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For a man who lost nearly $2 billion, at least on paper, John Foley sounds remarkably cheerful. The co-founder of home fitness company Peloton said This week, he told The New York Post that “I lost all my money. I had to sell almost everything in my life.” Undaunted, he concluded that “potentially, John Foley’s best days are ahead of him.”
I worry about people who talk about themselves in the third person, but that’s not the most striking thing about his attitude. Foley seems unnaturally calm about having gone Icarus-like from billionaire status to being forced to sell multimillion-dollar homes in the Hamptons and New York City. He struggled to stay solvent as Peloton’s value fell to less than 4 percent of its pandemic peak.
That must hurt, and yet he has bounced back from his personal financial crisis and public humiliation. Foley has weathered what he previously called “an unfun personal balance sheet reset” as Goldman Sachs made repeated margin calls on his personal loans secured by Peloton stock. left platoon in 2022 and is now back in business with a New York custom rug company called Ernesta.
He even appreciates the perks. His town is a hotbed of wealth and status anxiety, and owning a $55 million waterfront home on Further Lane in East Hampton is the strongest sign of parity with the hedge fund billionaire pack. But his family sold it at a $4 million discount, and he hasn’t looked back: “My kids are probably better off for it, realistically.” What’s going on?
I can’t look inside Foley’s head, beyond observing that he’s demonstrating a healthy mental resilience. But his nonchalance tells a larger story about the way financial failure doesn’t equate to defeat among a certain privileged group of tech and business entrepreneurs. Whatever outsiders might think of them, they themselves don’t feel disgraced.
It’s not a common experience. Losing social and financial status is a hard blow for most people. Daniel Kahneman, the Nobel Prize-winning psychologist, explained that humans are loss-averse: they worry more about losing a sum of money (whether it’s a dollar or a billion dollars) than they do about gaining it.
For most of us, getting through a serious financial crisis is very difficult, especially in middle age. One study found that about 30 percent of those who lost their life savings in a bank fraud suffered severe depression in the following two years. Another found that a “negative wealth shock” increased the long-term mortality risk for American adults age 51 and older (Foley is 53).
Of course, Foley’s position is substantially different than the average. Though he joked that he had lost all his money, he still has more than many: His remaining stake in Peloton was worth $22 million this week, according to Bloomberg (the stake peaked at about $1.9 billion in early 2021). He’s not destitute.
The loss of a fortune has always carried a stigma, even when the loser was solvent. Samuel Insull, the utility magnate whose empire collapsed in the 1930s, was denounced by Franklin D. Roosevelt as a worrying example of a “lone wolf, an unethical competitor, a reckless promoter.” Insull was tried three times for fraud, but acquitted each time.
The worst thing Foley could be accused of at Peloton is overzealous promotion. He told his board: “I see very clearly that this is going to be one of the few companies that is going to be worth a trillion dollars in 15 years.” The fact that it hasn’t come anywhere close to that figure (it’s now valued at about $1.7 billion) hasn’t embarrassed him or dampened his big ambitions for Ernesta in the years ahead.
Something of his boundless optimism was always present in the American business world. Alexis de Tocqueville wrote in the early 19th century that “the boldness of enterprise is the principal cause of success.” [America’s] “rapid progress,” Theodore Roosevelt’s 1910 “man in the arena” speech that “at worst, if he fails, he at least fails while daring much” is often quoted by executives.
But the current strain is the purest. This is largely due to the venture capital funding behind many startups, including Ernesta, and the belief that you have to keep betting until you get the results you need to make up for all the losses. The fact that a founder once had equity worth more than $1 billion and now has little is not a cause for concern. per se.
Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, once argued that early-stage investors and serial entrepreneurs should not be overly influenced by disappointments. “The right thing to do is to play the next hand of poker exactly the same way you played the last hand.” Failure is more “a result of randomness” than human error.
This is an easier philosophy for investors who can make repeated bets than for entrepreneurs who have few opportunities in life. But Foley has the backing of some of Peloton’s earliest investors in Ernesta, so he is surrounded by natural, if calculating, optimists. In this world, it makes sense to remain happy even if you have to drastically downsize your company. Desperation is not a rational option.