I share a checklist with my MBA students @ Columbia on the requisite conditions to strategically justify backward or forward integration. High on that list is whether the proposed acquisition allows the acquirer to meaningfully improve and differentiate their products (as recognized and rewarded by consumers in increasing their WTP).

Examples of successful applications of this test certainly include Apple’s forward (retailing) and backward (chip design, OS software) integration. Favorite examples of nonsensical integration that I encountered in my consulting career include Coors owning its own canning operations and VW growing its own lettuce on campus for its corporate dining room.

IMHO, Peloton not only failed this test with its acquisition/organic investment binge in manufacturing/delivery assets, but given the massive uncertainty in post-pandemic demand, this was a SERIOUS case of FDS: founder delusion syndrome (coupled with a feckless board that had ceded its voting rights).

My first reaction to hearing about the first (of many) Peloton layoffs from their peak employee count of 14,000 was "Why on earth does a connected (as in virtual) fitness product company need so many employees? " Short answer: They didn't!