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I get the impression they don't like the CEO very much. That was an impressively brutal attack on him, with probably the worst damage inflicted by the CEO's own

I get the impression they don't like the CEO very much. That was an impressively brutal attack on him, with probably the worst damage inflicted by the CEO's own statements. Blackwells is obviously not a neutral party here, there's a reason they created this thing. But on first glance it looks like a pretty solid argument that the management at Peleton is seriously flawed. I don't really buy the arguments on why Peleton is a good business and comparable to Streaming somehow. I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested. Doesn't mean they're wrong, but obviously this didn't stop Blackwells from investing in the first place.

jahller 5y ago
they obviously want to get a good ROI on their stock holdings and try to convince potential buyers that the company is amazing and just held back by their CEO (which definitely is not the only problem that Peloton has)
- notahacker 5y ago
  Yeah. The problem is that the deck makes a more convincing case that the company is badly run than that Disney might get value from acquiring a loss making niche hardware company to distribute its content...
  - IshKebab 5y ago
    It makes the assumption that a buyer could run it more successfully. Which I think is fairly reasonable.
    - notahacker 5y ago
      I think it's reasonable to assume it could be better run (apparently the CEO, who's since stepped down, agrees!) I think the list of putative buyers who ought to be interested in it as a premium strategic acquisition is stretching it a bit.
    - bradleyjg 5y ago
      There’s a lot of room to be more successful and still lose money.
akomtu 5y ago
I've got the impression that some big guys invested big money in Peloton, while its CEO with his buddies promptly sold off their shares while talking the talk about the bright future. The big guys are now trying to recover their investments.
A4ET8a8uTh0 5y ago
In my one of my MBA classes, we were discussing, whether Peloton's original super optimistic slides were reflective of reality ( most of the class agreed, it seemed more like a niche product rather than a gym replacement or even a $300 boutique training replacement as this presentation claims ) and were comparing it to AT&T Time Warner saga. We never touched on Peloton's management, but if we did, the quotes are pretty stunning. You absolutely do have a point about streaming, but the presentation argues that Peloton's assets may be valuable to some streaming services ( they are dying and fighting for content now ).
- DrBazza 5y ago
  > it seemed more like a niche product Yes. The Peloton 'model' reminds me of the gym model, at least in the UK. You always get a bunch of people sign up in 'fat' January for 12 months. They go to the the gym for a few weeks and stop. But continue paying £50pm or whatever for the next 11 months. Peloton feels similar in that people are made to want the shiny thing in the TV adverts, find that they don't have a room with a view to put the bike unlike the adverts, use it for a few weeks, and then have to see out their subscription. I'm sure Peloton's insider numbers probably show a slower drop off, but I'd bet it's still there. There's probably a big intersection of those that have bought a Peloton bike as well as joined a gym but rarely used it. The free alternative of course, is go outside and cycle or run.
  - dustymcp 5y ago
    Being a cyclist All my life i never understood those bikes you dont get fresh air or the navigation fun of finding new ways to explore :)
    - spookthesunset 5y ago
      It depends on the climate of where you live. Some places just don’t have the right kind of weather year round.
      - 5y ago
bla3 5y ago
Matt Levine made the point that the CEO has enough shares to control the board, so the point of this deck was to convince _the CEO_ that he no longer wants his job. It worked: he stepped down, and PTON was up 5% on the news.
- shmatt 5y ago
  He's still the executive chairman, so the CEOs boss. The new CEO doesn't work for Pelotons employees or non-voting stock holders. He works to please John Foley and John Foley alone I worked for a company in a similar situation a few years back. The new CEO was fired in less than year by the old ceo/new chairman
- usrusr 5y ago
  Oh, interesting plot twist! And it makes so much sense, because if the potential buyers listed were the intended audience, the tone would seem a little condescending: too much "they might fall for it" badly hidden between the lines of "that would be a good acquisition for them"
dijonman2 5y ago
As someone who has been through many due diligence operations for either M&A or investment people lie out of their teeth when money is on the table. A lot of really good talkers make it up the ranks and those are the ones you will speak to. It takes a equally skilled but rarer archetype to navigate through the BS. My point is: it’s a lot harder to find problems than you think. You find out the truth after close.
softwaredoug 5y ago
TBH the arguments are fairly compelling it should be a solid business. Maybe not valued what it is. Particularly the lack of churn on subscribers rings true. Their customers are loyal, they feel more part of a community, etc than your random Netflix subscriber. There's a large addressable market, as seen by Tonal and others coming into the fray. The counterargument IMO is that fitness is increasingly a fractured market between these home workout things, boutique gyms, budget gyms (Planet Fitness), fancier gyms, country clubs, people that just want to workout on their own...
OccamsRazr 5y ago
Blackwell is engaged in activist investing. Their goal is to make profit by changing how the company is run. This deck is surely part of that campaign. Thus it may contain truths, but it also serves their agenda. Best to be understood in that light. > I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested. Likely they knew and saw an opportunity for their investment strategy.
mdoms 5y ago
> I don't really buy the arguments on why Peleton is a good business and comparable to Streaming somehow. The addressable market section is especially ridiculous. It looks at global wellbeing spending of $4.2T including $600B in fitness. That is not the addressable market for a device that is expensive, tied to a monthly subscription and takes up more floor space than a couch. That's not even the addressable market for running shoes, much less a fancy exercycle or treadmill.

jahller 5y ago

they obviously want to get a good ROI on their stock holdings and try to convince potential buyers that the company is amazing and just held back by their CEO (which definitely is not the only problem that Peloton has)

notahacker 5y ago
Yeah. The problem is that the deck makes a more convincing case that the company is badly run than that Disney might get value from acquiring a loss making niche hardware company to distribute its content...
- IshKebab 5y ago
  It makes the assumption that a buyer could run it more successfully. Which I think is fairly reasonable.
  - notahacker 5y ago
    I think it's reasonable to assume it could be better run (apparently the CEO, who's since stepped down, agrees!) I think the list of putative buyers who ought to be interested in it as a premium strategic acquisition is stretching it a bit.
  - bradleyjg 5y ago
    There’s a lot of room to be more successful and still lose money.

akomtu 5y ago

I've got the impression that some big guys invested big money in Peloton, while its CEO with his buddies promptly sold off their shares while talking the talk about the bright future. The big guys are now trying to recover their investments.

A4ET8a8uTh0 5y ago

In my one of my MBA classes, we were discussing, whether Peloton's original super optimistic slides were reflective of reality ( most of the class agreed, it seemed more like a niche product rather than a gym replacement or even a $300 boutique training replacement as this presentation claims ) and were comparing it to AT&T Time Warner saga. We never touched on Peloton's management, but if we did, the quotes are pretty stunning. You absolutely do have a point about streaming, but the presentation argues that Peloton's assets may be valuable to some streaming services ( they are dying and fighting for content now ).

DrBazza 5y ago
> it seemed more like a niche product Yes. The Peloton 'model' reminds me of the gym model, at least in the UK. You always get a bunch of people sign up in 'fat' January for 12 months. They go to the the gym for a few weeks and stop. But continue paying £50pm or whatever for the next 11 months. Peloton feels similar in that people are made to want the shiny thing in the TV adverts, find that they don't have a room with a view to put the bike unlike the adverts, use it for a few weeks, and then have to see out their subscription. I'm sure Peloton's insider numbers probably show a slower drop off, but I'd bet it's still there. There's probably a big intersection of those that have bought a Peloton bike as well as joined a gym but rarely used it. The free alternative of course, is go outside and cycle or run.
- dustymcp 5y ago
  Being a cyclist All my life i never understood those bikes you dont get fresh air or the navigation fun of finding new ways to explore :)
  - spookthesunset 5y ago
    It depends on the climate of where you live. Some places just don’t have the right kind of weather year round.
    - 5y ago

bla3 5y ago

Matt Levine made the point that the CEO has enough shares to control the board, so the point of this deck was to convince _the CEO_ that he no longer wants his job. It worked: he stepped down, and PTON was up 5% on the news.

shmatt 5y ago
He's still the executive chairman, so the CEOs boss. The new CEO doesn't work for Pelotons employees or non-voting stock holders. He works to please John Foley and John Foley alone I worked for a company in a similar situation a few years back. The new CEO was fired in less than year by the old ceo/new chairman
usrusr 5y ago
Oh, interesting plot twist! And it makes so much sense, because if the potential buyers listed were the intended audience, the tone would seem a little condescending: too much "they might fall for it" badly hidden between the lines of "that would be a good acquisition for them"

dijonman2 5y ago

As someone who has been through many due diligence operations for either M&A or investment people lie out of their teeth when money is on the table. A lot of really good talkers make it up the ranks and those are the ones you will speak to. It takes a equally skilled but rarer archetype to navigate through the BS. My point is: it’s a lot harder to find problems than you think. You find out the truth after close.

softwaredoug 5y ago

TBH the arguments are fairly compelling it should be a solid business. Maybe not valued what it is. Particularly the lack of churn on subscribers rings true. Their customers are loyal, they feel more part of a community, etc than your random Netflix subscriber. There's a large addressable market, as seen by Tonal and others coming into the fray. The counterargument IMO is that fitness is increasingly a fractured market between these home workout things, boutique gyms, budget gyms (Planet Fitness), fancier gyms, country clubs, people that just want to workout on their own...

OccamsRazr 5y ago

Blackwell is engaged in activist investing. Their goal is to make profit by changing how the company is run. This deck is surely part of that campaign. Thus it may contain truths, but it also serves their agenda. Best to be understood in that light. > I do find the arguments around bad governance structures and oversight weird though, as those should have been known before they invested. Likely they knew and saw an opportunity for their investment strategy.

mdoms 5y ago

> I don't really buy the arguments on why Peleton is a good business and comparable to Streaming somehow. The addressable market section is especially ridiculous. It looks at global wellbeing spending of $4.2T including $600B in fitness. That is not the addressable market for a device that is expensive, tied to a monthly subscription and takes up more floor space than a couch. That's not even the addressable market for running shoes, much less a fancy exercycle or treadmill.