8 ms·

Peloton raises $550M at a valuation of $4B

55 points by huac 8y ago

ironjunkie 8y ago
Some of my colleagues got one of those connected treadmills in California. Seriously, why would you not go on a REAL bike ride instead of using an indoor bike? Everyday is a beautiful day outdoor. I'm all for tech, but in sport and fitness I think that sticking to the basics that work well is a pretty good idea. To me it looks like an attempt to capitalize on the crowd of geeks//nerds that wouldn't do fitness otherwise by gamifying the product.
- servercobra 8y ago
  Sometimes it rains. Sometimes it's really hot. Always, there's a lot of cars around. I generally agree and love to run outside, but I can easily see the appeal for a lot of people.
  - ranic 8y ago
    And sometimes you have small children who nap, allowing parents a small, often unpredictable, amount of time to exercise.
paulcole 8y ago
My mother once bought a treadmill. My dad described it as the world’s only $1200 clothes rack. I guess the hope for Peloton is that people will subscribe and never cancel. Otherwise they’re just another treadmill company and I can’t imagine there’ll be much VC interest in that. But it’s one thing to spend a few thousand on a treadmill and regret it. It’s another to spend a few thousand and then another $100 a month.
- ronilan 8y ago
  I bought 3 treadmills over the past 6 years and ran [2 of them] till the motors burned. And this why they say: YMMV ;)
  - ibdf 8y ago
    a 2k treadmill only lasts 2 years? That's a bad investment.
    - ronilan 8y ago
      > a 2k treadmill only lasts 2 years? Don’t know. Never bought a 2k treadmill. (Simple treadmills last to 50c a mile. I think it is a reasonable price).
  - ddorian43 8y ago
    Hiw many km/day ?
  - hiccuphippo 8y ago
    Yes, people gets surprised when I tell them my stationary bike broke because of the use rather than the disuse.
- camelCaseOfBeer 8y ago
  No kidding, right? What's going on now with exercise bikes is at best a fad, a novelty. From what I can tell as it stands the value proposition of this product and service is dubious at best, not to mention easily replicated. Yet this company with its weak product is valued beyond any reasonable comprehension of the number? Smells like a Ponzi scheme. Theres no way it can meet these expectations, with nothing but just desserts to be had when Petalon and all of it's investors endo right onto their faces. Meanwhile a small contingency of company insiders who funneled investment capital into their own assets laugh all the way to the Bahamas.
hayksaakian 8y ago
Is it typical for techcrunch to assume the reader is familiar with every odd startup they cover? I've never heard of this company, have no idea what they do after reading the whole article, and now I'm too frustrated to care. All I got there was "connected treadmill"... ok?
- stingrae 8y ago
  Peloton started with a connected spinning bike. It takes advantage of the Soul Cycle fad ($30/class) and sells people a $2000 bike and a $40/month subscription (for live streams of classes) with the idea that they will save money over time. More recently they released the treadmill.
  - tyrust 8y ago
    >with the idea that they will save money over time Is this actually a stated goal or are you being facetious?
    - gkoberger 8y ago
      Spin classes are expensive ($34 + $3 shoes + $2 water), and some people do them daily. If you use it daily for 2 months, it's easily "paid" for itself. Or, another way to look at it is "Don't let a high per-class cost stop you from getting healthy"
      - tyrust 8y ago
        >"Don't let a high per-class cost stop you from getting healthy" There are much cheaper ways to get healthy. But I guess this company is targeting people that have already purchased the idea that they need to pay a ton to make progress. Sidenote: >$3 shoes + $2 water Bring your own shoes and water, that will definitely pay for itself lol.
        darkerside 8y ago
        Decent cycling shoes are ~$100, plus cleats for another $15. So it'll pay for itself after about 50 classes... just like a Peloton!
davedx 8y ago
No mention of what the company does?
- Yhippa 8y ago
  Spin class you can dial in to. You have to buy the dial in apparatus for $2,000.
cellis 8y ago
This is pretty insane. I've used the Peloton bike because there's one in my apartment complex. It's a really nice exercise bike ( very stable, smooth, continuous pedalling without locking up ), but the tablet/software they attach to it left quite a lot to be desired. For instance, the UI is very clunky and I couldn't even figure out how to turn off the damn music. It's hard to just set a "free form" type of ride ( instead, you have to use their "classes" -- basically a video of someone telling you whats happening during the ride, whether or not you're in sync with the cadence ). I don't think it would take much for one of the better bike manufacturers to duplicate the "nice bike" part, and the UI should honestly just be a bluetooth to your phone with a mount.
- wazokazi 8y ago
  There is a "Just Ride" mode, hidden under the "Other" options. I use it often for quick rides.
- majormajor 8y ago
  I don't know if it has long term legs or is just an (extended, at this point) fad, since I've never used one or done soulcycle or whatever, but all the stuff that bugged you about it is the selling point. The hook is that nobody ends up using standalone just-do-what-you-will fitness gear (I do have experience on this side!). Some level of "training" programming has been much more effective for a lot of people, and this is taking this outside the studio into a broadcast form. My suspicion is that once you take it out of the class setting you've lost that hook, though.
  - chrisdsaldivar 8y ago
    I've had one for a bit over a year now and I really love it. You're exactly right about the hook for this product. Before using the bike I've just stuck with the same training I did in high school football because I've always needed structure and a way to track progress. The bike classes are kind of addicting since the instructors keep the tempo up (depending on the class) and you have leader board showing with a live ranking. Even if you aren't at the top it's still fun because you'll get used to seeing the same names around your rank (if you're doing the live classes) and it'll push you to compete with them. It's a lot like having a running group except you'll always have someone that is around your skill level to compete with.
collinf 8y ago
Like the other commenters, I had never heard of this either until reading the latest funding round recently. Here's a summary from the WSJ[1] from yesterday: > Peloton, founded in 2012, makes a $1,995 stationary bicycle. Most customers use the bikes at home, paying about $39 a month to stream live classes that the company produces using its own instructors. The New York-based firm, which has showrooms around the U.S., plans to launch a treadmill this fall. Part of the soul cycle bubble as well it looks like. [1]https://www.wsj.com/articles/pelotons-financing-round-values-stationary-bike-maker-at-4-15-billion-1533255443 https://www.wsj.com/articles/pelotons-financing-round-values...
- ryanwaggoner 8y ago
  Why is it a bubble?
iblaine 8y ago
Small installments seem to be gaining traction. With video games, it's micro transactions. With large ticket items, it's installments. I'd never expect an exercise bike to be part of this trend but here we are.
jbob2000 8y ago
This is ridiculous, these bikes are a fad. The company will get sold to a gym or furniture giant for pennies once people get bored and realize they paid $2,000 for a clothes hanger. I will say it's an interesting take on an old business. Furniture and exercise equipment manufacturers have this problem where everybody buys their stuff and they go bankrupt because nobody needs new equipment after the initial purchase. So attaching the subscription business model to this might give them a bit more longevity!
- joezydeco 8y ago
  Think about how many people sign up for gym memberships and then never use them but keep paying the monthly fee.
  - Zimahl 8y ago
    Doesn't make gyms $4 billion businesses.
    - joezydeco 8y ago
      What other fitness equipment manufacturer has cashflow not tied to equipment sales?
  - throwaway82729 8y ago
    Now they'll keep paying that and have a $2k clothes hanger at home.
jotjotzzz 8y ago
They sell these treadmills and bikes with video training and scenery on it. I have no idea who is buying their products though. I bet this is just another pump and dump startup.
- SubuSS 8y ago
  Adding some context since you said you have no idea: This is actually a huge market: Biking outside is dangerous/exposed/has real terrain that may not be amenable for your current intervals etc. It works when you do it for commute/weekend rides, but if you want anything like a training plan, you need an indoor trainer. Biking also is a rich (wo)man's sport nowadays: There are bikes you can get for $10-15k and many folks (like software engineers) don't bat an eye. Anecdotally, I personally have 5-6 bikes (one is in parts...) and add about 10k miles a year, and I am not even a racer at the lowest categorized level. NOTE: I don't own a peloton, I have a wahoo kickr. Similar trainer without the social aspects because I didn't care for that. As more and more people start becoming fitness conscious / want an active hobby - they are going to want a weekday option to keep up the fitness. This is it. Other companies to look at are Wahoo / Strava / Zwift / Trainer Road / Training Peaks / Flywheel / Soul cycle / sufferlandria and a ton more I am probably missing.
  - sonnyblarney 8y ago
    $2K stationary bikes + $50 a month is still a niche market.
    - SubuSS 8y ago
      So is $5 a latte. But seeing how Starbucks is doing - you can figure how this market will play out. The initial amount is steep - but I wouldn't be surprised if lease plans show up very soon.
      - sonnyblarney 8y ago
        Coffee is ubiquitous and everyone can afford a $5 latte now and again. It's easy to 'try once' and then to stay hooked. They have the benefit of chemical addiction. 'Stationary bikes' are already a niche market to begin with, then add on the crazy price and monthly? Crazy. The problem with regular financing is that these things have little to no residual value, i.e. difficult resale. You can put a price on a used car so it can be kind of de-facto collateral. Not Pelotons. Don't any of you remember 'Bowflex'?
polskibus 8y ago
For a moment, I thought that CMU's and Andy Pavlo's amazing database project got serious funding. https://github.com/cmu-db/peloton https://github.com/cmu-db/peloton I'm a bit disappointed now
- googlemike 8y ago
  "The Self-Driving Database Management System" Lol.
  - hood_syntax 8y ago
    Is it satire? the rest of it looks legit so I don't know what to think.
ebbv 8y ago
$4B? That's insanity. I know it's a dead horse but valuations are totally detached from reality.
sonnyblarney 8y ago
I lived through the .com bubble and the last couple of years I feel warrant a lot of comparison. The tech bubble burst because of a 'spook' i.e. interest rate change and massive bubble in the regular markets that needed to be cooled. So the smart money fled first, the dumb money later, and things became difficult. The underlying economic impetus these days is reasonable - but it could be fudged any moment by Trump's 'trade wars' (I'm not saying anything about him or the policy, just that there is risk), or it could be revealed that a marginal shift in rates really does have a bad effect. The all of the surplus 'lift' in the market evaporates and all of this gets wiped out. ICO's in particular are a really bad sign. CEO's are currently trying to get in on the IPO market while they can - with companies like Sonos popping on float day even with not particularly strong fundamentals. It's not that startup land is bad, it's just that fundamentals don't justify the valuations. These Peloton bikes and their services are way too expensive for mass market, and I'm not confident. It seems like one of many fitness fads to me. Note: this is series F. At $4B Billion. This behoves the question, why not public? Maybe because any amount of public scrutiny wouldn't bear such a lofty valuation? It makes you wonder who's writing these big cheques. This is not Uber or AirBnB which have naturally massive markets and cashflows. These are $2K + $50 / month stationary bike / status symbols.
- meritt 8y ago
  > It seems like one of many fitness fads to me I agree but I think the fitness industry itself is inherently based upon dietary and exercise fads. If it wasn't a fad, they probably wouldn't be raising capital so easily. Guessing these investors assuming there'll be a greater fool?
- jlarocco 8y ago
  Yeah, way too expensive is right. That $2k for the bike is enough to buy a nice mid-range bike and a nice indoor trainer, with the added benefit of being able to bike outside, if desired. And I believe there are tons of streaming workouts free on Youtube. Not to mention that a lot of people already think >$1k for a bike is crazy, so $2k for a stationary bike seems like it'll be a hard sell, but what do I know? I'm sure there's more to it, and they add more value than just that, but like the OP, I'm really skeptical.
cm2012 8y ago
I interviewed for a marketing position with them a while back. It seemed like a team that really knew what they were doing. Good luck to them!
tdees40 8y ago
Why do they need financing? How is a company that sells $2000 exercise bikes not profitable?
- balls187 8y ago
  Never turn down money if the cost is right. // I could purchase my car out right with cash, but since the interest rate was super low, there was no harm in financing it. Similarly, if you can use someone else's money to grow your business, and the terms are quite favorable to you, why wouldn't you? More likely in Peleton's case, they make profit, but it takes a lot of money to expand. Or possibly R&D costs.
- LarryDarrell 8y ago
  I also wonder how big the market is for $2000 exercise bikes/treadmills + subscription service... especially when consumer debt is already at a high. Maybe they are thinking gyms/apartment fitness centers will buy them?
  - scarface74 8y ago
    It’s aspirational. People think if they have the “convenience” of working out at home, they will be more disciplined. Few actually do. But on the other hand, having scheduled classes and the social aspect may serve as a commitmemt device.
evanagon 8y ago
The thing I don't understand is that you can already do this for much less money and arguably in a more fun way. Get a nice-ish real bike ($1,000), some rollers or a trainer ($200), and a subscription to Zwift ($14.99/month). Zwift allows you to create a biking avatar that rides around virtual racecourses with other bikers who are also using the service (usually there are thousands of people riding at any one time). You can do races, talk to other people, and more, for a fraction of this cost. Plus you have a real live bike you can take outside and enjoy.
- dkhenry 8y ago
  I got a trainer for winter riding, and it ate my tires. Also a good spin bike does a better job at keeping momentum which makes it feel more like a normal ride outside. I think like most things the amount of use really determines what you should do. If you are going to ride outside most of the time, and just want an indoor option then a trainer is a great choice, but if you are going to be riding daily, spend the extra money and get a real spin bike.
  - flother 8y ago
    > I got a trainer for winter riding, and it ate my tires. A tip I got from someone is to switch your rear road tyre for a special trainer tyre so you don’t have to worry about wear-and-tear. Something like this: http://www.wiggle.co.uk/vittoria-zaffiro-pro-home-trainer-tyre-road/ http://www.wiggle.co.uk/vittoria-zaffiro-pro-home-trainer-ty...
  - radix07 8y ago
    You can even get a professional level Wahoo Kicker for $1200 (no tire wear), have money for a mid-range bike and still save a ton of money month to month with Zwift over Peloton's monthly cost... Or buy a cheap training wheel and a $400 power meter and spend like $100 on the trainer. Why spend more for a spin bike when you can use a real one with just as good or better power controls and feedback? Point is Peloton is expensive indoors or out...
  - obmelvin 8y ago
    What PSI were you running on the trainer? I destroyed a Conti GP 4k II on my trainer this winter too because I was running it around 80 PSI. When I noticed how destroyed it was I did some googling and learned that on the trainer you should really be using the max PSI supported by your tier (i.e. 115-120). I ended up getting a trainer tire to put on a spare wheel and have been happy with that so far. But if you run a hard tire like Gatorskins, those seem to be fine at a high pressure. Any sort of racing tire will definitely be used up quickly regardless of pressure.
supernovae 8y ago
I wish a company would get valued this big on just getting people outside on their bikes.
jqbx_jason 8y ago
An anecdote: My father broke his collarbone (in a real bike) and I got him a peloton to be a safer replacement. After about an hour of introduction to the product he now uses it every day and so does my mother, who has never biked in her life. I don't get the appeal necessarily but any new product that can hook someone in their generation is positive signal IMO.
samstave 8y ago
So... at $550MM in funding. Just to simply get the $550MM BACK from selling the bike and getting users, that means youwould have to sell 183,000 NEW bikes AND have them maintain 2 years of paid membership fees (24 months at $40/mo) --- So, then you assume some attrition of those users, which means you will need to upsell the remaining users on some new products and continue to get new buyers of these bikes and services. You'll have to spend a fair bit on marketing, development and the general maintenance of paying your existing costs/overhead etc... I can't even come up with any fictitiously optimistic napkin math that would make this work. So, what do the Peloton people know that we dont know that allowed them to get $550 MILLION dollars in funding? All theories welcome. Heck, whomever it was that was able to get VCs to invest in this should be selling their services to a ton of startups...
- ryanwaggoner 8y ago
  Seems pretty obvious: 1) They're selling a ton of these bikes. I bet they'll sell another 200,000 in the next 12 months. 2) They're selling even more subscriptions than bikes. They had 600,000 subscribers six months ago. That's basically pure profit. 3) They're introducing new products. A treadmill this fall, and I'd expect an elliptical, a rower, and perhaps some other things to follow at some point.
infecto 8y ago
I think there is an number of unfair criticism against the company. I am not here to argue about the valuation, I have not examined anything about the financials of this specific company BUT I do think these companies are hitting a sweet spot in this market. This company is not selling you an exercise bike, they are selling you the community surrounded from the classes. There was an interesting talk by the founder of Peloton regarding religion and community. His argument was that many areas of the country have largely transitioned away from being religious and the one downside is people lack community that religion used to provide. People are replacing this with fitness communities. Look out how people treat SoulCycle or CrossFit as if it was a religion. They don't go there just or the workout but also the community of people. Companies like Peloton are trying to extend this relationship into the house. SoulCycle classes are expensive, $2k for a spin bike is not terrible, I would be surprised if the margins are not huge on this. So if I were to signup for Peloton I would not blink at the cost of the bike. $40/month for a subscription is also cheap when I compare it to things like SoulCycle. Sure its different but I am also able to workout at home. I can see the value in these companies. Is $4b too high? Perhaps but I have not examined the marketplace. I think last numbers were 600k subscribers and they have no something like 29 physical retail locations.
- scarface74 8y ago
  As I said previously, I have exercise equipment and I am looking at two more pieces.... https://www.nordictrack.com/exercise-bikes/nordictrack-grand-tour-pro-exercise-bikes https://www.nordictrack.com/exercise-bikes/nordictrack-grand... https://www.nordictrack.com/grand-tour-bikes https://www.nordictrack.com/grand-tour-bikes But even I can’t justify $2000 for a Peleton bike. On the other hand, when people ask me what exercise equipment they should buy, my answer is usually “none”. I saw too many people who bought equipment and never used it. https://www.nytimes.com/2009/01/06/health/nutrition/06well.html https://www.nytimes.com/2009/01/06/health/nutrition/06well.h...
  - infecto 8y ago
    Meh. Yeah of course, most people don't need to buy exercise equipment but I feel that these newer products are filling a religious niche that were not filled prior with normal exercise equipment. I could not specifically compare the two but I think you are buying into the workouts not just the bike. But just on initial view the peloton looks better. Magnetic vs flywheel. The workouts on peloton are night and day difference with a much higher level of quality as their are live streaming daily. Is it an expensive bike? Yes Is it for everyone? No Do people need to buy exercise equipment? No. Disclosure, I don't own a Peloton but own bike trainers. A good bike trainer is going to cost $400-$1k and that does not count my road bike. When I see peloton I don't blink at $2k if it was something I was going to be using on a regular basis.
dmode 8y ago
This, right here is our Pets.com moment. The TAM for a $2k bike + $40/month is hilariously small. Think about it, you would need a decent sized home to fit one of these bikes. That rules out 90% of the world who live on 1-3 bedroom apartments. Next, there isn't any new disruptive technology being introduced. It is a bike and can easily be replicated. The value of "community" is overrated. Lastly, their competition is FREE. You can go running and biking outside. It is nice out there. Even a gym subscription provides more value.
- poulsbohemian 8y ago
  I don't disagree at all... but I thought Juicero was our pets.com moment. Heck, I thought uber was our pets.com moment, as it was significantly more expensive than any taxi I'd ever taken. I'm still not convinced that my wifi-connected thermostat is actually saving me money over my previous ancient analog model, and that's significantly more useful still than so many other things crying out for my dollars. With each passing month, for each new startup promising us magic, I find myself wondering like Walter in the Big Lebowski if the whole world has in fact gone crazy. But, the question might be - ok, so yeah, it's a crazy valuation and raise for what it is, but it is actually going to bring down the economy like we are all foreboding? If WeWork or Peloton or even Bitcoin slide into the ocean with their out of whack financials, is it going to make a difference for my portfolio and retirement? So long as the answer is no, well... good for these folks padding their own wallet then, I guess. I'll stick to a walk around the block or the old fashioned "analog" bike.
  - seattle_spring 8y ago
    > as it was significantly more expensive than any taxi I'd ever taken Either you don't live in the US or you have only taken Uber at 2x surge or higher.
    - poulsbohemian 8y ago
      It's actually ironic that your name is Seattle_Spring, because I'm talking specifically about a Seattle experience. Flying into Seattle and taking a taxi or using a town car service downtown was at least formerly, much cheaper than what I have gotten on Uber / Lyft, to the point I've just gone to using the light rail even though it is slower to my destination. $65 on Lyft vs. $35 by taxi / town car, from my most recent experiences.

55 points by huac 8y ago

Some of my colleagues got one of those connected treadmills in California. Seriously, why would you not go on a REAL bike ride instead of using an indoor bike? Everyday is a beautiful day outdoor. I'm all for tech, but in sport and fitness I think that sticking to the basics that work well is a pretty good idea. To me it looks like an attempt to capitalize on the crowd of geeks//nerds that wouldn't do fitness otherwise by gamifying the product.

servercobra 8y ago
Sometimes it rains. Sometimes it's really hot. Always, there's a lot of cars around. I generally agree and love to run outside, but I can easily see the appeal for a lot of people.
- ranic 8y ago
  And sometimes you have small children who nap, allowing parents a small, often unpredictable, amount of time to exercise.

paulcole 8y ago

My mother once bought a treadmill. My dad described it as the world’s only $1200 clothes rack. I guess the hope for Peloton is that people will subscribe and never cancel. Otherwise they’re just another treadmill company and I can’t imagine there’ll be much VC interest in that. But it’s one thing to spend a few thousand on a treadmill and regret it. It’s another to spend a few thousand and then another $100 a month.

ronilan 8y ago
I bought 3 treadmills over the past 6 years and ran [2 of them] till the motors burned. And this why they say: YMMV ;)
- ibdf 8y ago
  a 2k treadmill only lasts 2 years? That's a bad investment.
  - ronilan 8y ago
    > a 2k treadmill only lasts 2 years? Don’t know. Never bought a 2k treadmill. (Simple treadmills last to 50c a mile. I think it is a reasonable price).
- ddorian43 8y ago
  Hiw many km/day ?
- hiccuphippo 8y ago
  Yes, people gets surprised when I tell them my stationary bike broke because of the use rather than the disuse.
camelCaseOfBeer 8y ago
No kidding, right? What's going on now with exercise bikes is at best a fad, a novelty. From what I can tell as it stands the value proposition of this product and service is dubious at best, not to mention easily replicated. Yet this company with its weak product is valued beyond any reasonable comprehension of the number? Smells like a Ponzi scheme. Theres no way it can meet these expectations, with nothing but just desserts to be had when Petalon and all of it's investors endo right onto their faces. Meanwhile a small contingency of company insiders who funneled investment capital into their own assets laugh all the way to the Bahamas.

hayksaakian 8y ago

Is it typical for techcrunch to assume the reader is familiar with every odd startup they cover? I've never heard of this company, have no idea what they do after reading the whole article, and now I'm too frustrated to care. All I got there was "connected treadmill"... ok?

stingrae 8y ago
Peloton started with a connected spinning bike. It takes advantage of the Soul Cycle fad ($30/class) and sells people a $2000 bike and a $40/month subscription (for live streams of classes) with the idea that they will save money over time. More recently they released the treadmill.
- tyrust 8y ago
  >with the idea that they will save money over time Is this actually a stated goal or are you being facetious?
  - gkoberger 8y ago
    Spin classes are expensive ($34 + $3 shoes + $2 water), and some people do them daily. If you use it daily for 2 months, it's easily "paid" for itself. Or, another way to look at it is "Don't let a high per-class cost stop you from getting healthy"
    - tyrust 8y ago
      >"Don't let a high per-class cost stop you from getting healthy" There are much cheaper ways to get healthy. But I guess this company is targeting people that have already purchased the idea that they need to pay a ton to make progress. Sidenote: >$3 shoes + $2 water Bring your own shoes and water, that will definitely pay for itself lol.
      - darkerside 8y ago
        Decent cycling shoes are ~$100, plus cleats for another $15. So it'll pay for itself after about 50 classes... just like a Peloton!

davedx 8y ago

No mention of what the company does?

Yhippa 8y ago
Spin class you can dial in to. You have to buy the dial in apparatus for $2,000.

cellis 8y ago

This is pretty insane. I've used the Peloton bike because there's one in my apartment complex. It's a really nice exercise bike ( very stable, smooth, continuous pedalling without locking up ), but the tablet/software they attach to it left quite a lot to be desired. For instance, the UI is very clunky and I couldn't even figure out how to turn off the damn music. It's hard to just set a "free form" type of ride ( instead, you have to use their "classes" -- basically a video of someone telling you whats happening during the ride, whether or not you're in sync with the cadence ). I don't think it would take much for one of the better bike manufacturers to duplicate the "nice bike" part, and the UI should honestly just be a bluetooth to your phone with a mount.

wazokazi 8y ago
There is a "Just Ride" mode, hidden under the "Other" options. I use it often for quick rides.
majormajor 8y ago
I don't know if it has long term legs or is just an (extended, at this point) fad, since I've never used one or done soulcycle or whatever, but all the stuff that bugged you about it is the selling point. The hook is that nobody ends up using standalone just-do-what-you-will fitness gear (I do have experience on this side!). Some level of "training" programming has been much more effective for a lot of people, and this is taking this outside the studio into a broadcast form. My suspicion is that once you take it out of the class setting you've lost that hook, though.
- chrisdsaldivar 8y ago
  I've had one for a bit over a year now and I really love it. You're exactly right about the hook for this product. Before using the bike I've just stuck with the same training I did in high school football because I've always needed structure and a way to track progress. The bike classes are kind of addicting since the instructors keep the tempo up (depending on the class) and you have leader board showing with a live ranking. Even if you aren't at the top it's still fun because you'll get used to seeing the same names around your rank (if you're doing the live classes) and it'll push you to compete with them. It's a lot like having a running group except you'll always have someone that is around your skill level to compete with.

collinf 8y ago

Like the other commenters, I had never heard of this either until reading the latest funding round recently. Here's a summary from the WSJ[1] from yesterday: > Peloton, founded in 2012, makes a $1,995 stationary bicycle. Most customers use the bikes at home, paying about $39 a month to stream live classes that the company produces using its own instructors. The New York-based firm, which has showrooms around the U.S., plans to launch a treadmill this fall. Part of the soul cycle bubble as well it looks like. [1]https://www.wsj.com/articles/pelotons-financing-round-values-stationary-bike-maker-at-4-15-billion-1533255443 https://www.wsj.com/articles/pelotons-financing-round-values...

ryanwaggoner 8y ago
Why is it a bubble?

iblaine 8y ago

Small installments seem to be gaining traction. With video games, it's micro transactions. With large ticket items, it's installments. I'd never expect an exercise bike to be part of this trend but here we are.

jbob2000 8y ago

This is ridiculous, these bikes are a fad. The company will get sold to a gym or furniture giant for pennies once people get bored and realize they paid $2,000 for a clothes hanger. I will say it's an interesting take on an old business. Furniture and exercise equipment manufacturers have this problem where everybody buys their stuff and they go bankrupt because nobody needs new equipment after the initial purchase. So attaching the subscription business model to this might give them a bit more longevity!

joezydeco 8y ago
Think about how many people sign up for gym memberships and then never use them but keep paying the monthly fee.
- Zimahl 8y ago
  Doesn't make gyms $4 billion businesses.
  - joezydeco 8y ago
    What other fitness equipment manufacturer has cashflow not tied to equipment sales?
- throwaway82729 8y ago
  Now they'll keep paying that and have a $2k clothes hanger at home.

jotjotzzz 8y ago

They sell these treadmills and bikes with video training and scenery on it. I have no idea who is buying their products though. I bet this is just another pump and dump startup.

SubuSS 8y ago
Adding some context since you said you have no idea: This is actually a huge market: Biking outside is dangerous/exposed/has real terrain that may not be amenable for your current intervals etc. It works when you do it for commute/weekend rides, but if you want anything like a training plan, you need an indoor trainer. Biking also is a rich (wo)man's sport nowadays: There are bikes you can get for $10-15k and many folks (like software engineers) don't bat an eye. Anecdotally, I personally have 5-6 bikes (one is in parts...) and add about 10k miles a year, and I am not even a racer at the lowest categorized level. NOTE: I don't own a peloton, I have a wahoo kickr. Similar trainer without the social aspects because I didn't care for that. As more and more people start becoming fitness conscious / want an active hobby - they are going to want a weekday option to keep up the fitness. This is it. Other companies to look at are Wahoo / Strava / Zwift / Trainer Road / Training Peaks / Flywheel / Soul cycle / sufferlandria and a ton more I am probably missing.
- sonnyblarney 8y ago
  $2K stationary bikes + $50 a month is still a niche market.
  - SubuSS 8y ago
    So is $5 a latte. But seeing how Starbucks is doing - you can figure how this market will play out. The initial amount is steep - but I wouldn't be surprised if lease plans show up very soon.
    - sonnyblarney 8y ago
      Coffee is ubiquitous and everyone can afford a $5 latte now and again. It's easy to 'try once' and then to stay hooked. They have the benefit of chemical addiction. 'Stationary bikes' are already a niche market to begin with, then add on the crazy price and monthly? Crazy. The problem with regular financing is that these things have little to no residual value, i.e. difficult resale. You can put a price on a used car so it can be kind of de-facto collateral. Not Pelotons. Don't any of you remember 'Bowflex'?

polskibus 8y ago

For a moment, I thought that CMU's and Andy Pavlo's amazing database project got serious funding. https://github.com/cmu-db/peloton https://github.com/cmu-db/peloton I'm a bit disappointed now

googlemike 8y ago
"The Self-Driving Database Management System" Lol.
- hood_syntax 8y ago
  Is it satire? the rest of it looks legit so I don't know what to think.

ebbv 8y ago

$4B? That's insanity. I know it's a dead horse but valuations are totally detached from reality.

sonnyblarney 8y ago

I lived through the .com bubble and the last couple of years I feel warrant a lot of comparison. The tech bubble burst because of a 'spook' i.e. interest rate change and massive bubble in the regular markets that needed to be cooled. So the smart money fled first, the dumb money later, and things became difficult. The underlying economic impetus these days is reasonable - but it could be fudged any moment by Trump's 'trade wars' (I'm not saying anything about him or the policy, just that there is risk), or it could be revealed that a marginal shift in rates really does have a bad effect. The all of the surplus 'lift' in the market evaporates and all of this gets wiped out. ICO's in particular are a really bad sign. CEO's are currently trying to get in on the IPO market while they can - with companies like Sonos popping on float day even with not particularly strong fundamentals. It's not that startup land is bad, it's just that fundamentals don't justify the valuations. These Peloton bikes and their services are way too expensive for mass market, and I'm not confident. It seems like one of many fitness fads to me. Note: this is series F. At $4B Billion. This behoves the question, why not public? Maybe because any amount of public scrutiny wouldn't bear such a lofty valuation? It makes you wonder who's writing these big cheques. This is not Uber or AirBnB which have naturally massive markets and cashflows. These are $2K + $50 / month stationary bike / status symbols.

meritt 8y ago
> It seems like one of many fitness fads to me I agree but I think the fitness industry itself is inherently based upon dietary and exercise fads. If it wasn't a fad, they probably wouldn't be raising capital so easily. Guessing these investors assuming there'll be a greater fool?
jlarocco 8y ago
Yeah, way too expensive is right. That $2k for the bike is enough to buy a nice mid-range bike and a nice indoor trainer, with the added benefit of being able to bike outside, if desired. And I believe there are tons of streaming workouts free on Youtube. Not to mention that a lot of people already think >$1k for a bike is crazy, so $2k for a stationary bike seems like it'll be a hard sell, but what do I know? I'm sure there's more to it, and they add more value than just that, but like the OP, I'm really skeptical.

cm2012 8y ago

I interviewed for a marketing position with them a while back. It seemed like a team that really knew what they were doing. Good luck to them!

tdees40 8y ago

Why do they need financing? How is a company that sells $2000 exercise bikes not profitable?

balls187 8y ago
Never turn down money if the cost is right. // I could purchase my car out right with cash, but since the interest rate was super low, there was no harm in financing it. Similarly, if you can use someone else's money to grow your business, and the terms are quite favorable to you, why wouldn't you? More likely in Peleton's case, they make profit, but it takes a lot of money to expand. Or possibly R&D costs.
LarryDarrell 8y ago
I also wonder how big the market is for $2000 exercise bikes/treadmills + subscription service... especially when consumer debt is already at a high. Maybe they are thinking gyms/apartment fitness centers will buy them?
- scarface74 8y ago
  It’s aspirational. People think if they have the “convenience” of working out at home, they will be more disciplined. Few actually do. But on the other hand, having scheduled classes and the social aspect may serve as a commitmemt device.

evanagon 8y ago

The thing I don't understand is that you can already do this for much less money and arguably in a more fun way. Get a nice-ish real bike ($1,000), some rollers or a trainer ($200), and a subscription to Zwift ($14.99/month). Zwift allows you to create a biking avatar that rides around virtual racecourses with other bikers who are also using the service (usually there are thousands of people riding at any one time). You can do races, talk to other people, and more, for a fraction of this cost. Plus you have a real live bike you can take outside and enjoy.

dkhenry 8y ago
I got a trainer for winter riding, and it ate my tires. Also a good spin bike does a better job at keeping momentum which makes it feel more like a normal ride outside. I think like most things the amount of use really determines what you should do. If you are going to ride outside most of the time, and just want an indoor option then a trainer is a great choice, but if you are going to be riding daily, spend the extra money and get a real spin bike.
- flother 8y ago
  > I got a trainer for winter riding, and it ate my tires. A tip I got from someone is to switch your rear road tyre for a special trainer tyre so you don’t have to worry about wear-and-tear. Something like this: http://www.wiggle.co.uk/vittoria-zaffiro-pro-home-trainer-tyre-road/ http://www.wiggle.co.uk/vittoria-zaffiro-pro-home-trainer-ty...
- radix07 8y ago
  You can even get a professional level Wahoo Kicker for $1200 (no tire wear), have money for a mid-range bike and still save a ton of money month to month with Zwift over Peloton's monthly cost... Or buy a cheap training wheel and a $400 power meter and spend like $100 on the trainer. Why spend more for a spin bike when you can use a real one with just as good or better power controls and feedback? Point is Peloton is expensive indoors or out...
- obmelvin 8y ago
  What PSI were you running on the trainer? I destroyed a Conti GP 4k II on my trainer this winter too because I was running it around 80 PSI. When I noticed how destroyed it was I did some googling and learned that on the trainer you should really be using the max PSI supported by your tier (i.e. 115-120). I ended up getting a trainer tire to put on a spare wheel and have been happy with that so far. But if you run a hard tire like Gatorskins, those seem to be fine at a high pressure. Any sort of racing tire will definitely be used up quickly regardless of pressure.

supernovae 8y ago

I wish a company would get valued this big on just getting people outside on their bikes.

jqbx_jason 8y ago

An anecdote: My father broke his collarbone (in a real bike) and I got him a peloton to be a safer replacement. After about an hour of introduction to the product he now uses it every day and so does my mother, who has never biked in her life. I don't get the appeal necessarily but any new product that can hook someone in their generation is positive signal IMO.

samstave 8y ago

So... at $550MM in funding. Just to simply get the $550MM BACK from selling the bike and getting users, that means youwould have to sell 183,000 NEW bikes AND have them maintain 2 years of paid membership fees (24 months at $40/mo) --- So, then you assume some attrition of those users, which means you will need to upsell the remaining users on some new products and continue to get new buyers of these bikes and services. You'll have to spend a fair bit on marketing, development and the general maintenance of paying your existing costs/overhead etc... I can't even come up with any fictitiously optimistic napkin math that would make this work. So, what do the Peloton people know that we dont know that allowed them to get $550 MILLION dollars in funding? All theories welcome. Heck, whomever it was that was able to get VCs to invest in this should be selling their services to a ton of startups...

ryanwaggoner 8y ago
Seems pretty obvious: 1) They're selling a ton of these bikes. I bet they'll sell another 200,000 in the next 12 months. 2) They're selling even more subscriptions than bikes. They had 600,000 subscribers six months ago. That's basically pure profit. 3) They're introducing new products. A treadmill this fall, and I'd expect an elliptical, a rower, and perhaps some other things to follow at some point.

infecto 8y ago

I think there is an number of unfair criticism against the company. I am not here to argue about the valuation, I have not examined anything about the financials of this specific company BUT I do think these companies are hitting a sweet spot in this market. This company is not selling you an exercise bike, they are selling you the community surrounded from the classes. There was an interesting talk by the founder of Peloton regarding religion and community. His argument was that many areas of the country have largely transitioned away from being religious and the one downside is people lack community that religion used to provide. People are replacing this with fitness communities. Look out how people treat SoulCycle or CrossFit as if it was a religion. They don't go there just or the workout but also the community of people. Companies like Peloton are trying to extend this relationship into the house. SoulCycle classes are expensive, $2k for a spin bike is not terrible, I would be surprised if the margins are not huge on this. So if I were to signup for Peloton I would not blink at the cost of the bike. $40/month for a subscription is also cheap when I compare it to things like SoulCycle. Sure its different but I am also able to workout at home. I can see the value in these companies. Is $4b too high? Perhaps but I have not examined the marketplace. I think last numbers were 600k subscribers and they have no something like 29 physical retail locations.

scarface74 8y ago
As I said previously, I have exercise equipment and I am looking at two more pieces.... https://www.nordictrack.com/exercise-bikes/nordictrack-grand-tour-pro-exercise-bikes https://www.nordictrack.com/exercise-bikes/nordictrack-grand... https://www.nordictrack.com/grand-tour-bikes https://www.nordictrack.com/grand-tour-bikes But even I can’t justify $2000 for a Peleton bike. On the other hand, when people ask me what exercise equipment they should buy, my answer is usually “none”. I saw too many people who bought equipment and never used it. https://www.nytimes.com/2009/01/06/health/nutrition/06well.html https://www.nytimes.com/2009/01/06/health/nutrition/06well.h...
- infecto 8y ago
  Meh. Yeah of course, most people don't need to buy exercise equipment but I feel that these newer products are filling a religious niche that were not filled prior with normal exercise equipment. I could not specifically compare the two but I think you are buying into the workouts not just the bike. But just on initial view the peloton looks better. Magnetic vs flywheel. The workouts on peloton are night and day difference with a much higher level of quality as their are live streaming daily. Is it an expensive bike? Yes Is it for everyone? No Do people need to buy exercise equipment? No. Disclosure, I don't own a Peloton but own bike trainers. A good bike trainer is going to cost $400-$1k and that does not count my road bike. When I see peloton I don't blink at $2k if it was something I was going to be using on a regular basis.

dmode 8y ago

This, right here is our Pets.com moment. The TAM for a $2k bike + $40/month is hilariously small. Think about it, you would need a decent sized home to fit one of these bikes. That rules out 90% of the world who live on 1-3 bedroom apartments. Next, there isn't any new disruptive technology being introduced. It is a bike and can easily be replicated. The value of "community" is overrated. Lastly, their competition is FREE. You can go running and biking outside. It is nice out there. Even a gym subscription provides more value.

poulsbohemian 8y ago
I don't disagree at all... but I thought Juicero was our pets.com moment. Heck, I thought uber was our pets.com moment, as it was significantly more expensive than any taxi I'd ever taken. I'm still not convinced that my wifi-connected thermostat is actually saving me money over my previous ancient analog model, and that's significantly more useful still than so many other things crying out for my dollars. With each passing month, for each new startup promising us magic, I find myself wondering like Walter in the Big Lebowski if the whole world has in fact gone crazy. But, the question might be - ok, so yeah, it's a crazy valuation and raise for what it is, but it is actually going to bring down the economy like we are all foreboding? If WeWork or Peloton or even Bitcoin slide into the ocean with their out of whack financials, is it going to make a difference for my portfolio and retirement? So long as the answer is no, well... good for these folks padding their own wallet then, I guess. I'll stick to a walk around the block or the old fashioned "analog" bike.
- seattle_spring 8y ago
  > as it was significantly more expensive than any taxi I'd ever taken Either you don't live in the US or you have only taken Uber at 2x surge or higher.
  - poulsbohemian 8y ago
    It's actually ironic that your name is Seattle_Spring, because I'm talking specifically about a Seattle experience. Flying into Seattle and taking a taxi or using a town car service downtown was at least formerly, much cheaper than what I have gotten on Uber / Lyft, to the point I've just gone to using the light rail even though it is slower to my destination. $65 on Lyft vs. $35 by taxi / town car, from my most recent experiences.