Peloton races to the future, but it’s still no tech company
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I can’t hide my admiration for Peloton.
I don’t own shares in the company, but I do own a bike, which my wife, to her continued amusement, had to persuade me strenuously to buy. And the only time I met CEO John Foley, at a Fortune conference in 2016, I was unimpressed with the fledgling company’s pitch.
But I am a fan in so many ways. I’m a fan of the company’s impressive head instructor and vice-president of fitness programming, Robin Arzon, who I interviewed in June. I’m a fan of the varied, high-quality classes, many of which are available for a lower price than the expensive bike and treadmill and the subscription they require. And I’m just a fan of the whole Peloton experience, in particular because the classes get me to try things I wouldn’t do otherwise. Example: I recently took a beginner’s yoga class with the suave and confidence-instilling Dennis Morton; it’s the first time I’ve felt successful in a yoga class after years of misfires.
Gushing about the product aside, I’ll gush now about the financial performance. Peloton reported its first quarterly profit Thursday. It has more than a million subscribers and an impressively low churn rate. The knocks against Peloton keep getting knocked down. Its for-rich-people equipment is getting a bit cheaper, and the digital app is affordable. The competition is fierce, but the line about how credit-card companies compete against cash comes to mind: Peloton is competing against gyms where people breathe on each other, not other fitness apps.
Peloton isn’t a technology company, of course, any more than NBC is. It too is a broadcaster, and even more like NBC when it was owned by TV-maker RCA: Peloton sells the “TVs” too. It uses technology well, including flat-screen monitors that connect to the Internet and Bluetooth headphones. But its business success revolves around implementing the technology others sell.
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This edition of Data Sheet was curated by Aaron Pressman.
No soup for you. With possibly just four days left for ByteDance to sell TikTok or face some kind of U.S. ban, President Trump says there "will be no extension" of the looming deadline. “We’ll either close up TikTok in this country for security reasons, or it will be sold.” The administration's previous orders include multiple deadlines. China threw a wrench in negotiations to sell to Oracle or Microsoft with new technology transfer rules. Elsewhere in Trumpland, the president is leaning towards nominating Nathan Simington, a senior advisor at the National Telecommunications and Information Administration, to replace FCC commission Mike O’Rielly. That's because Simington is on board with Trump's push to have the FCC gut speech protections for social media and O’Rielly, consistent with his conservative credentials, is not.
The long and winding road. Speaking of the FCC, the agency has dropped all efforts to regulate cable boxes and eliminated rules dating back to 1998 that required cable services to provide CableCards for DVRS like Tivo and HDHomeRun. I will be very sad on the day my Tivo stops working.
Keeping up with the EVdashians. In the debate over whether there's a bubble in stocks of electric vehicle companies, short sellers at Hindenburg Research have a pretty strong hunch. In a report on Nikola Motor released on Thursday, they allege all kinds of fakery and fraud in "an ocean of lies." The company denied the charges. But Nikola, which has seen its stock bounce all over, dropped 11% and has now lost almost its entire gain since going public via a SPAC merger in June. Elsewhere on Wall Street, Oracle's revenue rose 2% to $9.4 billion, better than expected. Oracle's stock, heretofore up 8% this year, gained another 4% in pre-market trading on Friday.
I don't know why you look so worried. Oculus founder Palmer Luckey has moved on from VR to drones. His company, Anduril Industries, has forged a new sword to fight Sauron...no, sorry, has developed a new military drone called Ghost 4 that's controlled by A.I. Maybe we'd be better off if it was a new sword. "I feel very comfortable saying that Ghost 4 is the best drone there is," Luckey writes in a blog post.
You better love me when my roots are showing. Oculus of course was bought by Facebook back in 2014, but now Mark Zuckerberg's company is really revisiting its early days. Perhaps cognizant that the young people favor other social platforms, the company released Facebook Campus, a limited online space just for college kids. Speaking of reviving old brands, Walmart has brought back the Gateway PC brand for a new line of very cheap laptops.
FOOD FOR THOUGHT
A few weeks ago, we noted that Rep. David Cicilline, chair of the House Antitrust Subcommittee, was talking about creating some form of the 1930s Glass-Steagall banking separation rule for big tech companies. Sam Bowman, director of competition policy at the International Center for Law & Economics, thinks that's a really bad idea.
Cicilline is concerned that tech companies have an unfair advantage over others by being able to set the rules and gather data from platforms, and also able to sell their own products on those platforms. That's a completely different issue than the one Glass-Steagall was trying to address. The similarities are barely even cosmetic - it is as if he described the split between male and female athletes as "a Glass-Steagall for sport."
That spurious analogy aside, limits on whether platform companies can sell their own products on their platforms are a bad idea if your goal is cheaper, better products and more choice for consumers. Imagine if we proposed a rule like that for grocery stores. Walmart sells its own brand of milk, but also manages the stores in which other milk brands compete and sell to customers. Would consumers benefit if Walmart either had to discontinue its milk offering, or stop selling milk made by other companies? If not, what is it about (say) Amazon that makes Amazon's store brand products bad for consumers in a way that Walmart's aren't?
FOR YOUR WEEKEND READING PLEASURE
A few great long reads I came across this week:
Reed Hastings: ‘Netflix is still in challenger status’ (Financial Times)
The streaming giant’s co-CEO on his ‘no rules’ culture — and why only world domination will do.
How a Massive Bomb Came Together in Beirut’s Port (New York Times)
Fifteen tons of fireworks. Jugs of kerosene and acid. Thousands of tons of ammonium nitrate. A system of corruption and bribes let the perfect bomb sit for years.
Targeted (Tampa Bay Times)
Pasco’s sheriff created a futuristic program to stop crime before it happens. It monitors and harasses families across the county.
The Democracy Factory (California Sunday Magazine)
For decades, the vote-by-mail business was a sleepy industry that stayed out of the spotlight. Then came 2020.
IN CASE YOU MISSED IT
How 2020 is like a colonoscopy By Aaron M. Sackett
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BEFORE YOU GO
We rewatched the classic Gen Y romcom Nick & Nora's Infinite Playlist last night and it's still just as funny as ever and the soundtrack is 💪🎶. It's also an appropriate love letter to New York City on this 9/11 anniversary. A big scene takes place in the horrid Port Authority Bus Terminal. But do not fret. Architecture firm STV and construction firm AECOM have a plan to bury the terminal and build beautiful parks and buildings on the land. Yes, please. Maybe we'll find Fluffy this weekend.