Marty Manley on economics, politics, technology, and culture

"Dream bicycles that change and grow"

One of my favorite cycling blogs, Eco Velo, ran this photo some time back. I am slightly obsessed with bicycles and business, so I noticed not just four sweet rides, but a nice illustration about how competition and business innovation are changing even the bike business. 

THE ROMANCE OF BICYCLES

Most bikes sold in most stores have a racing heritage. These don't — they are designed to be incredibly practical. They each let you ride comfortably upright, with your bars at least as high as your saddle. Nobody on these bikes will be confused
with Lance Armstrong and they are likely to enjoy their ride a lot more as a result. When John Kennedy said that "Nothing compares to the simple pleasure of a bike ride" he was not fantasizing about clipless pedals, carbon fiber frames, and aero bars.

These are deeply romantic bikes — the sort that caused novelist and poet Christopher Morley to declare bikes "the vehicles of novelists and poets" and H. G. Wells to declare bikes a cure for Melancholy. "When I see an adult on a bicycle", he later claimed "I do not despair for the future of the human race."

These are what what we used to call "touring" bikes and what many Europeans think of as normal: a steel frame, a long wheel base, a leather saddle, racks, fenders, comfortable tires, and bags. The prettiest one even has lugs (artistic steel joints) where the tubes come together. They are the profoundly useful bikes meant to cover long distances in comfort — the sort of bike that caused writer Iris Murdoch to observe that while "other forms of transportation grow daily more nightmarish, only the bicycle remains pure in heart". Grant Peterson, a local hero who founded Rivendell Bicycle Works, makers of the orange bike, got it right when he called them "rideable art that can just about save the world".

These bikes can shape your dreams. You come to understand what Wells meant when he claimed that "After your first day of cycling, one dream is inevitable…You ride … on wonderful dream bicycles that change and grow."

GLOBAL ECONOMICS

These four bikes are produced in a global supply chain by companies that target well-defined markets. All were designed in the US (two in Minnesota, a region that now plays a surprising role in the US bicycle industry.) Three of the four frames are manufactured in Taiwan, home to several high quality frame makers.

Frames make the bike and quality frames have migrated from the US to Japan to Taiwan.They are now heading for China. Walmart sells a highly credible Chinese made commuter bike for $185 and they sell a lot of them. Chinese bicycle factories are not the Dickensian nightmares of yore and the Chinese themselves no longer ride Flying Pigeons seemingly welded together out of scrap plumbing supplies. At least one high volume frame plant I visited in southern China is modern, clean, well-lit, and staffed by people who have learned from their Taiwanese customers how to steadily improve quality and productivity. Just as "Japanese" went from being a brand liability to an asset, "Made in China" will soon be one or two models down from premium, which will be made in Taiwan.

In contrast, all four bikes use leather English saddles made by Brooks, a 20 person company in Birmingham, England that has hand made the same product for more than a century. Brooks was recently purchased out of bankruptcy by Selle Italia, an Italian saddle maker famous for sexy racing saddles. They have introduced some terrific new products, including an expanded line of women's saddles.

Which posed a thorny marketing problem: how do fashionista Italians shake up an effete British product with small, loyal, conservative following? Click here to see the advertisement that sold a lot of saddles and told the world that Brooks was no longer standing still. (Test: if you ogled the interrupteur levers, cantilever brakes, and mixte frame in that photo, you are as sick as I am).

CYCLING INNOVATION

Each of these bikes is the product of a different kind of innovation and entrepreneurship. Each, believe it or not, is aimed at a slightly different market (notice that each bike has a different handlebar. This is not an accident).

The second bike from the top is a Steel Independence from Independent Fabs in Somerville, outside of Boston. The team there first came to cycling fame as Fat Chance cycles, makers of
premium mountain bikes. I lived in Somerville in their early years and visited the shop — it was as chaotic and energetic as any Silicon Valley startup. Today, Independent faces a tough challenge. They do not have the low overhead of artisanal frame makers nor the efficiencies and distribution available to larger companies. As a result, the Steel Independent frame costs twice as much as the other bikes in this picture. In fact, if you disguised the frames, most riders under most conditions would have a hard time noticing the difference between a bike built on this lovely $2,000 frame and a bike built on one costing half as much.

This problem keeps Grant Peterson of Rivendell Bicycle Works awake at night. I am passionate about Rivendell bikes and have owned several. The bikes are testimony to Peterson's engineering, aesthetics, and unyielding, point of view.

Richard Schwinn, grandson of the founder, once termed Rivendell "a religion masquerading as a bike company". He had a point. Peterson has been a proselytizer for practical bikes since the 1980s, when he designed bikes for Bridgestone that are still highly sought after. He favors  lugged steel, wool clothing, leather saddles, beeswax, fenders, polished Nitto stems and racks, and bags of his own design. (He loves bags and is brilliant at designing and marketing them. Once he
created a line of three bike bags and named them Adam, Hoss, and Little Joe after the
Cartright brothers on Bonanza. I owned one of each and when I finally
sold them on eBay a year or so after they had been discontinued, they fetched far more
than I had originally paid, so powerful has been the lure and the logic
of the Rivendell brand).

Grant is a also a champion of good handlebars and
personally designed the fantastic "mustache" and "Albatross" bars on
the bottom two of our four bikes. He dislikes Lycra, clip-on pedals,
undersized frames, and the influence of racers on his industry. He works
with a team in a crowded warehouse behind a car rental office in Walnut
Creek and they build outstanding bicycles. Literally everything they sell is well thought out.

But great design and branding includes a cost structure designed to hit a target price point. Rivendell has built its business on frames by Toyo. Years ago, Peterson got them to make a wonderful frame called the Atlantis (Grant's is pictured above). The Atlantis is an all-round bike that is heir to the legendary Bridgestone X0-1, an earlier Peterson design that is now a cult bike. The Atlantis is Rivendell's best seller and I ride mine with a passion.

But a built up Atlantis now costs more than some school teachers take home in a month. Worse, I cannot risk locking it up outside of a store in Oakland. So I am selling the Atlantis, and replacing it with a used Surly Long Haul Trucker with scraped off decals.(The herd will not be without a Rivendell however. The Toyo-made Rambouillet stays because it's a road bike that I rarely lock anywhere).

So what exactly is a Surly Long Haul Trucker? That would be the bottom bike in the photo. And you wouldn't know to look at it, but it is a cousin of the bike on top, the Civia Highland. Surly has been extremely successful and the Civia, which just launched, will be as well (I rode my first one yesterday in Palo Alto). 

Civia and Surly are both from Minnesota because both are owned by a bike company that even bicycle fanatics don't know much about: Quality Bike Products. QBP is as a parts distributor that figured out that in the bike business, shipping parts to retailers, and retailing itself isn't terribly profitable because it doesn't add a lot of value. Value in the bicycle business is captured by companies with really smart brand and product development skills. This requires three things that do not often go together: passion, discipline, and focus.

QBP seems to have all three. Few cyclists realize it, but they have built several of the finest brands in cycling by noticing niches, designing great products and brands, and using their distribution advantages to quickly grow profitable companies.

QBP saw prices rising on Japanese bikes and quality rising on Taiwanese parts and created Surly to make sturdy, no-frills steel road, mountain, and cross bikes. They saw the (frankly imbecilic) tendency for tattooed urban GenXers to ride fixed gear track bikes ("fixies") and they created All-City. (Hey, whatever gets you on your bike….). They have long owned Salsa Cycles, which make premium bikes, mainly  carbon fiber or aluminum. They spotted a surge in cycling related to environmentalism and commuting and aimed the Civia, at the high end of this market. (They are right about the energy efficiency of a bicycle. A famous Scientific American Article by S.S. Wilson in March, 1973
showed that a human on bike gets more miles per calorie of energy than
any animal or any known machine. Others have calculated that cyclist get the equivalent of three thousand miles per gallon).

QBP creates these separate companies like a bicycling venture incubator in the middle of Minnesota. They have assembled the expertise and distribution to identify markets, design products, and deliver them very quickly and in a very focused way. Not all of these companies will or should succeed, but it's a fantastic business model and, in its own way, as exciting as Rivendell.

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