Industry Special Q&A: Buyer ethics, Brexit, advocacy and more...

In our final episode of this limited series, we turn the floor over to member questions. Thank you to everyone who became members throughout this series. Every single one of you helps make us produce more content like this. If you're not a member, you can join here: https://escapecollective.com/join/

You can listen another podcast you'll enjoy about 'Why are modern bikes so expensive' podcast here: https://escapecollective.com/why-are-modern-bikes-so-expensive/

What is Overnight Success?

A podcast about the founders, the innovators, and the remarkable people in the cycling industry and the stories about the icons they've created.

Escape Collective is entirely member-funded. If you like this podcast please consider supporting us by becoming a member: https://escapecollective.com/member/

Unknown Speaker 0:12
Music. Hello again, fellow escapees. I'd like to thank everybody who listened, shared and reached out to me during the release period of the last four episodes of this series, and most of all the people who became escape collective members off the back of it, I can't thank you enough. The more members who support us, the more of this type of content we can produce. In this final episode, we open the floor to member questions. There were so many good ones that came through, we could have gone on for hours. So I chose a small selection that hit on topics that we hadn't covered yet. Let's start again with one of the stars of this series, Ellery Slater, who is the owner of the independent bike shop sports garage in Boulder, Colorado.

Unknown Speaker 1:00
Ellery, it's good to speak with you again

Unknown Speaker 1:03
after listening. Was there anything that anyone said in this podcast series that came to you as a surprise? Um, no, but that I want to say no, not in a way. I don't want my no to be like self important. My no is more because what I was attuning to in myself when I was listening to the podcast, was this a sense of relief, because I would hear like I wasn't talking to Tay at QVP, I wasn't talking to Tyler at seven mesh, even though sports garage has been a seven mesh

Unknown Speaker 1:38
like retailer for years. Oh, fantastic, yeah. Like, we've had a little store within a store for a long time, but I had never spoken to any of the other gentlemen that you interviewed, and so when I was hearing their stories, and there was alignment with how I perceived the marketplace as a dealer, because there were many instances where the block of questions you asked us, there was alignment in our experiences? Yeah, and I heard that coming out. And so I think that the emotional sense that I felt the most was relief, like, Okay, I'm not crazy. Like, this was really happening, and things that I was experiencing as a dealer, the stories of the other distributors, manufacturers and industry professionals who you interviewed, pieces of their story totally checked out. Like I'm not crazy. Those things were really happening. That's really interesting. You say that because if there's one piece of feedback, I seem to see a pattern in was this sense of

Unknown Speaker 2:47
I'm not alone. I felt like I was alone through this whole three years or two, or whatever it was, and people, I didn't realize how relatable it was going to be at every level of the industry and and to be honest, the the pain people went through, actually, I wasn't as attuned to because people spoke email about counseling they had to get afterwards and and being treated really, really badly when they tried to speak up and raise these Red Flags, which was, which is quite heartbreaking. And I didn't expect it to go this far and wide. And didn't realize how many people in the industry there were who had this exact same experience, and people spoke about the elephant in the room. I didn't realize it was that. So that was, that's interesting. You say that it's, no, it is an elephant in the room, and it's come up a little bit more. I had the gentleman who's the director of marketing for lifetime fitness, endurance sport, like endurance races, right? So he's the director of marketing for, like, the Leadville series and the the Grand Prix series, and he was leading a tour in Columbia, and he texted me, and he was like, I'm really glad you're saying this stuff, elle, really. He was like, it's really interesting listening like, I'm really glad that you're saying these things.

Unknown Speaker 4:07
And I do feel like I took a risk,

Unknown Speaker 4:11
but I also feel I do. I feel like I took a risk, but I said things that were 100% true, right? And I think it is true that people probably felt like they were alone, because if you feel alone, it means there's something in your experience that you can't share with others, or something in your experience that you know you don't have colleagues or a peer group to talk about, and now all of a sudden, we're talking about it. Well, it's ridiculous to think that in business, you didn't have anybody to talk to you about your own business, right? Like, you know, what does that mean? Like that the National bicycle Dealers Association is ineffective that you don't have good relationship with your vendors. Like the fact that that no one had a peer group to discuss this with is a whole nother meta level indicator of like problems.

Unknown Speaker 5:00
Right? And speaks to how fragmented the industry actually is, and it I've heard myself say that word so many times in the editing process where,

Unknown Speaker 5:10
you know, and the root of the problem is it is so fragmented, isn't it? And people seem to have this thing that everyone gets together at these great conventions like Euro bike, or previously in your bike, or sea otter now, or whatever it might be. And yes, and everyone's in one big happy family, and it's really not quite like that. Is it in terms of communication? No. And even when you go to like a Euro bike, or, you know, formerly an inner bike, or or sea otter, and I've been to all of those also, is it really one big happy family, or is it like a class reunion where you're, like,

Unknown Speaker 5:46
gained a lot of weight,

Unknown Speaker 5:49
big dysfunctional family? I like to call one big dysfunctional family for

Unknown Speaker 5:56
those guys now, like, yeah, you know we have in Australia here. I don't know if you want to call it. It's not a true not a trade show, but the Tour Down Under, which is a big professional cycling race in January, we all, or I always, call it first day back at school. And it really does feel like that. And I'm genuinely happy to see everybody, but I don't work in the same

Unknown Speaker 6:17
stratosphere as people like yourself so well, you know, and I don't either. And someone asked me, like, what brands are you going to work for? I still do independent strategy consulting, and got some really fun clients, and I've done some fun projects, but, you know, one thing we didn't talk about was the project I did last year was completely outside of bikes, other than working at sports garage 2024 I did not work for manufacturer in any way, and it was almost like I needed to decompress, like it was almost like I knew too much. Being at a manufacturer and at a dealer, you always felt like you were being gas lit, like you would talk to the other dealers and you'd be like, This is what's happening. And they're like, that's not what's happening. And then you go to I'd go to pivot, and I'd be like, Hey, this is what's happening at the dealers. And they're like, no sports garage is a unicorn. You guys are a different shop. That's not what's happening. And I'm like, No, that's what's happening. Like, right? You know, it was very strange experience to see both sides of the coin for three for the entire pandemic, the entire pandemic. I'm really curious. The reception you had on your side podcast can be a strange thing, where there's no comments and it's quite a delay and of people listening to actually giving feedback, and it's hard to give feedback, besides in person or maybe an email address. Did you find that you got much because I got that, Ellery, she's a badass. I love her. Where did you find her? And I'm so lucky to have found you. Ellery, what did you get back? You just say thank you.

Unknown Speaker 7:51
I had a few people connect with me on LinkedIn, like, from Denmark, Europe, that's United States, and they sent messages that were like, I heard you on the podcast, and I was just compelled to connect with you. But, you know, mostly I think, like I said, I did hear from people that were, you know, close to me, that were like, This is awesome. I'm glad you did this. And I was really appreciative that they said things like, I'm glad you did this, because I felt like they were offering me their personal support, and that really a lot to me.

Unknown Speaker 8:30
So maybe, if I was to recap everything that was said, and I want to know if you agree with me, and if there's anything to add, or it's the major theme. Themes seem to be the first party data, which you brought up very strongly, and the absence of that to communicate and forecast on maybe number two, the shadow, Shadow ordering that over indexed and hedged for these unrealistic forecasts. Yeah, leaders in the industry thinking this was forever, I actually refused to believe that, until I started speaking to more and more people. I'm like, how long are these people? Aren't these people are switched on people. How could they believe this? And then just the external factors of shortages and lockdowns and shipping and materials and that, do you think that sums up some of the bigger problems, or is there anything in between that I'm missing? No, I think those are the building blocks of the problems, right? And I think that the only other one that we spoke about throughout the podcast. But, you know, never assigned a label or a category of its own, is like kind of stepping back and saying, Why are, why is the cast of characters in our industry

Unknown Speaker 9:58
a particular way that this could have.

Unknown Speaker 10:00
And across hundreds of organizations. If you go to the zoom out level, why is there such consistency across the cast of characters like at the meta level, why are we creating a culture like this? That's such a good point.

Unknown Speaker 10:18
Let me be very careful, because I am a cyclist. I love my cycling business. I love riding my bike. I love cycling culture.

Unknown Speaker 10:27
Why is our business culture like?

Unknown Speaker 10:36
All right? This question, I think, was excellent, and it was a guy named a member named David Savage, and he spoke about how consumers should approach deals. So I'm going to just play it and and I'd love your response to that. Hi Wade. This is David savage in Indianapolis, Indiana. My question is, how should consumers be approaching these issues in the bike industry from an ethical perspective,

Unknown Speaker 11:05
like we all want to see the industry doing well, but there's also a lot of really great deals floating around, and it sometimes wonders whether we're doing the industry a disservice in the long run by taking advantage of Some of those. Thanks. That is a good question. Wade

Unknown Speaker 11:24
and David, thank you for asking. I can only speak through the lens. I want to speak through the lens of a small business owner when I say that it is still a marketplace driven by supply and demand, and there is an oversupply, and so there's nothing your ethics have nothing to do with the fact that the bikes are priced where they are, where I think if you want to act ethically as a consumer, I would ask yourself,

Unknown Speaker 11:58
whom do I want to have a positive impact on right? Because you alone as a consumer, you know, can't have too much influence over this total supply and demand. You know, Wade's done a great job bringing together a bunch of people to describe where the supply scenario came from, and that really had nothing to do with consumers. As a bike shop owner, what I appreciate is when my customers come in and say, Hey, Ellery, I'd really like to do business with you, but I saw this exact same bike for this exact same price.

Unknown Speaker 12:32
I never am offended by an opportunity to earn someone's business, and I think that's one thing I'd love to share with consumers. Sometimes I've seen people on the trail who I've sold a bike to, and they found a great deal on another bike someplace else. And when I saw them on the trail, even though I consider them a personal acquaintance in my community, they're embarrassed to tell me that they got a bike someplace else.

Unknown Speaker 13:02
But I am a business person, and I understand I'm not going to make every single sale in our community.

Unknown Speaker 13:09
So you know, sometimes, as dealers, we do have the opportunity to price match. I can say sometimes we can ask our vendors for an opportunity to acquire inventory at a similar margin. If they're a proactive dealership, they may be doing that. And the only way you'll know David is, I'm just going to go ahead and make the assumption that you want to support your local bike chef.

Unknown Speaker 13:34
And if that's the case, don't be afraid to go in and say, This is the deal that I have available if you were to make me a similar deal, is that in your best interest? And then the bike shop has the right to say yes or no, and sometimes they may say yes and sometimes they may say no. We often have said yes, because there may be some element of it, it is in our best interest. And actually, right now. I mean, for even currently, we actually have a homepage banner that says we will price match up to x percent,

Unknown Speaker 14:08
because, as a responsible business owner, I also, David, am thinking about the good deals that are out there,

Unknown Speaker 14:18
and I don't blame my customers for wanting to make a good deal,

Unknown Speaker 14:23
I would just love if they would give me the opportunity to earn their business. Great answer that's Yeah. That makes a lot of sense to follow on to David's question, how are bike shops or brands going to get back to normal pricing with the deals that are going on right now, with a people expecting 3040, 50% off? Well, I don't, I honestly, and this may be naive of me Wade, but I think that consumers, the consumers that are in the marketplace, as long time cyclists, I think on some level, they know that some of the prices that are.

Unknown Speaker 15:00
Out there are clearance prices, and I believe that the industry is already starting to give cues of a price normalization. Because when a manufacturer releases a brand new bike, let's say that a new bike launches like we've seen some new bikes launch in the last couple of weeks, whatever the MSRP of that bike is, let's call that price normal, right? Because new bikes typically aren't discounted out of the gates. So I think there are really good deals to be had out there, but I think that consumers can look to new bike launches for their cues about what price normalization looks like. Whereas we saw new bikes launching, let's say, at a certain price level in 2021 or especially late 2021

Unknown Speaker 15:48
those new bikes now are launching at a discount to those 2021 prices. So I would look to the launch price differential like the delta between where a bike launched in late 21 and where a bike is launching now, and I would look to that as the best indicator of price normalization. And I think, like I said, I think customers that are in the marketplace as cyclists are aware that some of the deals that are out there are, they're, they're, they're discounts, but they're not. Those discounts are not the new normal, yeah, yeah, you can't get the new ones for that discount. And if you want new That's exactly right, yeah.

Unknown Speaker 16:31
All right. Next question from David Lee, which addresses forecasting and first party data, the thing that you raised from our first conversation, hi Wade, David from Newcastle, New South Wales, here as someone who works in FMCG at wholesaling, I found the series especially fascinating. A lot of the logistical and forecasting challenges facing into an unprecedented situation were very similar, but one thing that sticks out to me is the disconnect between manufacturers and retail sales data, the question how many bikes did customers take home from a store last week doesn't seem to be something most companies can answer. Do you see any movement from the industry to address this? And have you seen any indication that entirely direct to consumer brands like Canyon, who presumably do have a decent handle on this, managed to escape some of the pitfalls the majority of the industry faced. Thanks for the series, and it's great to see escape collective thriving and expanding to include content like this. I'm getting all the credit for the stuff you and everyone else contributed.

Unknown Speaker 17:38
I didn't do anything. No, you ask good questions. And I think that's important. David's asking a good question. Yeah, the first person data, first party data. It is way something that I spoke about because

Unknown Speaker 17:52
I became very interested in this topic as a dealer.

Unknown Speaker 17:58
And I remember way pre pandemic. I can actually remember saying

Unknown Speaker 18:05
to one of our vendor partners, why aren't you asking me more about my customers? I remember asking that question, like, why aren't you more curious about who our customers are? Like, we know who they are. You don't know who is riding your bike. And at the time, I did phrase it in the context of like, this is going to be the single most important competitive factor between you and a direct to consumer brand. And at the time, there was a lot of more conversation about price being the most important factor between a direct to consumer brand and brands who worked with traditional brick and mortar bike shops, there was like a hyper fixation on, well, that means they're a price point brand. Direct to consumer is a price point brand while, while there may be an element of truth in price, the more important thing in the long run is exactly what David pointed out, which is direct to consumer. Brands are speaking directly to their consumers.

Unknown Speaker 19:14
I like to say that the traditional bike industry, for a very long time just grew comfortable with what I called the black hole. And the black hole is where they pass their customer to a bike shop owner.

Unknown Speaker 19:34
So if you think about how a customer becomes interested in a particular bicycle brand, they may see a YouTube video. Their friends may start riding that bike. They may have seen it. Maybe they saw it in bike shop.

Unknown Speaker 19:50
But there's lots of different ways now for a consumer to become aware of bicycle brands, and brands are spending millions of dollars to drive that away.

Unknown Speaker 20:00
Awareness through race teams, videos, online content, sponsorships, all of those expenses are marketing expenses designed to increase a consumer's awareness about the bicycle brand. And so brands go out and spend millions of dollars to attract this awareness and get people interested in their products,

Unknown Speaker 20:23
and then they completely take their hands off the wheel, and they may have a a dealer locator or a stockist locator on their website. Most do where they can say, hey, here's the here's the dealer that's in your area, right? And at that point in time, from a data standpoint, they literally stand back the black hole opens, and they hope that the customer walks into the dealer. At that point in time, an entirely new customer journey begins, where the customer is now becoming bike shop aware, and they're developing a relationship with the bike shop everything that the brand has to learn about that person in their decision making process. Traditionally happens in the bike shop.

Unknown Speaker 21:10
David's question about how we're going to stitch it together, that solution has to exist in where that black hole is right. So today's world, those are digital innovations in the tech stack, like, how do we cap, you know, how do we, how do we make a connection that is an advantage that direct to consumers brand. There is no digital black hole that the customer falls into. I

Unknown Speaker 21:33
think that there are some nascent efforts to solve it, things like bopus or buy online pick up in store, or robust reserve online and pick up in store. These hybrid direct to consumer sales models are a very clear effort to stitch the manufacturer directly to the dealer. And I think that by and large, those are can be very positive programs.

Unknown Speaker 21:59
Those are before the sale programs. Something you just said there, made me think it all makes sense from a forecasting perspective, but as an IBD yourself, would you really want the brand to have that relationship with the consumer, the direct relationship and you maybe being cut out of the picture at some point, especially now with more and more going online, I

Unknown Speaker 22:23
think it's inevitable. I think if you're a dealer that thinks you're going to slow that train, you are already too far back in your own thinking about your own business, right, right? Like, I mean, it's, it's, it's, it's like standing in front of who's tsunami, I feel like that is a dealer really, like, I don't think that we can slow that move. And honestly, I don't want to be the kind of dealer that says, Oh, if we just go back to the good old days where we don't innovate technically, digitally, like, everything would be fine. I don't believe that, because I also want to be sustainable, and I think that there's a generation of buyers coming zennials, they have been conditioned in to have, like, frictionless transactions. They can do everything online, right? They're not going to like code switch for cycling and not want to engage digitally. So I don't think the question is like, oh gosh, do I really want my manufacturers to have that relationship? That's not the right question for me. The right question is, as they're developing a relationship, how can I be at the table? Yeah, keep me at the table while you develop the relationship. It makes me think about a pretty powerful comment you mentioned in one of the episodes was, you know, is there a collective,

Unknown Speaker 23:41
maybe conscience around the industry, towards the the independent bike shop dealer, and someone told you, No, there isn't, I don't suppose a handshake deal is quite good enough for you to be at the table in that

Unknown Speaker 23:54
shift in first party data, if it ever happens. But the sad part is that I believe the tools are available, and that there are very savvy bike shop owners, owners, operators, who would be great people to have at the table. It would be great people to have at the table. They've developed all of these relationships with customers. There's so much information. Some of it, yes, it is local, but a target audience is just an aggregation of 1000s of local audiences.

Unknown Speaker 24:29
So, you know, I think really good owner operators would be great partners at the table.

Unknown Speaker 24:35
Excuse the interruption, but I want to take this opportunity to alert you to another podcast episode I think you'll enjoy from my colleague Ronan McLaughlin. Ronan just released a fascinating episode where he speaks to the CEO of factor bikes, Rob jellis, who you've also heard speak in this series. Rob basically opens up his books so to speak, and tells us in detail how much a.

Unknown Speaker 25:00
In bike costs to actually make, and all the things that go into the final retail price. If you enjoyed this series, I know you'll love Ronan's episode. You can find it on the escape Collective's main podcast channel in the geek warning show, which I think you'll also love. And I'll also post the link in the show notes for this episode. Thank you. We look at the absolute numbers, the bicycle was $3,000.20

Unknown Speaker 25:24
years ago for a premium level bike. And if you extrapolate that across 20 years, a $10,000 bike is not all that outrageous. Have you looked into that? Or you think it's sort of not what we tend to hear. A lot of people would assume that bike prices haven't really tracked with inflation.

Unknown Speaker 25:41
I think that the value of what you get out of a bike is a lot more. You know, bikes 20 years ago, you know, they had 10 speeds, they were friction shifting, and you know, now they're carbon fiber, they're electronic. I think the value you get today is actually far greater.

Unknown Speaker 25:59
Let's go to Mark Marionette, who has a really good question about forecasting, cleanup and also advocacy.

Unknown Speaker 26:09
Hey, Wade, this is Mark in Atlanta, Georgia, and I just want to say thank you to you and all the contributors for really producing an excellent series that I was both entertained by, but also

Unknown Speaker 26:20
learned a lot from in terms of where the industry has gotten to where it is today.

Unknown Speaker 26:26
I did have some questions for you and the group, in terms of, first off, if anyone really sees a realistic future where outside industry or businesses step into cycling to quote, unquote, clean it up, and I really mean

Unknown Speaker 26:41
putting them in a place where they're using modern day forecasting and metrics to have a realistic look at what the future will be for the cycling industry. I think it was Josh Portner that said something along the lines of with the numbers that were being forecasted at the time, they either had to have every person the United States buy a new bike in three to five years, or they'd have to involve the entirety of the outside world. Step into the cycling industry for the first time, which was just obviously unrealistic.

Unknown Speaker 27:11
Secondly, I really wanted to see what the thoughts are on the industry, having a more serious look at direct action, on advocacy and lobbying on city and local governments for safety. As a new dad here in Atlanta, I found that I'm just not riding outside much right now, and not at all at the moment, because I just don't feel safe. As somebody who used to race and ride a lot regularly. This is a strange place for me to be in, but I just know that taking my daughter out for a ride is something that I take a lot more seriously now and with the infrastructure that we have that while improving is still not great, and in particular the advocacy of

Unknown Speaker 27:58
trying to get people to look at cyclists as not an impediment in front of them on the road, but rather somebody that is choosing to use an alternative method that's actually making traffic better, something that I really think the industry should be taking a better and more serious look at new bikes and new tech, or something that I love, but feeling safer to get out with my family on the road, is something that would get me to purchase more and take a more serious part in the industry.

Unknown Speaker 28:29
And I know there's no local nonprofits here that that is their primary focus. But in terms of the industry as a whole, it's something that I wanted to see. If that's something that's realistic, or is the industry just too small and doesn't have the possibility of even doing that. Thank you again. So much for making this it's been really great to listen to lots in there. Hey, lots in there. Two really great questions. Yeah.

Unknown Speaker 28:53
His first question about, you know, Mark asked very specifically, someone from the outside coming in. I'm

Unknown Speaker 29:02
going to let that one marinate for a minute, but I am excited to talk about Mark's question about advocacy, yeah, let's go there. Yeah, let's go there. About, you know, and he said city and local governments. And this one is one that I was really excited to hear as a listener question, because I recently really stepped up my involvement in an organization in Boulder focused on safety. And I feel like his question is well timed, because I feel like what we're doing in Boulder is something that could be shared with other communities.

Unknown Speaker 29:41
Mark, what I'd love to say is that the industry can help, but the fact that you have local organizations is fantastic, because infrastructure at the local level, it's sort of like an inside out job. I recently became involved with an organization in Boulder called.

Unknown Speaker 30:00
Solution for cyclists, former cyclists for community locally, we call it C 4c

Unknown Speaker 30:04
and this is a non profit organization that has taken its mission to achieve the maximal expression of a multi modal transportation plan in Boulder County.

Unknown Speaker 30:20
So there are national organizations, most notably people for bikes in the United States, people for bikes, it is headquartered in Boulder, but it's not a boulder organization. It's a national organization, and they do lobby at the national level for bicycle safety and multimodal transportation as a priority in the overall aggregate American way of life. However, how that trickles down to actually like a new separated bikeway being built for you and your family in Atlanta has much more to do with the activity at the local level. I can't speak to Atlanta's regulations. However, I know in Boulder County, what we are doing at the county level is first question is, does our county have a transportation plan? Is that transportation plan multimodal? Meaning it takes into account multiple user groups?

Unknown Speaker 31:16
If the county has a transportation plan, what the nonprofit that I'm involved in does is that we seek to achieve. I think I already used the phrase the maximal expression. What we mean by that is, we fund, we find where we can insert our dollars that we've raised to increase the rate at which the transportation plan is actually built. So I would say number one, have your local organizations ask if in the area that impacts your family, there is a transportation plan in place. Is, does? Is there a forward thinking transportation plan? If there is not, then that is the level on which locally you have to activate. Is like getting a transportation and plan place that is multimodal. Once that transportation plan is in place, likely the next step are feasibility studies, meaning, where are we actually going to build this bike path?

Unknown Speaker 32:12
What we're doing is inserting ourselves to help fund and seed matching dollars for grants to get the feasibility studies paid for. Because what we have learned is, if there's a plan in place and the feasibility study can be funded, we're much more likely to get our work, our local projects up the priority of the county and state's Department of Transportation. So building infrastructure for cycling, these are large capital projects that local and county and state governments will have to be involved in. So I really love the individuals, all passionate cyclists in Boulder who founded the Coalition for cyclists. We learned all of this along the way, but I think it is going to be very helpful for local organizations who are finding pathways to success, to share their strategies with other local organizations and repeat that process. And then then I think the industry can be more effective, because they know where to spend money. We can put money towards lobbying. But how does that money trickle back into your community? Depends on whether or not your community has a transportation plan that includes a multi modal plan. So I would apply pressure locally to find out who develops those transportation plans. Are you taking multi modal users? And when I say that, I mean bikes, pedestrians, cars, you know, we have to look at cars as our allies in a multi modal transportation grid, scooters, you know, like anyone that is going to use that means of conveyance. So Coalition for cyclists in Boulder County, we specifically focus on funding feasibility studies so that our county's projects are more easily a budget priority for the government entities, the governmental entities that fund these projects. It's very hard for how do you guys get funded? Sorry to interrupt. How do you guys get funded? We raise money in two ways.

Unknown Speaker 34:19
We are a very small nonprofit, we have just found a niche of effectiveness. We hold an annual gala, and it's attended by cyclists, and we do all the things you do at a gala, you know, we pay for tickets, and we know your private auctions and things like that, and that is our operating capital. And then we fundraise. And so we fundraise with with donors and businesses specifically in the county, because we believe that the faster we can achieve our multimodal transportation grid, the better the quality of life will be. And that does impact the largest employers in the area.

Unknown Speaker 34:56
So Mark to answer your question, while the industry could apply.

Unknown Speaker 35:00
Pressure. I believe the most successful models are meeting that industry information. They're meeting them and coming from the other direction with a ground up process that is really informed by how infrastructure is built in your community. I tried to stay away from giving an opinion throughout this whole series, I mean, I didn't have one, I was just learning, like everybody else, but the one thing that I did begin to form an opinion on, after speaking to many people within the advocacy organizations who told me that bike the bike industry, is incredibly difficult to get a meaningful financial support from to help safety initiatives, I'm curious to know what you think about this. Aside from trek, who I've been told are excellent supporters in the advocacy space, there's a lot to be desired from other brands. Would a greater financial contribution from the industry even make a difference with the things you're talking about? Or would it be too little to make any sort of difference whatsoever. I think any amount does make a difference. I mean, certainly I heard someone once say, like,

Unknown Speaker 36:10
you can tell what's in someone's heart by what they do with their money. I what I do see the industry being concerned about, and they do put money behind in in larger ways, is, is ridership,

Unknown Speaker 36:24
ridership,

Unknown Speaker 36:26
like, for example, like making sure that new writers get introduced to the sport, you know, like funding teams, sponsoring, you know, youth initiatives.

Unknown Speaker 36:39
Example, on the mountain bike side would be nyka where, like, they're again, trek phenomenally well involved in ridership, right? So we see ridership as the future of the sport. And I don't think it's a big leap to see safety as the future of the sport. I do think it's hard for organization. I do think organizations. When I say organizations, I mean, the local organizations, it's hard for them to make contact with these companies and say, support our little niche, right? So that's why I do think people for bikes remains a very important entity, because people for bikes can speak to a brand that's doing business across the nation. They can speak to them at that level, right? You know, and they they speak to lawmakers. They speak to lawmakers about infrastructure. They rank cities based on their livability and their friendliness, like they do keep an eye on the cyclists quality of life, and they make a an earnest and proven attempt to have that conversation with policymakers and lawmakers.

Unknown Speaker 37:40
You know, they get involved in conversations at the policy level about like E bike infrastructure. People for bikes authored the E bike classification system in the United States. So I do think that there is a national entity that does have their eye on safety, access, advocacy, the future of the sport, the future of transportation. But I think, you know, Mark, I want to keep speaking to Mark's specific question, which was him and his family in Atlanta, right? And I want to be very realistic that I think people for bikes will continue to inform at a national level, in partnership with the industry at a national level, because that's where companies need to do business,

Unknown Speaker 38:24
but that when it comes to each of our own cycling communities, I do believe the industry is still at a place where that national level influence has to be met with a ground up, grassroots effort.

Unknown Speaker 38:39
I don't think the industry is at a place yet where it can pop into every community and say, we're going to make this community safe. When you say they're not in a place yet, do you mean a financial place? A What do you mean a place yet? I'm thinking about, like, actually building a bike path, right? I'm thinking about, what does safety look like? I'm being very pragmatic here. Like, safety looks like bike lanes, it looks like signage. It looks like separated bikeways. It's like physical infrastructure. Like, the industry can't afford physical infrastructure, no problem. No, no, no. So, like, you know, what, where do we apply those dollars? So when we say, like, you know, I mean, let's, let's really frame what a financial investment from the industry would look like, right? Like it's information at a certain level, but when we're talking about safety, I think we do need to be very realistic that we're talking about infrastructure, and the industry cannot build infrastructure. I don't, I don't believe the industry, the industry, can do that, but funding these local groups are having a way to support those local groups, you'd figure, I mean, us is a big place. I keep forgetting how huge it is versus Australia. I mean, it's 25 million people, but it is a problem that

Unknown Speaker 39:54
is probably more easily to conceptualize in my head anyway, but I do think, though this is how it could trickle.

Unknown Speaker 40:00
Down right. Okay. So if I am trek, since you brought up trek, I do business in America, in every state in America.

Unknown Speaker 40:08
So my audience as a is, is my, my scale, like, is is national. So it makes sense that I would support the national organization right now, let's go into like I'll pick on myself. My community in Boulder. I am a cycling business in the industry, right? So I'm part of the industry. When we talk about the industry applying pressure, I'm part of that,

Unknown Speaker 40:36
but my scale is boulder.

Unknown Speaker 40:39
So when we talk about the industry, we need to remember that that is your local bike shop, also, you know, or a race team, or the local mechanic that's got his independent, you know, service based business. So I would say, because the US is such a huge place that, like, match the level of the industry with the community. And, you know, okay, so Wahoo is in Atlanta. That's, that's, there's local, right? Like, you know, Santa Cruz is in Santa Cruz, California, you know, trek is in Wisconsin. Like, they're probably going to have a little more impact in their backyard communities, find out what is, what does the industry look like in your local community? It's probably there, and they're going to much more quickly be able to discover how you build infrastructure in your community, because how you build infrastructure in Atlanta might be different than how we build infrastructure in Boulder County. So that's why I'm still gonna say, like, yes, the national level awareness to policy makers and lawmakers is incredibly important, and we should continue to champion people for bikes in that effort and meet them from the ground up by seeing what does the industry look like where I'm riding my bike. How can I get them involved, and does my community have a transportation plan? Those are very realistic, very actionable items

Unknown Speaker 42:08
that anyone who cares about safety in their community could do they today, anyone could walk out and find out, okay, tomorrow, I am going to find out. I'm going to make a list of every business and every team or club that makes up the cycling industry in my community, and tomorrow, I'm going to call and ask if my county has a transportation plan. I do not think that we will get the infrastructure in America that we need for cycling safety if we wait for some great, big national advocacy organization to make it happen.

Unknown Speaker 42:38
That's a terrific response on advocacy from Ellery, and it appears to work quite differently in the US than my home here in Australia, or even from what I know about advocacy in the UK. I mean, every country will be different. This topic is a massive can of worms, but I thought it was worth another perspective, so I reached out to Australia's only professional bicycle lobbyist Stephen Hodge. Stephen also works for an advocacy organization called we ride, which is Australia's equivalent to people for bikes in the US or bicycle UK or sustran.

Unknown Speaker 43:15
It's extremely difficult for people who just love riding their bike and going out with their mates to really understand the picture of what goes into creating change to make it easier to ride a bike. Internationally, quite clearly, there are big differences in the commitment by major companies for advocacy

Unknown Speaker 43:40
any other industry where there's, there are big businesses involved,

Unknown Speaker 43:47
treats advocacy and lobbying. Is the action part of advocacy, if you like, breeds it extremely seriously. Pharmaceutical companies protect their patch with probably billions of dollars in advocacy, but certainly hundreds of millions of dollars. And in Australia, they're very powerful. The motoring industry. We've seen recently get super active on this fuel efficiency standard

Unknown Speaker 44:12
that they're they want to delay and push out, because they're selling a lot of highly polluting vehicles in this country and and they're and they're dumping all their, their, their really inefficient vehicles in our market, right? Yeah, yeah. It is distressing when you you see, you know that not every company has the same commitment. We have mentioned Trek and John Burke has always been a huge champion of putting bikes out there in the federal political processes, right and that. But there are other companies doing that. Other companies sometimes are just so busy doing what they're doing. They're happy to support someone like we write, or they're happy to support events. They.

Unknown Speaker 45:00
Get more people cycling and most companies spend a lot of money advertising their brands, right?

Unknown Speaker 45:07
Which is sort of indirect advocacy. It's more advertising to sell product. You mentioned motoring, pharmaceuticals, you know? And when you when I say the word industry, it might make it sound to the outside listener that this is one big, happy family who has 1000s of people have meetings every quarter. It's not like that, though, nobody talks to anybody in the bike industry, and

Unknown Speaker 45:34
that's not totally true, but it's a hard thing. It's infrequent, and there's a lot of people, right and a lot of people don't even consider them selves part of the industry or significant in the industry. I suppose. How? How does something like the motoring industry or pharmaceutical industry go about something like this? Is it sheer money that allows them to be able to

Unknown Speaker 45:57
push their agendas that cycling can't is effectively or what is it? What? What are we missing? So a couple of aspects to this. Clearly, they're selling products that make a humongous amount more money than bikes do, right? Yeah, yeah. So they have highly funded peak bodies that represent their interests

Unknown Speaker 46:21
and bicycle industries, Australia is an effective representative for the bike industries interests

Unknown Speaker 46:27
and but, but there is a quantum it's like a an order of magnitude greater impact, purely by virtue of the extra money that they have to put into their peak bodies and the advocacy that flows from that, right? And also, the big difference is that they represent large employee bases. They employ a lot of people. They have a high perceived value by general public like, you know, cars have always been the general public's freedom machines, right?

Unknown Speaker 47:03
Cycling suffers

Unknown Speaker 47:06
because, traditionally, in a transport sense, it's been seen as low status, because people would rather be seen driving a car than riding a bike.

Unknown Speaker 47:15
It's also because the benefits when more people ride a bike are spread so broadly across the different portfolio areas. And by that, I mean,

Unknown Speaker 47:27
if you ride a bike, you are lowering traffic congestion because 10 of you take up a lot less than 10 people in their cars, because you're contributing if you're physically active by commuting to work, you're 40% less likely to get a chronic disease,

Unknown Speaker 47:48
because if you ride a bike, you save significant amounts of carbon pollution.

Unknown Speaker 47:57
Noise pollution has a really significant impact on health, and there's a lot less noise when you have a more a community where less people drive and more people ride or walk or whatever. And because cycling doesn't benefit the really big money industries like the car industry, right? They don't want you riding, they want you buying a car, right? There are holy grails out there we're chasing, you know, the holy grail of acceptance, the holy grail of telling people and showing people what a community would be like when more people ride a bike or choose to and and let's not forget, it's a huge equity issue,

Unknown Speaker 48:40
20% or more or quite a bit more in some areas of people of driving age can't drive a car, whether due to disability or exclusion or choice, and so that's a hidden kind of another hidden agenda that that able bodied people who drive and who love their cars and who have the money to own a car to do all of that commuting, they really don't need to think about

Unknown Speaker 49:12
these, these other groups, you know, who who really benefit from some of the marvelous sort of E assist adaptive, you Know, trikes and quad bikes and some that exist now. You know, things that people can do in terms of advocacy on a grassroots level that don't require money, are the things you can suggest. How do people get into these

Unknown Speaker 49:37
local organizations? How do they find them and who's doing good work and get involved. So the really interesting thing about people who make decisions about what our suburbs and our streets look like and our transport systems are elected officials. Okay, most of them, or, you know, basically everyone has.

Unknown Speaker 50:00
Become sought election because they want to make Australia a better place, but they also want to be re elected.

Unknown Speaker 50:10
So we need to in our local council areas, we need to when we see a councilor who's basically giving up their time to try and make their the council area a better place. We need to have a chat to them and and say to them, Hey, look, this bike path that your the Council put in along x, y, z street has just made it so easy and safe for me to get to the shops with my kids or to take them to school by bike. You know, we've had counselors in our trial area for a national ride score Schools program who were dead against dead against the program, but then they went to school and they saw how the kids were so excited about the program and getting little rewards when they got to milestone trips to school and stuff, we've turned them around. Advocacy is a positive game. You know, advocacy is a rewards game.

Unknown Speaker 51:10
It's a game about

Unknown Speaker 51:14
your elected officials understanding

Unknown Speaker 51:18
what you want, because inevitably, the people who are really against something make a lot of noise, yeah. And what research that the wonderful Fiona Campbell, who drives the city of Sydney's bicycle strategy, has done is they've sent out, they've gone out and actually surveyed people door to door. Because, you know, there's a lot of noise against all the bikeways, right? So what they've done is they've actually then gone out and checked out what the residents who are not making any noise think,

Unknown Speaker 51:52
and that is completely different to the media narrative

Unknown Speaker 51:57
that everyone thinks is the case, right? Yeah, because the people who don't like something make scream the loudest. So if you really like something, and that's what I said in that op ed I did for you, you've got to be positive and make your voice heard and just generally say, hey, what you're doing is fantastic for us. We love it. We love not having to drive a car. It saves us heaps of money. The streets are safer with that area where you lower the speed limit. Now our kids, we feel safe. We feel okay about letting our kids ride to school, because the streets are not you know,

Unknown Speaker 52:33
what do you call them? Rat runs at 60 or 80 ks an hour. The other countries who are leading changes, you know, not with, not including, you know, like, say, Denmark, for example. They seem from the outside, already there, but maybe the UK for example. Like, where do they get their funding, and what does their program look like? And, and is that the A state that we want, an end state that we want to go towards, or is there something different for Australia? So yeah, so

Unknown Speaker 53:08
we have to advocacy is about getting a political leader to the point where they have a sufficient level of comfort that they agree to invest a lot of money in what we want, right? So currently, less than 2% of all trips in Australia are done by bike, but a lot less than that of the transport budget goes to cycling. So we're not even funding cycling in transport budgets to the level which they're already taking on the passenger transport task, right? The right. And what we've seen in in major cities now throughout Europe, the mayor of Paris and Hidalgo is is either a green or an independent. She keeps getting re elected with increased majorities, transforming the city and taking away 10s of 1000s of car parking spots because the residents love what she's doing. So it took a lot of courage. She was elected on a platform to do stuff for active transport, for cycling, but it's hugely popular, and mayors of major cities around the world are finding the same thing. Right Clover Moore, the mayor of Sydney, keeps getting re elected, despite being at war, often with some parts of the state government in the past and certainly the right wing media

Unknown Speaker 54:40
she follows, you know, a philosophy of

Unknown Speaker 54:45
making the city more welcoming, making it greener, making walking and cycling a real choice for people in the city, and it pays off.

Unknown Speaker 54:59
Let's.

Unknown Speaker 55:00
Turn to the next question by founding member number 6919,

Unknown Speaker 55:04
John claff, that's a great number. John,

Unknown Speaker 55:11
hey Wade, so great series. Really, really enjoyed it. I was thinking about the fact it was a US, angled industry piece in many aspects, and was wondering what the impact was in the supply chains, mainly from EMEA and Asia Pac and offers, obviously, if possible, Africa at all, if there's anything there,

Unknown Speaker 55:37
mainly looking at, sort of

Unknown Speaker 55:39
specifically in Europe, what the effects of Brexit were given COVID hit just as the UK and EU were divorcing, and there were obvious supply chains issues across the whole of a variety of different industries. And how did that affect the cycling industry, in particular, with the pressures that you described in the main series,

Unknown Speaker 56:06
Tom Marchman from hunt wheels. Tom, you listened to John claffs question, and I wanted to talk to you mainly about Brexit. But could you tell me your experiences with hunt and what you know of the general industry, on how the perfect storm of Brexit coinciding with the pandemic and what that did to the bike industry in the UK. Yeah. I mean, for us, it kind of felt, you know, a little bit sad, because in a way, the cycling community in Europe had grown up together over the last 30 years, including the UK. And so it was really easy for for British teams, British companies and European companies and European races and teams to work together, and riders and people in the industry to work across the border. Because effectively, you know, it was a single, a single economic community. And, yeah, you know, I totally respect that people had their views.

Unknown Speaker 57:13
But it, you know, those things did affect cycling when that changed in 2020 in lots of ways, I suppose. And there might be some good positives out of it in the in the longer term, we'll have to see how that develops. But at the moment, that definitely there were a few difficulties created by it. In general, was the podcast you said you listened to the the episodes that I did, did that resonate with how things were in the UK as well, notwithstanding Brexit, obviously, during the increase in sales, that was an area increase in demand. That was a time when you were handling the demand side and the lack of supply side. However, when you throw in the uncertainty that Brexit created on top of the uncertainty of COVID, it

Unknown Speaker 58:03
definitely created extra complications. So,

Unknown Speaker 58:07
yeah, I mean, obviously we want to do the best job of of, you know, the people who buy our wheels in in Europe. It created uncertainty for those, those customers, those riders. What kind of complications? Did you mention it? Brexit caused complications? What are some examples of the types of things that it may be prohibited or complicated?

Unknown Speaker 58:33
I mean, before Brexit, we could just ship a wheel set to a customer in France or Germany, just like they were in London. And of course, with customs duties, they were already paid when they entered the product, it was made in Europe. It could travel around Europe at ease, including into the UK. And if it was made outside Europe, once it entered European borders, the EU borders, you could transport that product around. So it became very easy, so, but as soon as the border, the border went up, there's lots of talk about tariffs, having a having a trade deal that really was only on product that was manufactured with a certain percentage in each region. Say, if you were sending a bike, you know, an E bike system, a fray and some wheels clearly not going to get your groups there you groups there and your suspension. That's all, pretty much all made in in the Far East. It makes that really difficult. So, yeah, it's, it's definitely created challenges that meant the customer was then having to pay administration charges from couriers. Now the customer would have lots of hold ups as soon as the soon as Brexit came in, it was to a certain extent, the Customs and Border workers in each country didn't really know how to handle it, so people would get quite a lot of delays. And so we as a company, decided we would cover all of those costs for the customer, pay their VAT, pay their duty.

Unknown Speaker 1:00:00
Um, so that the price they saw on the website was the price that they got when it arrived with them. That's quite expensive for us. And there's an administration charged on top of that. Yeah, there's a lot of complication and confusion and cost. Basically, has this forced you to rethink how you do business and where you build your wheels from. Um, it's, it's altered certain things. The main one is it's really altered is that the point of entry for the the product into the market, because the UK could act as a point of entry before quite easily, if the product was manufactured in and centered around Taiwan. But we have now opened a company interested in Germany to serve the EU rider, because we couldn't do as good a job of serving the EU rider from the UK anymore. Did did Brexit itself contribute to

Unknown Speaker 1:00:55
the amplify the factors that

Unknown Speaker 1:00:58
was discussed in the podcast series about, you know, over ordering and Phantom orders and bad first party data all the way up back to supply chain, and then a tsunami of product coming back the other way because of

Unknown Speaker 1:01:13
other factors. Does Brexit play into that and amplify it at all? Or were they

Unknown Speaker 1:01:21
was one very different than the other. It's hard to unpick so many different factors. Is obviously, if you're doing an, you know, an experiment, if you're doing your science project at school or university, you know, you're working in your thesis or something, you try and remove as many variables as you can, really, what we had was a huge amount of variables in a very short amount of time, I guess I would feel that, yeah, during the COVID

Unknown Speaker 1:01:46
demand fluctuations, it was much harder for people to understand what was happening in the market. And when you've got that added fluctuation of

Unknown Speaker 1:01:57
riders in Europe and the cross border differences that we we created in terms of trade at that point, it definitely added confusion. Therefore the decisions are going to be harder to make, and they're probably going to be if you have more confusion, your decisions are going to be more inaccurate. So as hard as you work, yeah, did the UK bike market end up quite similar to what was described in much of the US and Australian market, where the podcast series mostly spoke from. Yeah, I think if anything, it's at the end the more affected end of that, of that spectrum,

Unknown Speaker 1:02:36
the UK has had some of its own difficulties, and this is probably one of the things that

Unknown Speaker 1:02:42
a wider macro effect of Brexit is that we've had because as as an economy, the speculation that we benefited from a good flow of

Unknown Speaker 1:02:54
people coming in to help build our economy from Europe and from an economic point of view for the whole of the country, it's been speculated that the we have a large we have more of an imbalance of workers to jobs that has put a bit of a drag on the economy. And when you combine that with a particular bit of economic situation happened that we refer to as trustonomics. When this trust came into power, and you know, whichever way you choose to vote, as in this country, there were definitely financial effects of that, which happened at the end of summer 2022 just as the bike COVID Bike boom was probably unwinding, and that created very strong increases in interest rates in the UK. Combine that with the energy prices that happened in the UK and the drag on the economy from the Brexit potential. Brexit effects on

Unknown Speaker 1:03:51
people working in the economy. There's quite a few things that rolled up to affect the spending power, where you know whether people going out buying bikes or bike parts, right? You're saying on the more affected end of the spectrum, you your sort of generalization is that the bike industry in the UK is even worse off than what was described in US and Australia in the podcast series. Yeah, that's something we've had more recently. Is the obviously wiggle and chain reaction were probably somewhere at their height in the region of something like 20 to 35% of the UK market in terms of value, especially for that kind of devoted or very, very engaged rider type product. And obviously, when they go through the difficulties they've gone to, and it's incredibly sad for the people who work there. Several 100 people lost their jobs, but also they've had to liquidate a lot of stock quite quickly. That's obviously probably added to the effect we've had a few other businesses in the UK as well have struggled from a compound of all those factors that we've just talked about. And.

Unknown Speaker 1:05:00
Of course, you know it's harder,

Unknown Speaker 1:05:03
mentioned a few times with the wig on. Chain Reaction. Situation is the difficulties that they had to export to Europe like they used to be able to do quite effectively. That's something that they've they then actually chose to close their European sales once they went into administration, and just focus on selling into the UK market, and obviously fairly heavy discounts. And does Brexit affect anything to do with sponsorship? That's not from the UK, maybe European sponsorship. European company sponsorship? Yeah, I mean an element to some of the professional road teams struggling in the UK, and obviously we have several less UCI registered professional teams than we used to. Is down some of the cost of complication over traveling and working in in Europe. Now, for a British citizen as a threshold writer, and I know you can get permission to work in Europe, but it's more complicated now, and put that on the top of the difficulties of getting sponsorship and the difficulties of travel during COVID and the costs of that, you know, it's definitely another aggravating element that will have made it harder for British UCI professional teams to to operate companies like Rose bikes. And I believe some others said that there are definitely some component manufacturers that I saw who had their own sites and things who just wouldn't serve the UK market directly anymore. If that's happening, then probably sponsorship would have you know, potentially some sponsorship may not flow in that direction. How about you if you wanted to say sponsor? Cabec, again,

Unknown Speaker 1:06:42
a world tour team. Actually, that's a really, that's a really good question, because that that did create quite a few challenges with Brexit, because the goods that we were trying to ship to Quebec

Unknown Speaker 1:06:53
on several occasions did get held up in customs, and we also shipped often, we're sending out wheels to top professional riders who are interested in some of the technology we have, because we often have very lightweight or very aerodynamic wheels accomplished with both, and they might want to sample or potentially even ride them without our logos on. And we do get quite a bit of demand for that, but those types of serving those types of brands, actually became quite difficult, because they themselves would then have to handle the difficulties and not even an organization of getting it through customs. So,

Unknown Speaker 1:07:30
yeah, it was definitely added some complication there.

Unknown Speaker 1:07:34
John's Brexit question gave me a great excuse to also call up one of the sharpest people I know in the bike industry, and also one of my personal favorites. Her name is Tori Fahey, who founded a padura bike packing bags based in the UK and now also France. Tory,

Unknown Speaker 1:07:52
what do you think of John claffs question about Brexit that you can probably very well speak to? I think it's a very interesting and relevant question as a business, as the owner of a business

Unknown Speaker 1:08:06
based in the UK, but I think also for any business that does business with the UK. So the finalized finalization of Brexit wasn't until the end of the year in 2020

Unknown Speaker 1:08:22
but the thing was, even if all of the lockdowns started and the demand spikes were present from, I guess may onward through 2020

Unknown Speaker 1:08:35
most brands, I think, were still trying to figure out what to do with the demand spike that we had, although Brexit had been looming for four and a half years, with plenty of discussion and delays before then, there were a lot of signs around it not needing to be disruptive. I mean, our business, we had met with consultants that the UK Government had sent out to help readiness for businesses in advance of Brexit. We were already doing business like B to B business and B to C business internationally in the lead up. So there were lots of signs that it shouldn't be disruptive, because now the EU would not be any different than the rest of the world, and your 100% of your business in Napa Dora was based in the UK at the time. Yeah. So

Unknown Speaker 1:09:31
simplicity is kind of one of our core principles as a brand. So we had one office based in the UK, one warehouse based in the UK, and we relied on we chose the location

Unknown Speaker 1:09:44
as an ideal spot to effectively serve the world, access the European market.

Unknown Speaker 1:09:51
And it felt at the time we started in 2013 like a wise choice. Yeah, you know, you.

Unknown Speaker 1:10:00
I guess you said Brexit looming. You did have a foresight that and a date that it was coming. You didn't have that really with that pandemic did what was the mindset, mindset shift with now you're dealing with the pandemic and everything. You just described the delays and the spikes and everything, was Brexit almost put off the table in terms of things you had to deal with, or were you

Unknown Speaker 1:10:24
concurrently thinking about both and needing to deal with both at the same time? The thing was, because the guidance we had was that,

Unknown Speaker 1:10:33
effectively, if we could do business with the rest of the world already, then we were ready for Brexit. It was kind of the least of our concerns. We weren't we had discussed because it had been on the table for so long. We had discussed, you know, whether to set up a second warehouse, whether to move the operation to the EU and for business of our size. We determined that the that increased operational complexity and like financial cost

Unknown Speaker 1:11:05
to a level that didn't justify it, the pandemic supply chain questions and meeting demand and so forth was certainly just head and shoulders above the topic of Brexit at December 31 2020, it wasn't until the first week of January that it was clear that actually, regardless of whatever the agreement was, there were some problems to deal with, right? I remember the first time we met. We did the podcast on the founding story of apidira. You were sitting in, I believe it was London at the time, or the UK, definitely. When did you decide you would need to move a portion of the business into you? We moved to France, and then that would be the best thing for the business and trading.

Unknown Speaker 1:11:51
We recognized within the first week or two of january 2021,

Unknown Speaker 1:11:57
that we would need to set up a warehouse. We would certainly need to set up a second warehouse, we looked at a few locations, and ultimately

Unknown Speaker 1:12:05
put something together and had something in operation effectively, within a month in France. Then within about a month of that, it was clear that to keep things operating functionally, with a French warehouse in France

Unknown Speaker 1:12:23
that we would need an office here, just from an administration standpoint, having courier relationships, dealing with the tax authorities and so forth, having having the French entity was quite important. What type of I guess there's, there's two issues. One, one, exporting things out of the UK into the EU. And then there's also the problems of bringing things in. And talk to me about some of the challenges with with shipping, and the things that the pandemic did the shipping, and also the things that Brexit did the shipping. What can you speak to the complications that rose out of that, um, on the shipping side. So one of the first issues we had with shipping, shipping worked like clockwork before 2020 I think the first issue we had on the shipping side came as a consequence of the pandemic, with all of the containers leaving China with full of masks and other goods

Unknown Speaker 1:13:23
from, I guess, the second quarter of 2020, at the start of 2021, one of the issues that compounded that problem in the UK was at the ports, just the infrastructure was not well, was not established yet to deal with the amount of goods flowing between the UK and the EU and so there were delays at the port, not not just

Unknown Speaker 1:13:50
getting things in motion or on a container, but getting through things through customs within the UK. You mentioned that

Unknown Speaker 1:14:01
both COVID and Brexit took a lot of human and financial resources away from other parts of the business. Can you speak to some of those

Unknown Speaker 1:14:11
details and how that affected business, and probably the result of the business growing and the cost of business and everything, there any

Unknown Speaker 1:14:25
anything to say more about that, sure, like on the short term side, it was something that basically required our full time attention. We were, at that time, a team of less than 20. And if you take,

Unknown Speaker 1:14:41
like, the full time of two founders to be taking a look at evaluating warehouses, dealing with legal agreements, setting up courier agreements, managing the operational complexities of Okay, now we have two warehouses.

Unknown Speaker 1:15:00
Yes, how are we going to balance stock? So for the better part of, I would say, three months, we were not able to work on other projects. Beyond that, there's the problem doesn't just go away. There's like now it's pretty much a full time job to manage operations and logistics that used to be a side job, we now have to deal with accounts for two different countries with two different systems,

Unknown Speaker 1:15:29
employment law in two different countries, and so forth. It's quite a bit of complexity that wasn't there before, and for a business of our size, that it's very material, ongoing cost. You mentioned Brexit,

Unknown Speaker 1:15:44
increasing the localization of brands. I thought that was an interesting point in your email. Can you talk more about that? We noticed that there were a number of brands, both from the UK and from the EU. We're not yet trading in both markets. So websites for other cycling brands, apparel in particular was one that stood out where if, if they didn't have a warehouse in the UK before Brexit, they weren't shipping into the UK, I think that created an opportunity for UK based brands to pick up market share, because at least on a temporary basis, we observed disruptions for, I would say, notable brands in the range of six to nine months. To be out of the market for six to nine months is enormous, especially at a moment in time where there are a lot of new cyclists coming into the sector the community is growing. There are new eyeballs finding brands, and those brand relationships can be really sticky, so it was a huge opportunity cost for those brands that weren't able to

Unknown Speaker 1:16:56
establish a workaround for the the the the logistics and operational disruptions during the first six to nine months of Brexit, right? I guess the picking up market share UK brands who could no longer easily ship to the EU and vice versa, then picking up market share, potentially just from their local markets that they might not have seen before. Did you see examples of that? Or is that a gut feel that that might have happened? Or I think I'm going to be a bit reluctant to name names, but yes, I would say it was notable. The thing was, even in 2021 it was a period of time where some shelves were bare. So if you were the only thing left on the shelf, whether it's because of supply chain issues or because of Brexit, if you were there, you got the sale, and that makes a big difference in the long run, because that's you have an in that you otherwise wouldn't have. Yeah, yeah. So yes, I saw some EU brands, one in particular that competes with us was almost invisible after after Brexit. Yeah, right. You mentioned something else interesting in your email to me that spoke to the diversity of the talent pool being less in the UK after Brexit. What did you experience with that? So when we set up the business, initially in 2013

Unknown Speaker 1:18:32
the UK was an amazing place to set up a business. But on top of that, the the because the economy in London is so strong, they drew talent from across Europe and the globe. Brexit changed that it it probably started with the pandemic, because I know

Unknown Speaker 1:18:50
a number of I know firsthand a number of Europeans who went home

Unknown Speaker 1:18:55
during the pandemic and ended up staying there. But I think we've also seen absorbed in Exodus in the sense that

Unknown Speaker 1:19:05
the applicants we see, there's far less diversity. It tends to be it's just less International.

Unknown Speaker 1:19:12
There's still high quality talent pool within the UK, but we see overall, a lot more uniformity since Brexit, with much of Brexit, I don't want to say behind you. I don't know if you're still dealing with things, but I mean maybe the worst of it, and then the pandemic behind you. And I know there's lots left over there too, but are there any sort of shining lights that have come out of this, or opportunities that you've been able to

Unknown Speaker 1:19:41
in the long term, see as a net positive,

Unknown Speaker 1:19:45
yeah, for sure, Brexit will never be behind us. It is permanently changed our business. We went from being a single office in a single country with a single warehouse and that will.

Unknown Speaker 1:20:00
To change now. It was probably good for our business. It was a step we didn't want to take because it's feels like extra work that doesn't necessarily it's not the fun part of building a business, but it also affords us some flexibilities that we didn't have before. So if you know FedEx isn't working in the UK. We have stock in France that we can send all around the world. We also can access a different labor labor pool. Here, we set up our office in Annecy, which is a French town in the Alps, very outdoors. That's a positive

Unknown Speaker 1:20:39
on a personal level. It was very

Unknown Speaker 1:20:42
positive

Unknown Speaker 1:20:44
relocation, also the fact that we were well positioned to act, quickly, react, quickly, following Brexit and frankly, navigating through the pandemic. And everybody had the same problem. So the reality is, these are the moments where the industry changes, where there's brand shake up.

Unknown Speaker 1:21:08
Schwinn used to be the biggest bike brand in the world, and now they sell helmets at Walmart. Why they didn't move with the waves. So this is our moment, in my view, where we can move ahead.

Unknown Speaker 1:21:26
Let's circle back again to Ellery, as I have one last question of my own that I hope wraps up this series nicely and ends on a positive note.

Unknown Speaker 1:21:37
Do you think that the industry is at risk of pull everyone, pulling back at the same time and over, correcting in the other direction to scarcity at this point in time. Because it made me think about Jake dudes observation, when he was looking at the guy from wiggle chain reaction, who spoke on one of the episodes, and he was looking back in the past and saw this wild swings of procurement around, you know, zero participation, growth and and over, under supply. Do you think it's a potential problem that we're going to see coming up? I think it'll be a little different this time. I do remember what Jake was talking about, and I know, sort of like the history that he was referring to with, like, these wild swings, and you said it's cyclically normal, which was such a wow, you guys are talking about the same thing. It sounds like we were talking about the exact Yes,

Unknown Speaker 1:22:35
we were talking about the exact same thing. I think simply because of the fact that what happened in the last couple of years was so egregious,

Unknown Speaker 1:22:46
I would say, unprecedentedly egregious, with respect to like, that's why we're having this conversation. Yeah, that

Unknown Speaker 1:22:53
you know at the highest level the industry is aware now of a different level of discomfort with supply and demand shocks. I think that there will be more of a consciousness around avoiding shocks and retracting too far would be another kind of shock, right, right? I don't think it will be as big of a whiplash, simply because no one's can withstand. Nobody wants to do it again. You know, I don't think it's going to be smooth sailing. I just doubt that we'll have that much of a restriction that we that we go into a scarcity mode. I mean, if you just think about the Wrinkle in Time that it's going to take for the existing inventory to sell through at discounted prices while we return to normalcy, you know, there's a runway where hopefully we will meet at a point in time, in the future, where the excess inventory has dwindled to a level that a normal supply and quote, I'm using air quotes for Your listeners, normal supply and demand

Unknown Speaker 1:24:01
scenario can play out. You know, the industry has, you know, a season here to get their numbers in line while we sell through, you know, inventory, excess inventory. So I'm less concerned about extreme scarcity. How are things going for you since we spoke, I think it was November in terms of, is business picking back up? Are things are you managing? Okay,

Unknown Speaker 1:24:30
January was normal to a little slow. Things are picking back up. It feels a bit like a normal spring. We

Unknown Speaker 1:24:42
speaking specifically for our shop. We feel comfortable in our inventory position. And in November, we were still feeling like, man, you know how much longer we were concerned about acquiring more in.

Unknown Speaker 1:25:00
Inventory at that time, and we were, you know, as you and I discussed, we were, like, really not interested in placing large preseason orders. We wanted to be really confident that, like, pricing shocks were out of the system,

Unknown Speaker 1:25:16
and we feel like the majority of the pricing shocks are

Unknown Speaker 1:25:24
behind us at this point in time, we know there still may be a few here and there.

Unknown Speaker 1:25:32
We just had an internal meeting in the last week talking about increasing our inventory again in a few models. That's a really positive sign, because we would be increasing inventory in like models strategically where we will make margin, we will make full margin. So every time that we can have that conversation of like, oh, we could acquire this inventory, and we feel confident that we could get full margin out of this inventory,

Unknown Speaker 1:26:01
those are signs that we'd like to see that those are the those are the conversations we like to have. I mean, that seems so basic, Wade, but the fact that we can have that conversation is a dramatic shift from the first quarter of 2023 Well, that's good to hear. I'm happy things are turning around, and it's always a pleasure. Thank you so so much for being Ellery and

Unknown Speaker 1:26:27
speaking so candidly and intelligently. And I really do appreciate it, and it's been an absolute joy doing this with you. Thank you. Oh, thank you. I I have felt very fortunate to be included.

Unknown Speaker 1:26:42
You. That's it for this limited series on how the pandemic caused such havoc to the bicycle industry. The more I found out through this journey, the more I felt like I opened up Pandora's box. We could have kept going. That's not to say that any industry is without problems, but I was fortunate enough to scratch the surface on one of the industries that I care very deeply about. I want to thank again, everyone who went on the record and put their names and voices to this podcast. They all took significant risks that they didn't need to take. Some of the people on this podcast were sent threatening legal letters and potentially damaged professional relationships and career opportunities, but they felt that speaking the truth and exposing some of the problems were far more important, and I want to express my deepest gratitude for that, as for us escape collective we would have never had been able to produce This podcast series. If our revenue model relied on the advertising dollars from the industry we cover, it would have been far too tricky and potentially damaging for us to do so. This is why our members are so important to us and the work they enable us to do. I want to thank each and every one of our members, from the bottom of our hearts for supporting us financially, which enables us to do the work that we do. We're currently looking at what a regular podcast series in the same vein might look like. So please subscribe to this channel so you don't miss it when it's released. Finally, one important topic that I didn't talk much about or acknowledge are the businesses in cycling who did do well and are continuing to do so as a result of the pandemic, whether it be their stage of growth, smart discipline, planning, or just plain luck. There are lots of businesses who did capitalize on this, once in a lifetime, bicycle gold rush, and time will soon tell if there's a change in the guard in the dominant cycling brands, if there's any time for a shake up. This feels like it might be it one last thank you to will Jones and Hugh Owen for editing this series. Ashley Denise for composing the music, Craig Bruce, our executive producer, our members for submitting their questions and the rest of the escape collective team for all their input. This is Wade Wallace from escape collective. Thank you for listening. You.