Peloton Is Going Big—or About to Bust

The six-year-old company valued at $1.25 billion is growing at lightning speed. That may not be a good thing.

Peloton streams about a dozen live classes every day, immediately storing them in the on-demand library for anyone who missed them. (Courtesy Peloton)
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“What’s up, hustlers! I’m Robin, this is DJ John Michael, and welcome to this 45-minute live DJ ride!”

Robin Arzon is already pumping her legs on the stationary bike, facing the class dead-on while John Michael bobs in place next to her, queuing up music. “We are gonna bring you so many good vibes, and if you are joining us for the first time, wow-wow, welcome.” Arzon looks and sounds thrilled that you’re here, talking fast and beaming while she launches into rapid-fire instruction. She runs you through the three most important metrics of the spin class—cadence, resistance, and output—never losing breath or rhythm.

Her class, however, is happening on a screen, and the participants are strapped in and ready to ride in their own living rooms. This is Peloton, a six-year-old company valued at $1.25 billion that provides virtual cycling classes and has developed a cultlike following, seemingly able to get just about anyone on board after their first ride. Its customer base covers a huge range of ages and athletic levels, and nearly all reviews, ratings, articles, and anecdotes about the experience are overwhelmingly positive.

Arzon’s class is one of more than 8,500 videos available through the program. Peloton streams about a dozen live classes every day and stores previous classes in an on-demand library for anyone who missed them. To access the classes, though, you have to be a member of this exclusive community, meaning you own the brand’s proprietary $1,995 aluminum and carbon steel stationary bike and pay a $40 monthly subscription fee. The bike is sturdy and sleek and souped up with a 22-inch HD touchscreen. Today, there are roughly 113,000 bikes (a number that’s steadily growing) in homes across the United States alone, and each live class brings in an audience of as many as 1,500 riders (out of Peloton’s 1 million–person user base).

“The first time I got on the bike, I felt instant camaraderie,” says rider Brooke Bower. “You feel like you have a relationship with the instructor and the other people in the class and then feel some accountability to try harder.”

The company unveiled its first bike in 2013, promising to bring the intensity and devoted following of cycling classes like SoulCycle and Flywheel into the home. Founder John Foley, a former e-commerce executive at Barnes and Noble, created a Kickstarter video that helped him raise just over $300,000 and began generating industry attention. The next year, the company had to scale up its fundraising to create a bike that could be tested by real people and sold to consumers. At the end of that fundraising, Peloton had a few more bikes and its first brick-and-mortar studio, but it was taking way too long to get the bikes into peoples’ homes, significantly limiting growth. It wasn’t until 2015 that things started to take off. Over the course of that year, the company received almost $100 million in total investments, allowing it to speed up bike production and delivery, hire more instructors, expand its software team, create the monthly subscription model, and increase the number of streamed classes available. Today, Peloton claims to sell a bike in every state every day and has opened nearly 30 brick-and-mortar showrooms across the country. The company even livestreamed classes from Pyeongchang during the 2018 Winter Olympics.

Part of Peloton’s popularity stems from its role as a social network. Just like your Facebook or Strava account, you create a username and upload a profile picture. That name is then used to rank you on a leaderboard while you ride, allowing you to compete in real time against everyone else taking the class, no matter their location. The networking doesn’t end there: Many people follow individuals they regularly identify in their classes and strike up friendships independently through another forum, namely Facebook or Instagram. Although there’s no formal relationship with Peloton, the two social media platforms have become de facto headquarters for users to socialize and talk shop. Peloton diehards point to this social network creation as proof that you don’t lose out by spinning in your home rather than at a studio or gym.

Bower and her husband, Drew, are two converts in Fort Worth, Texas, and are representative of the sort of evangelical fervor the classes can inspire. The Bowers estimate that they’re personally responsible for at least a dozen friends buying bikes. “We’ve had our bike for two years, we’ve done over 1,400 rides on it, and we just can’t get enough, ” Drew says.

What exactly riders can’t get enough of is another question. Despite many conversations with home riders, I was never able to get a single narrative on what makes Peloton so compelling—there’s the camaraderie, the cross-country friendships, the competition, the drive to edge out other riders, the personal improvement, the sense of focus, the customization, the convenience. Nicole Steele, a home rider in Pittsburgh, picked up cycling after reconstructive surgery on her knee and started Peloton as a way to stay active after hearing from a friends who had picked it up as an alternative to running. Steele liked that she could choose from a variety of levels, intensities, and types of classes, from 60-minute cardio rides to ten-minute technique tutorials.

In spite of all the evangelism, there are some serious drawbacks. As Bryan Jarrett, the group fitness director at the massive Chelsea Piers Sports and Entertainment Complex in New York, points out, it’s hard to know if you’re doing something improperly without an instructor giving you live feedback. “We train our instructors to not give basic cues like ‘butt back, shoulders relaxed,’ that kind of stuff,” he says. “We’re focusing on specific people.”

For Becky Cerroni, the owner of the studio JoyRide Texas, the simulated group setting isn’t a substitute for a real crowd. “Having a person next to you, you can’t replace that with a leaderboard.”

Still, the company reports a 96 percent retention rate. Though the initial cost is high (again, the bike runs $1,995, while most at-home stationary bikes are nestled securely in triple digits), you pay just $40 each month for unlimited classes. By comparison, a single SoulCycle class is $34 (or, at best, $28 per class if you buy a 30-pack), and a Flywheel class starts at $30 (or $27 if you buy 20 classes). What’s more, in June 2018, the company released Peloton Digital, which gives users access to content without the hardware.

To maintain quality control, Peloton does almost everything in-house. Using a team of more than 70 engineers, the company has produced its own bikes and screens, as well as the Android-based software. The company has its own delivery mechanism, in many markets delivering bikes in Peloton-branded vans and dispatching employees to set up the bikes and help new customers find the right classes and instructors that suit their tastes. Eliminating middlemen allows Peloton to deliver parts or assistance immediately, contributing to a heralded culture of customer service.

The company pays that same level of attention to what senior vice president Carolyn Tisch Blodgett calls “beautiful brand experiences,” largely because Peloton considers itself a lifestyle and content company, not a fitness company. It has created a number of products and events around helping you take Peloton with you off the bike: an online store that sells standard fitness gear like clip-in shoes and heart rate monitors alongside branded swag like tank tops and necklaces; rider events at the New York headquarters; instructor meet and greets at showrooms across the country; and active outreach to users who haven’t been to a class in a while.

Now Peloton’s gearing up to grow even bigger. At last year’s Consumer Electronics Show, it unveiled Tread, a $4,000 treadmill that will stream group classes for running, hiking, and bootcamp-style workouts. Blodgett compares it to Orange Theory or Barry’s Bootcamp, saying, “When we thought about launching a treadmill-like product, we were pretty specific about not launching a treadmill.” That’s because treadmills have a bad rap, and most people who buy one end up not using it. Since Peloton is so dependent on subscriptions, the company had to steer clear of the dreadmill model and emulate the HIIT studio workouts that have started to incorporate running.

Why all this success? Walt Thompson, president of the American College of Sports Medicine who oversees an annual survey of fitness trends, blames the economy, often a driving force behind health and wellness trends. According to the ACSM survey, group training in particular has been surging in popularity. “Even if I just go back three years in our survey, you didn’t see group training,” Thompson says. Maybe it’s a stroke of luck, but Peloton happens to be where it is at the perfect time, as group exercise, wearable tech (and, by extension, obsessing over your personal metrics), and working with credentialed professionals all enjoy unprecedented popularity.

For all the praise, though, there’s still something about the whole thing that sounds at least mildly dystopian. You can get all the rewards of going outside and training with others, all without ever actually having to put up with the hassle of making it happen or dealing with other people.

So do we lose something when we find one more reason to stay home, even though we’re digitally right next to hundreds of other people all pedaling to the same Britney Spears song? I asked Mark Eys, a sports psychologist specializing in group dynamics, and to my surprise, the question was more theoretical to him than anything else, pointing out that the biggest hurdle people have for exercising is the perception, real or not, that they don’t have enough time for it.

“Would it be better if they’re out in nature and doing all those things with other people? Sure,” Eys said. “From what I see with physical activity rates and the lack of activity across the population, if it works and gets people active on an ongoing basis, then that’s great.”

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