Peloton chair and co-founder John Foley resigns

Peloton chair and co-founder John Foley has abruptly resigned from the connected fitness company along with two other executives, in the biggest management shake-up since Barry McCarthy arrived as chief executive in February.

McCarthy told employees of the changes late on Monday, following an turbulent few months in which Peloton announced it was cutting nearly 800 jobs, ended in-house production, replaced its finance chief, and partnered with Amazon to sell bikes and gear independently of its own website.

“Today’s changes are a reflection of personal decisions by leaders who paved the way for our future success, and we owe them our gratitude,” McCarthy told staff in an email provided by the company.

Also departing is co-founder and legal chief Hisao Kushi, along with Kevin Cornils, who joined Peloton in 2018 and has been chief commercial officer since last year.

Foley had already stepped down as chief executive in February, conceding he had made “missteps” by growing the business too rapidly during the first year of Covid-19, when work-from-home trends spurred massive demand for Peloton bikes and the company’s valuation nearly hit $50bn — more than quadruple its initial public offering valuation in late 2019.

As revenues leapt, costs grew even more quickly as Foley rejected the idea that the jump in demand was temporary, telling the board it was “clear as day” that Peloton would become a $1tn company.

It is unclear whether Foley and the other departing executives will sell some or all of their “supervoting shares”, which give a small number of people about 60 per cent of the voting rights in the company.

McCarthy, who had been finance chief of Spotify and Netflix, emerged from retirement to take on the chief executive role in February, telling the Financial Times he had experience “staring down the barrel of darkness and despair”.

It has not been an easy fix. Losses have widened and Peloton’s stock is down 71 per cent following an initial pop when McCarthy was hired. It is now valued at under $4bn.

Foley, who was chief executive for a decade beginning in 2012, said in a press release that the board supports the shake-up and he promised customers they would be “delighted” by new products, including a rowing machine, expected to go on sale in the coming months.

Foley will be replaced by Karen Boone, who joined the board in 2019. She was previously president of home furnishing group Restoration Hardware and is the audit committee chair of electric truck group Rivian and speaker company Sonos.

Kushi is being replaced next month by Tammy Albarrán, chief deputy general counsel at Uber. Peloton describes her as “the lead architect” of the Silicon Valley group’s cultural reset.

It is not immediately clear if McCarthy and Foley see eye to eye on Peloton’s future. But speaking to the FT in February, McCarthy made it clear that he was only taking the job on the understanding that the buck stops with him.

“To be unambiguously clear, I’m the chief executive officer,” he said. “The decisions land on my desk. And if there’s a disagreement between us about the path forward, I get the last vote.”