Posted on Wednesday, Jul 12th 2017
According to Technavio, the global home fitness equipment market including treadmills, weightlifting machines, and stationary bicycles is expected to grow at a CAGR of 5.08% during the period 2017-2021. Peloton, which sells an Internet-connected indoor fitness bicycle, recently joined the Billion Dollar Unicorn Club.
New York-based Peloton was founded in 2012 by CEO John Foley, COO Tom Cortese, CTO Yony Feng, Graham Stanton, and Hisao Kushi. The idea for Peloton was born when John and his wife became addicted to high-energy indoor cycling classes but were frustrated by the hassle of getting into the best classes as per their schedule. He then got together with the other co-founders to create Peloton and deliver the best indoor cycling workout to people on their own time, in the comfort of their own homes.
The main group of riders in a bike race is called the peloton and other riders riding along are pushed to ride faster and longer. Peloton home riders get a similar experience through Peloton instructors, the real-time leaderboard, and social media.
Peloton bikes come with a large built-in tablet stocked with more than 4,000 different on-demand classes and 14 daily live-streamed sessions. Peloton’s bike sensors collect data like speed and distance and during classes, riders can have their speed matched against others taking the same class at the same time.
The Peloton bike costs $1,995 and unlimited streaming classes cost $39 a month. Peloton has sold 113,000 bikes and has over 500,000 members across its platform. It has 20 showrooms in the US, and two studios in Manhattan and Chicago. Its Facebook Rider Group has 37,000 members.
Peloton employs about 400 people including close to 80 software engineers. It develops 12 hours of live television content a day, and sells through its own retail stores. It also delivers its own bikes in three markets. Its competitors include Flywheel Sports and SoulCycle.
Early this year at the CES, Peloton launched its commercial grade bike for gyms, hotels, country clubs, hospitals, universities, and health clubs. Uber’s New York offices, the Monarch Beach Resort, and the Westin Group were among the early adopters of the commercial bikes. Westin Hotels has partnered with Peloton to put its bikes in 30 US Westin hotel gyms. Peloton also announced a partnership with Fitbit to sync Peloton ride metrics directly to the Fitbit app.
Peloton generated $170 million in revenue in 2016, almost three times its revenue of $60 million in 2015. It has 100,000 paying subscribers.
The company has raised a total of $444 million in venture funding from investors including
Andrew Mitchell, Balyasny Asset Management, Bullish, Comcast NBC Universal, Fidelity Investments, GGV Capital, Grace Beauty Capital, Jed Katz, Kleiner Perkins Caufield & Byers, L Catterton, QuestMark Partners, Tiger Global Management, True Ventures, and Wellington Management. In its latest round of funding, it raised $325 million that valued it at $1.25 billion.
With the new funds, Peloton plans to increase the number of retail stores to 33 by the end of the year and extend in-house delivery to 10 markets, up from three right now. It also plans to double the size of the software and engineering team and increase marketing spend. An IPO is not on the immediate horizon.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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