Peloton generates momentum as it grows, which is an exciting prospect for a business. Its flywheels revolve around its passionate members both in terms of growth and retention. The more members they add, the more valuable the network becomes, and the longer they stay. The longer they stay, the longer they extend this virtuous cycle.
The most obvious flywheel effect Peloton demonstrates is social. An enthusiastic Peloton member recruits a friend to join a workout with them or signals their fitness virtues on social media. This creates a viral engine of organic growth, while establish belief and bandwagon network effects.
In terms of product, a bigger audience enables more data insights to test new content, attracts better instructors for exposure, and spins off more cash flow for R&D on new products, fitness modalities, and partnerships.
Economies of scale also enable lower fixed costs per user in everything from content creation to supply chain to financing. This allows them to spend more gross dollars on product, marketing and community, thereby strengthening the product offering to current and prospective members.