They take an iPad, slap it on an exercise bike, and charge $2000 for it. I could do that for the cost of the parts. The only thing protecting their business model is their exclusive patent on the idea. Perhaps the patent system is what is truly at fault here?
A comment from Hacker News.
What are we talking about here?
Peloton Interactive Inc., a home exercise startup filed for an initial public offering – access to public fund in exchange for ownership of the company – that will likely be among the year’s biggest. Founded in 2012, now with more than 1.4 million members, Peloton describes itself as the “largest interactive fitness platform in the world”
What they really do: The company sells exercise bikes and treadmills that have television screens connected to the internet for showing its own workout programs. Its basic “connected fitness” subscription costs $39 a month and the bikes start at $2,000.
How are they performing
Like almost all US companies that filed for an IPO this year, Peloton is unprofitable and has been so since inception. For 2017, 2018, 2019 here’s how it performed:
Revenue: $218.6 million, $435.0 million (+99.0%), and $915.0 million (+110.3%), respectively,
Net losses: $71.1 million, $47.9 million, and $195.6 million;
Connected Fitness Subscribers: 107,708, 245,667, and 511,202, respectively; and
Average Net Monthly Connected Fitness Churn: 0.70%, 0.64%, and 0.65%, respectively.
Out of all figures here, the most fascinating appear to be the subscriber growth rate, and its churn rate – the rate at which it’s customers leave a service – which at ~0.7% a month and 8.4% in the year is quite impressive.
Like everyone else, Peloton claims to be a tech company; with an ambition to empower people to improve their lives through fitness. Despite the constant loss-making streak, They must be up to something good here.
As Ben Thompson quipped “The key breakthrough in all of these disruptive products is the digitization of something physical. Netflix digitized time, Airbnb digitized trust, Facebook digitized offline relationships, etc. In the case of Peloton, they digitized both space and time: you don’t need to go to a gym, and you don’t have to follow a set schedule”
Do you think that’s enough value fo $2,000? Over 500,000 people think so.