Tuesday
Dec212010

4 reasons you'll pay more for a bike in 2011

There's a lot of news swirling around the industry right now, all of it pointing towards higher bike prices in 2011. To wit:

  1. The UCI's Approval of Equipment Seal. Last week the UCI announced that it has solved the problem of manufacturers launching non-conforming products into the market by requiring that products (frames and forks at first, to be followed by wheels, handlebars, seats and clothing) pass a UCI inspection ensuring that they meet the organization's technical standards. The duly approved items will then be given a sticker certifying compliance, which will then grant that product unfettered entry into UCI events. No mention of the expense of this program has been provided by the UCI, or who will shoulder it. Which means, of course, that it will almost certainly be the bike manufacturers who are expected to fund the program, along with the added internal expense of coordinating with the UCI in advance of new models going into production. What that may mean logistically is manufacturing delays that need to be compensated for by expedited shipping, or rushed production, or an accelerated internal engineering process to hit much earlier deadlines. Whatever the scenario, the UCI-compliant cutting-edge new model high-end bikes will be even more expensive to produce. Fortunately for bike companies, it's the cutting-edge new model high-end bikes that have shown the greatest resistance to margin erosion. Don't expect that to change - expect those added costs to show up in the price tag hanging from the handlebars.

  2. Shimano is protecting its dealers by raising everyone's prices. Shimano just announced a new distributor pricing policy - essentially one where margins are lower than before. This strategy is to combat online discounting and give retailers who charge closer to MSRP more of a competitive chance to win the business. The policy is restricted to the aftermarket - any shop or online retailer or brand that buys Shimano product either to sell a la carte or as part of a build kit. There is nothing about the announcement to suggest that the big brands that buy direct from Shimano for OEM (ie, complete bikes with Shimano gruppos delivered to shops) will be affected. Directly, at least. But these big brands are competing with small brands and online discounters for the same market. A customer who buys a frame from one place online and then buys  a gruppo from the cheapest place he can find online is now off the market for the shiny new 2011 model at the LBS. Don't be too surprised if some big brands take advantage of the aftermarket price increase their competitors are facing, and try to squeeze a little more margin out of the complete bike you're suddenly considering since that gruppo you were going to buy to finish off that frame you've been eyeing is now $200 more expensive. 

  3. The non-endemic sponsorship market in pro cycling is in the toilet. Whose marketing department would you rather be running right now - Saxo Bank, Geox or Radio Shack? You're either worried about a drug scandal (at best) eroding the ROI of your ProTeam investment or (at less than best) reflecting directly on your brand, or you just spent a ton of coin to come into the sport at the highest level, only to find out your team was denied a license that guarantees the team access to the Tour de France and other marquis events. When the snot hits the fan, Cannondale needs pro cycling a lot more than Liquigas does. The more inhospitable the environment is for non-endemic sponsors, the more burden the cycling companies will have to bear. Transitions cedes its title sponsorship to Cervelo, Doimo hands it over to Cannondale, and BMC keeps doing its thing on its own. But there are also teams with no title sponsor at all, on whose success the cycling companies have already pinned their hopes. The sponsorless Luxembourg project proudly straddle Specialized bikes, and Pegasus had already signed on with Scott before the UCI pulled the asphalt out from under them for not meeting their financial obligations. The Pegasus story is particularly interesting because of the 11th hour cash infusion from an existing sponsor. That sponsor wasn't named, but it's worth nothing that when Saunier Duval (smartly) distanced itself from the antics of Ricardo Ricco and Leonard Peipoli at the 2008 Tour, it was Scott that rode in on its white horse to resurrect the team as Scott-American Beef. Good money after bad? It doesn't matter so much if it's justified in bolstered margins at the register. 

  4. Carbon fiber is more expensive. We mentioned this a couple times previously. 

 I could add a couple other reasons to this list, like a (perceived) rebounding economy and the increased cache cycling is set to enjoy in the US with the 2013 CX Worlds and a chance at the 2015 Road Worlds in the U.S. But that would be like your coach prescribing your hardest interval workout of the season, and then ending it with "repeat until failure."

All of which is to say that if you don't know where to find a bargain on a racing bike, now is a good time to start looking.

Thursday
Dec162010

Trader Joe's called. They want their business model back.

When you're in business for yourself, the lure to say Yes to any request is great. And it's even greater when your business is new, and when the persons receiving the requests are the co-founders / co-VPs of Sales / co-heads of Product Development / co-directors of Customer Service / co-beneficiaries of the company's modest profit sharing plan. Dave and I realized this early on. In fact, some of the earliest conversations we had were not about what we would sell, but about what we wouldn't sell. We're niche, which is the marketing department's way of saying that we're small and have to focus. The downside is that we can't offer a product line so bloated that even if you know exactly what you want, you still have three products to choose from (as is the case with some bike companies). But the downside to that downside is that it takes a hella infrastructure to to manage a 20 or 40 bikes with 2 or 4 permutations of each. When we decided that we wanted to compete on price against much bigger companies, we became niche by choice - focus is the only way to avoid all the infrastructure that adds expense and makes your bike cost a grand or two more.

We liken our roles to editors - our job is to strike whatever doesn't add value, leaving you with precisely what you need. But the "you" here isn't up to us. If we're small, we don't have to go after a swarming, teeming mass of Yous like the big brands. Instead, we can be consistent with our story and our strategy, and the Yous who share the same value proposition will find us. It's a lesson I learned from blogging - focus on what you are uniquely qualified to create, and an audience will find you. 

Some of my favorite companies outside of the bike business work the same way. A couple of years ago I was shopping in a Trader Joe's. It was winter and my sons wanted hot dogs and chili cheese fries for dinner. We chased down the necessary provisions at TJ's but I couldn't find hot dog buns. I asked someone in an aloha shirt where they were. "Oh it's winter. We only carry hot dog buns in the summer." My son - who was about 7 at the time - remarked to me, "that's dumb." I was inclined to agree with him because he's my son and if I don't have his back who does? But I realized I didn't agree with him, and if I wasn't going to instruct him on a valuable life lesson who was? I told him about niche and focus and strategy, and said that one of the things that makes TJ's so cool is that they have stuff nobody else does. The only way to do that is to also not have stuff everyone else does. We found a half-baked ficelle loaf and used that instead, which ultimately made a much better hot dog bun than hot dog buns.

I also ended up telling him that the other thing that makes TJ's so cool is that they're impossibly cheap. The focus helps of course. Fewer SKUs mean a much smaller store with all of the accompanying reductions in overhead and infrastructure. But the other way they're cheaper is that most of their stuff is private label. Why pay for a cereal (or mayonnaise, or dish soap, or frozen pizza) with a bloated cost to justify massive brand advertising expenses when you can go to the same exact supplier and have a comparable product made with your brand instead? 

Today I was in Trader Joe's again, stocking up on supplies before the Anemic Blizzard of '10, which now seems to be over after gently draping my deck with about 25mm of snow. I couldn't find the Quick Beer Bread Mix, which you make by pouring in a bottle of beer and putting in the oven. (I used Rogue Dead Guy Ale last time, and paired the fresh bread with, um, Rogue Dead Guy Ale.) I found a woman in an aloha shirt and asked her about it, half-knowing the answer already. "We don't have that anymore. It wasn't very good." Now I disagree, and that's fine with Trader Joe's. Because even though they've disappointed me through the loss of a product, they've still got me hooked with their focus on customers who appreciate their editing. 

Anybody got a recipe for quick beer bread, or a recommendation for a cheese to pair with a bottle of 2-Buck Chuck?

Monday
Dec132010

A Dirty Victory

A few weeks ago, Mike and I were standing course-side at Schooley Mill, watching Chris Carraway get the hole shot and put in a great performance on a set of RFSWs.  At the time, we commented to each other how having some skin in the game made watching the races exciting and nerve-wracking.  Adding to the nervousness was that Chris was using just a standard set of RFSWs - not the SOB build.  We were confident enough to let a friend have his way with our wheels (and he's actually using the set that I'll be racing on for next year's road season, so I'm not exactly hoping that they'll get all trashed), but we'd still feel like poo if a wheel failure wrecked a race for him. 

Fast forward a few weeks, and Chris has sealed the deal, taking victory in the 3 race at the Virginia Cyclocross Series Final in Charlottesville.  There's even a nice helmet-cam video of it over in the Cross Hairs. 

On Saturday, I had the chance to get in some quality winter miles with Chris, who still has a few CX races left on the schedule, and he's pretty darm enthusiastic about the wheels.  He's promised a full write-up soon (apparently law school is a bit of a schedule hog), but the key points to his appreciation for the wheels so far are:

1. They're stiff, which improves the steering and handling, and lets one feel what the tires are doing.  I think I know what he's talking about on that last point, having felt a similar thing riding RFSWs on the road.  It's subtle, but definitely there.

2. Riding through slop is much easier.  The high rims slice through sand, mud and muck more easily than shallower rims do.  There is both a automatic rudder aspect and a "hot knife through butter" aspect to this.  There was a sand section in Charlottesville that Chris claimed to have had a pretty simple time riding through each lap, in contrast to the difficulties that everyone else was having. 

3. They stay true and they take it.  Watch the video.  The course looks mellow for the most part, until it's not, and they're going full bore over roots and logs and such.  Chris isn't anyone's idea of a clydesdale, but there's no babying of the wheels going on here.  Whatever the quick line is, he's trying to be there, wheels be damned.  After a bunch of races like this, the wheels are as nearly-perfectly round and true as they were the day he got them. 

So, full report from Chris to follow, but bravo to both Chris and the RFSWs.  We don't yet have to spring for the rainbow stickers to put on the wheels (a cost that we will gladly eat should it be necessary), but so far so good. 

Race smart.

Tuesday
Dec072010

Wide and Dirty... (or FISH ON!!!)

No, no, we aren't talking about my date to the junior prom today (ba-da-bum! my wife is an absolute freaking saint to put up with my so-called "humor") here today.  We're talking about tires that are wide and/or ridden in and on the dirt, and the next phase of our little enterprise. 

First the tires.  I've recently switched to 25c tires for my winter riding.  I do not believe that I will henceforth be using anything narrower than 25c in a clincher for any purpose.  The ride is fantastic, and cornering is exceptional.  It's really quite nice and I highly recommend it.   There is plenty of clearance in the Wheelhouse frame for the running of thusly diametered tires. 

Now to the dirt, and the fish.  We sent our agent his marching orders for the Taichung Bike Expo which is currently underway, and he's done rather freaking well indeed for us.  First order of business is our CX frame.   As Mike says it, we started of as "material agnostics" on this, with a preference for scandium.  Scandium is great stuff, sort of walking the line between regular aluminum and carbon.  It can give you a light and stiff frame with great road feel at a great price.  It's more expensive but lighter and rides nicer than aluminum, and it's less expensive but slightly heavier than carbon (and gives a similarly nice ride).  You also don't need such a big "handle with care" sticker on it like you might with carbon - a good thing for a cross frame.   So while we were definitely open to any material, I think in our minds we were pretty much in the tank for scandium. 

A rough outline of our requirements/wish list was race geometry (we were much more specific than that), top routed cables, tapered head tube, low-ish to low bottom bracket, replaceable rear derailleur hanger (you'd think you wouldn't have to ask but you do), ability to run a fork-mounted brake boss, and disc tabs.  We added some other niceties on there, but that list is pretty well the heart of the target we wanted to hit.  And of course it needed to come from the right supplier and be priced such that it made sense for us to enter the market. 

When we opened our emails this morning...  FISH ON!!!  We aren't going to announce any specifics until we've gotten our sample frames and had our crack staff of ace cross bike testers (i.e. NOT me and Mike) out them through the rounds, and tie up a laundry list of other things before we commit to giving it a go.  But we're pretty darn excited to get some over here, get them built, and ride them (or, more accurately, have them ridden) like rented mules. 

The disc tabs was a big thing for me.  I don't know what's going to happen with that.  One of the things I first thought of when I went through the "how are disc brakes going to screw things up for everyone" list (see Ethan? - armageddon is my role) was hubs.  There aren't really any top end road-spaced disc-compatible rear hubs.  Yeah, well, as of a couple of days ago, that issue is officially addressed.  Once you get past having the tabs on the bike, and having good disc-compatible hubs, the rest gets way way easier.  Right now you're sort of stuck with BB7s or one other kind of mechanical discs whose name eludes me right now (not that I don't think BB7s are great - I use them very happily on my mountain bike), but there will undoubtedly soon be myriad brake options.  Yeah, if you're using discs it makes it pretty well impossible to slap your road wheels onto your cross bike for the late summer Goon Rides when you want to get used to cross bike feel, but that will solve itself somehow in time (and we're working on that), but we felt like the likelihood that cross discs are going to be something too significant to ignore was absolutely worth the 20 or 30 gram penalty of having a frame and fork built to take them but not using them. 

True to our counter-cyclical selves, we'll have an ordering deadline in early (very early) spring.  If we wind up with this frame, the manufacturer (who would be first on anyone's list to have a scandium frame produced by) is no joke with the lead times for guaranteed delivery.  So we'll probably be standing there in the Jeff Cup parking lot, with our Leffe, frites and cowbells (although if Jeff Cup next year is anything like it was this year, we'll be looking pretty darn smart with frites and Leffe), getting everyone off their butts for cross season when we're about two laps into the new road season.  C'est la vie. 

Race Smart.

Friday
Dec032010

The Good, The Bad, and The Inventory

Spoiler alert – there actually is no bad in this post.  

MOQ.  Among all the senseless, technically questionable acronyms in cycling, none has caused us to stay awake at night like MOQ.  Minimum Order Quantity.  You can either order at or above the MOQ, or you can order nothing.  In many ways, the first frame we sold was the scariest – we were committed to supplying that frame to that customer, which meant that we were committed to buying the MOQ.  Fortunately, we sold plenty of frames and things went orders of magnitude more smoothly than our doomsday darkest scenarios might have played out.   But the MOQ, she’s no cheap date, and though we sold a lot of frames, we didn’t pre-sell every frame we’d committed to ordering.  Meaning that we have some unsold frames headed to us.  

Through January 19, these frames are available for pre-sale at $864. After 1/19, any remaining unsold frames will be available for $981.  “But Dave,” I can hear you asking already, ”normally when people get stuck with inventory, the prices go down.  It’s simple supply and demand.”  Yes, it is simple supply and demand, but not along those parameters.  We sold a bunch of road frames during cross season, which is a little bit like selling abstinence at a swinger’s convention.  Actually it’s a lot like that.  Our pre-order season occurs when demand is at its natural ebb – see multitudinous previous posts touching on the subject of selling counter-seasonally, the mutually advantageous nature of pre-ordering, etc.  By the time March or April gets here, and everyone who hasn’t got his frame for this year sorted out is looking for one, we’ll be thrilled to be able to help if we can, but our costs will have gone up, supply will have gone down, and demand will be at its peak.  It’s not at all that we’re going to try and take advantage of people in a fix for a frame (and it would be the height of delusion for us to think that we’re capable of occupying a space in the market to be able to do that), it’s that our original deal was the best deal we could possibly offer, and we’ll continue to offer the best deal we can, but we won’t have the ability to offer the same deal in April that we do in October. 

In simple terms, the early birds got the worm and got themselves a phenomenal deal.  The people who commit before 1/19 will still get a phenomenal deal, and so will the people who buy after that.  But the people who’ve bought already get the most phenomenal deal, and have guaranteed themselves a frame in their size.  We don’t have a ton of inventory headed our way – just a very limited supply in the more popular frame sizes: 52, 54, 56 and 58.

We are doing a similar deal with wheels, where our pre-order sales were very healthy, and we are actually choosing to take a bit of inventory.   Especially with the SOB build, we feel that we’ve got a product for which there’s a lot of demand and not a lot of supply.  Big dudes need love too.  So we have RFSW wheel sets in the SOB 24/2 spoke build vailable until 1/19 for $754, and thereafter for $856.  FSW wheel sets are available through 1/19 for $380, and thereafter for $431. 

And since we have some inventory of both frames and wheelsets, you can also elect to build one of the Wheelhouse frames into a Max Perkins.

The kicker on all of these items is of course that we aren’t going to have limitless supply, so when they’re gone, they’re gone – which may happen long before 1/19.  

The shopping cart functions on the site have been updated, and if you would like to reserve a frame or wheel set, by all means please do.  

Once again, thank you to all of our customers, to the teams who have partnered with us, to everyone who’s demo’d our stuff, and to everyone who visits and reads the site.  We are confident that we’re developing a new way for riders to race on great gear without it costing them an arm and a leg, and we’re excited to have so many of you along for the ride.  

Race Smart.