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The sky is falling. The four horsemen are running rampant. Apocalypse is nigh. Does that accurately describe the current mood of the collective cycling industry? Of course not. It’s worse. At least that’s what we hear. The big conventions are dying. The market is saturated with too many products, too many categories and too many high prices. Direct-to-consumer is killing the local bike shop. Asian production is killing the small-batch craftsman. Big brands are on a hiring freeze. No new riders are joining the ranks of cyclists, and brands can’t squeeze any more money out of current riders. Professional cycling is a disaster, with teams folding daily. What’s a cycling brand to do? Where is the growth and who is going to show us the way forward?
PELOTON / Image: M. Gasch
Peloton asked two entrepreneurs who have seen enormous success in cycling, building brands from the ground up that defied convention and continue to thrive, what they see now and in the future. Where are we all headed? What will it take to succeed in the coming years? Who and what still inspires them? In a wide-ranging conversation, they weighed in on a myriad of topics facing cycling today.
MICKI KOZUSCHEK is a cycling lifer, finding success in every venture he touches, from Maxcycles in Germany to the Truvativ component brand he sold to SRAM in 2004 to the company he founded in 2007 and still runs today: Lezyne. In what was thought to be a commodified segment dominated by cheap prices and plastic parts—small tools, pumps and accessories—Kozuschek redefined it with beautifully designed and engineered products made of high-quality materials and found riders thirsted for this kind of quality. He has continued to innovate, taking on new category after category, from GPS to LEDs.
GERARD VROOMEN is best know for co-founding Cervélo in 1995 with Phil White. Cervélo may not have invented aerodynamics, but the company certainly became synonymous with it in cycling. It saw stratospheric growth, doubling sales year after year until 2012, when Cervélo was sold to the Dutch conglomerate, Pon Holdings. Vroomen is characteristically blunt about why: “I hated it.” The small start-up, based on engineering, had grown into a company of 150 that needed constant managing. Vroomen wanted out and was eager to turn the traditional business model on its head—why grow? His new venture, OPEN Cycles, comprises two people, Vroomen and Andy Kesslar, and it’s designed to stay that way; yet its influence has surpassed bike companies literally a thousand times bigger. He has also invested in 3T, the Italian component brand, and taken it in new directions, creating enormous buzz.
Kozuschek and Vroomen have succeeded and continue to succeed in a very difficult industry, in a challenging time, in categories that appear completely saturated. When the current industry mindset is Armageddon, how do two men who have made a living by challenging the industry mindset think?
When asked about product development and what’s next, both men answer through the lens of their own creations, but it is insightful nonetheless.
“People will buy more and more into electronic products,” Kozuschek says, “whether it is shifting, or integration of Bluetooth, GPS with video, everything talking to each other…. I foresee more and more the internet will become a part of cycling. I also see more and more, another big part of the market is gauging yourself—this is really what I mean by the internet integration. Stravaing, the set counting, the calorie burning, the sharing that will become more and more a part of cycling.” Lezyne has bet big on GPS with units that are incredibly connected, both to a rider’s smart phone with its own app, GPS Ally, and to the internet through its own data-analyzing site, GPS Root.
OPEN Cycles, in a bit of a surprise for the road- and aero-focused Cervélo alum, launched with a lightweight hard-tail mountain bike, but it was the Open U.P., a gender-bending gravel-road-MTB, drop-bar mash-up that really made waves. Vroomen explains it this way: “The current trend in road bikes is one of marginal gains—so marginal it doesn’t do anything for the customer. Another watt saved, 50 grams shaved off, who cares? So the real developments are elsewhere, in gravel for example. You see the road companies trying to adjust for that, but with tweaks that make little sense. Hence the whole ‘the new model now fits 28/30/32mm tires,’ which is just a lastminute panic adjustment of normal road bikes to make them feel ‘gravelly.’ But nobody who actually rides on gravel says, ‘Ooh, I really wish I could put a 32mm tire on.’ They are all looking for 40, or 45, or even 54mm tires.”
The latest challenge to the industry, and one the U.S. will be grappling with in a very big way, is the direct-to-consumer movement. With Canyon’s long-awaited arrival in North America, the direct-to-consumer juggernaut will force many brands’ hands. It’s a movement Kozuschek believes will only grow, yet not grow the market as a whole: “There’s definitely a migration from brick and mortar. More and more online products are going to be sold in the future. I don’t predict any growth, there are no new customers coming in. There is definitely saturation in the market.”
How do Lezyne and Kozuschek continue to grow in the challenging environment he just described? Beyond the product’s inherent quality and relevance are business practices that focus on spreading sales around the world, insulating Lezyne from any one region’s hardship. In fact, in 2013, only 10 percent of the brand’s sales were in the U.S.
Vrooman’s OPEN U.P. is almost a statement piece, the antidote to what he calls the ‘me-too’ product, which he believes is the true reason so many brands are not seeing growth. “Too many me-too products, so when sales are down overall, the metoo’s are down too. At OPEN and 3T, we only see growth. If the product is right, it doesn’t matter what the general market does. We also see that at trade shows—everybody is complaining that traffic was down at Eurobike and Interbike. Well, not for us, it was way higher than ever before,” he says.
So who does Kozuschek see doing well? Who does he admire in this tough climate? Shimano. “I respect them as a company and I think they make great working product. They have it all under control—great product, great quality. To me they are trendsetting in sustainable technology. They are always my role model, in a way.”
When asked what brands he admires in today’s cycling world, Vroomen has a very different take, mentioning brands making cargo bikes, a Dutch company inspired by car production and a bike trailer for kids. “Larry vs Harry. I mean, with a name like that, how can you go wrong. I love the Bullitt (above). Or the Omnium Cargo, especially the mini. I love it. Or for the original manufacturing and great industrial design, the Mokumono. And last but not least, the product I use myself that I really love, the Weehoo trailer!”
Vroomen has been heavily involved in another aspect of our sport that seems to have a black cloud hanging over it: professional cycling. He used it as a tool to develop, validate and market Cervélo bikes, eventually culminating in the Cervélo Test Team in 2008—short lived, but incredibly successful. With a team that successful—stage wins in every grand tour, ranked No. 1 in the world—being forced to fold due to economic issues after only two years one would expect Vroomen to echo the doom-and-gloom we hear from most of pro cycling: the system is broken, the promoters won’t share TV money, we need franchises. Instead, Vroomen wonders what everyone is complaining about: “Clearly, people still watch, but with an (un)healthy dose of skepticism. Of course, the skepticism is usually reserved for ‘the other guy’ but still, that doesn’t make for enjoyable viewing. The funniest part for me about pro cycling is how everybody claims the model is broken. I don’t think it is. Yes, teams fold and some team owners lose money, but every year there are 200 riders at the start of every major race. The jerseys may change, oligarchs may have lost a few millions, but so what?”
Both Kozuschek and Vroomen have to focus many years out in product development to ensure they don’t fall in the “me-too” trap, simply reacting, rather than acting. We asked them where they look for inspiration, and expected the stock answers—Japan, motorcycles, cars—but that’s not what we got. Surprisingly, their responses are strikingly similar.
“I really look at everything: architecture, housing, bathrooms, bath fixtures, kitchens, cars. I don’t look at a particular industry, I like good product design. I very consciously walk through the world: architecture, bathrooms, fixtures, furniture. That’s what inspires me. I don’t look at motorcycles or fishing, anything that you could say is similar,” Kozuschek says.
RELATED: Check out Lezyne’s big push into the GPS market.
Vroomen begins almost the same way, but with even broader tastes: “Everything. And not just industries, everything is inspiration. Architecture, travel, art. Two weeks ago my mother broke her hip. Seeing her struggle, I got an idea for a better walker. Which just goes to show, ideas can show up everywhere.”
When it comes to drilling down into their own products and proclaiming a favorite, we can see their product and business ethos reflected in their choices. Kozuschek’s favorite Lezyne product is perhaps the brand’s benchmark for design and engineering, the Carbon 10 Multi-tool (left), which by his own admission is not a big seller, but it represents not just Lezyne’s philosophy, but also the brand’s core competencies. “The coolest product I ever designed other than, obviously, the pump with the hose, was our carbon tool. I feel with that carbon tool I built a true component that was so light and so sexy. We don’t sell a lot of them, but I would say it is my coolest, sexiest. It takes so many different manufacturing methods into consideration—carbon, forging aluminum, forging steel, CNC machining—it’s a truly engineered product to make an 80-gram carbon tool with an aluminum chain breaker. That’s pretty fucking crazy. That is my favorite product.”
Vroomen has been involved in a lot of cutting-edge products, from pushing aero dynamics in road and triathlon, to ultralight climbing bikes with novel materials and tech, but his favorites are his current disruptors: the OPEN U.P. and 3T Exploro. “They give people a new way of riding a bike, and that is not something you achieve very often,” he says. “You can make a better road bike, or a better this or that, but to create a bike that lets people explore in a way they haven’t before, and often didn’t even know they wanted to, is amazing. The feedback from customers who bought the bike because they thought ‘interesting’ and then report back that it’s ‘absolutely amazing, never had so much fun on a bike!’ That’s just incredible.”
To get a sense of what these two men use, appreciate and prize outside of cycling, we asked them to tell us about their favorite non-cycling products and the answers should surprise no one. No fast cars or fancy stereos here, just good design and lots of utility. “I would say my lightweight hiking equipment because it gives me great freedom,” Kozuschek says. For both men it was a tough decision to make, but Vroomen points to a humble wallet when pressed. “How can I narrow down to one? But let’s say the Bellroy travel wallet. Brilliant design, works like a charm; I never forget my passport anymore as I always have it with me. The little pen looks gimmicky but I use it all the time, it’s very durable and the company is really committed to sustainability.”
As the industry collectively deals with current hardship and the growing battle between bike shops and direct-to-consumer manufacturers, we feel confident saying that both Kozuschek’s Lezyne and Vroomen’s OPEN and 3T will be well placed to not just survive, but thrive. There is no magic trick or secret formula to their success. A simple focus on engineering, design and delivering products that redefine their respective categories has kept them one step ahead, combined with business practices that keep things simple (just two people in the case of OPEN) and diversified (Lezyne spreads its sales globally to insulate from any one market’s downturn).
As simple as this formula might be, as second nature as it is to these mavericks, it’s obviously incredibly hard to replicate. When the industry rebounds—which it always does—we’ll look back to this sea-change in the industry and it will be leaders like Micki Kozuschek and Gérard Vroomen that charted the most successful path for their brands through those troubled waters.