Since my last article on the differences between factories I have been thinking a lot about the reasons, how the factories have changed recently, the factors behind some companies thriving while others are going under and so on. Then there was the post about the publications in the bike sphere mostly being PR , pumped up statistics etc.
On top of that I was reading a very good book on investing and business development. From that a very good thought came to mind:
“The purpose of a business owned by a family or person is to provide best possible service and product to the customer (in our case bicycle, e bike, performance, servicing).
When this same company is bought by a third party investment fund the purpose of the company changes completely. From that moment on the COMPANY IS THE PRODUCT ! What they offer to their customers is only there to generate as much financial value to the fund as possible. “
And then it hit me, this is just what happened in the bike industry. Until 2010’s the bike industry was mostly family owned, value wise quite small and closed. Not interesting to investors at all.
A major change was the appearance of e-bikes. The value of the production started to skyrocket and bike industry needed help in a form of cash to grow the business. There came the fast adopting investors and helped grow the e-bike business greatly. We can be nothing but grateful for this. Investors were pumping money in growth and the companies were growing at an amazing pace. What was growing even faster was their potential for growth.
The numbers were a dream come true for the investors, even before the pandemic bloom. Until that point it was a great investment which in the end paid back multiple times.
With year 2019-2020 boom we were starting to see the crazy statistics about the growth until 2030. These were actually sales pitches of the investors. By then they knew what exactly was the bike industry and it’s short term potential.
Let me reiterate one thing here, most investors are looking short term positions to get the profit back out of their investment as soon as possible.
I am still a big believer that the bike industry has a moderate potential in the long term and on top of that a huge potential to produce new vehicles for micro mobility, public and last mile transport.
Seeing these forecasts so many companies changed owners in a short period of time both from investor to investor and from owner to investor. At this point it was a hype and this was not a sound logical investment. We are seeing the results of that now.
This changed the landscape of the bike industry completely where some of the the companies are products rather than what they are producing.
All changed, from the production processes, sourcing, sales, product development, products, prices etc. Everything to accommodate the new reality.
I am not saying this is completely a bad thing. It is a change we have to get used to and adapt to it because investors are here to stay.
We all have to adapt our product range, way of forecasting the business, way of looking at which products will be on the market and which will be popular, how we look at the statistics and publications. The competition between the companies is very different now and this must be taken into account when planning. Important point is that we must adapt our communication to the customer to be able to stand out and have their trust.
When you think deeper about the structure and how money works you become aware that “specific product hypes are the new reality” and we must adapt to this .
Maybe, now it is the time to buy some good “products” again at a reasonable price.
