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How They Launched It: Peloton

"How they launched it" is a recurring series of deep dives exploring how the world’s best teams launch new products and features.

Company: Peloton
Launch: Peloton
Launch date:
July, 2013

Peloton is one of those “why didn’t I think of that” ideas.

World class hardware, software, and content. All vertically integrated into a modern streaming platform and backed by a killer brand. Disrupting a giant industry starved of innovation. Why hadn't anyone thought of it sooner?

In just eight years, the company has gone from a scrappy startup raising funding on Kickstarter (yes, Kickstarter) to a multi-billion-dollar public company with over a million subscribers, 500,000+ bikes sold, and 66% revenue growth in just the last year.

But just getting the company up to cruising speed was a years-long battle. Founder John Foley faced thousands of rejections before he even had a product to launch. Hardware startups require prototypes and supply chains, which means capital. Unlike a slick new mobile app, you can’t vaporware a bicycle. But investors thought at-home fitness was a weak category, filled with goofy jocks hawking infomercial ab machines.

“They would hear: ‘fitness is a dopey category,’” Foley said on the Masters of Scale podcast, “where there’s been no capital and no software and no media and no innovation. And I would say, ‘exactly!’”’

Fast forward eight years, and today Peloton is one of the most widely recognized brands, and products, in American fitness.

Here’s how they launched it.

Summary

Dive deeper into a specific area of the Peloton launch:

The launch

After years of scraping together small checks from more than 100 investors, tapping personal networks to find the first batch of instructors, and asking early adopters to contribute to a Kickstarter campaign, in 2014 Foley was finally able to, for the first time, actually put a product on the shelf.

Now how—as the marketing adage goes—to get it off the shelf?

The answers might surprise you, as Peloton’s launch threw a lot of conventional wisdom out the window.


Back in 2013, Peloton kicked off its launch with a Kickstarter campaign that raised over $300,000 from nearly 300 individual funders. They’d built some early prototypes to feature in marketing materials and had some angel funding in the bank, but they turned to Kickstarter when it was time to scale manufacturing.

The stated goal was to raise $250,000. But beyond the stated goal, the Kickstarter campaign was also a strategic tool to build buzz for the company. 

Peloton’s Kickstarter campaign led to a lot of early PR mentions, including write-ups in The Wall Street Journal, CNN, and Time. Interestingly, none of this coverage featured interviews or exclusives. All the information in the articles was generally available and appears to have been pulled from either the Kickstarter page or a press release.

Companies who see great success with their PR efforts (like MailChimp) often approach those efforts with a series of exclusives, so it’s fascinating that Peloton was able to succeed without such a nuanced approach. We can only conclude that the concept itself, its messaging, and the fundraising method (Kickstarter had a lot of its own hype in 2013) were novel enough to earn the kind of coverage for which most companies have to really hustle. 

In addition to getting the word out about Peloton’s unique business plan, at least 25% of those early articles linked to Peloton’s website, with the rest linking out to the Kickstarter.

Since backlinks from high value sites (like The Wall Street Journal) have long been one of the most important factors for good SEO, the early coverage likely not only sent new funders to the Kickstarter campaign, but also gave Peloton’s website an additional boost in Google’s algorithms.

It’s a good lesson for new companies: have your own domain up early. At least as early as you expect to have other people on the internet talking about you. Even if you use a third-party platform like Kickstarter or Youtube to build pre-launch buzz, having your own URL people can link to will significantly help your site show up in search engines down the road.

Not only was Peloton’s choice of Kickstarter unique, so was their sales pitch: a well-crafted bike, yes, but also built-in live and on-demand indoor cycling video classes and—perhaps most importantly—a community where you could share triumphs, compete, and video chat with friends.

Their exact wording on the Kickstarter: “The Peloton Bike delivers live and on-demand indoor cycling classes to your home, while allowing competition & video chat with friends.”

The strategy here starts with the product itself. Exercise bikes weren’t new. Live classes weren’t new. Community wasn’t new. But combining them in the comfort of your own home was. And the pitch succinctly captured all of that. In just one sentence, you knew you were buying a bike, that it came with classes, and that it offered an opportunity to gamify the entire experience. All from your own home.

It’s also been interesting to watch Peloton’s value prop change over the years. They’ve wisely made the transition from positioning themselves as an alternative (“Spin class replacement”) to a category all their own.

To keep their Kickstarter campaign momentum going, Peloton sent update emails to encourage their early funders to share the campaign with friends. 

Email is a tried-and-true (and arguably essential) part of a good launch. But it’s not always done well. To avoid sending generic marketing messages (a trap many launches seem to fall into), Peloton leveraged the fast development they were doing behind the scenes as a reason to be in touch with people, sharing updates on not only the bikes, but also add-ons coming down the pipeline. 

One such add-on? Their own custom-made cycling shoes.


Email also helped the Peloton team sharpen their brand voice and messaging early on. Their early emails (and social media posts) reflected the energy and positivity their instructors and brand would later become known for. Liberal use of exclamation marks as well as high-energy language (WOW! Amazing! Fun!) was commonplace.

Interestingly, according to a study out of Wharton, emotional language like this increases customer engagement—the exact kind of customer engagement that Peloton’s earliest marketing campaigns had to drive in order to to keep their earliest adopters hooked.

Arguably, one of the smartest things about Peloton’s product and its launch was the way they came out of the gate deeply understanding their audience.

Marketers are taught to build messaging around people’s motivations. What does the customer ultimately want? It’s good advice. So for decades, messaging in the fitness industry was all about body image, and how people wanted to see themselves in the mirror the following day. “Get shredded,” “drop pounds today,” “abs in 30 days.”

But this kind of messaging has never appeared in Peloton copy. You won’t see a Peloton ad promising you’ll get ripped fast, because that’s the kind of language you hear from people who often don’t work out. Ask someone who doesn't exercise regularly what the benefits of exercise are and you’ll probably hear about body image and looking good at the beach. But ask someone devoted to fitness (as a vast majority of indoor cyclists already are) and you hear entirely different benefits: the energy and excitement of a good workout, the thrill of competing with others and consistently setting and beating goals, and the community and relationships formed with others at their gym. Just to name a few.

This is the enlightened tone Peloton uses, and it works. It reads more like a text message someone would send their friend after a great workout than the cover of a fitness magazine.

A focus on competition

Peloton’s bread and butter is its high-end equipment, with bikes and treadmills making up about 80% of the company’s revenue. But, unlike the stationary cycle companies who came before them, the brand doesn’t stop there. Just under $1B per quarter in revenue comes from subscriptions—a secondary revenue stream with enormous long-term value. 

(And when we say long-term potential, we mean it: Peloton’s current yearly retention rate is a staggering 96%, and the company expects to add more than a million subscribers in 2020.)

What’s the secret to this retention success? There’s probably more than one answer, but we suspect part of it is in their focus on competition, a focus they had from day one of their Kickstarter launch

Competition, even more than a supportive community, is the top motivator that keeps people exercising, according to a study by the University of Pennsylvania. In fact, students in a socially competitive exercise program attended classes 90% more often than students without the added incentive of competition. 

Which is why the frequent mentions of competition in Peloton’s own pitches (such as that on their Kickstarter page) and their early PR coverage are... pretty genius. They were already hinting at one of the most powerful things they’d invested in: gamification.

A focus on connection

Another feature of Peloton’s marketing and products from the start? Community. 

Instructors had leaderboards and started giving shoutouts early on—congratulating riders on milestone rides, birthdays, and so on. And video chat on the Peloton platform was one of the early selling points for their Kickstarter campaign.

Having an exercise buddy (or, you know, 23,000 in Peloton’s largest attended class so far) makes people significantly more likely to stick with their fitness goals and get more benefit from their workouts, according to study after study after study

Not only does this mean people get a boost from the group structure of the live classes; it also facilitates the long-term retention that Peloton prioritized on launch and continues to knock out of the park today.

A focus on customer loyalty

Most marketers already know it costs, on average, five times more to get a customer than to keep one. But customer retention is rarely top-of-mind for a brand-new startup. After all, you have to get customers before you can keep them, right? 

The obvious answer is yes, you have to get them first. But from customer #1, Peloton seemed hell-bent on keeping them—a smart strategy for any company, and particularly a company whose especially high barrier to entry involved the purchase of a brand new piece of hardware for your home.

Early moves—including pivoting quickly when delivery experiences weren’t up to par and sparing no expense to hire the top indoor cycling instructors in NYC to run their virtual classes—set the tone for the way they continue to prioritize customer experience today (and keep their retention stats at that whopping 96%).

The vast majority of companies spend less than 30% of their time and budget on customer retention. Peloton’s thoughtful choices show they were putting far more time in from the start.

Physical launch strategies for a physical product

Peloton’s success is a good reminder that rules—even the rules of a good product launch—are sometimes meant to be broken. 

Conventional wisdom tells us investing in retail space and building new products from scratch are expensive and risky strategies, especially for a brand-new company. But Peloton bucked this trend and did it anyway.

By the layman’s standards, a ~$300,000 Kickstarter round in a single month sounds pretty impressive. But for John Foley, it was less than expected. When VC funding didn’t come through, Foley decided to try something pretty unconventional in e-commerce: a pop-up store.

In late 2013, Peloton set up its first storefront in a New Jersey luxury mall. That four-month lease resulted in the “four best months for selling Peloton bikes, even to this day,” according to a 2019 interview.

Source: Somerset Collection

Retail stores, especially in high-end shopping malls, have been a major strategic pillar for Peloton ever since.

“We’re massive believers—as we release new products—of retail as a place to demonstrate. We do test rides and runs where consumers can come in and try the bike. .... As we launch more new products, that will become even more important,” Peloton President William Lynch said in an interview with Yahoo Finance.

But, importantly, most sales happen online. The success of a storefront isn’t measured in how many bikes a location sells. What they provide is visibility and top-of-funnel awareness. They also help customers who are in the mid-funnel consideration phase (“I’ve been thinking of buying one, but I want to see it in person and try it out first.”)

It’s also a smart arbitrage opportunity. Traditional brick and mortar retailers have been struggling in recent years, leading many to downsize or go out of business entirely. This leads to more availability and better prices on retail leases. A company like Peloton has taken advantage of this, and has its pick of strategic retail locations

For many of Peloton’s early customers, the first time they saw or tried the product was in a luxury hotel gym. These hotels served the same kind of higher-income customer Peloton needed to get in front of in the beginning. As the company scaled, they were able to leverage this audience in a targeted (and cost-efficient) way via Facebook ads.

In 2019, they even launched an online map, called Hotel Finder, to help people find hotels with a Peloton.

One of the early challenges for the combined hardware-software business was deliveries. They started out how most companies do: hiring another company to deliver their products. 

It didn’t go well. 

Delays, lackluster customer experience from delivery companies, and requiring customers to assemble their own bikes, were less-than-ideal.


Since Peloton’s business model relies on long-term customer loyalty, opening with a bad customer experience was unacceptable to the founding team. Which is why—in another unusual move—they hired their own delivery team and trained them in not only customer service, but also product assembly and setup. They also dressed them in Peloton uniforms, for an experience Foley described as “like a UPS driver meets an Apple Genius Bar technologist,” in a 2016 interview with Inc Magazine.

Big lessons

Of the more than half a million projects that have been launched on Kickstarter, we’d be hard pressed to find another example of one that now trades on the public stock exchange.

Peloton has been, and continues to be, a monumental success. And the reasons for many: a world-class product launch, a deep understanding of the psychology of their customer base, an unwavering commitment to building long-term relationships with customers, and a willingness to take unconventional risks. All from day one.

Here are a few key, big picture takeaways from the Peloton launch.

Take the long view

Peloton wasn’t taking shortcuts for short-term wins. They were thinking about customer retention, loyalty, and long-term value from day one. And not only thinking about them, prioritizing them.

Long before they had their bikes built, they had messaging focused on the value they planned to provide through competition and community. Before they’d sold more than a few hundred bikes, they were making an outlandish bet on building out their own retail spaces. Before their first customer complaint had been triaged in the support queue, they were implementing a homegrown delivery system that brought the end-to-end buying experience under the Peloton umbrella.

The company launch, and almost every action that followed, speaks to an unwavering focus on the long-term. And this long-term focus has paid off exponentially for the business over the past eight years.

Understand the psychology of your customers

Novelty makes you memorable. Emotional language fosters engagement. Competition keeps people exercising; so does community. That’s simple science. The genius of Peloton is that they used all these facts to their advantage from day one. 

They took a unique product and brought it to market in unique ways. They also built competition and community into their experience, and highlighted both things throughout their marketing from day one. 

Whether the result of lucky guess, great gut instinct, or smart research, it worked. Both during launch and now, when the company has gathered what media outlets call “a cult following,” with riders literally tattooing the brand logo on their bodies.  

Don't mistake risky ideas for bad ones

When preparing for a product launch, there are dozens of tried and true strategies that can be implemented. Strategies that have a high probability of success, and of boosting the profile of whatever's being launched. But there are just as many unique and creative launch strategies that, while on the surface may be more risky, can be even more impactful.

Pop-up stores and physical hardware are very risky for most businesses. But for Peloton, they were absolutely the right strategies. They catapulted sales numbers through the roof and set a strong foundation for long-term success. And while they were risky bets to take so early on, they were bets that ultimately paid off handsomely.

Not only should risky ideas never be written off as bad ones, but often times the earlier these risky ideas are carried out, the more time they have to be a true force multiplier on any successful launch. Or entire business!

Have a product or feature launch that you’d like us to do a deep dive on? Drop us a line at hey [at] launchnotes.io and let us know!

Drive 310% Higher Customer Engagement
Engage your customers. Keep internal teams in the loop. Or both! With cross-channel feature release announcements that match your brand and the speed of product development.
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Drive 310% Higher Customer Engagement
Engage your customers. Keep internal teams in the loop. Or both! With cross-channel feature release announcements that match your brand and the speed of product development.
Request a demo

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