David Rosenthal: belief

Transcript context

…I'm going to pull forward a playbook theme here. The second-order thing that I don't think they realized by jacking up the price is that now they're picking their customers and they're picking affluent customers. In particular, they're picking customers who have extremely low price sensitivity. What happens when you pick people with extremely low price sensitivity and you select for only people who are willing to throw $2300 post-tax at an exercise bike, they're pretty unlikely to churn even if your fitness subscription is pretty expensive. Even to this day, their annual churn—if you take their monthly churn and annualize it—is something like 9%. This is an unbelievably sticky business. When you look at most consumer businesses they're like 50% annual churn. Yup, as of last summer, they're on a June 30 fiscal year when they reported the last full year fiscal end, I believe monthly churn was like 0. 6%, which worked out to about 7% annual turn. Wow.…

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