John Foley, the CEO and founder of Peloton, joins Rebecca Jarvis of ABC for an interview on May 5, 2016.
Calmly and confidently, he says the following.
“I think that the Peloton brand will be bigger and more influential than Apple in 10 years.”
Now, maybe you’ve heard of Peloton, the all-in-one stationary bike and at-home cycling class platform, and maybe you haven’t. Either way, you’re probably wondering how, or why, the founder of a stationary bike start-up, then just four years old, could make such an ambitious claim.
The company has already proved Foley’s inspiring idea to be true: that people would pay to re-create the cycling class experience at home – but to have more influence than the most influential brand of the past decade? That is a different beast entirely.
I’m not here to say that his prediction will be true, but what I can say is that the Peloton riders, all 600,000 of them, likely believe it to be.
On the surface, it’s easy to think of Peloton as, well … a stationary bike company.
And from there, one might assume that they compete with other cycling and fitness-based brands SoulCycle, Flywheel and Barry’s Bootcamp.
But ask Foley and he will adamantly tell you that Peloton is not a stationary bike company and instead considers his competitors to be Tesla, Amazon and Apple.
To understand this line of thinking, you must first understand Foley’s philosophies. There’s no goal too grand, and no vision too wide. Later in that very interview, he goes on to say:
“You hear that goals should be achievable. I don’t think that goals should be achievable because you don’t want to set yourself up for failure. I think that if you hit every goal that you set out for yourself, you will never know how far you could have gone.”
In the two years since saying that, he has taken the company very far. For the second year in a row, Peloton tops the list of New York City’s fastest-growing companies, as subscribers tripled this past year alone.
Today more than ever, consumers are going to market to become more of who they aspire to be. They are constantly searching for brands that will help them change their behaviors for the better. They have a natural desire to change and improve. Peloton does just that, innovating an outdated category with a fusion of revolutionary software and masterfully designed hardware, they have inspired audiences in ways that benefit their well-being tremendously. Riding Peloton becomes a part of your weekly routine. It’s a lifestyle.
So, if Peloton isn’t a stationary bike company, then what is it?
It’s a great question, and one that Foley gets often. Peloton transcends so many categories, and because of that, it stands in a category of its own.
Yes, the company became popular for selling its own state-of-the-art bikes, but Peloton is far from a hardware company.
That bike comes equipped with a 22-inch tablet computer, one that Foley claims, in addition to being three times the size, is even better than Apple’s. If you don’t want to purchase the bike, you can still enjoy Peloton’s classes through a monthly subscription via its award-winning app, and although they recruit software engineers from the likes of Google, technology is only a part, albeit a very large one, of what they do and offer.
On that tablet, Peloton streams cycling classes led by professional instructors to its legion of subscribers live from its television production studio in New York City. It’s an aspect of their business that has people labeling them “the Netflix of fitness,” turning instructors into celebrities with hundreds of thousands of social media followers and giving its riders over 8,000 on-demand classes to choose from – uniquely positioning Peloton as a media- and content-production company that’s attracting executives from Netflix and HBO.
And with 31 showrooms nationwide, a number that’s expected to grow to 50 by the end of 2018, Peloton is also an e-commerce and retail company. When purchasing the bike, whether online through their website or through one of their showrooms, you can pay an additional $250 for the bike to be delivered in one of their Peloton-branded Mercedes Sprinter vans by Peloton employees, who then install the bikes into your home, which also makes Peloton a logistics company.
It’s not the most economical way to deliver the bikes, but it’s an important differentiator for Peloton, as it gives them 100 percent control of the consumer experience end to end. Uncompromising in their direct-to-consumer approach, the deliveries are made by brand enthusiasts who are equipped to deliver a high-touch, on-brand experience. They can answer any questions the consumer may have, give the brand a voice and build relationships. Most importantly, they know how to get them set up and riding in no time.
So, if you’re following along, that makes Peloton a part hardware, part technology, part media, part logistics, part e-commerce and part retail company, all while not truly being any one of those.
“At Amazon, they make the Kindle Fire, and they make it for $250 and they sell it for $150. That disrupted all the Dells and HPs and IBMs and Acers who also tried to make tablets, but they were hardware business models. When you make a tablet, and you make it for $250 but sell it for $500 because your business is making money on hardware, you can’t compete with Amazon, who makes their money on the digital content after the fact.”
For Peloton, it’s not about the hardware, as the company primarily has a subscription digital content business model.
That’s not to say the bike isn’t the best bike in the world, because it is, but what truly differentiates Peloton from anything else is the content, community motivation and software it provides its consumers.
The bikes are suited with an electronic dial that displays your exact resistance from 0 to 100. It shows your cadence (pedaling speed), calories burned, distance ridden and total power output (a combination of your speed and resistance). The tablet constantly compares your current ride to your personal record, minute by minute, pushing you each time to reach new milestones. The tablet also shows you where you rank among others who have taken the same exact class, giving you incentives to climb the leaderboard.
If you take a live class, the instructor will often shout out your achievements, like breaking a personal record or riding your 100th ride. This make the Peloton experience immersive, entertaining and interactive. You become a true virtual member of the class, giving you the magic of being in the room all from the comfort of your home. You can even video chat with other riders and friends while the class is in session.
With over 8,000 classes to choose from, there’s something for everyone. Rides vary in length, difficulty, music genre and by instructor. Some combine riding with an upper-body workout, and Peloton has even added yoga, ab workouts and stretching classes to their library as well. Skip a trip to the gym and enjoy the rush of your favorite classes at the tap of a screen, on your terms.
Everything at Peloton has been designed with intention. That intention is a bit of a tongue twister.
Peloton wants to make you want to want to work out more.
And they’ve succeeded. Through a synthesis of social marketing, word-of-mouth advertising, persuasion design, behavioral science and design thinking, Peloton has mastered the art of behavior change marketing. Proving that emotion leads to motion, they’ve inspired their audience, increasing their commitment to improving their health. Sprinkling in behavior change ingredients into every brand touchpoint, they have created a cult-like following that has become the envy of brands everywhere.
Ninety-six percent of riders would buy the bike again if they could go back in time. On average, riders ride eight times a month, or twice per week.
But more impressive than that is their Net Promoter Score, an index that measures the willingness of customers to recommend a company’s products or services to others. Peloton has an NPS of 91, which, per Foley, is the second-best NPS in the world and far ahead of Amazon, Apple and Netflix. Foley has stated that his goal is to make Peloton the first company ever with an NPS of 100.
This brand loyalty makes word of mouth a powerful acquisition tool, as over a quarter of Peloton’s customers first learned about Peloton through a friend or a family member.
So what’s next for Peloton?
Earlier this year, they announced their entrance into the treadmill market with the Peloton Tread, a $3,995 Internet-connected treadmill with a 32-inch HD screen, so that if you step off the treadmill to participate in any of the guided core exercises, you still have a fully immersive view. The Peloton Tread will be available this fall.
The treadmill market is five times bigger than the stationary bike market.
Peloton is already working on a third product, and it won’t be their last.
“We want to build the biggest consumer-products brand in the world. We’re going to make Apple look small-time,” Foley tells Bloomberg.
As for taking the company public, Foley has stated that he eventually will, but not for financial reasons. Instead, he looks at an IPO as a marketing event – a way to generate awareness and get the word out about Peloton to the masses, helping as many people as possible improve their health and fitness.
That’s why Peloton is our inspiring action brand of the month!
Starting out somewhere new is never easy. You’re tasked with figuring out a boatload of new information for yourself: what those acronyms stand for, which conference room you’re supposed to be in, or what your coworker’s name actually is because you’re pretty sure it’s Pat, but maybe you misheard him and it’s Matt, but it’s too late to ask now so you just decide to play it safe and avoid calling him anything at all.
It can be tough to navigate these new waters – unless that place is DiMassimo Goldstein.
I’ve had the privilege of being DiGo’s Client Fulfillment intern since December, and I can honestly say this transition has been seamless. From day one, I’ve been met with nothing but warm smiles, welcoming coworkers, and great opportunities to get to know them better. Perhaps the greatest opportunity of them all has been the Buddy Lunch.
I realize that this is not a widespread term, as I’m lucky enough to be at the company that’s at the forefront of the Buddy Lunch Revolution. To better clarify this DiGo terminology for our readers, I’ve created a definition:
Buddy Lunch (noun): a midday meal paid for by your company during which you get to better know one or several of your coworkers, and thus, make new friends.
Example: “Hey, John. You seem like a really cool guy. Let’s go to Panera and chat it up!”
This might not sound typical, but keep in mind that nothing about DiMassimo Goldstein is typical. This is the same company where within my first two weeks, I experienced things like team karaoke, meditation, cats and dogs in the office (and no, that’s not a metaphor). So, a free lunch during work as a way to make new friends? That just seemed like classic DiGo – and I was all over it.
Unfortunately, my execution was not as effortless as my excitement. After several drafted emails later, I still couldn’t think of the right words. How exactly is the best way to say “Hey, you probably don’t know me, but that’s why I’m emailing you. Should we get some lunch so that we can learn each other’s names?” Didn’t exactly work. Luckily enough, some kind soul in the office saved me from my own awkwardness and invited me out to lunch. If you know anything about DiGo’s employees, you’ll know that this display of kindness is par for the course. To no surprise, it was a great time: flowing conversation and plenty of laughs over a pizza that was definitely fit for more than two people. Was I sure this was the dreaded “work” that all my employed friends were warning me about?
After that, I felt comfortable. I had a friend in the office, and I had the momentum to make some more. With every Buddy Lunch I went on, I felt like I became more a part of DiGo because I got to know the people who made it so special. Each person imparted their wisdom on me, wanting to give me the best possible advice on how to succeed at this company. Though I valued their input greatly, it was their willingness and enthusiasm to help others that most resonated with me.
I quickly realized that everybody at DiGo wanted the best for their peers, and the feeling was contagious. Whether it was pizza with someone from Studio, dumplings with the Account team, or salad with someone from the Marketing team, I felt such a strong sense of support from the people I was surrounded by, and it made me want to do the same for others. To me, that defines success at a company.
If that isn’t #InspiringAction, I don’t know what is. Power to the Buddy Lunch!
I still remember when I first saw the job opening on LinkedIn; it described the CRM Manager as, “the organizational linchpin for the agency’s marketing efforts”. Now, six months in, I can see why.
With support from the rest of the Marketing team, I develop multi-channel and data-driven recommendations for lead nurturing and conversion. I analyze the different touchpoints and interactions of our contacts and build customized campaigns delivered to the right people, at the right time, through the right channels.
What’s your average day like?
I’m sure more than one would say the same, but at DiGo, there’s not one day like the other. My days go from being in meetings, planning and launching lead gen campaigns, updating the database and connecting with prospective clients; to running ads, sending PR pitches, building integrated reports and reviewing tools to integrate with our CRM. Oh, and testing, lots of testing!
Do you have a morning ritual to get you in the zone?
I love having everything ready the night before; it gives me time to slow the pace in the morning while enjoying my fresh brew of Colombian coffee with Nick, my husband. I wake up around 5:30 a.m. (when I decide to work out, which is not very often), then shower, coffee, breakfast, get a quick update on the news and leave. The ritual that gets me the most in the zone is probably during my commute. I always carry a book in my bag, listen to a podcast, read the Fast Company edition of the month, or listen to whatever playlist fits my mood — “90’s Hits” has been on repeat this last week!
What’s your favorite part about what you do?
Being able to do what I love with so many amazing people! Everyone is passionate, welcoming and ready to work. Working on the Marketing team, for example, is exciting and challenging but it can also be unpredictable. When days turn crazy, my team works hard, runs around and get things done while having fun doing it. There have been nights when I go back home with sore abs, just from laughing.
What elements of your workday do you look forward to most?
Besides working with a great team, seeing positive results is what I look forward to the most (don’t we all?). Launching successful campaigns, receiving positive feedback and seeing the hard work come to life will always be an energy boost. The baked goods in the kitchen, bagels, movies, ping pong tournaments and mimosas help too :)
What’s the most challenging part of being a CRM Manager?
Translating data into robust and customer-centric marketing campaigns. We are in a time when every user expects a completely unique experience and no two paths are the same. It’s a challenge, but I like it!
What’s your favorite thing about being a CRM Manager?
Being at the center of it. You can do so much when you have a fully integrated CRM system. You have a full 360 view of your database, a thousand possible touchpoints and a different behavioral history for each contact. It’s like a puzzle!
If you could describe DiGo in a phrase, what would it be?
An inspiring combination of originality, diversity and hard work!
– Daniela Arevalo, CRM and Email Marketing Manager
After a short hiatus, host and DiMassimo Goldstein CCO Tom Christmann returns to the booth for another exciting (and hilarious) episode of The A-List Podcast! This time, he’s joined by Paul Caiozzo, an award-winning creative and the cofounder of Office of Baby, a youngish creative independent agency that’s mature enough to work for companies like Google, Etsy, Zocdoc, and StreetEasy. Before starting his own agency, Paul served as the executive creative director at Goodby Silverstein & Partners.
In this inspiring interview, Paul shares the unique story behind how he got into advertising, how negativity is poison, the challenges and balancing act of starting a new business, why creativity is still the core of advertising, and where he sees the future of the industry. Full episode and show notes below!
[0:00 – 1:36] Intro
[1:37 – 4:59] The meaning behind the name “Office of Baby”
[5:00 – 8:08] Looking back on his time freelancing, Paul shares the lessons he learned from being around a variety of different agencies
[8:09 – 15:20] The power of remaining positive, even in the face of uncomfortable situations
[15:21 – 18:03] How a young web designer from Long Island found himself at a start up in Silicon Valley.
[18:04 – 20:25] Paul shares the inspiring story of how a favor for a friend turned into a lifelong passion for advertising
[20:26 – 24:20] Packing up his life in San Francisco and leaving to go an advertising school in Atlanta, where he discovered how ideas can be applied to art
[24:21 – 28:27] The mentor who convinced Paul to stay in the industry after a rocky start
[28:28 – 31:29] What he’s learned from starting a business and how to deal with the challenges that come with it
[31:30 – 35:08] Paul shares some of his favorite philosophies he learned working under advertising legend Alex Bogusky at Crispin Porter + Bogusky
[35:09 – 38:33] Paul reflects on his time as the executive creative director of Goodby Silverstein & Partners, building a satellite office and selling a vision
[38:34 – 40:34] Tom and Paul chat about “global agencies” and how the fragmentation of people solving a problem can be a problem of its own
[40:35 – 49:06] The current landscape of advertising, and how even in a sea of data and numbers, creativity still reigns supreme
[49:07 – 1:01:29] The future of Office of Baby, the company’s vision, why you should never chase money, and how being kind to others will ultimately reward you
[1:01:30 – 1:02:22] Outro
“The A-List” is a podcast produced by DiMassimo Goldstein, recorded at the Gramercy Post, and sponsored by the Adhouse Advertising School, New York’s newest, smallest, and hippest ad school. You can subscribe and rate the show on iTunes or listen along on SoundCloud. For updates on upcoming episodes and guests, be sure to like the A-List Podcast on Facebook and follow host Tom Christmann on Twitter.
“Five years from now, people will say, ‘Remember when we had to wander malls and find our own things? That’s crazy!’”
That’s the behavior change that Eric Colson, the Chief Algorithms Officer at Stitch Fix, is betting on.
It may sound like a drastic change, but in today’s digital world, drastic change is the new normal. Small, smart, and disruptive brands with fewer resources and nothing but a powerful and inspiring idea are, almost overnight, transforming our behaviors in ways like never before. We’ve seen it with the likes of Airbnb and Dollar Shave Club. We’ve seen it with Casper and Betterment.
And now we’re seeing it with Stitch Fix, the online personalized styling service that is reinventing the fashion shopping experience.
Let’s go back to Colson’s prediction. The timeline he provided was five years.
Five years ago, Stitch Fix was hardly more than just an idea in founder Katrina Lake’s head – combine innovative technology with the personal touch of seasoned style experts to change the way people find clothes.
During those five years, she received funding but not much. With less than $50 million raised in the company’s history, she was able to grow the company at an unprecedented rate, raking in nearly a billion dollars in revenue at the end of 2017 – creating what has been dubbed the most cash-efficient e-commerce company of the decade.
Five years was all it took for Katrina to turn that inspiring idea into a billion-dollar company.
OK, OK … maybe it was six years (Stitch Fix was founded in February of 2011), but you get the point!
So, how did she do it? What is Stitch Fix’s secret sauce?
Like so many other disruptors, they thought differently. They did differently.
In an era where technology is all the rage, brands everywhere are competing in a race toward lower costs and convenience in nearly every industry. Stitch Fix took a different route.
Since its inception, Stitch Fix has always been focused on the consumer, understanding that the technology itself is less important than the customer experience of the consumer through the technology. That’s not to say Stitch Fix isn’t a tech-led company, because it most certainly is, but that technology is harnessed and focused toward a different goal: personalization.
Behavior-Changing Data Science
Here’s how it works: Consumers fill out a survey, or a “style profile,” indicating their style preferences. Questions range from size, price point, and preferred colors to how often a consumer dresses for certain occasions. On average, each client provides 85 meaningful data points. Clients are even encouraged to link their Pinterest boards to their profiles. Clients then schedule a date to receive their “fix,” which can either be a monthly subscription or a la carte, an important distinction that makes Stitch Fix different from competitors.
That information is then run through a list of algorithms, which you can tour on Stitch Fix’s website here. The data then matches the customer with a human stylist, who, with the information provided, creates his or her “fix” of five items and then sends the box directly to the customer.
Once received, the customer has three days to either keep the items or return them. If the customer keeps an item, an additional styling fee of $20 is given to the stylist. If the customer decides to keep all five items, he or she receives 25 percent off the total cost of the items.
This strategic use of data is what makes Stitch Fix so unique. Merging fashion with technology, Katrina can leverage that data to make the business much more efficient. She can forecast purchasing behavior and merchandize optimization. On the consumer side, the data is used to create complex algorithms that help match customers with styles and stylists they love, and Stitch Fix has even begun experimenting with designing new styles specifically for consumers.
Stitch Fix employs over 80 data scientists with doctorates from a variety of disciplines, including astrophysics and computational neuroscience. That team is led by, you guessed it, Eric Colson. If there’s anyone who knows how to change behaviors, it’s Colson. Prior to joining Stitch Fix, Colson was the VP of data science and engineering at Netflix, where he fueled the company’s recommendation and targeting engine, helping us discover our new favorite shows and forever altering the way entertainment companies operate.
In a digital landscape that has already forced traditional brick-and-mortar retailers out of business, Stitch Fix sits in an enviable position, with an unmatched wealth of data on the changing behaviors of consumers. Stitch Fix knows what consumers like and what they don’t like, and each sale or return makes the company smarter. It’s a business model that thrives off engagement. The more feedback a consumer provides, the better suited the “fix” will be.
Stitch Fix is capturing the future. It is changing the way people shop, offering a more personalized, curated, and delightful experience and making the try-on room a thing of the past.
What you wear is an extension of your own personal brand, and consumers more than ever are going to market for guidance and help in shaping that brand. Stitch Fix delivers the type of clothing you didn’t even know you needed. It stays up on the trends for you. It takes the hours of browsing or reading up on fashion tips out of the equation and delivers it all to you in a personalized way that no other e-commerce outfit can compete with.
But it’s not all algorithms and numbers. It’s the Stitch Fix stylists that build trust and loyalty with the consumers. They take time to get to know their consumers on a personal level, leaving handwritten notes and creating the type of emotional connection that makes an otherwise digital experience feel human.
In a letter to investors, Lake said, “I founded Stitch Fix to take on a very human problem: How do I find clothes that I love? Spending a day at the mall, or devoting hours of time sifting through millions of products online is time-consuming and overwhelming and neither effective nor enjoyable. I knew there had to be another way.”
Today, Stitch Fix is another way, but in five years from now, it may be the only way.
Tony Hsieh, the CEO of Zappos, once said that “a great brand is a story that never stops unfolding.” And while Stitch Fix’s story is still very much being written, the first few chapters alone have already built a story worth telling. We can’t wait to see where it goes next.
That’s why Stitch Fix is our Inspiring Action Brand of the Month!
No doubt, this makes me an eccentric marketer and an odder ad guy, and casts extreme suspicion on my membership in the creative community.
Marketers are supposed to want to run their own empires – otherwise why spend all that money on a Harvard MBA and all that energy climbing the corporate ladder? Creative directors think the ideal client listens to their presentations, and then applauds. Ad agencies think their job is to please the target audience no matter what the client might think.
I’ve always hated that stuff.
You don’t let your target audience tell you what to be any more than you let your friends tell you who to be. There’s no integrity, surprise or life in that at all. Yet, in many places, it’s the norm.
And you don’t go to a dynamic, growing company – or a turnaround – to run a department like a fiefdom. You go there to be a key member of the CEO’s leadership team. You need that CEO to help you succeed even more than the CEO needs you.
I’ve always sought out clients with vision. Not rude or insulting, but laser focused, blunt, and as domineering about the brand as possible. Sometimes they are articulate. Sometimes they just know it when they see it. Either way, as long as there is really an “it” that will ultimately differentiate the brand in a world of bland, I’m in.
There will be twists and turns. I’ll hang in. I’m in it for the ride and because I believe in the destination.
As a marketing director or CMO, you are going to get the ride of your life working for a Founder CEO, and the twists and turns are no small part of it.
That inertia you feel is the marketing strategy hugging the road of a changing growth strategy. That’s a feeling you’ll rarely get in a big, lazy company.
But if you care about getting to the destination, you’ve got to care about making all the right turns along the way.
It’s exhilarating. But it’s not for everyone. If you can deliver on the business results, if you can be resilient through the twists and turns, and if you can bring on partners who share your passion and resilience, you will become irreplaceable to your visionary leader.
You’ll play your best game along side stunning colleagues. These will be the days and years you’ll never forget.
If you want to make a mark in the world, this is the way. And I’ll see you at the weekly meeting with the Founder/CEO.