Peloton founder and former CEO John Foley has founded another company. Along with fellow Peloton co-founders Hisao Kushi and Yony Feng, Foley is launching a direct-to-consumer custom rug business called Ernesta.
Foley will serve as CEO of Ernesta, Kushi will serve as Chief Legal Officer, and Feng will serve as Chief Technology Officer. The company put out a press release with additional details:
The global carpet and rug market is expected to reach $120 billion by 20301, with the current market fragmented across specialty retailers, mass retailers, designers and warehouses. Ernesta plans to expand the custom category of the multibillion-dollar domestic rug market by offering residential and commercial buyers the option to purchase from a thoughtfully curated selection of rugs cut to fit their exact space. Consumers facing a landscape of home decor items backordered for months will enjoy a quick fulfillment experience through Ernesta, thanks to its agile, on-demand manufacturing process.
According to the release, they’ve already secured $25 million in funding.
Foley provided an exclusive interview to Forbes, explaining that he’s been thinking about founding a company like this for years:
While still CEO of Peloton, no friends took him up on his offers to help fund such a business, Foley said. So after resigning as CEO of the exercise equipment company in February, and as executive chairman in September, Foley’s been fixated on getting Ernesta off the ground. “Trying to sit on the beach for a week, I was thinking about it, because I couldn’t help myself,” Foley said. “I am hungry, I am humbled, and I have time on my hands to do this company myself.”
According to Forbes, Ernesta will offer “50 different styles of machine-made, custom-cut rugs in five colors each.” Their prices are likely to fall within the range of retailers like West Elm and CB2, and they plan to begin sales in early 2023.
Unsurprisingly, Foley plans to use much of what launched Peloton into success on his next venture – however, there will be some key differences. According for Forbes:
By focusing on community and culture around its rug designs and the buying experience, Foley said he hoped to recapture some of what helped Peloton break out as an industry-leading brand. But his next act will follow a different playbook in another key aspect: Ernesta won’t attempt to vertically integrate its supply chain. Instead, the company will work with business-to-business partners in Georgia to source rolls of carpet in bulk, then cut them to order in a New Jersey warehouse to ship either directly or through logistics partners. By eschewing store fronts and sourcing within the U.S., Foley claimed Ernesta could reach 50% gross margins even on its first orders when the company starts selling to customers in spring 2023.
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