Peloton Got Trapped in Its Trillion-Dollar Fantasy

Fueled by manic demand during the early days of Covid, Peloton spent the next two years chasing a dream of fitness dominance. From a report: If Peloton's story thus far were a Peloton class, it would be a high-intensity one, perhaps even a Tabata ride. Everyone would pedal as fast as they could, recover for not long enough, then do it again, as a charismatic figure on the screen urged them on with promises of transformational personal growth and of the massiveness of the total addressable market of subscription fitness. Midway through, the instructor would announce that the 20-minute class would actually go for an hour. Here and there, riders would injure themselves. There would be technical issues with the machines. At the end, right after recommending a five-minute post-ride stretching class and intoning his mantra -- "We're not a stationary bike company, we're not a treadmill company, we are an innovation company that is at the nexus of fitness, technology, and media!" -- the instructor would announce his transition to a new role at the company. It would be exhilarating and entertaining, but perhaps not a ride you'd want to do every day. [...] The bring-your-own-bike model holds evident appeal for Barry McCarthy (new CEO), who's less interested in the physical machines than in his company's content. "The magic happens in the tablet," he says. He muses that perhaps the Peloton screen should be an open platform where third-party programmers can place apps. Or maybe the company could try the inkjet printer business model, offering machines for cheap and making money through higher monthly subscription fees. At the moment, you can ride your bike even if you're not paying for classes. McCarthy plans to experiment with making those payments mandatory. (On March 10, the company announced such a test, saying it would create a monthly subscription that combines the price of its hardware and content and lacks an upfront hardware payment.) In all of this, McCarthy says he'll let the data be his instructor. It's a familiar narrative: Startup founder gives way to the bean counters and market researchers. Peloton, more than perhaps any other company, trades on charisma -- of its instructors, of its corporate leadership, of its hardcore users cheerfully touting the brand. But even cults need accountants.

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