Best Self or Best Company? Peloton Searches for a Voice

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Cycle with a DJ

UV7898 Oct. 29, 2019

It wasn’t often that a fitness club could justify the hassle and expense of hosting a class with a live DJ. But by spring 2019, it had become a core element of Peloton’s cycling studio, with riders relying upon the energy of a DJ’s music two-and-a-half times every month, on average. Peloton had redefined many things about the boutique exercise experience, bringing it into members’ homes and eliminating the per-charge class fee of roughly $34 to instead charge $40 per month. Unlike common rhythm-based classes, Peloton used metrics to drive motivation at any given moment. Rather than require customers to get to a particular studio at a specific time to join 30 other acquaintances, they could select from a library of thousands of classes at any time. Yet these customers didn’t miss out on socializing with their friends by exercising at home. Rather than chatting with a pal beside the gym locker for a few moments before class, customers had an online community, created by Peloton, of hundreds of thousands of people who interacted with one another digitally throughout the day.

Cofounder and CEO John Foley encountered difficulties in creating a business model, raising capital, and designing a product—difficulties shared by many start-ups. But Peloton evolved from a struggling idea in 2012 to a company valued at over $4 billion that was poised for an initial public offering (IPO) by spring 2019.1 It did so by identifying a new opportunity in a constantly evolving fitness space, by defining its business broadly, and by capitalizing upon the energy of celebrity and personality that online communities could bring to a brand.

Unlike many pre-IPO unicorn2 company CEOs, Foley was an unknown to Peloton customers. Instead, devotees were committed to individual Peloton instructors. At many fitness studios, instructors were known by their first names only, and their identities were protected. At Peloton, the instructors were minor celebrities known by their full names and their personal background stories, and had tens of thousands of followers on social media. To most Peloton customers, their favorite instructor was Peloton. The company had built a community and a rewarding fitness experience around interactive technology, iconic instructors, and the personal progress of each user.

The business was essentially a television production studio for which the content could be a range of things but happened to focus on fitness. The instructors, recruited for their star power and put through hair and makeup before each filming, were inexplicably still relatable. They represented the range of race, culture, and sexual orientation: one was a clean-cut boy-next-door type who loved country music, another a former women’s college basketball player with a Boston accent and an ear for hip-hop.3 The instructors themselves were part of Peloton’s cult following. They were expected to lead and inspire, not just teach a class.4

However, in preparing for an IPO, it wasn’t obvious how to leverage the community. The success of Peloton’s community lay in its dispersion. Various groups congregated on multiple digital platforms to chat about everything from the playlist during that morning’s class to how they were beating cancer. There was no single voice for the company. How could a business built on a social community pivot to a position in the public marketplace?

The Fitness Industry

The timing of Peloton’s launch coincided with acceleration of boutique fitness brands. From 2012 to 2015, as Peloton first launched, traditional health and fitness club dues averaged $50 per month and membership grew at 5% in the United States. However, membership growth in boutique fitness studios grew 75% between 2012 and 2015. By 2017, consumers were spending $110 per month on specialty clubs to take Pilates and yoga, $150 per month on martial arts, and $170 per month to cycle indoors. In some markets, specialty classes cost $40 each. During this same period, new markets opened driven by technology: digitally distributed content, both paid and free, via start-ups such as Fitness Blender and Daily Burn, and also offered by big brands like Nike.5

A standout in the boutique fitness space was SoulCycle, an immersive stationary cycling experience in a dark studio with booming music, candles, and a competitive screening process to identify instructors with unique energy. Depending upon the location of an individual studio in this national US chain, individual classes’ costs varied: a 45-minute session in New York cost up to $36, and multiclass packs of 10 in Chicago sold for $280.6 By the end of 2018, SoulCycle had 90 studios in North America.7

Consumer tastes and psychology began to evolve, which provided an opportunity for new consumer-facing fitness businesses to enter the market. Personalities emerged, such as Kayla Itsines, an Australian who had an iTunes “Sweat with Kayla” app, her own fitness accessories, e-books, and stadium tours, all of which landed her in the 2017 Forbes “Top Influencers” list.8 By 2019, Itsines had 11.6 million Instagram followers and an annual app income of over $76 million, a majority of which came from the US market.9

Connected fitness began with step trackers. Approximately three million devices in the form of fitness bands and activity trackers were sold annually in 2013.10 By 2017, consumers bought 71 million smartwatches

that did more than just monitor fitness exertion, but fitness tracking remained a component. By 2022, annual unit sales were projected to be 243 million, a $29 billion market.11 As consumer appetite for customized, boutique fitness grew, and purchases of personalized tracking sensors increased. These consumers were willing to pay for a curated exercise experience, which helped Peloton and others grow.

Peloton’s Evolution

Foley, started the company while he was head of digital at the US bookstore chain Barnes & Noble. His busy schedule and personal habits didn’t allow him the flexibility to book the best instructors at the best boutique studios at the perfect times. He was motivated to exercise but often missed the opportunity. This led him to consider how he might create that same intense and motivational experience with more flexibility. He needed to deliver the equivalent quality of engaging content in a new way that didn’t require him to be across town at exactly 6:00 a.m.12

With the original idea of a stationary bicycle and accompanying screen, Foley approached funders for three years with limited success, and found venture capitalists to be risk averse in the creation of a brand-new business model. Company founders traveled across the globe trying to find quality hardware and investors, and neither was easy. Peloton embarked on an unsuccessful Kickstarter campaign, which raised only $250,000 with a mediocre, wobbly stationary bike. The founders eventually achieved the combination of an improved production-model bike and sustained sales through a new channel: pop-up stores in shopping malls. High-end malls put the product in front of customers in the correct demographic and also allowed Peloton to segment them. The sales associates could make assumptions about each customer and serve up the correct instructor, difficulty, and music genre to ensure that the product made a great first impression.

Peloton completed a $3.5 million Series A round of funding by the end of 2012. The company delivered its first bike at the end of 2013 and generated $50 million in revenue by 2015, then $150 million in revenue in 2016. Unable to forge content partnerships with companies like SoulCycle, Peloton sought its own talent by first advertising for the “best instructors in the world” and eventually poaching from other fitness studios. Beginning during the 2013 holiday season, the company sold five bikes per day at the Short Hills mall in Millburn, New Jersey, which it repeated in 7 markets by the end of 2015 and 60 by 2019. By spring 2019, Peloton had sold almost 500,000 bikes and claimed one million active members.13

Peloton offered live cycling classes with up to 60 people participating at its New York City recording studio. Prime-time early morning and evening classes were fee based, but midday classes at odd hours and of odd lengths (e.g., only 30 minutes), were first-come, first-served and free. In addition to the 60 people taking the live class in the studio, several hundred more took the class remotely via livestream. On demand, thousands of people took each class later that day, a week later, or even months later. Subscribers had a library of thousands of classes they could sort by instructor, class length, music genre, class difficulty, and the like. By extending the boutique studio experience, Peloton created a strategic advantage of scalability.

By 2019, riders paid $2,200 for the bike and paid a monthly subscription of $39 for unlimited class content, or $468 per year.14 Total cost summed to approximately $3,000 the first year and $5,000 each subsequent year. But Foley and his team did not stop at cycling. In 2017, they also introduced a treadmill for $4,200 up front and, in 2018, a $20-per-month Peloton Digital on-demand app available to individuals with neither a treadmill nor a Peloton bike.15 Machine owners and app users could access the broad range of classes Peloton continued to introduce, from 60-minute yoga classes to 10-minute prerun warm-up stretches, weight classes targeting specific areas of the body, and audio-only content for running or walking outdoors.

To make it all work, the company had created a huge New York City production television facility. The origin of Peloton was remote access to indoor cycling, though Foley was often heard saying that Peloton was neither an indoor-bike company, nor a treadmill company. Instead, he told staff and investors, he ran an “innovation company” that happened to produce fitness content.16

Best Self

The single most important element that made Peloton successful was the community it established. To be a profitable company that retained customers, it had to create stickiness for the range of people in its universe. Peloton identified how to do that.

Peloton instructors were essential to making its community work. They were energetic and motivational, which attracted participants to their classes. Instructors called out to people in the studio and at home by their screen names, congratulating them on their 50th treadmill boot camp class, or simply to say, “Keep it up!” They connected personally, sharing tidbits about their puppy hiding under the sofa the night before or how they struggled on their marathon training run over the weekend but overcame the mental hurdle to finish…which meant everybody else could too. The instructors were encouraging coaches, constantly telling users to push hard and do their best. They also urged users to listen to their own bodies and do what suited them that day.17

Each instructor had a unique persona, and each was a public figure with his or her own fan base. They were chosen for their star power, yet each was still relatable. Many came from dancing or entertainment backgrounds. Leanne Hainsby, a British instructor who frequently discussed her competitive running, was a former backup dancer for Taylor Swift and One Direction.18 Cody Rigsby, a former child star on Disney’s Mickey Mouse Club who went on to be a dancer for famous singers Nicki Minaj and Katy Perry and also earned spots on shows like Saturday Night Live, had a natural draw to public recognition.19

Before joining Peloton, Ally Love was recognizable to many as a model and the on-court host at Brooklyn Nets basketball games. She often recounted the personal struggle of a car accident that introduced her to fitness. Her electric energy and mantras, such as “Don’t do it because you want to, do it because you can,” and “Be your best self,” made her a successful TEDx speaker and helped her found a community called Love Squad, which hosted events about inclusivity and motivation.20

The instructors struck the delicate balance of prompting their classes to work hard by creating a sense of competition and personal drive while maintaining an atmosphere of encouraging exchanges. Subscribers valued their relationships with the instructors, the accountability, and the camaraderie. They created a username and uploaded a profile picture to participate with Peloton. Then they competed against everyone taking the class, viewing their rank on a digital scoreboard.21

Users interacted with the machine, they didn’t simply digest content. They had the ability to see where they ranked in any given class—sorted by all-time riders, viewing everyone currently there, or, for example, sorting by their age group only. Users also earned “badges” for achieving milestones like 100 rides, participating in a specific activity such as a 2018 Winter Olympics ride broadcast live from Pyeongchang, or exercising with Peloton for 30 days in a row. They could also digitally “high-five” anybody else taking a class at the same time they were. Users could track their own stats from outputs to classes and periodically receive emails comparing their performance to previous months.

Integrating the inspiring content with personal and social components was unique and novel. Instructors consistently talked about crossing personal boundaries, setting an atmosphere in class that was encouraging and confidence building. Woven into each workout was the digital piece: integration with personal tracking devices, the opportunity to see other participants’ profiles and success during a class, and the ability to immediately post session performance to a social media platform. There were multiple competitive elements as well, from the metrics-driven screen that tracked speed and output to keep users immersed in a class to the digital merit rewards users earned. Peloton successfully created a simple tool to make users proud of their work, which contributed to the reported 96% retention rate.

Second Family

Customers credited availability, privacy, and flexibility as the key elements helping drive their loyalty. But above all, they discussed the community as its selling point. They credited motivation to various Peloton Facebook groups, talked about friendships they formed with people in other cities, and felt true commitment to the instructors. Although hundreds of people might take a single class live and, within days, more than 10,000 riders may have taken that same cycle class, instructors earned a reputation for creating intimacy by speaking to the tough, shared moments of working hard together and also connecting to individuals.24 One rider explained the bond she felt with each instructor saying, “I never feel alone…They’re my friends. They’re a second family.” Customers regularly got tattoos of the Peloton logo and posted pictures of them to social media communities.


With the rise of online connectivity, social media, and mobile sharing, the importance of brand ambassadors had grown worldwide. In 2019, American adults spent 43 minutes per day on social networking apps.27 As consumers became increasingly skeptical of traditional push advertising, brand ambassadors were hired to increase awareness about products and services. People believed friends and third-party recommendations more than claims by the companies themselves.

Social influencers had created their own audiences and own celebrity through a specific niche—for example, in fashion. Most had millions of followers they had built through inspirational, genuine communication. Companies also utilized those influencers to capture their built-in audiences by compensating them to be a mouthpiece a brand.28 By 2020, brands were expected to spend up to $10 billion on social media influencers.29

Virtual influencers, essentially unregulated, rose in prominence during 2018 and 2019, used by brands from Coca-Cola to Luis Vuitton. These computer-generated characters released songs on Spotify and posted inspirational promotional images on social media channels. By June, 2019, a star in virtual-influencer marketing, Lil Mequela, had 1.6 million Instagram followers.30 Because they were created by teams of people, virtual influencers had the benefit of being the perfect combination of race, age, style, and sensibility, and never made a late-night mistake that might embarrass a brand.

The interesting thing about Peloton was that its instructors operated as both brand ambassadors and social influencers. They represented the brand to consumers in that they spoke as individuals with personalities and discrete voices who positively impacted people’s impressions of Peloton. They were also influencers because they had a huge social media presence, star aspirations of their own, and often did things online outside of their official capacity as Peloton employees.

Peloton’s Social Community

Many of the Peloton instructors started with a public image that only expanded once their audience grew with the large customer base the fitness company offered. Jess King, a cycling instructor, said: “Peloton has provided us with a platform…They support our personal brands.”31 King is up front about her eye on fame. During the interview process, Foley told her, “We’re going to make you a celebrity,” Her reply was, “Yeah, sign me up. That was the sole motivating reason to do it.

Rigsby and Love stressed the importance of genuinely connecting with their community to inspire. They did that by living “the life we talk about on camera” and being authentic about not every day being a good day. They tried to be relatable by offering a range of stories and also including calls to action on Instagram such as encouraging people to participate in classes or supporting others. They repeatedly expressed the importance of consistency on and off the bike, which was reassuring to their followers.33 Love ended her classes by telling the riders to raise their right hand off the handlebars, then raise their left hand, then demonstrated how to clap for themselves and each other. Rigsby often referred to individuals in his classes as “boo” and had an online community called his #BooCrew.

Rigsby, with 88,000 followers on Instagram, specialized in pop music in the studio. He often sang along with the music and his shout-outs related to the power of the music itself. His Instagram posts were often model poses of himself, smiling in sunshine, with positive energy. He also included happy shots with his life partner.34 Love, with 166,000 Instagram followers and an online community called her #LoveSquad, posted many photos of herself exercising and in fitness attire, plus handwritten inspirational quotes of her own, such as “Anyone can do it once…Bosses do it every day,” and “The time has come…be bold!” She also included images and short videos of herself with other Peloton instructors and occasional paid promotions, such as for Adidas or Fitbit.35

Peloton maintained an official Peloton member page with over 470,000 followers and helped each instructor maintain a company-sponsored community on Facebook. Informal online communities evolved to help customers find groups—or “tribes”—they wanted to connect to. Through those online platforms, people posted updates about their exercise progress and photos of themselves on their bikes, and had access to lifestyle posts from Peloton instructors such as dinner recipes.36

One of the most active online consortia was mothers, who claimed that the privacy and convenience of working out at home was invaluable to them. There was a Peloton Moms Book Club group and a Working Moms of Peloton group. No matter the subsection, mothers had determined that Peloton was a part of their lifestyle because it extended beyond their daily exercise routine.37

Peloton’s coach-influencers such as Rigsby hosted an annual celebration to bring their community together in New York City: “homecoming.” Rigsby said, “I have the opportunity to talk with people face-to-face whom I interact with on the leaderboard or on Instagram on a regular basis.” Peloton customers met one another and the star instructors. Rigsby confirmed, “It’s really important to me to be able to connect with people on different levels, both on social media and in real life.”38

Peloton was on track to achieve $700 million in revenue and valued at $4.15 billion in 2019. On June 5, 2019, Peloton made a confidential draft submission for an IPO.

Inevitable Challenges

Peloton was not without competition; in fact, some referred to the “Peloton effect” meaning the normalization of connected fitness in one’s home. Mirror, a company that entered the marketplace in 2018, was one example—a $39-per-month subscription on-demand-content service delivered through a device that looked like a wall mirror when not in use. A selling point was the simplicity of its screen on the wall, which didn’t take up more valuable floor real estate. Users followed cues to use resistance bands or weights and to do cardiovascular exercises. By spring 2019, Mirror was selling $1 million worth of digital screens each month, or 650 units.40 The company raised $38 million in funding by early 2019 with customers including luxury hotels, and had a valuation of $300 million.41 In addition to new concepts like Mirror, there was always the risk of Peloton copycats entering the market.42

Several of the challenges Peloton met played out in the digital sphere. One came from its television commercial during the 2018 Winter Olympics. A Caucasian woman in a high-end residence exercised in between shots of her struggles and joys in daily family life while a voice-over recited an inspirational message.43 The online backlash was relentless. Although wealthy stay-at-home moms may have been its number-one customer, Peloton had enough riders outside that demographic, and arguably should have had the sensitivity to go for more mass-market appeal and avoid stereotypes. Since that time, the company has worked to demonstrate a breadth of customers and experiences.

One instructor, Jennifer Jacobs, left Peloton after three years in spring 2019, in a moment of dramatic secrecy. She first announced a personal break, then, via Instagram, stated, “….It’s with much thought and so much gratitude that I’ve decided it’s time for me to leave Peloton to pursue other opportunities…”44 This came a week after she was accused of making an offensive comment to a rider with the username “BMIwayover50,” BMI being an acronym for body mass index. Allegedly, Jacobs insulted her weight with, “She’s not pedaling, so maybe that’s why.” Reddit, Instagram, and Facebook posts debated this for several days, with Jacobs’s defenders using Peloton’s closed captioning as defense that she hadn’t been referring to that rider.45 Jacobs did not respond directly to the accusation, nor to the online debate. Peloton never confirmed or denied the details of her departure—the only voices in the separation were the Peloton community.

Future Opportunities

In preparation for its IPO, Peloton was investing in content production, plus hiring television and digital- media experts.46 The organization took opportunities to classify itself to media and investors as a tech-focused lifestyle company rather than a fitness company. Peloton designed and built the hardware and software itself and created and distributed its own content. This “holistic member experience” led to comparisons with Apple and Amazon.47 Peloton employees delivered parts and set up bikes, and a staff of 70 engineers kept it running. The online store sold tank tops, yoga pants, and add-on exercise equipment. These were top-down choices one might expect corporate decision makers to prioritize as an organization was growing strategically. Yet Peloton also continued to reinforce the community that had built its success. The company hosted rider events at its New York City headquarters and held instructor meet-and-greets across the United States. It also sent automated, personalized outreach to users who hadn’t attended classes regularly or who hadn’t been active for a while.48

The company aspired to grow beyond the United States. After a successful trial with a small studio in London, in 2019, Peloton began investing in a bigger team and a new studio in London’s Covent Garden to enable live classes in a broader range of time zones.49 It invested in hotel partnerships to encourage trial with new audiences.50 And showrooms, responsible for 80% of sales in 2018, became a focus of its global retail strategy.51

Best Company

By August 2019, the company was poised for a successful IPO in many ways, but it was not clear how to communicate that readiness. It would be inauthentic for its brand ambassadors and best spokespeople, the instructors, to begin pitching the company’s strategic position. Customers simply wanted to keep discussing what they always had: their personal progress. The brand still wondered what its traditional corporate voice should be for something like an IPO.

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