Barry McCarthy indicators up for powerful exercise as Peloton chief

Barry McCarthy desires to trim Peloton into form.

The health bike firm has been “grossly mismanaged” due to its earlier chief govt John Foley’s “unbridled optimism” and a tradition of extra, in response to the activist investor who helped oust Foley this week.

Enter McCarthy, 68, a scientific number-cruncher who has constructed his four-decade profession by working because the grownup in a room of unpredictable tech founders.

McCarthy this week took over as Peloton chief as a part of a serious restructuring on the firm, which had been valued as excessive as $50bn within the depths of lockdowns, however has misplaced greater than 70 per cent of its market worth previously yr.

Reed Hastings, co-founder and chief govt of Netflix, is assured his former colleague can resuscitate the enterprise. “If anybody can flip Peloton into Tesla, it’s Barry,” Hastings advised the Monetary Instances. 

In typical McCarthy style, his first missive to Peloton workers was to “get actual”. 

“The laborious reality is both income needed to develop quicker, or spending needed to shrink,” McCarthy advised Peloton workers this week in an e mail seen by the FT. “We’ve got to be prepared to confront the world as it’s . . . even when the reality is uncomfortable or inconvenient.” 

Up to now, his reception has been combined. Wall Avenue analysts price him, however his phrases haven’t gone down nicely internally.

McCarthy sought to introduce himself at a digital city corridor on Wednesday. However he was met by rowdy, annoyed Peloton workers — together with a few of the 2,800 who had been laid off as a part of the restructuring — who despatched sarcastic messages in a chat-box for the occasion, in response to screenshots seen by the FT.

McCarthy declined to speak to the FT for this story.

As finance chief at Netflix in its early days, McCarthy constructed the corporate alongside Hastings. In a now notorious story, Hastings and McCarthy in 2000 tried to promote Netflix to Blockbuster, which was on the time the king of dwelling video. However after flying to Blockbuster’s Texas headquarters with their supply, they have been “laughed out of the room”. 

McCarthy had the final snort. Netflix would go on to topple the house video rental enterprise and a decade later Blockbuster was bankrupt. “Barry is so sensible that he found out earlier than the bond market that Blockbuster was going to blow their covenants,” Hastings quipped.

Netflix, in the meantime, went on to turn into one of the crucial profitable shares in latest reminiscence, growing its market capitalisation from $200mn at its 2002 public providing to $190bn immediately.

McCarthy later took on the highest finance job at Spotify, the place he constructed a status as a plain-spoken, numbers-oriented govt, incomes the nickname “professor Barry” internally.

“Barry is not any bullshit,” stated a former colleague at Spotify. “Individuals typically wish to spin issues or use corporate-speak or hype one thing up. Barry will give it to you straight.” 

Regardless of all his high-profile skilled expertise, little or no is publicly identified about McCarthy’s private life. “He doesn’t share a lot,” stated one former colleague who labored carefully with McCarthy for a number of years.

What we do know is that he studied historical past at Williams School in Massachusetts and some years later acquired his MBA from the College of Pennsylvania’s Wharton Faculty, earlier than beginning his profession buying and selling mortgage-backed securities at Credit score Suisse within the Eighties.

On LinkedIn, McCarthy has listed all 19 of his job titles since 1980, together with a six-month stint at failed funds start-up Clinkle, a uncommon mis-step on his resume.

As Hastings recalled, McCarthy left Netflix in 2010 as a result of he needed to be a chief govt. With no path to the highest job at Spotify both, McCarthy went into semi-retirement in 2019, leaving New York for California and sitting on the boards of corporations comparable to Instacart.

Now at 68, he has lastly achieved his aim — albeit at an organization in turmoil.

After using excessive in the course of the pandemic as a approach to train whereas caught at dwelling in lockdowns, Peloton has been hit by slowing gross sales, provide chain points and public relations crises.

With the corporate valued at about $12.5bn, Amazon, Nike and others are circling it as a discount purchase.

McCarthy’s Spotify playbook could show helpful for Peloton, which has been criticised for its bloated bills. When McCarthy joined Spotify in 2015, stress was mounting from personal fairness group TPG and different early Spotify traders for a pay-off, both by way of an IPO or a sale. Chief govt Daniel Ek, then a 32-year-old tech entrepreneur from Sweden, didn’t have a lot expertise with Wall Avenue.

Inside two years McCarthy helped restructure Spotify’s prices to make its margins extra palatable to traders, trimming its royalty funds to the music trade from 88 cents per greenback in 2015 to 79 cents in 2017.

McCarthy was additionally the architect of Spotify’s unconventional path to going public by way of a direct itemizing — once more discovering a manner to economize by circumventing the normal function of funding banks in an IPO.

“He’s superb at being price disciplined,” summarised Reid Hoffman, co-founder of LinkedIn, who has identified McCarthy since his Netflix days.

“Provide chain could also be one thing the place Barry wants assist, however the fiscal aspect of issues, what does the P&L truly appear to be? Barry is nearly as good as they arrive.”

Extra reporting by Patrick McGee and Andrew Edgecliffe-Johnson