Flywheel, like its competitor SoulCycle, is largely a studio-based model, with 43 studios nationwide; Peloton is almost entirely home-based fitness classes with the exception of one cycling studio in Manhattan where the classes are live-streamed hourly.
Flyweel launched its FLY Anywhere home platform in November, 2017. Like Peloton, riders can buy the home cycle with a screen and then pay a monthly subscription fee for content or just ride any stationary bike and stream the subscription content on a mobile device or streaming system.
In a December interview previewing the treadmill launch, CEO John Foley said he was not concerned about competition in the stationary cycling space. This is an exerpt:
Soulcycle and Flywheel are fantastic brands and big brands and known national brands for the studio space. They operate great studios and hire instructors and run the local studios. In order for them to become a hardcore technology shop like Peloton, there is a lot that needs to happen. I would not give them a good chance of doing all those things that executionally need to happen to reinvent yourself or reinvent your DNA as an innovation and technology company, which Peloton started as.
I don’t want to be cavalier about the competition. I think that there will be real competition, but from my perspective we would be more worried about a technology company, call it an Amazon, coming into our space, versus a content company trying to figure out what Peloton does. It just doesn’t feel like it’s a viable threat, but we’ll see what happens.
The lawsuit also claims that Flywheel received proprietary information from Peloton via Michael Milken, whose claim to fame was pleading guilty to violating securities laws back in 19990. Milken and Foley met at an invitation-only, J.P. Morgan investor conference.
Foley was pitching to the conference of investors and allegedly spoke to Milken afterward about potentially investing in Peloton. In the conversation, the suit alleges, “Milken held himself out to Foley as an interested, potential investor in Peloton and pushed for information on topics including Peloton’s future business plans and strategy, and how or whether Peloton could protect its intellectual property and exclude others from the at-home cycling business.”
Milken did not, allegedly, disclose that he was a major investor in Flywheel. Milken is not a defendant in the suit.
Flywheel has so far not answered requests for comment.