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Tuesday
Feb182014

This Year's Model

Hat tip to Elvis Costello, from whose second album (which includes such staples of my itinerary as "Pump It Up" and "I Don't Want To Go To Chelsea") I have inelegantly ripped off today's title.  As difficult as it is to come up with blog titles all the time, and I'll admit I pulled this one sort of out of thin air, it did work out rather handily that the substance of this post is the Rail 34, our second Rail album as it were.

Mike's last post talked about the creative brief for our advertising (in a blog he titled "The Creative Brief for our Advertising" - who's the creative genius, again?).  This is about the design brief for the 34.  Why did we make a 34? 

In our old wheel line, the 38 was the head and shoulders volume leader. Without canvassing each and every person out there about why they chose 34s over other wheels, we kind of know.  People like light, snappy wheels, and a lot of people are resistant to "deep" rims.  Whether it's for real or perceived cross wind troubles, or just not wanting to be "that guy" with deep wheels all the time, people like the whole program of mid-depth wheels.  When we came out with the 52, THE VERY FIRST question we got asked was "when will you make the shallower one?"  Retrospectively, that answer was "Winter of 2014."  Oddly enough, the question of when we'd make a deeper rim soon followed that.  If 100 people initially asked about a shallow Rail, a very small handful of people asked about a deeper Rail.  And we still don't plan to make one, and we're sorry about the guy we lost as a customer for not having made the wheel he wanted us to make but we can't be all things to everyone.

For way further back than when Mike wrote this blog about road feel, we've been fans of the concept.  Basically, the minute that Mike tested his first set of wide-rimmed wheels, he was sold and our move to all wide rims was afoot. Now we're starting to see the actual "road feel" nomenclature spring up in a lot more places and become part of the vocabulary.  The 52 has exceptional road feel, and believe it or not has WAY more crosswind stability than our old 38s (a lot of 38 customers bought Rail 52s, and this feedback has been universal), but we still wanted to bring the road feel and stability of the 52 to a shallower wheel.

One thing we didn't want to do was create a high redundancy area, where the differences between the 52 and its shallower sibling were splitting hairs.  A huge number of people wanted a Rail that was useful for mixed surface (if the phrase "gravel grinder" didn't nauseate me I would have used it there) riding and races, and for disc brakes, and for cyclocross, and for general every day ever ride use.  The 34mm depth was basically as shallow as we could keep the integrity of the Rail design philosophy, and about as deep as we could make it to optimize all the other factors. I've ridden them in very very windy conditions on this loop in Newport, RI, where you might as well be on the ocean, and they're simply invisible to cross winds. 

Many of you have been waiting for me to talk about weight, and that was one of the first questions we got when we announced the 34.  Pre-production rim weights are in the 440-450g range, which is simply what they need to be in order to do what they need to do.  Wider rim designs need more structure to maintain their shape under spoke pressure, but I'd struggle to call 34s heavy by any metric.  The thing on that is that they're durable as get out, we fully back them for 'cross and unpaved use (you can still damage them in those uses, but what damages a 34 would likely obliterate an alloy rim or a carbon rim with a lesser constitution), and they are STIFF.  Depending on which hubs you use, you can get them under 1400g for a set, and that's pretty freaking light.

We used to call the 38s a "Swiss Army Knife" set of wheels, and we now bestow that on the 34s.  They do everything well.  Plus they look dead sexy. 

Thursday
Feb132014

The Creative Brief for our Advertising

For a long time we took a hard stance against advertising, on the grounds that incremental marketing expenses would chew through our capital and require (and allow) us to raise prices. We launched with a mission of organizing our entire operations around streamlining expenses so we could keep our prices as low as possible. That, coupled with a candid approach (executed largely though this blog) would help tell our story better than ads. And it's been successful. Most of our exposure has been a result of our word-of-mouth friendly approach, which causes quite a few people who do find us to point their friends and teammates this way.

We still have the same desire to stay small, so aren't interested in ramping up marketing in order to scale or take the business to some mythical next level. But since we launched in 2010, a few things have changed. First, the number of pop-up bicycle brands has multiplied, many making similar product and pricing claims to ours. This makes differentiation more challenging, as we didn't stand alone either on price or product. And even if these pop-ups (I can use that phrase since we were one ourselves) churn pretty quickly, they're replaced each year by a new venture, keeping the market nice and crowded. The other change that's occurred since 2010 is the increasing visibility of direct-from-China as an option for bikes and wheels, putting a lot of price pressure on anyone in the market who chose to acknowledge the swelling demand for $500 carbon frames and wheels as a threat. We did, and we still do, so we made some changes.

Chief among them, as you may have guessed, was the Rail 52 - designed in-house, developed expressly by us, validated in the wind tunnel and brought to market. All in plain sight, in real time, right here on the blog. We elected to do it that way because we knew a lot of people would be skeptical if we kept the whole operation under wraps until suddenly one day - poof! - a proprietary design that competes with the best on the market, from this value-priced open mold outfit. Our objective was not expressly to sell more wheels, but to increase the legitimacy of our brand so we could compete better with established brands and avoid being lumped in with the pop-ups and Alibaba. To achieve this objective, the process was as important as the product. 

That same motivation is why we've begun advertising - not to sell more wheels (I've worked at the Interactive Advertising Bureau and have consulted with many online advertising companies and can assure to you that running online ads is no way to sell more product), but to help tell that story of legitimacy. The ads pictured here are now running on CyclingTips, and will start running on some other cycling sites soon. 

We used a creative brief to tune the message. "When fast matters most" is siimple, but also aims squarely at our objective. I'll take you through the brief to see how we got there.

The first thing we did was identify the Highest Hurdle to Clear. More than just the challenge we face, it's the heart of the heart of the problem. Finding it requires acting like a 4-year-old. "Our greatest challenge is that people are comparing us to China direct at half our price." Why? "This makes them not see real value from our product." Why? "Lumping us with unbranded doesn't elevate unbranded, it erodes our position." Why? "Instead of taking a chance with the whole unbranded / off-brand / underbranded category, they feel safer with brands sold through their LBS." Why?

We kept going down that road and ultimately realized that the greatest challenge has to do with a product's price being a shortcut to perceived quality. The more something costs, the more people think it's worth. We are less expensive not because our product costs less to make, but because it costs less to sell. Still, we suffer in the market expressly because of our value-oriented operation and positioning. Ironic, no?

The second step in the creative brief is to identify the Market White Space - some need that our customers have that isn't met currently. This step was a little easier, and less annoying. Pretty quickly we alighted on a key insight related to what we found in the Highest Hurdle step. People really dont like to pay a lot. Instead, they want to pay a little for something that costs a lot. What percentage of $2800 Zipps and HEDs and Mavics do you think have actually been bought at full retail? How many of the sets you see at the business park crit or the coffee shop ride have been obtained through some sort of a team deal? You can't know, but you do know that that guy is sporting some fine ass 3 bills wheels. And that guy is more often than not happy to let you believe he dropped that kind of bank to be (ok, look) so fast.

So yeah, ego is involved in the purchases road cyclists make. That may sound more self-evident than insightful but it really influenced our understanding of the challenges we face. Cyclists want to have nice stuff - both to give them confidence in the purchases they've made and also because the equipment we use (and display) defines who we are as cyclists. It's simply more gratifying to have a set of wheels that people think costs $3K than it is to have a set that ostensibly costs less, and have to apologize for them in some way. So the unmet need we identified is that it needs to be somehow acceptable to have cycling gear that costs less, for reasons aside from the fact that it costs less. In this industry, you can't win on "because they're cheap." But maybe you can win on "They're good. (Oh, and also they cost less.)" There's more detail on that thought on the blog here. Wouldn't it be great if you could spend less money on wheels and bikes and feel exactly the same way about them as if you paid twice as much for a different brand? That's the unmet need.

The next step is to find the Brand Ceiling. How far can we realistically push an idea so that it influences the way customers view us, and still remains credible? In the context of the first two steps, we first sought to figure out how we might give less expensive a bit of caché. But then we realized that we can't try to pump up the cool factor of paying less. Rather, we'd do better to obscure the price by focusing on the product. Make the price an unexpected surprise once we sold the product in on its performace and design. So the brand ceiling we spotted is that November means cycling performance and quality. Period. And the low prices? Let us not speak of those again. 

Put all of that together and you have a creative strategy. We saw that the way through all that morass was to build Aspiration into our products and brand. Instead of leading with what they cost, turn up the volume on what they will do for you - whether that means your sprint top speed, your bike split or your ego is left deliberately vague. 

"When fast matters most" is one way of tying it all together. For some people, we expect (hope?) it will build credibility for the brand because it begins with a product benefit instead of a price. But we also want to address the unmet need of wanting to pay less and still get something that inspires confidence and envy. For some people, perception matters more than performance. But if fast matters most to you, the price you pay is secondary. (Some of our competitors use a similar positioning to justify high prices instead of low, which I find to be a delightful counterpoint.)

You'll see this same strategy employed in much of what we do moving forward - from website copy to blogs and emails and other ads. It won't always be the same language, but for a marketing strategy to work the message has to be consistent and persistent. Fortunately both Dave and I are stubborn SOBs, so consistency isn't really a problem for us.

Tuesday
Feb042014

Frame Dies, Framework Thrives

As some of you will have heard, we canceled the dojo pre-order.  We'd achieved the level of sales we needed both financially and to convince ourselves that the market was, indeed, hot for dojo enough for us to move forward with it.  Unfortunately, a series of progressively more impactful announcements from the manufacturer compromised our ability to deliver the product as we'd tested and sold it, so we had to bail. 

All the money's been returned, and while people are understandably bummed, all the ones who've written back to us in response to the news have been supportive and offered some version of "I'm sure you made the right call." And like a huge percentage of people who ordered wrote.  Obviously we appreciate the support, but we didn't expect the concern, with nearly all also offering some version of "I hope you guys can pull through this and keep selling wheels."  So we also appreciate the concern.  Fortunately, it's superfluous.

We're pretty darn conservative with how we run things.  The pre-order money was sitting all by itself in an account, sufficient to cover any eventuality around the dojo order.  Needing to do what we did is an eventuality that's very much within the realm of eventualities we plan around. 

With wheels, we've minimized supplier risk.  We've got a strong relationship with the supplier, we buy a ton of stuff from them, we have our own molds there - we're not just some schmucks off the street, and they in turn provide us with awesome rims.  This isn't to say we're complacent in the relationship, you have to stay alert in this world, but it's a good relationship. We have a standing order with them. 

With the frames, we had a situation that's happened to a lot of people, some combination/variation on a bait and switch and a soft kiss-off.  Our strong suspicion is that someone acted more quickly than we did (not that hard to do), placed an order big enough to make us an afterthought at best and a hindrance at worst, and when we placed an order that didn't bowl them over, they wanted rid of us.

So, yeah, it sucked to have to cancel the frame order, but far more from the perspective that we'd told the people who got into the pre-order that it was on, and then had to go back and tell them it wasn't.  From a cash flow perspective for us, we would only really have made money as frames sold from stock. It's a punch that's super easy for us to roll with, we just focus on other things (like the 34, which now that I've got them on my bike I've actually caught myself just sort of staring at them, which if you know me like few do you'll know isn't something I'm at all prone to doing; they're just that dead sexy) and play judo. 

The 34 is a going concern, the pre-order is nearly 0% about finance and nearly 100% about managing the order.  If we opened the 34s for sale outright, we'd never be able to get them and build them fast enough.  Only so many can come out of the mold, and we can only build so many per day.  More or less, we're handing out numbers like at the deli counter, only we're paying people a discount for their patience.   

So what's the story on frames going forward?  We don't know.  We're trying to figure it out.  This game with being able to buy only at the manufacturer's whim is BS and we're done with it.  We're only interested in products that we can control, like Rails, where we're in control of our ability to deliver to you what we say we will.  And, of course, we have to be able to offer a unique value to the market.  Without those two factors, we're not doing anything.  It's a slightly pressing concern for me, as after 4 winters of sweating my caustic mank on the thing while riding rollers, and about 25,000 miles on the road, my bike is starting to get that "not so fresh" look.  Runs great, looks a little rough.  Oh well, same with my car.  It's long since paid for. 

Oh yeah, the picture.  That's Mt Lemmon, taken from the front door of the house where I stayed in Tucson. It was an unbelievable experience and I could not possibly recommend The Cycling House enough.  It was far more than just one of the best weeks of riding that I've ever had.  Go.  

Sunday
Jan192014

Why is a wheel company selling bikes without wheels?

Before I answer the question in the title here's some relevant data on the dojo pre order (which remains open through today so is subject to change a bit):

 

  • Framesets by themselves were less popular than frames plus a gruppo, build kit, and/or wheels - only 26% of dojo buyers bought just a frame.
  • Of those who did buy more than a frame, only 20% included wheels.
  • Of those who did include wheels, 100% opted for Rails with 0% choosing our alloy FSWs.

 

Let's unpack these a bit and see what's going on here.

The first one - on the preference for frames+ instead of frames only - was the only one that surprised us. Our pre orders are normally pretty heavy with frame only buyers - always over 50% and as high as 70% in the past. My guess is that the wholesale conversion of gruppos to 11 speed this year lured more people to start fresh with their builds - exactly as most brands and retailers in the industry like it. Planned obsolescence is alive and well.

Are you surprised that so few people add wheels to their dojo? If you saw the number of dojo customers in the pre-order list who know about us after having bought a set of our wheels you wouldn't be. That is the heart of our decision to make bikes without wheels available, even though we have as much leverage as other brands when selling a bike to force the inclusion of wheels, and the incremental profit they yield.

But the other driver of the decision to make wheels optional is a function more of our mission and philosophy than customer analytics. When you set out to deliver value in unique ways, you necessarily have to examine every product decision to see where there is consumer waste. That's a very different approach than looking at product launches as opportunities for incremental revenues and profits. Because we have sold both bikes and wheels since our outset, we know first hand that people buy wheels hella more frequently than bikes. And based on eBay and Craigslist and other secondary markets, we know that OEM wheels shoehorned into a new bike purchase get jettisoned pretty quickly. Instead of trying to capture a piece of that well-established waste for ourselves, we set out to reduce it. Don't waste money on shit you don't need. That philosophy drives me and Dave as people as well as November as a brand.

The data suggests that our customers like the flexibility that results from our philosophy, as it creates a custom buying experience at a less superficial level than choosing your paint and decal colors on the bike that includes wheels and a cockpit whether you need them or not. It is also borne out by the last data point - that 100% of dojo buyers who did opt for wheels went to the highest end and rolled in some Rails. If you don't waste money on shit you don't need, it's easier to afford more upmarket versions of the stuff you've decided you really want.

We're not yet sure how these data and insights will impact our frame and bike business in the future. But they're interesting to us in that they validate our philosophy (anything that tells us we did something right is interesting to us), and also speak towards the market opportunity for greater degrees of customization. As people pay more attention to how they spend their money, "precisely right" begins to win out over "good enough." I frankly have no idea yet what we'll do with that nugget, but we're hanging onto it regardless.

Friday
Jan172014

dojo is a go-jo.

We reached our pre-order goal for the dojo yesterday so the dojo pre-order is a go. Everyone who pre-ordered will have a shiny new dojo in the spring. Anyone lurking on the sidelines waiting to make sure they weren't wasting their time with the pre-order can now pile on with conviction. Hooray, new bikes for everyone!

When I say we reached our goal I don't mean that we pre-sold 100 dojos. We didn't. But we did sell enough frames with gruppos, build kits and wheels to generate enough cash to cover the frame order. This means we'll have frames in inventory in a few months. Good news for people who want to pay one day and receive a bike the next (though you'll be paying substantially more than the pre-order), but it's not the outcome we were hoping for. Selling out of inventory means raising our prices by quite a bit, moving us into a pretty competitive area with other direct to consumer brands (there are still quite a few out there, despite the dozen or more that have disappeared in the past 18 months), and shop-distributed brands at inevitable clearance prices. Our business model is never to do what everyone else is doing only better or less expensive; rather, it's to deliver something that adds unique value to our customers. I can't say we're not a little disappointed that the pre-order was not bigger, and it's causing us to take a hard look at the frame business moving forward. We're psyched to have new bikes on the way, but it's becoming clear that the market for value is substantially smaller than the market for immediate gratification. To compete, we may need to get all Warby Parker and FedEx customers 3 fully build dojos in different sizes to test ride, and have them just send back the ones that aren't quite right. Good luck doing that on the margins from $1045.

Thanks to everyone who did get in early and made this pre-order happen. You're going to love your new dojo. And I'm going to love mine!