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A thread on Peloton’s $PTON competitive advantages.
This is an inside peak of my first newsletter coming very soon!
My newsletter focuses on moats (competitive advantages). Link in bio.
Here’s what I’ve found so far
This is an inside peak of my first newsletter coming very soon!
My newsletter focuses on moats (competitive advantages). Link in bio.
Here’s what I’ve found so far
Moat 
High Switching Costs
Equipment (bike/tread) costs $1.9k up to $4.3k a significant sunk cost
99.3% monthly customer retention, 90% after 12 months (traditional gyms: 60%)
High retention translates into high subscription revenue
High Switching CostsEquipment (bike/tread) costs $1.9k up to $4.3k a significant sunk cost
99.3% monthly customer retention, 90% after 12 months (traditional gyms: 60%)
High retention translates into high subscription revenue
Gross profit from selling equipment is greater than the cost to acquire customers (CAC). Incredible!
Then, lifetime value per customer is ~$3,500
Summary: they immediately earn back CAC cost with equipment sale and then expect to earn $3.5k over several years
Then, lifetime value per customer is ~$3,500
Summary: they immediately earn back CAC cost with equipment sale and then expect to earn $3.5k over several years
Moat 
Social Network Effect
To think a Peloton membership is grossly overpriced mistakenly undervalues the community aspect
Peloton’s platform recreates the benefits of working out in a group by encouraging peer-to-peer interactions, but at the convenience of your home
Social Network EffectTo think a Peloton membership is grossly overpriced mistakenly undervalues the community aspect
Peloton’s platform recreates the benefits of working out in a group by encouraging peer-to-peer interactions, but at the convenience of your home
Peloton will dominate because they benefit from social network effects
When people consider their connected, at-home fitness options and understand the power of group workouts, there is a forceful gravitation pull towards the Peloton community.
When people consider their connected, at-home fitness options and understand the power of group workouts, there is a forceful gravitation pull towards the Peloton community.
Increased engagement per user is a strong signal that Peloton benefits from network effects
Monthly workouts per user increased from 7.2 to 21.8 at the end of 2020
22x/month sounds like an addiction. Competitors will need to break strong habits.
Monthly workouts per user increased from 7.2 to 21.8 at the end of 2020
22x/month sounds like an addiction. Competitors will need to break strong habits.
Moat 
Content & Data Asset
Although the social network effect contributed to increase # of workouts, the main driver was their creative and expansive content library.
Peloton is now a one-stop shop for health and wellness either cardio, strength, and meditation classes
Content & Data AssetAlthough the social network effect contributed to increase # of workouts, the main driver was their creative and expansive content library.
Peloton is now a one-stop shop for health and wellness either cardio, strength, and meditation classes
Music is a main ingredient in Peloton’s secret sauce.
Tempo of the music plays a role in the cadence of the workout.
Instructors weave lyrics into encouraging messages or stories.
It is what makes their content exceptional!
Tempo of the music plays a role in the cadence of the workout.
Instructors weave lyrics into encouraging messages or stories.
It is what makes their content exceptional!
Peloton’s first music partnership was with Beyoncé, who signed a multi-year deal.
They also created exclusive Elvis remixes for their platform.
Peloton has an enormous amount of data that connects fitness, music, and personal data to drive decisions.
They also created exclusive Elvis remixes for their platform.
Peloton has an enormous amount of data that connects fitness, music, and personal data to drive decisions.
Peloton’s tools provide feedback on which music performs better, which music drives higher engagement, what music you’re listening to when you set personal records
Leveraging their data and improving the experience will attract more consumers, which adds more data, repeat
Leveraging their data and improving the experience will attract more consumers, which adds more data, repeat
Moat 
Brand
Peloton’s brand is a culmination of everything it does.
Their NPS is 94!
Brand loyalty improves pricing power.
Also, to improve brand: they are investing in apparel, vertical integration, celebrity partnerships (Beyoncé), and more.
BrandPeloton’s brand is a culmination of everything it does.
Their NPS is 94!
Brand loyalty improves pricing power.
Also, to improve brand: they are investing in apparel, vertical integration, celebrity partnerships (Beyoncé), and more.
