Peloton‘s new CEO sent an email to staff which is an example of his past success and what Peloton can look forward to.
Before I provide the text of the email for review, let’s think about Peloton’s product. Without addressing the price or company, I haven’t come across anyone that has disliked the product itself. While it may not be the product for some who don’t like to exercise or don’t like the exercise the way Peleton provides, it is a product that has wide appeal.
Pelotons sales declined. No surprise as we start to get outside and visit gyms again. The combination of interaction and exercise that Peloton provided is the only option as it was a year ago. Though it is still a good option and I believe after a reset back to pre-pandemic economic management, it will survive. Though I also believe it will survive as an acquisition target though I digress.
Brian McCarthy has had an extraordinary career by any measure. As CFO of Netflix and Spotify, he successfully assisted in growing those companies in a fiscally focused way. Now as Pelotons’ CEO, he is in a new role that he should also thrive in similar to Tim Cook at Apple.
He has taken over just after a large staff layoff and other operational reductions. A process handled badly in which some staff found out they were let go as their Slack access was disabled.
When Mr. McCarthy took over, here is the email he sent to staff:
I would like to begin this email with a shout-out to my favorite Peloton instructors, Denis Morton and Matt Wilpers, who don’t know me from Adam but whose Power Zone endurance rides first made me a Peloton advocate. And I want to thank John Foley and co-founders Hisao Kushi, Tom Cortese, Yony Feng, and Graham Stanton (on whose shoulders we stand today), for this opportunity to help shape the future of connected fitness.
In the last 20 years, I’ve had the opportunity to partner with two visionary founders, Reed Hastings of Netflix and Daniel Ek of Spotify. Now I’m partnering with John to create the same kind of magic. If you thought today’s news meant John will be scaling back his involvement with Peloton, then let me assure you……I plan on leveraging every ounce of John’s superpowers as a product, content, and marketing visionary to help make Peloton a success as my partner.
I know today’s restructuring news has been difficult. There’s no sugar-coating it. It’s a bitter pill and, in my experience, the sting has a long half-life. But the hard truth is either revenue had to grow, or spending had to shrink. The math simply didn’t work otherwise, and the status quo was unsustainable. One of my core management principles is about getting real. We have to be willing to confront the world as it is, not as we want it to be if we’re going to be successful. We have to be honest with ourselves and each other in order to make that happen, even when the truth is uncomfortable or inconvenient to deal with.
And now that the reset button has been pushed, the challenge ahead of us is this…..do we squander the opportunity in front of us or do we engineer the great comeback story of the post-COVID era?
I’m here for the comeback story, and here’s why I think we can pull it off. The love of our Members, and tons of it. Over the past 12 months in the US, our net promoter scores have hit  and  for the bike and Tread, respectively, which is ridiculously great. And our subscriber churn numbers are the best I’ve ever seen, which means our customer lifetime value is truly exceptional.
Finding product/market fit is incredibly hard to do. It’s extremely rare. And I believe we have it (remember those shoulders I said we were standing on?). The challenge for us now is to figure out the rest of the business model so we can win in the marketplace and on Wall Street. Take care of the business and the stock price will take care of itself. Don’t do that and you’re roadkill.
Winning, in my experience, starts with accountability. Me to you, you to me, and you to each other. We sink or we swim as a team. Today’s restructuring reminds us that results matter. It’s never been more important that we get real about what we can accomplish and accomplish what we commit ourselves to. It’s about accountability and expectations management.
I’ve tried to summarize what that means in terms of my management style below. If you’re wondering whether these reflect my Netflix and Spotify experience, they do. but I also think they transcend corporate cultures, or at least the ones that choose to embrace radical transparency, which I do (and to be clear, many successful companies don’t); meaning I think they’re as applicable to Peloton as they were at Netflix and Spotify, but probably not Apple or Snapchat, by way of example. That’s not a knock on either of these great companies, BTW. It’s simply an observation of corporate culture and reflects my preferred approach to building a high-performance culture. To the best of my ability, you’ll find these “values” reflected in my day-to-day interaction with you, and I hope you’ll consider embracing some or all of them as you develop and refine your own management philosophy. In any event, you’ll hear me talking more about these in the months and years to come.
- Be stubborn on vision, flexible on details
- Fast is as slow as we go
- Intuition drives testing. Data drives decision making
- Your comfort zone is your own worst enemy
- Talent density is foundational
- Stress context not control, freedom and responsibility
- Understand in order to be understood
- Get Real
- Think from first principles
- Put first things first
In the months ahead, you can expect to hear from me about our strategy and the choices we’re planning to make to drive our success. For the avoidance of doubt, we’re in the business of driving growth. And that will require us to take risks, be willing to fail quickly, to learn quickly, to adapt and evolve quickly, rinse and repeat.
I promise the journey won’t be dull.I look forward to working with you,
There is a lot to dissect in the text and with additional time, I think he could have made it more concise. Though it hits the high points of establishing who he is along with the reference to being a current user of the product. It also sets the reset point and establishes reality as being straightforward and transparent.
I can think of several executives that even if they conveyed what was in this email, would only have done it to the executive team. Mr. McCarthy sending this to all in an inclusive measure that allows all employees to establish ownership of the current reality and vision for how Mr. McCarthy plans to move forward.
I may write a secondary email on specific parts of the email that deserve more thought including a mild debate about Pelotons hardware being just a delivery vehicle similar to a water cooler where you constantly are buying and consuming water. The cooler is not the product, the water is. I’ll leave this here for you to re-read and ponder how you may have handled the transition and communication to employees.