then be needed to help instructors mount the machine? Will custom-
ers think the stool is something that comes with the device?
“Yes, and the stool costs $5,000,” deadpans Bud Intonato, VP of
product. The room bursts into laughter. (For the record: No stool is
required.) But Peloton employees know they’ll have to justify the cost
of the treadmill, just as they’ve had to justify the cost of the bike; the
company has been giving Americans sticker shock for years.
Peloton’s bike costs $1,995. The treadmill will be $3,995. The
company has long grappled with how to explain this expense,
though Foley says it’s necessary. Theirs is a premium product, and
it’s expensive to produce. “Two thousand dollars is crazy for a bike,
but our bike does all this other stuff and doesn’t exist anywhere
else,” he says, clearly having had this conversation hundreds of
times before. The treadmill is a larger, more complicated product,
and in turn, it carries a higher price tag. Foley’s only defense is to
make sure Peloton effectively communicates the long-term value
of owning this equipment—which may not soothe consumers
who can’t afford the upfront costs, though some analysts do agree
with him. “If you look at how much, say, a single SoulCycle class
costs compared with the unlimited access to fitness you get with
your Peloton bike, it can be really economical,” says Anya Cohen, a
fitness industry analyst at Ibisworld. Say a customer buys a Peloton
bike and over the next 18 months takes 200 classes. In total, that
year and a half of exercise will cost $2,697 (combining the costs of
the bike and monthly subscription). At a brick-and-mortar studio
where one class is $35, it would cost $7,000.
Foley was never surprised by pushback on the price, though he
has evolved how Peloton responds to it. The treadmill is a part of
that. If you own the bike and buy the treadmill, your $39 monthly
fee covers both. “One of the ways we plan to stave off competition is
to not be greedy from a business model perspective,” he says. New
workout programs are constantly being added. He compares Pelo-
ton’s approach to that of Amazon Prime, where Jeff Bezos is always
adding new perks for the same subscription price. Greed, he says,
will do a company in. “Pigs get fat, hogs get slaughtered,” he says.
Peloton is also actively exploring new ways to get people on
its products at no or low cost. In early 2017, it introduced a
commercial- grade bike to place in luxury hotels, apartment build-
ings, and universities around the world, to allow nonsubscribers
to experience Peloton’s classes at no charge. (Though Peloton,
of course, hopes some of those people eventually become device
owners.) And in October, Peloton launched a financing program
for its bikes, in which payments resemble the cost of a weekly
Flywheel habit.
Nevertheless, even as it expands its product offering and its com-
munity, price will remain a vulnerability for Peloton. And competi-
tors have taken notice.
→ In November 2017, Flywheel introduced Fly Anywhere, an
at-home bike that streams studio classes. It starts at $1,699, plus a
$39 monthly subscription; the more affordable bike syncs with your
current iPhone and iPad to display content. It came seven years after
Peloton first attempted to partner with the brand, and since then,
Flywheel has expanded to 42 studios across the country.
“We’ve had over half a million people ride with us in our studios,
but there are 40 million people in the U.S. who fit the same profile
but don’t necessarily have access to one of our studios,” says
CEO Sarah Robb O’Hagan, who joined Flywheel last February,
having previously served as president at Equinox. When I ask what
makes Flywheel’s effort different from Peloton’s, Robb O’Hagan has
a quick and simple answer. “We are a fitness company enabled by
technology,” she says. “Not the other way around.”
There, the two brands are in agreement. Foley believes his
tech-first approach will keep Peloton at the front of the fitness
pack—enabling it to build out a system of interconnected workout
tools, with the content to match. “We do not believe that Flywheel
is going to be a meaningful competitor,” he says. “‘Not impressive’ is
a dramatic understatement.”
Apple, Amazon, Nest, GoPro, Tesla—these are the companies
Foley cites as inspiration, and perhaps even competition. They are,
after all, companies that come into your home, and are actively
looking for more ways to engage consumers wherever they go. Per-
haps that’s why he constantly references them to inspire his team.
“We’re worried about Amazon,” he says. “That’s really the only
people we think could compete with us.”
And yet much like Amazon, Foley sees his company as completely
changing consumer behavior—bringing fitness fully into the home
and making the retail space increasingly irrelevant. After all, who
needs a gym when the gym comes to you? A change like this would
leave plenty of casualties in its path, so I ask point-blank if Foley
wants to put gyms out of business. He pauses before answering.
“Henry Ellenbogan at T. Rowe Price told me once that Peloton will do
to fitness what gaming consoles did to gaming. In the ’80s you went
to the arcade. Today they’re gone, because you get a better experience
at home, interconnected with the world, and you get a better value
because you don’t have to pay 25 cents every time you die,” he says.
With the launch of the treadmill, Foley will see just how much of
his vision people are ready to take home.
Stephanie Schomer is Entrepreneur’s senior editor.
January-February 2018 / EN TREPRENEUR.COM / 55“ We don’t want to be a
stationary-bike company,”
Foleysays.“Wewanttobe
adisruptivetechcompany.”
→RIDE OR DIEHead instructor
Robin Arzónleads a class.