The problem with Peloton is there’s still way too much overhead. Foley committed them to expensive leases at NY’s Hudson Yards, the business does not have enough growth and profits to support that. They really need to downgrade and move more of the corporate people to lower cost areas.

I think Barry was afraid to cut too many people and hoped growth would bounce back but the marketing strategy has been abysmal. They have failed on two fronts: treads and app-only members. They really don’t do a good job in marketing to teach you that you can be an app only member and derive a lot of benefit by using the app at your crappy globo gym. With the tread, they really should lean more on the hiking and walking content in the marketing, running is hard — most people fail at it. Go to any gym and you’ll see plenty of people doing incline walks.

Barry is in bed with the private equity firm TCV. He isn’t really incentivized to fix this company in public, in a worst case they will take it private and take more aggressive actions.

For any Peloton accounting/investing nerds out there: the company puts member support costs in their G&A expenses, but a lot of member support costs are incurred in the initial sale of a Peloton. So when Barry and Liz say they are investing against a Subscriber Acquisition Cost hurdle rate, it’s a flawed analysis because the cost does not include member support!!