More Companies Eliminate the Annual Performance Review

For many years when I worked for large companies, I was responsible for the annual performance review process: identifying competencies, creating forms, training managers, and tracking those yearly conversations that were often painful for everyone involved. Since then, more and more companies are eliminating the annual review.

The tight labor market seems to be the biggest impetus for the recent wave. With more frequent reviews, managers can increase antsy employees’ salaries, hoping to retain talent. However, companies are cautious because more frequent reviews may set expectations that employees will always get an increase. Instead, managers have other retention tools, such as increasing benefits and giving one-time bonuses.

This recent news reminds me of a 2016 article. But at that time, the impetus was to increase feedback. When an annual process exists, some managers rely too heavily on that one meeting in lieu of giving feedback when needed throughout the year. Eliminating the review also reduces anxiety and ends a rating system that some see as inaccurate or unfair.

Of course, the best feedback is ongoing. Ideally, managers and their reports have a relationship where either can initiate a conversation at any time to encourage accountability and improved performance.

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Deception in the Hiring Process

A New York Times article surprised me. During a video job interview, someone else answered “technical questions while the job candidate moved his lips onscreen.”

All applicants present themselves in the best light. We describe our accomplishments and may push the limits of our expertise. We also “cover” parts of ourselves that we fear may be undesirable to an employer.

But having a friend interview for a candidate is out of bounds. In this example, the interviewer wondered, “What did he think was going to happen when he moved across the country and realized he couldn’t do the job?” The article concludes with a quote from a deceptive candidate who felt relieved when she didn’t get the job. Of course, that’s a better outcome than suffering the embarrassment of failure.

This situation is a clear example of integrity—misrepresenting oneself, claiming to be someone they (intentional plural) are not. Today, we have a particularly strong job market; I would hope that candidates can find a job for which they’re qualified.

Image source.

Peloton's New Ad Campaign

Peloton is trying for a comeback with a new ad campaign. After losing market share, market value, a CEO, a couple of fictional characters, and about 2,800 jobs, the company needs a boost, but the latest campaign feels, to me, defensive and, dare I say, desperate.

Ads quote negative views of the company and counter with positive quotes, presumably from people who have been converted. For persuasive communication, research supports acknowledging opposing sides, even hostile points of view, and then arguing against them. But the counter-quotes in these ads represent one person’s opinion and may not provide enough evidence to outweigh the introductory quote, which seems to represent many.

I also wonder whether Peloton—without providing more evidence—might inadvertently reinforce negative perceptions of the company and products. Introductory quotes refer to Peloton as a fad, a cult, elitist, a scam, an easy workout, and an overpriced coatrack. These are all good reasons for me to never buy a Peloton.

The ads seem to disregard real challenges. The quotes represent good feedback for company leaders who, in response, defend rather than try to change the brand.

Tesla Accuses SEC of Harassment

In a letter to a U.S. District judge, an attorney for Tesla describes how the SEC tries to “muzzle and harass Mr. Musk and Tesla.” Tesla claims that the SEC monitors Elon Musk’s Twitter, yet hasn’t distributed settlement funds to shareholders.

We see strong language throughout the letter, for example, “gone beyond the pale,” “formidable resources,” “endless, unfounded investigations,” “broken its promises,” and “police.” The last paragraph reads as follows:

“Enough is enough. Mr. Musk and Tesla write in the hope that the Court can bring the SEC’s harassment campaign to an end, while ensuring that the SEC finally delivers, at long last, on its commitment to Tesla’s shareholders and this Court.”

The letter is an example of persuasive communication, with the lead strategy emotional appeal. Although logical arguments are included, the language and medium emphasize what the company perceives as irrational. We get the sense that Musk is personally targeted. We’ll see whether the letter gets the desired results.

A Resume for Remote Work

A Wall Street Journal writer offers good advice for adjusting your resume for a remote job. The author of Remote, Inc.: How to Thrive at Work . . . Wherever You Are, Alexandra Samuel suggests five ideas to incorporate.

Some suggestions may be obvious, for example, including remote work experience and tech skills, such as Slack or Basecamp proficiency. But Samuel also recommends describing “facilities” or “affiliations,” for example, if you have dedicated space in your house or a private remote office. You might write, “ergonomic home office with excellent soundproofing” and identify special equipment you own.

Of course, these distinctions might disadvantage people who don’t have private spaces or the luxury of buying high-end technology. Employers may decide to properly equip new hires.

All this is to reinforce what we know about employment communication: applicants need to find ways to differentiate themselves in job search. If an employer reviews 20 resumes for a remote position, maybe yours will stand out. Convince the employer that you are accountable and can be trusted to work well independently.

Best and Worst Super Bowl Ads

The Kellogg School of Management rated the 2022 Super Bowl Ads based on a framework called ADPLAN: attention, distinction, positioning, linkage, amplification and net equity.

Uber Eats received the highest rating for its commercial featuring several celebrities eating inedible objects delivered to their home. It’s funny and memorable, with a close connection to the company’s new service.

On the other hand, Salesforce got an “F” for its commercial staring Matthew McConaughey. The ad took jabs at other tech company leaders focusing on space travel and, instead, implored us to “engage,” “plant more trees,” “build more trust,” and “make more space—for all of us.” Kellogg justified the bad rating: “for fumbling on effectiveness and linkage back to the brand.” I see the point: after watching the ad, viewers still won’t know what Salesforce is selling.

The Kellogg School’s ranking is one measure. In a USA Today viewer poll, the Coinbase ad, showing a QR-code worth $15 traveling across the screen for a minute, ranked last. Kellogg gave it an A.

Encouraging Humility

David Axelrod, a New York Times opinion writer, weighs in on President Biden’s first State of the Union address, scheduled for March 1. The article, “Mr. President, It’s Time for a Little Humility,” criticizes the president’s previous news conference in which he “energetically sold a litany of achievements” without acknowledging “grinding concerns that have soured the mood of the country.”

In addition to humility, which is defined at recognizing one’s own and others’ limitations, Alexrod is encouraging compassion—caring for yourself and others. He makes good arguments for being positive, while avoiding a “doom and gloom” speech like one of President Carter’s.

Getting the balance right will be difficult. The president needs to remind people of his successes to inspire reelection, while being honest about COVID deaths, the decline of mental health, and economic challenges. As Alexrod says, “Now, he needs to find that voice by telling the story of the ordeal so many Americans have shared, honoring their resilience and painting a credible, realistic picture of how we can all reclaim control of our lives.”

We’ll see how President Biden does. Multiple speech writers will wordsmith his address. But as business communicators know, how the speech is received depends on the president’s delivery as well as his words. I’m curious how much of the president’s genuine self we’ll see—his authenticity.

Zillow's Letter to Shareholders

Zillow ended its failed iBuying business, but is recovering well, as the latest letter to shareholders explains. A foray into the home-flipping business didn’t pan out for the company, resulting in losses and layoffs.

The company’s letter demonstrates accountability, humility, and vulnerability, yet express optimism, as the CEO and CFO write in the closing:

“We want to acknowledge the past few months have been challenging for us all — Zillow leadership, employees, and investors — but innovation is a bumpy road. Big swings are core to Zillow, and they are what make our company so unique. We are excited about the opportunity in front of us. Thank you for joining us on this journey.”

In addition to describing plans, the leaders want readers to take away that performance was “better than expected.” “Better” is used 13 times in the 20-page letter. The approach seemed to work. As a CNBC article summarizes, “Zillow soars on upbeat outlook and faster-than-expected selloff of homes in portfolio.” However, for perspective, the article reports that the stock increased 20% after the letter was published, yet “the stock has lost three-quarters of its value since reaching a record almost a year ago.” Zillow’s leaders have more work to do.

Announcements About Leader Departures

Company announcements about leader departures typically follow a standard format, but content and medium choices communicate history and context. Two recent examples illustrate these types of messages:

• Meta, Facebook’s parent, announced that Peter Thiel, a long-time investor, will step down from the board. The company chose a press release for the news, also posted on the Meta website. As expected, the press release includes positive quotes from CEO Mark Zuckerberg and from Thiel. What’s not said is found in a Wall Street Journal article: Thiel is a supporter of former President Trump and two Senate candidates who have spread false claims about election fraud. Thiel has also resisted changes to Facebook to quell misinformation on the platform.

• Peloton announced that John Foley, the company founder, will step down. Like Meta, the company chose a press release and posted it on the Peloton website. Although the statement names Foley as executive chair and includes a quote from him, we don’t see the typical complimentary quote about his leadership. A New York Times article titled, “Peloton’s Future Is Uncertain After a Swift Fall from Pandemic Stardom,” cites several problems at the company: “The chief executive stepped down as a glut of unsold machines, negative TV portrayals, activist investors, and a recall plagued the fitness company.” A personal message, below, from Foley to Peloton customers explains more of his perspective.

These messages are a type of bad news—and they are examples of persuasive communication. Foley’s email tries to convince “members” that the company will continue to thrive and that Barry McCarthy, as the new CEO and president, is the answer. Foley uses logical arguments, such as the number of current users, and credibility, such as McCarthy’s past success, to persuade. He also uses emotional appeals, complimenting customers and their stories. He reassures customers by describing what won’t change—a persuasive strategy Adam Grant talks about in his book Think Again.

Whether Foley remains with the company—and what the future of the company holds—is questionable. In his email, he demonstrates some humility by introducing McCarthy but little accountability for what has happened to a company that was only recently a major success story.

Fellow Members,

There’s been quite a bit of news about Peloton in recent weeks, and through it all, you have stood with us. Thank you for all your support and encouragement! This year marks Peloton’s 10 year anniversary. My co-founders and I brought to life the concept of recreating the energy and benefits of a studio fitness class in the home to make getting healthy and staying healthy more achievable for more people. And together with you, we have built this incredible community from five people to 6.6 Million people, of all stages, ages, and backgrounds, leading healthier, happier lives. I remain inspired by you and your stories. Our north star has always been and will always be improving the lives of our Members. Your experience is what matters most and this is why we are making some changes to position Peloton for continued success the next 10 years and beyond.

Effective today, I will be moving into a new role as Executive Chair, and Barry McCarthy will be joining Peloton as CEO & President to lead the company. Barry is an incredible leader with a proven track record of working with founders to scale world-class businesses like Spotify and Netflix. In addition to the senior executive roles he has held at some of the world’s most successful media and entertainment brands, Barry has served as an advisor and board member at public and private technology companies. This appointment is the culmination of a months-long succession plan that I’ve been working on with our Board of Directors, and we are thrilled to have found in Barry the perfect leader for the next chapter of Peloton.

I care deeply about Peloton – our community, our team, and our ability to continue to motivate and inspire you through our world-class instructors and deep library of classes across fitness disciplines. And, because operating with a Members-first approach is one of our core values, I want to assure you that the changes that we’re making at the company across our operations will not impact our instructor roster, number of classes produced, or range of class modalities.

I still believe as strongly in this brand and in connected fitness as I did on Day One. But in order for us to continue to deliver the best possible member experience and lead us into the future, I need to hand the day-to-day reins of running the business to a seasoned and gifted executive who has helped transform and grow some of the world’s best streaming media companies – first in video, then in music, now in connected fitness.

I’m so excited to partner with Barry and for you to see what he brings to this brand and community. Please join me in welcoming him to the Peloton team. And I hope to see you on the leaderboard soon!

John Foley

Spotify CEO's New Statement

Following new allegations against Joe Rogan, Spotify CEO Daniel Ek apologized to staff, yet reinforced his commitment to the podcast host. A video compilation of Rogan using a racial slur caused new criticism and calls for Spotify to take action. Rogan apologized, explaining that some recordings were from many years ago and were taken out of context.

Ek’s statement is addressed to Spotify employees, but of course, the secondary audience is intended to be the public. The message includes Rogan’s decision, apparently in consultation with the Spotify team, to remove 113 episodes. Although Ek writes that the choice was Rogan’s, we don’t know how much pressure he received.

Ek’s note is a good example of a persuasive communication that tries to balance the needs of many stakeholders. He demonstrates compassion to employees, vulnerabiiity in how the situation affects the company, and integrity in his $100 million commitment to artists and in holding firm to what he sees as a core value of the platform. We could see more personal vulnerabiity and authenticity. Unfortunately, leader will never satisfy all parties in this type of situation.

Spotify Team,

There are no words I can say to adequately convey how deeply sorry I am for the way The Joe Rogan Experience controversy continues to impact each of you. Not only are some of Joe Rogan’s comments incredibly hurtful – I want to make clear that they do not represent the values of this company. I know this situation leaves many of you feeling drained, frustrated and unheard.

I think it’s important you’re aware that we’ve had conversations with Joe and his team about some of the content in his show, including his history of using some racially insensitive language. Following these discussions and his own reflections, he chose to remove a number of episodes from Spotify. He also issued his own apology over the weekend.

While I strongly condemn what Joe has said and I agree with his decision to remove past episodes from our platform, I realize some will want more. And I want to make one point very clear – I do not believe that silencing Joe is the answer. We should have clear lines around content and take action when they are crossed, but canceling voices is a slippery slope. Looking at the issue more broadly, it’s critical thinking and open debate that powers real and necessary progress.

Another criticism that I continue to hear from many of you is that it’s not just about The Joe Rogan Experience on Spotify; it comes down to our direct relationship with him. In last week’s Town Hall, I outlined to you that we are not the publisher of JRE. But perception due to our exclusive license implies otherwise. So I’ve been wrestling with how this perception squares with our values.

If we believe in having an open platform as a core value of the company, then we must also believe in elevating all types of creators, including those from underrepresented communities and a diversity of backgrounds. We’ve been doing a great deal of work in this area already but I think we can do even more. So I am committing to an incremental investment of $100 million for the licensing, development, and marketing of music (artists and songwriters) and audio content from historically marginalized groups. This will dramatically increase our efforts in these areas. While some might want us to pursue a different path, I believe that more speech on more issues can be highly effective in improving the status quo and enhancing the conversation altogether.

I deeply regret that you are carrying so much of this burden. I also want to be transparent in setting the expectation that in order to achieve our goal of becoming the global audio platform, these kinds of disputes will be inevitable. For me, I come back to centering on our mission of unlocking the potential of human creativity and enabling more than a billion people to enjoy the work of what we think will be more than 50 million creators. That mission makes these clashes worth the effort.

I’ve told you several times over the last week, but I think it’s critical we listen carefully to one another and consider how we can and should do better. I’ve spent this time having lots of conversations with people inside and outside of Spotify – some have been supportive while others have been incredibly hard, but all of them have made me think.

One of the things I am thinking about is what additional steps we can take to further balance creator expression with user safety. I’ve asked our teams to expand the number of outside experts we consult with on these efforts and look forward to sharing more details.

Your passion for this company and our mission has made a difference in the lives of so many listeners and creators around the world. I hope you won’t lose sight of that. It’s that ability to focus and improve Spotify even on some of our toughest days that has helped us build the platform we have. We have a clear opportunity to learn and grow together from this challenge and I am ready to meet it head on.

I know it is difficult to have these conversations play out so publicly, and I continue to encourage you to reach out to your leaders, your HR partners or me directly if you need support or resources for yourself or your team.

Daniel

Arguments in the Joe Rogan, Spotify Situation

A few musicians and podcast creators are leaving Spotify over controversy about “The Joe Rogan Experience,” a popular show that has included misinformation about COVID-19 vaccinations. Comparing messages from different points of view is an interesting look at persuasive arguments and raises issues of character. Here are a few to explore:

• Spotify’s stance is explained in this statement and may be summarized as follows from the chief executive and co-founder: “I think the important part here is that we don’t change our policies based on one creator nor do we change it based on any media cycle, or calls from anyone else.” Spotify also created a COVID information hub.

• Neil Young removed his music, which had hundreds of millions of views, and explained his rationale in a letter (since removed from his website): “I am doing this because Spotify is spreading fake information about vaccines—potentially causing death to those who believe the disinformation being spread by them.”

• Crosby, Stills, and Nash followed suit and posted their reason on Twitter: “We support Neil and agree with him that there is dangerous disinformation being aired on Spotify’s Joe Rogan podcast. While we always value alternate points of view, knowingly spreading disinformation during this global pandemic has deadly consequences. Until real action is taken to show that a concern for humanity must be balanced with commerce, we don’t want our music—or the music we made together—to be on the same platform.”

• Roxane Gay explained her decision to remove “The Roxane Gay Agenda” in a New York Times opinion letter. In closing, she wrote, “I am not trying to impede anyone’s freedom to speak. Joe Rogan and others like him can continue to proudly encourage misinformation and bigotry to vast audiences. They will be well rewarded for their efforts. The platforms sharing these rewards can continue to look the other way. But today at least, I won’t.”

• Bréne Brown “paused” her two podcasts and wrote that she is waiting for more information: “I’ve enjoyed the creative collaboration with Spotify, and I appreciate how the leadership has shown up in our meetings over the past week. Now that Spotify has published its misinformation policy, and the policy itself appears to address the majority of my concerns, I’m in the process of learning how the policy will be applied. I’m hopeful that the podcasts will be back next week.” As you might expect, Brown demonstrates vulnerability, including negative, personal comments she has received about the issue.

• Joe Rogan apologized in a 10-minute Instagram video, promising to “balance out viewpoints with other people’s perspectives.”

UPDATE: A video compilation of Rogan using a racial slur has emerged, and he apologized—again.

BlackRock CEO Defends Focus

Investment firm BlackRock has pushed companies to pursue a social purpose in addition to profits. The chief executive’s annual letter to investors defends this approach, which has been criticized as anti-business.

Up front in the title, “The Power of Capitalism,” Larry Fink addresses criticism head on and further explains in the letter:

“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.”

Fink states his belief clearly in the last paragraph:

“…it is more important than ever that your company and its management be guided by its purpose. If you stay true to your company's purpose and focus on the long term, while adapting to this new world around us, you will deliver durable returns for shareholders and help realize the power of capitalism for all.”

The letter illustrates persuasive communication, focusing not on emotional appeal but logical arguments. For his audience, which he defines at the beginning as CEOs, he encourages a commitment to purpose—for leaders to let stakeholders “know where we stand on the societal issues intrinsic to our companies’ long-term success.” He writes “long-term” 18 times in the letter, using repetition to drive the point home. Fink illustrates a few leadership character dimensions, for example, authenticity, integrity, and courage.

Candidates for U.S. Supreme Court Justice

Speculation abounds on the next U.S. Supreme Court Justice, but something we know for sure: it will be a Black woman. President Biden promised to fill the spot with a Black woman should a position open up during his presidency.

Several women are in the running, including Judge Ketanji Brown, shown here. Many candidates have degrees from Harvard and Yale, serve as judges, and have experience as law clerks for past and current justices.

The selection process will be interesting to watch. Like any employment situation, the candidates will be interviewed, but unlike business employment situations, they will be vetted under a microscope. After the president nominates a candidate, the Senate votes, by majority, whether to confirm the nomination. We’ll see to what extent race and gender come into the conversations.

The Supreme Court website describes the job qualifications:

The Constitution does not specify qualifications for Justices such as age, education, profession, or native-born citizenship. A Justice does not have to be a lawyer or a law school graduate, but all Justices have been trained in the law. Many of the 18th and 19th century Justices studied law under a mentor because there were few law schools in the country.

Today, it would be quite unusual for a justice to lack a law degree, and the selection process favors certain schools. Of the nine current justices, four graduated from Harvard Law School and four from Yale. Amy Coney Barrett, the most recent addition, graduated from Notre Dame.

Justice Breyer's Resignation Letter

U.S. Supreme Court Justice Stephen Breyer signaled his resignation from the highest court and followed up with a formal letter. The letter is typical for anyone who quits a job. The first paragraph confirms the news and timing, and the second paragraph is a brief, positive reflection about the job.

Recall Announcements

Product recalls are classic bad-news messages. A recent example comes from Mushie & Co, makers of FRIGG silicone pacifiers. As we typically see, the company “voluntarily” recalled products after receiving more than 200 reports of “the silicone nipple detaching from the plastic shield of the pacifier.” No injuries were reported, but of course, the flaw presents a choking hazard for babies.

The company “volunteered,” but company leaders had little choice because of the danger and because the regulating government agency would likely demand a recall if they didn’t take action. Still, they demonstrate accountability despite the costs.

In addition to news reports, two main sources provide information about recalls:

• The U.S. Consumer Product Safety Commission

• The company

The messages offer similar information about product styles, dangers, and refunds. What we don’t see in these messages is a company apology; instead, this genre of business communication is essentially a template with the sole purpose of providing consumers with needed information.

Strong Tone in Activist Investor Letters

Two recent letters illustrate strong language in persuasive messages to boards of directors:

• Blackwells, which owns less than 5% of Peloton, is calling for the board to remove CEO John Foley and to sell the company. A Fortune article provides background, but the letter, as are most activist investor letters, is quite explicit. Jason Aintabi, chief investment officer for Blackwells, cites “multiple leadership failures,” blaming Foley for the company’s decline. With strong language throughout, Aintabi ends the letter with a pun intended, “The ride for Mr. Foley is over. This Board must now independently chart a new path for Peloton.”

• Engine Capital wants the Kohl’s board of directors to evaluate the ecommerce business separately and to consider selling the company. The letter comes after a Starboard Value bid to buy the company. The tone of this letter is just as strong as the Blackwells letter about Peloton, but it’s less personal about the CEO. Still, Engine implores the board, “As we will show, there is no excuse for the Board to cling to the status quo.”

Both letters are good examples of tone in context. Of course, investors are not required to be so blatant, but the language is typical—and likely expected—for such demands to be considered credible and to be taken seriously.

Apology for Meatloaf Recipe

The folks at Weber Grill didn’t realize that singer Meat Loaf died on the day they published a meatloaf recipe. Had the company used the rock star’s death as a way to promote its products, that would have been in poor taste, but the email with a BBQ recipe was an unfortunate coincidence.

After some predicable backlash, the company quickly apologized for the mistake. Fortunately, just as the initial email made the rounds, so did the company’s apology.

The apology is simple and works well. The company didn’t need to apologize for insensitivity because the mistake was unintentional. In these situations, customers typically are more forgiving, and in this case, demonstrating compassion and humility was enough.

Peloton CEO Addresses Difficult Times

Peloton was hot during the pandemic, barely keeping up with demand for bikes and treads. But sales have tumbled as consumers became more price sensitive and competition increased. The Sex in the City HBO reboot, And Just Like That, and Billions Season 6 episode didn’t help when they killed off lead characters during or after a vigorous workout on a Peloton bike. Company shares tumbled 76% in 2021.

CNBC reported that Peloton is pausing production, but Co-Founder and CEO John Foley denies the claim. In a statement (posted on the website as a “note” sent internally), Foley criticizes an internal leak and subsequent “speculative articles.” His tone is firm when he writes about legal action against the “leaker,” a warning to other employees. Trying to get ahead of more bad news, Foley admits that layoffs are possible, while complimenting the team. He chooses positive data to present: the number of users, workouts, and churn rate. He doesn’t include negative data about revenue or stock price.

The note is part defense and part cheerleader, as Foley props up employees—and the company—against a turbulent time in the company’s history. He demonstrates some integrity, humility, and vulnerability, but his leadership will continue to be taxed in the weeks ahead.

Foley’s full message follows (with the giant logo as it appears on the website):

We have always done our best to share news with you all first, before sharing with the public. This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy. It has saddened me to know you read these things without the clarity and context that you deserve. Before I go on, I want all of you to know that we have identified a leaker, and we are moving forward with the appropriate legal action. But moving forward, I want to take a moment to talk about some of the changes with you directly.

As a public company that is in a pre-earnings “Quiet Period”, we are limited in what information we can share. However, we issued a pre-earnings press release earlier this evening about our preliminary Q2 results, in order to offer an initial and more accurate picture of our business performance.

As you have heard me and other leaders say over the past few months, we are continuing to invest in our growth, but we also need to review our cost structure to ensure we set ourselves up for continued success, while never losing sight of the important role we play in helping our 6.2+ million Members lead healthier, happier lives.

What this means for our team right now

In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion. And we are still in the process of considering all options as part of our efforts to make our business more flexible.

This team is made up of some of the smartest, most passionate, hard-working and KIND people I have ever met. You have each painted your masterpiece at Peloton in your own way, and your contributions matter. They always have, and they always will.

I am SO proud of everything we have accomplished together, and it pains me we are faced with these tough decisions. I know this is difficult, and I want to thank you for your patience as we work through these times together.

Rumors that we are halting all production of bikes and Treads are false

Notably, we’ve found ourselves in the middle of a once-in-a-hundred year event with the COVID-19 pandemic, and what we anticipated would happen over the course of three years happened in months during 2020, and into 2021.

We worked quickly and diligently to meet the demand head-on at a time when the world really needed us, in large part thanks to how hard you worked every day. We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.

Connected Fitness is here to stay

This past quarter, our churn rate was 0.79%. This means that our Members are sticking with us, again thanks to your brilliance and continued innovation. Connected fitness provides the convenience people need to stay active and centered and will continue to be a key part of the future of fitness. In fact, just a few days ago, we recorded our highest ever number of daily workouts -- over 2.9M workouts.

I want to acknowledge that this does not answer all of the questions I am sure many of you have right now. But, I did want to share what we could at this time.

I know there is a lot of noise and anxiety in our environment right now, which is why I wanted to take this moment to provide some additional context for you all as we navigate the next few weeks together.

John

Activision Acquisition Announcements Omit Information

Microsoft’s acquisition of Activision significantly boosts the company’s prospects in the gaming space. In a statement, Microsoft said, “This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse.” Games under assets now include millions of players of “Warcraft,” “Candy Crush,” “Call of Duty,” and others.

As expected, Microsoft’s announcement doesn’t include bad news about Activision—reported just the day before the acquisition. Rampant sexual harassment allegations resulted in more than three dozen terminated and another 40 disciplined employees. The day after the acquisition, the Wall Street Journal reported, “Activision Blizzard’s Workplace Problems Spurred $75 Billion Microsoft Deal.” Similarly, Activision CEO Bobby Kotick’s email to employees fails to mention that the company may have been in trouble before the agreement.

As usual, what is not said is often as important as what is said. Both messages announce good news and omit the bad news. This story illustrates that positive business messages are also persuasive messages.

Misrepresenting COVID-19 Study Findings

A study about COVID testing in schools is criticized for its authors’ conclusions. Researchers at Duke, in collaboration with the North Carolina Department of Health and Human Services, studied the “test-to-stay” approach for schoolchildren. With this approach, if a child tests negative after being exposed to someone who tests positive, that child can go to school. Researchers found this strategy to be effective in getting kids back to school—without increasing COVID transmissions.

The trouble, described in a Wall Street Journal opinion piece, is that authors concluded, “in schools with universal masking, test-to-stay is an effective strategy.” The writers explain their thinking:

“That invites readers to assume that test-to-stay doesn’t work without forced masking. But since they studied no unmasked schools, this conclusion is baseless. An honest report would either have said so or not mentioned masking at all.”

The writers believe that study authors are pushing their own agenda for schools to require masking. This is a good example of a study interpretation that is technically correct but omits important information for a fair comparison. In such cases, researchers might hurt their own credibility. On the other hand, do people assume, as the writers say, that “test to stay” doesn’t work in schools without mask mandates?