Unconventionals Podcast | Season 6 Episode 1

Peloton and the Fitness Experience That Won’t Quit

Peloton is becoming one of the hottest brands in fitness, and it all starts with an extraordinary experience.

Stripped down, the company sells you a cycle in your home and spinning classes delivered through the internet. But it adds up to something new and different: an addictive fitness regimen that almost no one who starts wants to stop. In this episode of The Unconventionals, we talk to founder Tom Cortese to find out how Peloton got there. The company stitched together several business models—talent management, logistics, software, hardware, internet content—to deliver an experience that makes you “want to want to work out.” Peloton has also figured out how to engage their “crazies”—their most loyal customers—to spread the word and grow the business. There is a tribal, family element that gathers around each Peloton instructor, to the point where many fans have opened Facebook groups for their favorite coaches and many coaches have their own clothing lines. You’ll hear the customer perspective directly from PJA’s own Jeff Porzio. He’ll help us understand how the company has earned a Net Promoter Score of 91—we can’t find another company that comes close.

Video Highlights
PODCAST TRANSCRIPT

Jafeela Lahey:
Next, on PJA Radio's, The Unconventionals.

Tom Cortese:
We have about 10 riders who have sent us photos of the Peloton corporate logo permanently tattooed on their body, sometimes right along with their user name. This has become a real part of everyone's everyday life.

Mike O'Toole:
That was Tom Cortese, co-founder and chief operating officer of Peloton. We talked to Tom at the Peloton headquarters in New York City. Peloton is, and I'm quoting the company here, a world-class studio cycling experience in your home. Now if I strip it down to its essentials, Peloton customers buy a bike, and they pay a monthly subscription that connects them virtually to 12 instructors in all the spinning classes they need. But, honestly, these descriptions don't really capture the company. What makes Peloton unconventional and tattoo-worthy is the experience the company has created. It's a different, more addictive way of getting fit. Peloton found a gap in the market and put together a business that is part fitness company, hardware maker, media, software, logistics, and Tom made sure that I wouldn't forget logistics, and talent management. No they figured out how to harness the energy and passion of their fans and we like to call them crazies, who are happily spreading the word on Peloton, because of what the Peloton experience means to them.


A word about crazies, for full disclosure Tom wasn't completely comfortable with the term, and I get it. Crazy can be pejorative, right? As in clinically insane, or out of control, or destructive. That's not what we mean. Crazies in the Unconventionals world are people who take a risk, try out a company who's doing something different and convince others to do the same. Companies like Warby Parker, GE or Peloton, are successful in large part because they figured out how to make common cause with people who love what they're doing. We'll talk to Tom about Peloton customers, but we also wanted to hear about the company directly from a user. We didn't have to go far. In fact, I first heard about the company from people here at PJA. Jeff Porzio run digital operations for us, and along with his wife, he's a Peloton customer. Yeah, he's a little crazy. He doesn't have tattoos, but Jeff recently went to New York City on his own dime to join a Peloton class in studio, and he calls this a pilgrimage. So, if you were going to introduce Peloton to me, or to a friend, what would you say?

Jeff Porzio:
Shit man, you know it's hard to define Peloton in a way that I think everybody who uses Peloton would agree on. For me, personally, Peloton is an experience, an accessible experience that allows me to really focus on my health. It's more than on online spinning class. It actually bothers me when people kind of synthesize it to that. Yeah, there's a bike, yeah it's powered by the internet, it's connected, but it's way more than that for me. It's really fueled by the community that participates in it, as well as the personalities, and the instructors that guide it.

Mike O'Toole:
Tell us about a memorable ride or two that you've had.

Jeff Porzio:
One ride that sticks out to me, and it happens to be my highest number that I have yet to beat, and it was the day after the election. It was the morning after the election. It was that Wednesday morning.

Mike O'Toole:
I remember it well.

Jeff Porzio:
You know, without even really being conscious of it, like I destroyed my 45 minute best. Another ride that was pretty memorable for me was actually with my favorite instructor, Alex Toussaint, that's my guy. I didn't even realize it was my 50th ride. A lot of people keep track. I didn't realize it was my 50th ride until he called it out about half way through the ride "Jeff Porzio in Boston, keep doing your thing man! I like that!" It's a shot of adrenaline. At that time, there was maybe 600 people in that particular live ride, and that kind of recognition is extremely motivating.

Mike O'Toole:
How do you like characterize yourself? Are you like a super user? Are you a middle of the road guy?

Jeff Porzio:
I'm definitely not a super user. The super users on Peloton, they are another level.

Mike O'Toole:
Fifty rides, though, and you sound a little-

Jeff Porzio:
Fifty rides and growing. You know, like I'm riding more often every month since I've purchased the bike. So, I'm confident that however long it took me to get to 50, it will be less than that to get to 100. I feel life I'm a middle of the road guy, you know father of two. Just trying to do something for my health, not trying to join a Tour de France team, but having fun and participating in a community that I have come to really enjoy and respect.

Mike O'Toole:
Some of my favorite moments from The Unconventionals are when I've talked to founders about getting funding early on. What makes The Unconventionals interesting is they figured out something new. A new way to meet a gap in the market. New means untested and risky, and funders like to invest in proven models, so there's tension there. As much as the fitness market is crawling money and business, there are gaps everywhere. We join gyms we don't use, we have fitness trackers that don't talk to each other. The bottom line, we don't exercise enough, and we aren't fit enough.

Tom Cortese:
My wife and I have two kids. John Foley who's CEO and founder, same wife and two kids. We live in New York City. We work a ton, but we want to see our kids, we want to love our families. We want to do the things that you're here to do in life. What you find is there's not enough time for fitness. You see this happening for folks all across the country, all across the world. It's tough to get to a gym. If you leave the city and move to the suburbs, some of the best instructors don't necessarily come with you. So you have a convenience problem, you have a cost problem and a you have a talent problem. We thought, well if you take everything that we've learned about the magic about the connected internet, the connected world that we have today, and we applied that to fitness, can't we have a better, more convenient, more engaging product? That's sort of how Peloton was born.

Mike O'Toole:
Fetching multiple insights there, right? So it isn't just about it's convenient 'cause it's in your basement, as opposed to the gym a mile away or a couple of blocks away. It's also about the talent. So that makes you an interesting business, but tell me about when you told that story in the beginning, especially for funders, what were those conversations like?

Tom Cortese:
We got tons of interest. A lot of folks would say to us, "When you build it, I want one." Or "Yeah, you know, I had the same idea." Something I think a lot of folks run in to. I think the trouble was, a lot of people had a difficult time wrapping their head around, how are a bunch of consumer internet software people who are building this company, going to go and develop the many verticals required to pull all this together. Right? So we are equally a media company, a talent management company, a software company.

Mike O'Toole:
Equipment company.,

Tom Cortese:
Hardware company, yeah, and a logistics company. We happen to have a retail footprint as well as an e-commerce footprint. Any one of those things could be someone's entire business. We were going out to the investor community saying "Don't worry. We can do them all." People just said, "I'll believe it when I see it."

Mike O'Toole:
Was there advice like, "Hey great idea, but lose the bike. Don't try to do the bike." Or "Forget about the monthly subscription." Like what kind of advice were you getting?

Tom Cortese:
Of course, nowadays it feels like a lot of folks want to invest in a pure software play, so like why not be the cable company fitness media, why not create the pathways to move this content all around to other people's equipment, beaming out of someone else's studio. We thought about it and it seemed like not a terrible path to pursue, and we did. We were open to how are we going to piece this together in the beginning. So we went to some of the top fitness companies and tried to pitch the idea that way. We went to some of the top equipment companies, tried to pitch the idea that way, and it turns out that all those folks thought we were equally crazy. They all slammed the door in our face as well.


On top of that, there wasn't really any piece of equipment out there, especially in the indoor bike category, that was a clear winner. There certainly wasn't any that had the type of interconnectivity that we were seeking. There certainly wasn't any that had the type of tablet computing that we were seeking. We wanted the same experience that you have on your iPad, and the fitness industry just wasn't doing any of that. So there wasn't an existing hardware platform. There wasn't a content platform. There wasn't a fitness company out there that was daring enough to partner with a bunch of busted dudes who had a good idea. So, slowly but surely we sort of realized, we just have to do this on our own. We have to do all these pieces in order to make the great experience, and it was the best decision that we made.

Mike O'Toole:
'Cause you control all the elements of your success, I suppose, right?

Tom Cortese:
We control the end to end user experience. That's what's important. We think about crafting an experience for you in your home, we don't think about creating a piece of equipment. We don't think about creating software. We think about what's it like to wake up in the morning and want to work out? How can I make this enjoyable? How can I have a fun start to my day? By crafting a bike that is designed for your home. We were able to think about the home user. We were able to think about ... I was able to think about my kid sleeping in the next room, and you know, we live in New York City so I was able to think about the woman who lives the apartment below me, who doesn't like whe…

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