Fighting the Temptations of Scaling

The main story

Pandemic favorite Peleton faces an uphill future after news of store closures, production pauses, and rumors of job cuts circulate.

On Tuesday, January 18th, a leaked audio recording revealed Peloton’s plan of laying off 41% of sales and marketing teams while hiring management consulting firm McKinsey to help review cost structure.

The news was recently followed by official announcements of two production halts - two months for its entry-level Bike and six weeks for its Tread product.

As of last June, Peloton employed 6,743 people, more than double the employee count from a year earlier.

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Teachable Moment

It’s easy to kick a horse while it’s down, but there’s a valuable lesson to be learned here about the temptations of scaling.

When your business is doing well, your natural inclination will be to keep it that way.

This means adding more resources, more marketing, and more promises to sustain your previous level of success.

The idea is intoxicating, as it’s a natural assumption that “more” will always lead to better.

In situations like these, you have to prepare for the eventual ride down and for what’s at risk when demand balances out.

Learn to produce more with less and maximize your existing resources.

The alternative is a hill you don’t want to ride on.