To win in markets, you need to have a great product-market fit. It is a spot where the frictions in markets and the “forces” (the products and services) you are creating to overcome them attain equilibrium.
[Bear with me for using big grammar. My grandmother, Lechi, truly liked them because it showed that I was learning in secondary school. How do you come back from school without saying something she could not understand, after all the school fees? ]
So, when Peloton, an experience exercise company, which helped people do exercise at home, was raking it at the peak of the pandemic, I wrote: “before you invest, think beyond Covid-fit to market-fit”. In other words, that product must not just do well during Covid pandemic, but also when normalcy returns.
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Normalcy is fairly back and Peloton is crashing. According to CNBC, “the company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a ‘significant reduction’ around the world due to shoppers’ price sensitivity and amplified competitor activity.”
This week, Peloton is replacing its CEO, updating the board and cutting about 2,800 jobs, and may end up in the museum of also ran. Our prayers with the workers affected.
Is your product-market fit sustainable? Yes, do you have a moat to protect the castle?
Changes are afoot at Peloton. The exercise company announced it is replacing its CEO, cutting around 2,800 jobs and reconfiguring its board. Co-founder John Foley will be replaced as chief executive by Barry McCarthy, Spotify’s former CFO, and will become executive chairman. The layoffs include 20% of Peloton’s corporate positions, but do not affect its roster of instructors.
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The company has been the subject of frenzied acquisition speculation, with Apple, Amazon and Nike all floated as potential buyers. Foley said the company is open to any deal that “could create value for Peloton shareholders.”
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Laid-off employees will receive a complimentary 12-month Peloton subscription as part of their severance, Foley said in a press release about the changes.
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Peloton employees are taking to LinkedIn to post about the layoffs.
According to ProductPlan, “Product-market fit describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability. According to entrepreneur and investor Marc Andreesen, who is often credited with developing the concept, product-market fit means finding a good market with a product capable of satisfying that market.”
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