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 Peloton does just that, innovating an outdated category with a fusion of revolutionary software and masterfully designed hardware, they have inspired audiences in ways that benefit their well-being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!
If you could give people access to their own DNA, and interpret what it could potentially mean for their health in the future — would they change the way they lived? Would they exercise more? Make alterations to their diet? Stop smoking?
Would they change the way they behave everyday?
That’s the bet that Anne Wojcicki waged when she started 23andMe, a world-changing, first of its kind direct-to-consumer genetic testing company that aims to shift the way we think about healthcare from its current diagnostic model to one based on prevention.
Before launching 23andMe, Wojcicki had already led a successful career as a health care analyst on Wall Street. This career path also came with a front-row seat to the red tape and lack of action that was plaguing the health care industry. Convinced that America needed a more efficient and more consumer-focused way to treat illness and invent drugs, she decided to pioneer a path forward. By founding 23andMe, she made championing that change her life purpose.
It’s a mission that landed her on the front page of Fast Company, accompanied by the bold headline “The Most Daring CEO in America.”
“We’re not just looking to get a venture-capital return.” Wojcicki told Fast Company. “We set out with this company to revolutionize health care.”
23andMe’s $999 saliva kit, which was delivered right to customers’ doorstep, allowed consumers to track their ancestry. It analyzed their DNA, tested for 254 health risks, and alerted consumers on their susceptibility to certain diseases – all without having to go to a doctor. Just a few weeks after submitting your kit, the results would come in with tips and guidance on how to reduce those health risks. Wojcicki was using technology to shorten the cycle of optimization.
Having this type of information could potentially spur people to make healthier lifestyle choices. Learning that you are at a higher risk for a certain disease, simply because of your genetics may propel you to mitigate that risk by making changes where you can, like quitting smoking or beginning to exercise more.
After a blazing hot start, the company’s personal genome test kit would go on to be named “Invention of the Year” by Time Magazine in 2008 – just two years after the brand was launched.
More venture capitalist funding came pouring in, and 23andMe drove the prices of its tests down from $999 in 2007, to $399 in 2008, to $99 in 2012. The product was intentionally being sold well below its marketplace cost, because the real growth potential, and the world-changing impact that comes with it, doesn’t lie in the saliva kits.
Instead, 23andMe was steadily building a gold mine of health and DNA data by building on its wide community of consumers – a valuable commodity to pharmaceutical companies, hospitals, and even governments.
Each consumer is asked to participate in research, with a clear majority of them providing consent. All of the information gathered is under anonymity, with no individual data being sold. Through partnerships, this aggregated data could now be used to research and discover cures for diseases that spring up from troublesome genetic mutations.
23andMe was disruptive. It utilized technology to supplant an ingrained habit with something that didn’t formerly exist. An entirely new experience – and one that was less expensive, more convenient, and more consumer-driven.
And the disruptive brand is one that is met with confusion, uncertainty and resistance – and, in November of 2013, that resistance came by way of the FDA.
With a harshly worded email, the U.S. Food and Drug Administration demanded 23andMe to withdraw all its tests for genetic risks related to health from the market – limiting the company to providing information about ancestry and ancestry alone.
23andMe had failed to communicate with the agency and meet their compliance standards – leading their health analysis to being terminated due to the USFDA’s growing concern of inaccurate results — and the consequences that come with it.
She and her company were in a difficult spot. Following the moratorium, sign-ups had dropped by more than 50 percent. The company was barely surviving on their ancestry services. This was a sink-or-swim moment.
But Wojcicki was a challenger, and 23andMe was a challenger brand. She started the company with a vision, and she wasn’t going to separate what they were doing from why they were doing it. This was simply another problem she had to solve – and when you have an inspiring idea, nothing is insurmountable.
If 23andMe was going to survive, Wojcicki would have to find a way to cut through the red tape. With her back against the ropes, she and her team began working closely with the FDA.
Two years later, in 2015, the FDA granted 23andMe approval for a different kind of testing. This test would be focused on “carrier status” reports, which tell you if you have a copy of a mutated gene for a disease like cystic fibrosis or sickle cell anemia. The mutation would not affect the consumer directly, but it could affect their future children. Still, 23andMe was not authorized to tell the consumer about their personal risk.
A far cry from the 254 tests the company used to offer, the FDA decision was a still victory for 23andMe. It was the first step in the right direction, albeit a small one.
Determined to lift that bar even further, the 23andMe team continued to work closely with the FDA, and earlier this year that hard work was finally rewarded.
On April 6, 2017, the FDA came out with a press release allowing the marketing of 23andMe Personal Genome Service Genetic Health Risk (GHR) test for 10 disease or conditions, including Parkinson’s and Alzheimer’s disease.
This was a groundbreaking moment. The first direct-to-consumer test authorized by the FDA that provides information on an individual’s genetic predisposition to certain medical diseases or conditions.
Until that moment, the only way for people to get such genetic tests was to see a medical professional. Now, 23andMe consumers can log in to an online account and see their report and its interpretation. Behaviors were being changed.
Wojcicki discovered that she had to work with the FDA, rather than against them, to really drive that change. And in doing so, she proved that there is a market for direct-to-consumer health care.
The door is now open. The FDA has established new and less rigorous guidelines for approving at-home genetic testing, which will allow other direct-to-consumer health companies to enter the market with less resistance. Plenty of competitors are already waiting in the wings.
Today, the company is still growing rapidly. Its products have been used in several research projects, including studies on female fertility, depression, Parkinson’s disease, and even nail biting.
With a current valuation of $1.1 billion, the company now boasts well over two million customers. This past June they were ranked #4 on MIT Technology Review’s50 Smartest Companies List – right behind Jeff Bezos’ Amazon and Elon Musk’s SpaceX.
Behavior change is hard to create – but courageous marketers who obsess over helping people make more inspiring decisions and live more empowering lives will stop at nothing to do so.
Anne Wojcicki is that type of inspiring action marketer.
That’s why 23andMe is our Inspiring Action Brand of the Month!
Five years ago, Randy Heath and David Goldberg stumbled upon a quote that would change their lives forever.
“Socks are the number one most requested clothing item at homeless shelters.”
Not coats. Not gloves. Socks. The very same items that we subconsciously put on every single morning also happen to be a luxury to millions of people in need. Socks are what’s called a “wear through” item, which means that you cannot donate used pairs due to hygenic issues. This makes sock donations particularly difficult, putting them in high demand in homeless shelters across the country.
Surprised and upset by this heartbreaking insight, the two began to brainstorm. They wanted to help bring awareness to this under-publicized issue. They wanted to make a change. They wanted to inspire action.
So they did just that. They quit their jobs and launched Bombas, a sock company built from the ground up with an inspiring idea above commercial intent. To help the over 560,000 homeless people in the United States, Bombas would use the same buy-one-donate-one model made famous by TOMS Shoes and Warby Parker to help deliver to those in need.
But a brand is only as strong as the product and experience it delivers. If Heath and Goldberg were to succeed, they would need to design a product that was superior to whatever was already offered in the marketplace.
They spent over two years on research and development, studying the industry, experimenting with countless fabrics, and dissecting every pain point associated with socks.
The result was a perfectly engineered sock, with every minute detail designed with the consumer in mind — perfect for both athletic performance and leisure.
But the needs of the homeless and the needs of the Bombas consumer are very different. With that in mind, Heath and Goldberg reimagined the structure of their donation sock. The donation sock is engineered with reinforced seams for greater durability and a longer lifespan. It contains an anti-microbial treatment that prevents the growth of fungus and odors, and the socks are in darker tones to show less wear and tear. The refashioned sock is a testament to Heath and Goldberg’s commitment to fight homelessness with innovation and further solidifies Bombas’ reputation as a brand that’s driven by purpose rather than profit.
Stitched inside every Bombas sock is the brand’s mantra “Bee Better.” The name Bombas is derived from the Latin bombus, which means bumblebee. Bees are small, but together, they can make a huge impact. Bombas is no different, and the mantra serves as a constant reminder that we are all connected, and that even the smallest of actions can make a big difference.
Anxious and excited to share their product with the world, they went to market with the goal of donating 1,000,000 socks by 2024 – but it took just two years.
Word of their inspiring brand story spread like wildfire, and people flocked to be a part of it. It was human to the core, and consumers felt emotionally connected to the brand’s purpose and mission. It’s much more than just a pair of socks. It’s an experience that leaves you feeling impassioned, rewarded and inspired.
Today, Bombas has donated 2,287,666 socks to charity – a number that rises by the thousands with each passing day.
2,287,666 random acts of kindness. 2,287,666 inspiring actions.
That is why Bombas is our inspiring action brand of the month!