Peloton, every mention
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Peloton - the entire history and strategy behind America's trendiest workout · Acquired
- ▶ 1:29:13 David Rosenthal If they really want to push the bike, like, why don't they use the pluses?
- ▶ 1:29:36 David Rosenthal And perhaps the most puzzling is in December, 2020, they announced that they're buying pre-core for four hundred and twenty million dollars in cash.
- ▶ 1:30:02 Ben Gilbert And I was hoping they used some stock to pay for it, given their stock was, you know, trading ludicrously high at the time, but alas, they spent the, uh, the, the, the rare assets they have on, on hand there, the cash, uh, and primarily…
- ▶ 1:30:31 Ben Gilbert Uh, a secondary benefit that comes with it is Precore is really, really good at selling in commercial distribution channels, so Pelotons are then can inherit all those relationships with all the hotels to get more, more Pelotons in there…
- ▶ 1:31:20 David Rosenthal Then they announce in, uh, spring of twenty-twenty-one that they are going to build the Peloton output park to insource their own
- ▶ 1:31:20 David Rosenthal Then they announce in, uh, spring of twenty-twenty-one that they are going to build the Peloton output park to insource their own
- ▶ 1:31:33 Ben Gilbert They're, uh, trying to manufacture it.
- ▶ 1:31:37 Ben Gilbert We'll come back to that in a bit, but that's another four hundred million that they announced they're breaking ground on.
- ▶ 1:31:54 David Rosenthal The company doesn't handle that super well.
- ▶ 1:31:56 David Rosenthal At first, they sort of say, oh, people aren't using it right.
- ▶ 1:32:08 Ben Gilbert They ask you a mea culpa and say, you know what, we are gonna play ball with the investigation.
- ▶ 1:32:16 David Rosenthal And then November of 2021, last fall, they miss earnings.
- ▶ 1:32:21 David Rosenthal They cut their
- ▶ 1:32:52 Ben Gilbert I mean, yeah, but it's indicative of, uh, the, I think when something like that happens, so someone died on sex in the city and was on a Peloton and Peloton stock dropped.
- ▶ 1:33:17 Ben Gilbert The future prospects of this company that merely imagining that something like that could happen is enough to spook investors.
- ▶ 1:33:40 David Rosenthal News comes out that supposedly Peloton is completely stopping production
- ▶ 1:35:13 Ben Gilbert And this company just believed that there was way, way, way more demand out there.
- ▶ 1:37:07 David Rosenthal So after that news on January 20th, a couple of weeks later, an activist investor called Blackwells Capital comes out and announces that they've accumulated a five percent stake in Peloton.
- ▶ 1:37:29 David Rosenthal And they publish a deck calling for Foley to resign and for the company to initiate a strategic sale process.
- ▶ 1:37:49 David Rosenthal They pull the plug on Peloton Output Park.
- ▶ 1:38:34 Ben Gilbert Uh, they no longer have day to day responsibility running the company.
- ▶ 1:38:44 Ben Gilbert They're still like a, an employee of the company
- ▶ 1:39:03 Ben Gilbert And so while they're not running the day to day, they are still the senior most person, uh, who is an employee of the company.
- ▶ 1:39:54 Ben Gilbert According to Peloton's proxy statement, he controls 39.6, so right around 40% of the voting power of Peloton's stock, and his co-founders own another 18%.
- ▶ 1:40:07 David Rosenthal That's enough to, that's over 50% of the voting power of the company right there.
- ▶ 1:40:21 Ben Gilbert So the message Peloton wants Blackwell's and other upset shareholders to hear is John Foley has sort of moved on, stepped down as CEO, uh, and we've brought in Barry McCarthy.
- ▶ 1:43:22 Ben Gilbert You know, noon subscription, noon deals, or Under Armour deals, or even though they're making 500 to a million from Peloton in salary or whatever their contract is, I bet they're making a lot more from their other engagements.
- ▶ 1:44:46 Ben Gilbert There's, there's so much crazy lore in the building of Peloton, um, which I think we would have done if we gave this the three hour treatment, but let's, let's go into our, uh, our narratives.
- ▶ 1:45:03 Ben Gilbert Well, on the bull, there's just an insane level of customer love for this company.
- ▶ 1:45:11 David Rosenthal You're wearing a Peloton hat as we do this.
- ▶ 1:45:14 Ben Gilbert I'm wearing a Peloton hat because I referred you, and they sent me a hundred dollars of free credit to buy, uh, gear for myself, which I proudly wear around, and I hope Peloton stays a prestige brand, because I've definitely bought a…
- ▶ 1:45:30 Ben Gilbert Even if they sell, I, I have to imagine this will stay a prestige brand for a reasonable amount of time.
- ▶ 1:45:35 Ben Gilbert Like I won't, it's funny how I feel like a little bit weird wearing my soul cycle, like shirt and stuff now, cause I haven't been in two years, but the Peloton stuff, maybe it says a lot about me, but happy to wear it.
- ▶ 1:46:07 Ben Gilbert Uh, another huge component is say what you want about growth right now, but how could, how could they possibly be worth less than they were worth before COVID?
- ▶ 1:46:16 Ben Gilbert The, they, they grew membership from 700,000 to nearly three million.
- ▶ 1:46:21 David Rosenthal And it's not like they're just selling bikes here.
- ▶ 1:46:23 David Rosenthal They just
- ▶ 1:46:29 Ben Gilbert They invented the connected fitness category, and they're still the largest player in it.
- ▶ 1:46:33 Ben Gilbert Uh, we'll talk about this on power, but there are network effects from your friends having Peloton, so the fact that they grew all these subscribers, you know, there is some amount of lock-in that comes from that.
- ▶ 1:46:53 Ben Gilbert You know, they selected for customers that aren't going to turn and that that's slowly shifting because that's the other side of the sword of selling a product that is cheaper than it used to be is that you're going to have customers that…
- ▶ 1:47:31 Ben Gilbert So, when Affirm went public, there was, uh, some information in their S-One where, at the time, Peloton was the largest customer, the largest source of revenue to Affirm.
- ▶ 1:47:50 Ben Gilbert The, I, I took a firm up on their offer and Peloton up on their offer to finance my bike over the course of a few years rather than pay for it in cash outright because it was a zero percent deal.
- ▶ 1:48:35 Ben Gilbert So when you look under the covers of why was Peloton willing to offer zero percent, or why was Affirm willing to offer zero percent, what does that deal look like?
- ▶ 1:48:44 Ben Gilbert Well, Peloton and Affirm did a back-end deal where Peloton said if you agree, Affirm,
- ▶ 1:49:01 Ben Gilbert At the time of IPO, of a firm's IPO, 28% of all of the revenue in the previous year leading up to the IPO was from the Peloton deal.
- ▶ 1:49:17 Ben Gilbert That is one hundred and fifty million dollars a year that Peloton was paying to a firm to offer this zero percent financing thing.
- ▶ 1:49:31 Ben Gilbert Peloton knows and knew even then,
- ▶ 1:50:53 David Rosenthal Bull case, which I think really is a valid bull case is like, Hey, you know, uh, I don't like to put faith in single people, uh, in general, but like, I do think there is a lot of like fundamental, like to my mind, my experience as a…
- ▶ 1:51:41 Ben Gilbert And hopefully Barry can provide the right sort of, it's almost like the check and balance to make sure that Peloton can
- ▶ 1:52:00 David Rosenthal And the market, the market liked the deuce Peloton was up 25% yesterday.
- ▶ 1:53:03 Ben Gilbert Uh, and, and, you know, maybe Barry can be the Tim cook of Peloton.
- ▶ 1:53:48 Ben Gilbert Um, another interesting narrative that I haven't seen as much around Peloton specifically, but seems to be a fairly widely held, uh, belief is that in the last 10 plus years, there has not been a breakout consumer hardware piece of…
- ▶ 1:55:39 David Rosenthal I thought about bringing this up earlier in the episode, and I decided not to because I decided it was unfair to Peloton.
- ▶ 1:55:55 David Rosenthal And, um, lots of different dynamics there, but, you know, if you just look at what Tesla has done with, in many ways, a very, uh, resonant, uh, strategist, a similar, you know, harmonizing strategy with Peloton of like, start with the…
- ▶ 1:56:19 David Rosenthal Over the past several years, you know, it was not that long, uh, after Peloton was started that the Model S came out and like, what has Tesla done with their brand strategy and their pricing and their marketing and their position within…
- ▶ 1:57:27 Ben Gilbert But Peloton has been exactly the opposite at manipulating financial markets for their own favor.
- ▶ 1:57:47 Ben Gilbert So there's another bear case, which is being floated by our good friends, the activist investors, which is, hey everyone, did you know John Foley sold ninety six million dollars of Peloton stock in 2021 when the price was really high and…
- ▶ 1:58:50 David Rosenthal And also like, it's hard to, you know, look, he, uh, he started Peloton in late 2011, early 20 12.
- ▶ 2:00:00 David Rosenthal Look, sometimes activists have good points and they're good points to be made against Peloton here.
- ▶ 2:00:21 Ben Gilbert I mean, other stuff too, but like, did I pay 2000 dollars, 2300 dollars for a bike because it was a Peloton bike that otherwise I would have paid maximum, I don't know, a thousand dollars for?
- ▶ 2:00:40 David Rosenthal But I do think, I did a lot of research, and I seriously consider doing a hack of Peloton, because I kind of enjoy doing stuff like that, you know.
- ▶ 2:00:49 David Rosenthal And to get the same quality of bike, you really, yes, you can do it cheaper with a Hakka Pelta, but not that much cheaper.
- ▶ 2:01:14 David Rosenthal Like, you know, the amount that Peloton can invest, even with the music, uh, variable cost overhang, but the amount that they can invest in content and in the best instructors, I think, which is where this plays out the most, uh, relative…
- ▶ 2:01:33 David Rosenthal And then even relative to other connected fitness companies, because Peloton has the largest member base, just like with Netflix, they can invest in more great content because they have more resources from more subscribers.
- ▶ 2:01:58 Ben Gilbert Yeah, it just makes total sense that Peloton would say, like, uh, we can make this much more interesting for you both in terms of fame, dollars, career advancement, because your rides are gonna be 5000 people instead of 40.
- ▶ 2:03:32 Ben Gilbert I, I looked into this a couple of years ago and I think Peloton pulled all their content down, which was an interesting move because it's basically saying we don't want to continue to build your brand for free to compete against us.
- ▶ 2:05:48 Ben Gilbert So would it ha so obviously soul cycle came out with a Peloton competitor after Peloton
- ▶ 2:06:04 Ben Gilbert Uh, what would have happened if you had this sort of like JV between Peloton and SoulCycle five years in, in a strong position six years in when COVID hit?
- ▶ 2:06:17 David Rosenthal I, I, I wanna say I don't think the JV would have worked nearly as well as Peloton did as a standalone full stack.
- ▶ 2:06:30 David Rosenthal There would have been too many, um, you know, I think back to power, there's an element of counter positioning in the early days of Peloton here too.
- ▶ 2:07:03 David Rosenthal Right now you could just record that and put it on the, on this JV with Peloton, but I think that would be lower quality content than what a like full, you know.
- ▶ 2:07:11 Ben Gilbert Oh, the Peloton rides are so produced.
- ▶ 2:07:50 Ben Gilbert Okay, well, there's another one here, which I know you want to do is, how should Peloton have managed over the last couple of years?
- ▶ 2:08:05 David Rosenthal The Peloton output park was misguided, you know, probably good in the long run to bring your production in-house, but like, that big, using cash at that moment in time, probably not the right thing.
- ▶ 2:09:15 Ben Gilbert Uh, whereas Peloton saw a spike and then a decline.
- ▶ 2:09:21 Ben Gilbert It's funny, I was thinking about what would be an interesting comparison here, and I think Eric Yuan against John Foley is sort of an interesting one, or let's just say Zoom against Peloton.
- ▶ 2:09:34 Ben Gilbert Peloton down over 80% from peak, Zoom down over 70%, but for Zoom, despite the fall, I think it's still growing revenues at close to a hundred percent year over year, and is a free cash flow positive machine.
- ▶ 2:09:49 Ben Gilbert Whereas Peloton is deeply unprofitable on a, you know, full bottom line, uh, still raising billions from the public market with new stock issuances.
- ▶ 2:10:32 David Rosenthal Spike created huge complexities for Peloton as a business in a way that, you know, for Zoom, like, yeah, it created some complexities for Zoom.
- ▶ 2:16:30 David Rosenthal You know, and then there is the digital app, right?
- ▶ 2:18:47 David Rosenthal And I'm sure he will bring the Peloton of, uh, how to, how to plan and build your
Taylor Swift (Acquired’s Version) · Acquired
- ▶ 1:00:48 Ben Gilbert I will say, I also did the Peloton, Taylor Swift, Taylor's version ride, and, uh, on the 30 minute ride, 10 minutes of it is the 10 minute version of All Too Well.
- ▶ 1:00:58 Ben Gilbert It was a bold Peloton choice.
Complexity Investing & Semiconductors with NZS Capital (Extended Cut) · Acquired
- ▶ 48:20 unnamed speaker Like a good example is beyond Peloton before the pandemic, you know, and the stock obviously went parable, like they were huge beneficiary of work from home, but it's also still just a really dynamic company, you know, that's early in its…
- ▶ 49:00 unnamed speaker And sometimes, like I said, it's both like, I think Peloton is definitely a different company in this version of the universe versus the non COVID version of the, of the, of the metaverse.
- ▶ 51:19 unnamed speaker Like, um, you know, the stocks, uh, that had huge, um, were huge, uh, multiverse winners in the beginning, the Pelotons, the Zooms, you know, and the like, I'm thinking Zoom, uh, you know, Zoom went from, I don't know what, 70, 80 dollars…
Standard Oil Part II (Extended Cut) · Acquired
- ▶ 2:38:36 David Rosenthal I bought a Peloton, uh, and, uh, it's great.
- ▶ 2:39:18 David Rosenthal Uh, got a Peloton.
- ▶ 2:39:27 David Rosenthal Um, so I got the bike plus initially, and it's like really nice for sure, but it just wasn't, I had used a regular Peloton before, and I was like, this is not, especially with the price drop on the regular Peloton, this is not a thousand…
- ▶ 2:39:42 David Rosenthal Like, they need to, there's so many things wrong with Peloton's pricing strategy, but, um,
- ▶ 2:39:49 David Rosenthal Like, literally, you know, I don't say mean this to her, but I'm actually helping Peloton now.
- ▶ 2:39:57 Ben Gilbert We should do a Peloton episode.
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