During the pandemic, Peloton was a beacon of success, with its stock value soaring as home fitness became a necessity. However, as the pandemic receded, Peloton’s fortunes took a dramatic turn. The company’s stock plummeted, and former CEO John Foley, once a billionaire, saw his wealth erode significantly.
At its zenith, Peloton was valued at an impressive $50 billion. Yet, a series of missteps—including overproduction, product recalls, bad press, and declining interest in its high-cost exercise bikes—caused its valuation to crash. By early September, Peloton’s worth had dropped to $1.2 billion, though a recent stock boost has nudged it closer to $1.7 billion.
Foley’s New Venture
John Foley, now 53, is focused on a new project: Ernesta, a custom rug company he launched in 2022. Though shifting from fitness to rugs might seem unusual, Foley has long been intrigued by the rug market. He reminisces about pitching the idea to investors like Lee Fixel over a decade ago. Initially skeptical, Fixel later invested in Ernesta.
Reflecting on his financial journey, Foley admits that his billionaire status was short-lived, as much of his wealth was tied up in stock rather than liquid assets. He had to sell many of his personal holdings, including a $55 million East Hampton home. Now, Foley is dedicated to making Ernesta a success.
The Rise of Ernesta
Ernesta, based in Manhattan, represents a fresh start for Foley. The company has already secured $25 million in funding from notable investors such as Fixel and John Callahan, who had also backed Peloton. Foley has assembled a strong team, including former Peloton executives, to drive Ernesta’s success in the competitive home goods market.
Foley is optimistic about Ernesta’s future, projecting that the company could generate up to $500 million in free cash flow by 2030. He sees the rug market, which he describes as fragmented and underexplored, as ripe with potential. Despite the challenges of transitioning from a tech-driven fitness brand to a home goods company, Foley believes Ernesta can become a major player in its field.
Reflecting on Peloton’s Legacy
Foley’s tenure at Peloton was marked by both remarkable success and serious challenges. The company’s rapid growth was followed by a steep decline, exacerbated by events like a controversial storyline in the “Sex and the City” reboot, where a character died while using a Peloton bike. This plot twist contributed to an 11.5% drop in Peloton’s stock, complicating its recovery efforts.
Foley looks back on his Peloton experience with a blend of regret and determination. He acknowledges that Peloton, once a symbol of innovation, struggled to maintain its success post-pandemic. After stepping down as CEO in early 2022, Foley witnessed a series of leadership changes and strategic shifts aimed at stabilizing the company.
Foley is now focused on turning Ernesta into a thriving business. His experience with Peloton has made him wary of the public markets, which he believes fail to accurately value companies. He prefers to keep Ernesta private to better control its growth and avoid the volatility associated with being publicly traded.
Despite the difficulties he faced with Peloton, Foley remains optimistic about his new venture. He values New York City’s vibrant business environment, viewing it as an ideal location for launching and scaling a company. Foley’s journey underscores the unpredictable nature of entrepreneurship and his resilience in the face of setbacks.
