At some point last year, Lisa Getty decided it would be fun to take a dozen different indoor cycling classes all in the same day.
The 50-year-old copywriter from Champlain, New York, had never been so enthused before about exercise. “As far as my fitness level, I’m kind of an all or nothing person,” Getty told me over the phone. “I’m up or down on the scale. I tried running for awhile but it was always more of a chore, like ‘Ugh, I have to go out and run five miles today.’”
Then, a little over a year ago, Getty’s husband saw an ad on television for an Internet-connected stationary bike with a giant touchscreen attached to it, one that would live-stream classes into their living room. With an upfront cost of nearly $2000 for the bike itself, and a required monthly subscription fee of $39 per month for the exercise videos, Getty hesitated; she had just spent $1,500 on a treadmill that she wasn’t using. So she made a deal with herself: if she could sell enough personal items on eBay within six weeks to cover the cost of the bike, she would get it.
Getty got the bike. Not only does she ride the bike daily, but she sometimes takes multiple live classes in a single day. On three occasions she has made the seven-hour drive to the company’s studios in New York City, where the videos stream from, to take a class in person. On April 25th, it will be her one-year “Peloversary,” she tells me. Also, she has since become a certified cycling instructor.
Such is the craze, I’ve learned, that is Peloton.
Peloton Interactive Inc. first came into existence in 2012, but didn’t sell its first internet-connected, indoor cycling bike until 2014. Since that first bike sold, the company has grown more than 200 percent year over year, according to its chief technology officer Yony Feng. In February, the company said it had 285,000 users, including bike owners, mobile app users, and in-studio riders. Now, that number is approaching 500,000.
When I’ve asked customers and investors over the past several weeks whether they see Peloton as a hardware company, a services company, or a fitness company, I’ve heard a variety of responses. It does sell hardware: that expensive bike and touchscreen console. But like a lot of tech companies, it makes money off of the subscription it sells. Some people — including Peloton’s Feng — seem hesitant to call it a “fitness” company, probably because fitness fads come and go fast. Almost everyone I talk to, though, suggests that Peloton is capitalizing on a kind of perfect storm of bigger trends: the obsession with cycling communities like SoulCycle, the proliferation of screens and Wi-Fi connectivity in our lives, and a growing emphasis on health and “wellness.”
Peloton has managed to capitalize on a perfect storm of health and tech trends. Can it last?
I first heard about Peloton from people in the tech industry, so my initial thought was that it was a Silicon Valley thing. (In fact, when I first told Verge executive editor Dieter Bohn that I was considering trying one out, he said, “Sounds like a Silicon Valley thing.”) But then I began to hear more about its existence outside of the New York and Bay Area bubbles; I saw it advertised on airport TVs in different locations; and friends who were using it told me that riders appeared to be from all over the country. Sufficiently intrigued, I reached out to the company in January and asked to borrow a bike.
The Peloton bike is like a Spin bike, although “Spin” is trademarked, so let’s call it an indoor cycling bike. It’s a carbon steel and aluminum bike with a weighted flywheel in the front that determines the level of resistance while you’re riding. It’s nicely constructed and, at 135 pounds, so heavy that I needed help moving the bike around my apartment. This is not something you assemble at home, either. It requires in-home delivery, a process I went through twice because the first Peloton that was delivered physically locked up when I started riding it. The second unit’s pedals worked like they were supposed to.
If the $1,995 price hasn’t made you wince yet, the add-ons might push you over the edge. First, the shoes. There are two basic types of cleats that are compatible with these types of bikes. Peloton’s pedals are compatible with something called LOOK Delta cleats, which have three holes to lock into the pedal with. If you don’t have those shoes, get ready to cough up at least another $100. Peloton sells a branded pair for $125. Also, this is a small thing, but that nice bike mat you see in Peloton ads, the one that will stop your floor from getting scuffed or keep your carpet sweat-free? That doesn’t come with the bike; it’s $59.
Consider that and the fact that you’ll have to pay $39 per month for Peloton’s live and on-demand classes; otherwise, you’ve just bought a high-end stationary bike that won’t do anything special. But live video content is precisely the thing Peloton believes will keep users coming back their bikes instead of gathering dust in basements like so many other exercise equipment fads of the past. The Peloton videos have also turned New York City spin instructors into quasi-celebrities among the broader cycling community.
Peloton videos are streamed through the 22-inch touchscreen that’s affixed to the front of the bike. It runs a custom Peloton operating system, built on top of Android. The display has a resolution of 1080 x 1920 pixels, and all of the video content is streamed in 1080p HD. It’s a thick, unremarkable monitor, with a camera in the front, volume buttons on the side, and speakers in the back. The speakers were my least favorite things about it; I sometimes got the sense that my neighbors could hear the Peloton videos better than I could, since the audio was directed outward and not at me.
There’s also an iOS app that streams Peloton videos on your iPhone or iPad, so you can ride another stationary bike while you follow along. But it’s a neutered version of the Peloton experience. Your cycling metrics won’t appear in the app, because it’s not connected to the bike.
Up to fourteen Peloton classes are streamed live every day. If you can’t tune into the live streamed classes, you can view over 5,000 classes on-demand. They vary widely in terms of intensity, length, style, music playlists, and instructors. The instructor is positioned in the center of the frame with a squad of barely-visible Peloton riders behind him or her — all real people, who are taking the class in Peloton’s New York City studio. Along the bottom of the display, you see your stats: your cadence, your resistance, your output or overall exertion level, and if you wear a heart rate strap, your heart rate. Along the righthand side of the screen is the all-important Leaderboard (caps mine).
Peloton streams up to 14 live classes per day; to mark special occasions, some riders even attempt to do all live classes in a single day
This is where you can compare your efforts to other people taking the class. If you’re live-streaming a class, you’ll see your output and your class rank in real time. If you take an on-demand class, you’ll see the numbers on the leaderboard for other participants who have already done the class, giving you a kind of illusion of a live leaderboard, but it’s not actually live.
It’s not uncommon for a few hundred people to be participating in a class simultaneously. Sometimes that number even creeps up over a thousand. The leaderboard is also the part of Peloton where I learned my earlier assumptions about it being a “Silicon Valley thing” were incorrect, because I saw other riders from New Orleans, Louisiana; Arlington, Virginia; Bozeman, Montana; Manchester, Massachusetts; Austin, Texas; Los Angeles, California; from “somewhere in Illinois”; and many more locations.
After a few Peloton classes, I understood the draw. Some of it was just the pure convenience of it: I could roll out of bed, hop on the bike, and get myself in the shower all before 6AM, and without having to drive anywhere. There were 45-minute classes when I had the time, and 30-minute ones when I didn’t. I ended up trying 18 Peloton classes in the eight weeks that I tested it.
But that could be said for any home exercise equipment. The bigger draw with Peloton was the built-in competitive element of it: seeing that leaderboard somehow did make me pedal harder. And despite being alone in my living room, it effectively simulated a “real” cycling class, for lack of a better description. I’ve always liked group sports or races for the intangible energy that’s generated from a bunch of people all trying to achieve the same physical thing, and I was skeptical that Peloton could provide that. At some point during a Friday afternoon class led by a super fun and sometimes foul-mouthed instructor named Christine, who had brought in an actual DJ to spin in a booth next to her, I realized I was enjoying myself a lot more than I ever thought I would on a stationary bike.
Tech aside, it’s Peloton instructors like Christine who keep people coming back to the live-streaming platform. Ask any rider who their favorite Peloton coach is, and most answer right away; either they like the intensity of their classes, prefer their music playlists, or they just relate to their zany personalities the way that TV show fans have a way of choosing favorite characters out of an ensemble cast. And Peloton has tried to market the instructors as Real Humans, not just online spin instructors: the company trots them out for meet-and-greets at Peloton showrooms around the country, publishes blog posts about their personal struggles, and has created official Facebook pages for them.
Peloton knows its instructors are a huge draw for the video platform, and is marketing them as quasi-celebrities in the indoor cycling world
For Lisa Getty, the copywriter from upstate New York, that Peloton instructor is Jenn Sherman. Sherman is an athletic blonde woman who hosts regular “Music Legends” rides and who has a remarkable ability to shout out at riders who have accomplished anything remotely standout during a class — whether it’s a 100th Peloton ride, a notable screen name, a birthday. It’s Jenn Sherman who Getty drove seven hours to New York City to see in person, and one of Getty’s goals has been to finish every single Jenn Sherman on-demand class before her one-year anniversary with the bike.
Getty’s first ride was actually with another instructor, Jess King; but once she took Jenn Sherman’s class, something clicked. “I noticed she was talking to all these people,” Getty told me. “Not just leaderboard names, but like, ‘David in Dallas, are you going to the game next week?’ I thought … I mean, I know they’re real people behind those screen names, but how does she know all of them? It was a revelation. That was a magic moment for me.”
Another rider, New York City-based Steve Martocci, says he plans to move his Peloton bike up to an empty water tower on the roof of his apartment this summer, where he’ll project the videos onto the 18-foot wall surrounding him and have a more immersive experience. He credits Peloton for helping him lose the weight he gained while he was running GroupMe, the popular messaging app that he co-founded and eventually sold to Skype. “The culture is very powerful,” Martocci said, noting that he hasn’t been back to SoulCycle since he bought a Peloton.
As part of reviewing Peloton, I felt compelled to join a couple Peloton Facebook groups and poke around. The official page has nearly 32,000 members, while the #Westcoastcrew group has several hundred. Most of the Facebook posts are brimming with positivity, a bubbly alchemy of encouragement and welcomes to new members and an aggressive number of hashtags. Occasionally, someone tries to sell their Peloton bike on Facebook, though they don’t often say why. It’s a cultish community, and as with any cult, there are downsides to being a part of a rabid group, as Peloton rider Drew Hallett learned back in March.
Hallett, a 47-year-old, Florida-based clinical account rep for a medical device company, posted a poll on the main Peloton Facebook page on the morning March 28th: “Who would like a class with more music and less dialogue?...I appreciate the instructors['] motivation and coaching but it’s hard to hear the music. Thoughts?”
Within a couple days, Hallett’s post had 145 comments below it, including: “What's the point of even buying a Peloton bike if you don't want instruction?” and “I LOVE PELOTON INSTRUCTORS!!! I want & need to hear EVERY word out of their mouth!! You could go to a regular spin class, there you can't hear the teachers over the bad music.” And “hey buddy, it sounds like maybe your bike seat is shoved too far up your ass.” Eventually, things got political (Hallett appears to have instigated this part of the discussion), but many of the responders to Hallett’s original post fired off some form of the same question: Aren’t the instructors the best, though? What’s wrong with you, dude?
“Hey buddy, it sounds like maybe your bike seat is shoved too far up your ass.”
Hallett seemed unperturbed by the interaction when I reached him by phone to ask about his Peloton experience. An avid mountain biker who uses the Peloton as a supplement to his outdoor rides, he characterized the responses as “probably from non-athletes, and people who discovered Peloton and rediscovered how exercise can make you feel better. They might need as much motivation as possible, they want a trainer at the gym, they don’t want to put on music and do it themselves.” He paused. “And there’s nothing wrong with that.”
Peloton isn’t perfect. The bike pairs with Bluetooth heart rate straps, but it took me several attempts and an eventual reboot of the bike to get this to work. Peloton connects directly with apps like Strava and Fitbit to share your rides when you’re done, but I had to re-authenticate with Strava after every ride in order to share my workout. Peloton says this issue has since been fixed.
What alarmed me the most were elements of Peloton that indicated a more lax approach to privacy and security than I would have expected from what is, essentially, a health-tech platform. It’s obvious the cycling instructors have some access to rider data: there are three data-filled screens in front of the instructors while they lead a class, one laptop for music control, a second screen running Peloton software, and another that the company says show more “in-depth” performance information. All of this is supposed to help inform the instructors so they can give shout outs to remote riders and try to keep them engaged. (Riders also sometimes change their usernames to reflect a milestone or personal information, i.e. “Lauren’s100thRide” rather than “LaurenGoode,” so that information is explicit.)
When I asked the company what other personal data the instructors can see, it still wasn’t totally clear to me. Feng, the chief technology officer, confirmed that “output” is visible, which is shared by default and is not personally identifiable. But he also said there was “quite a bit more metadata” being shared with instructors, including your total number of Peloton workouts, your birthday, and other information “relevant to the playlist.” When I asked whether heart rate is visible to instructors, Feng initially said he didn’t know. A company support page for heart rate pairing, last updated on April 16th, says “you [the rider] will see the metric for your heart rate appear on the lower right hand of your screen” but says nothing about whether it’s visible to the instructors on the other end.
Peloton later confirmed to me that instructors cannot see users’ heart rate, and that they only see output, cadence, and resistance. But there’s also no opt-out for any of this, and there’s no way to limit visibility of specific metrics once you’ve opted into a class. Peloton’s solution for this is to simply change your screen name, to make yourself less identifiable, but that struck me as a weak workaround.
Peloton takes a surprisingly lax approach to user privacy — which ended up being the biggest turnoff for me
The same approach seems to apply to the more social features of Peloton. Like a lot of social fitness apps, you can “follow” other members and they can follow you. But if there’s a member you’d like to prevent from following you, it’s surprisingly difficult: there’s no mechanism for blocking someone within the app. Instead, the company said, you have to send an official request through customer support. Recently, after going to a party in San Francisco and hearing two Peloton fanatics talk about their bikes, it surprised me to hear a woman tease a co-worker about the number of calories he was burning on his morning rides; I suddenly realized that my (few) followers could see my caloric burn, too.
It’s also worth noting that the Peloton tablet attached to the bike has a front-facing camera and microphone built into it. Peloton says this can be used for video chatting among members — a feature that almost every single Peloton user I spoke to while writing this story said they’ve never used. How customers feel about the camera and microphone probably depends on whether they’re also the kind of person who covers up their laptop camera and uses encrypted messaging apps, but I’m not embarrassed to say I felt unnerved having a camera aimed at me while I was sweating my way through online classes. One person close to the company told me that Michelle Obama has a Peloton, but it’s been modified, without a camera or microphone. Peloton declined to comment on this at all, as did the press office of Michelle Obama.
Feng acknowledged that the the chance of someone maliciously activating that camera isn’t zero. But he said that the the fact that Peloton doesn’t let users download apps onto the device is a “huge factor” in creating a secure environment.
“We don’t have an app store. It’s a single purpose console. We control every aspect of it,” Feng said. “So unless you as a user hack or tweak the device to allow third party apps on it, everything that is published on it, is from us. So that eliminates a whole category of potential issues.” He also said that the company uses end-to-end encryption for the data transmitted between the Peloton console and the Peloton cloud-based app.
All of which again begs the question: is Peloton a tech company, or a health and fitness company? Or is it the inevitable combination of the two? And in any case, is it sustainable?
Feng claims that Peloton’s one-year user retention rate is 96 percent, and that customers complete nine to 10 workouts per month on average. These are impressive metrics by almost any fitness standard, whether you compare it to gym memberships, home exercise equipment, or even consumer fitness trackers.
While gym and health club memberships in the US have been rising steadily in recent years, reaching a high of 55.3 million Americans in 2015 (the most recent data), less than 50 percent of members are considered to be “core” members or frequent gym-goers, according to the 2016 IHRSA consumer report on US health clubs. More than one study has shown that the user retention rate on home exercise equipment like treadmills is dismal. And when you look at companies like Fitbit, “active” user numbers of such a device hover between 50 and 70 percent of the total user base, and the criteria for “active” is pretty light.
Apps like Zwift and Fitness Blender are changing the digital workout world — and for less than the price of Peloton
The more important question may be whether Peloton can compete with lower-cost, more accessible forms of exercise classes at home, from upstarts like Zwift, a popular, $10 per month “gamified” cycling app, or Fitness Blender, a totally free YouTube fitness channel that has amassed four million subscribers and was profiled last week by The Wall Street Journal. If Peloton users get stretched financially, if another financial crisis hits: that $39-per-month service could be one of the first things customers cut out of their budgets.
That’s why at least one potential Peloton investor walked away from the company, according to a recent report in Bloomberg. That same report said the company has been looking to raise at least $120 million at a valuation of over $1 billion. (I asked Feng about the company’s fundraising, and he declined to comment on it; the company also did not make chief executive John Foley available for an interview.)
Other investors, like Brand Foundry Ventures’ Andrew Mitchell, are unsurprisingly optimistic. “It’s a sleek, good-looking piece of equipment,” Mitchell told me, “but it’s all about gross margin. It’s a ridiculous software gross margin.” In other words, the bike isn’t what makes money for Peloton, it’s the services. But again, this also underscores the point that if people stop paying for the services, Peloton becomes a “dumb” bike that acts as a coat rack in your apartment, rather than a useful machine. Could we all be looking at our Pelotons as they gather dust in two years, wondering how to sell them off?
Mitchell likened Peloton more to a standard exercise routine that people tend to stick with, like weight lifting or running, than what he called “super niche” fads like Tae-Bo or P90X. He also said, “It makes a lot of sense when you also consider putting Pelotons in hotels, cruise ships, and clubs.”
That may very well be in Peloton’s future — some luxury apartment buildings are already putting Pelotons in their fitness centers — but in the near-term, Feng says it’s focused on improving the experience in every possible way for its current riders. They’re looking at time-shifting the leaderboard in the on-demand classes in a way that makes them feel more “live.” They’re working on their mobile strategy and plan to deliver more “off-the-bike” video content, in addition to the yoga classes that are already included into the subscription. They want to “optimize the information flow for the instructors,” too. Like a tech company would.
Peloton may just be the Next Big Thing in fitness or it could end up being a fad, but I can say this for sure: I kind of miss that bike now that it’s no longer in my living room.
Update April 25th, 3:10PM ET: The article has been corrected to reflect that Peloton rider Lisa Getty was impressed when an instructor could call out riders by name, i.e., “David in Dallas.” A previous version mistakenly read, “David and Alice.”