Peloton co-founder John Foley in an August 2021 image. John Seewer (AP)
John Foley’s dream came true and he was worth more than $50,000 million in the stock market. His idea of internet-connected exercise bikes became a reality at Peloton, founded in 2012. The company went public in 2019 and had its sweet moment amid a pandemic. At the time he seemed unstoppable. Shares surged above $160 before crashing into reality. The company ended 2021 with record losses, appointed a new CEO and has now accepted co-founder Foley’s departure from his role as CEO.
“He is widely recognized as the pioneer who was the driving and creative force in today’s globally connected fitness industry,” the company said in a statement announcing its departure.
Foley had already been relegated somewhat from day-to-day operations with the appointment of Barry McCarthy as CEO. With him, the company is trying to become a business of subscribers paying a fee for training. McCarthy hails from Netflix and Spotify and is trying to emulate that model. The company has shelved ambitious plans for industrial manufacturing and also transformed its distribution channels.
But the transition is ruinous. The company suffered losses of $2,823 million (a similar amount in euros) in its most recent fiscal year ended June 30, compared to a loss of $189 million a year earlier. The company’s shares, which once traded at more than $160, are now at $11 after losing more than 90% of their value in a year.
The pandemic is being left behind and outdoor exercise has regained a foothold over home exercise. Inflation has also changed the habits of consumers, who spend more on gas and groceries and have less disposable income for discretionary consumption. Also, anyone who buys an exercise bike will have it for several years, especially considering that it sells for high prices that start at around $1,500. Many bike buyers have put them up for sale second-hand, competing with the company itself.
In the statement announcing his departure, Foley said, “As I reflect on the journey Peloton has come since its inception, I am immensely proud of what we have built together. From day one, the incredible talent within our team and the dedication, hard work and creativity of every Peloton employee has gotten us to where we are today. We started the company because we wanted to make fitness and wellness comfortable, fun and effective. Thanks to the work of thousands of people, we made it.” He adds: “Now is the time to start a new professional chapter. I have a passion for building businesses and building great teams, and I look forward to doing it again in a new environment,” without specifying what it relates to.
Also departing with Foley is Hisao Kushi, the company’s legal director since 2015. Peloton’s board of directors has appointed Karen Boone as its new non-executive president. Tammy Albarrán will replace Kushi as General Counsel and Corporate Secretary. “Albarrán is one of the most recognized legal executives in the tech industry and brings a wealth of experience to the table,” says the firm of the executive who was Uber’s number two on legal issues.