Peloton CEO Peter Stern Talks Future, Growth at the Bloomberg Tech Event
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Bloomberg Audio Studios. Podcasts, radio, news. The Bloomberg Tech Summit in San Francisco. We have something special going on though on stage right now. Yeah, let's head on over to the main stage because we've got Peter Stern, the president and CEO of Peloton Interactive in conversation. It's happening right now with Bloomberg Technologies' Mark German. A typical day for me is like this morning, getting up and doing a little bit of cardio. Ran to the gym actually and then did also some strength training.

and then i'm mostly spending my time working on those 25 initiatives with our team members trying to define how we can serve our members better you know if i can spend my time on that kind of substance that's a really great day what are the top three of your 25 um so not going to announce all of the you know all of the details of these sorts of things but the i'll tell you a little bit about the the top one and that is that we have reignited the innovation engine for us

as a company and so focusing on the products and the experiences that we're going to offer over the next few months is absolutely my number one. Another one that I think is really important that we're focused on is how we use AI to deliver personal experiences for our members. That is another one I'm spending an enormous amount of time on, so huge priority for us. Talk to us a little bit more about that, about AI and

What is the future of fitness look like with AI at its core? So every every member is different they all have different intents for why they They choose to become a member of Peloton that can change over time So we need to not just get to know you but we need to evolve along with you Every member is different in terms of their baseline level of fitness their level of commitment their level of confidence and so

One of the things that I really value is

the human coaching that our amazing instructors provide at Peloton, but I want to find ways to scale them by creating individualized programs for each of our members so that they can get the right class from the right instructor that's personalized for them. A really simple example of how we're doing it right now is that we do something called power zones on bike or we do pace targets on tread where we actually set individualized

speeds or levels of effort for each of our members. But then we've introduced a new set of features called personalized plans. And we've had at this point, over 600,000 of our members have started a personalized plan.

And the system basically understands your goals and then builds a plan out for you. And we deliver real results with these sorts of things. So just to give you an example of how this stuff really does make a difference, for example, when one of our members

buys a treadmill, within the first four weeks of using the treadmill, we're on average reducing their mile time by 30 seconds. So we can make real differences in somebody's conditioning. And that translates not just into more confidence and better performance as an athlete, it translates into a longer life.

What about data collection so you can get some more information about the user and then use AI to optimize their workouts? Do you need a wearable? Do you need a new heart rate strap? Do you need more sensors on the treads and bikes themselves? Yeah, we're very lucky in this regard in that our members are doing a lot of that hard work for us.

So we have a great partnership with Google Fitbit, for example. We have done integration with Garmin smartwatches because a lot of top athletes choose that. And we also are working with the Apple Health app to make sure that we can import data from there. A very large fraction of our members have an Apple Watch.

And that Apple Health app basically can act for many, many members as basically a Rosetta Stone for us, allowing us to get access to the data that we need with the permission of the member. Once we have that data, now we can use the third-party information that our members are providing us. But we have such rich first-party information on our members as well based on the

the workouts that they're doing on our machines and how much they're pushing themselves. If they have a watch, we can look at their heart rate and we can impute then how much effort they're expending. And if they don't have a watch, we can basically compare them with members who do have one. And so we can basically determine

how hard you're working. And we can, for example, calculate things like a cardio fitness score. So I'm really excited about how we'll be able to use data to deliver ever more personalized experiences for our members. So you said you did a workout this morning. Obviously, Peloton's based in New York, so you're here, probably stayed in a hotel. Yeah. How important is the hotel business and the gym business

to Peloton under Peter Stern and compare it to the someone buys one for their home business? - Yeah, so the nice thing about this is

These are not either/or situations. I think it might have been perceived that way in the past, but it's absolutely not. Let's take travelers and hotels as an example. If you're the type of person who is in a hotel, then you're a person who is investing in yourself, you have some ability to pay for a service, and you're going to a hotel gym, you are really committed.

to taking care of yourself, that is a situation where we should have Peloton equipment everywhere. I'm really happy with the partnerships we have right now with Hilton and with Hyatt, where we have Peloton equipment in most of their gyms. I do think in hotel gyms, basically, Peloton equipment should be a must-have amenity. It's the sort of thing where you shouldn't even choose, you wouldn't even want to stay in the hotel if it doesn't have the Peloton equipment that you count on having at home.

And then that's a great way for us to meet new members because some people might not have had a chance to try our equipment out, but while you're traveling at a hotel gym where you've got a little time on your hands, that's a great way to do it. Now, with regard to commercial gyms, there's also tremendous opportunities there. We have a number of pilots taking place with all sorts of gyms, including the Y, so we can try to make Peloton equipment as accessible as possible.

But one of the things that I'm really excited about, and this is not something that we've really talked about publicly before. Not a lot of people know that we own Precor, which is one of the leading providers of equipment to gyms everywhere. We are bringing Precor in to basically be the lead partner in a commercial operating division for Peloton. And the Precor business has the skills to be able to install and service

equipment to the exacting standards of gym operators who have a very heavy duty cycle on that type of equipment. And so we're going to be able to bring Peloton equipment into more gyms with the capabilities of pre-core. At the same time,

We're now bringing Peloton workouts onto pre-core equipment, which will really differentiate that pre-core equipment in the minds of gym operators and hopefully open up even more new audiences for them. So, you know, I would basically say this is a long overdue post-merger integration that we're doing with pre-core and making it the foundation for our commercial business.

How do most people buy a Peloton? Are they subscribing to it with your rental program? Are they doing installments? Are they buying it outright? And then earlier this week you launched a new program, sort of a resale website, like a Craigslist for Peloton, I guess you can call it. Talk to us about that. I would say actually the two largest channels are people buying Peloton equipment from our website. Go to onepeloton.com and it's all there and it's a really great way to buy it.

But one of the largest ways for us to acquire new members is in the secondhand market. So you raised, Mark, this announcement that we had a couple days ago about something called Repowered.

And the idea here is that there are lots of Peloton bikes in particular that are out there in the world that are being underutilized. And that does no one any good. I'd love for people to get back on the bike. It's the right thing for them. Certainly it's great for us as a company. But if you're not going to use a Peloton bike, we want to make it really easy for you to get that into the hands of someone who will love it. And historically, that's taken place, for example, on Facebook Marketplace.

And that's absolutely fine for people who want to do that, but it means that you need to transact with a stranger on both ends and potentially have that stranger come into your home. And so what we're trying to do is streamline that and deliver a more premium experience for those secondhand customers. What this does is it allows us to get our bikes that are built to last into the hands of people who will love it at a price that's a fraction of a new bike.

And there's no capital expenditure for us as a company. There's no environmental impact associated with producing those bikes because they're already out there in the world. And so it's a great way to help somebody get fit and grow our business. Last question for you. Peloton, standalone business for years to come? Is it potentially an acquisition target for a larger company?

What do you see as the... I was not hired to sell this company. I was hired to bring this company back to growth, to reinvigorate it, and it is happening. So there is... We are a standalone company for years to come. Great. Thank you, Peter Stern. Thanks for having me, Mark. All right, everyone. You've been listening to a live conversation between our Mark Gurman and, of course, Peter Stern, who is the president and CEO of

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