The Blackberry of the Bike Market

June 12, 2008

A great little profile of Kickstart participants Phil White and Gerard Vroomen on Cervélo Cycles, the duo who somehow managed to make a Toronto-run operation a major player in the previously Euro-centred bike game.

How’d they do it?

Apart from devoting themselves to R&D innovation, putting their heads down, and living on $50 a week for a few years, the company’s breakthrough came when Vroomen took a relationship-establishing meeting back in 2002.

In its early years, Cervélo was a cult-secret, a company that made ugly but slippery quick time trial bikes. They knew they wanted to break into the Tour, but assumed they wouldn’t be ready to make a serious go of it until 2005. Still, for practice as much as anything else, Vroomen set up a meeting with Bjarne Riis, the 1996 Tour de France champion who had taken over Team CSC in 2000. Vroomen had no expectations, but he left a Cervélo bike behind after their meeting. A few days later, the phone rang. It turned out Riis didn’t care that the company had only two European distributors at the time. He looked their commitment to cutting edge engineering. He just wanted to win.

The cycling world was shocked and the company wasn’t really ready. They had only just cracked $1 million in revenues the year before. Now they had to provide roughly 200 frames to varying specifications to picky, world-class riders. The stress and pressure were immense. If they screwed up, the whole world would be watching and the company would be dead on arrival.

But Cervélo didn’t fail. Their first year as suppliers to CSC was the team’s most successful ever. They won three stages of the Tour. CSC was #1 in the world in 2005, 2006, and 2007. Sales sky-rocketed. They were on top of the world.

Then things came crashing down. A doping scandal derailed the Tour and the CSC team. Suddenly, the public attributed those three years of victories to drugs rather than design innovation.

Cervélo could have chosen to back away from CSC, but they haven’t. They’ve stood by their team – the team that took a chance on them in the first place. In the end, the scandal hasn’t hurt them so much. They’ve remained diversified, focussed just as squarely on the triathlon and time-trials markets. The company is now relying on monied baby-boomers to fuel its growth – that, and a return tot he winner’s circle.

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