Of course small brands can exist and make amazing stuff. Respect to Rohloff, Intend, Pinion, and allllll the builders putting these bespoke bikes/parts together. But they’re...
Of course small brands can exist and make amazing stuff. Respect to Rohloff, Intend, Pinion, and allllll the builders putting these bespoke bikes/parts together. But they’re a rounding error in the market. If boutique shops had to supply the whole industry, they literally couldn’t meet demand.
And “not the cheapest” is really a big part of this debate. A Rohloff hub alone is around what... $1,300? A boutique shop can build one great bike for people who can afford it. Scale lets companies build a million good ones at prices normal people can pay. Fox, SRAM, and Shimano bring performance and value because they benefit from economies of scale. The examples you gave do not, and their pricepoints all show for it.
Those small companies also stand on the shoulders of giants: CNC machines, aluminum alloys, carbon, bearings, seals, damper design, modern oils, modern tech infrastructure, distribution networks, and industry standards like axle spacing, shock sizes, headset specs, and BB specs that the big players set and paid for. Any shop can service parts, and the rider base that supports premium niches exists in part because big brands grew the sport and had the ability to "set the standard". You conceded tires, but the same is true of rims, chains, and bearings.
Pinion is a funny example here. It was founded (I think) in 2008 by two engineers who met in Porsche’s development department, and its gearbox was modeled on a car manual transmission, born out of one of the most capital-intensive industries on earth. Since 2022, BRP, the publicly traded Ski-Doo and Sea-Doo maker, has owned 80% of it. That’s literally access to capital funding a challenger to Shimano and SRAM (i could be wrng here)
Private doesn’t mean no capital either, as I'm sure you know. Bootstrapped companies run on founder savings, bank lines, and customer deposits. Boutique builds one great bike, scale builds a million good ones, but in some way, shape or form - capital is what makes both possible.
Again, at a point we just are talking about the amount of capital, which feels really arbitrary to me. Who am I to say Fox, Shimano, SRAM, and a handful of other companies shouldn't have access to 10 figures of capital if needed?
Remember, without all this money in the market, and without all this competition, many of us probably wouldn't be able to afford the sport, nor would the tech be anywhere near where its at...
I thought we were talking about outside capital in just the bike industry.
What does "outside" mean?
My read of what Jeff wrote is he's thinking about the normal economics definition of outside vs inside capital. Basically inside capital is the cash generated by the business itself. Everything else is outside capital. Further this means that virtually all businesses require outside capital to get started.
Now if you just mean "outside the bike industry" capital... you're basically trying to draw a very squiggly, fuzzy ass line. And IMO it's so squiggly and fuzzy it's basically pointless to try and draw. And I think Jeff is basically making this point as well, but very nicely. (Correct me if I'm wrong, obviously).
At the end of the day it's a passion based industry. Which is one of the challenges for businesses. I think it's useful to view the market as a thing that contains ONLY actual financial transactions--this strips away the bullshit people say from what they actually do (how many people say they will buy one thing, and then don't, or buy another for example). Companies compete in the market. It's like evolution, survival of the fittest. Companies are born, they struggle, they thrive, they die. It's a VERY good thing that companies are born and die.
Of course small brands can exist and make amazing stuff. Respect to Rohloff, Intend, Pinion, and allllll the builders putting these bespoke bikes/parts together. But they’re...
Of course small brands can exist and make amazing stuff. Respect to Rohloff, Intend, Pinion, and allllll the builders putting these bespoke bikes/parts together. But they’re a rounding error in the market. If boutique shops had to supply the whole industry, they literally couldn’t meet demand.
And “not the cheapest” is really a big part of this debate. A Rohloff hub alone is around what... $1,300? A boutique shop can build one great bike for people who can afford it. Scale lets companies build a million good ones at prices normal people can pay. Fox, SRAM, and Shimano bring performance and value because they benefit from economies of scale. The examples you gave do not, and their pricepoints all show for it.
Those small companies also stand on the shoulders of giants: CNC machines, aluminum alloys, carbon, bearings, seals, damper design, modern oils, modern tech infrastructure, distribution networks, and industry standards like axle spacing, shock sizes, headset specs, and BB specs that the big players set and paid for. Any shop can service parts, and the rider base that supports premium niches exists in part because big brands grew the sport and had the ability to "set the standard". You conceded tires, but the same is true of rims, chains, and bearings.
Pinion is a funny example here. It was founded (I think) in 2008 by two engineers who met in Porsche’s development department, and its gearbox was modeled on a car manual transmission, born out of one of the most capital-intensive industries on earth. Since 2022, BRP, the publicly traded Ski-Doo and Sea-Doo maker, has owned 80% of it. That’s literally access to capital funding a challenger to Shimano and SRAM (i could be wrng here)
Private doesn’t mean no capital either, as I'm sure you know. Bootstrapped companies run on founder savings, bank lines, and customer deposits. Boutique builds one great bike, scale builds a million good ones, but in some way, shape or form - capital is what makes both possible.
Again, at a point we just are talking about the amount of capital, which feels really arbitrary to me. Who am I to say Fox, Shimano, SRAM, and a handful of other companies shouldn't have access to 10 figures of capital if needed?
Remember, without all this money in the market, and without all this competition, many of us probably wouldn't be able to afford the sport, nor would the tech be anywhere near where its at...
last time i checked intend forks are not due for a recall. rock shoxs are though. all that sweet sweet capital and they failed to properly qc their shit.
I think the vast majority of the bike industry is made up of people forgoing capital to be an engineer at rockshox, or trek, or wherever. Risking their life savings on a bike shop that will never increase in value. Just more work for more people who also are probably forgoing a better salary somewhere else to do it. People who run a second company while putting food on the table from a first job. hoping one day they can provide employees and themselves with a modest living built around riding bikes. And I think as far as innovation in the modern world. The vast majority is driven by people who are passionate about being a doctor, chemist, engineer, paleontologist, artisan, teacher, etc. etc. etc.
It’s been a century since anyone with the ford name offered innovation at ford. The same guy who did that innovation. who history teachers tell grade schoolers offered his workers high wages to pay for the cars they built. Also had to be forced by the president to agree to an auto union and give said workers a raise to reasonable wages for world war 2. Of course the ford family and its investors were still set to get rich off government contracts even with the raises. But it does show the difference between a government acting on behalf of regular folk doing the work and a government acting/not acting on behalf of the families with their name on the property.
Jeff, reading through your newsletter, one thing that jumped out to me was how Garmin is way outperforming everything else in your bike graph. How the hell are they pulling it off? Is it because it's tech? Is it because it covers a wide range of outdoor (boating, offroad, bike computers, watches)? I understand why it's doing better than GoPro (because they're actually innovating in ways the user notices, and not reliant on generating terabytes of content that the user then has to edit and post for no one to watch). I feel like Garmin might be a decent candidate for deep dive on what's actually working.
On your speculation point 5, I think that's spot-on. I'd bet significant real money that SRAM will be taking another swing at a motor (this time in house rather than just a Brose rebadge) for this reason.
Because it's actually incredibly relevant to this thread,
A brief history of CNC machining;
1946- USAF pays kids at M.I.T. to use punch cards and hyrdaulic controls to automate lathes and mills for the first time. Somewhere in Ukraine, punchcard operated lathes start spinning precision parts for the Soviet Airforce.
1949- The Coordinating Commitee for Multilatleral Export Controls(CoCom), an "unoffical and involuntary agreement" in between the USA and Western, industrialized nations aligned against the Soviet Union not to allow industrial technology to be exported outside the Capitalist world- American industrialists had financed Japanese factory building in the 1930's in the lead up to the war... they wanted to protect their investments(the American military still occupied Japan at this point).
Mid 50's- The united states government funds more kids at M.I.T. to develop G-Code, the computer numeric code that still drives all cnc machines and industrial robots today. Fujitsu, in Japan, a private company at the time, develops what becomes the FANUC control. The United States installs FANUC controllers on thousand of Defense Production Act era machines to jumpstart The Jet Age with billions of dollars in government spending, but very soon new FANUC-native ground up CNC products from Japan were taking over machine shops.
1960-70's. The Defense Advanced Projects Administration(DARPA) spends untold sums of money creating 5-axis cnc machines so American submarines can run a little bit quieter
1983- Fanuc goes public in Japan
1987- Soviets reverse engineer western 5-axis cnc machines and inspire the plot of Hunt for Red October.
2009- CoCom Export Restrictions on 5-axis CNC machines are lifted.
Because it's actually incredibly relevant to this thread,A brief history of CNC machining;1946- USAF pays kids at M.I.T. to use punch cards and hyrdaulic controls to...
Because it's actually incredibly relevant to this thread,
A brief history of CNC machining;
1946- USAF pays kids at M.I.T. to use punch cards and hyrdaulic controls to automate lathes and mills for the first time. Somewhere in Ukraine, punchcard operated lathes start spinning precision parts for the Soviet Airforce.
1949- The Coordinating Commitee for Multilatleral Export Controls(CoCom), an "unoffical and involuntary agreement" in between the USA and Western, industrialized nations aligned against the Soviet Union not to allow industrial technology to be exported outside the Capitalist world- American industrialists had financed Japanese factory building in the 1930's in the lead up to the war... they wanted to protect their investments(the American military still occupied Japan at this point).
Mid 50's- The united states government funds more kids at M.I.T. to develop G-Code, the computer numeric code that still drives all cnc machines and industrial robots today. Fujitsu, in Japan, a private company at the time, develops what becomes the FANUC control. The United States installs FANUC controllers on thousand of Defense Production Act era machines to jumpstart The Jet Age with billions of dollars in government spending, but very soon new FANUC-native ground up CNC products from Japan were taking over machine shops.
1960-70's. The Defense Advanced Projects Administration(DARPA) spends untold sums of money creating 5-axis cnc machines so American submarines can run a little bit quieter
1983- Fanuc goes public in Japan
1987- Soviets reverse engineer western 5-axis cnc machines and inspire the plot of Hunt for Red October.
2009- CoCom Export Restrictions on 5-axis CNC machines are lifted.
You probably either know that already or will like the history. Some of the first commercial cnc machining was undertaken in sleepy little northern Michigan.
Jeff, reading through your newsletter, one thing that jumped out to me was how Garmin is way outperforming everything else in your bike graph. How the...
Jeff, reading through your newsletter, one thing that jumped out to me was how Garmin is way outperforming everything else in your bike graph. How the hell are they pulling it off? Is it because it's tech? Is it because it covers a wide range of outdoor (boating, offroad, bike computers, watches)? I understand why it's doing better than GoPro (because they're actually innovating in ways the user notices, and not reliant on generating terabytes of content that the user then has to edit and post for no one to watch). I feel like Garmin might be a decent candidate for deep dive on what's actually working.
On your speculation point 5, I think that's spot-on. I'd bet significant real money that SRAM will be taking another swing at a motor (this time in house rather than just a Brose rebadge) for this reason.
Good question. Garmin does ~$700M in “fitness”, $600M in “outdoor” (adventure watches, handheld GPS, golf and dog tracking), $300M in marine, $250M in aviation and $130M in auto in Q3 2026. Garmin is guiding to about $8.15B of revenue for the full year.
They also have gross margins that look more like “tech” than “outdoor industry”. Garmin’s gross margin was about 63% last quarter, roughly double Fox’s ~30%.
When you roll those two facts against the idea that Garmin’s real total addressable market is at minimum one order of magnitude bigger than anything in “cycling”, it starts to make sense.
Maybe time for a deep dive into Garmin!
Also - the chart for those who don't follow my substack.
Hearing about some rumblings at ZEG in Germany (largest European purchasing association that owns many brands such as Bulls, Kettler, Hercules, i:sy, Kalkoff etc). There's talk about layoffs and some financial issues that require discussions with banks and are delaying the release of their 2025 annual report. I've thought so many times over the past years that surely the worst for this industry must now surely be behind us, but the hits just keep on coming.
Hearing about some rumblings at ZEG in Germany (largest European purchasing association that owns many brands such as Bulls, Kettler, Hercules, i:sy, Kalkoff etc). There's talk...
Hearing about some rumblings at ZEG in Germany (largest European purchasing association that owns many brands such as Bulls, Kettler, Hercules, i:sy, Kalkoff etc). There's talk about layoffs and some financial issues that require discussions with banks and are delaying the release of their 2025 annual report. I've thought so many times over the past years that surely the worst for this industry must now surely be behind us, but the hits just keep on coming.
If only someone could push one (or two) new wheel sizes in the market, that would for sure help the struggling industry. 😉
In all seriousness, won't the push to introduce 2 new wheel standards just hurt the industry even more overall? Setting aside whether or not they're good from a ride quality perspective, I'd think that it will introduce a bunch of new SKUs they'll have to manage, will instantly make their current supply seem obsolete (restart the inventory glut), and further hurt sales of the current products when the early adopters sell their current bikes, leading to more discounting.
Jeff please never leave us! Garmin is interesting. How does little Suunto compare now it's not part of Amer but owned by tech? Which leads me onto, Amer in the ski department, is their rise not due to fashion/gravel/general none ski, outdoor stuff? If B.D are counted as Outdoor, yet do ski and aren't as of yet at a level of Patagucci or Arcteryx fashion wear is this gonna happen?
Curious as a french resident, what role Compagnie dez Alpes plays internationally for comparison with the Vail/Big pass America world.
this time around, i'd add "rad power bikes / surrons / e-scooters" (used as an all-encompassing generic term for kids ebikes) as a disruptor to the...
this time around, i'd add "rad power bikes / surrons / e-scooters" (used as an all-encompassing generic term for kids ebikes) as a disruptor to the MTB and even eMTB markets as we know them*. anecdotally i see more kids on those than pedal bikes by a landslide in the last year. kids used to a throttle probably aren't going to be super excited to have to pedal. MTBs and eMTBs that we all enjoy being twice the price of an e-moto will perplex parents for sure.
*do not derail this into a discussion about e-bike/e-moto access or rider stupidity please.
I've said this elsewhere, but I think it bears repeating: Gravel bikes make little sense to mountain bikers. They make a lot of sense to road bikers...
I've said this elsewhere, but I think it bears repeating:
Gravel bikes make little sense to mountain bikers. They make a lot of sense to road bikers, and road bikers love them and spend money on them.
Ebikes make little sense to moto riders. They make a lot of sense to mountain bikers, and mountain bikers love them and spend money on them.
If you are young and have yet to pick your hobby, its rare that an ebike makes more sense than a Surron, since you have yet to form a mountain biking foundation. I think sppomer is right, what ebikes have done to mountain bikes will be done to ebikes by Surrons.
Lots of caveats and exceptions of course
I went to my first GNCC race at Snowshoe this year and everybody, I mean everybody had e-bikes. Even people not racing the ebike XC race. EMTB most certainly does make sense to moto people. (maybe due to lack of maintenance and ease of riding from lower power?) Their kids start on Strider bikes just like us.
Lotta interesting observations at that race:
Easily 60% Specialized or more
I’ve never seen so many of that horrible Yamaha ebike in my life. Plenty of GasGas too. The Honda bike will sell to these people.
Only 2 Santa Cruz and one Orbea. No other bike industry brands at all.
Only 1 or 2 Amflows. I saw more Amflows at the jam band music festival up there than the moto event!
If only someone could push one (or two) new wheel sizes in the market, that would for sure help the struggling industry. 😉
Good thing we have 32", and not one but two competing 30.5" sizes! That's three so far! Let's get some modern 36" tires as well! The industry is saved!
What does "outside" mean?
My read of what Jeff wrote is he's thinking about the normal economics definition of outside vs inside capital. Basically inside capital is the cash generated by the business itself. Everything else is outside capital. Further this means that virtually all businesses require outside capital to get started.
Now if you just mean "outside the bike industry" capital... you're basically trying to draw a very squiggly, fuzzy ass line. And IMO it's so squiggly and fuzzy it's basically pointless to try and draw. And I think Jeff is basically making this point as well, but very nicely. (Correct me if I'm wrong, obviously).
At the end of the day it's a passion based industry. Which is one of the challenges for businesses. I think it's useful to view the market as a thing that contains ONLY actual financial transactions--this strips away the bullshit people say from what they actually do (how many people say they will buy one thing, and then don't, or buy another for example). Companies compete in the market. It's like evolution, survival of the fittest. Companies are born, they struggle, they thrive, they die. It's a VERY good thing that companies are born and die.
last time i checked intend forks are not due for a recall. rock shoxs are though. all that sweet sweet capital and they failed to properly qc their shit.
I think the vast majority of the bike industry is made up of people forgoing capital to be an engineer at rockshox, or trek, or wherever. Risking their life savings on a bike shop that will never increase in value. Just more work for more people who also are probably forgoing a better salary somewhere else to do it. People who run a second company while putting food on the table from a first job. hoping one day they can provide employees and themselves with a modest living built around riding bikes. And I think as far as innovation in the modern world. The vast majority is driven by people who are passionate about being a doctor, chemist, engineer, paleontologist, artisan, teacher, etc. etc. etc.
It’s been a century since anyone with the ford name offered innovation at ford. The same guy who did that innovation. who history teachers tell grade schoolers offered his workers high wages to pay for the cars they built. Also had to be forced by the president to agree to an auto union and give said workers a raise to reasonable wages for world war 2. Of course the ford family and its investors were still set to get rich off government contracts even with the raises. But it does show the difference between a government acting on behalf of regular folk doing the work and a government acting/not acting on behalf of the families with their name on the property.
Jeff, reading through your newsletter, one thing that jumped out to me was how Garmin is way outperforming everything else in your bike graph. How the hell are they pulling it off? Is it because it's tech? Is it because it covers a wide range of outdoor (boating, offroad, bike computers, watches)? I understand why it's doing better than GoPro (because they're actually innovating in ways the user notices, and not reliant on generating terabytes of content that the user then has to edit and post for no one to watch). I feel like Garmin might be a decent candidate for deep dive on what's actually working.
On your speculation point 5, I think that's spot-on. I'd bet significant real money that SRAM will be taking another swing at a motor (this time in house rather than just a Brose rebadge) for this reason.
Because it's actually incredibly relevant to this thread,
A brief history of CNC machining;
1946- USAF pays kids at M.I.T. to use punch cards and hyrdaulic controls to automate lathes and mills for the first time. Somewhere in Ukraine, punchcard operated lathes start spinning precision parts for the Soviet Airforce.
1949- The Coordinating Commitee for Multilatleral Export Controls(CoCom), an "unoffical and involuntary agreement" in between the USA and Western, industrialized nations aligned against the Soviet Union not to allow industrial technology to be exported outside the Capitalist world- American industrialists had financed Japanese factory building in the 1930's in the lead up to the war... they wanted to protect their investments(the American military still occupied Japan at this point).
Mid 50's- The united states government funds more kids at M.I.T. to develop G-Code, the computer numeric code that still drives all cnc machines and industrial robots today. Fujitsu, in Japan, a private company at the time, develops what becomes the FANUC control. The United States installs FANUC controllers on thousand of Defense Production Act era machines to jumpstart The Jet Age with billions of dollars in government spending, but very soon new FANUC-native ground up CNC products from Japan were taking over machine shops.
1960-70's. The Defense Advanced Projects Administration(DARPA) spends untold sums of money creating 5-axis cnc machines so American submarines can run a little bit quieter
1983- Fanuc goes public in Japan
1987- Soviets reverse engineer western 5-axis cnc machines and inspire the plot of Hunt for Red October.
2009- CoCom Export Restrictions on 5-axis CNC machines are lifted.
https://en.wikipedia.org/wiki/John_T._Parsons
You probably either know that already or will like the history. Some of the first commercial cnc machining was undertaken in sleepy little northern Michigan.
Good question. Garmin does ~$700M in “fitness”, $600M in “outdoor” (adventure watches, handheld GPS, golf and dog tracking), $300M in marine, $250M in aviation and $130M in auto in Q3 2026. Garmin is guiding to about $8.15B of revenue for the full year.
They also have gross margins that look more like “tech” than “outdoor industry”. Garmin’s gross margin was about 63% last quarter, roughly double Fox’s ~30%.
When you roll those two facts against the idea that Garmin’s real total addressable market is at minimum one order of magnitude bigger than anything in “cycling”, it starts to make sense.
Maybe time for a deep dive into Garmin!
Also - the chart for those who don't follow my substack.
Hearing about some rumblings at ZEG in Germany (largest European purchasing association that owns many brands such as Bulls, Kettler, Hercules, i:sy, Kalkoff etc). There's talk about layoffs and some financial issues that require discussions with banks and are delaying the release of their 2025 annual report. I've thought so many times over the past years that surely the worst for this industry must now surely be behind us, but the hits just keep on coming.
If only someone could push one (or two) new wheel sizes in the market, that would for sure help the struggling industry. 😉
In all seriousness, won't the push to introduce 2 new wheel standards just hurt the industry even more overall? Setting aside whether or not they're good from a ride quality perspective, I'd think that it will introduce a bunch of new SKUs they'll have to manage, will instantly make their current supply seem obsolete (restart the inventory glut), and further hurt sales of the current products when the early adopters sell their current bikes, leading to more discounting.
Jeff please never leave us!
Garmin is interesting. How does little Suunto compare now it's not part of Amer but owned by tech?
Which leads me onto, Amer in the ski department, is their rise not due to fashion/gravel/general none ski, outdoor stuff? If B.D are counted as Outdoor, yet do ski and aren't as of yet at a level of Patagucci or Arcteryx fashion wear is this gonna happen?
Curious as a french resident, what role Compagnie dez Alpes plays internationally for comparison with the Vail/Big pass America world.
I went to my first GNCC race at Snowshoe this year and everybody, I mean everybody had e-bikes. Even people not racing the ebike XC race. EMTB most certainly does make sense to moto people. (maybe due to lack of maintenance and ease of riding from lower power?) Their kids start on Strider bikes just like us.
Lotta interesting observations at that race:
Good thing we have 32", and not one but two competing 30.5" sizes! That's three so far! Let's get some modern 36" tires as well! The industry is saved!
Post a reply to: The Bikeconomics (Mega)Thread