Peloton's new CEO is joining the fitness company at a difficult time. Exercise bike sales are slowing, stock price is declining and takeover rumors are swirling. On Tuesday, the company announced plans to cut 20% of its corporate positions.
But new chief executive Barry McCarthy has a history of helping transform companies. McCarthy, 68, is the former chief financial officer of both Spotify and Netflix, and he's served on the boards of companies ranging from Pandora to Rent the Runway and Instacart.
McCarthy was an early employee of Netflix, joining the tech company in 1999, two years after it was founded by current CEO Reed Hastings. McCarthy served as chief financial officer until leaving in 2010 — and during that time, he helped shift Netflix from mailing DVDs to the online streaming business that has since helped disrupt the entire entertainment industry.
When the company's online streaming service first launched in 2007, it only had about 1,000 films available to stream, compared to roughly 70,000 titles on DVD. But McCarthy remained confident: In March 2008, he told Reuters that Netflix would be the market leader for streaming movies online, even ahead of larger tech companies like Apple and Amazon.
We're making it easier for you to find stories that matter with our new newsletter — The 4Front. Sign up here and get news that is important for you to your inbox.
The plan, McCarthy said, was to make Netflix's platform as widely available as possible. "We'd like to be on as many platforms as possible," he said. "If you buy an electronic platform and you're able to access Netflix content on your TV because it's on that set-top box, that's great."
At the time, McCarthy said bundling physical movies and streaming services would help Netflix stave off any competitors in the online streaming market. His reasoning, according to Reuters, was that streaming technology was still new — and it was often slow and unreliable. Pairing it with DVD rentals would keep customers in pocket long enough for the streaming technology to improve, McCarthy reasoned.
By 2009, Netflix's movie streams were already outpacing DVD shipments. Streaming quality had indeed improved by then, and Netflix already had more than 12,000 streaming titles. Today, that number is over 13,600, and Netflix produces hundreds of its own movies and shows each year.
Since McCarthy's comments, Netflix's valuation has skyrocketed from around $2.3 billion to more than $175 billion. Rivals like Amazon, Apple and traditional entertainment companies have rolled out their own online streaming platforms in the hopes of knocking Netflix off its pedestal atop that market.
Peloton also faces stiff competition — from both gyms and other at-home fitness brands like Tonal, Hydrow, and Lululemon's Mirror. The New York City-based company's recent struggles have also ignited speculation over a potential takeover, with possible suitors ranging from Apple and Amazon to Nike. But at least for now, McCarthy doesn't seem interested in leading Peloton through an acquisition.
"As a passionate Peloton member, I have experienced firsthand this fantastic company's mission and believe there is enormous potential for the platform," he said in a statement on Tuesday. In the same statement, he promised to "take the business to the next level."
Sign up now: Get smarter about your money and career with our weekly newsletter
Netflix didn't kill Blockbuster — how Netflix almost lost the movie rental wars
VC who's backed companies like Peloton: My best advice for growing and scaling your side hustle