Peloton appoints new CEO, announces layoffs of 2,800 employees

AppleInsider · February 8, 2022 9:29PM

Peloton is currently in the midst of a broad shake-up, with the company appointing a new CEO and announcing that it would cut its corporate workforce by about 20%.

Credit: Peloton

The fitness hardware company announced on Tuesday that it would replace CEO John Foley with Barry McCarthy, the former chief financial officer of Spotify and Netflix. McCarthy will take over as CEO effective Wednesday, CNN has reported.

Peloton president William Lynch is also stepping down from his role and will also be replaced by McCarthy,

In addition to the new chief executive, Peloton also said that it would be cutting about 20% of its corporate workforce. That amounts to about 2,800 employees in total. It is also scaling back warehousing and delivery operations.

"This restructuring program is the result of diligent planning to address key areas of the business and realign our operations so that we can execute against our growth opportunity with efficiency and discipline," Peloton wrote in a press release Tuesday.

Employees who are laid off will receive a one-year digital subscription to Peloton as part of their severance package.

According to Bloomberg, other top executives are also leaving Peloton as part of the shake-up, including Sam Bowen, senior vice president of hardware, and Rob Barker, a commercial operations SVP.

The sweeping changes announced Tuesday comes after Peloton lost nearly 80% of its value in 2021 and came under pressure from an activist investor.

Peloton shares increased as much as 36% in intraday trading on Tuesday as some investors see the shake-up as setting the company up for a sale.

Earlier in February, Amazon was said to be in talks to purchase Peloton. Some financial analysts have also floated a potential Apple acquisition of the fitness maker as a way for the Cupertino tech giant to boost its health and wellness hardware offerings.

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cg27 · February 8, 2022 10:51PM

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

hmlongco · February 8, 2022 10:55PM

Yes, but did the departing CEO also get a free one-year Peloton subscription???

I mean, in addition to his pre-negotiated multi-million dollar severance package...

Xed · February 8, 2022 11:38PM

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

That's a lot of odd statements. Because there are successful EV startups with fewer employees anyone who has more than the lowest has too many? are you aware that startups have few employees than established companies? Are you aware that Peloton does more than "dumb bikes"? How many employees did Amazon and Google have when they were just an online store and just a search engine?

Xed · February 8, 2022 11:40PM

Fitness companies come and go. Peloton will likely still have its niche but this pandemic boost was always going to be short-lived.

MplsP · February 9, 2022 12:29AM

Xed said:

Fitness companies come and go. Peloton will likely still have its niche but this pandemic boost was always going to be short-lived.

Peloton had a niche and a devoted following before the pandemic; the pandemic just pushed a lot of people onto the platform - I (and my family) am a perfect example.

I think there will be some attrition but there will also be many people who stay. At this point I can't imagine going back to our membership at the gym. We use the peloton far more than we ever did our gym membership and after the bike is amortized it is far cheaper.

Xed said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

That's a lot of odd statements. Because there are successful EV startups with fewer employees anyone who has more than the lowest has too many? are you aware that startups have few employees than established companies? Are you aware that Peloton does more than "dumb bikes"? How many employees did Amazon and Google have when they were just an online store and just a search engine?

Agreed, but I also think they were likely overstaffed.

darkvader · February 9, 2022 12:32AM

Xed said: Are you aware that Peloton does more than "dumb bikes"?

Sure, they also do killer treadmills.

flydog · February 9, 2022 12:59AM

MplsP said:.

I think there will be some attrition but there will also be many people who stay.

So what you’re saying is one team will win the super bowl, and the other will lose. Incredible insight.

flydog · February 9, 2022 1:00AM

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

chadbag · February 9, 2022 1:17AM

darkvader said:

Xed said: Are you aware that Peloton does more than "dumb bikes"?
Sure, they also do killer treadmills.

We’ll done. First time for everything

mark fearing · February 9, 2022 2:09AM

Going public is OFTEN more or less a con. In this case it's a case study for the corruption and ridiculousness of the entire 'going public' system. A bunch of folks get a bunch of money and run, (where is this wealth created? What is the bases of the value?) then the company, never a great idea and it has now expanded and is burning huge bundles of cash (again - this cash is coming from where and why?) is faced with reality. A huge amount of money's been drained, the folks who could have sold their stock and soon a husk will be sold to some investment bank who will mash anything of value out of it, again taking the money off the top. Scam on top of scam. Employees and customers are afterthoughts. The system is a mess and creates more harm than good. But whatever. Everyone seems content to pretend it's not a scam especially if they can get in on it.

cg27 · February 9, 2022 3:36AM

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

An Electric Vehicle is orders of magnitude more complex to engineer and manufacture and certify. Hence the need for more employees. I could’ve used other industry examples but hopefully you get the point. It seems Peleton would need only a couple thousand at most. Even if they were planning more exercise machines.

Angmoh · February 9, 2022 3:40AM

MplsP said:

Xed said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

That's a lot of odd statements. Because there are successful EV startups with fewer employees anyone who has more than the lowest has too many? are you aware that startups have few employees than established companies? Are you aware that Peloton does more than "dumb bikes"? How many employees did Amazon and Google have when they were just an online store and just a search engine?

Agreed, but I also think they were likely overstaffed.

10,000 employees and 4B turnover? That is a very much overstaffed. They are having $400k turnover per employee. Benchmark is $1-2M per employee. Compare with Google: 156,000 employees and $257B turnover for $1.6M per employee. Apple: 154,000 employees and $365B turnover for $2.4M per employee.

Xed · February 9, 2022 4:46AM

cg27 said:

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

An Electric Vehicle is orders of magnitude more complex to engineer and manufacture and certify. Hence the need for more employees. I could’ve used other industry examples but hopefully you get the point. It seems Peleton would need only a couple thousand at most. Even if they were planning more exercise machines.

That's not a connection. That's, at best, a bad comparison.

StrangeDays · February 9, 2022 6:09AM

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

Seemed pretty clear - EVs are a much more complicated business than exercise bikes with screens. If they had a staff of 10,000 that seems way, way too big.

Xed said:

cg27 said:

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

An Electric Vehicle is orders of magnitude more complex to engineer and manufacture and certify. Hence the need for more employees. I could’ve used other industry examples but hopefully you get the point. It seems Peleton would need only a couple thousand at most. Even if they were planning more exercise machines.

That's not a connection. That's, at best, a bad comparison.

It’s not a connection, it’s an example, and an apt one. EVs are higher tech than exercise bikes for a hundred reasons. If they had 10,000 employees then management did a poor job managing their growth and costs.

Xed · February 9, 2022 6:36AM

StrangeDays said:

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

Seemed pretty clear - EVs are a much more complicated business than exercise bikes with screens. If they had a staff of 10,000 that seems way, way too big.

Xed said:

cg27 said:

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

An Electric Vehicle is orders of magnitude more complex to engineer and manufacture and certify. Hence the need for more employees. I could’ve used other industry examples but hopefully you get the point. It seems Peleton would need only a couple thousand at most. Even if they were planning more exercise machines.

That's not a connection. That's, at best, a bad comparison.

It’s not a connection, it’s an example, and an apt one. EVs are higher tech than exercise bikes for a hundred reasons. If they had 10,000 employees then management did a poor job managing their growth and costs.

A startup is always small. Peloton is not a strap and well established over a decade with offices around the world and trying to grow into different areas. It's foolish to think it should be smaller than a startup.

cg27 · February 9, 2022 7:17AM

Xed said:

StrangeDays said:

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

Seemed pretty clear - EVs are a much more complicated business than exercise bikes with screens. If they had a staff of 10,000 that seems way, way too big.

Xed said:

cg27 said:

flydog said:

cg27 said:

So prior to the cuts Peleton has over 10,000 employees? If that’s the case they’re beyond bloated. There are successful EV startups that have fewer employees than that. This is just a dumb bike with some app and personal trainers, not exactly rocket science.

Even if the article means to say 2800 remain that’s still a ton of overhead, for what??

Not seeing the connection between Peloton and EV startups.

An Electric Vehicle is orders of magnitude more complex to engineer and manufacture and certify. Hence the need for more employees. I could’ve used other industry examples but hopefully you get the point. It seems Peleton would need only a couple thousand at most. Even if they were planning more exercise machines.

That's not a connection. That's, at best, a bad comparison.

It’s not a connection, it’s an example, and an apt one. EVs are higher tech than exercise bikes for a hundred reasons. If they had 10,000 employees then management did a poor job managing their growth and costs.

A startup is always small. Peloton is not a strap and well established over a decade with offices around the world and trying to grow into different areas. It's foolish to think it should be smaller than a startup.

You’re completely missing the point. But keep digging your hole. They’re bloated, and even after cutting 20% they’ll still be bloated.

Marvin · February 9, 2022 12:12PM

StrangeDays said:
It’s not a connection, it’s an example, and an apt one. EVs are higher tech than exercise bikes for a hundred reasons. If they had 10,000 employees then management did a poor job managing their growth and costs.

They wrote something to that effect in their financial report:

https://onepeloton.gcs-web.com/static-files/76cbf8bf-dc7c-45af-8910-de3552078c2e

"Because we have a limited history operating our business at its current scale, it is difficult to evaluate our current business and future prospects, including our ability to plan for and model future growth. Our limited operating experience at this scale, combined with the rapidly evolving nature of the market in which we sell our products and services, substantial uncertainty concerning how these markets may develop"

That report describes the employee count: "between June 30, 2017 and September 30, 2021, our employee headcount increased from 443 to 8,976". They seem to be mostly in sales/marketing/showrooms.

Their latest quarter shows a $376m loss and it says they've never made an annual profit but the company is valued at $12b:

"We had net (loss) income of $(376.0) million and $69.3 million for the three months ended September 30, 2021 and 2020, respectively, and we have incurred operating losses each year since our inception in 2012, including net losses of $(189.0) million, $(71.6) million, and $(195.6) million for fiscal 2021, 2020, and 2019, respectively, and may continue to incur net losses in the future."

This move of cutting employees is standard for new leadership because it's the easiest and quickest way to show that they turned around the company's finances. Old CEO gets millions for hiring, growing and leaving, new CEO gets millions for firing the new hires.

sconosciuto · February 9, 2022 12:57PM

I hope there’s nobody here suffering the delusion that Apple should buy Peloton. Apple doesn’t want to get into the business of making exercise equipment and they don’t need their subscribers, some part of whom already have Apple accounts and some other part of whom don’t want to be Apple subscribers. I would be surprised if anybody at Apple spent much time at all studying the notion.

foregoneconclusion · February 9, 2022 1:34PM

Marvin said: This move of cutting employees is standard for new leadership because it's the easiest and quickest way to show that they turned around the company's finances. Old CEO gets millions for hiring, growing and leaving, new CEO gets millions for firing the new hires.

Layoffs used to be a last resort because it was interpreted to mean that management had run out of ideas to improve the companies products/services and make them more attractive to customers. These days layoffs are treated like they represent bold leadership, which is mostly a joke even if the layoffs are financially necessary. CEOs like to use phrases like "tough decisions", but like you say...it's really the easy way out. There are people in corporate America who make entire careers out of primarily laying people off and making budget cuts. That's their only business skill.

Beats · February 9, 2022 3:20PM

sconosciuto said:

I hope there’s nobody here suffering the delusion that Apple should buy Peloton. Apple doesn’t want to get into the business of making exercise equipment and they don’t need their subscribers, some part of whom already have Apple accounts and some other part of whom don’t want to be Apple subscribers. I would be surprised if anybody at Apple spent much time at all studying the notion.

You know Apple entered the fitness market over a decade ago right?

I’m not saying Peloton is a good buy I’m just baffled how people can’t see what Apple could get from the purchase.

Peloton appoints new CEO, announces layoffs of 2,800 employees

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