Good friend of mine works for Morgan Stanley. He has a Peloton and loves it. At some point into the pandemic we talked about bubble vs some in-house analysts investment thesis that the world was going to change and gyms could be a casualty. We were on the bubble side of that debate, as are you.
I’ve actually been on both sides and don’t believe that one precludes the other. Maybe this is interesting (or not), but our local gym (that I love) is for sale and I toyed with the idea of buying it. I have no doubt I could do a better job marketing through the local community than the current owner. But ultimately I decided no as it I believe I’d facing an uphill battle against what seems to be a long term hybrid work model where people are still outfitting their homes to replace external memberships.
Silicon Valley is not the real world. Come over to Sacramento and see how many are going to real world gyms.
On behalf of gym owners, I hope you are right.
I think there will always be a role for gyms in society…but we are definitely seeing a culling of the herd (and had been even leading up to the pandemic).
Whether that makes it a smart move to enter the market now depends on your business model, I guess…
there are even some bike training facilities that have managed to survive despite the emergence of Zwift, TR and other training platforms…but that is definitely not a business I would start today!!
After a few years of “buy whatever you can find”, our shops are now loaded with bikes and we’ve been seeing a lot of barely used bikes on our local “for sale” pages. Not sure if that means people are going back to gyms or selling the stand ins they bought while waiting for the good stuff to come back in stock.
Also, at least 50% of the large shops in the greater Houston area (serving 7+ million people) have been bought out by Trek or Spesh in the last 6 months.
I’m not arguing in favor of starting or investing in a gym! Only time will tell if society goes virtual and we as a species retreat into our homes, one step away from being plugged into the matrix 
In a surprising move [to me], Specialized bought out NorCal’s largest retailer of their bikes - Cognition in Mountain View & San Mateo (where I bought both my Roubaix and Tarmac from). TBD whether it becomes a good thing or bad thing for consumers and to what extent Specialized continues this vertical integration acquisition path.
That’s to compete with Trek buying Mike’s, right?
That’s what happened here. Trek bought our biggest chain, Bike Barn, and Specialized had to respond. They’re moving too slow though. I just heard a rumor that Trek bought the biggest dealership in my suburb, which comes as a shock.
I don’t know Specialized’s motivation. I knew the Cognition long time staffers well, including the founder and president. But immediately after the sale he went to Hawaii and seems to have had no involvement in transition. Cognition and Specialized were sponsors of our club, so we had a fair bit of involvement, but Specialized has opted to discontinue local sponsorships so we have no further insight into their plans/motivation.
Is this Silicon Valley or Sacramento 
Probably neither (Google says its San Diego) 
https://i.pinimg.com/originals/23/ec/f6/23ecf6098745f95ef2d18d49f9561a1c.jpg
More post-covid:
“We are like a twin-engine plane when one engine dies … it’s all connected corporately, we can’t separate out the trainer business,” he said.
I don’t think that’s how twin engine planes work.
That explains the massive discount on the H3
It’s actually pretty interesting the sectors of the bicycle industry that are doing well (e.g. bikes themselves) and those that have been negatively impacted (e.g. training hardware). But the author is wrong about Zwift; ditto about Peloton’s software/subscriber business.
I don’t know much about Peloton’s business, but if I read your comments right, I gather you’re saying they’re doing well on the software/subscriber side. I’m not surprised. I’m not a subscriber, but this winter I tried it out for a few times so I could do some workouts with a group at work. I was really impressed with the quality of their content. On the other hand, I was super disappointed by the limitations of the experience via their app, which is clearly by design and intended to drive subscribers towards their full content subscription and crappy spin bikes.
From my perspective as a TR user (real power meter, better data, etc…), I think it’s a shame Peloton’s app experience is so lame. I think Peloton’s long term value is in their content. The spin bike can always be a convenience upsell that will be very appealing to many users. But their ecosystem would be a lot larger if the experience of app users was as rich as that of their bike users.
Well… or so I think, for whatever that’s worth.
Yes, subscriber growth has been spectacular as compared to all rivals and customer retention rate is also extremely high (e.g. over 3x better than TR).
When the app was originally launched (about 1 1/2 years ago), it’s primary intent was to get users interested in the Peloton experience and trade up (as you hypothesized). Since then, the app features have expanded significantly (strength training, stretching, yoga, etc) and are mostly serve as an added service to the bike subscribers.
[FWIW: My wife has been a Peloton user for 5 1/2 years and uses both the bike and the app. The spin bikes are actually very high quality, but they are not training bikes for serious athletes].
As for your disappointment with the app: the app can’t rival the bike, because doesn’t have native connectivity to live classes and thus can’t show leaderboards as it does on the bike. Fortunately for Peloton, they won the patent battle when rivals tried copying the leaderboard idea (you can think of Strava segments but in real time on a class basis).
As for TrainerRoad: The data it presents was not developed by TR, but rather is licensed from Training Peaks (most metrics invented by Andy Coggan), including FTP, NP, and IF. So TR and its users (i.e. us) are very lucky that it is available as such.
As for your disappointment with the app: the app can’t rival the bike, because doesn’t have native connectivity to live classes and thus can’t show leaderboards as it does on the bike.
If I were king of Peloton, I would solve for this and unlock the full potential of their experience (leader boards, shout-outs, etc…) via the app.
As for the bike, perhaps I was being a bit dramatic, but other than the screen, the build didn’t strike me as being anything extraordinary. Seems like any other solidly built spin bike with a manual knob for cranking up resistance albeit with a nicer paint job.
Anyway, I confess. Part of me wanted to diss Peloton, but once I tried it, while not my cup of tea, I was really impressed by the content and can see why the platform is having subscriber success. I can’t help but to imaging the growth they could have if the app was fully functional. Plus, imagine the Peloton bike experience if the app could drive a smart trainer in ERG mode?
Just FYI - it’s been out for 4 years now