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How Peloton Became A $4 Billion Fitness Start-Up

People are obsessed. Introducing The Upstarts, a new series about the companies you love that came out of nowhere and are now everywhere. » Subscribe to CNBC Make It.: http://cnb.cx/2kxl2rf Peloton is a bonafide fitness phenomenon — it has a million impassioned users to whom its bikes and original streaming workouts are a way of life, making it much more than a company that sells exercise equipment, though it does that too. In fact, Peloton has sold over 400,000 bikes so far and started delivering its first treadmills in late 2018, the company tells CNBC Make It. Peloton changing the way America works out. "People are pretty obsessed with Peloton — myself included," Robin Arzon, Peloton's head instructor and vice president of fitness programming, tells CNBC Make It. Arzon joined in 2014 after reading an article about Peloton that made her feel like she was seeing the future of fitness. "From the beginning, I drank the Kool-Aid," she says. She's not alone. The convenience of being able to take a top-notch studio cycling class on a high tech bike at home any time you want, combined with motivational instructors and a supportive but competitive community of users has created a devoted following willing to pay $1,995 for an exercise bike, not including the $250 delivery fee or the $39-per-month subscription to stream the company's live and on-demand classes. Over 440,000 people follow Peloton's official Facebook page, where users connect, posting photos of themselves and their bikes along with updates on their workout regimens, and superfans have even gotten tattoos of the company's logo. You can even count more than a few famous faces among the Peloton community, including actor Hugh Jackman, Olympic champion sprinter Usain Bolt and even billionaire Virgin Group founder Richard Branson. Investors are enamored too, pouring $994 million into Peloton. In fact, the company was valued at a whopping $4.15 billion after its latest funding round of $550 million in August 2018, Peloton confirmed to CNBC Make It. Peloton's impressive growth — the company says it's on track to reach $700 million in revenue for the fiscal year ending in February after tallying $370 million in sales the previous year — and valuation even has public investors salivating at the idea of a potential Peloton IPO, which could come as soon as this year, though the company declined to comment on that matter to CNBC Make It. Secret sauce If you ask Peloton's founders, it's actually a media-technology-retail-logistics company. In fact it's been dubbed the "Apple of fitness," but it could also be compared to Amazon, for the way it aims to control every aspect of your workout, from designing and building the bike or treadmill you're using to training the instructors encouraging you to pick up the pace and even the music playing in the background. Not to mention creating its own content and designing and building the hardware and software that lets you stream those fitness classes on a tablet affixed to a machine that was delivered to your home by Peloton's own "dedicated team of professionals." "We did talk a lot about Apple early on, and we talk about Netflix and Amazon," Tom Cortese, one of Peloton's five co-founders and COO, tells CNBC Make It. "When you think about these game-changer companies who have this focus on user experience, that is where we looked for inspiration." In particular, Peloton's instructors are part of the secret sauce. Indeed, popular instructors like Arzon are one of the main draws, as evidenced by her the nearly 200,000 people who follow her on Instagram. Arzon is known for her high energy, motivational style and her catch phrase, "sweat with swagger," which is also the name of the tribe of Peloton users who specifically follow her classes. She calls Peloton's group of instructors "a team of superheroes" whose job it is to inspire and lead the community. Read more about the cult of Peloton here: https://cnb.cx/2SJ4ui4 About CNBC Make It.: CNBC Make It. is a new section of CNBC dedicated to making you smarter about managing your business, career, and money. Connect with CNBC Make It. Online Get the latest updates: http://www.cnbc.com/make-it Find CNBC Make It. on Facebook: http://cnb.cx/LikeCNBCMakeIt Find CNBC Make It. on Twitter: http://cnb.cx/FollowCNBCMakeIt Find CNBC Make It. on Instagram: http://bit.ly/InstagramCNBCMakeIt Find CNBC Make It. on LinkedIn: https://cnb.cx/2OIdwqJ #CNBC #CNBCMakeIt How Peloton exercise bikes became a $4 billion fitness start-up with a cult following | CNBC Make It.

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