Peloton (company)

Peloton is an American exercise equipment and media company that was founded in 2012 and launched with help from a Kickstarter funding campaign in 2013.[2] The company is based in New York, New York. Its main product is a stationary bicycle that allows users to remotely participate in spinning classes that are streamed from the company's fitness studio and are paid for through a monthly subscription service.[3] Much of the company's popularity stems from its now-celebrity fitness instructors, such as Robin Arzon, Ally Love, Alex Toussaint, Cody Rigsby, and Jess King.[4]

This article is about the exercise equipment company. For the vehicle technology company, see Peloton Technology. For other uses, see Peloton (disambiguation).
Peloton Interactive, Inc.
Public
Traded as
IndustryExercise equipment
FoundedFebruary 2012 (2012-02)
FoundersGraham Stanton
Hisao Kushi
John Foley
Tom Cortese
Yony Feng
HeadquartersNew York City, New York, U.S.
Number of locations
37 (Retail)
2 (Studios)
Key people
John Foley (CEO)[1]
William J. Lynch Jr. (President)
ProductsStationary bicycles and treadmills
ServicesFitness classes and subscriptions
Number of employees
1,800 (2020)
Websiteonepeloton.com

History

Peloton was founded by Graham Stanton, Hisao Kushi, John Foley, Tom Cortese, and Yony Feng in 2012.[5]

In January 2017, William J. Lynch Jr. joined Peloton as company president.

In May 2018, Peloton announced plans to expand into Canada and the United Kingdom in fall 2018.[6]

In June 2018, Peloton acquired Neurotic Media, a music distributor.[7]

In March 2019, Peloton was sued by the National Music Publishers Association for using copyrighted music in their videos without proper synchronization licenses, seeking $150 million in damages.[8] The action resulted in changes to music used in its sessions, as well as removal of certain programs that used the songs that were specifically named in the suit. Users criticized these changes as affecting the quality of its product experience.[9] In September 2019, the suit was amended and increased to $300 million.[10]

In February 2020, Peloton announced that the competitor Flywheel would cease services at the end of the month, after it had settled with Peloton over a patent lawsuit. Peloton is offering exchanges for Flywheel Home bikes.[11]

Peloton was one of the few companies that benefited from the lockdown measures during the COVID-19 pandemic. According to the estimate dated May 2020, its stock price increased by 36%, online searches for “Peloton” increased almost three times since the end of February, and quarterly sales jumped nearly 61% to $420.2 million.[12]

Products

Bike

Peloton's stationary bicycle was released in 2014 at a price of $2,245. It includes a 22″ touchscreen on which the user may view classes.[13] The product operates on a custom version of Android.[13] The bicycle requires cleats, which lock onto the pedals.[14]

Classes are recorded daily and streamed live from Peloton's cycling studio in Chelsea, Manhattan, and then uploaded to their library for on-demand access 24/7.[15] The studio is open to the public with daily walk-in style classes that don't require payment.

A version of the bicycle designed for commercial environments was unveiled in January 2017.[16]

Treadmill

The Peloton Tread is the company's treadmill product. It sells for $4,295, and was unveiled in January 2018 by the company at the annual Consumer Electronics Show in Las Vegas, with initial shipments slated for the fall of 2018.[17] Classes are streamed via a 32″ touchscreen and sound bar mounted at the front of the machine.[18] Peloton is reportedly developing a new treadmill that will cost less than the current model. It is expected to be available in 2020.[2]

Peloton Digital (app)

Peloton Digital is a monthly subscription service that allows users to stream on iOS[19] and Android[20] devices the company's classes on cycling, running (both treadmill and outdoor), yoga, and meditation. Due to the Covid-19 pandemic, Peloton instructors began streaming classes from their individual homes in April 2020, rather than from the Peloton studios. These classes were noted on the app as "Live from Home."

Funding

Before launching its stationary bicycle and fitness platform, Peloton raised $3.9 million in 2012 for product development.[21]

In April 2014, Peloton raised a $10.5 million series B round of funding.[22] In April 2015, Peloton raised a $30 million series C round of funding.[23] In December 2015, Peloton raised a $75 million series D round of funding.[24] In May 2017, Peloton raised a $325 million series E round of funding, valuing the company at $1.25 billion.[25] In August 2018, Peloton raised a $550 million series F round of funding, valuing the company at $4 billion.[26]

In February 2019, Bloomberg reported Peloton had chosen Goldman Sachs and JPMorgan Chase to lead its initial public offering, valuing the company at more than $8 billion.[27] Peloton Interactive confidentially filed with the Securities and Exchange Commission for a proposed IPO on June 5, 2019.[28] The company had not yet decided on the number or price range of shares it plans to sell.[29] On September 26, 2019, Peloton raised $1.16 billion via its IPO, floating 40 million shares of class A common stock at $29 per share. At the market close, Peloton's share price had dropped to $25.76 reflecting an 11.2 percent drop on its first day of trading.[30]

Marketing

Peloton launched a major advertising campaign, "Better Is in Us", during the 2018 Winter Olympics, which aimed to focus on personal stories of its users and how it had affected their lives. The company bought advertising inventory from NBC to air the ads during its coverage of the Games, and also streamed four classes from NBC's Olympics studio in Pyeongchang, South Korea, with instructor Robin Arzon joined by NBC personalities such as Paul Burmeister and Natalie Morales.[31][32][33]

The Gift That Gives Back ad controversy

In November 2019, the company released a new holiday commercial, "The Gift That Gives Back", where a wife receives a Peloton bike for Christmas from her husband, and begins recording a video diary of herself using the bike. A year later, she proclaims that she "didn't realize how much this would change me." In late November, the commercial began to receive criticism from viewers who claimed that its plot implied that the woman's husband was unsatisfied with her physical appearance.[34] Peloton defended the ad, arguing that it was intended to celebrate a "fitness and wellness journey", inspired by how its users were often "meaningfully and positively impacted after purchasing or being gifted a Peloton Bike or Tread, often in ways that surprise them." Criticism over the campaign has had an impact on Peloton's share price.[35][34]

Ryan Reynolds hired the actress that played the wife, Monica Ruiz, for an ad titled "The Gift The Doesn't Give Back" for Aviation American Gin released in December 2019 which lightly mocked the Peloton ad.[36]

References
  1. "Meet Our Team". Peloton official website. 7 December 2019. Retrieved 8 December 2019.
  2. Verhage, Julie; Gurman, Mark (13 November 2019). "Peloton to Sell Cheaper Treadmill and Rowing Machine in 2020". Bloomberg. Retrieved November 15, 2019.
  3. LaVito, Angelica (23 May 2018). "Peloton CEO John Foley says fitness company is 'weirdly profitable'". CNBC. Retrieved 3 August 2018.
  4. Kurutz, Steven (2017-02-01). "Peloton Instructors Ride for Fitness and Fame". The New York Times. ISSN 0362-4331. Retrieved 2020-06-12.
  5. Mitra, Sramana (12 July 2017). "Billion Dollar Unicorn Peloton – Cycles Into The Club". Yahoo News. Retrieved 4 August 2018 – via LinkedIn.
  6. Shankar, Bradly (10 May 2018). "Peloton's connected spin bike is coming to Canada this fall". MobileSyrup. Retrieved 4 August 2018.
  7. Fernandez, Marisa (27 June 2018). "Peloton acquires music distributor Neurotic Media". Axios. Retrieved 3 August 2018.
  8. Deahl, Dani (March 19, 2019). "Peloton is being sued for using music without permission in its video fitness classes". The Verge. Retrieved 2019-03-20.
  9. Garun, Natt (2019-04-24). "Peloton owners are pissed about bad music after copyright lawsuit". The Verge. Retrieved 2019-04-25.
  10. "Music Publishers: Peloton 'Let Down Its Customers By Failing to Pay Creators'". Variety. September 13, 2019. Retrieved 2019-09-16.
  11. Garun, Natt (2020-02-20). "Flywheel owners found out that their bikes were bricked through Peloton". The Verge. Retrieved 2020-02-25.
  12. "Peloton gets lockdown boost as home workouts drive exercise bike sales". Reuters. 2020-05-06. Retrieved 2020-05-18.
  13. Eadicicco, Lisa (May 31, 2018). "Working Out Is Hard. Streaming Just Might Make It Easier". Time. Retrieved 4 August 2018.
  14. Goode, Lauren (April 25, 2018). "My two-month ride with Peloton, the cultish, internet-connected fitness bike". The Verge. Vox Media. Retrieved August 4, 2018.
  15. Frieswick, Kris (May 2016). "This Startup Will Keep You From Ever Going to the Gym Again". Inc. Retrieved 4 August 2018.
  16. Takahashi, Dean (4 January 2018). "Peloton launches immersive fitness bike for commercial gyms". VentureBeat. Retrieved 3 August 2018.
  17. Hanbury, Mary (27 February 2018). "We tried the new $4,000 treadmill from the billion-dollar startup that could be 'the Apple of fitness' – here's the verdict". Business Insider. Retrieved 3 August 2018.
  18. Schomer, Stephanie (9 January 2018). "Peloton Just Unveiled a $4,000 Treadmill – and Everything Is Riding on It". New Haven Register. Retrieved 4 August 2018.
  19. Moscaritolo, Angela (20 June 2018). "Get Your Sweat On With Peloton App (No Pricey Machine Required)". PC Magazine. Retrieved 4 August 2018.
  20. "What does the Peloton Digital Membership offer?". Peloton. Retrieved 12 June 2020.
  21. "Peloton". AngelList. Retrieved 4 August 2018.
  22. Dorbian, Iris (24 April 2014). "Tiger Global leads Series B round for Peloton". The PE Hub Network. Retrieved 4 August 2018.
  23. Buhr, Sarah (16 April 2015). "Stationary Bike Startup Peloton Expands Production And Distribution With $30M In New Funding". TechCrunch. Oath Inc. Retrieved 4 August 2018.
  24. Porter, Kiel (1 December 2015). "Peloton Raises $75 Million From Serial Fitness Backer Catterton". Bloomberg News. Retrieved 4 August 2018.
  25. Rao, Leena (24 May 2017). "This Tech Cycling Company Is Now Worth $1 Billion". Fortune. Retrieved 3 August 2018.
  26. Sawers, Paul (2 August 2018). "Peloton snags $550 million in new financing, valued at $4 billion ahead of expected IPO". Fast Company. Retrieved 3 August 2018.
  27. Zaleski, Olivia (25 February 2019). "Peloton Picks Goldman Sachs, JPMorgan to Lead IPO". The New York Times. Retrieved 21 April 2019.
  28. LaVito, Angelica; Hirsch, Lauren (June 5, 2019). "Fitness company Peloton says it has filed for an IPO". CNBC.
  29. Kellaher, Colin (June 5, 2019). "Exercise-Bike Maker Peloton Files Confidentially for IPO". The Wall Street Journal.
  30. Henderson, Richard (26 September 2019). "Peloton skids on stock market debut". Financial Times. Retrieved 3 October 2019.
  31. Steinberg, Brian (2018-02-06). "NBCU, Peloton Will Stream Spin Classes from PyeongChang in Olympics Marketing Deal". Variety. Retrieved 2019-09-16.
  32. "Peloton Pedals Into the (Winter) Olympics With New Campaign". Ad Age. 2018-02-07. Retrieved 2019-09-16.
  33. Gay, Jason. "Queasy Rider! A Pedal Through NBC's Olympic Spin Zone". The Wall Street Journal. Retrieved 2019-09-16.
  34. Belam, Martin; Partridge, Joanna (2019-12-04). "Peloton loses $1.5bn in value over 'dystopian, sexist' exercise bike ad". The Guardian. ISSN 0261-3077. Retrieved 2019-12-04.
  35. "Peloton 'male fantasy ad' could dent brand image". Ad Age. 2019-12-03. Retrieved 2019-12-04.
  36. Wolfe, Elizabeth; Gast, Phil (December 7, 2019). "The actress behind 'Peloton wife' has finally spoken". CNN. Retrieved December 8, 2019.
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