April 28, 2020 - Post

Scott Galloway: SoulCycle’s At-home Bike is “Dead on Arrival”

Photo | SoulCycle

According to Scott Galloway, SoulCycle’s at-home bike and Variis by Equinox won’t be able to keep pace with Peloton.

Galloway, a successful serial entrepreneur and professor at New York University’s Stern School of Business, is best-know for predicting Amazon’s acquisition of Whole Foods and the collapse of WeWork.

On a recent episode his Prof G podcast, Galloway answered a listener question [25:30] about SoulCycle versus Peloton this way:

SoulCycle’s effort into the home or connected fitness space is dead on arrival. They’re competing against a company that has access to extraordinary cheap capital, a technology mindset, a direct to consumer mindset — these are not competencies that you develop overnight. There’s no way they can compete with the type of massive investment Peloton is making in marketing or the attention Peloton gets — [their IPO] was more of a branding event than a financing event…

SoulCycle’s primary point of differentiation, or advantage, was multichannel. They understood the terrestrial experience and could probably sign up or acquire customers at a low rate, and say, here’s a trial or $10 off your SoulCycle at-home to build community. So multichannel is very powerful.

They’re also owned by the same people who own Equinox — a great company and fantastic in-store feel. The problem is, that leg of the stool has been kicked out from under them because of COVID-19 and the fact that no one wants to sweat next to someone 24-inches from them… and they’re just not going to recover to the extent that they can compete with a publicly-traded, multi-billion dollar organization like Peloton.

Does that mean SoulCycle goes away? No, they still have rabid fans, they do a great job, they’ll still have profitable locations, but Peloton continues to pull away and SoulCycle will likely recover, but won’t recover to pre-COIVD levels while Peloton continues to zoom.

Takeaway: Galloway concludes by saying SoulCycle might have to “shut down” it’s connected fitness effort to focus on its core studio business.