How Peloton went from being Porsche to being Honda with one advertisement

Peloton.

Everyone knows the story now.

It's so omnipresent that Peloton was the punchline to two SNL jokes last night and even Ryan Reynolds is using the attention to sell gin.

This situation was bound to happen.

Maybe not with all the jokes, memes, and most certainly future MBA marketing case studies. But once Peloton went public, the company had no choice but to go broad, wide, and average.

Mass revenue generation and shareholders demand going mass market, seeking commoditization, and securing the mushy middle of consumers - hence this ad.

Peloton used to mean fierce, independent, sexy, and aspirational. This new comms effort is all about timorous, dependence, sensible, and apathy.

Hence why this ad is so disappointing, off-the-mark, and brand negative.

It should be no shock that shares dropped as much as 15 percent with the final trading share price removing almost $1.5 billion off the value of the company.

The Financial Times' How To Spend It magazine says: "Yes, they have the sexiest carbon-steel stationary bikes on the planet."

But sexiest is only good enough for 1.4 million members - current company claims on its ridership and engagement.

Founder John Foley's public aim is to reach 50 million people in new markets.

But consider the current market for bike/treadmill owners is believed to 34 million.

So Foley and his team need to acquire 100 percent of this current market and still add 16 million more people.

This move to add so many new customers moves the company from being Porsche to being Honda.

Seth Godin talks about this frequently:

"Marketers must learn to shun the non-believers and only focus on the people at the edges who will be prepared to listen and engage with your product.

“The challenge in marketing a commodity is that you are in a race to the bottom, and the problem with a race to the bottom is that you might win. Even worse you might come in second. If you are a mass marketer your goal is to make something that normal people want to buy. The problem is that normal people are ignoring you because they have chosen to be normal and what it means to be normal is that they are able to ignore you.

"What we should be saying is that we are going to make stuff for people who get us. We have to shun the nonbelievers and say it’s not for you.”

It is not wrong and not without merit to have goals to build a huge brand, have millions of customers globally, and chase billions in market capitalization - it is just that the company you want doesn't mean the market is there.

In 2018, worldwide sales of Porsche cars reached a new record of 256,255 vehicles. Honda, on the other hand, sold nearly 5 million vehicles.

Porsche can't be Porsche by seeking Honda vehicle sales.

- Marc

Marc A. Ross is a business strategist and communications advisor working at the intersection of globalization, disruption, and politics. Ross is the founder of Brigadoon.

Vehicle design and urban mobility

Vehicle design and urban mobility have been on my mind a lot lately. In fact, two of the guest speakers at Brigadoon salon dinners last fall led discussions on the intersection of moving people with transport and moving people with design.

Growing up in Detroit I have had a long love affair with the automobile. Both of my grandfathers worked at the famous Ford River Rouge plant and my father was a senior executive at an auto components company. I grew up with the Big Three and many members of my family were employed and able to build a rich life because of the car.

I have always loved being in a car - so much so I couldn't wait to drive. I would frequently take one of my family's car on little spins around town even before the great state of Michigan officially sanctioned such behavior. Even today I find a road trip to be one of the most pleasant experiences.

But that seems to be all changing. The desire to get behind the wheel - heck even owning a car seems antiquated these days.

Young people are not getting driver’s licenses so much anymore. In fact, no one is.

According to a 2016 study by Michael Sivak and Brandon Schoettle at the University of Michigan Transportation Research Institute, the percentage of people with a driver’s license decreased between 2011 and 2014, across all age groups. For people aged 16 to 44, that percentage has been decreasing steadily since 1983.

It’s especially pronounced for the teens—in 2014, just 24.5 percent of 16-year-olds had a license, a 47-percent decrease from 1983, when 46.2 percent did. And at the tail end of the teen years, 69 percent of 19-year-olds had licenses in 2014, compared to 87.3 percent in 1983, a 21-percent decrease.

Among young adults, the declines are smaller but still significant—16.4 percent fewer 20-to-24-year-olds had licenses in 2014 than in 1983, 11 percent fewer 25-to-29-year-olds, 10.3 percent fewer 30-to-34-year-olds, and 7.4 percent fewer 35-to-39-year-olds. For people between 40 and 54, the declines were small, less than 5 percent.

Kara Swisher penned her March 2019 New York Times column with the headline = Owning a car will soon be as quaint as owning a horse - The shift away from private vehicles will happen faster than we think.

In business as in politics, it is important to be mindful that demography is destiny and the trend is your friend.

So what do the trends of fewer people getting driver’s licenses and a major thought leader using the word quaint to describe car ownership mean for the future of vehicle design and urban mobility?

I have some ideas, but I am not completely sold on my viewpoints. I am fully aware I biased because I love a car and the freedom and purpose it provides. At the same time, I know living in a dense urban core is far different than living in a sprawling suburban metroplex.

Just last week I took a meeting just outside the gates of the White House and used a water taxi and a shared pedal-assist electric bike to get there.

My transport choices have come a long way from breaking the law to go on a joyride.

Even if you live in a one-vehicle household like me, it is clear at certain times we want some private mode of transportation as well as access to shared and public modes of transportation.

In the editor's letter at the start of June's Monocle magazine, Tyler Brûlé recalls his experience in Milan where one of his most interesting observations came for an industrial designer who proclaimed that mobility design isn’t going to be all liquid, streamlined shapes but that, rather, we’re heading for a very boxy future.

“As speed isn’t going to be the key aspect for future personal mobility, we don’t need to have pointy vehicles,” said the designer. “City roads will all have speed limits that will be 30km/h – max. This means we’ll be looking for space efficiency and that will mean boxy shapes allowing for more headroom, bigger doors, and more seats. For designers and auto brands this is a huge challenge as differentiation will be very difficult: a box is a box is a box.”

Brûlé suggested the designer seemed frustrated by the challenge ahead for transportation but it could be argued that the industry has already found itself in a place that’s not far from where mobile-phone design has ended up.

Just as a Huawei device looks very similar to an iPhone as well as any Samsung smartphone, the same will probably happen to automotive design: shared designs and similar shapes produced in the same factories but with different badges.

If our vehicles of the future do end up being boxier, more of the same, and less unique, Brûlé suggests it likely that much of what will make transportation experiences more premium will be what happens on the outside. That is, where our vehicles are taking us and hopefully allowing us to pursue other more productive tasks than crawling through commuter traffic.

Regardless of the shape and speed of the vehicles of the future - to make any of this successful and useful will call for proper infrastructure.

As cities figure out how to get more people off the road, they need to make public transportation and shared options feel more premium and more useful.

- Marc

Marc A. Ross is a strategist and advisor working at the intersection of globalization, disruption, and politics. Ross is the founder of Brigadoon.

The bored room

Ideas are rarely built in a boardroom.

A boardroom is a place of CYA, one-upmanship, committees, factions, spreadsheets, cost allocation analysis, and financial statements.

A boardroom is ties, suits, starched collars, wingtips, multiple chairs that are hardly ever comfortable, massive tables which ensure friction.

At one startup I worked at when the founders gleefully told me they had purchased a proper boardroom conference room setup, I knew our days were numbered.

The best ideas come when you step out of the office.

For me, it could be a walkabout, on a chairlift, watching a documentary, listening to jazz, seeing world-class art, or behind the wheel.

One time on a drive through the Virginia countryside I had conjured such a brilliant idea it cost me a speeding ticket.

I was so in the zone, DJ Doran: Monuments blasting from the sound system, high on Red Bull and PayDay.

There it was - boom - a brilliant idea literally speeding across my mind.

The state trooper was unfazed at my sensational out of the boardroom idea generation tool, he told me to slow down and pay a fine.

What's your idea generation tool?

By stepping out of the boardroom and into a more realistic, actual #IRL situation, and awe-inspiring setting, you allow yourself the freedom to generate new ideas.

Boardrooms are all about hierarchy, who sits where, who can speak when, status, seniority, and pressure to maintain a serious meeting vibe.

Far more important to find an environment and develop a culture where everyone feels safe to be heard and unfamiliar concepts are welcome.

I grew up with an active family dinner table discussion.

Growing up, we had to go around the table and announce five things we learned that day.

This taught me that regardless of age or station all voices at that table were equal and we were encouraged to share ideas and concepts from politics to sport from business to culture - frankly anything.

The exercise wasn't about the content, but about the ability and freedom to recognize and share ideas.

It's hard to know when or where your next great idea might come. But stepping out and embracing life around me has been a positive tool to generate new ideas.

From a walkabout on the shores of the Potomac River or a drive on VA State Route 20, chances are for me, it won’t be in a bored room.

-Marc

Marc A. Ross is an advisor and connector working at the intersection of globalization, disruption, and politics. Ross is the founder of Brigadoon.

What Alibaba can learn from Argentina

Alibaba looks wonderful until you realize it is protected from Amazon in its home market of China.

Is Jack Ma up to the challenge of Jeff Bezos?

Possibly.

But we will really never know.

How to properly manage the balance between protection and competition has been a challenge for governments for centuries.

Leaders know the steps you take to build a modern, world-class economy matters - do you protect it with subsidies and limiting market access or do you challenge it with trade and open market access?

Time and again those nations that challenge their home companies to be competitive globally are the most prosperous and most successful. Germany, the United States, Britain, Japan, and Italy are all prime examples.

In the 1930s, Argentina ranked among the ten richest nations in the world, after the likes of Australia, Britain, and the United States, but ahead of France, Germany, and Italy. With all the benefits of land, natural resources, and immigration, Argentina should have been able to maintain its position on this table and even possibly overtake the United States.

As it now stands, we know how this turned out for each country.

Argentina chose protectionism while the United States chose competition.

China and the leadership of Alibaba should consider Argentina and grasp that what looks good and sensible today, may not last forever.

-Marc

Marc A. Ross is a strategist and advisor working at the intersection of globalization, disruption, and politics. Ross is the founder of Brigadoon.