"We derive a significant majority of our revenue from sales of our Bike and a decline in sales of our Bike would negatively affect our future revenue and operating results;"
What many people don't know is that you can access all their classes using your own exercise bike and their apps, paying a little over 1/4 of the normal monthly subscription fee. The limitations of this approach is that you don't get to participate in the leader-board gamification of your workout, and your bike won't have the integrated sensors to tie your output back into their app, but for a fraction of the price of both the bike and the service, it's a good way to either test out their service to determine whether it's something you're into, or to permanantly utilize most of their product at a fraction of the cost.
When I see a guy on the same exact machine as me, showing bad form like a slightly curved back or whatever with the heels, and then correcting to the proper form, referencing the same bike, on a giant Android tablet in front of me, that is very helpful.
And this whole thing is sitting right there in my room as a ready to go thing whenever -- taking mini-obstacles out of the way like going to the gym, studying proper form without someone having to ape it for me, etc. are admittedly pretty trivial things -- for a lazy sack like me, having all these done and together has made a difference.
"It just works."
(Edited for grammar.)
I can’t even remember what the competitors were, because none of that matters if it’s not effortless to use.
Here, too, I thought -- it's an Android tablet bolted to an exercise bike.
Not saying that either the Peloton or the iPhone were epoch-shattering brilliances. Just noting that, as you suggest, sometimes putting together things that used to be separate is, well, a good and useful thing.
In my 20s I had injured myself several times, from lifting and running around Ann Arbor. After one extreme and almost paralyzing injury I went to a neurosurgeon.
The neurosurgeon gave me the choice of surgery or strengthening my core and perfecting my form in exercises going forward.
Fancy exercise stuff is cheaper than surgery.
Strictly speaking the best exercises are all completely free.
There are a lot of comments here smirking about bikes that go nowhere, etc. If you think a stationary bike is "unnatural," pounding pavement does not seem all that different.
The point is good form. There are many rivers to that ocean.
An actual road bike. You can, like, go outside and stuff.
$19.49/mo gets you all the content. It's double that ($39) to make use of the bike's live metrics/dashboard/leaderboard, plus the bike itself is $2245.
This is really interesting to me, as I've heard quite a few people say that the content is what they really like.
I'm doing Startup School this summer with the project - Slipstream https://slpstream.com/
The mission is to make it easier for people to get a workout done with a motivational content assist. Most of the content is free access, some is from Netflix/Amazon Prime Video and others. I don't produce content, just recommend the best I can find.
In some ways it could be seen as an alternative to Peloton for people who don't want to add another subscription. Or those who would rather use their own equipment.
Initial features are a filter so you can narrow your search by media type (podcasts, documentaries, guided workouts) featured sport, access type (free/Netflix/Amazon Prime etc.) duration, etc. Also a playlist/bookmarking feature where you can cue up a series of videos to roll through during your workout or bookmark podcasts or other content for later.
Roadmap/wishlist is to build a community where users can recommend content to the main site and to each other. Also to monetize via ad sales for promoted posts and featured sponsor/athlete pages where they could feature their content and product recommendations.
I'd love any feedback from readers of this thread who have used Peloton or spent time thinking about it or using alternatives.
p.s. I have a ton more content on my to-add list. If you have any suggestions you can submit content on the site https://slpstream.com/contact/
Presumably that post has affiliate links. It’s not my page.
I guess they’ve raised the subscription price. I think I’m grandfathered in at $13/mo paid via iTunes which I preload with discounted iTunes cards to knock another 15-20% off the price paid.
I do wish I had the metrics and integrated solution. Maybe I’ll upgrade someday.
The only metric that matters is how many workouts did you do today, or this week. Unless perhaps you're planning on entering some sort of competitive spinning event all those numbers don't add up to anything.
I get that I'm not Peloton's market (they don't care about nerds who build their own kit, and that's probably the right choice) but I 100% understand why this stuff matters.
Not if you're actually serious about going faster on a bike. Power data (as provided by basically any non-Peloton smart trainer) is incredibly useful in maximising the effectiveness of workouts and measuring your fitness. A high-end smart trainer like the Wattbike will also give you data on power delivery through the pedal stroke and left/right power balance, which has real implications for performance.
Kind of like when my dad bought an elliptical machine and my mom called it the world’s only $2,500 clothes rack.
If you are handy doing your own repairs it's also very cost effective since not too many tools are required and compatible parts are cheap, easy to find and easy to install.
My road bike cost $300 AUD, I have maybe spent another $250 on parts and tools. I have been riding to and from uni and now work pretty much every day for three years and I love it to bits.
Peloton has a mechanical knob that controls the resistance.
It's clear that a lot of people love the Peloton experience, but it's a pretty lousy training tool for any kind of real cycling.
You can also get a roller with resistance, that is probably the best investment I ever made.
For people in the US I recommend http://www.insideride.com/
and in Europe the equivalent is this: https://www.elite-it.com/en/products/home-trainers/rollers/q...
As we expand our content offering, develop new interactive software features, and grow our community of Members, we believe we can maintain a low Average Net Monthly Connected Fitness Churn, resulting in a high Connected Fitness Subscriber Lifetime Value. In addition, with the growth of our Connected Fitness Subscriber base over time, we expect to improve our Subscription Contribution Margin as we scale our fixed content production costs.
Net Customer Acquisition Cost (profit) can be calculated as Adjusted Sales and Marketing Expense (which excludes depreciation and amortization expense and stock-based compensation expense) less Adjusted Connected Fitness Product Gross Profit (which excludes depreciation and amortization expense and stock-based compensation expense). Our Net Customer Acquisition Costs (profit) for fiscal 2017, fiscal 2018, and fiscal 2019, was $14.2 million, $(4.9) million, and $1.6 million, respectively, or $183, $(33), and $5 per Connected Fitness Subscriber added, respectively. We believe we will continue to drive rapid payback and efficiencies in Net Customer Acquisition Costs (profit) by further leveraging sales and marketing investments as a result of heightened brand awareness and growing word-of-mouth referrals. Changes in Connected Fitness Product margins or sales and marketing expenses may result in an inability to fully offset our customer acquisition costs.
If you spin enough, you actually do save money with a Peloton. $40/month + $2000/bike vs $30/class (in LA/NY/SF) results in a breakeven point of roughly 4 months if you spin every weekday, which many spin aficionados do.
Located in the most expensive markets in the country.
I thought that was a high number, and I live in a lower-cost market (Atlanta). Looking at one-off/small chain spinning places that do not have outposts in New York State or California, I found single-class pricing to be in the $20-25 range. Given the cost of living difference between here and NYC, the $30 quoted for LA/NY/SF seems on target.
Not to get too "ad-speaky", but people aren't buying something like this to be entertained, they're buying it because it promises them a better life. Peloton aren't selling content, they're selling the idea of being in shape and healthy.
content that results in entertainment != content that results in health benefits
People regularly pay $50~$100/month for a gym membership so they're anchored against that.
Peloton is a cheap gym and an expensive Netflix, by reasonable comparisons. Damn is that a great business model.
The Peloton may not make much sense to people living in pleasant cycling meccas on the West Coast, but east of the Rockies the weather is a lot worse and being able to spin indoors is huge.
No, it turns out women don't buy carbon bikes, a standalone trainer, wrench a cassette on it, put the bike on, hook up a tablet somewhere, install a power meter, ... it's the ole "rsync is superior to Dropbox".
New Yorker here. If I had the space I’d totally get one of these.
I think its a mistake to think of a spin bike as a bike. There is peddling, and you can get most of the same experience out of a turbo, HR, PowerMeter, but then you are also putting the frame and peddles through really weird force profiles as you spend time bouncing between the front and back of the bike.
I mostly ride PowerZone, for which a turbo, hr and power meter would be perfect, but if you like the ‘dance’ classes you might want to look for a more ridged machine, you really have to be able to trust that its not going to break on you.
What? You need to visit some more cities. Just because bikes & cars co-exist in a city does not make them bike friendly.
Obviously there are way more bike-friendly European cities but as far as US cities go NYC doesn’t seem that bad to me (I don’t live there, but have noticed all the new cycle paths when I visit occasionally over the years).
45 mins on the peloton is a completely different thing to even 45 minutes out in the country.
In the risks section, Peloton says that their revenue could decline due to changes in credit markets and decisions made by credit providers - a.k.a. if a bunch of people start to default on their expensive luxuries.
"In the future, we cannot be assured that third-party financing providers will continue to provide consumers with access to credit or that available credit limits will not be reduced. Such restrictions or reductions in the availability of consumer credit, or the loss of our relationship with our current financing partners, could have an adverse effect on our business, financial conditions, and operating results."
For what it’s worth, according to the S-1 they stopped bundling the subscription as part of the bike financing in 2018, so people are just financing the bike alone now.
You pay for the phone over 24 months but they “bundle” the cost of an additional line. You would pay for the cost of the line over 24 months but no one would call that “interest”. You could buy the phone outright and just use it over WiFi just like you can use a Peleton without the subscription. But, in both cases, it reduces the functionality of the product.
In fact, if people are making use of that option unusually often, economists get worried. Prior to a recession, consumers often feel more confident (and take on more financial obligations) than they have the resources to keep up with.
The equation has changed more recently as smartphone innovation has really slowed and very incremental. In either case you can just keep you phone for 18 mo and buy it outright.
I have a 128GB iPhone 6s from 2015 that my son is still using and will at least get the current version of iOS through September 2020. Phones have been “good enough” since the 2013 iPhone 5s.
People have been getting “free phones” with a contract at least since the mid 90s when I was selling them at Radio Shack.
As you said, very clever.
In this particular cycle, more companies seem to be using this profitable business model: charge huge margins for your product and sell it on credit. Bikes, SUVs, higher education (phones, too, but that's not new). When the economy hits a blip -- say, due to a trade war -- people start losing their jobs, default on the loans, and things spiral down.
(To be clear, I'm not saying it will happen soon. It might, and probably will take years and be a mild pop.)
It sounds like you are stereotyping Peloton purchasers into one group, then assuming that the majority of them can't afford nice things.
What if you look at it from the flip side and say "people buying $2.4k in-house bikes have a lot of money and all is well in the world"?
Interesting, but lots of wealthy people do finance their purchases, especially if they are active investors.
Someone elsewhere in the thread mentioned that the Affirm rate is de-facto 0% if you factor in the subscription for the full-term. Taking that as fact (apparently it's changed now, so can't 100% confirm), you'd have to be pretty anti-debt (or lacking in cashflow) to pay in full on that rather than earn interest on the balance for 3 years if you intended to book the subscription anyway.
The wealthy borrow in order to get tax-advantaged liquidity (borrowing against, instead of selling their securities which attracts immediate tax obligations). I'm also certain the wealthy are not borrowing at 27% APR - they'll likely get a 5% APR loan from a bank and use a small fraction of it to buy the Peloton bike in cash.
I did not mean to do that. In fact I was on the brink of deleting my comment, to avoid this exact misunderstanding.
I wanted to point out that getting expensive things on credit is risky for most people who cannot afford to buy them straight out.
I wouldn't interpret this behavior as success per se. I think a significant motivating factor for going public now would be to provide liquidity for your existing investors (and yourself as the founder) before a recession hits.
If you've had significant capital tied up in a company and you're worried a recession is on the horizon, then this is a great time to push your company to go public. If you wait much longer then you risk either:
1. Going public in a recession and losing some of your potential gains.
2. Waiting an unknown amount of time for the economy to rebound and to pull your cash out then. This assumes the company weathered the recession well AND given you the same or better gains than investing in something else during that time.
TL;DR: Going public now is a much safer time for investors to divest than closer to or after the coming recession.
But don't worry, it's different this time. ;)
The trick here is fooling common investors into into without realizing it is a luxury market.
Basically, there is a small but lucrative market. You know that you have to milk it while you can and move on.
This kind of startup, exploit this small market mostly to inflate the numbers. Probably they already have 100% of their real market cap, but they will claim that they can still expand to billions of people that pay $5/mo gyms all around the world and only increase their growth (when they very might be already at 100% and realistically their future growth is zero ...or until the pile of money they get runs out)
...a funny exercise: search for the first anecdotes from the first clients of juicero here on HN ;)
On a personal level it would be a stretch for me to spend $2200 when I could get a used airdyne and an ipad for less than half.
I’ll probably end up buying a Mid range NordicTrack stationary bike ($1800) within the next year to go along with my NordicTrack treadmill and elliptical. I don’t currently subscribe to IFIT, but I might seeing that I could potentially use it across three pieces of equipment.
The IFIt modules are an optional piece for the elliptical and treadmill and I believe it is built into the elliptical.
As far as cost, between the cardio equipment I have (and plan on purchasing), the kettlebells, weight bench, weight bars, tv, wall mount, AppleTV, etc, by the time all is said and done, I will have spent close to 8 grand.
It’s well worth it for the convenience of just being able to go to the spare bedroom and workout anytime that we want to while catching up on TV or in my case watching technical videos without having to go through the ceremony of going to the gym.
The one argument in its favor is that youth sports are usually very heavily subsidized by masters sports. So if you weren't on a varsity sports team in high school or college and didn't learn how to work out properly, then it's easily 5x more expensive to do so as an adult. So maybe there is some value in having someone to teach you how to do basic cardio.
Peloton addresses two real needs in the exercise marketplace: home-based classes, and high-quality exercise machines. It simply combined both into one product.
There is huge demand for the former, especially from white-collar workers with high demands on their free time, and a a fair amount of demand for the latter.
At $2000, a Peloton bike is $1000 to $2000 cheaper than the cheapest carbon-frame bike I could find on Google, and more than $3000 cheaper than a racing or tri-bike. For indoor use, you'd also need a trainer, adding another $600-$2000 to the cost (depending on the trainer you get).
Generally, the people I know that have carbon fiber frames also have several other bikes, each for a different niche, and the Peloton would slot right into the indoor spin use case.
At $2000, a Peloton bike is $1000 to $2000
cheaper than the cheapest carbon-frame
bike I could find on Google
Unless of course you're ignoring every sub-$4000 bike as "bad cheap carbon" but that's not what your post says :)
Of course, if you're buying a bike exclusively to use on an turbo trainer, I'm not sure I see the logic to getting a carbon frame anyway - it's not like the weight or bump handling makes any difference.
True, REI has the Synapse on sale for $1700 right now not including delivery. Once you add a trainer of the equivalent functionality as the Peloton trainer, you're looking at $2500 spent. Add in a screen, and you're looking at $2700 for a small screen or $3500 for a similar-size screen as on the Peloton.
I suspect people are overestimating this part of Peloton's market. All the people I know who spin value being a part of the community: the camaraderie of working out with other people, chatting after the class, etc etc. It's more like going to church than going to the cinema.
I think exercise bikes and treadmills are dreadfully boring, but what Peloton offers is exactly targeted at that problem. Adding an array of things to do and a social aspect has to be a big deal, and if that's all packaged together in a high end package that "just works", and works really well - that seems like a winning formula.
There's a lot of fitness subscription services out there, but there's more money to be made on hardware in general. So as long as there's a market for people to pay two grand for a stationary bike and whatever dollars a month for a subscription, it's a winning business model. I'm guessing it stacks up against the SoulCycles of the world very nicely.
It's a lot more convenient to exercise in your living room than go outside or go to the gym.
I thought Guitar Hero was stupid and people should just buy a guitar, but people loved it.
I am surprised that people are willing to spend 2x-10x as much as competing products when you look at the total cost.
But as far as spending more than the functional equivalent, do you have the cheapest house that would give you shelter? The cheapest car? The cheapest phone?
I loved teaching classes with 50+ people and was completely comfortable. But I hate interacting with large groups in more social settings.
Not to mention that when I want to go out and ride I don't need to detach my bike from the trainer, or when I want to get a workout I don't need to attach my bike to the trainer. As somebody that is primarily a bike commuter, the accessibility alone is worth having 2 bikes. And if you are going to have 2 bikes, why not buy an indoor bike that is specialized for the task.
"For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software."
No, it isn't just an ipad slapped on an exercise bike. And no, the patent system is not at fault here. There are dozens of competitors in this market. But Peleton won it.
Nah it’ll never catch on /s
You're already $400 behind the cost of a Peloton, which is only $2000...
If you have access to wholesale prices for these parts, sure you could build your own Peloton at home. But using off-the-shelf parts you're just wasting money.
The subscription part is interesting, they did 4x the sales in bikes -connected fitness products- as 2 years ago (719/183), and cogs is ~4x (410/113). But subscription revs are up 5x (181/35) and cogs on that are only up 3x (100/3).
Their risk is that spin studios are a luxury item over and above gym memberships and will be the first things cut in a recession.
At 33:30, John Foley and Guy Raz start talking about the Kickstarter and how it didn't achieve its goals.
At 35:00, they talk about the the initial pricing for the bike being breakeven ($1,200) and how that didn't work. The feedback was "at $1,200 [the bike] 'seems cheap', 'it sounds cheap.' And so, we said, well, let's increase the price...."
You can listen to more of the podcast, unpack this, and analyze what the reveals about that the demographics of the customers with whom they've connected so far. Without any intent to be critical, the HN readers who think the bike is too expensive have the opposite reaction to the people who became customers.
I suspect the average Peloton customer has more money than time.
“We have identified material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.”
There are also three long subsections about music licensing (edit: and music-related legal proceedings mentioned in multiple places).
I'm a customer. I've noticed that some of their old classes are no longer available, presumably due to music licensing issues.
> In addition, customers of certain of our providers have been subject to litigation by third parties claiming that the service and basic HTTP functions infringe their patents. If we become subject to such claims, although we expect our provider to indemnify us with respect to at least a portion of such claims, the litigation may be time consuming, divert management’s attention, and, if our provider failed to indemnify us, adversely impact our operating results.
The bike’s only have a lifetime of a couple years and the experience isn’t that great. The promise of software upgrades only take it so far until planned obsolescence kicks in.
This is just creating a fleet of useless metal that will have software vulnerabilities up the wazoo in a decades time.
> The bike’s only have a lifetime of a couple years
What's your source for this figure?
> and the experience isn’t that great.
According to whom? You? Or the legions of apparently very satisfied subscribers?
Mike biggest complaint is the music change. Way too many knock-off versions of songs by “studio musicians” instead of the original artists... https://www.engadget.com/2019/04/25/peloton-users-music-comp...
I can see a game like Mario Kart being very popular.
But the general and administrative costs in 2019 seem ridiculously high. The tender offer last year only makes up 1/3 of that increase. What's up with that?
$915000000 revenue / 1800 full-time employees = ~$500k revenue per employee, though.
I was also surprised to see the margins on the bike itself are about the same as on the subscription business. They have room to lower the price of the bikes to get more customers hooked on that sweet, sweet recurring subscription revenue.
The lie factor of the "Peloton's Current Markets" chart is 4.2. The lie factor of the "U.S. Only" chart is 5.8.
Losses going up 4x year over year to $200m on $1b in revenue is pretty insane though.
Once consumer credit dries up, this company goes poof
"Nice" gyms like Equinox are of course significantly more. It's important to segment the gym market into different tiers and niches, and figure out what the market size is for each. Same as for direct equipment sales like this.
To your point, though, I suspect the people who would pony up for a Peloton are the same people who would splurge for a $100/month gym membership instead of a 24 hour, Planet Fitness, or local hole in the wall gym.
It's obviously not for people like me who would happily buy a set of used free weights for a few hundred bucks if I had a garage or basement.
Grouping this by complete weeks (excluding weeks where we don't have a complete Monday -> Friday list) we get totals of 45, 37, 27, 28, 30, in that order. Don't know what typical trends are by time of year, etc. HN has had a flurry of posts about S1s, but this trend doesn't seem to be the sudden uptick it has seemed to be on HN.
It isn’t even clear that there is a risk of a recession according to some economic indicators.
It does seem like there are a number of them, but maybe that's just my impression. Anyone got numbers?
EDIT: my bad interpreting the loss format, they are not profitable.
> We have incurred operating losses each year since our inception in 2012, including net losses of $(71.1) million, $(47.9) million, and $(195.6) million for fiscal 2017, 2018, and 2019, respectively, and expect to continue to incur net losses for the foreseeable future.
They've never been profitable.