@CPT_A Sure I can understand that but think back to the environment in the financial markets coming into the pandemic and even into the early stages of the pandemic.
Interest rates were historically low along with a vigorous IPO market with lots of SPAC deals - capital was everywhere and investors were feeling really good. My guess is that the initial investors probably wanted some liquidity along with money to scale the business at the time and saw a great time to bring in capital for a nice return on equity. Buy low sell high right? We all do it - or at least try to.
Unfortunately the new investors used leverage for the transaction. My guess is that the new investors expected that there was an opportunity to ramp up the business and then perhaps either sell or list on a public exchange and so the debt and related covenants were not thought of as an issue at the time. Obviously their models were inaccurate and the post-pandemic crash in trainer sales and related equipment along with a historic rise in interest rates put the brakes on that.
Look at the 1st quarter of 2023 - several very large regional bank failures occurred due to the rapid change in market conditions. Lots of big players were caught up in these macro changes. Take a look at M&A transaction volume over the past year - a significant drop from prior years. Those with dry powder are sitting on the sidelines and probably wonât start acting in a meaningful way until mid-2024.
I certainly donât blame Wahoo management for reacting to a macro economic environment that was well beyond their control. I think they did a good job of preserving the business.
No one likes to see layoffs but if the cost structure doesnât make sense for the business you need to prioritize what is most important and make changes where needed.
RGT failed to grow market share despite investing lots of money. Chip admitted that it was a mistake and became more obvious as the company tried to mend fences with Zwift. Personally I was somewhat annoyed when they bought RGT - as there were other things I wanted to see them focus on. However I did grow to appreciate the platform and I saw the benefit of another way to do workouts, the opportunity to take a break from videos and do more social riding. I also came to really appreciate the community that had rallied around the product and I feel most for them that the platform shut down.
I also get the position on the watch. I previously used Suunto and have used Polar as well. Those companies are much more established than Wahoo in the market and yet with the 8,000 pound gorillas (Apple and Google) pushing further into the sports side of the market with additional innovation that is capital intensive, even those well established players are struggling so it makes sense to me that Wahoo isnât going to invest further on the watch side. I like the watch and wish that they further enriched the functionality just a bit more to bring it to mid-market specs. Seems like those development teams were cut early in the layoff process to preserve the teams built around core products like the Kickr line which is too bad. Still it works for me and I use it daily for runs outside and on the treadmill, for strength sessions, hiking and skiing.
Anyways I just feel like there is a lot of negativity in the forum these days and yet I really feel like the platform and products are solid and heading the right direction. Looking back at some of the posts over the last few months there has been a lot of doom and gloom. Sure I get it - there were lots of things in the media that we didnât have full details of and it caused uncertainty.
However, now I feel like we have more clarity and some reasons to feel optimistic about where things are headed. We saw a few product launches over the past months, a couple new SYSTM videos and a revitalized Wahoo app - so stuff is happening and apparently something new is coming in Q1 2024.
So that is my glass half full view. Apologies for the long post.
if it replaces RGT so we can do no vid or workouts that have already been done eith video watched before directly on Systm then its a good one for me.