Vie Bikes Post Mortem
I am in the final stages of shutting down Vie Bikes, which I co-founded and ran from 2014 to 2018. It was an incredible experience, good and bad (mostly good), and am still wrapping my head around the full experience. But since I'm occasionally contacted by people who are interested in starting something similar, or are just interested in the cargo bike space, I thought I'd write down some of my thoughts.
The ModelTo start, one of the key things to know about Vie was that I had a very big vision for what I wanted it to be. In short, I wanted to restructure the entire business around the customer experience of families buying and using cargo bikes for transportation, and take that model to scale across multiple markets to fit the rising demand. I saw an absolute dearth of retail expertise and care of families--women in particular--interested in family biking in most places in the region and country (with some notable exceptions). I passionately believed that there needed to be a safe, welcoming service of fellow moms and dads available to families to explore the idea and get the help they needed to make the best possible choice for their particular needs. The growing demand was obvious--I used to get stopped all the time to beg for information about my family's biking set up. All. The. Time. All that said, I absolutely never wanted to run a bike shop; I knew going into things that that would be a bad fit for me.
Here are some business models and elements we tested. We explored some conceptually in the pre-launch through modeling and others in the early phases of the business:
- Monthly leasing
- Monthly service
- Rent to own
- Cargo bike share
- Free test rides v. paid test ride fee deducted from purchase price up to a point
- Maintenance included v. some maintenance included v. a la carte
- Bikes delivered and picked up for test ride (for free or at cost, one bike versus multiple bikes) v. picked up at a static location
- Targeted event marketing and test rides v. online and friend referral marketing
- Online signup for test rides v. open hours
- Stocking inventory v. on demand ordering
- Business use v. family use
- In field maintenance v. maintenance in a single place v. pick up and delivery for maintenance (free v. paid in all cases) - provided in house v. provided by an external partner
- Cargo bikes only v. all forms of family biking
- Marketing lifestyle v. marketing bike specs
- Hands off test ride v. guided specific sequence of maneuvers to build confidence
There are probably others I'm forgetting. I've bolded the elements that ended up being both good for customers and reasonably profitable. Others may find a way to make some of the non-bolded elements work in a less-expensive market, or with a different set of expertise and priorities than what my co-founders and I brought to the undertaking. But I can say that the things that did work still only barely worked financially. They were just barely sustainable in a notoriously expensive market, but without a much bigger explosion in demand in the market, not anywhere in the galaxy of profitable enough to fuel the kind of large-scale company I had initially envisioned. (We had little control over pricing for the core product, and the industry prices in a race to the bottom.) Again, this may be different in other markets where there are few to no existing cargo bike options but a significant rising customer demand. And ultimately, the experience turned into a concierge, highly specialized bike shop, and I knew that I had hit a wall.
Things I LovedI want to be clear that the number one thing I loved about Vie Bikes was simply getting a huge number of families on bikes. Even on the jobs where I was bleeding from lugging bikes up and down into a tight van space and/or on the road at 5 a.m. for the third day in a row, I loved the process of test riding. It was fascinating to see how different families reacted to existing bike options, and I loved the moment when everything would click and people (including kids!) would start smiling big because they were having so much fun. (The harder part was the frequent tears that would come when kids discovered they had to get off the bike so I could take it away.) I met some truly wonderful people, and learned a ton about the Bay Area. And I love that I can still wave to many customers in the bike lanes--and that they have become experts for their friends.
I also loved the entire start-up process. I'm an entrepreneurial and creative person, so I relished diving into almost all of the details that go into putting things together. From recruiting people to building the website to figuring out what software to use and how to make the processes as seamless as possible. I loved the a-ha! moment of realizing that we needed to guide our customers through a specific sequence of maneuvers on the bikes to build their confidence and skill, otherwise we'd never sell any front-carriers. I even grew to love doing parts of the accounting and sorting out insurance and storage.
ChallengesDespite all the good things about the business, I also freely admit that I made all kinds of mistakes, from small to large. Things I look back on and think, "what were you thinking?" Most I can probably chalk up to inexperience with running a business (the vast majority of my career has been in the nonprofit sector), and the rest to hubris and haste.
However, it's not that useful for you to hear me bleed my sins in public, so I'll focus here on things people need to consider if they attempt a similar business.
- Supply chain: Where do I start here? Though we worked with a few notably awesome suppliers, I think any honest person in the bike industry will tell you that the supply chain for components, bikes and accessories is seriously messed up--particularly for complicated machines like electric cargo bikes. It's a long chain that disappears into opaque factories foreign lands, and almost no one is making a sustainable profit as a result. San Francisco has some unique challenges because of our hills in that most cargo bikes were horribly under spec'd. Inadequate brakes and rotors, and underpowered electric assist systems being the primary problem--expensive and unacceptable problems for both the customer and Vie Bikes. This has thankfully begun to change. But the overall problem remains, and it's neither profitable to stock these bikes given the cost of rent nor to order on demand. This is likely why some of the more successful cargo bike sellers only sell certain brands, often brands that they also stock for non-cargo bikes, where they do enough volume to make their overall business profitable. The flip side problem with the supply chain is the constant tweaks to the bike models every year by many suppliers. It's still not great, but, hey! it's new! One supplier, who I wanted to love so badly, actually sent bikes with significantly different frame designs each time. (Mind blown.) All that said, I totally get why the suppliers were doing this stuff. It was completely rational from their point of view. But ultimately no one was benefitting, including the customer. Finally, on this topic, I think it's a serious issue that there's a disconnect in the feedback loop from the manufacturers to the customers (particular the female customers). If suppliers closed that loop, they'd be able to stop iterating in the dark so much, and begin producing a refined product that they could push at scale.
- Maintenance and expectations: This is the one of the most glaring mistakes we made in our initial financial modeling. We way underestimated the maintenance costs of these bikes. Because the long and short of it is that the builds take a long time (far longer than regular bikes), and the variety of things that can go wrong during a build (see above about different frames) or routine maintenance unusually high for these complicated electric bikes, and the costs mount quickly. I envied people in flat places like Chicago, where you have basic brakes and no e-assist and still pedal kids around fine (one hour builds!). But that was not the Bay Area, and we ended up eating a ton of cost all the time because of this problem both because of my own poor business decisions and just routine bad luck and trouble. (And to be clear, this was not an area that we ever contemplated skimping on. Safety for the kids on the bikes absolutely came first.) The maintenance cost problem was compounded by the wildly varying expectations of customers. I found this really interesting, though I should have seen it coming. But because these products are relatively new in the world, people understandably don't know what's normal and what's not. And since they're paying a lot of money for the product, they expect it to run perfectly. Again, totally understandable! But it became a challenge to help customers distinguish between worrying problems and imperfections that weren't any sort of safety issue. And those ambiguous consultations ate more of the small sales margin. If I had come from a technical background with bike mechanics, this would have been less costly. But I didn't, and it bit me in the ass. Ouch.
- Labor: Related to the above, oh my is it hard to find mechanics who have the skills and desire to work on electric cargo bikes! Especially if you also want them to be customer facing. We paid an unusually high wage, and provided some other attractive perks, but it was still a source of constant worry. Again, if this is something you are thinking about doing, I strongly suggest you have a technical background in bike maintenance. I learned enough to take over certain aspects of our wrenching needs, but the labor issue is a big one if you have any dreams of scaling a business. Few professional bike techs can afford to live in San Francisco or nearby, and few of the ones who can have experience in electric-assist bikes or cargo bikes. Even fewer of those people find electric cargo bikes interesting enough professionally to work on them. When someone doesn't care, they make careless mistakes. And careless mistakes become safety concerns, especially when you're carrying kids around. Ergo, you either need to create a pipeline of people with the soft and basic hard skills who are willing to learn, and figure out a way to keep them without bankrupting your business. Or you will be doing a lot of your own wrenching.
- Rent: San Francisco is expensive. No news there. We tried having no physical space and being entirely mobile, but that was not sustainable or a business we wanted to be a part of on an ethical level. That said, there may a way to do this without vans, in which case, if you are someone who loves riding enormous hauls of bikes around your city, this could work. We were planning to do that, but it didn't come together for various reasons. I should have tried harder to figure this out, though still, the labor cost involved (and the challenge of finding skilled couriers who could also do test rides) was also an issue. Eventually we rented space in a place with tiny units that cost below market, and supplemented them with a nearby storage unit. This barely worked. But was the best compromise at the time. On the whole, though, I do think there's something to be said for less space, and more targeted, scheduled service. It wasn't gorgeous, but I liked the cozy space full of toys that we offered our customers.
- Sexism: If you're a woman who wants to open this sort of business, be prepared to deal with sexism in the bike industry and other aspects of the experience. For example, at one point I actually had to send a photo of my two male co-founders standing near workbenches to a potential supplier before they'd agree to sign us on. Good times. Conversely, if you're a man who wants to sell cargo bikes to families, you're going to run into a lot of problems if you're not actively listening to the moms in your life, as well as your customers. For example, there is nothing charming to many women about yet another photo of a man riding his bride/wife/girlfriend around in the front (or back) of a cargo bike; we're not possessions to be hauled around. So, please eat some humble pie and listen. Your bottom line will thank you, and you'll be doing the right thing by humanity.
Final ThoughtsI've skipped over some underlying issues, like the basic cost of producing these bikes at the current volume and the still tepid support of biking from most cities (see Her Bike Lane for a good summary of problems and opportunities there). Is the price point a problem? San Francisco and the South Bay, where we also sold a lot of bikes, is a luxury market compared to most, so you can still sell a lot of $5-9K product. But we're a bubble, and that price point doesn't fly in the vast majority of the country, no matter how often you point out that it's far cheaper than another car. Hence the rise of some brands that only sell direct at a much lower price point. Like I said, the supply chain is ... troubled. And anyone who wants to take this industry to scale needs to solve that basic problem. I personally have vowed never to sell anything I don't directly produce ever again.
All that said, if you're still reading this, you are likely crazy like me about cargo bikes and maybe noodling on the idea of going forward with a business. I salute you, and wish you all the best! Some day the demand will rise fast enough (it's very healthy now, but not big enough to compel the rapid and painful change in the key problems holding things back for everyone) that an entrepreneurial person will be able to storm the country with cargo bikes. In the meantime, there's plenty of room for smaller-scale businesses more akin to traditional bike shops. You probably won't make