Say that five times fast!
On a slightly more serious note, focus has been a huge topic in the hallowed halls of the November Service Course and Low Velocity Wind Tunnel lately. As our business grows, we continually have to tighten up our operations and get more efficient with our time and resources. As anyone who's ever started a business probably knows all too well, what worked when you were getting "x" orders out per week has a tendency not to work as well when you're putting out "6x" orders per week. The balance between what you want to be able to do, and what you can reasonably do well, is one that takes discipline to achieve. For example, we are now big enough that we're building a significant volume of wheels with each of the hubs that we offer. Each of them offers something that the others don't, and between the lot of them they cover a huge breadth of what anyone could want in hubs. There are other hubs out there that make compelling cases for themselves, but in order for us to offer the four that we do as well as we can, we need to focus on just those four.
There was a comment on another company's blog that best illustrates an angle of focus that Mike and I have to be diligent with. Discussing various products to possibly come from this other company, one guy commented "I'd love to be able to consider a titanium singlespeed 29er from you guys." We try to be as customer focused as anyone around, but seriously? Titanium singlespeed 29ers are a niche of a niche of a niche - of a niche - and compared to the size of this niche's market, it's a pretty well served niche. Consumers have the ability to consider different offerings and choose something that's a darn near exactly perfect match for what they want. It's not a niche that's served particularly cheaply (titanium's an expensive material and requires great skill and particular working conditions); after all the more specific your requirements, in general the more you're going to pay for them. It's a blessing and a hard won one at that (for us and this other company and for anyone else) to have developed an audience of people who'd like to buy anything from popsicles to postage stamps from you. Trust me, when you are building an audience from scratch and someone wants to buy WHATEVER from you, it's flattering and your impulse is to absolutely do it. But if you aren't in the business of popsicles and postage stamps and not headed toward being so, it's not going to benefit either you or the customer, really. And so you have to find a way to amicably disappoint the people who want to buy popsicles and postage stamps from you.
Which segues nicely into announcing that the 29er and TT bike are on indefinite hold. We're doing well with road and cross bikes, but doing them as well as we want to is pretty demanding. Supplier management is a constant ongoing thing, and we are striving hard to become an ever more important and significant customer to our suppliers. In the case of at least one of the above projects, we were going to have a new supplier. The products and markets for both TT bikes and 29ers have some overlap with the core of what we do, but they both also have a lot of specificity. We love that people want us to "Novemberize" the 29er and TT markets, but we aren't at the moment capable of doing them in a way that would equate to full scale Novemberization. The other areas of our business are growing in such a way that they require our full attention.
Two conversations with friends sort of sum up where we stand right now. The first, when I was discussing the 29er project with one friend who is both a pretty smart business guy and someone who wants us to have a 29er for him to buy, was him telling me "yeah, it'd be great for me if you guys had a 29er, but to be honest I was blown away that you were able to get the cross bike going so quickly. Launching products takes A LOT!" The second is sort of a one liner that my other friend, who's also building his own business, occasionally throw back and forth at one another: "congratulations, you've now graduated to the next set of problems that you'd hoped to have some day!" Tackling these new, higher rent problems as well as we can takes lots of focus.
6 comments
While I'm disappointed I can't get my 29er from you, I'm glad you guys aren't the type to just half-ass something together just to have it. Good on you for sticking to what you know you can devote the attention needed.
HOW THISS ONE NOT EVVEN MENTIONS JPOWS???!!!!!!!!!!!!!!!!!
After reading your business model, I don't get why you guys make such a big deal of getting new products. You invest very little considering you do everything based on preorders.
Velowit – Thanks for the comment. There's plenty of room for you to develop the misunderstanding you have about the way the world works for us. Product selection (and development) actually takes a lot of time and resources. For example, we've been asked a whole bunch of times for wider carbon wheels even though ours are pretty wide to start with. So first off we need to find a supplier who's doing them, then we need to get them to sell us some samples, then wait for them to arrive, then see them weigh them evaluate them build them ride them reevaluate them and then decide if they are a go or not. It's easy to think "hey I can go on eBay and order whatever I want and have it on my door in a week" but the suppliers that we work with, and who we trust our and your necks to, who are in it for the long run and have verifiable trade references and track records and have liability insurance and meet a whole bunch of other criteria aren't slinging it out on eBay. They have zero interest in an individual's business and in a lot of cases it's quite a job for us to get in the door with what we think are pretty huge orders. As an individual looking for stuff for yourself, the only one of our suppliers that you'd have access to is Velocity. Hubs and spokes you could buy at retail. Frames and carbon rims you are SOL. If we do decide to go for a product, we need to meet a minimum order quantity whether we have the pre-orders in hand or not. As a gross number, our pre-order business is growing. As a percentage of our business, it's shrinking. We have the resources to support only so many products, which also means that we need to hold warranty stock (which we do at our cost), and this means that each product that we do has an opportunity cost. Spending what it would take to bring the number of 29ers that we'd need to buy in would tie our hands in growing our wheels business and our cross business and our road business. In each market, we need to be present. I don't know if you race cross but we were all over the midatlantic for about 3 straight months at events all weekend long. If we're there, we can't be other places, and being there is important for us and our customers. When we're in a market, we like to be really involved in it, not just get by on the bare minimum. Even within each market, there are opportunity costs. Some companies say 'hey, we should have a really light frame – people seem to want those' an wham they go out and put a pile of chips behind some tame that happens to be light. And then they do the same with other niches. We prefer to have a really good bike or each category and devote our resources fully to that. Perhaps in time this will expand but for now our road frame is hitting on all cylinders and our cross frame, I really think its about as good as you'll find anywhere. We don't just fire crap at the wall and see what sticks, both out of necessity and out of sensibility. I'll modestly say that we've built a website that does a lot, but there is some content in it that hasn't kept pace with the way we have grown bigger and grown up. We're beginning to spend some time giving a more up to date picture of how we work. Thanks. Dave
Thank you for an excellent article explaining your business model.That said, do you have any plans to offer a disc wheel in future? My club (Pax Velo, http://paxvelo.com/index.php?page=main) runs five time trials each year, 2 of 15km, 1 of 26km, 1 of 40km, and 1 that varies by group from 30-50km. A disc wheel would sure come in handy for those.