Peloton, Spinning Faster Than Ever
New York magazine|October 14–27, 2019
Peloton accidentally built a fitness cult. A business is a little more complicated.
Amy Larocca

On Thursday, September 26, stock in the fitness company Peloton began trading on NASDAQ. It didn’t go that well.

The company-slash-cult, which sells expensive stationary bikes and treadmills equipped with screens for live-streaming intense fitness classes, wound up opening at $27 a share—a price that valued the whole company at close to $8 billion. It closed at $25.76—not a bonanza day. Still, everyone was cheering, not least because cheering is a reflex for a lot of people in the fitness world, and a number of the Peloton team members who had gathered in Times Square that morning are in the business of motivation. Mostly, though, they were cheering because predictions for the debut had been even worse. And because, even with that price decline, you’re still talking about a $7 billion company selling something not hugely different from the bike that sat unused for years in my grandfather’s Boca Raton apartment after he had a stroke. Which is all to say that, despite some negative press the next morning, Peloton’s prospects are still looking pretty good.

Peloton was founded in 2012 by John Foley, a Harvard M.B.A. and tech executive who had worked at Barry Diller’s IAC and at barnesandnoble.com. Foley and his wife both loved boutique fitness but realized, when their two children were born, that it might be years before they had time to go out for classes again.

The idea was a simple and somewhat obvious one in the age of streaming media and expected convenience: Why shouldn’t top-level spin classes (and strength and stretch and yoga classes) be available on demand? That way, you could deliver the focused energy of a class without any of the ickiness of sprayed sweat and other people’s grunting or the stress of accommodating someone else’s schedule. But it took Foley a while to raise the capital he needed to start; he often tells the story of how 400 investors turned him down, leading him to raise a little more than $300,000 in a Kickstarter campaign, promising anyone who invested over $1,000 a year of “free” classes. By 2018, the company had raised close to a billion dollars and signed a lease on 35,000 square feet in the new Brookfield development near Hudson Yards for a mega media studio, home base, and mecca from which to stream classes to (the company hoped) millions of fitnesshungry, time-starved people all over the whole entire world.

That valuation seemed to make sense— as did the company’s designation as the first “fitness unicorn.” (For a while, every sector seemed to need one.) To begin with, Peloton carried the promise of being infinitely scalable. Sure, there are a relatively limited number of people out there willing to spend more than $2,000 on a piece of exercise equipment, but that number seemed to be growing—wealthy people are always down to throw some cash at body fixing. And subscriptions tend to be a great business, since so few people ever cancel them, even when they stop using the service. Plus, at $39 a month for the streaming classes, membership to Peloton costs less than membership to most gyms— never mind a single class at a boutique fitness chain in New York, London, or Los Angeles, which can easily cost that much or more. And managing the quality of streamed offerings would be much easier than IRL studios, each of which has to be staffed separately. Because in the world of boutique fitness, the instructors are everything. They lead the exercises, yes, but they also go guru, offering aphorisms and encouragement and the kind of life advice that quotes perfectly on Instagram. The devoted form deep attachments to a few stars, while lesser instructors often fail to fill their classes. With streaming, the instructor roster can stay tiny, featuring only the stars—and whatever you may have heard about the cult of SoulCycle instructors, who lead classes of about 60 a couple of times a day, Peloton instructors, who often lead classes of 6,000, have become stars of an entirely different magnitude. Janet Fitzgerald, the beloved master instructor of SoulCycle, has a committed fan base: 9,319 followers on Instagram. Robin Arzon, the head instructor at Peloton, has 273,000. In 2018, 19,700 people took a “turkey burn” Thanksgiving Day Peloton class at exactly the same time.

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