In my recent Armory manifesto post I write about how entire industries are finding themselves competing with specific software-first companies. I believe Peloton will become one of these juggernauts in the health category.

Most fitness equipment manufacturers don't think of themselves as software companies first – or at all.

Peloton is different. They're not selling you a bike, or a treadmill. Instead, they're selling you an experience. An opportunity to become a part of a community and join some of the top fitness instructors – right from your living room.

And the kicker is that you don't even need to order Peloton hardware to join. Peloton offers an app experience that I recently used with an iPad and an old recumbent bike at a family member's house. Here's a video:

To say the app transformed an old piece of exercise equipment would be an understatement. One of my family members walked by and remarked "I'm glad someone is finally using that bike!" I wasn't there for the bike per-se – I was on the bike to join into Jess King's 30 minute morning ride, along with over 1,000 others who were joining into the class with me.

Another amazing thing about this software-first approach is how it allows Peloton to charge a huge premium on the hardware. The bike costs $2k, whereas a similar bike– without the software experience built in– might run you $500 max. As I remark in the video, my wife and I are convinced – we've ordered the bike, because although you can use an old bike and iPad, none of your health vital & usage stats get captured. It's worth the extra cost to be fully immersed in the Peloton universe.

I'm someone who's done– and loved– Barry's, Orange Theory, FiiT, F45 and other high intensity classes. To now have that available to me in my own home is transformative.

If I were in the executive suite of any company in the fitness industry– from equipment manufacturers to brick & mortar class providers– I'd be thinking very hard about whether I was a fitness company that used software, or a software company that provided fitness experiences. I'm firmly convinced that the latter category– companies like Peloton– will be doing to the fitness vertical what Airbnb has done to hospitality, Amazon has done to retail, Tesla has done to auto manufacturing, Wealthfront has done to financial advisors, Instacart has done to grocery, and so on.