George Mason UniversitySchool of Business

Peloton’s Business of Well-Being

Written by Benjamin Kessler on .

David Miller

In November 2016, Mason entrepreneurship professor David J. Miller’s wife made a purchase that, unbeknownst to him, would change how he viewed our societal and economic future. That pivotal purchase was a Peloton exercise bike.

At first, Miller wanted nothing to do with it, preferring to stick with his established treadmill routine. However, curiosity eventually got the better of him. Soon after his first on-demand “Beginner Ride”, he found himself on the Peloton more and more, and using the treadmill less and less.

Cut to five years later. Miller is now a die-hard Peloton fanatic. In addition to taking more than 5,000 Peloton classes, has made several pilgrimages to the so-called “Mothership” – the main studio in New York City where Peloton’s famously charismatic instructors shoot their workouts for the platform.

His forthcoming book Sweating Together: How Peloton Built a Billion-Dollar Venture and Created a Community in a Digital World (Ideapress Publishing) is the culmination of that journey. Not your average business book, Sweating Together combines Miller’s personal story of falling in love with the Peloton brand with strategic lessons taken from the company’s meteoric rise. The book draws upon Miller’s extensive interviews with top executives (including the current CEO/co-founder John Foley), four superstar instructors and hundreds of devoted Peloton fans.

Peloton has indeed enjoyed astonishing growth. Even before the pandemic, the company was doubling its registered membership every year. The first year of Covid saw Peloton’s revenue more than triple, as lockdowns made at-home workouts the only option. Sweating Together’s big takeaway is that Peloton’s appeal as a brand goes far beyond exercise equipment. Peloton users constitute a close-knit, voluble community of millions, interacting not just in Peloton’s online classes but also in dedicated Facebook groups and even in the flesh. Before Covid, groups of brand loyalists frequently met up to ride together in local Peloton showrooms.

“As I started observing Peloton and its members, as well as my own behaviour being a part of the community, I started realizing that it wasn’t just physical fitness and meeting people. I was going to museums and reading books that other members were recommending. My idea of health and well-being was expanding,” Miller says.

The Peloton community perhaps owes its vibrancy to the fact that the company allowed it to form and grow organically, rather than trying to dictate its development. Miller says this leading-from-behind strategy aligns with Peter Drucker’s principle of “the unexpected success”, from the seminal 1985 book Innovation and Entrepreneurship. In contrast to economic theory stressing rational self-interest, Drucker highlighted the spontaneous and unpredictable dimensions of human behaviour as golden opportunities that entrepreneurs should watch out for.

As Miller writes in the book, “for the Peloton team, the community has been a surprise and an asset to be leveraged to expand and improve the business model and the value it generates for the members and others”. To cite just one example, the company’s referral program allows community members to convert their brand ambassadorship into cash rewards. Miller estimates that he and his wife alone have driven at least $70,000 in Peloton hardware sales alone through word of mouth.

Community cohesion is further fostered by the positive vibes that infuse virtually everything connected with Peloton, from the high-end yet approachable brand identity to the tightly integrated elements of gamification and friendly competition. (Users can see a leaderboard that ranks their performance against that of everyone else that has ever taken the same class.) Certain Peloton instructors are as famous for their colourful personalities and the pop playlists that underscore their classes as they are for their teaching skills.

To Miller, what makes Peloton an exemplary company is the way it transforms something gruelling but good for us – heart-pounding workouts – into a fun, emotionally enriching experience. The Peloton story points to what Miller claims is the biggest untapped entrepreneurial opportunity in today’s world: “the business of well-being”. He refers to the official definition of well-being, according to Mason’s Center for the Advancement of Well-Being: “building a life of vitality, purpose, resilience and engagement”.

The recipe for successful capitalism is changing, Miller suggests. Selling guilty pleasures – fast food, fast fashion, etc. – is becoming a less tenable business model than helping consumers build lifestyles that are beneficial to themselves, as well as their organizations and communities in the long term. Peloton shows that conscientious consumerism isn’t always about choosing vegetables over dessert. Users can have their cake and eat it too.

“If you can make people happy, they’re going to keep coming back”, Miller explains. “As obvious as that sounds, entrepreneurs often forget it. You fall into other things, like ‘I’m competing with someone else’ or ‘I want to be the lowest price’. But when you get on the bike or follow [Peloton] on Instagram, all of a sudden, you realize, ‘Oh, this is just a happy space’.”