🚴 How Peloton fell off

While most companies struggled early in the pandemic, Peloton was increasing its forecasts. Now, the connected-fitness pioneer is doing the opposite.

In its Q4 earnings call, the company posted a $313.2m loss, and a lower-than-expected forecast for Q1 2022.

So what happened?

The trouble started with delivery delays

After the pandemic forced many gyms and fitness centers to shut their doors, Peloton saw a flurry of orders that they weren’t prepared for.

While Peloton has been called a cult for its devoted customers, the shipping delays sparked the 1st crack in its reputation. At the height of the delays:

• 10k people joined a Facebook group dedicated to Peloton delivery problems
• 1.1k complaints were registered through the Better Business Bureau

Customers frequently complained that delivery of their new bikes would be canceled and rescheduled far in the future.

Peloton took the issue seriously and invested $100m+ to expedite deliveries.

Then came the treadmill recall

In May, Peloton recalled its Tread and Tread+ machines after reports of numerous injuries and a child’s death.

The company also offered full refunds to any customers who wanted to return their treadmill — and more customers took advantage than the company expected, doing damage to the balance sheet.

Now, the company is cutting prices to drive customer acquisition

The company announced plans to lower the price on both its signature bike and treadmill:

• The Bike will drop from ~$1.9k to ~$1.5k (though the Bike+ will hold at ~$2.5k)
• The Tread will sell for ~$2.5k compared to the original Tread+, (which sold for ~$4.3k)

Peloton CEO John Foley believes the Tread will outsell bikes by 2x-3x, and a recent report suggests the company is working on a connected rower as well.

If Peloton can keep both products safe, and figure out its delivery woes, we may just be looking at a momentary blip.

THE BREAKDOWN

• Problem: 400m people in the world have a rare disease. There are 7k rare diseases — 95% of which have no FDA approved treatment.
• Pitch: Healx uses AI to identify existing, clinically approved drugs that could be repurposed to treat rare diseases.
• Timeline: David Brown and Tim Guilliams founded Healx in 2014, and the company raised a $56m Series B in 2019.

Healx isn’t David Brown’s 1st foray into drug development. The dude’s a big deal in pharmaceuticals — he co-invented Viagra in the ‘90s.

Viagra, though, was discovered by chance

Brown and his team at Pfizer created a drug they thought could be a treatment for cardiac chest pain, but early trials returned disappointing results.

Weeks away from getting the axe, an interesting side effect popped up: the participants had all experienced increased erections.

Brown pivoted immediately and began a new trial for what would later become Viagra.

That happy accident informed the concept behind Healx

The UK-based startup doesn’t actually develop new drugs but uses its AI platform, Healnet, to match existing drugs with the world’s 7k rare diseases, 95% of which don’t have approved treatments.

AI that enables the repurposing of current drugs can save time and money:

• The cost to develop a prescription drug surged 145% since 2003 to $2.6B
• Existing treatments for some rare diseases can cost millions out of pocket

It’s hard to beat the legacy of the little blue pill, but we think the potential to cure the millions of people affected by rare diseases — 50% of whom are kids — is just epic.

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Next time you grab for your fly swatter, you may want to reconsider.

Insectta is a Singapore-based startup using fly larvae to fight food waste.

The company set out to solve a local problem. In 2020, Singapore had 665k metric tons of food waste, and only recycled 19% of it.

So how do the flies help?

Insectta feeds its flies ~8 tons of food waste per month, creating 2 byproducts:

1. Flash-drying the bugs creates animal feed
2. The insects’ waste can be converted into fertilizer

The firm isn’t alone: Goterra, Better Origin, and AgriProtein also utilize insects to convert food waste into agricultural products…

… but Insectta is looking beyond fertilizer and feed

The company developed technology to remove biomaterials from the insects, like chitosan, which can be used in moisturizers and other cosmetic products.

It’s all part of the company’s mission of leaving nothing to waste, which seems like a mantra that could grow far beyond Singapore in coming years.