Peloton's former CEO predicted the fitness group would become 'one of the few $1 trillion companies,' report says

Former Peloton CEO John Foley once predicted that the fitness group would become “one of the few $1 trillion companies,” according to a report by the Financial Times.

In a virtual client event hosted by Goldman Sachs in October 2020, the contents of which were reported by the FT, Foley recalled a conversation with his board in which he remembered saying: “I see this as clear as day: this thing is going to be one of the few $1 trillion companies in 15 years.” According to the FT, Foley added: “And they said, ‘Don’t say that again. It makes you sound like an idiot.'”

Peloton announced last week that Foley was stepping down as CEO to become executive chairman. The company also said it would axe 20% of its workforce to cut costs and claw back profitability.

According to the FT, at the Goldman Sachs event, Foley insisted that Peloton was not a “COVID story” and that the pandemic was not a one-off boost to demand. “When I hear Peloton being a COVID story, it annoys the crap out of me because what we are building is here to stay,” the FT reported him as saying.

Barry McCarthy, a former CFO of Spotify and Netflix, has replaced Foley as CEO. In an interview with the FT, McCarthy said Foley and his fellow cofounders had assumed that booming demand during the pandemic was the “new normal” – and then based spending around it.

“Founders walk this fine line between reality distortion which is the vision of the thing they’re trying to build and the capacity to see the world as it is,” McCarthy said, adding: “Did they scale their fixed cost structure proportional to the growth in revenue? No. Why? Because they assumed COVID was the new normal. And it wasn’t.”

Between 2019 and 2021, Peloton’s net losses jumped from $191 million to more than $1.1 billion.

A spokesperson for Peloton told Insider that the leadership team made “certain decisions during COVID regarding the supply chain and operations that did not work.” The spokesperson said that under a new management team, the company had “hit the reset button toward becoming an even more vibrant, sustainable, and profitable business.”

Foley, who cofounded Peloton in 2012, became the target of activist investor Blackwells Capital in recent weeks. In a fiery slide deck, reported by Insider earlier this month, Blackwells called for Foley to step down, accusing him of gross mismanagement and making bad decisions related to product, pricing, demand, and capital allocation, among other things.

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