To the casual observer, Peloton—the popular all-in-one stationary bike and at-home cycling-class platform—is practically an overnight success. In 2013, a well-publicized Kickstarter campaign first introduced the concept, netting an impressive $300,000. Today, total funding is about $120 million, and the brand commands a fervent following of more than 200,000 riders. They obsessively compete and communicate online—some even sport tattoos of the company’s logo.
But Peloton founder and CEO John Foley is quick to disabuse any starry-eyed entrepreneurs of the notion that the path to riches is simply one successful Kickstarter campaign away. The story of Peloton, from breakthrough idea to success, was a grueling journey—particularly when it came to funding, ironically enough. In that sense, Peloton serves as an example of the resilience and stubborn optimism required of most entrepreneurs.
That was a lesson Foley had to learn himself. Given his experience as the former president of e-commerce at Barnes and Noble and his Harvard Business School degree—not to mention the connections that come with it—the first-time entrepreneur expected a relatively smooth ride getting funded when he started out in 2012.
“Like a lot of entrepreneurs, it’s part ignorance, part hubris, and a little bit of confidence,” says Foley. “I thought I was a proven tech leader, I had a great idea, and I had a great team.”
Surely, venture capitalists would agree. “I was going to be able to afford my lifestyle, raise tens of millions of dollars, pay myself a nice salary, and live a nice life as an entrepreneur,” says Foley. “It was massively flawed thinking.”
Three years in, he hadn’t landed a single venture capitalist. Ultimately, he says, “I had to pitch thousands of human beings to get 104 angel investors to give us the first $10 million to get any momentum going.”
Complicating the company’s early growth was Foley’s decision to eschew the easier path that off-the-shelf solutions might afford. He and his team were determined to build their stationary bike and the companion tablet that runs Peloton’s digital streaming and analytics systems from scratch—a huge undertaking that required an intense and meticulous development process.
And, instead of forming a content partnership with an established fitness company, Peloton’s founders built a hybrid cycling and production studio to film the brand’s competitive live-streaming and on-demand group classes. (The instructor appears on the bike’s screen, like a virtual coach, surrounded by other riders.)
Eventually, that work would produce the company’s greatest assets and set them apart from other fitness companies. But in the early stages, developing these components added a degree of difficulty, expense, and uncertainty that most investors simply couldn’t stomach.
Bit by bit, Foley pieced together small investments, buying the time needed to develop a distinctive product that ultimately attracted larger venture firms. “After months and months and hundreds of ‘nos,’ somebody would give me $50,000,” he says. “I’d be like, ‘All right, that’s going to let us run for another couple days.’ It was either raise money, or fail. I decided failure wasn’t an option.”
Positive feedback from consumers was a critical validation—and motivation—in those difficult years. “We would talk to consumers and see that they saw the potential way before investors did,” Foley says. “We’d hear from people who’d say, ‘Peloton has changed my life. It has allowed me to get those endorphins. I’m stuck at home, I have two young kids, but I now have access to great boutique content anytime I want it.’ You hear enough of those, and you know that there’s something real there.”
His perseverance paid off. Peloton’s state-of-the-art hardware pairs with a content production platform unlike anything else so far in the fitness industry. Investors took note. They wanted in, which created the sort of momentum that every cyclist—and every entrepreneur—dreams of.
“There’s a quote from Churchill I had to lean on several times,” Foley says of the early challenges. “ ‘When you’re going through hell, keep going.’ I was just like, ‘Don’t stop in hell.’ ”
This article was created for and commissioned by Peloton.