The Peloton of “X”
There was a time, not long ago, when Uber seemed like a crazy idea. The concept was so far-fetched that seasoned investors like Fred Wilson, Mark Cuban, Gary Vaynerchuk, and Ashton Kutcher all initially passed on putting money in (note: some invested in later rounds). Then, something clicked, the service took off, and now, despite a laundry list of woes, the company is valued at more than $70 billion dollars.
Thinking back on the years just as and after Uber found product-market fit, you’ll remember a phenomenon known as the Uber of “X”. Startups the world over were—and many still are—modeling themselves after the ride sharing company, promising to Uberize everything from real estate and healthcare to parking spots and bathrooms. While many have tried to replicate Uber’s success, raising and blowing billions, few have succeeded in hitting paydirt.
As recent reports point out, Uber’s still in hot water. But their success or failure isn’t the point of this write-up. Here’s the punchline: all it takes is one unicorn to send investors and entrepreneurs into a frenzy. And right now, the hype surrounding connected, at-home fitness equipment has reached Uber of “X” level.
The Peloton of “X”
If you’ve been following these Insider briefings, and even if you haven’t, you’re probably familiar with Peloton. As the makers of an at-home, tech-enabled bike, the company has created an interactive cycling platform and digital content that has won over a growing community of exercisers.
Although the company initially struggled to raise institutional dollars, they’ve clearly proven their worth — investors recently poured $550M into the company at $4.15B valuation. While the road ahead is anything but certain (Will Peloton IPO? Will anyone use the bike after a year? Could Amazon acquire them?), there’s one thing I’m confident in saying: Peloton is to the fitness industry what Uber is to the ride sharing economy. Said differently, the Peloton of “X” will define the foreseeable future of at-home fitness equipment.
For starters, with the introduction of their souped-up $4,000 treadmill, Peloton tried to out-Peloton themselves. There hasn’t been much reporting around sales of or subscribers to Tread—which leads me to believe they’re not as stellar as the company might have hoped—but the treadmill has officially gotten the “connected” equipment treatment.
Remember those infomercials for Bowflex? How about Chuck Norris’s Total Gym? Well, Tonal is like that, but with, you guessed it, “connected” capabilities. Headlines have done the headliney thing, referring to Tonal as the Peloton for weightlifting. Starting at $3,000, with the option to add a $49-per-month virtual trainer, Tonal isn’t cheap. But, like Peloton, they’re hoping that the interactive element and updated digital content will help entice people to exercise.
Even though it delivers one hell of a workout, the erg (aka indoor rower) has never achieved widespread adoption. But in the age of connected equipment, Hydro by Crew is vying to become the… drumroll, please… Peloton of rowing. With $5M in seed funding, CEO Bruce Smith—a former US National Team Coach and executive director of Community Rowing—hopes Crew’s proprietary, patent-pending broadcast and delivery system can rival the content platforms being created by other connected fitness companies.
From Rumble and Shadowbox to TITLE Boxing, and Floyd Mayweather’s plans to launch 500 studios, boxing workouts are becoming big business. Enter: Fight Camp, the Peloton of boxing. Aiming to bring hard-hitting workouts into your living room, Fight Camp by Hykso uses streaming workouts and punch-tracking sensors to measure the count, type, speed, and “intensity” of your punches.
Not to be outdone, Rumble is teaming up with Scooter Braun (talent manager to Justin Bieber, Ariana Grande, Usher, Kanye West, and many others) to launch At-Home 360. According to the Hollywood Reporter, “the project will stream digital programming (a.k.a. workout videos) featuring celebrity trainers and offer at-home fitness equipment and branded gear.” Whether or not this is purely a streaming play versus a truly connected experience is TBD.
Last, but not least, be on the lookout for Mirror. Details are sparse, but here’s what we know: back in February, the company announced a $13M funding round to create, what it’s calling, a “nearly invisible, interactive home gym that brings live and on-demand fitness classes right to your living room.” Although the product is yet to launch, expect a high price tag for a wall-mounted device that streams workouts, which are purchased through a monthly subscription. Yes, you could say that Mirror wants to become the Peloton of boutique fitness classes or personal training.
Billions or bust
Like every venture-backed startup, these companies have their sights set on 1.) an acquisition or 2.) an IPO. That, or they go the way of every Uber of “X” wannabe… bust. And truth be told, the latter is the most common outcome — some 75%+ of venture-backed startups fail.
While it’s not explicitly stated in any conversation on the topic, when it comes to at-home, connected fitness equipment (read: any fitness anything), adherence is the dragon everyone is trying to slay.
Exercise adherence refers to maintaining an exercise regimen for a prolonged period of time following the initial adoption phase. Here are the facts: most people don’t ever take up exercise. And of the people that do, the vast majority quit. Over the years, there has been no shortage of at-home exercise equipment claiming to be Excalibur, but none have been able to crack the adherence code.
What makes us think this next generation of connected fitness devices will succeed in getting us to start and continue exercising? I honestly can’t say.
While it’s pretty obvious that, from a business perspective, connected fitness seems like a great gamble for investors playing the odds. But whether or not they’ll produce sustainable health outcomes or behavioral change seems like more of a longshot.
In that way, connected fitness equipment (and probably streaming and voice workouts, too) are no different than gyms that charge members dues knowing that they’ll rarely use the facility. It’s the seldom discussed secret of the fitness industry known as breakage. The vast majority of members who belong to a gym don’t ever go, but every month, the club rings the cash register.
For now, let’s sit back and watch as funding flows and connected equipment flies off the virtual shelves. We’ll check back in a year or so to see if the Pelotons of “X” are burning calories or collecting dust.
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