Speaker 1: It had a very large touch screen display mounted in 382 00:23:19,840 --> 00:23:22,840 Speaker 1: front of the handlebars. That screen, according to the campaign, 383 00:23:22,920 --> 00:23:25,639 Speaker 1: was a twenty one and a half inch ten a 384 00:23:25,720 --> 00:23:30,320 Speaker 1: DP resolution LED display. The display connected to a circuit 385 00:23:30,320 --> 00:23:32,359 Speaker 1: board that had a one and a half giga Hurts 386 00:23:32,480 --> 00:23:36,240 Speaker 1: dual core processor from Texas Instruments inside it. It also 387 00:23:36,280 --> 00:23:40,399 Speaker 1: incorporated a forward facing camera and a microphone, so not 388 00:23:40,520 --> 00:23:44,159 Speaker 1: only could you watch a class streaming to you, the 389 00:23:44,240 --> 00:23:47,920 Speaker 1: class could see and watch you. This is the part 390 00:23:47,960 --> 00:23:50,720 Speaker 1: I like to call the nightmare of Peloton, or at 391 00:23:50,800 --> 00:23:53,800 Speaker 1: least Jonathan's personal nightmare, as I am certain that I 392 00:23:53,840 --> 00:23:56,400 Speaker 1: do not want anyone looking at me when I work out, 393 00:23:57,320 --> 00:23:59,360 Speaker 1: But then I'll be honest. That's been kind of a 394 00:23:59,359 --> 00:24:02,960 Speaker 1: moot point for two years and going now because I 395 00:24:03,000 --> 00:24:06,840 Speaker 1: haven't worked out in two years, so I guess I 396 00:24:06,880 --> 00:24:10,200 Speaker 1: don't need to worry about it. Users would be able 397 00:24:10,240 --> 00:24:13,480 Speaker 1: to connect the bike to a WiFi network. Obviously you 398 00:24:13,520 --> 00:24:15,320 Speaker 1: would need to in order to be able to receive 399 00:24:15,359 --> 00:24:19,199 Speaker 1: streaming content. UH. The bike also supported Bluetooth tech, so 400 00:24:19,240 --> 00:24:22,560 Speaker 1: you could connect your own wireless headphones or speakers to 401 00:24:22,680 --> 00:24:25,640 Speaker 1: at the bike. It also had the ability to connect 402 00:24:26,119 --> 00:24:29,600 Speaker 1: wireless heart rate monitors to the bike so that you 403 00:24:29,640 --> 00:24:33,240 Speaker 1: can trace that metric for the bike itself. The pedals 404 00:24:33,240 --> 00:24:36,640 Speaker 1: connected to the resistance wheel via a belt rather than 405 00:24:36,640 --> 00:24:40,159 Speaker 1: a chain. This helped make it UH operate much more 406 00:24:40,280 --> 00:24:44,040 Speaker 1: quietly than a chain based stationary bike, and instead of 407 00:24:44,119 --> 00:24:49,159 Speaker 1: using brakes to create resistance, the Kickstarter campaign explained that 408 00:24:49,240 --> 00:24:55,399 Speaker 1: Peloton would use magnetic resistance, so magnets position near the 409 00:24:55,440 --> 00:25:00,159 Speaker 1: flywheel the wheel that turns through the belt connect to 410 00:25:00,400 --> 00:25:06,600 Speaker 1: connection to the pedals. UH. Magnets would end up creating resistance. Right, 411 00:25:06,640 --> 00:25:09,040 Speaker 1: you have a magnetic force where the magnets are technically 412 00:25:09,119 --> 00:25:12,399 Speaker 1: pulling on the flywheel, and that requires the user to 413 00:25:12,600 --> 00:25:15,240 Speaker 1: overcome that force in order to make the wheel turn, 414 00:25:15,880 --> 00:25:18,680 Speaker 1: and a resistance knob gave the rider control of how 415 00:25:18,760 --> 00:25:21,840 Speaker 1: close or far away the magnets would be from the flywheel, 416 00:25:21,880 --> 00:25:24,359 Speaker 1: So the closer the magnets were to the flywheel, the 417 00:25:24,400 --> 00:25:26,720 Speaker 1: stronger the magnetic poll would be and the harder it 418 00:25:26,760 --> 00:25:31,120 Speaker 1: would be to pedal the bicycle. A later upgraded version 419 00:25:31,160 --> 00:25:34,640 Speaker 1: of the Peloton bike, the Bike Plus, would include digital 420 00:25:34,680 --> 00:25:37,800 Speaker 1: controls for the magnetic resistance, and in fact, users could 421 00:25:37,840 --> 00:25:41,160 Speaker 1: set their bikes to mimic the resistance used by the instructor, 422 00:25:41,240 --> 00:25:44,159 Speaker 1: so that as the instructor were at was, you know, 423 00:25:44,200 --> 00:25:48,000 Speaker 1: adjusting the resistance of their own bicycle, then the users 424 00:25:48,000 --> 00:25:51,320 Speaker 1: bike would follow suit. And that way the user would 425 00:25:51,320 --> 00:25:54,280 Speaker 1: never have to be conscious of this or make the 426 00:25:54,359 --> 00:25:58,440 Speaker 1: changes themselves. Their bike would just do it automatically and 427 00:25:58,640 --> 00:26:01,600 Speaker 1: they could focus rather not dying while they keep up 428 00:26:01,640 --> 00:26:05,159 Speaker 1: with a professional instructor. The video showed off that the 429 00:26:05,200 --> 00:26:08,959 Speaker 1: bike would allow users to take online classes and they 430 00:26:09,000 --> 00:26:12,000 Speaker 1: could find, you know, trainers that they really connected with 431 00:26:12,400 --> 00:26:16,399 Speaker 1: and they could take live classes along with hundreds of 432 00:26:16,400 --> 00:26:18,960 Speaker 1: other people at the same time, or they could scan 433 00:26:19,080 --> 00:26:23,280 Speaker 1: through recorded workouts from past sessions and take those instead, 434 00:26:23,720 --> 00:26:27,000 Speaker 1: and the workouts would include music and motivation from the trainers, 435 00:26:27,320 --> 00:26:30,359 Speaker 1: who are kind of positioned almost like celebrities. In fact, 436 00:26:30,480 --> 00:26:33,600 Speaker 1: many of them would essentially attain celebrity status, at least 437 00:26:33,680 --> 00:26:37,880 Speaker 1: within the Peloton community. Uh some of some of them 438 00:26:38,000 --> 00:26:41,639 Speaker 1: would actually be celebrities in their own right, like professional 439 00:26:41,680 --> 00:26:45,840 Speaker 1: cyclists who had participated in like Tour de France, for example. 440 00:26:47,080 --> 00:26:50,600 Speaker 1: The display would show users stats about their workouts, including 441 00:26:50,680 --> 00:26:56,879 Speaker 1: information about specific sessions and accumulative data that would gather 442 00:26:57,040 --> 00:27:02,840 Speaker 1: throughout multiple sessions, and users could earn achievements by attending 443 00:27:02,880 --> 00:27:06,400 Speaker 1: classes and performing well. This would mimic a pretty successful 444 00:27:06,400 --> 00:27:09,600 Speaker 1: strategy we've seen in the video game industry. Achievements really 445 00:27:09,680 --> 00:27:12,680 Speaker 1: drive engagement there. That was the same reason Peloton used 446 00:27:12,680 --> 00:27:15,840 Speaker 1: them in their model. The kick started campaign had a 447 00:27:15,880 --> 00:27:19,200 Speaker 1: goal of two dollars, and it actually raised more than 448 00:27:19,280 --> 00:27:23,639 Speaker 1: three hundred thousand dollars. Now, that is less than the 449 00:27:23,720 --> 00:27:26,080 Speaker 1: seed money that the group had used to launch the 450 00:27:26,119 --> 00:27:29,480 Speaker 1: company in the first place back in but it was 451 00:27:29,520 --> 00:27:32,439 Speaker 1: also enough support to show investors that there was a 452 00:27:32,520 --> 00:27:36,159 Speaker 1: demand for this product. UH that I think might be 453 00:27:36,320 --> 00:27:39,920 Speaker 1: the real purpose of this kick started campaign. The campaign 454 00:27:39,960 --> 00:27:42,000 Speaker 1: said the money was actually going to be used to 455 00:27:42,040 --> 00:27:46,399 Speaker 1: officially start peloton production, like this was the the cash 456 00:27:46,520 --> 00:27:50,920 Speaker 1: needed to get that ball rolling, to get the tools 457 00:27:51,000 --> 00:27:54,240 Speaker 1: designed to produce the bikes, and to get the production 458 00:27:54,840 --> 00:27:57,040 Speaker 1: UH system in place and all that, Like this was 459 00:27:57,080 --> 00:28:01,320 Speaker 1: the actual money to start that. They were up front 460 00:28:01,359 --> 00:28:04,560 Speaker 1: that they had already raised investments to fund a studio 461 00:28:04,560 --> 00:28:07,800 Speaker 1: in New York where trainers could lead classes, and they 462 00:28:07,920 --> 00:28:10,879 Speaker 1: had already actually developed all the hardware and software, and 463 00:28:10,920 --> 00:28:15,080 Speaker 1: that you know, the initial investment money covered all that. Again, 464 00:28:15,119 --> 00:28:17,960 Speaker 1: I suspect the campaign's real purpose was to test the 465 00:28:18,080 --> 00:28:21,919 Speaker 1: idea among the public and get some grassroots enthusiasm for it, 466 00:28:22,000 --> 00:28:27,320 Speaker 1: so that folks with deeper pockets, meaning investors, would see 467 00:28:27,359 --> 00:28:30,000 Speaker 1: this kind of enthusiasm and say, yes, I will invest 468 00:28:30,040 --> 00:28:32,200 Speaker 1: in this because I see that there is a demand 469 00:28:32,640 --> 00:28:36,680 Speaker 1: for the product. Now that three hundred thousand dollars, or 470 00:28:36,920 --> 00:28:39,560 Speaker 1: to be more specific, that three hundred seven thousand, three 471 00:28:39,600 --> 00:28:43,800 Speaker 1: hundred thirty two dollars came from just two hundred ninety 472 00:28:43,920 --> 00:28:47,640 Speaker 1: seven backers. That would mean that the average amount of 473 00:28:47,640 --> 00:28:50,360 Speaker 1: money that backers spent on that campaign was an excess 474 00:28:50,440 --> 00:28:54,280 Speaker 1: of one thousand dollars each. And that makes sense when 475 00:28:54,360 --> 00:28:56,480 Speaker 1: you look at the rewards, because you would see that 476 00:28:56,560 --> 00:29:00,280 Speaker 1: to qualify for the early Bird Special of our seeving 477 00:29:00,320 --> 00:29:03,480 Speaker 1: a Peloton bike, you would need to plug down fifteen 478 00:29:03,560 --> 00:29:07,440 Speaker 1: hundred dollars cash. The early Bird Special was limited to 479 00:29:07,520 --> 00:29:10,640 Speaker 1: just two hundred fifty backers, and it did. It didn't 480 00:29:10,640 --> 00:29:13,600 Speaker 1: sell out though at least five folks backed at the 481 00:29:13,640 --> 00:29:16,400 Speaker 1: next level up anyway, that was at seventeen hundred dollars 482 00:29:16,400 --> 00:29:19,560 Speaker 1: for the Peloton bike. Maybe it maxed out initially and 483 00:29:19,560 --> 00:29:22,400 Speaker 1: then people backed out of it before the campaign ended. 484 00:29:22,760 --> 00:29:26,800 Speaker 1: That's possible, where they got two fifty people to sign up, 485 00:29:27,200 --> 00:29:30,320 Speaker 1: and then before the campaign ended, some of those two 486 00:29:30,960 --> 00:29:34,400 Speaker 1: people said you know what, uh, never mind and backed out. 487 00:29:34,520 --> 00:29:37,800 Speaker 1: That's possible, uh, And then a few people backed at 488 00:29:37,800 --> 00:29:41,800 Speaker 1: slightly higher levels. And these were all like the seventeen 489 00:29:41,840 --> 00:29:44,000 Speaker 1: hundred dollar levels. Those were just for if you were 490 00:29:44,040 --> 00:29:46,280 Speaker 1: in the United States. Folks overseas would actually have to 491 00:29:46,280 --> 00:29:48,600 Speaker 1: back at a higher level because the bike would have 492 00:29:48,640 --> 00:29:53,480 Speaker 1: to be quote equipped for Canadian, European or Asian product standards. 493 00:29:53,640 --> 00:29:56,840 Speaker 1: End quote. We don't believe in their standards here in 494 00:29:56,840 --> 00:30:00,680 Speaker 1: the US of A. Well, the campaign made clear that 495 00:30:00,720 --> 00:30:03,800 Speaker 1: the manufacturing of the bikes would happen overseas, and that 496 00:30:03,880 --> 00:30:06,400 Speaker 1: Peloton had partnered with a company that had a history 497 00:30:06,400 --> 00:30:10,560 Speaker 1: of making indoor cycles and a second company that creates 498 00:30:10,720 --> 00:30:13,760 Speaker 1: O d M tablet hardware. O d M stands for 499 00:30:13,920 --> 00:30:20,040 Speaker 1: original Design manufacturer. Essentially, this is a company that produces 500 00:30:20,040 --> 00:30:25,080 Speaker 1: the stuff that another company designs. So if you ran 501 00:30:25,120 --> 00:30:27,160 Speaker 1: a design company you would come up with a design 502 00:30:27,200 --> 00:30:29,320 Speaker 1: for a tablet, you would partner with an o d 503 00:30:29,560 --> 00:30:33,800 Speaker 1: M and they would actually produce the hardware. This works 504 00:30:33,840 --> 00:30:37,880 Speaker 1: great for companies that don't have fabrication facilities of their own. Now, 505 00:30:37,920 --> 00:30:41,640 Speaker 1: the results of the campaign weren't exactly a windfall for Peloton, 506 00:30:41,800 --> 00:30:45,120 Speaker 1: like they hit their goal, but it wasn't a runaway 507 00:30:45,200 --> 00:30:49,080 Speaker 1: success like some other viral campaigns we've seen on Kickstarter. 508 00:30:49,160 --> 00:30:53,800 Speaker 1: In fact, in all people had ordered a bike, so 509 00:30:54,600 --> 00:30:58,720 Speaker 1: it wasn't It wasn't the runaway success they were hoping for, 510 00:30:58,920 --> 00:31:00,680 Speaker 1: and they realized that they were going to have to 511 00:31:00,720 --> 00:31:04,080 Speaker 1: start getting these bikes in front of people in order 512 00:31:04,120 --> 00:31:07,240 Speaker 1: to sell more of them, to get people to see 513 00:31:07,280 --> 00:31:10,800 Speaker 1: what the promise and premise of the bike were all about. 514 00:31:11,680 --> 00:31:15,200 Speaker 1: So then the company secured a pop up store location 515 00:31:15,280 --> 00:31:18,280 Speaker 1: in a mall in New Jersey and things would really 516 00:31:18,320 --> 00:31:22,320 Speaker 1: get moving for the stationary bike company. I'll explain more 517 00:31:22,680 --> 00:31:33,120 Speaker 1: after we come back from this break. Okay, So Peloton 518 00:31:33,200 --> 00:31:36,840 Speaker 1: has had its Kickstarter campaign, which was a modest success. 519 00:31:36,880 --> 00:31:39,760 Speaker 1: I mean it's successfully funded, but it wasn't, you know, 520 00:31:39,880 --> 00:31:43,400 Speaker 1: a Grand Slam home run. And then they look for 521 00:31:43,520 --> 00:31:46,160 Speaker 1: a physical space where they can show off the bikes 522 00:31:46,200 --> 00:31:49,840 Speaker 1: and perhaps get a little more traction, which, again, using 523 00:31:49,880 --> 00:31:53,320 Speaker 1: these metaphors for a company that was making station stationary 524 00:31:53,320 --> 00:31:55,480 Speaker 1: bikes is an irony that is not lost upon me. 525 00:31:55,960 --> 00:32:00,760 Speaker 1: So they went to this luxury mall in New Jersey. Uh, 526 00:32:00,840 --> 00:32:03,200 Speaker 1: it's exactly the kind of mall that I really hate 527 00:32:03,200 --> 00:32:05,920 Speaker 1: going to. We have something similar here in Atlanta, and 528 00:32:05,960 --> 00:32:08,120 Speaker 1: it's pretty much the opposite of the kind of place 529 00:32:08,160 --> 00:32:10,440 Speaker 1: I want to spend time in. But it is the 530 00:32:10,560 --> 00:32:13,440 Speaker 1: kind of place that you would want to be at 531 00:32:13,480 --> 00:32:15,840 Speaker 1: if you're trying to sell a high end piece of 532 00:32:15,920 --> 00:32:20,840 Speaker 1: exercise equipment too well off suburban nights who may not 533 00:32:21,000 --> 00:32:24,640 Speaker 1: have access to gym locations in their area because they 534 00:32:24,680 --> 00:32:29,800 Speaker 1: live in a suburb. By late the team was demonstrating 535 00:32:30,120 --> 00:32:34,840 Speaker 1: the bike and selling orders for around five bikes a day, 536 00:32:35,000 --> 00:32:37,720 Speaker 1: and they had considered it they could get one order 537 00:32:37,760 --> 00:32:40,680 Speaker 1: a day that would be success, so they were actually 538 00:32:41,320 --> 00:32:45,360 Speaker 1: exceeding what they were hoping for. However, they could not 539 00:32:45,560 --> 00:32:50,480 Speaker 1: produce five bikes a day. Their manufacturer in Taiwan had 540 00:32:50,520 --> 00:32:55,320 Speaker 1: a turnaround time that was between three to four months. Now. 541 00:32:55,480 --> 00:32:58,360 Speaker 1: Early on, they promised customers that they would deliver the 542 00:32:58,400 --> 00:33:01,240 Speaker 1: bikes within thirty days and then, you know, I kind 543 00:33:01,240 --> 00:33:03,560 Speaker 1: of hope that the customers wouldn't get too cheese off 544 00:33:03,680 --> 00:33:06,680 Speaker 1: when inevitably there would be delays, and they knew there 545 00:33:06,680 --> 00:33:08,960 Speaker 1: would be delays from the start. They actually said later 546 00:33:09,000 --> 00:33:11,640 Speaker 1: on that they realized that if they had just told 547 00:33:11,640 --> 00:33:15,440 Speaker 1: people up front it will be nine twenty days before 548 00:33:15,640 --> 00:33:17,920 Speaker 1: this can be delivered, there would have been a lot 549 00:33:18,000 --> 00:33:22,240 Speaker 1: less you know, friction. Meanwhile, Fing was in charge of 550 00:33:22,240 --> 00:33:25,040 Speaker 1: building out a production studio in New York where the 551 00:33:25,240 --> 00:33:27,480 Speaker 1: classes were going to take place, but no one on 552 00:33:27,520 --> 00:33:31,680 Speaker 1: the team had any experience creating a production studio, so 553 00:33:31,760 --> 00:33:34,120 Speaker 1: it was kind of a trial by fire, as was 554 00:33:34,320 --> 00:33:38,520 Speaker 1: everything else it seems with Peloton. The first bikes were 555 00:33:38,640 --> 00:33:43,280 Speaker 1: finally reaching customers by January. At that time, the New 556 00:33:43,360 --> 00:33:46,760 Speaker 1: York studio had not yet been finished, so the initial 557 00:33:46,840 --> 00:33:51,520 Speaker 1: classes for those first customers were conducted in that little 558 00:33:51,560 --> 00:33:55,479 Speaker 1: curtained off section of office space in the studio. The 559 00:33:55,560 --> 00:33:59,920 Speaker 1: actual UH, the full production studio wouldn't open in Chelse 560 00:34:00,000 --> 00:34:04,200 Speaker 1: in New York until May. The company also had to 561 00:34:04,200 --> 00:34:08,000 Speaker 1: create their own logistics department to handle things like delivery 562 00:34:08,040 --> 00:34:10,600 Speaker 1: of the product because they found that they had been 563 00:34:10,640 --> 00:34:15,720 Speaker 1: dependent on third parties and those third parties were UH. 564 00:34:15,880 --> 00:34:18,520 Speaker 1: Let's say that those third parties were not living up 565 00:34:18,600 --> 00:34:22,759 Speaker 1: to the standards of your average Peloton customer. It's a 566 00:34:22,840 --> 00:34:24,840 Speaker 1: kind way of putting it. And this is where we 567 00:34:24,840 --> 00:34:29,359 Speaker 1: should remember that a Peloton bike is really freaking expensive. 568 00:34:29,560 --> 00:34:35,400 Speaker 1: In a Peloton bike would set you back one thousand dollars. 569 00:34:35,440 --> 00:34:39,040 Speaker 1: This was the original basic Peloton bike, and that's for 570 00:34:39,160 --> 00:34:41,360 Speaker 1: the hardware. You have to remember that the real selling 571 00:34:41,400 --> 00:34:44,880 Speaker 1: point of the Peloton where those streaming classes, and that 572 00:34:45,040 --> 00:34:48,319 Speaker 1: service would cost you thirty nine dollars a month, So 573 00:34:48,960 --> 00:34:51,799 Speaker 1: you'll be spending nearly two grand on the bike, and 574 00:34:51,840 --> 00:34:55,640 Speaker 1: then forty bucks a month to continue getting useful content 575 00:34:55,840 --> 00:34:59,160 Speaker 1: while you're using that bike and that's the business model 576 00:34:59,600 --> 00:35:02,040 Speaker 1: that are really we wanted to touch on this ongoing 577 00:35:02,680 --> 00:35:06,440 Speaker 1: subscription fee, and we've seen this model become incredibly popular 578 00:35:06,480 --> 00:35:10,279 Speaker 1: among tech companies, and really what it really boils down to, 579 00:35:10,320 --> 00:35:14,319 Speaker 1: it's all about getting the customer into an ecosystem and 580 00:35:14,320 --> 00:35:18,600 Speaker 1: then capitalizing on that. And you see this everywhere. Printers 581 00:35:18,680 --> 00:35:21,320 Speaker 1: do it more often than not. If you buy a printer, 582 00:35:21,880 --> 00:35:24,959 Speaker 1: you are required to purchase toner cartridges from the same 583 00:35:25,000 --> 00:35:29,319 Speaker 1: manufacturing company that made the printer. You are discouraged or 584 00:35:29,360 --> 00:35:34,360 Speaker 1: sometimes outright prevented from using third party toner cartridges. We 585 00:35:34,440 --> 00:35:37,960 Speaker 1: see it in coffee makers. Curig famously tried to block 586 00:35:38,120 --> 00:35:41,040 Speaker 1: customers so that they would only be able to use 587 00:35:41,120 --> 00:35:45,839 Speaker 1: Curig produced coffee pods with their Curig coffee makers. We've 588 00:35:45,880 --> 00:35:48,879 Speaker 1: seen it in game companies like Microsoft Gaming, which has 589 00:35:48,880 --> 00:35:53,399 Speaker 1: its Xbox Game Pass service. This is a service that 590 00:35:53,480 --> 00:35:56,040 Speaker 1: people will pay a monthly subscription to and in return, 591 00:35:56,400 --> 00:36:01,000 Speaker 1: they get access to the game's currently supported by the service, 592 00:36:01,040 --> 00:36:03,720 Speaker 1: and games come on and leave the service over time. 593 00:36:04,520 --> 00:36:07,600 Speaker 1: We see it in companies that push back against the 594 00:36:07,719 --> 00:36:10,040 Speaker 1: right to repair. These are companies that want to lock 595 00:36:10,160 --> 00:36:12,480 Speaker 1: customers into a system where they have to go to 596 00:36:12,560 --> 00:36:16,480 Speaker 1: a company approved and licensed vendor for maintenance and repair. 597 00:36:17,200 --> 00:36:19,799 Speaker 1: We've seen it in the form of planned obsolescence, in 598 00:36:19,800 --> 00:36:22,640 Speaker 1: which a company's product is designed to only last a 599 00:36:22,680 --> 00:36:25,520 Speaker 1: certain amount of time before the customer has to go 600 00:36:25,560 --> 00:36:29,839 Speaker 1: out and buy a replacement. These are all aspects of 601 00:36:29,880 --> 00:36:33,680 Speaker 1: the same basic business philosophy, which is to find a 602 00:36:33,719 --> 00:36:37,960 Speaker 1: way to keep your customers giving you their money, rather 603 00:36:38,040 --> 00:36:41,000 Speaker 1: than having a one and done approach where someone comes up, 604 00:36:41,080 --> 00:36:44,719 Speaker 1: they buy your product, the transactions over and that's it, 605 00:36:44,880 --> 00:36:46,600 Speaker 1: and the only way you make more money is to 606 00:36:46,600 --> 00:36:49,439 Speaker 1: sell more products to more customers. This is a way 607 00:36:49,719 --> 00:36:54,480 Speaker 1: to keep a customer as a recurring customer. Well, all 608 00:36:54,520 --> 00:36:57,759 Speaker 1: of that is pretty much a steep asking price, right 609 00:36:58,040 --> 00:37:03,040 Speaker 1: to grand plus forty bucks of for perpetually. This meant 610 00:37:03,040 --> 00:37:07,160 Speaker 1: that Peloton's clientele typically were among the more affluent people 611 00:37:07,239 --> 00:37:12,040 Speaker 1: in society, and some of the Peloton's equipment would cost 612 00:37:12,080 --> 00:37:15,680 Speaker 1: even more. Like there were the Peloton Bike Plus, which 613 00:37:16,200 --> 00:37:19,799 Speaker 1: was marketed for two thousand, four nine dollars, as was 614 00:37:19,840 --> 00:37:24,080 Speaker 1: the Peloton tread treadmill. I think the tread Plus was 615 00:37:24,160 --> 00:37:28,359 Speaker 1: topping out at just under five thousand dollars, so very 616 00:37:28,360 --> 00:37:33,759 Speaker 1: expensive pieces of equipment anyway, Peloton, unlike its bikes, which 617 00:37:33,800 --> 00:37:38,520 Speaker 1: are stationary, was moving forward. In fourteen, the company raised 618 00:37:38,520 --> 00:37:42,319 Speaker 1: another ten point five million dollars in funding. The following year, 619 00:37:42,360 --> 00:37:46,080 Speaker 1: the company raised another thirty million dollars at least early 620 00:37:46,120 --> 00:37:48,640 Speaker 1: in the year, and then, uh, you know, on the 621 00:37:48,680 --> 00:37:50,880 Speaker 1: back end of the year they earned another seventy five 622 00:37:50,960 --> 00:37:54,080 Speaker 1: million dollars. And Peloton was using this money to build 623 00:37:54,080 --> 00:37:57,160 Speaker 1: out more brick and mortar locations to show off the bikes, 624 00:37:57,800 --> 00:38:00,759 Speaker 1: and also to build out that legit sticks department I 625 00:38:00,800 --> 00:38:03,720 Speaker 1: talked about, and to grow the software engineering team as well. 626 00:38:04,880 --> 00:38:07,120 Speaker 1: And that wasn't the end of the investments. Peloton got 627 00:38:07,160 --> 00:38:12,279 Speaker 1: another three five million dollars in The company established its 628 00:38:12,280 --> 00:38:16,360 Speaker 1: products as being trendy, if somewhat restricted to a wealthy 629 00:38:16,440 --> 00:38:20,920 Speaker 1: subset of the population, and in twenty nineteen, the company 630 00:38:20,960 --> 00:38:24,680 Speaker 1: held its initial public offering that's when a private company 631 00:38:24,760 --> 00:38:28,799 Speaker 1: transitions into a publicly traded company. The first day did 632 00:38:28,800 --> 00:38:33,600 Speaker 1: not go particularly smoothly. The I p O pricing was 633 00:38:33,640 --> 00:38:37,800 Speaker 1: set at twenty nine dollars per share, meaning that Peloton 634 00:38:37,960 --> 00:38:41,040 Speaker 1: expected that shares of the company would trade at twenty 635 00:38:41,080 --> 00:38:45,200 Speaker 1: nine dollars a piece once the market opened. However, when 636 00:38:45,200 --> 00:38:50,160 Speaker 1: trading began, it was actually dropped down to twenty seven dollars. Still, 637 00:38:50,239 --> 00:38:52,319 Speaker 1: it would mean that the company would establish a seven 638 00:38:52,360 --> 00:38:58,279 Speaker 1: point to billion dollar market valuation. Essentially, the valuation is 639 00:38:58,320 --> 00:39:01,680 Speaker 1: the number of shares of the company issues multiplied by 640 00:39:01,800 --> 00:39:06,480 Speaker 1: the price per share. The little slip from twenty nine 641 00:39:06,520 --> 00:39:09,319 Speaker 1: dollars to twenty seven dollars meant that Peloton got the 642 00:39:09,400 --> 00:39:13,120 Speaker 1: dubious distinction of having the quote second worst debut of 643 00:39:13,160 --> 00:39:16,359 Speaker 1: a unicorn end quote up to that point in two 644 00:39:16,360 --> 00:39:20,440 Speaker 1: thousand nineteen. That's according to c NBC, a unicorn is 645 00:39:20,440 --> 00:39:23,440 Speaker 1: a startup business that has a valuation of a billion 646 00:39:23,480 --> 00:39:27,040 Speaker 1: dollars or more. Now, all that being said, I think 647 00:39:27,040 --> 00:39:29,160 Speaker 1: a lot of folks in the tech space we're actually 648 00:39:29,160 --> 00:39:32,720 Speaker 1: at the time far more focused on the spiraling WE Company, 649 00:39:33,320 --> 00:39:36,040 Speaker 1: the company behind we Work that was supposed to go 650 00:39:36,080 --> 00:39:39,799 Speaker 1: public the week before Peloton, but ended up scrapping those 651 00:39:39,800 --> 00:39:44,520 Speaker 1: plans because of lots of valid and crazy reasons. But 652 00:39:44,640 --> 00:39:49,200 Speaker 1: that's another story. Now, it's possible Peloton would have been 653 00:39:49,360 --> 00:39:54,160 Speaker 1: on a steady but slow trajectory, except then we get 654 00:39:54,200 --> 00:39:59,320 Speaker 1: to the pandemic. In early with the threat of coronavirus 655 00:39:59,360 --> 00:40:02,120 Speaker 1: out there, a lot of people were lamenting the fact 656 00:40:02,280 --> 00:40:04,799 Speaker 1: that they did not feel safe going to the gym, 657 00:40:05,000 --> 00:40:07,799 Speaker 1: and heck, a lot of places Gems were closed, right, 658 00:40:07,880 --> 00:40:11,360 Speaker 1: so you couldn't go even if you wanted to. And 659 00:40:11,680 --> 00:40:14,799 Speaker 1: that showed off the real benefit of Peloton, right, like, 660 00:40:14,880 --> 00:40:17,160 Speaker 1: you don't have to go to the gym, you get 661 00:40:17,200 --> 00:40:20,560 Speaker 1: one of those expensive Peloton machines, whether it's a bike 662 00:40:20,680 --> 00:40:23,839 Speaker 1: or it's a treadmill, and you take classes at home 663 00:40:24,200 --> 00:40:26,640 Speaker 1: that you still get the benefit of a professional trainer 664 00:40:26,760 --> 00:40:29,520 Speaker 1: pushing you to your limit, but you don't have to 665 00:40:29,600 --> 00:40:32,920 Speaker 1: leave the house. And Peloton sales took off, as did 666 00:40:32,960 --> 00:40:37,640 Speaker 1: the company's stock price. There were some pretty big setbacks too, though. 667 00:40:38,040 --> 00:40:41,680 Speaker 1: For one, in May one, the company issued a recall 668 00:40:41,840 --> 00:40:45,200 Speaker 1: for the most recent tread and tread Plus treadmill models 669 00:40:45,600 --> 00:40:48,200 Speaker 1: due to reports of users getting injured on the devices, 670 00:40:48,280 --> 00:40:52,280 Speaker 1: as well as a truly tragic report that a child 671 00:40:52,360 --> 00:40:55,600 Speaker 1: had died in an accident involving one of the treadmills, 672 00:40:56,520 --> 00:41:00,920 Speaker 1: and that obviously was a huge issue for the company. 673 00:41:00,960 --> 00:41:03,600 Speaker 1: They had to react quickly to it, and that's why 674 00:41:03,640 --> 00:41:08,080 Speaker 1: they recalled those those products. When HBO launched its follow 675 00:41:08,120 --> 00:41:11,399 Speaker 1: up series two, Sex in the City called and just 676 00:41:11,520 --> 00:41:15,160 Speaker 1: like that. The show began with the character of Mr 677 00:41:15,200 --> 00:41:18,480 Speaker 1: Big dying of a heart attack after having worked out 678 00:41:18,600 --> 00:41:21,520 Speaker 1: on his Peloton bike. Now, that's not the kind of 679 00:41:21,520 --> 00:41:24,680 Speaker 1: product placement you typically want when you're promoting your business. 680 00:41:24,760 --> 00:41:28,760 Speaker 1: And to make matters worse, Peloton commissioned and ad featuring 681 00:41:28,840 --> 00:41:32,760 Speaker 1: Chris Noth, the actor who plays or played Mr Big, 682 00:41:33,400 --> 00:41:36,040 Speaker 1: to kind of play off the fact that the show 683 00:41:36,080 --> 00:41:40,719 Speaker 1: had killed off his character and implied that Peloton was responsible. 684 00:41:41,480 --> 00:41:44,200 Speaker 1: And the reason I say to make matters worse is 685 00:41:44,239 --> 00:41:48,920 Speaker 1: because shortly after that ad started to air, the world 686 00:41:49,000 --> 00:41:52,000 Speaker 1: heard allegations that Chris Noth had a history of sexual 687 00:41:52,040 --> 00:41:56,799 Speaker 1: harassment and sexual assault. Uh. And obviously it would be 688 00:41:56,840 --> 00:41:59,959 Speaker 1: a terrible idea to continue to run an ad fee 689 00:42:00,120 --> 00:42:03,359 Speaker 1: uring Nath in it in the wake of those allegations. 690 00:42:03,600 --> 00:42:07,000 Speaker 1: So the company pulled the commercial And I told you 691 00:42:07,040 --> 00:42:09,080 Speaker 1: I would explain the end just like that thing at 692 00:42:09,120 --> 00:42:11,840 Speaker 1: the beginning of this episode, And there it is. Was 693 00:42:11,840 --> 00:42:15,400 Speaker 1: it worth the wait? It was not. Mr Big was 694 00:42:15,480 --> 00:42:18,000 Speaker 1: not the only fictional character to have a fictional heart 695 00:42:18,000 --> 00:42:21,840 Speaker 1: attack after working out on a Peloton bike. The Showtime 696 00:42:21,920 --> 00:42:25,319 Speaker 1: series Billions featured a scene in which a character named 697 00:42:25,320 --> 00:42:28,880 Speaker 1: Wags has a heart attack after following a similar workout 698 00:42:28,960 --> 00:42:32,279 Speaker 1: on a Peloton. Wags, however, does not die from the 699 00:42:32,280 --> 00:42:35,799 Speaker 1: heart attack. He even references the scene from and just 700 00:42:35,920 --> 00:42:41,080 Speaker 1: like that, he references Mr Big. I'm sensing a meme here. Now. 701 00:42:41,120 --> 00:42:45,800 Speaker 1: Before the pandemic, Peloton's stock price was in the twenty 702 00:42:45,800 --> 00:42:49,920 Speaker 1: two to thirty five dollar arrange, so, you know, leaning 703 00:42:49,920 --> 00:42:53,640 Speaker 1: into that's kind of where the stock price was hovering. 704 00:42:53,719 --> 00:42:56,719 Speaker 1: It was not too far off from the targeted I 705 00:42:56,800 --> 00:42:59,200 Speaker 1: p O price of twenty nine dollars way back when 706 00:42:59,200 --> 00:43:05,000 Speaker 1: the company first public, but the pandemic would change things significantly. 707 00:43:05,160 --> 00:43:07,760 Speaker 1: In early March of twenty the price had actually fallen 708 00:43:07,800 --> 00:43:11,880 Speaker 1: to below twenty dollars per share, but by October of 709 00:43:11,960 --> 00:43:16,040 Speaker 1: twenty twenty, after several months of the pandemic, the stock 710 00:43:16,080 --> 00:43:19,440 Speaker 1: price had skyrocketed up to a hundred thirty one dollars 711 00:43:19,440 --> 00:43:22,920 Speaker 1: per share. Now that's not its peak. The peak of 712 00:43:23,000 --> 00:43:26,200 Speaker 1: Peloton stock price went to more than a hundred sixty 713 00:43:26,320 --> 00:43:31,839 Speaker 1: dollars per share, a huge jump. Peloton's pandemic trend of 714 00:43:31,880 --> 00:43:36,480 Speaker 1: selling more equipment, however, was not sustainable, and the stock 715 00:43:36,520 --> 00:43:40,440 Speaker 1: price would ultimately reflect that. For example, in November twenty 716 00:43:40,520 --> 00:43:43,879 Speaker 1: twenty as the world was anticipating the production of a 717 00:43:44,000 --> 00:43:47,080 Speaker 1: viable COVID nineteen vaccine, Like we had just heard the 718 00:43:47,080 --> 00:43:50,239 Speaker 1: announcement that yes, they were going to be produced and 719 00:43:50,280 --> 00:43:55,400 Speaker 1: we would get access to them early on in Peloton 720 00:43:55,640 --> 00:44:01,279 Speaker 1: stock then took a dive. It felt sent because investors 721 00:44:01,280 --> 00:44:04,719 Speaker 1: were worried that people would, you know, stop buying Peloton 722 00:44:05,160 --> 00:44:08,400 Speaker 1: bikes and treadmills and just head back to the gym. 723 00:44:08,440 --> 00:44:13,360 Speaker 1: So it's weird to think that a a solution or 724 00:44:13,440 --> 00:44:16,879 Speaker 1: a a way to combat the spread of coronavirus would 725 00:44:16,880 --> 00:44:20,719 Speaker 1: have a harmful effect on the company, But there you go. Now, 726 00:44:20,840 --> 00:44:24,319 Speaker 1: Peloton stock price did have a brief recovery, but it 727 00:44:24,320 --> 00:44:27,040 Speaker 1: wouldn't stay north of a hundred dollars per share for 728 00:44:27,200 --> 00:44:30,720 Speaker 1: very long. The recalls in twenty one came to time 729 00:44:30,800 --> 00:44:33,759 Speaker 1: when the stock was in a slide, and it would 730 00:44:33,800 --> 00:44:38,720 Speaker 1: slide seventy in value. According to Slate as I actually 731 00:44:38,719 --> 00:44:42,200 Speaker 1: record this episode, the company's current stock price is around 732 00:44:42,280 --> 00:44:45,320 Speaker 1: twenty nine dollars per share, right back to that target 733 00:44:45,360 --> 00:44:48,680 Speaker 1: I p O price and well below that height of 734 00:44:48,680 --> 00:44:51,000 Speaker 1: a hundred sixty two dollars per share. That's what it 735 00:44:51,040 --> 00:44:56,880 Speaker 1: was at in December of twenty twenty, Peloton reportedly overestimated 736 00:44:56,960 --> 00:45:00,400 Speaker 1: demand for the bikes and treadmills, largely but cause of 737 00:45:00,440 --> 00:45:03,960 Speaker 1: that huge boom early on in the pandemic, and now 738 00:45:04,280 --> 00:45:08,000 Speaker 1: apparently the company has warehouses filled with equipment that has 739 00:45:08,080 --> 00:45:13,319 Speaker 1: so far gone unsold. As such, someone within Peloton not 740 00:45:13,520 --> 00:45:16,720 Speaker 1: too long ago leaked out information that the company was halting, 741 00:45:16,880 --> 00:45:21,200 Speaker 1: at least temporarily, the production of its various machines. Some 742 00:45:21,560 --> 00:45:25,319 Speaker 1: like the Basic Peloton Bike are on hold from February 743 00:45:25,360 --> 00:45:28,880 Speaker 1: through March, while the Bike Plus will be on hold 744 00:45:29,040 --> 00:45:32,600 Speaker 1: through June, and the tread Plus treadmill is not going 745 00:45:32,640 --> 00:45:35,320 Speaker 1: back into production for the rest of fiscal year twenty 746 00:45:35,400 --> 00:45:40,360 Speaker 1: twenty two. The company's stock price took another huge tumble 747 00:45:40,360 --> 00:45:44,320 Speaker 1: in the wake of that news nearly twenty but John 748 00:45:44,320 --> 00:45:46,680 Speaker 1: Foley then said that the company was making moves to 749 00:45:46,840 --> 00:45:50,640 Speaker 1: right itself, which saw the stock price rebound a little bit, 750 00:45:51,160 --> 00:45:55,719 Speaker 1: and that process of making things right may actually include 751 00:45:55,800 --> 00:46:00,319 Speaker 1: layoffs in addition to changes in production. Also, the company 752 00:46:00,440 --> 00:46:03,640 Speaker 1: said that it had identified who had leaked the information 753 00:46:03,680 --> 00:46:05,560 Speaker 1: to the media in the first place and was now 754 00:46:05,640 --> 00:46:10,400 Speaker 1: pursuing legal action, which is big old yikes. Meanwhile, the 755 00:46:10,600 --> 00:46:15,120 Speaker 1: black Wells Capital lll C company that's an activist investor group, 756 00:46:15,600 --> 00:46:20,480 Speaker 1: has published an open letter urging Peloton to fire John Foley, 757 00:46:20,760 --> 00:46:24,719 Speaker 1: s CEO and to seek out a buyer for the company, 758 00:46:24,760 --> 00:46:29,200 Speaker 1: which is a big old oof right there. Um and 759 00:46:30,000 --> 00:46:33,080 Speaker 1: black Wells owns about five percent of Peloton stock, so 760 00:46:33,200 --> 00:46:36,600 Speaker 1: it's influential, but obviously doesn't have like controlling interest of 761 00:46:36,640 --> 00:46:39,799 Speaker 1: the company by any stretch of the imagination. But it 762 00:46:39,880 --> 00:46:44,040 Speaker 1: does sound like they are pushing other shareholders to pressure 763 00:46:44,080 --> 00:46:48,120 Speaker 1: the company into into firing John Foley and and looking 764 00:46:48,160 --> 00:46:53,120 Speaker 1: to get bought out. Um. Again, it's an interesting story 765 00:46:53,120 --> 00:46:55,520 Speaker 1: with Peloton, and obviously the story is not over. Like 766 00:46:55,960 --> 00:46:59,200 Speaker 1: we could see things dramatically turn around for the company 767 00:46:59,200 --> 00:47:02,440 Speaker 1: and see that this was just a dark period in 768 00:47:02,480 --> 00:47:06,080 Speaker 1: the company's history and then it returns to a pretty 769 00:47:06,120 --> 00:47:09,520 Speaker 1: prominent place in the tech space. It's interesting to me 770 00:47:09,600 --> 00:47:14,120 Speaker 1: because obviously the real value in Peloton wasn't so much 771 00:47:14,120 --> 00:47:17,480 Speaker 1: in the technology. As I said, all the technology Peloton 772 00:47:17,680 --> 00:47:22,279 Speaker 1: was using existed in some form or another, just had 773 00:47:22,360 --> 00:47:26,160 Speaker 1: not yet converged into a product like what Peloton offered. 774 00:47:27,360 --> 00:47:29,760 Speaker 1: But but they did it really well. I mean, apart 775 00:47:29,760 --> 00:47:34,480 Speaker 1: from the fact that it's prohibitively expensive for a large 776 00:47:34,719 --> 00:47:39,080 Speaker 1: portion of the population. Obviously, that ends up limiting your 777 00:47:39,120 --> 00:47:42,600 Speaker 1: potential customer base all on its own, right, you only 778 00:47:42,719 --> 00:47:46,320 Speaker 1: have so many people who can afford to buy products 779 00:47:46,400 --> 00:47:49,560 Speaker 1: that are that expensive. But yeah, it'll be interesting to 780 00:47:49,600 --> 00:47:51,200 Speaker 1: see if the company is going to be able to 781 00:47:51,239 --> 00:47:54,960 Speaker 1: weather this current storm and turn things around. I wanted 782 00:47:54,960 --> 00:47:56,960 Speaker 1: to cover it because it has been in the news 783 00:47:57,480 --> 00:47:59,400 Speaker 1: and I thought it was interesting that the company had 784 00:47:59,400 --> 00:48:02,720 Speaker 1: announced or didn't announce, but had to address the fact 785 00:48:02,719 --> 00:48:06,239 Speaker 1: that it was halting production on several of it's all 786 00:48:06,239 --> 00:48:11,920 Speaker 1: of its products really, at least in for temporary basis. Anyway, 787 00:48:12,000 --> 00:48:16,719 Speaker 1: that is the Peloton story so far, and like I said, 788 00:48:16,800 --> 00:48:20,640 Speaker 1: unless unless something really major happens, I expect that story 789 00:48:20,680 --> 00:48:23,319 Speaker 1: will continue. If it doesn't, I'll be sure to touch 790 00:48:23,360 --> 00:48:25,000 Speaker 1: on that at the end of this year when I'm 791 00:48:25,040 --> 00:48:28,759 Speaker 1: covering the big stories of twent two. In the meantime, 792 00:48:28,920 --> 00:48:30,960 Speaker 1: if you have suggestions for topics I should cover in 793 00:48:31,000 --> 00:48:33,120 Speaker 1: future episodes of tech Stuff, please reach out to me. 794 00:48:33,480 --> 00:48:35,799 Speaker 1: The best way to do that is on Twitter. The 795 00:48:35,840 --> 00:48:39,480 Speaker 1: handle for the show is text Stuff H s W 796 00:48:40,200 --> 00:48:49,040 Speaker 1: and I'll talk to you again really soon. Text Stuff 797 00:48:49,120 --> 00:48:52,239 Speaker 1: is an I Heart Radio production. For more podcasts from 798 00:48:52,280 --> 00:48:56,080 Speaker 1: My heart Radio, visit the I heart Radio app, Apple podcasts, 799 00:48:56,200 --> 00:49:00,560 Speaker 1: or wherever you listen to your favorite shows. Eight