Wow I was heavily skeptical of Peloton until these numbers. I would have thought who would pay a few thousand dollars for a machine and then an additional $39 a month. But 92% of all customers who have purchased the equipment are still subscribers at the end of June 2019, that is extremely impressive.
Peloton S-1
31–40 of 212 posts
Re: Peloton S-1
#32It really makes we wonder how we could be on the verge of a recession when companies like this become successful? Maybe I'm just too cheap to ever buy something like this but it feels like a mass marketed luxury good that requires a decent level of consumer confidence to have succeeded.
Edit: This isn't a commentary on Peloton specifically, but all of the S-1 posts we've been seeing on HN recently.
I wouldn't interpret this behavior as success per se. I think a significant motivating factor for going public now would be to provide liquidity for your existing investors (and yourself as the founder) before a recession hits.
If you've had significant capital tied up in a company and you're worried a recession is on the horizon, then this is a great time to push your company to go public. If you wait much longer then you risk either:
1. Going public in a recession and losing some of your potential gains.
2. Waiting an unknown amount of time for the economy to rebound and to pull your cash out then. This assumes the company weathered the recession well AND given you the same or better gains than investing in something else during that time.
TL;DR: Going public now is a much safer time for investors to divest than closer to or after the coming recession.
Re: Peloton S-1
#33It really makes we wonder how we could be on the verge of a recession when companies like this become successful? Maybe I'm just too cheap to ever buy something like this but it feels like a mass marketed luxury good that requires a decent level of consumer confidence to have succeeded.
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Re: Peloton S-1
#34There are some funny things in the Risk Factors section: “We have identified material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply wit…
"There are also three long subsections about music licensing." I'm a customer. I've noticed that some of their old classes are no longer available, presumably due to music licensing issues.
Re: Peloton S-1
#35It really makes we wonder how we could be on the verge of a recession when companies like this become successful? Maybe I'm just too cheap to ever buy something like this but it feels like a mass marketed luxury good that requires a decent level of consumer confidence to have succeeded.
I feel like you're onto something. 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?
Do you have a Peloton or have you at least tried one? I don't/haven't but this seems pretty reductive.
Re: Peloton S-1
#36It really makes we wonder how we could be on the verge of a recession when companies like this become successful? Maybe I'm just too cheap to ever buy something like this but it feels like a mass marketed luxury good that requires a decent level of consumer confidence to have succeeded.
I feel like you're onto something. 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?
Comments like this remind of the top comment when Dropbox was announced on HN[0]:
"For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software."
No, it isn't just an ipad slapped on an exercise bike. And no, the patent system is not at fault here. There are dozens of competitors in this market. But Peleton won it.
Re: Peloton S-1
#37It really makes we wonder how we could be on the verge of a recession when companies like this become successful? Maybe I'm just too cheap to ever buy something like this but it feels like a mass marketed luxury good that requires a decent level of consumer confidence to have succeeded.
On the surface this is basically the Juicero of fitness equipment. If you want a good piece of workout equipment, buy a Concept2 erg. If you want a bike, you can get a carbon-frame bike for the same amount of money and then just get a trainer for it. Ostensibly there is zero reason for this to exist. The one argument in its favor is that youth sports are usually very heavily subsidized by masters sports. So if you we…
> Ostensibly there is zero reason for this to exist.
It's a lot more convenient to exercise in your living room than go outside or go to the gym.
I thought Guitar Hero was stupid and people should just buy a guitar, but people loved it.
Re: Peloton S-1
#38It really makes we wonder how we could be on the verge of a recession when companies like this become successful? Maybe I'm just too cheap to ever buy something like this but it feels like a mass marketed luxury good that requires a decent level of consumer confidence to have succeeded.
I bought one. I like it because it's pretty high quality, I didn't have to pay cash ( using Affirm it's 62/mo /39 months), and I was able to test ride 2 of them for free ( apartment complex has a gym with one, but very hard to get a time to ride ). My girlfriend likes it because it saves tons of time compared to driving to e.g. SoulCycle or a spin class and they have nice social features like a competition ladder. Bu…
I use the one at our gym and I do like it. I have a decent carbon bike and an indoor trainer that I use Zwift with. However I do like the peloton for the classes/instructors. The machine itself is nice and the ride is smooth. The screen is amazing. It pairs with ANT HRMs and Bluetooth earphones. It’s nice to visually see the metrics and have target numbers. Missing ERG is a problem but not a huge one.
I don’t think it’s a fair comparison with juicero. Although I’d admit I won’t pay for it - I’m not the target market. I’m primarily an outdoor cyclist.
Re: Peloton S-1
#39Earlier quoted context omitted.
Also looks like they are already profitable, and growing like crazy. EDIT: my bad interpreting the loss format, they are not profitable.
> We have incurred operating losses in the past, expect to incur operating losses in the future, and may not achieve or maintain profitability in the future > We have incurred operating losses each year since our inception in 2012, including net losses of $(71.1) million, $(47.9) million, and $(195.6) million for fiscal 2017, 2018, and 2019, respectively, and expect to continue to incur net losses for the foreseeable…
Look at their contribution margins though. Especially on subs. Unit economics are, I guess unsurprisingly, fantastic on selling 2k bikes with a ~40$ monthly sub.
Re: Peloton S-1
#40Earlier quoted context omitted.
I feel like you're onto something. 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?
Comments like this remind of the top comment when Dropbox was announced on HN[0]: "For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software." No, it isn't just an ipad slapped on an exercise bike. And…
Exactly. I can’t say for sure they’ll succeed but they are definitely onto something here. I explained the things o like in the comments above. It is well integrated. All the pieces work really well together. In comparison it’s a fight to get zwift to connect with my smart trainer, hrm and cadence sensor every single time I hop on it.