EJ: The countdown to the next crisis of The System has started.

[EJ]

Re: EJ: The countdown to the next crisis of The System has started.

1. never is an exceedingly long time

2.Turns out Peloton is burning cash as quickly as its users burn calories. ... In its fiscal 2018 year, which ended just two months after that interview, on June 30, Pelotonposted a net loss of $47.9 million. In fact, according to its S-1, Peloton posted net losses for the past eight consecutive quarters.Aug 28, 2019

3. i think virzoom has a MUCH bigger potential market than a $2000 stationary bike.

Peloton is a very different kind of business than VirZOOM. Both are in the connected fitness space and have recurring revenue models, but the similarity ends there.

The Peloton business model requires massive capital investment to pay for manufacturing, distribution, installation and support of a combination of a spin bike and custom tablet, with an estimated COGS of $2,000, and production of streaming spin class content at studios that entails celebrity instructors, producers, and production teams. To reach the audience of $100k+ annual household income customers they target, many millions of dollars needs to be spent on high production values advertising. Peloton’s Customer Acquisition Cost has been estimated at $500, which with a $40/mo subscription implies an average CAC Payback Period of 12 months, quite high by average SaaS standards, and only if monthly churn rate was zero. A company with such a high CAC and long CAC Payback Period is churn-sensitive: our models estimate that Peloton has to keep the monthly churn rate under 1% to hope to ever become cash-flow positive.

Unit and SaaS economics are unforgiving. If the unit and SaaS economics aren’t there to support positive cash flow, doesn’t matter how much capital you input into a SaaS revenue machine, you will always get less out of it. I expect that companies that cannot show a clear path to profitability and burn cash at the rate the Peloton does may face challenges as market and economic conditions that were present at the time Peloton went public deteriorate. Also, at $2,200 Peloton is a luxury discretionary purchase, and these typically do poorly in recessionary periods. The 7.7% decline in PTON stock today likely reflects that. VZfit as an inexpensive add-on ($99 sensor + $150 VR headset) to existing fitness equipment with a $10/month premium membership compares favorably as a substitute to, for example, a Lifetime Fitness $80 initiation fee and $62/month membership fee.

VirZOOM's business model is more similar to Zwift's than Peloton’s: the value is in the content. At this stage of the VirZOOM’s development, on seed stage level funding, the goal is to prove compelling unit and SaaS economics, and capital efficiency, then raise institutional funding to scale the business: Customer Acquisition Cost, Customer Lifetime Value, CAC/CLV ratio, CAC Payback Period, Trial-to-Paid Conversion Rate, Retention Rate, and Churn Rate all have to be proven. These ultimately determine the potential for positive cash flow at scale.

So far most of these metrics are proving favorable comparable consumer mobile SaaS business comparables. For example, the average Trial-to-Paid conversion rate across all application types within the category is 26%. For VZfit it's 92%. Our CAC/CLV ratio is comfortably mid-range for a SaaS business, and our CAC payback period (you don’t start to actually make money from memberships until you cover your CAC) is very favorable compared to others, and about 1/4 of Peloton’s.

The premise of VirZOOM is that VR, by virtue of being immersive, is a fundamentally superior medium for fitness motivation over flat screen solutions. In the words of an Evening Standard reporter, ”a kind of next gen immersive Peloton.” Also, the range of physical activities that consumers can engage in with VZfit is nearly infinite (running, biking, flying, racing, battling, etc.), rather than confined to spin classes and online racing ala Zwift. At the end of the day, Peloton is still a single-app connected fitness platform. A number of Peloton users report getting tired of it and adding VZfit. They can be found in social media posts and Amazon reviews about VZfit. Some of our high net worth customers invest.

In this MarketWatch segment I make the case for VR as the future of connected fitness.

The primary VZfit adoption rate factor is the rate of VR adoption. The mass media plays a critical role.

During a period of slow VR sales after the peak of the hype cycle in 2017, positive mainstream media coverage of VR was rare. The recent market success of the Oculus Go and Quest 2nd generation mobile VR platforms is now encouraging journalists to revisit VR; for example, this recent Washington Post article on VirZOOM that was also published in The Independent.

Still, while Gen2 mobile VR addresses cost, complexity, and some of the weight issues of Gen1 tethered VR, one more generation of VR is needed before mass market adoption can occur. A reporter for a major women’s health magazine who declined to cover VZfit after she tried it after attaching our VZfit loaner to her Peloton bike. She told me after trying it that she is “convinced that VZfit will make my Peloton obsolete” but that her readers are not going to wear a VR headset that “makes you look like you’re wearing a toaster on your face.”

Qualcomm announced the next generation XR2 AR/VR chip set in December 2019. The design concept for the next generation of VR headsets based on this chip set is included in the PR: glasses-like headset for display, position tracking, and hand tracking tethered via 5G to iOS or Android device where the heavy CPU/GPU processing takes place.

If there's interest, let's continue the VirZOOM discussion on the VirZOOM forum.

Other recent VZfit press:
https://www.thegamer.com/virzoom-vzf...latform-review
https://www.vrfitnessinsider.com/vzf...irtual-reality

[gugion]

Re: EJ: The countdown to the next crisis of The System has started.

a reason to be optimistic:

a doctor friend of a doctor friend of mine spent several weeks at lackland afb, caring for the passengers of the diamond princess as well as wuhan evacuees. he described the cruise ship group as essentially geriatric, with a lot of medical comorbidities. he reported that their fatality rate was 1%. in general, he said, people get either no symptoms or the symptoms of a mild cold.

the doctors there, chatting among themselves, agreed they's rather get covid-19 than influenza a.

i find the diamond princess observations particularly compelling- you have a defined group of highly vulnerable people who have all had a high level of exposure to the virus. this is a natural experiment of the highest order.

Interesting, thank you. Curious did they know which "strain" of Covid-19 they had? I read there are two strains, one that started in China is the deadly one and the one that mutated is the one you may be talking about on the cruise. Any idea which strain that was, the bad or "not so bad"? Thanks in advance.

[kbird]

Re: EJ: The countdown to the next crisis of The System has started.

Here's the economic COVID-19 economic forecasting problem in a nutshell: the modern global economy is predicated on the free movement of people -- along with goods and capital -- among and within national borders, yet effective management of a global pandemic may prove to demand opposite on a global and national level.

This inherent contradiction will continue to play out somewhat chaotically, and markets will reflect unpredictable short-term and and long-term economic and political consequences.

The title of this thread is "the countdown to the next crisis of The System has started." It seems like the coronavirus presents a huge deflationary shock resulting in declining cash flows for companies and governments alike. Is this likely to cause a recession (it seems increasingly so to me) and, if so, are the financial markets currently experiencing the ka before a large poom in the form of a balance of payments crisis for the United States?

[LargoWinch]

Re: EJ: The countdown to the next crisis of The System has started.

Private companies do not publish their financials. One of the advantages of being private over public is that you can avoid sharing information that competitors can use against you. To protect the company and investors, we do not and should not publish these. We issue detailed, confidential financials to our investors quarterly, and share these with prospective investors under NDA. We felt comfortable sharing the unit sales growth rate because it reveals growth without disclosing financial information that is inappropriate to share on a public forum.

How convenient Eric. I am fully aware of how private companies work and operate, thank you.

My point is that you are disclosing irrelevant and/or insignificant selected financial information about Virzoom. This is done to shed a positive light on your company (to which you have obviously a significant and material interest) to a group of actual and/or potential investors in this forum.

I simply want all iTulipers to be aware, that the information provided is just that: irrelevant and potentially misleading to the assessment of a private company that is Virzoom. I hope no one believes this straw man of a metric unless full due diligence is performed on the company.

Further, I suspect (again, not having seen the F/S) that Virzoom has not made a single profit since being launched on or around Feb. 2015, that is 5 years ago. At the time, $4.73m in securities was sold but somehow, there was a need to "relaunch" iTulip for the sole purpose it appears was to raise funds for Virzoom Inc.

Again, without full financial disclosure, no one not privy to the company performance can assess the company, but I am willing to review the financials (under NDA) and then "make market" (i.e. offer a bet) on the fact that iTulipers (if any) who invested in Virzoom will never make any money. That assessment is based on the chain of event above, public review about the company's product, management and common sense.

[LargoWinch]

Re: EJ: The countdown to the next crisis of The System has started.

My understanding of the underlying reason for the success of Peloton is that they have, for some considerable time now, been spending a fortune on marketing; particularly TV advertising, with advert after advert throughout the evening, and no one needs to tell me that costs a lot of money . . . a lot of money.

So what? Who cares how they succeed? My point is that Peloton is so much more successful than Virzoom than they cannot even be compared. They are not from the same universe. Now, I am not endorsing Peloton in any way as I personally think that it is a dumb business model. It happens that I view Virzoom as a much more dumber business model.

There is a very distinct line between a business led by the likes of EJ, and the likes of a Peloton where, it seems certain, their investors have taken up the challenge to fund a marketing exercise that will lead to dominance in their marketplace. Correct me if I am wrong, there has been no evidence that EJ has asked anyone here for that level of funding support.

You can stand corrected Chris: EJ has seeked recently and is potentially still seeking (not today but at a later time) funds from iTulipers to fund Virzoom:

iTulip Select Perks Offering -

$375 Investment in VirZOOM for 1-Year FREE iTulip Select Subscription

$600 Investment in VirZOOM for 2-Year FREE iTulip Select Subscription

$1,000 Investment in VirZOOM for 5-Year FREE iTulip Select Subscription

I will add that the manner and timing of this offering is highly suspicious to me and should raise several "red flags" for potential investors.

There are always more than one way to look at how to make progress with a new business; some take a much longer, slower view than others. Both can work, both can succeed. Both deserve respect.

No they don't. A bad idea is just that; a place where good money dies. Bad ideas deserve no respect and certainly no capital from investors. In my book, Virzoom fits that bill in spades as it is a stunningly bad idea.

[kbird]

Re: EJ: The countdown to the next crisis of The System has started.

Bad ideas deserve no respect and certainly no capital from investors. In my book, Virzoom fits that bill in spades as it is a stunningly bad idea.

Nobody is forcing you to invest in Virzoom or to post on itulip. I would add that your comments and tone reflect far more poorly on you than they do on EJ.

[LargoWinch]

Re: EJ: The countdown to the next crisis of The System has started.

Nobody is forcing you to invest in Virzoom or to post on itulip. I would add that your comments and tone reflect far more poorly on you than they do on EJ.

That is true kbird and the same applies to you. If you want to invest in doomed private ventures, then suit yourself. I am expressing my deep concerns about Virzoom to prevent any further losses from iTulip members who suffered enough already. I am further expressing dismay at behaviour that I would consider "borderline unethical".

I think you do not like my message, which is irrelevant to my "tone" and that is why you are reacting this way. Instead, why don't you convince me - through reasoning and argumentation - that my arguments are wrong instead of spewing insults my way (reflecting poorly on you my friend, not me)?


edit: I would add that ad-hominem attacks such as yours have been severely enforced on iTulip in the past. We shall see.

[LargoWinch]

Re: EJ: The countdown to the next crisis of The System has started.

The title of this thread is "the countdown to the next crisis of The System has started." It seems like the coronavirus presents a huge deflationary shock resulting in declining cash flows for companies and governments alike. Is this likely to cause a recession (it seems increasingly so to me) and, if so, are the financial markets currently experiencing the ka before a large poom in the form of a balance of payments crisis for the United States?

kbird, are you really referring to "ka" and asking about it ... in 2020?! Please say no more.

[EJ]

Re: EJ: The countdown to the next crisis of The System has started.

a reason to be optimistic:

a doctor friend of a doctor friend of mine spent several weeks at lackland afb, caring for the passengers of the diamond princess as well as wuhan evacuees. he described the cruise ship group as essentially geriatric, with a lot of medical comorbidities. he reported that their fatality rate was 1%. in general, he said, people get either no symptoms or the symptoms of a mild cold.

the doctors there, chatting among themselves, agreed they's rather get covid-19 than influenza a.

i find the diamond princess observations particularly compelling- you have a defined group of highly vulnerable people who have all had a high level of exposure to the virus. this is a natural experiment of the highest order.

For every re-assuring story there is a troubling one. On my Titter feed is a frequent contributor who recently returned from a ski trip in Italy. Of the six members of his party, five contracted CV-19, 2 were hospitalized and one of them we for a time in a coma. He's doing okay now. He went in for testing even though he had no symptoms and sent home without being tested. Later his aunt became ill days after visiting and tested positive, then he was tested and the results were positive.

To try to keep emotion out of it as much as possible, I think it's best to avoid the stories and do the best we can with the data, such as it is.

There's plenty of evidence that CV-19 is not a particularly dangerous virus, even for the 70+ age cohort that has been identified at highest risk. The zero fatality rate in Germany compared to is indicative.

The unique feature of CV-19 compared to previous pandemics is the way it gets around. SARS took 5 months to reach 26 countries, and only gained significant traction in 2 of them. N1H1 was confined to 6 major geographic areas over a 1-year period. CV-19 has spread from 6 to 86 countries in 45 days.

https://youtu.be/kNLUT-LuW6g

https://youtu.be/UIeaXCbemDg

[Chris Coles]

Re: EJ: The countdown to the next crisis of The System has started.

So what? Who cares how they succeed? My point is that Peloton is so much more successful than Virzoom than they cannot even be compared. They are not from the same universe. Now, I am not endorsing Peloton in any way as I personally think that it is a dumb business model. It happens that I view Virzoom as a much more dumber business model.



You can stand corrected Chris: EJ has seeked recently and is potentially still seeking (not today but at a later time) funds from iTulipers to fund Virzoom:

iTulip Select Perks Offering -

$375 Investment in VirZOOM for 1-Year FREE iTulip Select Subscription

$600 Investment in VirZOOM for 2-Year FREE iTulip Select Subscription

$1,000 Investment in VirZOOM for 5-Year FREE iTulip Select Subscription

I will add that the manner and timing of this offering is highly suspicious to me and should raise several "red flags" for potential investors.



No they don't. A bad idea is just that; a place where good money dies. Bad ideas deserve no respect and certainly no capital from investors. In my book, Virzoom fits that bill in spades as it is a stunningly bad idea.

Having published an improved edition of INNOVATION by William Kingston, and, being an internationally recognised inventor, it behoves me to inform you that your immediate assessment of any such enterprise shows a deep flaw in your underlying thinking. Failure is an inevitable aspect of the full process of innovation; tried that, did not work; try something else, did not work; try again, and again, and again. One of the reasons I was happy to work permanent nights at what, (one must assume), you would regard as a low level occupation - setting multi-spindle lathes, was the constant need to accept the challenge of failure, to keep trying until one did overcome. Tool making is a classic example of an occupation unrecognised for the intellectual challenge it presents; particularly when combined with the use of what are massive cam operated machines, designed to produce millions of components for the vehicle production industry. You have not lived if you have not spent a full 12 hours trying to gain the precision required, and failing. One must add, with one's colleagues quietly smiling, that it was your turn to experience the failure, they themselves have also had to endure. In that environment, as with any that provides such experience, your stature rises parallel with your endurance to accept failure full on and never let it bring you to your knees.

Honest failure is the solid foundation of human endeavour; for without failure, and the recognition of its function in enabling anyone to take a step forward; in any direction imaginable; we would all still be living in caves.

On the other hand, your view is the classic one of requiring constant success; "it is my money and I want it back" . . . so to speak; when failure was, in my opinion, the original driving force where the money was placed in the hope of success, but with the acceptance that if lost, it remained in circulation as additional prosperity for the surrounding community.

Here I can only add my personal admiration of anyone; anyone, that has had to endure the need to keep trying to succeed; rather than just give up because the first road to success failed to fully materialise. Period!

[EJ]

Re: EJ: The countdown to the next crisis of The System has started.

Having published an improved edition of INNOVATION by William Kingston, and, being an internationally recognised inventor, it behoves me to inform you that your immediate assessment of any such enterprise shows a deep flaw in your underlying thinking. Failure is an inevitable aspect of the full process of innovation; tried that, did not work; try something else, did not work; try again, and again, and again. One of the reasons I was happy to work permanent nights at what, (one must assume), you would regard as a low level occupation - setting multi-spindle lathes, was the constant need to accept the challenge of failure, to keep trying until one did overcome. Tool making is a classic example of an occupation unrecognised for the intellectual challenge it presents; particularly when combined with the use of what are massive cam operated machines, designed to produce millions of components for the vehicle production industry. You have not lived if you have not spent a full 12 hours trying to gain the precision required, and failing. One must add, with one's colleagues quietly smiling, that it was your turn to experience the failure, they themselves have also had to endure. In that environment, as with any that provides such experience, your stature rises parallel with your endurance to accept failure full on and never let it bring you to your knees.

Honest failure is the solid foundation of human endeavour; for without failure, and the recognition of its function in enabling anyone to take a step forward; in any direction imaginable; we would all still be living in caves.

On the other hand, your view is the classic one of requiring constant success; "it is my money and I want it back" . . . so to speak; when failure was, in my opinion, the original driving force where the money was placed in the hope of success, but with the acceptance that if lost, it remained in circulation as additional prosperity for the surrounding community.

Here I can only add my personal admiration of anyone; anyone, that has had to endure the need to keep trying to succeed; rather than just give up because the first road to success failed to fully materialise. Period!

Regret we had to ban Largo temporarily but we can't ignore complaints from other community members forever and the endless trolling was getting old. Hope he has a change of heart and returns to contribute constructively.

[EJ]

Re: EJ: The countdown to the next crisis of The System has started.

1. never is an exceedingly long time

2.Turns out Peloton is burning cash as quickly as its users burn calories. ... In its fiscal 2018 year, which ended just two months after that interview, on June 30, Pelotonposted a net loss of $47.9 million. In fact, according to its S-1, Peloton posted net losses for the past eight consecutive quarters.Aug 28, 2019

3.virzoom has a MUCH bigger potential market than a $2000 stationary bike.

Peloton is a very different kind of business than VirZOOM. The Peloton business model requires significant capital investment to pay for manufacturing, distribution, installation and support of a combination of an OEM spin bike and custom designed and manufactured tablet, with an estimated COGS of $2,000, and production of streaming spin class content at studios that entails a cast of celebrity instructors, producers, and production teams. To reach the audience of $100k+ annual household income customers they target, millions of dollars needs to be spent on high production values advertising. Peloton’s Customer Acquisition Cost (CAC) has been estimated at $500. With a $40/mo subscription an average CAC Payback Period of 12 months can be estimated -- quite high by average SaaS standards, and then only if the monthly churn rate is calculated at zero. A company with such a high CAC and lengthy CAC Payback Period is churn-sensitive; some analyst models estimate that Peloton has to keep its monthly churn rate under 1% to hope to ever become cash-flow positive.

Unit and SaaS economics are unforgiving for these types of businesses. If the unit and SaaS economics aren’t there to support positive cash flow, it doesn’t matter how much capital you input into a SaaS revenue machine, you will always get less out of it. It's the equivalent of the old joke about selling every unit at a loss and making it up on volume. I expect that companies that cannot show unit economics that paint a clear path to profitability and burn cash at the rate the Peloton does today will face challenges as market and economic conditions that were present at the time Peloton went public continue to deteriorate. Also, at $2,200 Peloton is a luxury discretionary purchase, and these typically do not do well in recessionary periods. The 7.7% decline in PTON stock on Friday likely reflects that estimation by investors.

VirZOOM's business model is more similar to Zwift's than Peloton’s: the value is in the content and user experience, and the turnkey hardware platform is secondary. At this stage of the VirZOOM’s development, on seed stage level funding, our goal is to prove compelling unit and SaaS economics while remaining capital efficient, then raise institutional funding to scale the business. Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), CAC/CLV ratio, CAC Payback Period, Trial-to-Paid Conversion Rate, Retention Rate, and Churn Rate that add up to sustained positive cash flow all have to be proven.

So far most of these metrics are proving favorable for us compared to B2C mobile SaaS businesses, the closest available comparable. For example, the average Trial-to-Paid conversion rate across all application types within the category is 26%. For VZfit it's 92%. Our CAC/CLV ratio is comfortably mid-range for a SaaS business, and our CAC payback period (you don’t start to actually make money from memberships until you cover your CAC) is about 1/4 of Peloton’s.

The premise of VirZOOM is that VR, by virtue of being immersive, is a fundamentally superior medium for fitness motivation over flat screen solutions like Peloton. In the words of an Evening Standard reporter, VZfit is ”a kind of next gen immersive Peloton.” As a content platform, the range of physical activities that consumers can engage in with VZfit is nearly infinite (running, biking, flying, racing, battling, etc.), and not confined to flat-screen projections of spin classes. In this MarketWatch segment I make the case for VR as the future of connected fitness.

The primary gating factor for scaling any VR application business is the rate of VR adoption. The mass media plays a critical role.

During a period of slow VR sales after the peak of the hype cycle in 2017, positive mainstream media coverage of VR was rare. The recent market success of the Oculus Go and Quest 2nd generation mobile VR platforms is starting to encourage mainstream journalists to revisit VR. For example, this recent Washington Post article on VirZOOM that was also published in The Independent.

Still, while Gen2 mobile VR addressed cost, complexity, and some of the weight adoption barriers of Gen1 tethered VR and that brought the VR market back to life, one more generation of VR is needed before the remaining key adoption barriers are overcome and mass market adoption can occur. A reporter for a major women’s health magazine declined to cover VZfit after she tried it. She attached our VZfit loaner to her Peloton and told me after trying it that she is “convinced that VZfit will make my Peloton obsolete” but... her readers are not going to wear a VR headset that “makes you look like you’re wearing a toaster on your face.” To the thousands of our customers who use our product and enjoy it, that may sound petty, but that's the difference between an early adopter and a follower. The way VR makes you look when you're wearing a headset and the idea of wearing something on your face while exercising are the main reasons why more consumers don't even try our product. Once they do, it almost always exceeds expectations, as our 92% Trial-to-Paid conversion rate attests.

Qualcomm announced the next generation XR2 AR/VR chipset in December 2019. A design concept for the next generation of VR based on this chipset is included: light, attractive glasses-like headset for display, position tracking, and hand tracking tethered via 5G to an iOS or Android device where the heavy CPU/GPU processing takes place.

Let’s continue the VirZOOM discussion on the VirZOOM forum if there's interest.

Other recent VZfit press:

https://www.thegamer.com/virzoom-vzf...atform-review/

[Mega]

Re: EJ: The countdown to the next crisis of The System has started.

YYEESSS.................Ok
Could er we sort.................. of move on to the............. coming collapse?

[Slimprofits]

Re: EJ: The countdown to the next crisis of The System has started.

Subscribe to Naval Ravikant's COVID19 twitter list for up to date coverage from many corners

https://twitter.com/i/lists/1221004646656835585

[touchring]

Re: EJ: The countdown to the next crisis of The System has started.

It appears that the Coronavirus is more serious than what Wall Street thinks. Dozens of people dying in Italy a day and as we know, in Europe, they don't censor news, unlike China and the USA.