Of course you already knew about this... ;^p,,,
*** Santa Cruz Bicycles on cutting edge ***
Santa Cruz, CA (AP) -- 09/19/2003 Despite the overall downward trend of bicycle sales and mass
industry consolidation, Santa Cruz Bicycles is quickly gaining market share in the high-end mountain
bike industry with a simple formula.
"We only make what we would personally want to ride," says former local professional skateboarder
Rob Roskopp, company owner.
Santa Cruz Bicycles, led by Roskopp and his business mentor and partner Richard Novak of NHS Inc.,
is smartly navigating the industry's bumps and turns with cutting-edge technology that has helped
push the company to the top echelons of U.S. bike makers.
"We're the one everyone's shooting for," Roskopp said.
The small, private company reports 75 percent growth in the last year, which has included the debut
of the Blur, a cross-country bike with new technology that has gained rave reviews in the trade
press since it was released in April 2002. Roskopp says it will help boost company sales this year
to 20,000 bikes. About 70 percent of sales are domestic, but the company sells to more than 40
countries.
Crammed into several different corners of Santa Cruz's light industrial warehouse neighborhood on
Bronson Street, Roskopp said the staff is working hard to keep up with Blur-driven demand. The
company is in the middle of an expansion that will nearly double its 7,800 square feet while
consolidating divisions in various buildings.
For now, one gets to his second floor office for the first time only with a guide who can lead the
way around boxes and bicycle parts lined up on shelves.
Visitors head down a couple short hallways and up some stairs to a couch parked next to a couple
desks and a jar of peanut butter beside a stack of tortillas on a tiny fridge. Some bicycle parts
lean up against the file cabinet and Roskopp's view is a metal warehouse roof. He says he's looking
forward to reorganizing the company for "the next phase of growth and stability."
Roskopp got his start in business as a young professional skateboarder for Novak's NHS, which is the
parent company of Santa Cruz Snowboards/Skateboards. After racing, Roskopp worked for NHS. That's
when he and Novak decided to start a bicycle company with Mike Marquez in 1993, the heyday of
mountain biking. Novak was to be a behind-the-scenes partner in Santa Cruz Bicycles.
They liked a full-suspension design by Santa Cruz bike designer Tom Morris and it became the Tazmon,
a simple, lightweight bicycle that they carted around to different dealers with new business partner
Hans Heim from well-known Bontrager bicycles.
A year later, a new model, the Heckler, bumped sales 350 percent and Heim, Novak and Roskopp
incorporated as partners.
By 1996 Santa Cruz Bicycles was a $2 million company with a reputation for new technology that
pushed biking to a new level. Parts were made in Portland, Ore., and Taiwan and assembled, according
to custom orders in Santa Cruz.
The company designed several styles of mountain bikes, focusing on the high-end market where
innovation makes the difference. They left the low-end, low-margin sales to mass distributors. They
created a hard tail bike called the Chameleon and full -suspension bikes such as the Superlight, the
Super-8 and the Bullet. By 2000, Santa Cruz Bicycles was a $10 million company.
In the late 90s, however, Roskopp had started to look for the next big technology.
He found what he was looking for in a failed company called Outland Designs, which had a short life
in the 90s with a novel suspension system called virtual pivot point suspension. Roskopp bought
rights to the technology and engineers started working on it.
It took more than 700 configurations on the CAD (computer aided drafting) engineering software
program to get the right virtual model but finally they came out with the V-10, a downhill version
that was well received. Since the introduction of the cross-country model, the Blur, in late 2001,
sales have spiked.
Roskopp expects to sell 10,000 Blurs by year-end. The frame alone with a powder coat starts at
$1,350 and the complete bike can be about $4,700.
"It's our most successful bike ever," Roskopp says.
The recipe is simple, according to Novak.
"You make really good stuff, keep the technology level high, find the right niche and try not to get
out of it," he says.
And it's worked. Half-jokingly Novak complains that he went into business with Roskopp planning not
to work hard but success has brought many challenges and they discuss the business regularly.
"Business capitalization is a tough one," Novak says. "You have to move money really fast. You can't
be sitting on inventory or debt. It's really tough in this business climate to do that, and it's
extremely hard in California. Your windows of opportunity are really small."
Novak predicts sales could double in the next year and then maybe grow 15-30 percent in two years.
But it depends on the next innovation in the world of bikes.
In a sloping industry, success has had many challenges. The bicycle industry's high point, in terms
of unit sales, was the so-called "bike boom" in the 70s, according to the National Bicycle Dealers
Association. But, the market was soon saturated with low-end, inexpensive imported bikes.
Improvements in design and materials helped the industry survive, but the National Sporting Goods
Association still ranks bicycling seventh in popularity in the United States behind exercise
walking, swimming, camping, fishing, exercising with equipment and bowling.
The bright light has been mountain biking, which continued to grow in market share into the 90s and
represented 37.4 percent of all bicycles sold in 2002, according to the National Bicycle Dealers
Association. That number had been as high as 60 percent just a few years earlier.
The U.S. bicycle industry, estimated at $5.5 billion in 1999 by the National Sporting Goods
Association, grew to $5.8 billion in 2000 before dropping to $5.3 billion in 2001 where it
stayed in 2002.
In addition to new technology, the company has pioneered innovative Internet customization, an
online ordering system that allows bike enthusiasts to pick among styles, colors and bicycle parts
to create a one of a kind, truly personalized, really expensive bicycle.
"I'm pretty good at feeling what works," Roskopp says. "The industry's declined since 1994 but we
are taking market share.
In a move that puzzled some, Santa Cruz Bicycles recently licensed its virtual pivot point
technology to a direct competitor, Intense Cycles Inc. of Southern California. The strategy was
two-fold, Roskopp said. Competition can speed up the development process, and it also helps validate
a new technology in the marketplace.
"We work together to build a better product," he says.
The VP-Free, a virtual pivot point extreme bike with "a long travel" of 8 inches
- which means it smoothes out bumps
- should be out later this year.
The company employs 38 people and sponsors a number of professional extreme bikers such as the
Lunachix team with Alison Dunlap and Marla Streb, who is featured in IMAX movie Top Speed and
ITS/Santa Cruz team with Gary and Rich Houseman and Johnny Waddell.
Not too far down the road may be a line of mountain bikes for kids with a 24-inch wheel.
"I don't have a ceiling (for growth) but I don't want to mass produce and stick the Santa Cruz name
on every trinket," Roskopp says. "I always want to make high-end. Maybe down the road we'll get into
something else but I want to always make the best product."
Santa Cruz Bicycles WHAT: Designs and manufactures high-end downhill and cross-country
mountain bikes.
HEADQUARTERS: 104 Bronson St., 22, Santa Cruz.
BACKGROUND: Founded in 1993 by Rob Roskopp, Richard Novak and Mike Marquez. They incorporated after
bringing in Hans Heim as a partner.
EMPLOYEES: 38, not including production in Portland, Ore., and Taiwan.
LEADERSHIP: Rob Roskopp, owner, with partner Richard Novak.
INFORMATION: 459-7560, santacruzbicycles.comsantacruzbicycles.comOpen ↗
FINANCIALS: The privately held company reports 75 percent growth in the last year. Roskopp hopes to
sell 20,000 bikes this year. About 70 percent of sales are domestic, but the company sells to more
than 40 countries.
GUIDANCE: Novak hopes the company will double sales next year.