How Peloton Could Die, and Tonal As The Next Fitness Unicorn

Tonal (which I wrote about last week) is one of the most impressive pieces of tech I’ve ever owned, and I can’t remember being this truly blown away by something since the original iPhone. This seems hyperbolic, but specifically refers to how I felt when I got a device that truly felt dimensionally different to the competition. Using the iPhone back in 2007 felt totally new because it had things that others hadn’t really tried to do properly - chat-like text, a huge screen, visual voicemail - things that would end up becoming standardized across the industry, but nevertheless things that totally redefined it.

Peloton’s Problems

The Peloton Bike, and I say this as a guy who has 840 rides and spends 3-5 hours a week on the bike, has a pretty mediocre product and has survived/will survive entirely based on inertia. They have a great stable of content, metrics that work, really good instructors, rabid fans and a product that’s approachable and has a huge addressable market, mostly because it isn’t a fitness product that requires you to be fit already.

They’ve also done basically nothing with the product since I got it in 2018, and I’d argue that their product development speed is mostly based on the fact that they know people will keep buying and using it because of the weird brain magic they do on certain people that makes them fall in love with the instructors. I like it because the classes are well-balanced and there’s lots to do and the numbers are endearing, but I would love to see how their churn is post-pandemic.

They also have a significant problem with metrics and cheating. It’s very common to have people either receive bikes that are miscalibrated or very easy to use the calibration tool to cheat with your bike, and thus leaderboards are full of people who are apparently stronger than Tour De France riders. One guy on the leaderboards called MikeYeager allegedly can ride at 450W for 45 minutes, which would make him a stronger cyclist than Chris Froome, or a stronger athlete than quarterback Cam Newton. Zwift has been extremely aggressive in stopping cheats, but there is no policy to do so with Peloton, meaning that if you think about it too hard the metrics behind Peloton are inherently broken. This isn’t a problem now but it will be eventually.

Plenty of people have asked me why people would cheat at Peloton, and the answer is because people love to show off to other people. And when they inevitably try and gamify it further, adding in a Zwift-like video game aspect, this will become a huge issue, and people are going to go completely berserk.

It’s also…fiddly. It’s not difficult, but getting on a Peloton requires you to put on some weird shoes and clip in. This is a mental leap for some people. It also becomes an issue when you travel, which I’ll get to.

Another more pressing issue is that as a company, they can now only extend outward and try and strike gold again, except their model doesn’t really work outside of biking. Running has endearing statistics, but not ones that directly involve you and the machine, and thus there’s little reason to buy a Peloton treadmill when you could buy a cheaper and better treadmill of your own and get the same statistics.

Rowing is a potential next move, but I don’t know how many people are going to be excited about rowing. I’d probably have done it before I got Tonal, but now I don’t see the point, and imagine plenty of people will feel the same way. Who wants to row? Is rowing that fun? It feels repetitive. I don’t want to be a Winklevoss!

Peloton also has an enterprise problem. Assuming they ever consider developing their product more than they have today (I really cannot express how little they’ve done in the last few years beyond adding more content), they could add in the ability for coaches to set up rides for people via the platform. This platformized process is absolutely possible for them to do, but it is going to require a huge amount of engineering talent to pull off, and will directly eat into the audience for their live rides. They have to do this to continue to grow, and they have to hope that they can do it fast enough to fight off churn.

Finally, Peloton also has an industrial issue - they are absolute dogshit in every single gym I’ve ever been to. The inconsistent calibration issue is the first problem - that you can’t hop on a bike and do the same numbers reliably - and the second is that most hotel gyms have toe cages versus the clips for your cleats. This means that the experience outside of your home is almost always inferior, which means you’re less likely to use it when you travel, which breaks the routine, which leads to churn.

The media loves to lord upon Peloton as the second coming of Christ, mostly because a lot of them haven’t really used it much and the Peloton Facebook makes it seem like they can do no wrong. I love my bike because I really enjoy the user experience - the power zone classes are great, varied and truly work, but I worry that the overwhelming popularity of pop psychology feel good bullshit is going to eventually win out and push that out the door. That, and the company feels like it’s built on sand - their model is sustainable but is easily broken by a bad quarter.

In short, I feel like Peloton has built their empire on content over user experience, which in my mind is not remotely sustainable. The general justification as to why people keep using it is a combination of the metrics (wattage, your threshold power, growing said power) and good content, along with the general purpose addiction to fitness you get when you like something, but I think that their ultimate strategy is arrogant - they assume that their content is so good that they don’t need to improve the product, which is both expensive and harder to differentiate.

Specifically, one of the reasons people stop doing fitness is that they don’t have consistency and structure. Peloton’s “programs” are half-assed (and there aren’t enough of them) because they don’t really customize to the user unless they do their 20 minute FTP class, and even then that’s only power zone classes, and even then it’s very hard to tell which ones to do in what order. The only way to get customized classes is to do a 20 minute threshold class where you do your best 20 minute effort, which sucks ass, and it’s almost entirely user-driven - Peloton doesn’t recommend you do it, and it’s an unpleasant test that can end in a failure to get stronger, making you feel like you’re going nowhere, and then you’re left to your own devices again.

The reliance on either self-motivation or competition with other users - which is full of cheating and miscalibrated bikes - is a huge misstep on their part that could prove fatal. Not everybody is a weird freak that hires a guy to give them a slate of bike classes every week, and I don’t believe that it’s sustainable to rely on the content alone. It’s framed as personal training, but they’ve leaned too far toward entertainment.

Peloton has very little in place to guide users, and most people need guidance in their fitness. Their current product strategy is basically Netflix with a bike, and will be, I think, dramatically hit by people returning to the real world. Ironically, they get a delayed version of the Bowflex problem - there’s lots to do, but it’s not obvious how to do them.

Where Tonal Fits In (And Beats Peloton)

As a product, Tonal beats Peloton simply by providing structure and guidance, which I admit is somewhat based on the static nature of the classes. You calibrate immediately on getting the device, and as you do more classes it builds a strength profile during and after classes to push you harder (or reduce weight when you’re struggling). Everything you need is part of the device beyond the handles that sit right next to it and clip in easily, and it waits for you to get everything done before a lift starts.

More importantly, there is very little “what do I do next?” in Tonal. Once you’re calibrated, there are about 41 programs that all do different things, and it is by definition tuned to your strength profile. When you get stronger, Tonal ups the weight. If you’re feeling weak, Tonal recognizes and changes the weight (or you can do it manually). The user gets feedback to know they’re doing it right, and the experience is consistent.

The issue with indoor cycling is that it requires an impetus to keep you on the bike - either through instruction or entertainment - as otherwise you’re just pedaling. Tonal is more pragmatic - you’re lifting to get stronger, which requires you doing X number of things either Y times or for Z many seconds. While each time you jump on the bike has to be incredibly varied and have exciting content to keep people engaged, Tonal has to be engaging but more instructional - you are there to do a job, which requires you to do movements in a certain way. Peloton instructors jabber on and on in different ways, which is good when you’re trying to do a consistent effort and get tired - Tonal lacks that need to fill space in the same way.

This is a challenge because Tonal also needs to still create engaging enough content that people enjoy it, and said content also needs to tell people what it is they’re doing, why they’re doing it and how to do it right. This is also a net benefit - classes are easier and quicker to make, they can be made more varied without the same amount of creativity, and thus their job is to keep people engaged enough.

As a product experience goes, it’s great. It does the job it needs to do incredibly well. It counts reps for you, it gives you suggestions to improve your form, it reduces weight when you’re getting tired or struggling so you can complete a rep, it provides the guidance you need to do more and automatically pushes you to get stronger. The experience of moving the arms and attaching accessories is smooth, and the machine lets you know where each arm goes (and if you’ve done it wrong). It has thoughtful touches like the ability to engage/disengage weights based on the handles. It’s got different modes to help you along with tougher lifts, or even make lifts tougher on different movements with chains. Lots to do in lots of ways.

These are all product decisions that were made to reduce friction in the experience of lifting weights, and automate the things that you’d usually have a personal trainer do. Where Mirror (valued at $300 million last year) requires you to have extra gear lying around and Tempo requires you to clip and unclip and move weights, Tonal does basically everything for you beyond moving the arms. The “AI powered coach” stuff is interesting, but I question how accurate it can be and how much it makes up for the fact you’re dicking around with accessories. The more futzing someone has to do with objects to make your product work, the more reasons they have to not start using it - and fitness is something that already comes with 290 excuses before you’ve even started.

I think that Tonal’s key difference is that, as a product, it’s built to get past a lot of these excuses. What do I do? This class. Okay, cool. Wait how much do I do? Oh this much. How heavy? That much. Ah I’m tired, what do I do? Nothing? Oh, the machine did it for me. Am I getting the right balance? I’m in a program and this day is focused on this. And when they have to build more content, they are able to get ultra-specific about what they want that content to do. If they want to build a new P90X (and they already have Tony Horton), they can simply add it to the programs. It is something that is useable from someone who has no lifting experience and someone who lifts all the time, though powerlifters will probably want a power rack or whatever.

It is an experience that is more addictive than Peloton because it relies on you connecting with the experience over the content, and takes the mental work of preparation and strategy out of your hands. The problem is the cost ($3500) and the installation (it requires studs in a wall a certain space apart - Peloton simply sits on the floor). If they ever work out a free-standing one, that’ll be huge.

There are some limits - 100lbs per arm, specifically - but I think that most people won’t reach those limits quickly, and Tonal could likely build some sort of floor-brace (thanks for the idea, Kasey) that would allow each arm to do 200lb. I have had a few people sneer at it, claiming that not having free standing barbells stops them from doing huge dumptruck deadlifts at 400lbs - to which I say, well, I dunno, the same thing I say to people who ride 100 mile bike rides every weekend - this isn’t really for you.

On an enterprise level, Tonal is basically perfect for hotel gyms. Consistent experience, easy to use, more compact than a squat rack or a smith machine (and potentially cheaper), and significantly more people can actually use it. It has Peloton’s everyman approach without the shorts or the cleats. Selling these into office gyms or hotels shouldn’t be difficult, and I’m honestly shocked they haven’t got more press considering how really good the experience is. And when they inevitably expand toward selling personal training directly from Tonal, it won’t be a huge departure from the core product - you can already create your own schedules and choose your own workouts if you don’t want to do classes, and you still get the guidance, rep counting and so on.

Realistically, this is a product that (if they can find a way to make it easier to install) can be sold en masse to consumers and even more so at the enterprise level. It’s a natural fit for company and hotel gyms, and remains consistent across different machines and geographies. They have significant manufacturing challenges - it took three months to receive mine - but if they can find a way to build them faster and install them in an easier way, I truly think that they can be the actual future of fitness.

Their product could absolutely be copied, too. But based on how difficult it’s been to get one, and how long it took for them to get them out the door, it’ll be tough to copy and paste the experience for Peloton or another fitness company.

Anyway, just my two cents. If you’re reading this Tonal, I want to do your PR or buy your stock.