Peloton – A call for action [pdf] | Hacker News Reader

Peloton – A call for action [pdf]

blackwellscap.com

322 pointsa-bit-of-code270 comments

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.

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)

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...

It makes the assumption that a buyer could run it more successfully. Which I think is fairly reasonable.

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.

There’s a lot of room to be more successful and still lose money.

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.

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 ).

> 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.

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 :)

It depends on the climate of where you live. Some places just don’t have the right kind of weather year round.

What weather would make your bicycle unrideable?

I can only think of heavy snow if you don't have fat tires, or maybe sun and 40+ degrees celcius.

So yeah the two things you mentioned.

PNW black ice. I’ve lost count of the number of times that I ended up on the ground with torn tights and a bleeding elbow, wondering what the hell just happened. Now if it is between 30F-39F, I’ll just skip that ride.

> black ice

This. Pre-covid I cycled to work each day, and at 5am (!) black ice was frequently a nightmare on cycle paths that had smoother tarmac than the road.

As some who felt the same way but now lives somewhere with snow on the ground this of year it’s nice to still be able to cycle without the freezing cold and ice patches.

My 2-cents on this as someone who owns a Peloton. Riding a bike is great but doing it for 30-60 minutes 5 times a week is a bit hard to do. We do most of our riding while our toddler naps. I certainly can't leave him alone at home to go bike. I don't live somewhere where it's safe to bike during the day, I certainly can't do it when visibility is anything less than stellar. Where I live is mostly flat, I can't get the type of workout riding outside that I can riding inside where I can more granularity control resistance.

This doesn't replace riding outdoors, it gives you a consistent, reproducible, and flexible way to work out on terms that you can more easily control.

Drive around Denver for a day and observe all the people on cell phones swerving into the bike lanes. I wouldn’t ride a bike around here at gunpoint.

It's right there in your house, you can hop on and hop off whenever you want, you don't have to finish your trip like with a regular bike where you'd have to bike back home. Lots of reasons, primarily being the convenience of it.

> it seemed more like a niche product rather than a gym replacement

I don't know, I have a peloton. I've never been in a gym in my life.

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.

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

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"

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.

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...

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.

> 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.

The fact is. Not every company can be a $12B company. Peloton might be a super successful $1B company, who slowly tries to creep into new areas for growth.

And it sounds like Blackwell understand this, and instead of pushing for Peloton to focus internally on its product and get rid of the extra fat, they want a fast sale to a not-really-smart company. So they can at least get some ROI

People talk about monthly fees being high or fair, thats not it at all, Pelotons prices for hardware and membership or completely fine. What they did do is

* Pouring money into building their own factories (even Apple doesn't do this at their scale, they pay Foxconn)

* Building a full fledged apparel brand

* Hiring way too many engineers, FAANG level org size

* Having their own warehouses and delivery full time employees

No other company does this. I'm not sure what the long term plan was, maybe they become a white label manufacturer for other start ups? It failed, badly

You do not need 14,000, or 11,000, or 3,000 employees to do what Peloton currently does (again, maybe they had grandiose plans in the pipeline). If we want to compare proprietary hardware + Android + online streaming service. When MIRROR was bought out by Lululemon for $500M, they had 200 employees

I have a feeling no one has offered Foley more than $3B for the company, and i'm being generous

Their apparel brand is a joke. It’s run by Foley’s wife. Unless I messed something, what experience or qualification does she have in apparel?

Never mind the fact that I’ve maybe seen only 3 people in the real world wearing anything that is Peloton branded (no, the free Century t-shirt doesn’t count).

Personally, I find their apparel to be a little loud and obnoxious, but that’s just me. As a consumer, I don’t see what value they bring to the apparel market. Nothing new, just branding.

Just for a counterpoint, as commented in a previous thread, my partner and her friends are obsessed with the culture of peloton and they all wear a considerable amount of peloton clothing. It’s been a predictable gift given among her friends over the last 2-3 years.

Any clothing with a logo on it is nothing new, just branding. Nike does pretty well.

The HN crowd is always quick to point out that Peloton has no moat - its just a screen on a bike. Creating a lifestyle brand (ala in person fitness brands like Soulcycle or Barrys) is a way to address that moat, and apparel is a core part of that.

Whether or not they were successful is an execution issue.

How would having a lifestyle brand create a moat? How would you define "moat"?

(Genuine questions, I have no position on the issue and no real knowledge in the area)

Branding is a bit of a moat that puts you ahead of other competitors. Literal true story but perhaps a counter example: my wife is considering buying an exercise bike and is trying to choose between Peloton and Beachbody. Everyone online seems to be suggesting she buy the Peloton. She is a little torn, because she already has done non-bike exercises on Beachbody for several years. Peloton has the leg up for the bike, because it has the best branding in that area; however, my wife was at least willing to consider Beachbody, because of her previous experience with their brand.

I use moat here in the sense that it creates some level of defense against competitors. Nike's shoes obviously contain a lot of advanced technology in it, but the strength of their brand what shields them against a newcomers and generics selling similar items.

IIUC, the classes/instructors are the moat.

Instructors definitely are, but I think they recognize that it would be very easy to poach an instructor to jumpstart a competitor.

I just took a look at Peloton apparel and I don't see how you could class it as "loud and obnoxious". Most of it looks like pretty generic branded fitness gear. If anything it's especially understated compared to the competition.

Considering how strong the brand is I think apparel is a genius idea for growth. It has just been mismanaged due to nepotism.

Apparel makes sense.

It’s very high margin and the company is in a great position to market to fitness conscious people. But I don’t see it ever being more than a side business.

Why would Blackwell buy into a $12B company in order to make it a $1B company?

It might make peleton live longer but it would lose a lot of money for their LPs

From Matt Levine’s Money Stuff piece on this:

> In a sense, the pitch here is straightforward. Blackwells does not think that Foley is very good at running Peloton. The stock market does not think that Foley is very good at running Peloton, in that the stock is down 80% from its highs last year and spent last week below its 2019 initial public offering price of $29. (It’s up today.) And Foley does not think he’s particularly good at running Peloton, at least if you believe the quotes that Blackwells selected here. If someone else takes over the day-to-day running of Peloton, or the process of selling it to a better owner (and Blackwells is also pushing for a sale), then Foley will have more money (because he owns a lot of Peloton stock) and also more free time (because he’s not running Peloton). It is no fun to do a job that you’re not good at, particularly when doing that job costs you money. If you can get in a room with Foley, or just lob a PowerPoint deck at him, and explain “hey, everyone is mad at you, you’re not having fun and it’s making you poorer,” that’s fairly persuasive and maybe he’ll listen. He did!

Sidenote: I suggest subscribing to Money Stuff. It’s a free email newsletter, and Matt’s writing is stellar.

Why did any shareholder buy into the hype? When Peloton decided building their own personal factory in Ohio was a great use of money, their shareholders and fans cheered about how great idea it was. We're getting healthy and helping unemployment in the rust belt! Same for having a full time Peloton employee drive the bike to your home

Those decisions made absolutely no sense financially, and were immediately shut down once the CEO changed. But when they were decided Wall Street was cheering them on

The factory part aside, white glove delivery is not unheard of in premium offerings of various items. It makes perfect sense to have white glove treatment for the delivery of Peloton devices, and you can almost always guarantee the customer interaction is better when your employees are in-house instead of contracted.

Peloton is far from the only expensive product being shipped coast to coast. You let someone else do the work for you. I'm going on a whim and guessing that a Tesla being delivered to your door, is not delivered by a full time Tesla employee

And to double down on that - starting 2 days ago, Everyone receiving a Peloton will receive it from a non-employee

Peloton does not use FT employees to deliver everywhere in the US and I know for a fact that their first-party delivery is a far better experience than when you get third-party delivery.

They have virtually no experience on their C-suite in managing complex logistics problems. The people they hire from FAANG are mediocre middle managers who then get titles like VP or SVP. They are trying to scale too fast to keep up with their valuation, without a clear vision.

> Hiring way too many engineers, FAANG level org size

Ahem... that's now FAAAN (facebook, apple, alphabet, amazon, netflix)

I'm sorry, I hated to write this, and for what it's worth I didn't know what you meant by FAANG... had to look it up only to find the term has fallen from use.

Don't you mean MAAAN?

or MAANA

I think Netflix should be removed, MAGA.

You're missing Microsoft: MANAMA

Pouring money into building their own factories (even Apple doesn't do this at their scale, they pay Foxconn)

Is it possible to run a manufacturing business in the US without slave labor somewhere?

I don't think the "building their own factories" is as cut and dry. Here in Australia, many of these small to medium sized businesses do their own manufacturing in house. I believe it depends on margin and volume.

The examples I'm referring to are Rode Microphones, Cochlear hearing aids, and ResMed CPAP machines, are all manufactured in Australia (though I'm not sure all of their world-wide manufacturing happens here, they could have other factories).

Would love to get the feedback from people who may have any idea in where and why it sometimes make sense to do your own manufacturing.

My issue with Peleton has always been that the cost for a stationary bike is more than the cost of my road bike, and about the same prices as my mountain bike. From my user name, you may be able to tell... I ride, but how many people want to spend the kind of money Peleton is charging to ride indoors?

They got the early adopters who were willing to pay the price, but they may have run out of consumers. I know of a few people who LOVE their Peleton, I don't know of anybody who doesn't have one that wants one.

> I know of a few people who LOVE their Peleton, I don't know of anybody who doesn't have one that wants one.

Bingo. The growth opportunities at this price point seem to be close to zero. Move the price point by a factor of 5, and maybe (maybe) that changes.

Meanwhile, you can pry my Racermate Computrainer from my cold, dead hands :)

> Q: Is there anything about being CEO that you don’t like, that you like to delegate?

> A: Finance. Our CFO does 99% of finance. I engage because I want to know how we’re doing. But to say I don’t add value to her operation is an understatement. You can also say the same with technology. Our CTO doesn’t get any help from me. I’ll go sometimes months without talking to our CTO, which as a CEO of a technology company, that’s kind of rare.

Wow...

One might ask, if the CEO does 1% of finance, and 0% of technology, what does a CEO do? Office, HR, comms management?

Marketing and sales

How can you do Marketing without looking at the curre t development to Merker the new features?

How can you do sales without feeding customer feedback back into development?

How can you do all that without looking at the numbers to see what you can afford?

I've seen many times sellers selling things that didn't exist yet. Maybe a term describing that is Market Development. It doesn't end well every time but there is usually time to cope with customers after they signed a contract.

> How can you do Marketing without looking at the curre t development to Merker the new features?

Marketing shit that’s not out is just barely better than marketing shit that’s not even planned.

> How can you do sales without feeding customer feedback back into development?

Surely you have normal channels for doing that and it doesn’t require the CEO to talk to the CTO?

I don't know anything about Peloton, but my impression is that they're selling a way of life much more than a device with a particular set of features.

On the CEO level, marketing and sales might very much be all about mood, positioning, culture etc and very little about the display pixel density or the logistics.

I'm not saying that this is sensible, I'm just saying that lots of companies are run this way and a CEO saying they don't sync with tech nor finance every day doesn't necessarily disqualify them.

This guy built a pretty big company pretty fast so he's gotta have done something right. Maybe let's not go all-in with an activist investor's cherry-picked quotes of an uncommonly honest/humble CEO.

Isnt that called 'business development' at the C-level?

"Well--well look. I already told you: I deal with the god damn customers so the engineers don't have to. I have people skills; I am good at dealing with people. Can't you understand that? What the hell is wrong with you people?"

"Office Space" reference for anyone wondering[0]. Another Mike Judge's gift to us.

[0] https://www.youtube.com/watch?v=hNuu9CpdjIo

It's funny, before I starting working as a developer I thought this guy was useless, but now I understand how valuable not having to deal with the customers actually is.

It’s also one of those jobs that is hard to measure the performance of.

As much as we make fun of the new Agile/Startup/SV world, it looks like I'd absolutely dread work on a 90's Software company (though granted this is exagerated for comedic purposes).

He's the Chief Enthusiasm Officer:

> Peloton has been horribly mismanaged, with unbridled enthusiasm taking the place of disciplined leadership

In the startup I worked at in college, one of the most visible jobs our CEO did was talking with investors to get the next round of funding. He was also the top-level business strategy guy (for an example in a more mature company, look at the difference Nadella made to Microsoft's strategy relative to Ballmer), although implementation details were delegated to other roles (that he was responsible for hiring).

The main job of the CEO is to manage the board of directors (i.e. the shareholders). And the main job of the board of directors is to decide when to fire the CEO.

> The main job of the CEO is to manage the board of directors (i.e. the shareholders).

Uh, no. Dealing with the board is indeed part of the job for the CEO, but a relatively small part unless you're doing poorly.

The CEO is also managing the direction of the company, and managing the top-level managers of the various departments. The CEO has to fight the fires, and allocate limited resources to where they are needed across all departments.

You're right, but I think parent was joking

Half-joking, but yeah. "Managing the board of directors" of course means keeping the board happy, which is done by what ansible wrote. Not just directly trying to talk them out of firing the CEO.

Of course. Jokes aren't funny if they aren't at least a little bit true!

The deck also calls out another interview where he said he does very interviews (meaning hiring decisions). The deck also calls out that he gave an executive role to his wife.

Amazing. I just hope Matt Levine (of Bloomberg’s money stuff) has seen this deck today.

It was in the newsletter 2 days ago

Thanks, I missed it. Here it is:

https://www.bloomberg.com/opinion/articles/2022-02-08/peloto...

He covered it a couple of days ago.

It's here:

https://www.bloomberg.com/opinion/articles/2022-02-08/peloto...

As someone who's been a CTO at times in the past, I wish I'd worked with a CEO like that. There are few things worse than having a leadership team who don't trust you to deliver the tech that drives the company's ideas.

Of course overly managing the CTO is also bad, but would you really like to "go sometimes months" without talking to the CEO? Especially during a pandemic in which your product becomes the hot new thing?

yeah, on the surface it is a bit weird, Peloton has capital intensive hardware, there should be some interaction as to how much capital is allocated to the technology, product releases etc.

It would be absolutely alarming to go even a week without speaking to the CEO in some capacity. How can you have a strong leadership team if they aren’t communicating?

>> I’ll go sometimes months without talking to our CTO,

> ...leadership team who don't trust you ....

When did talking come to mean having trust issues!!?

I mean I get the sentiment but months? Which kind of company size are we talking? I'm not saying you should talk to your CEO every week, but twice a year sounds really weird to me.

At a tech company? Definitely the CTO and CEO should be talking every week.

Months is VERY weird.

I mean you are both part of the executive team. The CEO is an immediate part of your working group. You probably should be talking almost daily at times.

It would be like the product manager never talking to their team’s engineering manager. The two are tied at the hip—at least in orgs I’ve worked at.

Although I agree with the other child posts here, I also agree with your sentiment. As a CTO, an interfering CEO is worse than one who doesn’t engage at all. But ideally it’s a collegial relationship.

Having your CEO change course every two months is definitely worse - just let me finish something! (it was a hardware company so there's not really such thing as a pivot)

I've had experiences like that both as CTO and Director of Engineering - I vividly remember one exchange when I'd been at a company for a month or so:

CEO: How are you fitting in?

Me: Good, I've got a good handle on where we want to take the product.

CEO: I know you don't.

Me: OK, care to explain?

CEO: I've just changed the vision for the product!

This was also a company with a significant hardware component.

How do you make sure you are aligned and that you both see the problems, challenges and opportunities that one party sees?

This looks more like a traditional company than a tech company, which is not helped by it being based in NYC. The CEO and CFO are probably buddy-buddy while the CTO is an outsider "geek."

I am not so sure why this sounds odd. All successful startup that I have seen, had a great builder and a great seller. A CFO/COO running internal operations and finance is great to have. So since he is not the builder and obviously not the CFO/COO, he could still be a very successful CEO by being the seller, who is advocating for the company on the market. Think Steve Jobs. Wasn't the CEO of Peloton not that kind of guy?

Steve Jobs was one of the most micromanaging CEOs I've read about. He overruled many CTO decisions during his time at Apple, both at the founding of the company and upon his return to the company years later, so I wouldn't use him as a comparable example. You'll rarely find a good CEO that isn't intimately aware of the current actions and goals of each other executive. What you're describing would be the role of a CMO, which Foley is not.

> He overruled many CTO decisions during his time at Apple

That is not micromanaging.

That's the CEO's job. Take input from whatever valuable sources you have, and decide on behalf of the entire organization.

Steve Jobs was a lot of things over the decades. But a micromanager, he was not.

I can't tell if this is just humility / delegation coming off poorly or an actual disengaged CEO.

I also think it can be helpful to self-deprecate a bit as a leader but I'm not sure why all these statements got published in public.

At the very least, it shows poor communication skills.

If you have a fantastic CFO, that's great. Just say that. "I'm very confident in person X." or "We have a great team who's been doing a great job." Things like that.

You don't say: "I don't add any value." That makes you sound like an empty suit.

Also the "I haven't talked to my CTO in months" sounds really bad. How the eff are you planning new product launches? Shouldn't the CEO at least be aware of any ongoing issues with current products? Talk about the plan to reduce hosting costs? Anything? WTF

This might be a cultural bias, but for me (being German) what the CEO said sounds much more honest and trustworthy than what you suggest.

To me, that seems to give off the vibe that he was confident in the business, basically striking a golden goose. And wants to not interfere with it.

It could also show apathy and lack of concern because he wants to cash out.

So many words trying to obfuscate the simple fact that “We are a treadmill maker trying to masquerade as a tech company.”

A treadmill maker trying to get users to pay monthly subscription to use it...

The subscribers aren't subscribing for using the treadmill, they are subscribing for fitness courses and the likes.

Which... isn't a bad business model per se IMO. With the current trend of "self improvement", there are enough people willing to pay lots of money, for everything from gym memberships to individual personal trainers.

The issue is: this is not going to be an exponential-stock-growth-style business model, as many seem to expect. There is no hope for the usual "undercut the competition in pricing and establish a monopoly that can be used for rent-seeking afterwards" VC model, no hope for a make-everyone-filthy-rich acquisition by an established market player, at best this is going to be a steady, "boring" cash cow.

(Note, I don't hold any stakes in Peloton or competitors)

Aren't gyms generally famous for cashing in on people who sign up for memberships they never actually use? Seems like a genius plan to disrupt that tried and tested business model with a more efficient alternative where users buy the gyms for you so you don't need to maintain them.

(unless you want your job to be meaningful or something)

I think Richard Simmons already brought us this disruption, and you can pay what you want at the closest yard sale!

The slide deck is comical in its defensiveness of the company itself, how does one compare video remote classes with boutique classes that had better have 8- students to explain $300/month?! Or is this people in LA assuming their local phenomenons are normal?

Second hand kit? Aren't you and your goals of self improvement worth more than that? ;-)

I do agree on costs, though. I'm a pretty keen cyclist (outdoors) and dabble in running. I have tried various fitness apps like Strava out of curiosity, even played around trying to analyze my own gps traces in Jupyter to figure out my aerobic threshold. But I don't see any of the apps as worth paying a subscription for [1].

[1] Except maybe trailforks, if I'm on holiday in an area I don't know that has unofficial mtb trails well documented on that platform. But now they've made it proprietary I'm far less inclined to contribute my own trails to the database, so go figure.

> With the current trend of "self improvement"

Expecting long term income from trend followers.

You don't need any of their hardware. A large portion of the courses are exercises that need nothing but a floor. The quality of the classes is very good. Its a SaaS media company with an optional hardware upsell.

This is not a core part of their business and never will be because there is an unlimited amount of this content available for free on Youtube.

Is that similar to a video store masquerading as a tech company? Or a book store masquerading as a tech company? Or an apple masquerading ... Oh wait, that actually IS a tech company.

I kind of agree it's time to depedestalize "tech"founders. Every company is a tech company and their bosses can be just as scumbags. The religion that worships infotech as inherently unevil and idealistic needs to die.

The fawning over Steve Jobs (and I don't mean apple coolaid folk) is always bizarre, and I think really drove a lot of the "super star ceo" nonsense these days.

I'm not saying he didn't save apple or whatever, I'm just unconvinced that being that particular model of arrogance was necessary part of said "saving". Obviously we can't roll back time and replace him with an identical clone with the only difference being that he didn't shout at people or have personal vendettas against other people.

I don't recall similar stories about Bill Gates, and yet MS clearly did well.

> I don't recall similar stories about Bill Gates

I don't know about yelling and vendettas, but he has a checkered relationship with the open source/hobbyist community because he imposed proprietary licensing on his BASIC implementation despite the computer hobbyists of the time working more on a FOSS model. When hobbyists copied his software despite the license, he wrote an open letter claiming they were stealing from him. However, the rampant copying also meant Microsoft Basic became the most popular variant which solidified Microsoft's market lead.

https://en.wikipedia.org/wiki/Open_Letter_to_Hobbyists

I think the point is more about people who worked with Gates not having that many bad things to say about him. I used to follow MSFT news very closely during the Gates era and invariably you'd hear stories how people at the company genuinely liked him.

Steve Jobs was, quite likely, one of the biggest jerks in Silicon Valley history. I've worked with two people, over the years, who worked closely with (or directly under) him, at one point or another, and they both loathed him. I mean serious hate. It was pretty shocking, as they were very calm, likable folks, otherwise.

He was, unquestionably, a true visionary, though, and his obsessive, brutal management style, allowed him to implement his visions, with little interference. It reminds me of the "bad guy" in Braveheart, Edward "Longshanks" the First. He was a complete bastard, but he also unified a lot of what is now Britain.

Steve Jobs was also an outstanding persuasive speaker. He could not only convince you that the world was flat, but sell you First Class tickets, on a boat to the edge. The "RDF" was real.

But so many people think that dressing, and acting, like Steve Jobs will somehow allow them to channel him (see: "Cargo Cult"). They get the "asshole" part down, but can't quite synthesize the "visionary" part.

It's a bit ironic that Tim Cook is sort of the polar opposite of Jobs. It seems to me, that he's actually a rather decent chap (as much as any CEO can be).

You mean you shouldn’t admire a CEO who took a company from near bankruptcy in 1997 to the most valuable company in the US in 2011?

You should also admire the boy who took his dorm-gossip php script and made it the world's biggest media empire

Wall Street thought he was a loser too after we was fired as CEO of Apple and just another dumb founder and he should sell his company to IBM. This story repeats again and again. Steve Jobs proved them all wrong and now everything Apple does is brilliant and they should buy Peloton.

Jobs was never CEO during his first tenure.

I said fawning.

Business people, startup people, VC funders, etc all idolize a specific image of Jobs, which mostly appears to focus on how he dressed, and how he was an asshole to people.

We will never know if being an asshole was needed to get Apple to where he got it, I'm inclined to think it isn't.

Beautiful word you coined there, btw: "depedestalize". Maybe "depedestal" is enough, but at any rate, one knows exactly what's meant.

I know plenty of people who argue about whether Netflix is a tech company - certainly their infrastructure is non-trivial but are they meaningfully different from HBO?

For Amazon though, it's incorrect to refer to them as a bookstore - AWS is a huge portion of their revenue.

On the other hand you have Google and Facebook that people call technology companies, but their core business is advertising.

I think at this point "tech" in "tech company" doesn't mean technology, because otherwise surely Lockheed Martin, Raytheon, etc would surely be tech companies?

I think of "tech" companies as companies where you've got large fixed costs to build out and maintain the product, but the marginal cost of your product is very close to zero.

So Facebook and JCDecaux are both advertising companies, but only Facebook is a "tech" company.

Lockheed Martin is a tech company, but Google is a "tech" company.

I don't think it's a great term for that kind of company.

In spirit it's to take big bets on things that may not work; the transistor radio, the microprocessor. The eventual goal is to push forward something potentially for the social welfare such as say a logarithm table or star catalog in an earlier time.

Companies like Uber or Netflix don't do this. They're platform for rent-seeking of services or durable goods (or perhaps call it "assisted living for people under 60")

Tech investing (big bets in say, a new solar panel manufacturing technique) has really been replaced with very conventional investing that uses technology (a platform to say rent panels out and have the rental fees paid by the power sold back to the utility company).

Sand Hill Road has lost its mojo. I'm part of the problem. The rentier multisource funding model sounds way more attractive to me then some technical way to reduce manufacturing costs by say 80%.

Our minds have been polluted. We need to get back to the fundamentals and avoid the lemon squeezing extractive stuff. That's not how we move things forward and it's part of the reason many people have lost faith in capitalism; it's become too much a siphoning of the commons instead of a servicing to it. It needs a reorientation.

How is Netflix “rent seeking?” They pay up front to either license or produce shows.

It's an academic economic term. Economic rent isn't the same as the common term. Taking a back catalog of content and charging for the right to view is a form of academic, economic rent. Licensing models, such as a video store, are frequently used as examples of rentierism.

I've got zero interest getting into one of those internet "debates" where a bunch of people extremely unfamiliar with concepts flex their knowledge to show me how "wrong" I am. No interest

Have a good day and forget about it

> Rent seeking (or rent-seeking) is an economic concept that occurs when an entity seeks to gain added wealth without any reciprocal contribution of productivity.

Are you really saying that Netflix offers no “contribution of productivity.”? Or that they don’t have any added value.

If you had said that the 30% App Store fee is “rent seeking”, I would agree with you.

Sorry, I've got lots to do today. Have a great day

Yes because you’re the only person on the internet who knows economics

FYI: I have an MBA that I never used…

Thus you show your hand. Your intentions are purely hostile, insincere, argumentative and spiteful. You've got exactly zero genuine interest. You are simply trolling. I've seen enough attacks in defense of ignorance to know not to play. This is my final reply. Further baiting will be ignored

There is two sides to Netflix. One is the content side, which is much like HBO, and the other side is the infrastructure side, which without a doubt is a tech company. They could contract out their infrastructure and they would surely not be a tech company, but as long as they develop that, they are a tech company in my book.

Does HBO develop its own steaming infrastructure?

They use BAMTech, now owned by Disney.

I think of tech companies whose main purpose is to sell or make software for businesses and people. Netflix is a media company. Tesla is a car company. Apple is both a consumer device company and tech company. Peleton is a fitness company.

Treadmills are a uniquely obtrusive, pointless, and expensive product

You've never owned, or likely even used, a really good one.

I don't know if Peleton makes good ones, but Precor certainly does. That said, it was weird of Peleton to overpay for a company that makes expensive fitness equipment purchased largely by gyms, who probably aren't purchasing much of anything these days.

It's not a personally derived anecdote, just an observation. I just don't see people who aren't sufficiently motivated enough to go for a real bike or workout at a gym changing their mind because they consoomed a new $$ one. I do know some people who do, but they basically have no choice in the matter but to do something in winter.

It's like buying an iPad pro and expecting yourself to find an interest in illustration.

You aren't just buying an indoor "replacement" of an outdoor activity. You are also purchasing a coach/work out buddy. It's this latter part that is the differentiator between a normal indoor trainer/treadmill and what Peloton sells.

Right, because treadmills are exactly a boring replacement for an outdoor activity, and you need to augment that to convince people it's different and you should consoom their version.

They may be boring for you, because you have your own experiences, your own inclinations, your own way of seeing stuff.

It's perfectly reasonable to believe that there must be people for which treadmills are incredible.

I like riding and running outside, sometimes really early in the morning when the sea is good for surfing. But I can understand people who would consider the few miles I have to run or ride to the beach utterly boring to ride or run a few days a week.

Other than the different asshole drivers trying to kill me from time to time, there isn't much variety in my outside rides tbh. I can understand someone preferring riding a Peloton bike under nice air-conditioning, with their favorite music in the background, under the watchful eyes of their cat, while watching they kids playing outside.

People are motivated by the most diverse stuff you can imagine.

Sometimes people watch a movie that makes them cry and they decide to learn guitar just like the girl with cancer in movie.

Or they decided to buy a really expensive bike and now this is a big motivator for them to ride everyday.

Or sometimes people live in a cold place, they are shy and have feelings of inadequacy and won't feel good in a gym where they think people will judge them.

Or maybe they are from a minority and kind of don't feel welcome at the only gym in the backwards small town they live.

Of course this is a personal anecdote, but I found in my life plenty of people who were never motivated enough to go to a gym, to learn surfing, to practice jiu-jitsu until they become.

Change the environment, nudge a factor here and there, tweak an incentive here, and maybe you just did enough to motivate someone.

Yes, in some circumstances I absolutely agree, there's a lot of reasons someone wouldn't be motivated to do something, but my opinion is that the overwhelming factor is that they don't find it fun enough to try and overcome those things. Sure, someone might feel uncomfortable at a gym, but often that's a matter of finding one that suits you, getting used to it, or finding it remotely fun for some reason. If you find running satisfying enough, the likelihood that there will be an insurmountable obstacle to doing that is usually low. Buying $400 shoes won't make you love running.

For me, I hate the cold more than I like snowboarding, and I don't really have the money to invest in equipment. If I loved snowboarding enough having had a very good experience initially, perhaps through one of those variables that you mentioned being tweaked, then I'd find a way to do it by sourcing used gear or w/e, but ultimately I just don't like it enough atm to do that. Therefore I'm very much in favor of tweaking anything to explore a new activity, but I'm doubtful that more than a tiny percentage of people stick with it for more than a month because they really wanted to play cancer-girl's song. It wasn't an innate drive to pursue an art, it was an external momentary source of novelty, akin to setting a New Years resolution.

Likewise with ice-skating or something. If you feel genuinely driven to do that, but you don't like skating indoors at the local rink, you'll try and do it regardless of your equipment, and try to find an outdoor rink, or maybe a frozen lake, or pond, or you'll be sad if you can't because you live somewhere too warm with a culture that doesn't support it, or you'll vacation to somewhere colder. I always recommend not trying to find something fun that you don't find fun, but instead just exploring many options horizontally to eventually find something you do find fun. Great, you don't like the gym, try climbing, try hiking, try swimming, try running, whatever. Then think about spending $$ as you see fit to support the thing you're actually compelled to do.

What makes a good treadmill good?

Genuinely curious as I've (in my limited experience) only ever seen them intermittently used a handful of times and then forgotten about. My dad used to buy up used ones for a pittance for their motors which he used for hobby projects, and most of the time they looked unused except for some dust or dry rotting.

I'm not sure what the parameters look like, but the deck needs to exhibit a combination of sturdiness and resilience underfoot to make for a comfortable running surface. Basically it should be springy but not too springy, and only in the normal direction. The frame needs to be solid and massive, again so that the whole thing doesn't move in unwanted directions while using it. The motor should be strong enough to operate smoothly at speeds up to at least 10 to 12 MPH, preferably more to allow for headroom.

Feature-wise, a good treadmill supports inclination of several degrees in the 'up' direction and at least a couple of degrees downward. Obviously the controls need to be responsive and easy to work with while running. And the whole thing needs to be designed without forehead-slapping engineering errors like the ability (much less the tendency) to pull objects beneath the deck. If the belt is exposed at the rear without a cover or guard of some kind, as was notoriously done by Peloton, that would be an example of how not to do it.

Basically, any treadmill that doesn't suck is going to end up weighing a few hundred pounds and costing several thousand dollars. It will be designed with gym use in mind, rather than primarily for home users.

I had a Precor C964 for several years, but sold it when I moved. I eventually replaced it with a similar model from the same company (TRM 425), and I'd say those two models are examples of very good commercial-grade treadmills that will last more or less forever in a home environment. Frankly I liked the older model a bit better, as it had simpler controls with less lag.

I dislike running outside and live somewhere that is freezing cold almost half the year.

I use my treadmill daily. Even if I'm not doing a proper guided run workout, I'll just hop on the treadmill and walk for a couple hours while watching TV instead of just sitting on the couch. It's easily the best purchase I made during the pandemic. I'm not convinced the expensive peloton machines are worth it, but I'm rarely going above 9 mph so my basic one with a TV in front of it and the free peloton subscription provided by my insurance has served me very well.

Well, that's more or less what I was saying in a sense, though I'm a little surprised that anyone would prefer that experience to running outside, supposing it wasn't mid-winter. I personally would prefer to spend the money on snowboarding or something, or living somewhere without winter, or somewhere more interesting to run, but I'm sure there are circumstances that you favour living in that place for.

It sounds like you're fortunate enough to live in an area with good outdoor air quality. There are many places where aerobic exercise without a good HEPA filter in the room with you is almost certainly a net negative for health and longevity.

Also, as others have suggested, Peloton is really a social network... or at least they should think of themselves that way, if they want to make money. Arguably they shouldn't be in the hardware business at all. They are trying to run two radically different businesses, each of which is hard enough on its own.

Certainly, if I lived somewhere with shit air quality, I'd prefer something indoor. But then if I was in the market for a peloton, I'd probably have enough money (which I don't and am not in either case) to live somewhere worthwhile instead of struggling to breath as soon as I step outside. At least, that's where I'd be trying to allocate my money. Idk why someone would want to be a part of a social network to interact with other people who are sitting in one place and who bought the same product. Seems like the friendship would be pretty shallow.

haha your comment reminded me of this incredibly well made video[1]

The punch line "we are not a window blinds company; we are privacy company" takes the cake!

https://www.youtube.com/watch?v=Hv6EMd8dlQk

Haha, damn, that’s perfect!

In the case of Juicero, being a ‘tech company masquerading as a juice company’ is and order of magnitude worse

"tech company" is an obsolete term now. all companies are tech companies

> "tech company" is an obsolete term now. all companies are tech companies

Just have an ear what many employees talk about at the water cooler or coffee machine:

* technology (in the engineering sense): tech company

* software: software company

* something else: ... company (for example finance company)

In other words: Is producing software the actual goal of the company or a means to an end?

* If software is in the opinion of most employees the actual goal of the company: software company

* Is software a means to the end of producing engineering products: tech company

* Is software written for high-frequency trading: finance company or investment company

etc.

And HN eats it up because this company is on the front page on a seemingly weekly basis, so something's working for them.

Their stock dropped like 75% in a bull market. That's what gets the vultures circling. If the CEO was a weirdo who gave some bad interviews while the stock doubled we'd all be calling him an eccentric genius. It works for Elon Musk.

I think they're actually a media company that happens to make hardware.

The loyalty of their customers is a result of the high-production value streamed and recorded classes and the celebrity appeal of their instructors.

They are a realtime content company that just happens to use technology in the same way a tv station is not a theatre troupe. Did they ever try to give the impression of being a tech company?

CEO quote from the link....

> which as a CEO of a technology company

Heh, now they really convinced me that he need to be removed

I get that, but when a lot of what they sell is the subscription, and streaming content still takes some work, I think there's a non-trivial amount of tech that makes that happen.

Peloton does have a lot going for it. From everyone I've heard, their physical products are well made (with the exception of the treadmill issue..). They have extremely low churn which is hard to do in fitness.

The main problem is that they grew too fast. All the pandemic sales were probably just pulled forward from future sales, not a sign of sustainable growth. They overcommitted and now need to trim back again.

Agreed, apart from the fact that their treadmill kills kids, their products are exemplary.

Exemplary? Have you even tried other stationary bikes? You can get a BETTER stationary bike for less than the cost of a Peloton bike.

I thought above poster was sarcastic.

Do you have any recommendations?

Preferably one I don't HAVE to pay a subscription to use...

The fact you called it a stationary bike is kind of telling.

There's two kinds of people:

People who actually know what equivalents to Peloton hardware cost

... and people who think the hardware is overpriced

Powered slatted treadmills started at around $15,000 when the original Tread launched at $4,000

Spin bikes can be $200... they can also be well over $2000, and the Peloton has more in with the over $2,000 models than the $200 Alibaba special.

Heck, you can get a decent enough actual bike that you can actually ride places and a Wahoo Kickr for less.

The treadmill incidents were absolutely terrible but without knowing Peloton's internal design process I don't want to assign blame. Any physical product with powerful motors and moving parts is inherently dangerous, and the best we can do as hardware engineers is to follow the standards as best we can and do a thorough hazard analysis and try to mitigate as much as possible.

Now, if it turns out Peloton did NOT do those things, then they absolutely deserve more blame for the accidents with their treadmills. I know they didn't have a shield behind the belt, but my treadmill doesn't have that either so I am not sure what the standard is without paying for it.

I think it was one kid. Mike Tyson's daughter was killed by a treadmill many years ago. I was kind of surprised that based on the CPSC's numbers, treadmills kill 8.5 people a year on avg.

That's part of the criticism. The investor group was upset that the CEO built up way too much production infrastructure for what should have been viewed as a temporary bump in demand. Peloton is very vertically integrated committed to a ton of capacity they don't need.

While a brutal dressing down of the company, I have to admit that this is one of the most nicely made decks I’ve ever seen.

What is the reasoning behind them sharing this publicly, I wonder?

Increase short interest I guess? Presume they have a massive short position.

No, they own 5% of the company. The deck is not a take down of the company, is a take down of the CEO.

Interesting, thanks for clarifying!

Based on their press releases, it sounds like they actually hold significant stock, hence the urgency to do something about it I guess.

https://www.blackwellscap.com/pressrelease/blackwells-capita...

They want to improve the price as they hold the stock, probably want to offload it and are hoping a CEO change will lead to a price bump.

They're an activist fund. They own 5% of the company, and want the CEO removed.

https://www.reuters.com/business/retail-consumer/activist-bl...

Are we calling slideshows "decks" now?

yes

And here I was thinking my boss wanted to battle me in Magick.

The way I learned it, decks are slideshows that are information-dense and can thus be read independent of a presentation. But Googling it just now reveals that they're interchangeable words.

So... yes.

"POOR DECISION MAKING: UNNECESSARY & EXPENSIVE OFFICE SPACE IN NYC"

This whole report is absolutely scathing, but this particularly stood out to me. I've actually been in a similar situation where a CEO decided he was going to rent extremely expensive office space, in one of the most over the top pricey areas of Los Angeles, simply because it was close to his residence.

This snowballed into other various stupid financial choices, and I was lucky enough to get out before the entire office got fired.

This serves as a very good argument for fully remote companies. Get a corporate we work account for the extremely rare case where you need a physical presence.

The brand is pretty damaged though. They had a short window where the Equinox crowd had nowhere to spend their exorbitant incomes. No shortage of cheaper alternatives exist. I suggest buying a used exercise bike and playing Eye of the Tiger on repeat for 30 minutes.

Infact if you don't have access to Eye of the Tiger you can just sing it to yourself.

Eye of the tiger it's the thrill of the fight, saving money on a used bikes.

> I've actually been in a similar situation where a CEO decided he was going to rent extremely expensive office space, in one of the most over the top pricey areas of Los Angeles, simply because it was close to his residence.

I've seen a CEO move an entire company's headquarters because he personally moved to a mansion on the beach, so now everyone needs to commute from the city across a single bridge onto a touristy beach peninsula every day just so CEO-man can walk to the office.

I think the idea is to have the office space near the physical studio. It's not completely irrational.

It's interesting but I think it's important to take it with a huge pinch of salt. It's obviously designed as a hit piece, pushing their opinion the CEO needs to go, and as such is chock full of selective quotes and figures designed to paint one picture.

ed: the top comment from yesterday says it better https://news.ycombinator.com/item?id=30272154

I have my gripes about Peloton as a former employee (left back in November 2021), but this is just a hit piece. They're taking whatever facts that conveniently fits their narrative.

anything specific you object to?

Interesting to note that the CEO (39.6%) and co-founders (18%) have 58% of the voting power of Peloton's stock.

The sad thing is that they own much less(how much?) than 58% of the stock.

Just like FB, Google and many other companies. You can sell majority ownership and still hold the majority voting power due to dual(and triple) class shares.

This is a perversion of common stocks and stockholders rights.

In old days there would be such a thing as preferred stock which at least granted liquidation preferences to those buying preferred.

I am still shocked that the CEO actually listened to the 5% holders and stepped down.

As Matt Levine rightly stated, Peleton CEO could have let the company burn to ground and there was nothing that minority stockholders(which could have owned the majority of the company but not the voting rights) could do.

> This is a perversion of common stocks and stockholders rights.

It is a step in the refeudalization of society.

> The sad thing is that they own much less(how much?) than 58% of the stock.

The 'special' shares have 20 votes per share - could be as low as 3% of the company. It's hard to see why anyone would invest in a company where someone who was deemed incompetent to be CEO but still has a massive control of the board.

https://www.bloomberg.com/opinion/articles/2022-02-08/peloto...

I wonder if this will be a big issue for companies that look floundering and whose CEO/Founders are seen to be unable to control it - I've seen a few articles about Zuckerburg not being the right CEO for FB/Meta anymore (he also has over 50% of the votes) - if their share price did a few more 25% drops...

Special shares having 20x the votes of plebeian shares is still better than the Snapchat situation.

As someone on HN quipped at the time: No, the shares have no voting power. They are Snapchat fun bucks basically.

https://news.ycombinator.com/item?id=13807515

There are a lot of pages showing how management enriched themselves by selling shares and because of their RSU policies.

But the whole purpose of this presentation is to get them to sell the company at 75$. On the most basic level this looks to me like this investor is salty that they didn't sell when the share price was high and now they want to get some of their losses back. Or is their argument that the CEO made false promises? You don't have to listen to him, the balance sheet is all you need to make your decisions.

While I could think of plenty of adjectives to describe this deck, amazing would certainly not be amongst them. It's the traditional hit piece from activist funds. It looks pretty. It reads well without having to think to much because well, it's not heavy on substance. They want the company to be sold but they fail to present a convincing case for why it's the correct strategic decision.

There is nothing on Peloton competitors, nothing on the market trend. They rightfully point that Peloton failed to properly forecast market demands but nothing on the future outlook and how Peloton production capacity and stock align with futur predictions. No real analysis of why the company which is profitable would be better able to produce value if it was bought out.

My key takeaway from it is that Foley is bad at PR. Gosh, I hate this deck and I really hate what activist funds are turning finance into.

Do I read the decks properly, or do they have only 2331 subscribers for Q4 2021? This looks like a super low for such big valuations of their disruptive product.

I'm assuming that is wrong. They laid of 2800 staff in Q1 and they all had subscriptions which were continued for 12 months as part of their severance.

Probably thousands.

But on par for Silicon Valley

hmmm, as a Peloton owner this would be a bit weird --- live classes tend to have thousand of participants, unless they are bots.

2,331 million

I rode in a live Peloton class yesterday that had more participants than that.

That probably 1,000 scale. So the actual number is 2,331,000 subscribers with a very small churn rate, which is enough to sustain that business and valuation.

Well, that's a type of deck that I never seen before. The amount of times and ways they leverage the actual bad state of the company to make it look like a worthwhile investment is astonishing.

Yesterday’s thread about this: https://news.ycombinator.com/item?id=30272154

Dual class shareholder companies are a terrible idea. Even if you believe one person should have more control for the owners, does it really make any sense for that person's heirs to have more control? People only accept it because the management has power over short term investors (VCs, people who buy the IPO) and the long term investors-- pensions, mutual funds (aka little guys) get stuck with it.

It is the same thing over and over. Founders are praised when the company is growing, and the same founder for the same reasons are criticized when the company is not growing anymore.

If the CEO is so bad, how did he manage to create such a valuable company while almost nobody on earth has been able to do it ?

How? Luck, really. I think we give way too much credit to people for being "visionary" or talented when really the large part of their success is just luck (particularly around timing). For example, I think the situation with Peleton would look very different if it hadn't been for the pandemic.

This is probably the most interesting PDF I've ever read. As a Peloton member, I never really gave much thought into how the business side of things ran - I just really enjoy the product.

Seeing $PTON so low surprised me as I haven't really been following the news much. I just bought some shares.

I'm in awe of how many different sources a person had to sift through in order to get all this data. Is there software in this space? My naive sense is that it took months to get this deck together.

Well sure that's what analysts at these funds do, continuously keeping a very close eye on portfolio companies. Also: entire teams of interns.

Maybe something like this?

https://www.devontechnologies.com/apps/devonthink

I haven’t used it personally but I think it could be used for this type of research.

Does anyone here actually use Peloton equipment? My spouse wants one of the bikes but I'm wary of having a subscription to a company with questionable future longevity.

My wife has a bike and absolutely loves it.

We’ve recently tried to purchase one of their treadmills and it’s been a complete joke of incompetence actually trying to get it delivered. Combined with this news it does make us nervous about investing even more money into their ecosystem even though the bike experience has been so positive.

Now is probably the best time to buy a bike, with the company down 82% since last year. Probably won't go much lower than that.

I absolutely love it. Tried it for a few days on vacation because the resort had a few, then started doing it at my work gym, then bought one. I was an athlete in high school and college and now in my 30s I’ve tried all kinds of aerobic fitness equipment over the years. It is the most immersive and exciting piece of fitness equipment I’ve ever used, and singularly the only one that has been able to keep my attention as a real option to train versus going outside and running or cycling. I have also heard very similar stories from colleagues.

I think the people calling it a dumb treadmill or saying it can be replaced by YouTube and a used exercise bike are clueless.

See previous response in another thread: https://news.ycombinator.com/item?id=30260468

Try to do a live spin class if you're not sure. Barring that - ride a spin bike.

It's about as engaging as indoor cardio can be, but if indoor cardio is highly objectionable or boring for someone it's hard to get over that.

From what I've heard, Peloton is spending way more than the retail price of the bikes to make them. There's certainly plenty of successful businesses that have some sort of loss-leader and then make up for it with follow-on products or services (e.g. game consoles and game publishing). However it seems like they were happily riding the huge growth in subscribers and revenue but not really managing costs in a way that it would ever be net positive.

Excuse me but I don't see in there any reference to what made peloton stock "actually" explode which was the enforcement of wfh. This is a VERY biased deck.

...that's the point?

they are making an argument for their point of view. They list specific actions and evidence to support their points. They don't claim to be 'unbiased'.

The fetishization of objectivity and being unbiased will honestly be the death of the human species.

The question it begs is if the CEO is not the right-person for the job (which they don't appear to be) then why keep him on as executive chair? That sounds like dragging things out for the sake of it, if he doesn't add anything useful, buy him out and send him somewhere else, it sounds like his experience is not really needed any more?

Because buying him out would be expensive. Much cheaper to convince him to step aside.

Open question. How easy would it be for Apple to build a Peloton competitor from scratch? Are there any real barriers to entry?

They would probably make something like FitnessKit similar to HomeKit, so that your iPhone can adjust settings on your fitness device. Fitness device makers can then make apps to give you exercise programs and track your progress. It might already exist. I don't know.

A bike that you can attach your iPad to seems like one way too. They probably don’t want to make iBikeOS for a new class of iDevices!

Seems to me that management bandwidth is probably the main issue given Apple’s structure.

From the pure technology point of view not too hard, but there are business and logistics challenges. Apple is highly optimised to hold minimum stock near the customer and use a lot of just-in-time delivery, but this depends on a high product value relative to weight and volume of the parcel. Treadmills and exercise bikes are only really cost effective to ship by ocean.

It's also doubtful that the addressable market of an expensive treadmill or exercise product is large enough to be worth going after for Apple (even in the bumper year 2021 Peloton turnover was $4bil, not a viable business unit for Apple).

The barriers are the investment in diverse, engaging instructors and developing a well integrated product.

Neither are insurmountable for Apple, but then really given the amount of cash that Apple has - very few businesses are out of reach for them.

This is yet another chapter in the long series of stories about investors who destroy the goose that lays golden eggs. The analysis is a "well, what did you do for us lately?" that disregards unsustainable, explosive growth in 2020 and an obvious correction 2021.

Putting con-imbeciles on a board is a recipe for disaster.

I got downvoted the other day for calling Peloton a Ponzi scheme, look at the "TROUBLING INSIDER SELLING AND PLEDGING" slides and the quotes like "We have built a team that I believe is ready to run a $500 billion company. Pick a number. A FAANG-style leadership team" that the CEO was making.

Maybe from an investment point of view but the product is still solid.

You have to be clear if you're talking about Peloton as a financial investment or as a consumer product.

As a product - there's real value there. If it's been oversold as an investment, that's a different issue.

But millions of people are willing to pay $1000+ as an initial investment, then $40/month into perpetuity. With presumably good gross margin on both.

That's a good business

this was an interesting read. Never seen a doc like this before.

That was rough. I have similar vibes from the investor call a week after Cyberpunk 2077 released but even that was much more generous.

It all seems like well-earned criticism. As someone with no stake I am happy to see the consumer-hostile behavior of the treadmill murder machine incident be given its own slide.

I don’t understand the disproportionate hate Peloton gets. They have a fanatical costumer base.

From past experience with similar attitudes towards fancy gyms, fitness products and basically anything catering to the rich, hot and fit, I can only think of one cause: ressentiment.

Peloton just didn't wine and dine and wow Wall Street enough for them to consistently hype the stock and now it's the CEOs fault? Because he didn't create the "magic show" that Wall Street wanted to see? John Foley is a founder of the Peloton business and created value from nothing to a leading fitness technology company. Why should he have to justify anything he does to asset managers who have never created any value in their entire careers? Wall Street only destroys value and extracts they don't create anything.

You're a founder and your business goes through a few rough years as you build the business and experiment? Wall Street says "quit, give up and sell". What a bunch of Wall Street hacks and they pushed out a perfectly good CEO, really sad. Just so the business could be sold off for a fraction of its' real value to some conglomerate to let it wither away and die.

Even though he is a founder, he kind of gave up part of his right of not having to justify anything on the day the company went public. And not by that much for that matter, as he seems to have a disproportionate voting right compared to other shareholders, and can still do pretty much what he pleases even after stepping down as a CEO. There is an option to be completely free from Wall Street's vagaries, and it's called not going public. Once you have taken in investors money, it seems fair to me to have to be accountable to them. The anomaly seems to me to be the other way round here, that people who put their money into the company and undeniably contributed to the company getting to where it is now have pretty much no say on how it should be managed. This lack of accountability might be one of the reasons why poor decision making went on unchecked and led to the current situation.

Wow. That presentation is like an autopsy level of scrutiny and criticism. Many of the quotes look like they were taken out of context. I am not sure, but perhaps a bit more context than just the quotes would be fair.

A lot of Peloton in the news lately. Is there anyone that owns a Peloton machine that can comment on what they like and dislike about Peloton? Have you guys noticed a decline in the product, software, classes?

One and only one data point: the handle allowing the chair to move forward and back broke 2 months ago, about 6 months out of warranty. (Great for my partner, who now has exclusive use of the bike in her position… not so good for me.)

Support originally wanted to charge me $250 for replacement and service. A few YouTubes and a second call, the service person admitted that a $5 part would probably do the trick.

It’s taken two full months from that support call to get the shipping notification on that part.

Other than that, though - my experience with the bike and classes has been positive.

I have a family member that owns one and I've tried it a few times recently. The bike hardware is very good, the instructor content is very good, the software is decent. No noticeable decline in software or content.

Overall cost compares pretty well to a gym, PT, or class subscriptions esp if you live in an expensive area.

It does feel like a potentially valuable company that is just being run badly, but also could face competition. It also does feel like a company that could work well within a larger fitness or content company.

See my response in another thread: https://news.ycombinator.com/item?id=30260468

TLDR: I love my Bike+ as does my partner. It's well worth the monthly fee (and this document seems to imply that its too cheap!). Is the bike itself worth £2250? Probably not in theory but it is to me.

Further elaboration: The tech is interesting. It's very polished but there is SO much room for additional reporting, functionality etc. I have actually played abit with the unofficial API and theres lots of data available.

Bike+ owner.

> like and dislike about Peloton

Likes: - It's soooooo easy to just get on it and ride. One of the core tenets of habit-building is to make a habit easy to do. I can't imagine an easier way to exercise than sitting on a bike that's a few feet from my bed. - The classes are all high quality. The instructors are charismatic and varied. There are a lot of them and they all have their own personal style. You can find the 2-3 that work for you or hop around. I only actively dislike 1 or 2, but I get why others could like them. - The classes extend beyond the bike. I like taking their stretching classes and my wife takes a strength class nearly every day. - The powerzone classes are great and a perfect example of something that can't easily be reproduced by competition that doesn't fully integrate hardware, software, and content. - People complain about the subscription cost, but $40 a month is less than the ~$100 a month we were spending on 2 memberships to the only gym in a 15-minute driving radius to my house.

Dislikes:

- Delivery was a NIGHTMARE. Just absolutely terrible. It'd take me 30 minutes to type all the pain we went through for delivery. - Literally nothing else.

> Have you guys noticed a decline in the product, software, classes?

Nope, not at all. In fact, they recently added some boxing stuff which is a new class type for them.

I'm a satisfied customer - one of my favorite products. Based on that I would assume there's a solid business here. Did the valuation get too far from fundamentals - I dunno and I don't care as long as they stay in business.

Peloton is a great product and Foley built it up from nothing, what's the point of keeping all that voting power if you don't use it to tell these private equity groups to fuck off?

I hope they don't sell.

I'm surprised by this claim "Attractive Lifetime Value Low churn". I thought the main reason Peloton was falling out of favor was the recent high churn numbers.

I wonder how Peleton imploded while iFit (owner of NordicTrack and other fitness brands) has been humming along for years offering the same hardware+ streaming combination.

iFit unfortunately is not humming along. Amid plummeting home fitness equipment sales (particularly bikes), they postponed their planned IPO, laid off tons of people including engineers in December, and at their current burn rate, they either need to find new capital, slash costs to the bone, or be acquired. The situation there is not as dire as Peloton, but I wouldn't be surprised if they got acquired by end of year.

The main strategic error that both companies made, was to assume a certain level of permanence when home-training equipment sales exploded during the beginning of the COVID era. People are now (rightly or wrongly) returning to gyms and buying less home stuff.

I'd love to see the same company acquire both Peloton and iFit, and hopefully preserve iFit's library of high-production-quality workouts and charismatic trainers and perhaps combine it with Peloton's charged competitive live workouts.

Direct link to view the pdf: https://docmadeeasy.com/v/656502559

> Seemingly admitting the lack of internal capability, discipline and experience, Foley is looking to outsiders for answers

> Hiring McKinsey is a clear declaration of failure

"I’ll go sometimes months without talking to our CTO, which as a CEO of a technology company, that’s kind of rare."

I can't not read this as a joke.

This is a deck from a tiny activist investor that were angling to get rid of the CEO for a while. They are not "their investors".

Honestly I'm very concerned that my expensive bike will become a brick in the future if Peloton goes out of business.

Kind of hard to see why someone would have invested in this rocketship in the first place.

That's fascinating to see. Anywhere I can see other decks from different places?

I saw this a few days ago in Matt Levine's newsletter.

Where this road is going, it looks highly likely it is going to Amazon or even Meta.

So this is the company that is supposed to rescue Stadia cloud services?

For sure lots of issues for peloton after those accidents with kids.

Seems a lot of people think this is a deck by Peloton, not by Blackwells Capital. The title should be changed to clearly reflect that.

You'd think the first slide "PRESENTED BY BLACKWELLS CAPITAL", would be a tipoff

What's up with a treadmill?

Is it so special because it has WiFi?

HN rules forbid shallow dismissal. I would only say, adding a WiFi to a random thingy is a weekend project for any engineering company i've worked in, in the most literal sense. Design injection molding enclosure, add relays, motor VFD, rpm sensor, wifi module, wire & screw together.

I've done few project for sporting goods makers, and even no-name village factories in China with zero marketing probably ship more goods per months than this treadmill sell in a year.

Get a bike (or some walking/running shoes), go outside, and exercise. But since that doesn't require cool gear and apps...

I don't know anything about Peloton or its management, but the main takeaway from this deck is something I already knew: (1) private equity guys are assholes, (2) who are obviously compensating for something inadequate three feet below the nose.

How about we come up with a better way to insult men, rather than "hehehe peepee small"

We can call the thing two inch above the nose small? Or dysfunctional?

I don’t know, I don’t necessarily agree with the message itself, but I certainly agree with the sentiment.

Whoever made this deck is an asshole.

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