As a startup, we've found that the only asset that rivals cash in critical importance is trust. Trust can be built a number of different ways, but many of them are outside of the scope of our business model. Advertising is the tactic most often used. Throw a sack of cash at your favorite print or online publication and a brand can jump out of a corner and spin up to speed as fast as a pair of 1370g carbon clinchers.
But what a brand is buying through advertising is not actually trust, but recognition. Yeah most of the ads you see have a "click here buy now!" component to them, but the other thing at work is that riders (and their influential friends) start to become familiar with a brand through the ads, and often end up adding a brand to a choice set because "they must be serious because I see them advertising everywhere." In most cases the advertising doesn't compel a purchase. Rather, it removes a reason to write off a lesser known brand. But advertising at a level necessary to engender this kind of trust is expensive. We could do it, but it would mean having to charge at least $100 more per wheelset, and $400 - $500 more per frameset. That would result in us selling less of either, which would compel us to raise our prices further to make up the shortfall. This is how brand new brands end up with premium positioning - it becomes the cost of doing business once you start the slippery slope of heavy ad spending. We decided from the outset not to go that route. (We do advertise on GamJams, but that's because we own it, allowing us to negotiate very hard for unreasonably low rates.)
Another way to achieve trust is through professional sponsorship. Dave and I both have written at length here on the blog about how paying pros to ride your stuff does nothing to make your bikes or wheels any more race worthy, resulting only in unnecessarily high prices for the buyer. But even if Bjarne Riis himself called us and said, "Boys, I like your bikes and really want my team on them next year," we couldn't do it. Our model is to buy bikes in November to deliver them to customers by the end of winter. Even domestic pro squads want their bikes in advance of that, which can only be achieved by already having them in inventory just in case, or by having enough influence on the means of production to accelerate a special order. Neither tactic is within or ken, so we don't play in that pond. (Be glad - if we did it would make our bikes even more expensive than the heavy advertising route - and no faster.)
PR is another way. I like PR because it's less expensive and - they way we intend to do it - more authentic. It encompasses everything from product reviews on racers' blogs, and whatever chatter our products are the subject of on the Facebooks or the Tweetster or the forums. For our part, we want people to experience and talk about our products - real people, who actually race bikes. Now that our products are arriving, we're going to be very aggressive about letting as many people as possible experience them. We already have some Test Ride Testimonials from the fall, but we'll be augmenting those reviews with, well, everything we can.
Which brings me to the fourth way a brand can engender trust - be un-virtual. In the Mid-Atlantic, where Dave and I live and race, we actually exist as people. But to the rest of the country, we're just another website selling high end cycling products. We know how many other sites are doing the same thing (more than you would imagine). It's easy to discount a new brand's commitment or reliability or trustworthiness when you can't see their skin in the game. Websites are cheap and easy to construct; everybody sees generic carbon frames that go for $325 on eBay so assume they cost brands almost nothing to buy (it doesn't quite work like that, but the perception that it does is something every new brand needs to address); and our pre-order model which allows racers to save even more money ends up undermining our skin-in-game credibility even further. Surely any brand that had confidence would just buy $100K worth of inventory out of their own pocket, knowing they'll be able to sell it at a profit, right?
In any industry where you're selling actual products to real people, a physical location goes a long way towards building trust. It shows there is a commitment at least as long as a 12-month lease (and capital to back it up) and creates the illusion of being able to readily inspect and sample merchandise. I say "illusion" because if we had a store, we'd be no more accessible to our Mid-Atlantic customers than we are without it - perhaps even less. Right now, we'll be taking out show on the road almost every weekend, going to races and other demo functions. Even the most brightly lit downtown corner retail location won't be as close to 400 racers every weekend as our tent. So the irony of physical space for us is that its outcome would largely be to make us more trustworthy to the customers who live in Ohio, Florida, California or Colorado than the ones who live in Maryland, DC or Virginia.
That's hard for us to stomach - adding the expense of a physical location just for the illusion of trustworthiness. We're happy if a physical space puts us more in the game, but we can't countenance any expense that doesn't translate either into an improved product, or improved service. So whatever physical space we may have one day has to work twice as hard for us, but cost only a fraction of what other "bike shops" cost. Dave and I have started to flesh out what those parameters are. In a conversation on one of the forums last week though, Dave managed expectations by saying "For now and for probably many months to come, we are a garage band."
In truth, we're more of a shed-and-storage-room band right now. A garage would actually be the ultimate upgrade. 20x24 with a roll-top door to make it easy to unload the van after race weekend demos, none of that foo-foo office carpet that gets ruined whenever a wheel tips over cassette-side down, enough space to rack our inventory of wheels and frames but not so big that we feel compelled to fill it with stuff we then have to discount in order to sell, space in the corner for a fit studio, and maybe room against the back wall for a TV by the espresso machine, which we'll park a row of trainers in front of for the 5 months of winter we seem to be having every year now.
Now if we could just find such a garage - ideally at the intersection of River Road and Esworthy, where the only traffic is the two-wheeled variety - we'll be in business. Until then though, we have to earn your trust the old fashioned way - by telling you the truth about what we're doing and the products you're considering.