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$8M in debt might sound a lot but that is definitely nothing compared to what I heard Rocky Mountain is sitting on. Luckily for them, it seems like they had a lot of bidders and moving forward with a plan.
While I share everyone's sentiment about it being odd to launch 3 models just a week before closing doors, it is important to remember that new models have been in development for years, and for all we know there were production delays and they were supposed to be launched prior to Sea Otter. Thinking back to the GG closing, they were announcing new plans (builds and/or paint colors if my memory serves me correct, but it has been a while) right before they closed. Unfortunately things happen higher up that aren't known by the "day-to-day" employees who continue doing things as usual until someone tells them the company is all of a sudden closed.
I worked for another small Colorado bike company for many years (before, during, and post COVID eras), so hearing about this stings. It sucks to hear about any company closing and a bunch of good people losing their jobs, but this feels like it hits a bit closer to home.
The CEO of Revel Bikes spoke about tariffs on NPR just two days before announcing their closure: marketplace.org/story/2025/04/15/can-pandemic-supply-chain-snarls-prepare-us-for-tariffs
"You know, let’s not change anything. Let’s just hold tight to see what happens with the dust settling,” said Ben Coates, the CEO of Revel Bikes in Colorado.
Your hunch about the c-suite not doing anything may be spot on.
Got this email this morning from 7Mesh about their industry purchase program shutting down orders to the US due to tariffs.
I'm on a lot of B2B and B2C mailing lists, and e-mails about price increases and other tariff-related items are rolling in. The latest is Wahoo, who will be adding tariff surcharges to every product at retail and wholesale. They vary, but the surcharge on their latest product, the Trackr Radar, is $50 – effectively a 25% increase ($199 retail as of right now).
Seems like a few brands aren't increasing advertised price, just tacking these surcharges on at checkout. Curious how that pans out. For example, I know I love it when I go to book a hotel for $150, then there's a $50 "resort fee" on top. And everyone loves Ticketmaster's practices, right?
Re: 7mesh email, are tariffs based on retail prices? Their $200 goes to $490, so seems like it’s based on that versus some kind of manufactured cost.
Tariffs are on the landed cost I believe. Not retail price.
Correct. Guessing they didn't feel like sharing their landed cost in that email.
Let's just say their margin is 50%. That means what used to cost them $100 now costs them $245 including duties. If they passed along just the incremental cost of the tariff to the consumer, the new retail price would be $345, not $490.
Thanks! In no way am I thinking 7mesh is unreasonable or should eat tariffs. I just didn’t know how they were factored.
I wonder if tacking the tariff price on that way might help make it clear to customers exactly how much the tariffs are costing them? (Whereas with a "resort fee" or similar charge I usually interpret that as the seller playing games w/ pricing...)
That and they can remain flexible with these fees as the tariffs change.
That’s if they were just DTC. If the wholesale price is now $245 then the full cost at a shop would be $490.
While typically I agree that add-on prices are an annoyance, I find the idea of adding a tariff fee line item pretty interesting.
https://www.bicycleretailer.com/industry-news/2025/04/16/specialized-announces-pricing-strategy-account-increased-tariffs
It's a brands way of saying "The price of the actual product didn't go up, but the fees associated with getting the product here did." Seems like a good way to clearly assign responsibility for why consumers are paying more now.
It's worth noting that if Spech is charging dealers 10% of dealer cost, or consumers 10% of MSRP for DTC sales, as opposed to the actual 10% of their imported invoice cost, then they are actually making margin on the additional 10% duty they are incurring. But TBH thats not any different if your margins are calc'ed off landed COGS.
FDT
I hope that tarrifs get presented to us consumers in the "resort fee" or "service charge" itemization fashion for as many products as possible. With that reality staring people glaringly in the face, it will show the remaining sheep that stay aggressively igornant, exactly what the choices of the executive branch are costing them. That will of course be difficult, similarly to the example being discussed above where a dtc brand may pass the tarrif through on a 1/1 basis, but a wholesale/distributorship model has a quadratic price increase as it passes through the line. Maybe if people see the reality staring them directly in the face, they will look for change and a more stable economic climate where businesses, and consumers can be successful.
One last thing... I think it may have been said earlier in this thread but I cannot recall, I'm reading too much financial news and it's all blending together. It seems that this could really start to impact the wholesale/distributorship models in many sectors/industries. Pass through markup becomes the biggest cost driver for many of these products. I don't quite frankly know the bicycle industry well enough... I'm just a dumb contractor. However it seems to me that this could spell trouble for anyone that is in the path of distribution from a mfg to the ibd's. Now more then ever, it would be important to prove your value as a logistics facilitator or distributor.
Is that not a touch disingenuous given that tariffs are applied on wholesale, which for soft goods would be far less? Not defending tariffs and I understand 7mesh scaling back their discounts but the effect is not as dire as they are claiming.
I think if they want to maintain their gross margin on that pair of bib shorts, that's the calculation. And that's fair enough to a degree; the gross margin factors into all of their accounting and risk calculations, i.e. if your cost price more than doubles, but you elect to simply maintain your gross profit at the same level it was before, the cost of making that profit more than doubles and that's an increased risk to the business.
Edit: How the risk of now having to convince your customers to spend $490 on a $200 pair of bib shorts balances with all of the other risks is a different question!
Interesting IG post from Revel...
https://www.instagram.com/p/DIm4VdPJEHW/?igsh=MzRlODBiNWFlZA==
"Due to the unprecedented demand and traffic, we cannot accurately reflect our inventory and pricing at this time."
With all due respect, "huh?"
How does demand to your webpage impact pricing? How poor are the company controls to not be aware of inventory (and for that inventory to be reflected on your storefront)? Maybe they are just phoning it in at this point, but this is pretty strange. Though, to be fair, everything about their story the last few weeks is incredibly strange.
I read that post a little differently.
The cynical me. due to the demand and traffic we aren't sure how low we are going to blow out the pricing on our inventory because we might be able to save this in the end, or at least recoup a lot of that debt.
The less cynical me. due to the demand and traffic we think we might be able to convince our creditors and other lenders to give this one more go. We still need to off load a bunch of inventory but the blow out might be more tannerite not C4
Sounds a bit like a "fuck it, its not worth our time" kinda decision. If they are making enough money to cover everything outside the US market than why bother with the headache, just shut'er down, down size a little and ride it out.
Looks like everyone hunting for deals crashed the website.
Hey everyone, this is TJ.
Tariffs aren't fixed to factory cost, or wholesale or retail. They're calculated based on the specific transaction price. The example we used is accurate for an ecomm purchase, shipped from our warehouse in Canada. If a retailer ordered the same short and we charged them half the price ($100), the same tariff percentage would apply, so tariffs would be $145 for a total cost to the retailer of $245. If the retailer sells that short to a customer and maintains their dollar margin the short would be $345 to the end user - however if the retailer wants to maintain their percentage margin it would again be $490.
To the person who suggested we're walking away, nothing could be further than the truth. We have a major launch coming this fall, with a new warehouse in California, and a new US sales partner. This will be our most efficient way to get product to US customers - shipping it to ourselves in the US first, paying the tariffs on our factory price ( FOB ). But the current rates are prohibitive, so we have to wait it out.
Agree it’s strange… but it also brings this thread full circle because this was exactly what happened with Guerilla Gravity. They’d just announced new models (colors), and then almost immediately after the announcement was made they were closing g shop.
Don't forget similar with Kona st Sea Otter a couple of years back too - new bikes pre-announced, booth set up, then taken down before the show opened and the VC owners shutting it down.
You may be underestimating the sheer number of companies (in and outside of bike) that rely on spreadsheets and manual updates. Frightening to think that Excel really does run the world.
100% they are trying to figure out pricing. They didn't expect this much demand and are now reconsidering sale pricing.
What I know of Revel it sure seemed like a CBC, Colorado Bro Company. Pumped on riding, BBQing, and crushing beers. Perhaps not so focused on the business details?
Combine that with the cost of replacing broken rims that carry a "lifetime" warranty. I know someone who went through 3 rear rims before giving up and moving on. Revel always replaced the rim for free, but sometimes it took quite a while. At what point are you bleeding cash; after rebuilding the 2nd wheel, 3rd wheel? New rim, new spokes, maybe an hour of labor and then cost of shipping a wheel has to add up quick for a small company.
I wasn’t going to post this, but you’ve provoked me.
Ben Horowitz wrote a book years ago called The Hard Thing About Hard Things. In it, he talks about his time as a CEO in the early 2000s, and how brutal the job can be. One thing that sticks out is how often people walk into a C-suite role with a prebuilt narrative in their heads. They assume there will be a well-rounded team, a healthy bank account, a working business, and a highly defensible product. That version of the story almost never plays out unless you’re stepping into a Fortune 500 role, like becoming CEO of Costco.
If you end up leading any company that’s not default alive, that’s trying to grow, that’s clawing its way out of a hole, that doesn't have product market fit, especially under the $50M mark, buckle up. Don’t expect to surround yourself with a big team and get ready to do a ton of work you didn’t think would be part of the job. As Reid Hastings says, its like staring into the abyss, eating glass and getting used to the taste of your own blood. It sucks. And even the good ones often fail.
There’s a strange inversion to the role. The larger the company, the more you get paid and the easier the job tends to be. Just look at Ballmer’s run at Microsoft. By most accounts, he wasn’t a great CEO. But he became one of the wealthiest people on the planet because he picked the right company and stayed. That’s the Gravy Train.
In the bike world, I’ve seen a lot of people take these leadership roles expecting a Rob Roskopp-esque lifestyle, not knowing what Robb had to weather to get there. They aren’t willing to see the business for what it is and acknowledge the (often) simple math. They don’t want to wear all the hats or do the ugly, thankless work. I’m not saying that’s exactly what happened at Revel, because I’ll never really know, but it’s a pattern in the space worth calling out. People should think long and hard about what they’re signing up for and whether they’re truly cut out for it.
A good example of someone doing it right is Chris Canfield. Sounds like he’s running Vampire out of a basement. It’s as unglamorous as it gets, but I’d bet on him - and he clearly knows a thing or two.
There’s no magic. No shortcut. No easy way to do this. If there was, we'd all do it.
“There are no silver bullets, only lead bullets.” – Ben Horowitz.
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