Peloton: Riding off a cliff (Part 2)

Summary

Corporate Gossip Podcast

Episode: Peloton – Riding Off a Cliff (Part 2)

Date: October 21, 2022
Hosts: Becca Platsky (CPA scorned), Adam Platsky (data analytics playboy)

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Overview of Episode Theme

This episode continues the saga of Peloton’s dramatic fall from grace after its meteoric pandemic rise. Becca and Adam dive deep into Peloton's post-holiday crash, eye-popping executive gaffes, mass layoffs, and C-suite exodus. They dissect how hubris, poor management, and failure to adapt to post-pandemic realities led to a nearly 80% stock plunge, and gossip about the juicy boardroom scandals, investor revolts, and bizarre management decisions that have shaped Peloton’s struggle to survive. Throughout, they analyze the broader lessons for founders, employees, and would-be investors.

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Key Discussion Points & Insights

1. Peloton Hits a Wall After the Pandemic Boom

• [00:00–03:28]
  • Holiday sales disappointed drastically; fewer customers used the Peloton app as gyms reopened post-pandemic.
  • Executives were in panic; emergency meetings were held to address declining fortunes.
  • A leaked “Project Fuel” recording revealed the “strategy” to cut over 40% of the sales and marketing team, rather than owning leadership flaws.
  • Layoffs of sales and e-commerce staff are viewed cynically:
    • "Why take accountability when you could just blame others?" – Becca [02:15]

2. The Club/Gym Scene Returns – Setting the Stage

• [03:29–04:19]
  • Adam recollects Miami in Nov 2021:
    • “No issues going to the club… Everything was open. Everything was good.” [03:36]
  • Gyms rebounded just as Peloton assumed they’d be obsolete.

3. John Foley and the Foolhardy Optimism

• [04:19–11:42]
  • John Foley (CEO) finally admits underestimating the impact of reopening:
    • “It is clear that we underestimated the reopening impacts on our company and on the overall industry. That is the understatement of the century.” – Becca quoting Foley [04:24]
  • Foley and other top execs cashed out $100 million in stock before the company’s problems became apparent.
    • Adam jokes: “They’re trying to buy a yacht in Miami…” [05:15]

4. The Activist Investor Take-Down

• [05:33–09:21]
  • Blackwell Capital’s scathing 47-page activist investor deck accused Peloton of gross mismanagement.
  • Favorite excerpts ripped Foley’s lack of management, failure to speak to key execs, and inability to price products or manage demand.
    • “Mr. Foley has made a series of poor decisions related to product pricing, demand, safety, and capital allocation...” – Becca [06:17]
    • “How much should a burger be?... I don’t know. How much does a burger cost these days? $40?” – Becca, mocking Foley’s pricing ignorance [08:41]
  • Peloton wildly increased manufacturing, just as demand dropped, creating inventory chaos.

5. Executives Sell Shares While Preaching Eternal Growth

• [11:10–12:12]
  • During the 2021 holiday party, execs and board members offloaded $700 million in shares, while still hyping future growth to public/investors.
  • Foley alone sold $119 million after IPO, even while company metrics tanked.
    • “I thought you said that it was only gonna grow? If it was only gonna grow…” – Becca [11:35]

6. The Great Peloton Sell-Off (Literal and Figurative)

• [11:42–13:51]
  • Secondary markets flooded with unwanted Pelotons.
  • Soul Cycle offered to trade $1,400 in classes for used bikes.
  • Massive layoffs: Foley resigns, 2,800 jobs lost (28% of workforce)—with a free year’s subscription as severance.
    • Adam: “This is exactly what I want. I’d love to be associated with the company that just shit canned me.” [13:11]

7. Executive Exodus & Aftermath

• [13:51–15:48]
  • CFO, CMO, and other major execs step down.
  • Becca highlights the communal “LinkedIn” job-hunting energy of mass layoffs, and how a very public firing may even help laid-off staff rapidly get recruited.

8. Barry McCarthy's Ship of Fools

• [15:48–17:27]
  • New CEO Barry McCarthy faces more layoffs—another 500 employees (down to 3,800 from 8,600).
    • “You look to your left and you look to your right, one of those people is gone.” – Becca [17:18]

9. Will Peloton Get Acquired? The Hope for a Corporate “Mommy”

• [18:01–18:47]
  • McCarthy angles for a buyout: rumors swirl around Amazon, Lululemon, Nike, Apple.
  • Analysts believe stand-alone Peloton may not be viable anymore.

10. Inventory Glut & Desperate Partnerships

• [18:47–19:48]
  • Second-hand bikes sent to hotels (deal with Hilton) and Dick’s Sporting Goods.
    • “It’s turning into garbage… hardware garbage.” – Adam [18:57]
  • Hosts debate whether there’s a future for Peloton: Becca pessimistic (“too little, too late”), Adam optimistic about a niche home-gym market and brand “cachet.”

11. Product & Content Pivot: Subscription or Bust

• [20:24–22:47]
  • Discussion of Peloton Rower flopping, competition from “Hydro.”
  • Suggestions to pivot to new content models (VR, Netflix integration).
  • Recognition that subscription ("fitness as a service") revenue is the only sustainable path; regret that they realized this too late.
    • “At what point is my subscriptions going to cost more than my rent? Because at this point I have like 15 of them, you know.” – Becca [22:45]

12. Capitalism, Competition, and the Future of Fitness Tech

• [22:47–23:41]
  • Adam articulates a faith in capitalism’s “weeding out” effect; failed companies/ideas will yield better services for consumers.
    • “I think there’s a greater good with these companies and I think it’s gonna weed out, you know, the losers, the Pelotons.” – Adam [23:17]

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Notable Quotes & Memorable Moments

• Layoff Irony:
  • “One of the things that they gave for all the fired employees: that they would receive a free year subscription to the platform.” – Becca [13:01]
  • Adam, deadpan: “This is exactly what I want. I’d love to be associated with the company that just shit canned me.” [13:11]
• Founder-CEO Tropes:
  • “How many times are we gonna see the same story over and over again? ...Elizabeth Holmes... Adam Neumann... John Foley…” – Adam [24:04]
  • “These founder CEOs need to... say: yes, I had this great idea—maybe it's time I take a back seat and bring in the CFO and align this company.” – Adam [24:44]
• Self-Owns:
  • Quoting Foley: “I interview almost nobody.”... “Our CTO doesn’t get any help from me. I’ll sometimes go months without talking to our CTO.” – Becca [07:18–07:41]
• Analogy of Activist Investor Deck:
  • “This is analysts listing out all their icks.” – Becca [06:41]
• Subscription Fatigue Rant:
  • “At what point are my subscriptions going to cost more than my rent?” – Becca [22:45]
• Corporate Slack Meltdown:
  • “They invite everybody to the call, including the 2,300 workers who had just gotten laid off, who are just spamming the Slack channel: like, what the fuck are you, Kidding me? Thanks for the 1 year subscription…” – Becca [15:48]

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Important Timestamps for Key Segments

• Leaked Emergency Meeting & Layoff Plan: [00:44–02:40]
• Executives Dump Shares Pre-Crash: [04:45–05:33], [11:10–11:42]
• Activist Investor Deck Rips Foley: [05:33–09:21]
• Peloton Overbuilds Inventory: [09:40–10:15]
• CFO and C-Suite Exodus: [13:51–14:13], [15:01–15:25]
• Mass Layoff Aftermath & Slack Channel Meltdown: [15:48–16:40]
• Rumored Acquisition Targets: [18:01–18:47]
• Hardware Dump to Hotels/Gyms: [18:47–19:13]
• Big Picture Lessons on Founder CEOs: [24:04–25:52]

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Big Picture & Parting Gossip

• The fatal flaw in founder-led startups: Visionary CEOs must learn to listen, delegate, and accept reality checks, or risk total collapse—Peloton is but the latest cautionary tale.
• Join with eyes open:
  • “Before you join Peloton and everything looks great... Do your research. Is the CEO being called out by activist investors?” – Adam [27:19]
  • “If I were interviewing for a startup right now, I would ask: how often does the CEO get told no?” – Becca [27:34]
• To Peloton Users: Are they using or selling their bikes? Hosts invite listener feedback.
• To Founders with Spouses: The hosts want YOUR wildest husband-wife business stories for future gossip.

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Tone & Style

Conversational, zippy, sarcastic, and loaded with sibling banter. The analysis is sharp but irreverent, mixing CPA-level business insight with gossipy asides and corporate tea.

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For Listeners Who Missed It

This episode delivers a no-holds-barred look at how Peloton's arrogance, missteps, and leadership drama sent it “riding off a cliff.” Whether you’re a business nerd, a pandemic-era Peloton user, or just love boardroom scandal, the episode’s deep dive, receipts, and quick wit offer plenty of lessons—and laughs—to go around.

Transcript

[A]

It's early January 2022 and employees are making their way back into their airy offices in New York City's Flatiron district after the winter holidays. It's a weird time of year, isn't it? Re entering the world after two weeks of vacation induced indulgence. Winter, having lost the allure of the holiday season, is now just really damn cold. Peloton is dealing with a bit of a business hangover from mid-2020 to mid-2021, Peloton was flying high. Once wasted off consumer and investor hype, executives were finding reality to be much more sobering. In fact, their world is imploding and fast. Holiday sales came in well under expectations. Fewer customers were using the Peloton app. The river of cash that was flowing during the pandemic is quickly drying up as people go back to the gyms. The who would have thought that would happen? Certainly not John Foley. The steady income stream of dedicated pedal pushers suddenly feels dehydrated. Peloton stock, after reaching the stratosphere in a pandemic influenced mania for at home exercise equipment, is down more than 80% and panic is setting in. In a frenzied attempt to save face, executives are in emergency meeting at the Peloton hq. Their objective? Avoid an embarra Told you so from all the people who saw this coming from miles away. The executives in the room agreed there was a lot of ground to cover. Our app is terrible, said one exec. We have a lot of unforced errors, Another chimed in. Unbeknownst to those gathered on the call, one participant records the discussion and leaks the recording to Business Insider. The recording gives a glimpse into the groundbreaking strategy Peloton was about to deploy to reverse its declining fortunes. So what is the brilliant solution to the dilemma? The age old cure all layoffs? Not of them, of course, but lopping off sales and E Commerce staff should do just the trick. Why take accountability when you could just blame others? In the recording of a Project Fuel meeting, executives discussed cutting over 40% of the sales and marketing team. Of all the innovative ways they could have taken their committed customer base and pulled them back into the magic of Peloton, they chose layoffs. Brilliant Mass layoffs were trending after all. They may as well grab something off the one size fits all rack. Peloton was about to ride off a cliff from NightToast Media, this is the Corporate Gossip Podcast episode two peloton riding off a Cliff. So the party is over. It's November 2021, so we're a year and a half into the pandemic, and generally things are pretty much opened up. I think this is when you could go back inside to restaurants. Gyms are reopening. Can you take yourself back to November 2021?

[B]

November 2021. I'm in Miami.

[A]

Do you have any issues getting into the club or the gym?

[B]

No issues going to the club. Well, it was Miami after all, so we were fast to open up. But, yeah, no issues going to club. I don't remember wearing a mask any. No. Yeah, Yachts were. Yachts were sailing.

[A]

Yeah. Did you go to the gym?

[B]

That was not a high gym. That was not a gym moment for me. November 2020.

[A]

Could you go to the gym?

[B]

But you could. Yes, I opted not to. I was walking.

[A]

Oh, right. That was during your hot walks.

[B]

Yeah, that was a hot girl walking.

[A]

Hot girl walking.

[B]

I was walking. So, yes, gyms were open. There was actually was like an F45 right next to my building. So that was packed. Equinox was packed. Yeah, everything was open. Everything was good. So.

[A]

Well, here's what Foley has to say. Everyone says, you know, John Foley, man, things are opening up, like, doesn't look good for Peloton. And his response is, it is clear that we underestimated the reopening impacts on our company and on the overall industry. That is the understatement of the century.

[B]

This is John Foley biting the bullet. And I think the demise of John Foley, maybe.

[A]

Yes.

[B]

Is this his last hurrah?

[A]

This is absolutely going to be his last hurrah. So here's where we are. That was November 21st. December 21st is the holiday party that we talked about at the beginning of the last episode. And by the way, we haven't mentioned this yet, but he and a couple of the other executives pulled out $100 million in stock right before that party. Why do you think that someone would do that?

[B]

They're trying to buy a yacht in Miami. No. Yeah.

[A]

Flash sale.

[B]

Yeah. Miami yacht prices were way down and it was the time to get in. Yeah. No, it seems that belief in the future of the company might be dwindling now.

[A]

February. Have you ever read an activist investor deck?

[B]

I have never had the pleasure.

[A]

Oh, my God. Okay, well, if you follow me on TikTok, you know that we love activist investor decks. They are so much fun. One in particular, Blackwell Capital, took a stake in peloton and for 47 pages just railed on Peloton. I'd love to just share with you a couple of these slides. Peloton has been grossly mismanaged.

[B]

I would love to be the person who put together this deck.

[A]

Oh, my God. Imagine. CEO John Foley is right to be insecure about his capabilities and qualifications. Mr. Foley has made a series of poor decisions related to product pricing, demand, safety, and capital allocation. He has lost credibility with discontent employees. We talked about that last episode. Shareholders and analysts. This is my favorite slide.

[B]

What is this equivalent to if you have a company? Like, I'm trying to think of, like, something in my personal life where this would equate where, like, everybody's just talking shit about me, but it's, like, warm.

[A]

You know what this is? I see this on TikTok a lot where girls are like, I just got broken up with. And so to make myself feel better, I'm going to list out all the icks that I had when I was with my boyfriend. This is analysts listing out all their icks.

[B]

Good.

[A]

John Foley's icks. That's a better way to put it. So he says, I think I am not a very good manager. This is an interview with Time magazine. He says, I interview almost nobody. Okay. This is my favorite one. Someone asks, is there anything about CEO that you don't like or that you like to delegate? He goes, easy, right. Finance. Our CFO does 99% of finance. I engage because I want to know how we're doing.

[B]

But.

[A]

But to say I don't add value to her operation is an understatement.

[B]

Right? And for those of you who don't know much about corporate leadership teams, the CEO and the CFO should basically be best friends.

[A]

You could say the same with technology. Our CTO doesn't get any help from me. I'll sometimes go months without talking to our cto, which, as a CEO of a technology company, that's kind of rare.

[B]

Oi. We're a technology company. Cto. Never heard of him.

[A]

Never heard of him.

[B]

What's his name?

[A]

They ask, how would your colleagues and your co founders describe your strengths as a manager? He responds, I'm not sure they'd say I have many strengths at all.

[B]

John Foley just, like, completely went back to, like, being a baby. Or he's like Michael Scott.

[A]

He goes, I a baby.

[B]

He's like, I genius, but I'm a baby. Could you ask me that question? Ask me that question as if I were five.

[A]

Explain it to me like I'm five. Someone. CNBC asks, what's the optimal price here of a peloton bike? Foley? Is it $1,000? He goes, I don't know.

[B]

It's demand, price.

[A]

What the. You don't know. This is your biggest. This is your product. At least have a price in mind. Yeah, yeah. The CEO of McDonald's. How much should a burger be? I don't know. How much does a burger cost these days? $40. So meanwhile, the cost of the peloton is all over the place. Like, it's 1400, it's 2000, it's. You can do financing. You can't do financing. And it's creating all this mess. So a couple more slides again. But he insisted demand would only ever increase. Only ever. It's only going to get more and more. I mean, this is worse than Shark Tank.

[B]

Yeah. Jeff Foley knows, like, for the most part, there's a finite number of people, right?

[A]

I don't think so. I don't know. I mean, like, you could make baby pelotons, I guess.

[B]

Yeah.

[A]

We want them in every day.

[B]

Everybody can afford a peloton. Government stimulus. Peloton

[A]

in February 2021. Okay, so this is around the same time, which is. This is so crazy to me because this is. This is the month after the holiday party. Stocks are down, all this stuff. He goes, we've increased manufacturing capacity by 6x, which is pretty herculean, but we're definitely not going to stop there. We're going to be investing in US manufacturing. That demand slowed because, you know, we're back in the clubs, we're back in the gyms. And he goes, at that same February conference, literally the same day he said that, he goes, we're now making more bikes than we're selling.

[B]

What was he thinking? What was happening in his mind that peloton would be any different. Right. He expected there to be a pandemic throughout the rest of, you know, history or the future. Right. It's bad foresight.

[A]

It's insane. I mean, he really did think he was Apple. And every year you were gonna get a new Peloton bike, and every year, you would want more content.

[B]

Except here's the thing. I can live without a peloton.

[A]

Yeah.

[B]

I've been very good at doing it for, you know, 30 years almost. So I've escaped a peloton and.

[A]

Yeah, no, absolutely. But that's the thing. Like, who is telling this guy no.

[B]

Okay, so not. Not. Not his.

[A]

Not Jill.

[B]

Not Jill.

[A]

It ain't Jill.

[B]

Not his cfo, who he's not talk to, know, have in his phone.

[A]

Yeah.

[B]

And definitely not the cto. I think John Foley is on an island and no one's reaching him.

[A]

Yeah. So again, right out. I just want to make this really clear. Around the time of the party, this is why they are so happy. During that party, Peloton's executives and board members sold $700 million in shares of Peloton. Foley alone sold 119 million in shares after the IPO, even as the stock price was plunging. I thought you said that it was only gonna grow if it was only gonna grow. We're on the ground floor, baby. We only have half a million people using Pelotons, and you said it's gonna go to 100 million. So why are you selling stock?

[B]

Because he needs his cash now. Like JG Wentworth.

[A]

This is really funny. Suddenly everybody just starts to ditch Peloton at this point. This is when we start to see the beginning of last year. Everybody's trying to put their Peloton on Craigslist, on Facebook, Marketplace, and it's really hard to. This, this is funny. Soul Cycle is offering a package of 47 classes valued at $1400 in exchange for pre owned Peloton bikes.

[B]

Wow.

[A]

Yeah.

[B]

In exchange for pre owned.

[A]

So, yeah, bring in your bike and we'll give you $1,400 worth of classes.

[B]

Good deal.

[A]

Yeah. Okay. So February 2022 is a true clusterfuck for all of Peloton. It is an absolute disaster. So you have that activist investor back in the beginning of February, and it just exposes all of the craziness that's been going on. You've got people working in these Peloton warehouses just jigsawing extra pelotons around. You have people, in addition, putting all of their inventory out into the world. Peloton's not capturing any of that income. The subscriptions are down. Foley announces he's going to step down, and the company would cut 2,800 jobs, 28% of their workforce. One of the things that they gave for all the fired employees, that they would receive a free year subscription to the platform.

[B]

This is exactly what I want. I'd love to be associated with the company that just shit canned me.

[A]

Can you imagine?

[B]

No, that's really, really, really. How did that get past?

[A]

I know. That is so like being fired is such a term. We should do an episode on that. But being fired is such a traumatic experience. Can you imagine if when you were working at Disney, if they fired you and then they said, you can give it, you can have a genie pass for six months and you're just crying and it's a small world.

[B]

That actually seems reasonable to me. Disney is much better. Experience than Peloton, but I can't imagine like waking up every morning and, well, at least I can work out.

[A]

Insane. This year there's been a ton more departures. The CFO Jill Wordworth stepped down. Another 800 employees were laid off in August. Another Peloton co founder he saw Kushi, also stepped down on September 10th. Chief marketing officer Dara Tressetter stopped, stepped down on October 4th. So basically the entire executive exodus.

[B]

Exodus.

[A]

So replacing him was our old ship captain, Barry McCarthy.

[B]

Can I just say something? Have you ever been a part of a company that's going through a mass

[A]

exodus on a small scale?

[B]

It's kind of fun because you're just going to happy hours all the time and sometimes they're doubling up on happy hours.

[A]

There's a certain. When people get laid off and especially if they're given a two weeks notice, the chaos that ensues in terms of the tea that they're spilling, the fucks that they don't give, you know, it's why it's. The energy is just so. It's chaotic and I love it.

[B]

Yeah, no, and even better if they're finding something better, right? If everybody hates their job and they're like, yes, I'm so happy you found another job. Get me in.

[A]

And you'll remember during this time, I Remember seeing on LinkedIn a bunch of people saying, hey, I got laid off at Peloton. And there's this, like, there's this community, right. Of people who got laid off together and then they're all, I'm sure they all found really good jobs. And in a sense, when you're being laid off and it's a newsworthy moment, I think it's probably better because you're going to have recruiters reaching out to you left and right.

[B]

That's great. I mean, it's the worst, one of the worst moment, probably the worst moment in your professional career.

[A]

Yeah, it's devastating. I mean, when I was fired, I guess.

[B]

Yeah, I guess I see it now. I see it does make it better if you're going through it with somebody, with others and generally I think they got rid of sales and marketing. It sounds like. So most of your co workers.

[A]

Yeah, yeah. Oh. So there was an all hands call, by the way. So Barry McCarthy joins as CEO of Peloton and he's on an all hands call. They invite everybody to the call, including the 2,300 workers who had just gotten laid off, who are just spamming the Slack channel. Like, what the fuck are you Kidding me. Thanks for the 1 year subscription. Nice to know you, Barry. Like, there's no screenshots of the text, but I can just imagine, like, again, it's just like, don't you think about this? You just fired 20% of your workforce and then inviting them to an all hands. Like, it's just, I'm sure, total chaos. So now Barry McCarthy has this ship that he's trying to.

[B]

Yeah, let's chart. Get the ship metaphors out of the way. So he's riding course.

[A]

He's riding course.

[B]

The ship that is Peloton.

[A]

The ship that is Peloton. And there is a number of holes in the helm.

[B]

The helm starboard and aft.

[A]

Correct. And so he's basically just gonna take some more workers and plug the holes. So he is announcing another layoff of 500. That's another 12% of his employees. So at this point, they've got 3,800 employees globally. I think this is from 8,600 a year before. So half. You're a Peloton employee. And you look to your left and you look to your right, one of those people is gone.

[B]

Guys, it's really important that we're doing more with less.

[A]

Yes, I'm sure that's all the messages. McCarthy says that the latest cuts mark Peloton's final significant move to reduce its operating footprint and now would focus on increasing revenue. Okay. There was this weird statement he made where he gave the impression that the company has six months to live, and then he rejected that statement. But I don't think that's very far off. There are a lot of analysts that say that Peloton is going to run out of cash in the next eight to 12 months.

[B]

Wow.

[A]

Well, at this point, he's hoping for corporate mommy to acquire them. And so the people in the running are, or who are in discussions are Amazon, Lululemon, Nike, Apple. They really need to be bought. Because at this point, most people don't think that it's a standalone company that's worth even $2 billion. That it is now.

[B]

So what do we think? Can we just roughly see what are the high seas that we have to navigate right now for Peloton going forward? We're running out of money.

[A]

Yeah.

[B]

We've got a glut of secondhand inventory that we've kind of got a grasp on. Right.

[A]

So what they're doing now is they're taking that secondhand inventory and they're putting it in hotels, they're putting it in gyms, which is so ironic.

[B]

Okay. Yeah. So I saw partnership with Hilton was announced. So 5,400 or all Hilton branded hotels will now carry peloton bikes.

[A]

But what do you do? You just put them everywhere. I mean, I could imagine they're like lift scooters. You go to Atlanta and there's a lift scooter, there's a graveyard. I mean, it's like, it's. It's turning into garbage.

[B]

Hardware garbage. The other place they're placing these are dick's sporting goods.

[A]

Yeah.

[B]

So they're gonna be in 100 dick stores.

[A]

I don't know. I. I just. I think that it's too little, too late. My guess is it's just gonna fizzle out.

[B]

No, I think there's no. I disagree. I think there's a market for it. I think people who love peloton and use peloton and aren't in it for the fad will continue to use it. And there will always be a market for people who want a home gym and have space for a home gym and have the money for a home gym.

[A]

Yeah.

[B]

We live in a city where that's just not something that we can do. Right. But I think there is a market for it. And I think what you're saying about it being purchased, I think it's. There's a cleaning house that needs to take place. You know, whether it's chapter 11 or not, something needs to be done. But it's difficult for me to say, you know, this brand that has a lot of cachet still.

[A]

Yeah.

[B]

And a lot of recognition goes away like that. I think there's a buyer out there for any. Anything. But we did just launch the rower.

[A]

Yeah. But a lot of people say it's not worth it. There's another competitive hydro. Hydro that's supposed to be even better in a thousand dollars.

[B]

Yeah. So hydro was first to market in that space.

[A]

Yeah.

[B]

And the one thing that peloton has is. Right. They can. They have the cachet. They have the celebrity trainers. I think there's. There's. There's still some. There's still some light at the end of this tunnel.

[A]

Yeah. Smaller light, though.

[B]

Smaller light. More reined in light, more rained in,

[A]

which I think is why Barry McCarthy is probably a good choice. I have some ideas for how they can improve peloton.

[B]

Okay.

[A]

Okay. I think. Okay. So one of their big things is they want content. Right. I think that they should partner with Netflix and work out to a TV show so I can work out to stranger things. So when. When there's some tension I'm going really hard and then I'm slowing down when they're, you know, and I'm like interacting with the content that I'm seeing in front of me.

[B]

That would be cool. I think there's an opportunity for some VR aspect. Oh, VR, yeah, that would, yeah.

[A]

Like, I wonder if you could take a VR headset and take it to a treadmill at a gym even. Like, it's like the hardware. Do you really, really what the biggest value is? The subscription hardware? Okay, that's a couple thousand dollars. But it's the month over month, which

[B]

they realize, which is like.

[A]

I know, they realize a little too late.

[B]

I think late.

[A]

This is going to be too technical and we probably got to wrap up. But one of the things that I think is really interesting is VC's love ass as a service. Right. So there's software as a service and then you have, in this case, John Foley positioned it as fitness as a service, which is subscription based fitness, which is also a gym membership. Right. And, but really what that is is recurring revenue over time versus just one outlay. But yeah, they did figure it out too late. I mean, that's why Netflix, Spotify, all these other, I mean, even, you know, you see BMW trying to do seat heaters as a service, you have to pay $5 a month for your seat heaters to turn on.

[B]

Oh, I didn't know that they canceled

[A]

it because there was so much backlash over it. But like, yeah, I mean, that's the thing. It's a nickel and diming situation and I just don't know that that's sustainable. At what point is my subscriptions going to cost more than my rent? Because at this point I have like 15 of them, you know.

[B]

Yeah, yeah.

[A]

I mean, yeah, every single podcast. But that's what they're trying to.

[B]

Yeah, but that's what they're trying. That's what they're trying to do. That's. This is gonna be good weather the storm. This is going to be great for consumers because there's going to be new value for us. Right. Like, yes, Netflix is raising the price. They just came out that they're going to have an ad for, for a cheaper price. And like, yeah, it's, it's gonna hurt. But this is ultimately going to weed out so many. I, I guess I have a, I think there's a greater good with these companies and I think that it's gonna weed out, you know, the losers, the pelotons. And we as a society are gonna come out with way better Services.

[A]

So you think that capitalism creates a natural competition that ultimately benefits consumers?

[B]

Yeah. I mean, look at any streaming, like all the streaming services. Look at all the great content we've gotten.

[A]

Okay, that's a topic for another day.

[B]

Okay. Yeah, well, we'll talk about that. Okay. Talk about that offline.

[A]

We'll talk about that offline. What were the biggest, the juiciest pieces of gossip that you got from this story?

[B]

What I'm learning from this tea is, you know, founder, CEO, wife combination. How many times are we gonna see the same story over and over again? I mean, let's just name off a few. Elizabeth Holmes.

[A]

Yeah.

[B]

Okay.

[A]

Oh, yes. Oh, my God. With Sunny.

[B]

Yeah. Okay, that's a founder, CEO.

[A]

Adam Newman and Rebecca Newman.

[B]

That's a founder, CEO and husband, wife duo.

[A]

But John Foley and Jill Foley.

[B]

Okay, right. Let's concentrate more on founder and CEOs, because that's where I was going. There's so many founder and CEOs that just like, had a vision, great idea, but they couldn't execute on the business side of it. Right. These founder CEOs need to be able to look at themselves and say, yes, I had this great idea. Maybe it's time I take a back seat and, and bring in the CFO and align this company and I have like a fiduciary responsibility to do that thing.

[A]

They don't.

[B]

Otherwise you end up with a workforce that goes from 8,400 to 3,800. Now we're talking about 5,000 people who are without jobs. So, so many ripple effects.

[A]

Right. I know.

[B]

This is the theme that we're going to see over and over and over again. And there are so many founder CEOs that are probably in Silicon Valley right now with the next billion, trillion dollar idea. And guess what? Nobody's ever going to learn.

[A]

Like, if I were a vc, I would be like, I need to conduct a battery psychological assessment on you yearly to make sure that you haven't completely lost your attachment to reality. Because it just seems so. It seems so inevitable that it's going to happen.

[B]

Right.

[A]

How do you prevent it and not. And then if you, if you got your hubby with you, then even your, your, you know, the entity that you

[B]

created is larger than you.

[A]

I know. And you can.

[B]

Downstream effects.

[A]

Yeah.

[B]

That, you know, can impact people's lives and. Yeah, people are losing, you know, their jobs, their livelihoods, you know, in really awful cases sometimes they're losing their lives over it.

[A]

Yes.

[B]

So, you know, that's not to say that there aren't other factors out there, but the driving factor is that these founders, CEOs just, just, you know, have a vision and are isolated to that vision and completely driven by it. And they're not seeing everything. All the warning signs along the way, which John Foley had every bit of.

[A]

That's what I'm saying. So I said at the beginning of this, you're going to see all of the warning signs were there. And people kept telling him, analysts and people who interviewed him and people at the old company said, maybe you shouldn't build so much manufacturing capacity. Maybe we shouldn't assume that demand is going to maintain. But he said, no, this is a trillion dollar company, baby.

[B]

Well, also, you know the other goal of this podcast, right, Is to also leverage the listener and say, hey, before you join Peloton and everything looks great. Take a look at the CEO. They're gonna sell you the dream.

[A]

Yeah.

[B]

You know, but take a look.

[A]

So enticing it is.

[B]

The equity's there and the money, but hopefully, you know, do your research. Is the sustainable. Is there an activist investor that's saying the CEO has no idea what he's doing?

[A]

Like, if I were interviewing for a startup right now, I would ask how often does the CEO get told no.

[B]

Yeah.

[A]

And what's his reaction or her reaction? So that's all we have on the Peloton gossip for now. And I literally mean for now because I feel like every time I Google Peloton, there's always new news. So we may have to come back and do a follow up episode maybe after the holidays. But, you know, we'll see what happens with Barry McCarthy. We'll see if he can turn the ship around as he says, maybe find Peloton a new buyer. It does not look good. Most of the buyers that have been mentioned are seemingly uninterested. So please write in, let us know what you think. If you are a Peloton owner, let us know, are you going to keep your Peloton? Are you going to try to sell it on the secondary market? And if you are starting a business with your husband or wife and you think it's not going to go well, or is going to go well right in and tell us about that too. All of the articles that we identified in this podcast I will be posting to corporate gossip pod.com so check out for those. And we'll be back next week for a deep dive on Bed, Bath and Beyond. Thanks, Adam.

[B]

Thanks. Yeah, thanks, Adam.

[A]

You know, it's been great.