The Best Market Research Is Research Not Yet Done


Uncovering new opportunities requires new research. Research to discover new opportunities should come as no surprise; this is not some groundbreaking insight. But in the world of business, common sense is not all that common, and no story better exemplifies this than the story of Peloton. Rated one of the top business podcast episodes of the year, NPR’s How I Built This | Peloton: John Foley, listeners can hear the first-hand account of one of the most compelling and edge-of-your-seat stories of the rise of Peloton. John Foley, Founder of Peloton, walks the listener through his breathtaking tale of how he created one of the most disruptive brands in the world from literally nothing. The Peloton story is one of courage, ingenuity, and community – and I strongly encourage all Clear Seas Research clients to take a listen.

One of the most insightful parts of the podcast for us is at the 25-minute mark, as it shows how too many people listened to their “gut” and did not research any customers. Investors ended up losing out on years of opportunity to invest in a fantastic growth opportunity; many missing out altogether because they did not do any market research. 

It was after raising $10M in initial seed funds from about 100 Angel Investors that John began to pitch his idea to West Coast Institutional investors three times a day for four[AC2]  years. He approached literally thousands of institutional VC’s and approached all 400 Sand Hill institutions, and every single one of them said no. Here’s an excerpt:

“Sand Hill, and the Valley, didn’t see what was happening with the East Coast boutique fitness movement. They would say there are two types of biking, mountain, and road. It was a Blind Spot for them.

That was the frustrating thing; there was no market data. And I thought when they heard this, they would say this is groundbreaking stuff; this is true disruption.

‘No, this is dumb, no thank you. There’s no market data. There’s no research’. We don’t see any pattern recognition. But early customers saw it and said, ‘Oh my gosh, this idea has changed my life.’”

After hearing so many “no’s,” John decided to extend a unique research opportunity to Lee Fixel at NY Based Tiger Global. John asked Lee to attend a boutique cycling fitness class to experience the atmosphere first-hand (this was after he first approached him three years earlier).[AC3]  After capturing these actual ethnographic data, Lee finally decided to say "yes" (Peloton later IPO’d on Sept 25, 2019, at an $8 Billion valuation). Had anyone at any of the Sand Hill VC’s taken the time to survey or interview these ecstatic clients at the very beginning, would they have picked up on the boutique fitness movement? Would they have heard how much people love working out in their own homes with on-demand instructors? We’ll never know because, as they admit, they never spoke with their customers.

Next time you are approached with an idea, stop and ask yourself this simple question: “What do our customers think? Is there data? No? Then let’s go get some.”