spinning is winning

Spinning and Winning: How Flywheel’s Digitization Competes in Boutique Fitness

In many ways, Flywheel Sports resembles most cycling studios: dark lighting, loud music, high prices, and lots of Lululemon. Find out how Flywheel uses digitization to stand apart.

While many fitness studios have incorporated technology in basic ways such as online sign-ups, advertising and communication, Flywheel is one of the first to use technology and the Internet of Things as a key competitive advantage.

Turning up the torque – Flywheel’s business model

According the Harvard Business Review, “smart, connected products have three core elements: physical components, smart components, and connectivity components.”[1] Flywheel is the first spin studio to integrate both the smart and connectivity components with the central physical component required in a spin studio: the bike.

In fact, Flywheel’s incorporation of smart and connectivity is at the heart of its business model – its customer value proposition – and is primarily what sets it apart from its fierce rival, SoulCycle. According to Business Insider, and evident based on personal conversations, “There are two kinds of people in New York City: Those who go to SoulCycle and those who go to Flywheel.”[2]

Since opening in 2010, Flywheel has opened in 18 geographic areas and will operate 40 studios by the end of the year. Comparatively, SoulCycle, founded in 2006, currently operates 62 studios.

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Where the rubber (metaphorically) meets the road – Flywheel’s operating model

The “smart” component at Flywheel is the proprietary “tech-pack” which is a device that connects to the bike and allows riders to control resistance (torque) and accurately view their own work effort based on resistance, cadence (RPMs -revolutions per minute), time, and an overall power output. At Soul Cycle, the bike has a manual resistance knob. Flywheel “believed that incorporating performance tracking technology…would provide a more rewarding workout.[3]”

The connectivity, and most unique aspect, is the link from the “tech-pack” to the “Torqboard” as well as the Flywheel website and app. Riders can opt in to have their overall performance displayed during class on a large screen called the “TorqBoard.” The display shows only the highest preforming riders in the class in rank order and encourages competition. Regardless of whether or not a rider opts in to be displayed on the Torqboard, each rider has access to a record of his/her performance via Flywheel’s website and iphone app. The online platform allows users to set individual goals and to view customized reports on his/her progress.

Sample profile display from a Flywheel class. Source: Flywheel website.

Torqueboard at Flywheel displays final results for a class. Source:

While Flywheel and the Troqboard concept in particular will not appeal to everyone, I think the company has succeeded in looking beyond the technologies themselves and instead, as Michael Porter and James Heppleman suggest, looking to the “competitive transformation taking place.”

Never coast – a look forward

The competition between Flywheel and SoulCycle is real. Not to mention, many other boutique spin and fitness studios like Orange Theory Fitness, PureBarre, and Solidcore are gaining momentum. In order to stay ahead of the curve, I suggest Flywheel continue to innovate with technology.

The website and app provide valuable information, but stop there – I would urge Flywheel to keep going. The platforms have the potential to better engage clients and allow for a more interactive experience. Ideas that come to mind are additional goal-setting, playlist curation and suggestions, communication with other users exchanging tips not only on Flywheel, but lifestyle issues as well.

In addition, as technology advances and becomes more affordable, Flywheel should consider implementing additional smart components to the class experience such as heart rate monitors. Alternatively, or in conjunction, Flywheel should develop a way for the fitness aficionados who already wear a heart rate monitor to class to easily sync that data into their Flywheel profile.

To investors, the match between the Internet of Things and fitness should look a lot like dollar signs. Of course, companies have to have the right business model to make it work, but the potential is there. Let’s not forget that “wearable tech” such as smartwatches and fitbits is set to be a $16 billon market this year[4], stadiums are continuously investing in wifi capabilities and innovative ideas like POS systems on mobile phones, high-tech tennis rackets provide performance feedback to the player, and popular Topgolf venues provide players with microchipped golf balls that score themselves.

Spinning and Winning: How Flywheel’s Digitization Competes in Boutique Fitness In many ways, Flywheel Sports resembles most cycling studios: dark lighting, loud music, high prices, and lots of

Spinning and Winning: How Peloton is revolutionizing fitness, technology, and everything in between

From Fitbit to P90X, SoulCycle to Equinox, gone are the days when the average fitness addict is satisfied with a 3-mile jog on the treadmill. Enter Peloton.

Peloton (noun) – the main group of riders in a bicycle race[1]… “riders in a peloton work together, conserve energy, and perform better because of one another”[2]

Founder Yony Feng and his team inspect a bike prototype. (Source:

Introduction: In 2012, John Foley and three co-founders started on a journey to “create a new concept in fitness” that would “create a world-class indoor cycling experience on your time, and in the comfort of your own home”.[3] Just three years later, news outlets like Biz Journal and Bloomberg Businessweek are speculating on the IPO of the young and fresh-faced Peloton (who just received their second round of funding of $75 million from PE fund Catterton) and what the future looks like for this Fitness, Tech, & Media company.

Peloton sells its state-of-the-art indoor bikes (complete with 22-inch screen, about the size of 4 iPads) to customers for at-home use, but they are no ordinary pieces of fitness equipment! Unlike your typical stationary bike, riders clip into their Peloton and can access both live streaming and an extensive library of on-demand spin classes, broadcast from Peloton’s brick and mortar cycling (AKA spinning) studio in Manhattan’s Flatiron district. In addition, Peloton operates twelve retail showrooms across the U.S., a number they hope to double by the end of 2016.

Competition, value proposition, & business model: Foley chose to found Peloton’s flagship studio and headquarters in “Silicon Alley” knowing that New York City is the “media mecca of the world”. A skeptic of Peloton’s decision to launch in 2012, in New York City no less, might point to an immensely crowded and competitive boutique fitness market, lead by industry beast SoulCycle, which is soon expected to IPO for almost $1 billion.[4] However since January 2014, Peloton has sold and installed approximately 20,000 bikes in homes in twenty-two countries, separating itself in both value proposition to its customers as well as its operating and business models.[5] Bikes cost riders a lofty price of $1,995 and Peloton charges a $39 per month via a subscription model, which costs the customer approximately $2,500 in the first year of use but only $468 (12 months x $39) in years after.[6] Peloton is expected to book $50 million in revenue in 2015, a five fold increase from its 2014 revenues.[7] In founding Peloton, Foley sought to capitalize on several realities:

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  • The at-home fitness competition comprised DVD’s by mail such as the Insanity and P90X programs, effective programs but “out of date” according to Foley, who saw an opportunity to innovate in both the hardware and software of at-home fitness equipment.[8]
  • As SoulCycle and Flywheel devotes raise families and have less time to operate according to studio schedules and step away from their homes, an at-home experience provides increasing value to a fitness devotee still seeking an addictive, high-quality, interactive experience.
  • “We are more than just a class, a cycling studio, and a bike. We deliver a fully engaging experience with the technology to make every workout effective, and the social connection to make every workout addicting.”[9]

Peloton riders who purchase and use the bike at home benefit from the “interactivity” element that allows riders to track their metrics against other riders in remote locations (using a leaderboard), even video chat with other riders if they chose! The platform offers “thousands of on-demand classes”, which include varying lengths (15-, 20-, 30-, 45-, and 60- minute) as well as ride themes (Metrics, Rhythm) and music themes (Adele vs. Sia, Live DJ). In 2015, Men’s Health awarded Peloton “Best Cardio Machine” of the year calling it “the best cardio machine on the planet”.

So what makes Peloton different, why are they succeeding to date, and why does Foley believe that they are fundamentally unique from competitors and changing the industry?

Alignment of their Operating and Business Models:

  • A service-oriented business:Despite the high price-point of roughly $2,000 for a Peloton bike, Foley has been very transparent that Peloton sells their bikes at cost and this is not where they make their money. To this point, it appears that Peloton is selling a product, a stationary bike, to its customers. In reality, Peloton is much more focused on the service it delivers to its consumers (its value proposition and strategy). Similar to companies like Netflix that operates on a subscriber-based model and Keurig that earns its money through selling K-cups rather than actual coffee machines, Peloton is transparent that, “the hardware, while key, is not where the money will be made… cash will come through subscriptions”.[10] Peloton has put its money where its mouth is, investing heavily in its engineering teams to support its software and platform. While spin studios like SoulCycle and Flywheel invest heavily in their corporate offices and instructor talent, Peloton’s model requires it to operate differently in terms of who they hire and what they need to operate. (of their 90-person back-office team, 17 are engineers and another 15+ work in Operations, Customer Experience, & Production) and operating a 24-7 service model around its platform, to ensure high-quality rider experience.
Investing in Tech: Peloton’s Control Room in New York City
  • Rider experience and scalability: Peloton considered early on having a fake set with actors to record classes for at-home riders, but quickly realized that streaming live classes with the “visual stimulation of the dark setting” was critical to making riders feel like they were in the class: said a founder, “the authenticity was important to us”. Furthermore, Peloton’s ability to stream to unlimited riders in 50 states and across the world will only allow it to successfully scale and improve its bottom line in future quarters. Unlike traditional spin studios that are limited to earning revenue on 40-60 riders per class, Peloton will never face this challenge and can bring their service to a wider audience.

Looking ahead: With scalability on its side as well as potential for network effects (each marginal user on the platform creates more value for other riders and increases barriers to entry for other market movers), things are looking up for Peloton. With potential to be a leader in fitness (competing in both the at-home & boutique studio spaces), technology (a major disrupter), and media, I would say that they have pulled ahead of the pack, at least for now.

Spinning and Winning: How Peloton is revolutionizing fitness, technology, and everything in between From Fitbit to P90X, SoulCycle to Equinox, gone are the days when the average fitness addict is ]]>