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BloombergBusinessweek November 2, 2020aremorethan100,000Radbikeson
theroadworldwide.Thecompany’s
success comes down largely to its pric-
ing. Rad bikes are hundreds, and some-
times thousands, of dollars cheaper
than competitors’ bikes. The compa-
ny’s cargo bike, the RadWagon, for
instance, sells for $1,700, whereas a top-
of-the-line model from Riese & Müller
goes for more than $8,000. Rad keeps
its prices low, in part, by cutting out the
bike shops. Markups there account for
$600 of the average price of $2,600 for
an e-bike, according to the nonprofit
PeopleForBikes. Rad also uses cheaper
motors, gears, brakes, and other parts
than many of its bike shop competitors.
For Rad to live up to its vision of selling
workaday vehicles by the millions and
reshaping the way Americans go from
place to place, it will have to prove that
low cost doesn’t mean low quality and
fend off increasing competition from
traditional bike makers.R
adenbaugh, 30, built his first
e-bike 15 years ago as a teen-
ager. He wanted a new way to make
the 16-mile trip to and from his high
school in Garberville, Calif., a dirt-road
town four hours north of San Francisco.
The bus was a “long and dreary” ride;
his mountain bike left him soaked in
sweat; and there was nothing more
mortifying for a self-described “nerdy
guy” than arriving with his mom, the
school nurse. So Radenbaugh soldered
together a 40-pound lead-acid bat-
tery and a Specialized mountain bike
using parts he found online and at the
local RadioShack. After a few failed tri-
als, the bike was ready to ride down
Highway 101. It did get him to school,
but didn’t help his efforts to look cool:
“I got honked at a lot by classmates,”
he recalls.
Two years later, in 2007, Radenbaugh
sold a home-built e-bike at a local sum-
mer fair, swapping it for a 20-foot tepee,
which he put up in his family’s yard
and lived in for a few months. Over the
next couple of years, as he finished high
school and enrolled at Humboldt State
University, Radenbaugh and Collins,
a childhood friend and college room-
mate, built and sold custom bikes oncampus, advertisinginclassifiedads
and on Craigslist.In2014,Radenbaugh
moved to SeattletopursueRadPower
full time. Thefollowingyear,heand
Collins soldtheirfirstbatchofabout
300 bikes througha prepayonlinecam-
paign on Indiegogoandopenedtheir
online store.
“We sawwhatthelikesofWarby
Parker andCasperweredoingandsaw
an opportunitythere,”Collinssays.But
as a relatively low-margin business
with hundredsofcompetitors,e-bikes
hadn’tbeena typicaltargetforven-
turecapitalists.Duringitsfirstyear,
Radtooka five-figuresumfroma pair
of investorswhohappenedtohavean
office nearby,butotherwiseroseonits
own steamuntillastyearwhenDarrell
Cavens andMarkVadon,co-founders
of Zulily LLC,putinmorecash.
Still, Radcouldn’tfollowthetypi-
cal direct-to-consumerstartupplay-
book of losinghugesumstoacquire
new customers.“Wedidn’ttakethe
strategy oflet’sgetcustomersatany
cost,” Collinssays.“Weneededprofit
to keep going.”Intheearlydays,he
adds, he wastheonlypersonanswer-
ing calls whencustomershadquestions
or problems.Heusedwhathelearned
from thoseconversationstotargetads
onFacebook.HeandRadenbaughhad
expectedtosellbikestopeoplelike
themselves—twentysomething citydwellers—but their early customers, he
says, were mostly “suburban dudes in
their 50s, 60s, and 70s.”
“It really was baby boomer after baby
boomer,” Radenbaugh says. As sales
grew, so did Rad’s ad budget. The com-
pany now spends in a day running ads on
Facebook, Instagram, and Google what
it used to spend in a month, Collins says.
The customer base, he adds, has since
broadened to include more of the young
city dwellers they had envisioned.
In February, Rad raised $25 mil-
lion from a group of venture investors,
including Vulcan Capital. Although
Rad has been profitable since 2015,
Radenbaugh says, the infusion of cash
will allow the company to develop prod-
ucts, expand service, and sell bikes
faster. “When people jump on these
bikes and try them out, it’s a totally new
experience,” says Stuart Nagae, one of
Rad’s venture investors. “So I’m super-
bullish on adoption.”
Rad’s growth prospects will depend
partly on convincing customers that
they can use the bikes to replace at
least some car trips. That’s what hap-
pened to Zachary Deegan, a school-
teacher in exurban Denver who got
interested in e-bikes while teaching a
lesson on urban planning to his high
school environmental studies class. He
was running through the costs of the
Hyundai Santa Fe and Subaru ImprezaRAD BIKES IN THE SEATTLE SHOWROOM