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.
Lastly, their competition is FREE. You can go running and biking outside. It is nice out there. Even a gym subscription provides more value.
And yet, people buy millions of stationary bikes, rowers, and treadmills. People actually commonly drive to the gym in amazing weather just to run on the treadmill.
And people clearly disagree with you on Peloton and whether it has no value vs. riding a bike outside (which isn't free either, or even remotely the same experience), or they wouldn't have sold 250,000 of them.
Also, you don't need much space for one of these bikes. I have multiple friends who have them in NYC apartments. I bet 80% of the US has enough space for one of these. The upfront cost is the bigger issue...and yet they've sold hundreds of thousands.
Maybe people just value things differently than you?
Apple just proved that you don’t have to cater to 90% of the world to be successful if you can cater to the top 10%
As far as competition being “free”. That free competition also depends on weather and safety.
“Community being overrated?” - the market value of Facebook kind of disproves that.
I hate working out outside. In fact, I trained for an entire half marathon - and did pretty well all things considered, my time was faster outdoors - on a treadmill.
I have a bedroom that I converted to a home gym with weights, a treadmill, an elliptical, and soon a mid range stationary bike. It’s well worth not having to schedule my workout at a time the gym is open or leaving the house.
Once I stopped teaching fitness classes part time, I really didn’t feel inclined to go the gym. At home, I just go to the next room, turn the TV on and workout.
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.
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.
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.
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.
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.
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.
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.
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.
> 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.
Kickr/Tacx/etc + $600-800 road bike + Zwift and you have comparable experience. Sure you wont get the human in your face thing, but a lot of communities on Zwift are embracing voice chat to communicate during the rides. Combine this with a much more realistic feeling to riding and it's pretty hard to beat. Thankfully some more companies are beginning to show up to try and make Zwift get better (like RoadGrandTour).
You know you don't have to turn it on right? My mother has one that I've used and I just treat it like an old exercise bike. There's a knob between your legs for adjusting the difficulty.
I know you can do all that, but it's hard, and I'm kind of surprised they've raised a billion dollars to build and market this, given it's relative shortcomings. If you had told me they raised $20 million, I would have been surprised. Today I found out they raised $1 billion...I don't have any words to describe my shock.
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.
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.
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?
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.
> 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:
> Also a good spin bike does a better job at keeping momentum
With smart trainers this is no longer a thing. They can more reliably control the resistance to mimic the elevation percentage and rolling stop/downhill feel. If you are serious in anyway about riding there is no reason to not have a smart trainer at this point.
My bike cost like 4k (scott plasma), and my trainer cost 1k (wahoo kickr). Peloton is a "cheap bike" for me. I don't think I am that abnormal in the tri community.
(I actually sold my kickr and tri bike to fund my startup, but 5k on bikes is not much in the tri world)
I haven't used Zwift, but riding virtually with other people on virtual roads where you can chat as you ride is totally different from a typical spin class.
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.
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.
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?
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.
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.
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.
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.
Can't comment on the money side of things since I didn't take regular studio cycling before. (And let's say price is not an issue for any readers here on HN)
However, the product itself is very well put together. It is a really good studio grade bike to begin with, and the classes are constantly updated. The leaderboard and all keeps you motivated and I do find myself doing more cardio now I can utilize 20 30 or 45 mins for a quick workout (as opposed to driving to the gym, parking and change etc.)
I got one this year. When I had a membership at a gym, I didn’t really use it. Now I am on the bike 5 times a week. So it works for me and they’ve done a good job.
Not necessarily. At many YMCAs (in the US at least), unlimited group exercise classes are included with a monthly membership. 3 days/week, I teach an early-morning cycling class at a Y in St. Louis, using a "canned" format named SPRINT:
Understandable. I've found that I neither have the drive nor time (busy software developer) to create my own playlists and workout plans. I greatly respect instructors who do that week in and week out!
I find what LM puts together to generally be pretty good. I also teach their BODYPUMP and CXWORX formats (used to teach GRIT as well). By experience, I've learned that to keep class participants happy, it's best to rotate material every 2–3 weeks. That keeps me and them from getting too bored of a workout, but also allows them time to master technique and discover areas in which they can push a little harder. LM publishes new stuff every 3 months, and I've built up substantial catalogs of quarterly releases, so it works out pretty well.
I am also a software developer. When I first started teaching was back in the days of Napster before iTunes. When the iTunes music store came along it was like manna from heaven. For cycling, boot camp, and the occasional water aerobics classes it was easy to put together a playlist just choose songs based on the drills.
For classes where I had to stay on beat like step, cardio kickboxing (early on, it was a fad), and general strength training, it was a combination of buying 32 count aerobic mixes and creating my own consistent beat mixes music with CoolEdit (now Adobe Audition).
I could find plenty of 32 count combos by going to other instructors classes and turnstep.com.
My wife just started teaching for a local les mills type organization that has prechoreagraphed workouts and she loves it and her classes do look fun especially for people who naturally have rythym and can dance.
I had neither, but I could do pretty well to standard 128-136 bpm, 32 count phrased music.
LM formats, at least the ones I teach, mostly consist "counts of 8". With respect to beats in the music, each count is 2 beats. In BODYUMP, for example, a "slow" clean-and-press is 8 counts (instructor can comfortably and naturally say aloud 1-2-3-4-..., from start to finish of the movement), but it's indicated on the choreography sheet as 2x8. In SPRINT (HIIT cycling), I might say something like: "next interval is 25 seconds seated sprint, then 10 seconds standing power, then another 25 seconds seated sprint, then rest for 25 seconds". That equates to head-counting with the music of 8x8, 4x8, 8x8, 8x8; but strictly by beats would be 16x8, 8x8, 16x8, 16x8.
that just seems like a staggering up front cost to be combined with a monthly service. Actually it appears you are locked into an initial 12 month contract. Reading reviews on their site it doesn't seem to be widespread acclaims, some of the negative reviews are pretty amazing. This cost structure is higher than some gym programs and many of those went to month to month which encourages them to keep delivering a good service.
Basically they offloaded the risk to the customer which is the opposite of the old razor blade business model. Reminds me a bit of that Juice Squeezer that failed. However I doubt Peloton is losing anything on the stationary bicycles or treadmills.
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"
>"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.
Being part of the high quality online classes, with a professional class bike, integrated directly with a personalized app... it's a complete experience. Trivializing it down to buying shoes and a road bike would be ignorant to how the average person purchases products (for emotional experience first, not some robotic rational process measured in dollars per ROI).
Everyone has different ways of getting healthy. You're right, you can get fit for exactly $0. But if you're the type of person that dreads the gym and puts it off, an upbeat fun workout with friends can make a difference.
Having a cheaper alternative is moot if you don't actually bring yourself to do it. There's something to be said for saving money, sure, but there's also something to be said for acknowledging what actually works for you rather than fighting it.
I bought a $20 stainless steel water bottle 4 years ago and now I have water with me all the time. I can’t imagine wasting a disposable plastic bottle every time I’m thirsty, that’s insanely wasteful.
I’ve never been a part of a for profit gym. I had free memberships at the Y and corporate gyms for over ten years as a part time fitness instructor and also taught at country clubs, and large churches. It wasn’t until my wife started teaching fitness classes part time at commercial gyms, that I got an up close and personal idea of how scammy they all felt. The classes where I use to teach were all free with memberships.
What? Fitness is just "do more, eat less". Do some pushups, run up some stairs, and stop eating sugar. That'll get you healthier than 90% of people. And it's free.
It's ridiculous how much complexity and BS has been added on top that people seem to think they need to get healthy.
Treadmills as a service have become big business. The services on offer are:
- Live classes/instruction
- Recorded classes/back-catalogue
- Being able to cycle real routes (e.g. major cycling events, popular cities, etc)
- Games (although still early/poor)
So the differentiator becomes what is behind the screen, and what a subscription offers you, rather than who can produce the nicest fly wheel or similar.
You're not the only one. I came to the comments here primarily to see if someone would remind me what this company does. (Of course, I could also have just Googled.)
I think it's fairly safe to assume that, if someone landed on your article, they had some sort of interest (or perhaps possessed the information literacy to figure out context) in the first place and you don't need to reintroduce the basics to every single reader.
You could also click the company name to get the Crunchbase company overview.
It’s not safe to assume that. because you can land on the article without having any sort of interest aside from “ooh who is this new billion dollar company?”
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!
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...
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.
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.
I think there are two distinct markets and personas here:
"Wahoo / Strava / Zwift / Trainer Road / Training Peaks" cater to competitive cyclists which is niche group (huge downtrend in bike racing; look at #s from long running races as evidence).
Peloton is more geared towards "fitness" and otherwise would be gym and spin class goers; this is a much bigger market.
Second that, and in the north central US it takes real hardcore riders to brave the snow and ice on mountain or fatbikes in the winter.
Having said that: Zwift + decent road/TT bike + power pedal/feedback trainer is more cost-effective in the long run and you get to actually take your bike outside on rides (gasp) to boot. Not sure why people like to watch some instructor sweat - give me nice scenery with other actual riders any day.
Zwift also happens to work for running with a treadmill and supported foot pod, but I haven't tried this yet. It's easier to run outside in the winter than to cycle outside in the winter!
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.
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.
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.
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?
