Amber: Hi I’m Amber Ambrose and this is BusinessMakers USA coming to you from Seattle, Washington at ATLAS Workbase and we’re brought to you by Insperity, inspiring business performance. Today my guest is Mike Radenbaugh of Rad Power Bikes. We’re really excited to talk to him so welcome to the show.
Mike: Great to be with you Amber.
Amber: Thank you Mike. So my first question is what is Rad Power Bikes?
Mike: So we’re a consumer direct electric bike company. We have four unique models of electric bikes, kind of a wide range from family style bikes to fat tire bikes for hunters and what we’ve done is really brought down the price of electric bikes so it’s a lot more affordable and realistic for most people in the United States, Europe, Canada are kind of more of our target markets right now. We kind of lead in the space of electric bikes by volume and we’ve built a really big office here in Seattle now and we’re super excited to be able to share our love for electric bikes with the mass market now.
Amber: That’s great. I know you didn’t start out that way, you started out very custom, one bike at a time, so I would love to hear the back story of when you started building bikes at age 15 for yourself to having a, what, $30 million in revenue company.
Mike: So really 2 years ago we re-launched the company as a consumer direct model business. Before that in 2007 we started building electric bikes that’s when we first launched the Rad Power Bikes brand. Back then we were building one-offs and I actually paid my way through undergrad and then grad school building electric bikes for people one or two at a time. So we learned a lot about the technology, which we’ve been able to apply in developing all our production models that you see today.
Amber: We were talking earlier before we put the cameras on is that in some way all the R & D that you did before was actually paid for by the work you were putting in because you were selling actual bikes to people at the end of it.
Mike: Yeah, it was a really great learning curve. A lot of the batteries, motors, controllers, components 10 years ago were worlds different than they are today.
Amber: That’s right, so you’ve been able to upgrade everything.
Mike: It’s a lot like growing up in the age of PCs when you first started playing The Oregon Trail and then you become a programmer so I was able to do the same sort of thing, kind of grow up with the industry.
Amber: Sure, and pay attention to it for the last 10 years I guess since 2007 was the custom bike phase and then fast forward to 2015, I would love to know about your re-launch.
Mike: In 2015 we started a crowd funding campaign on Indiegogo with a fat tire electric bike. And for people who don’t know what that is, it’s a 4” wide tire that was originally developed for riding in snow and sand.
Amber: Oh wow, because it covers more surface area I guess, so it gets more traction?
Mike: Yeah. So when there’s a larger surface area on the ground you can run them a lot lower psi, but that really turned on for consumers was it kind of drew people to the bike. Versus an electric bike, it’s kind of hard to even tell that they’re electric bikes.
Amber: That’s true.
Mike: They’re silent, so the fat tires grabbed peoples’ attention.
Amber: So the tires were almost like an accidental marketing thing that engaged interest or peaked interest.
Mike: Absolutely. And today it’s our best selling product and it really draws people to it. It’s also more comfortable and easy and user friendly and safety and security; people feel very safe. It’s kind of like a big, tough Tonka Truck of an eBike.
Amber: It’s like you can beat it up a little bit.
Mike: That’s right, yeah.
Amber: So who is your ideal target as far as clients go?
Mike: So now we have city bike, we have a family style bike, we have fat tire bikes, we have folding bikes. But all of our products are very simple; there’s only one or two colors, there’s only a single frame size, so it’s really our product line is attractive to almost everyone from baby boomers all the way down to high school kids that want to have independence.
Amber: Sure, that makes sense; so why Seattle?
Mike: Well we launched in Seattle for a number of reasons, one is we’re closest to the ports; we’re moving so much inventory we wanted to be close to a fast moving port. And then just the talent here we’ve grown from 3 to 30 people in our Ballard office alone in the last 12 months, so we knew we were going to have a pretty substantial need for talent and this had been a really great city for that. So all those things combined and it’s a great city to live in, a lot of fun bike trails and great events and things to do on the weekends.
Amber: When it’s not raining. Well when it’s drizzling I guess that’s okay, right?
Mike: Well we have fenders for that too so you can ride in the rain all year.
Amber: I see, so you thought of everything. So one of your things I saw is that the shipping, at least in the lower 48 states, is included in the price of the bike, so is that correct?
Mike: Yeah. We did something kind of unique, we’re offering free shipping on an electric bike which is a really, really big box and it arrives right to people’s doorsteps for free.
Amber: And I imagine it’s pretty heavy as far as shipping goes.
Mike: Yeah, it’s a 60lb box, which the UPS drivers aren’t super happy about all the time but we’ve added handles all around the box. And one of the big things in terms of the way our business has developed is learning as we go, and the big one was improving the packaging, making it easier for the bike to get directly to the consumer’s doorstep. Just recently we launched a white glove delivery service which we’re pretty excited about.
Amber: So they take it out and make it look pretty and put a bow on it?
Mike: Pretty much; a van with a full size bike shop inside the back of the van will pull up outside of your home, assemble your bike and hand it right to you, fully tuned for you. Then they’ll come back 30 days later and give you a free tune up. So a lot of options now for people to get the bike without having to go through the traditional waiting process and going into a bike dealership.
Amber: With that white glove service how do you make sure around the country that this is being done properly and that they’re trained? Do they come to your facility?
Mike: They don’t, actually it’s a company called Velofix and they’re now nationwide, they have over 100 franchisees they all train to the same standards and go to the same trainings where our company will go and show them how to assemble and work on our particular bikes.
Amber: And just so our audience knows – hopefully they’ll go to your website after this – but what is your price point?
Mike: So all of our bikes are $1,499 except for our cargo bike which is $100 more, so it’s $1,599. Very simple pricing, just like the bikes it’s very simplified purchasing process.
Amber: Easy to understand. So when you re-launched Rad Power Bikes Company in 2015 you guys had a little help from your friends shall we say through a crowd funding campaign. And I know you had a goal but you slightly exceeded that goal, tell me more.
Mike: All along – and the last couple years especially – we’ve had a huge outcry from evangelists for our product. Naturally our biggest driver – we have the largest marketing budget in the eBike space, but really the true marketing happens at the evangelist level with our owners. And it all kind of started with our Indiegogo campaign, we raised I think just over $300,000.
Mike: $320,000 in just a couple weeks; we ran kind of an express campaign. We had already ordered inventory, so unlike most crowd funding campaigns where you fund your initial start through crowd funding we had ordered inventory and helped deploy the bikes to customers quickly.
Amber: So they were kind of ready to go at the ready?
Mike: And were already had completely finished the product and done all of that side of it versus most crowd funding where you wait forever.
Amber: I was going to say because usually it’s backwards and you have to wait a long time.
Mike: Or you never get it.
Amber: Yeah, exactly, because there’s no guarantee. Also – more numbers – how many bikes have you sold?
Mike: We don’t publically disclose our exact sales and figures in terms of gross number of bikes sold per year but I can tell you we did a million in 2015 gross sales, 8 in 2016, this year we’re on track for just over 30 million.
Amber: No big deal.
Mike: A lot of big growth initiatives in the works.
Amber: Yeah it sounds like your evangelists are doing their job because they’re so happy with the product.
Mike: It’s really exciting to see. Everyone in our office commutes in on an eBike every day and you get to work happy and you see the same thing with customers and it’s a good feeling all around.
Amber: You mentioned something in the beginning that you guys are direct to consumer. What is the difference between you and your competition and why that makes a difference?
Mike: Two years ago we kind of re-launched, like I said, as direct to consumer. Since then a lot of companies have tried to follow suit through Indiegogo, Kickstarter – crowd funding campaigns. Most of those companies have came and gone because it’s a difficult space to compete in now since we’ve taken a large part of our market share. But what it really means is the customer is going to be able to get the highest quality electric bike on the market at usually one third of the price because there’s no markups that you would normally experience.
Amber: Because there’s no middle man. The graphic on your website shows that the traditional model is that there’s a manufacturer, there’s a dealer?
Mike: That’s right.
Amber: And then retail and then customer, so there’s two steps in between.
Mike: Yeah, there’s generally a couple of steps; a distributor and then local independent bike dealers. And we still are fully supportive of the IBDs so we push a lot of our customers there for service and parts and accessories and that’s where IBDs make a lot of their margin anyway. So we’re not trying to disrupt the industry in the sense of a lot of my friends own bike shops and they’re a great service, I’ve used them my whole life.
Amber: You don’t want to make them mad.
Mike: We’re trying to support them the best we can.
Amber: Well also they have value in the market as well.
Amber: The batteries on these, are they working like a hybrid like a Prius and recharging when you’re going downhill or when you’re breaking?
Mike: We have two kind of separate sides of our business, one is the fat tire bikes which are more for like do-it-all Swiss Army Knife electric bikes, and then the more city bikes with the RadWagon and the RadCity. Both of the city bikes have regenerative breaking just like a Prius or Tesla; when you apply the break levers the motor actually turns from a motor into a generator and then recharges your battery going downhill.
Amber: So you don’t have to plug it in?
Mike: You don’t but most people will plug it in each night to charge, just like a laptop.
Amber: I saw the word assist on some of them. What does that mean exactly? How does the electric part of the bike work?
Mike: That’s a good question. Our bikes have two basically power assist systems. So there’s a throttle on it so you can ride it just like a Moped or a scooter.
Amber: Okay, that’s super fun.
Mike: Which is great, it’s totally a feeling of like exhilaration, excitement you get from a motorcycle but packaged into a little silent motor system. There’s also a pedal assist sensor so you can go without the throttle – not use the throttle at all – and you just can ride it like a regular bike and there’s five levels of assistance so it will help you out when you peddle as it snese your peddling.
Amber: Oh my goodness, so when I’m going up that hill and I’m just about to pass out it’ll be like no Amber, you’re not going to pass out, I’m going to kick in and help you get up here.
Mike: That’s right.
Amber: That’s always a good thing. And how fast can these bikes go? What is the capacity?
Mike: So the federal legal speed limit for an eBike is 20 miles per hour.
Amber: Oh, okay.
Mike: So they go 20 miles an hour and it’s definitely plenty quick and you don’t have to have a license or registration for the bike that way.
Amber: Oh that’s great.
Mike: So it’s just treated like a regular bicycle.
Amber: Okay, well thanks for joining us today.
Mike: It was my pleasure, thanks.
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