This startup lost $48 billion

Biking away from Profitability

Founded in 2012 by John Foley, Peloton changed home fitness by merging premium exercise equipment with live-streamed classes. Being valued at $50 billion, Peloton scaled too quickly and lost more than 90% of its valuation.

Startup Story of Peloton

How Peloton Got Started

John Foley, a former e-commerce executive at Barnes & Noble, was frustrated by the time constraints of attending in-person cycling classes. His solution was to create a connected fitness platform that allowed users to enjoy live fitness classes from home. 

Foley’s initial challenge was producing the first Peloton bike. With a small team, he developed a prototype and raised $307,000 through Kickstarter in 2013. With a rough prototype and a presence on Kickstarter, this helped Peloton start gaining its first traction.

With the initial funding, Foley opened a studio in Manhattan, where instructors streamed live classes to a growing base of users, creating a community early on that set Peloton apart.

Funding and Explosive Growth

Peloton’s business model—selling high-end fitness bikes while offering a subscription for live and on-demand fitness classes—proved successful. By 2015, Peloton had raised $75 million funding to scale its operations, open retail locations, and accelerate production of its bikes.

Investors were drawn to Peloton’s strong subscription revenue model and the high engagement levels among its users. By 2019, Peloton had raised $1.2 billion through its IPO, setting the stage for massive growth

One year after the IPO the pandemic supercharged Peloton’s success. Being the downfall of many other fitness startups, for Peloton the demand to stay fit at home put their products at the center of attention. Peloton became a household name, and their valuation skyrocketed from a $1.2 billion dollar IPO to over $50 billion.

Challenges and Decline

Peloton’s revenue had skyrocketed during the pandemic, increasing by 232% in 2020 to $1.8 billion. Despite Peloton’s rapid growth, the startup quickly faced challenges as pandemic restrictions eased. By mid-2022, Peloton's revenue had fallen to $964 million and resulted in a loss reaching over $2.2 billion.

Peloton faced severe production delays, supply chain disruptions, and a sharp slowdown in subscriber growth, resulting in another $1.2 billion loss last year.

Once riding high with a $50 billion valuation, Peloton has gone from being the most valuable fitness startup to losing over $48 billion dollars since the height of its IPO, barely holding on to its unicorn status.  

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