How I Built This with Guy Raz - Priority Bicycles: Dave Weiner

Episode Date: November 13, 2023

Priority Bicycles founder Dave Weiner quit his job as a software CEO to pursue a risky idea: building a new kind of bike. In 2014, he started sourcing parts to make his first low-maintenance model, with a rust-proof aluminum frame and a carbon fiber belt drive instead of a chain. Dave was able to keep costs down by selling DTC, but had to scramble to meet demand when his first Kickstarter campaign yielded 1500 orders. From there, Priority pedaled forward steadily, adding new models, and partnering with hotels to provide low-maintenance bikes for guests. Today, after weathering the extreme whiplash of Covid and a debilitating bike accident, Dave is optimistic that Priority will keep growing, with 25 current models and sales of roughly 25,000 bikes a year.This episode was produced by Josh Lash with music by Ramtin Arablouei.Edited by Neva Grant, with research from Carla Esteves .Our engineers were Gilly Moon and Robert Rodriguez.You can follow HIBT on Twitter & Instagram, and email us at [e-mail] Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Yeah. And you had that really successful initial Kickstarter, but a year later, not much, not much action. Yeah, the classic bike was still doing well. So I knew that we had a win that could carry the company, though it couldn't carry me. Yeah. And now I'm pretty deep. I have one successful product. I have one unsuccessful product.

I know that the way I can grow this business is simple in theory and hard in reality. I need to have a bike that changes everything. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Dave Wiener quit his job in tech to build a bike that wouldn't rust or need a new chain and grew priority bicycles from a Brooklyn startup into a major player in bikes. Back in the early days of this show, we used to run a segment called How You Built That. And it was where founders of very small mom-and-pop businesses could tell us their story, usually in two to three minutes. Anyway, one of those companies was founded by a guy named Dave Weiner. And at the time, this is back in 2017, Dave was barely three years into founding his small bicycle company.

So we heard a bit about it. Dave talked about what made the bikes different, and we parted ways. But six years on, priority bicycles have. has become a formidable brand. So today on the show, we're bringing Dave back to tell the full-blown story of how he built priority. Now, initially, the idea was to make a low-maintenance bike at an affordable price.

And Dave's bike would include things like disc brakes, puncture-resistant tires, and internal gear hub, and most importantly, instead of a metal chain, his bikes would have a carbon-fiber belt drive. Now, normally, components like these would drive the price of a bike up to $3,000 or even $4,000. Only super high-end bikes had these features. But Dave wanted to price his bikes at under $1,000. But to do that would require a whole lot of engineering and an entirely new business model.

Dave decided to start priority after a career in computer software. It was a risky pivot because his job was steady. and the money was good. And the bike industry is a hard nut to crack. Three companies tend to dominate sales, at least in the U.S., giant, specialized, and trek. But over time, priority managed to carve out a place for itself. Dave would have to draw on his skills from his first career in software

to handle the challenges of selling these bikes, including the chaotic rollout of his first models after an unexpectedly successful Kickstarter campaign. and an explosion in demand during COVID that basically emptied his warehouse, followed by a big falloff in bike sales this year, which has affected the entire industry. All along, though, the driving force behind priority bikes was rooted in Dave's own love of cycling, which began when he was a kid, riding around with his friends in a small town in Northern California. I loved riding my bike, and my friends and I went riding.

That's what we did after school. It was a, you know, long before there were kids playing video games, right? We were mountain biking and we loved it, and that was absolutely my passion and still very much is. So you grew up really, like a lot of kids, just into, I mean, this is the, the 80s. And all you have to do to understand the 80s is just watch ET because that's all they did. They biked around and sometimes they'd have an alien in the basket of the bike. and that's what like kids did. It's spot on.

We got home from school. Well, first off, we rode our bike to school and then rode our bikes home and then stayed in front of the house or down the street at the mountain. And not only did I like to ride my bike, I love to work on it. I like changing my bike and fixing my bike

and making my bike better. And then I loved working on the neighbor's bikes and doing everything I could to be involved in how the bike worked and how to improve it. This wasn't just about putting like a playing card in the spokes. to make the sound, which I did.

Every kid seemed to have done that in the 80s. You put a playing cards and rubber bands on the spokes. I don't know if kids. I think it was more, yeah, it was playing cards. Not like a baseball card. You need like a wax-coated playing card. Wax playing card to make that sputtering sound. Yeah, that was fun.

And in high school, you got jobs at bike shops, right? Yeah, so I was fortunate enough to work for the local chain of bike shops. I had a wonderful owner who took me in and let me learn, let me extend my knowledge of how to work on bikes through their mechanics, which were all great with me. And I learned a lot more about how a bike shop ran. Yeah. So, okay, so for college, I guess you studied business at UC Santa Barbara. And I guess you also got a pretty solid background in, like, IT, because I'm, you know, I guess all during college, you worked at a company that did, like, software for bike shops.

That's right. And so then when you graduated, did you stay in the bike world? Like, what did you wind up doing? Yeah, so I got a job opportunity from Giant Bicycle, which was, you know, one of the top, and still is. Of course, one of the top bicycle companies in the world. And I saw myself growing in the bike industry. Yeah. So who doesn't want to go work for one of the top bike companies?

And there, they were based, or still are based maybe in Los Angeles? Yeah, yeah, Newbury Park. So kind of halfway between Santa Barbara and L.A. And what did you do for Giant? I worked a dual role in both parts ordering and the aftermarket parts ordering, and I worked in IT. And was, I mean, at that time, I imagined that the IT part of a bike company was still very new, very small part of Giant at the time. It was tiny. Yeah.

And that's why having me who, you know, I was at, I both had this kind of database in my head of every bike for doing it for four years. You didn't need the software. You had me. I could tell you every little specific off the top of my head. And I knew a lot about software. And that's why they had, they asked to put me in this joint role because they had a small IT department. And they were going through a big system implementation. What kind of, what was the software doing?

So it was enterprise resource planning, and that entails all aspects of the company. So it's your inventory management, your financial management, you know, everybody in accounting and down the line. Yeah. And all of a sudden, I realized that Microsoft owned this software, and they were going to be putting tremendous resources behind it. And I knew it really well. Right. And so I started to look for a role in doing this new software, which was later called Microsoft Dynamics.

And I found a company in New York that needed someone to head a group to take this software on. And I took that opportunity to move to New York and try something new. And plus, my friend Connor Swigel just moved to New York, and he was having a good time. And it seemed like a fun place to be in your... early 20s. And did you, I mean, were you a bike commuter? Were you riding a bike to work every day? Yeah. Right when I got to New York, I got a, you know, a used 70s Schwinn and made sure it was properly adjusted and used it every day to get to work and get around the city. And so I've now

been in New York 19 years and I rarely go anywhere that's not my bike. And by the way, the company you were working for in New York, had nothing to do with bikes. I think it was just, it was strictly like a software business called coal systems. And you started there as, I guess, like an IT consultant, but then you stayed for a long time. In fact, you actually rose the ranks. You eventually became the CEO. That's right. And so how did that happen? I mean, did the founders, I don't know, I know it was a small business when you joined, probably 10 or 15 people, but did the founders kind of like mentor you into that role? Yeah, there were two founders and they mentored me extensively. And they also really encouraged me to grow my area of the business and then at some

point take over management of the business. And I liked managing, I would say I liked managing the business more than I liked managing people, you know, but we had a really nice group that We're all passionate about the software. And even more importantly, we're passionate about our customers. While you were, I mean, you would end up working there for 10 years. But I guess you're like with your friends and people you knew in the city, you kind of had a reputation as the bike guy. Like people knew you as they come to you for like recommendations for what to buy or like ask you to help them fix their bikes, right? Like people knew you as that person.

Yeah, absolutely. So something that was different for me in New York. than California. In California, we ride our bikes all year round. Right. In New York, we don't. And, you know, it gets really wet. And the snow and the ice are on the ground, and we stop riding bikes.

And so people here in New York, you know, spring comes and their bike sat in the basement all winter. And, you know, if they're lucky in the basement didn't flood, the bike probably needs a tune-up and needs some adjustment. And so I found a lot that every time I wanted to go ride a bike with a friend, my bike was ready to go because that was part of what I did, but their bike never was ready to go. So I always had to call a friend, get there early, tune their bike, and make sure it's ready to ride. And I guess even while you were kind of rising through the ranks at Cole, this company, you still were thinking about bikes. Like maybe, I mean, not even thinking about it, but you were literally sketching out ideas. for like, could you create a bike company?

Yeah. In 2013, I started to think about what would be next for me. I loved having entrepreneurial ideas. I loved in software being able to twist and turn with the software company and figure out how we could evolve. We grew to, we grew much larger. We had, I think, 280-something employees when I left in 2014. This was, I think, just to clarify, the company was bought. It was acquired by a bigger company, right?

That's correct, yeah. We wound up selling the company to a bigger company, which was the right thing to do. It's where our industry was going. But it got to the point that I felt like I wasn't using my entrepreneurial energy the way I wanted to. So I had the title of president and CEO, but I certainly didn't. feel like it. And I was getting told to run the business in ways that I disagreed with. And so I felt like it was time to go. Yeah. And when I stepped down, I was used to working seven days a week. And I've never known how to relax. And so relaxing wasn't going to start then. And I had a young

family. So I knew I needed to do something. In selling the company a year earlier, my non-compete was heavy. And, you know, I knew software at this point. I knew bikes. And all I could think about is how can I put those two together? And this idea that I had written down a year earlier about starting a bike company kept ringing in my head as the only answer. So I guess, from what I understand, you were really landing, kept landing on this idea of like, could I make a different kind of bicycle? Could we sell like a bicycle that didn't require a whole lot of maintenance? Yeah, that's right. So I was trying to take my experience of working in a bike shop, working for a bike manufacturer.

And when you're in that world, you're most excited about the high-end bikes. You're excited about the carbon fiber, the titanium, the full suspension. and when I left the bike industry, the way I used a bike changed. I wasn't riding $5,000 bikes off road. I was riding $300 bikes on the road. And so were my friends. And so I started to think about what do my friends need? Well, I go to their house and have to tune their bikes every time before we go for a ride.

And, you know, the bike needs to be reliable. So people aren't getting flat tires and they're not ruining their pants as they ride you know, with their pants getting stuck in the chain, I started to just think about all these really simple creature comforts. And I also started to bring in my experience of software. And back then in 2014, there wasn't a lot of bicycles being sold online. And those that are, were pretty low quality. So I thought, gee, if we could bring something to market that's a bike shop quality bike,

that's really reliable, really long-lasting, that maybe that'll that'll resonate with people. And you basically now, I mean, spring of 2014, you were unemployed, but you had this plan to kind of build a bike. And I think at this time, you convinced your friend Connor Swigle from college to help out. Yeah. Was there anybody around you who thought this was kind of, I'm sure there are lots of people who are excited for you. But were there anyone who is like, I don't know, maybe your parents or family who cared about you are like, you know, you're leaving this job to do this? It's really risky. There was. My parents have always been nothing but supportive of me. And my wife, I had her full support to do this and to give it a shot.

But there was other people in my life that when I told I left a high paying job, CEO of a company. and a very good paycheck to start a startup with no money. And I'm not going to make any money, but I'm going to make this work. There were definitely others in my life that looked at me like I was crazy. And the bike industry is an overcrowded industry. It's not an industry that is needing another brand. Not 10 years ago, not today. It's not a slam dunk.

When we come back in just a moment, Dave pulls together a prototype and a Kickstarter campaign, but then has to make a decision that carries a lot more risk and costs a lot more money. Stay with us. I'm Guy Raz, and you're listening to How I Built This. As a business to business marketer, your needs are unique. B2B buying cycles are long and your customers face incredibly complex decisions. Isn't it time you had a marketing platform built specifically for you? LinkedIn ads empowers marketers with solutions for you and your customers. LinkedIn ads allow you to build the

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Hey, welcome back to how I built this. I'm Guy Raz. So it's 2014, and Dave Weiner has just left his job as the CEO of a successful software company to build a new kind of bicycle. I knew how to design everything on the bike other than the color and graphics where I needed some help, but I knew how to do all of the basics. Right. And I wanted this bikes to last a long time. You know, you still see a lot of older bikes on the road because they were made with. good materials. A lot of what you buy today doesn't last like it used to. So we wanted to go back

to that and really use every component with stainless steel and aluminum where we could so that the components would last, you know, would last. All right. So let's talk about this bike that you were designing because most bike maintenance involves the chain or the brakes or the tires, I think, right, for the most part. That probably covers like 60, 70% of why people need their bikes repaired. That's right. That's right. And so you wanted to completely overhaul those things. Yeah, and we didn't want to, if you will say, reinvent the wheel.

We wanted to use the best parts that were out there. So simple things. I knew that when I worked in a bike shop, people got flats a lot. And if they came in, I could say, hey, in addition to changing your tube, let's put a thorn-resistant tire on here or a thorn-resistant tube, and let's make sure that it's less likely you'll get the next flat. Nine out of ten tires, customers say, great, we want that. Other bike companies, they weren't selling bikes with things like puncture-resistant tires

because those cost more, and most customers don't see that on the price tag. They see a bike, and they want the cheapest bike that does what they need. and if one guy says, our bike has puncture resistant tires, most people don't care. So I just tried to do things like the puncture resistant tires. I tried to do the brakes.

We wanted low-maintenance brakes, and I always rode what's called a coaster brake bike, which is probably how you grew up riding a bike guy with we pedal forward to go and backward to stop. Right, backward to stop, yeah. Yeah, yeah, and called a coaster brake bikes. So, coaster brake bikes are, you know,

rather maintenance-free. You can run those for thousands of miles without ever tuning the brakes. Because they don't have any brake pads on the tires. Yeah, there's some braking components inside the hub, but they go thousands of miles without ever needing anything. So, you know, just we tried to think of simple things, like, you know, very high-end spokes so the wheels, you know, don't go out of true or don't rust.

And to use a comfortable seat, little things like the bike should come with a kickstand, right? Yeah. And then the final one was the belt drive, and that was really our differentiating feature. And I guess we should explain this for, I mean, lots of people know what it is now, but basically most bikes have a chain, which requires oil. And that chain, especially if it's a bike with gears, will, like, move from one, you know, one gear to the next as you switch the gears, right? a belt drive is literally a belt made out of carbon fiber and there's no, the whole gear system's in an internal hub. So it essentially replaces a metal chain. Yeah, that's right. So the belt drive that we use is made with polyurethane and inside of it

is carbon fiber cords. And the carbon fiber cords, you know, keep it together. And the belt drive last three times longer. And the advantage is you don't have to oil it at all. You don't have to oil it. It's not going to eat your pants or stain your pants. You never have to grease it. It's not going to rust. All of the gearing is inside the hub.

And the advantage there is it's sealed from all the elements. And so it doesn't need all the constant maintenance. And if your bike falls over, nothing bends. You can just really focus on riding your bike. Yeah. So, Dave, when you went from... from like running a company with 200 plus people to just being by yourself. And then Connor was on the West Coast, kind of giving you feedback.

That must have been kind of lonely just sitting there and, you know, all day, just kind of working on this. No, it was great. I liked having a small company. I didn't like having no company. So Connor was helping in the beginning nights and weekends, so that moved to full time pretty quickly. Our first employee, Lauren, was working with me. We've been in the same building on Hudson Street in Tribeca ever since we started. So one of the founders of coal systems, a software company, was the initial financier of priority.

And so he gave us office space. And I've only worked in that building since 2004. So you did not, like, you decided that you were going to go start raising money. from venture funds or whatever, and probably was, but you needed some money to start. So how much money were you, did you, did you sort of need to get this off the ground? You know, I don't remember the exact number, but it was in the hundreds of thousands of dollars. Right, right. It was not a little amount of money.

I approached John, who was one of the founders of coal systems, and I presented him what my plan was for priority bicycles. And he said right away that he would support it and he would finance it. And he did. So he wrote you a check. And because you needed the money to presumably for the research and to source the components to build the bike and then to even start a production, you know, small production line. Yeah, that's right. So I worked before we started the company, I of course worked on how much this bike would cost and how many we need to make to even start. production of it. And the first thing I did is I got on a plane and I went to Taiwan because Taiwan

is still where most quality bicycles are made because all of the suppliers are there from the frame welding to the seats to the handlebars to the grips. Everything is made in Taiwan or at least in if you want a high quality bike. It's all very much made in Taiwan. And I met with, I think, about 30 different suppliers to show my idea. And this is what? In the spring of 2014? Yeah. It would have been in the spring of 2014.

And there's a annual bike show that was coming up in Taiwan. So I made those my dates. And I made sure I had all of my spec sheet and what I wanted to build with the bike ready. And I started weeks beforehand emailing many of the. suppliers to set up a meeting. And when you say suppliers, like, you couldn't just go to one factory and say, here's what I want. You guys go make it for me. You had to go to, like, the people who made every component of the bike separately?

Yes and no. Certainly when we talk about the belt drive, that was very much on us and we had to do on our own because bike companies, bike manufacturers didn't know anything about belt drives yet. But, you know, and working with the tire makers to make sure we get the tires the right color and the right type of rubber in them, that was really important. But the simpler components, like a handlebar, I drew what we wanted as a handlebar, and I handed that over to the different bike companies, and they can price out getting what I'll call the more straightforward components. So you go to this trade show with your plans. And by the way, I mean, I have to assume that most of these factories had minimum mortars. And probably minimum mortar would have been, I don't know, in the hundreds of thousands of dollars. Absolutely.

Yeah. Any serious factory doesn't want to talk to you about making a couple hundred bikes. The number used often in the industry is 300 because it used to be you could get 300 bicycles in a container. You can't anymore, but because the boxes have gotten bigger, but no one will entertain an order under 300. And that said, most better factories won't talk to you under 3,000. So you go to this show in Taiwan in the spring of 2014 with your plans. And tell me about the experience. I mean, was there resistance where most of the companies like, I, yeah, I'm not, I don't work with such a small, you know, I work with big brands or, I'm not.

not interested in such a small order. Yeah, 80 to 90% of the companies I had tried to make appointments with would take them but didn't want to talk to me. And the first question they ask is, you know, where's the money coming from? How many bikes are on your first order? And my confidence was the other way around. I remember meeting with these suppliers saying, I know we're going to sell a significant number of these bikes.

I need to know if you can make them and how good you can. make them and and also where you can improve on on our designs and our ideas so you were looking to order i mean did you have a number of bikes that you you thought you want you needed to to make for that first round not quite yet because we hadn't started selling it yet yeah i was confident that if we had a good quality product that we could sell some i didn't know if we could get to the 3,000 that some of the better factories wanted i did think i could get to 300 which one of the some of the smaller companies wanted so So there was this idea that a friend gave you to go to Kickstarter, try put on Kickstarter and see what happens.

And when you made that decision, did you have a prototype already built or not yet? When we started working on the Kickstarter, we only had a prototype that I had made in New York. You welded yourself. I didn't weld myself. I bought it off the shelf bicycle frame, and I made modifications to it. I made a cut in the frame to get the belt drive on. I had a friend of a friend weld it in his kitchen. It wasn't the prettiest, but it did work,

and it did start to show what we wanted to create. And so leading up to the Kickstarter, I had narrowed it down to three different factories, and I paid all three factories to make essentially the exact same thing, knowing that if you ask three companies to make the same thing, you'll get three very different items. And when they arrived, was there clearly a better one out of the three? Yeah, absolutely.

There was. And also that factory, they had worked better with us in the process. You know, I think one of the factories took our drawings and didn't ask any questions and produced what they thought it was. The other two asked questions, and certainly the one we went with, asked the most questions. And because they asked the most questions, they got the best answers. And we also thought that they had suggestions on how to make that design a little bit better.

And they were right. So one of the questions I have about the chain-free bikes, right, the belt drives, was the reason why most bicycles at the time were not made with that was because it was more expensive? Yeah, it's significantly more expensive. Certainly the belt drive is more expensive than a chain. But how are you going to make a cheaper bike with these components? That's what I don't understand. I mean, if internal hubs and belt drives and, you know, puncture resistant tires were just inherently more expensive and really were on high-end bikes, how are you going to sell it for, you know, I guess under a thousand bucks? Yeah, so that's where, you know, some of my experience in working with software systems came in. I, I I knew we had to sell the bike online. As much as I grew up working in a bike shop, and I love, love, love bike shops. We wanted the bike shops to help the customer make sure it's assembled correctly and certainly be there if they have a problem.

But we wanted to ship these bikes directly to consumers. You did not want to sell them through bike shops. We couldn't because it would be too expensive. We couldn't and be cost effective. Yeah. And so, you know, we're, you know, 10 years later, we work with many bike shops and we actually sell quite a bit of bike shops. now through bike shops and more to come. But back then, it was we needed to have a direct relationship with the customers.

It's the only way we could get to that price that they needed. And we felt that customers were looking for that product, or at least I did. All right. So you guys, so you decide to launch this Kickstarter in July of 2014. It's about four or five months after you left your job as CEO. Right. What was the offer? You could pay what to get a bike?

$350. I believe they included shipping. $350 and you would get a belt drive bike, aluminum frame. It would be shipped to your door. And I mean, that's a, and how much were you hoping to raise for that Kickstarter? Yeah, and at the time, I don't think you could find a belt drive bike under $1,000. Yeah. It was a really amazing value bike.

And at the time, we wanted to raise $30,000. I felt that if we raised $30,000, it would be the world showing me that this was good enough to make more and figure out how to sell them. $350. So, I mean, you were basically looking to make what, like, 100 bikes, right? a little less than a few, about 100 bikes for $30,000. Yeah. Okay. And, you know, we always felt that if we got some bikes out in the field, people are going to love these.

And they're going to go to work the next day and say, what a cool and different and unique bike they bought. But were you going to cover your costs? I mean, $350 per bike and shipping? We would cover our costs, but not anymore. Right. So you're essentially just, it was just a wash. Yeah, we had a one part-time employee, and Connor and I were at the low, low price of nothing. Right.

Okay, so you launched this Kickstarter, and it actually, I mean, as some cool Kickstarter campaigns go, it did very well. Was it on the front page of Kickstarter? You know, I think it did make it to the front page of Kickstarter at some point, not on day one. A friend who I just met, a friend of a friend, who had a one, who had a one. watch company. I met with about maybe 60 days before our launch. And he was telling me about growing his watch company. And when I told him about priority bicycles and what I wanted to do, his advice to me was you need to hire a PR firm today. It was 60 days to go. You need to hire him today. Because otherwise, you're only going to, the only people that are going to support you on Kickstarter are your friends.

Yeah. So you got to spend the money. You got to hire a PR firm. And And they need to tell your story. And then you got to hope it works. And did you do that? I did it the next day. I think I did the same thing as looking for a bike company. I think I called 10 of them. I set up appointments.

And I dropped everything I was doing and I found a PR firm. And how did you, I mean, PR companies are expensive. You presumably had to use a significant amount of your working capital to pay them. It was the biggest risk decision we made at launch. That was our single biggest expense before we launched. But they told our story to the media, and we had, it must have been a dozen articles on the day we launched on Kickstarter with major media.

And I think in the first day in Kickstarter, we sold over $200,000 in bikes. Wow. Your goal was $30,000, and by the time the campaign ended, how much had you raised on Kickstarter? $5.50, so half a million, more than a half a million dollars. So that's a big order. And so you get 1,500 bikes that you had to order at that point. And you promised to have them by Christmas, I think, right?

That was the deal? We did. The Kickstarter ended in August. I thought we could make them in 60 to 90 days and have them by Christmas. And so as we've experienced in the show with other companies that have starred on Kickstarter like Uni and some others, it's kind of a mixed blessing, right? Because you have to fulfill the orders. And I have to imagine, I mean, 1,500 orders, that's 1,500 different customers. And it was just the three of you at priority.

Yeah. I became very good at customer support. And any of our original Kickstarter backers, they've asked a question. And I was generally up till 10 or 11 at night doing support. Yeah. And, you know, this is a conversation that my wife and I have. I like to say that when I started priority, I worked less because I worked so much in software. And she says there's no chance I 100% worked more. And so I've got to assume like most things she's right. Right. I never felt like I was working more because I loved it. And I can talk about bicycles all day long and I can talk about customer experience all day. And I love going to Asia to work on the bikes and work with the production team. I just loved every moment of it. How are you, so between the time that you close this Kickstarter and the time that you have to start, you know, get these bikes out, there are lots of every single day there are at least two, three, maybe more roadblocks. You get a call or an email from a customer, a supplier can't make this part in time, big and small challenges every day.

And how did you kind of handle those mentally? I mean, did you ever like get, did they ever stress you out? create anxiety or were you like, okay, let's just tackle this one thing at a time? Well, I live on stress. I do very well under stress. I think that's kind of my happy place, unfortunately. But doing software programs, I became a project manager. So I handled this the same way I would a big software implementation. I had every step. I had every supplier. Everybody was in my database, I knew who I was contacting which days, I knew who I was following up on, and I wasn't letting anything slide. And if you were my supplier back then, I'm sorry, I probably called you too much, I probably checked in too much. I wanted every update, and I stayed on top of

every detail, and I loved it. I loved that time. When we come back in just a moment, how Dave grows priority with some big wins, but also some stumbles. His first model, has a chaotic rollout, his second one falls flat, and then the extreme whiplash of COVID. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Your business was humming, but now you're falling behind. Teams buried in manual work, taking forever to close the books, getting one source of truth is like pulling teeth. If this is you, you should know these three numbers. 36,000, 25, 1. 36,000. That's That's the number of businesses which have upgraded to NetSuite by Oracle.

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Right now, download NetSuite's popular KPI checklist designed to give you consistently excellent performance. Absolutely free at NetSuite.com slash built. That's NetSuite.com slash built to get your own KPI checklist. NetSuite.com slash built. You know that's the sound of another sale on your online Shopify store. But did you know Shopify Power's sales? selling in-person too? That's right. Shopify is the sound of selling everywhere, online, in store, on social media, and beyond. With Shopify, you get a powerhouse selling partner that effortlessly unites your in-person and online sales into one source of truth.

Track every sale across your business in one place and know exactly what's in stock. Plus, Shopify's award-winning help is there to support your security. every step of the way. Do retail right with Shopify. Sign up for a $1 per month trial period at Shopify.com slash built. Go to Shopify.com slash built to take your retail business to the next level today. Shopify.com slash built. Hey, welcome back to how I built this. I'm Guy Raz. So it's late 2014 and Dave is on the hook to deliver 1500 bikes to his customers on Kickstarter. And he manages to deliver most of them by Christmas

with just a few days to spare. Yeah, so for the most part, we got most of them out, I think, around the 22nd, and most of them got to people by the 25th. Why so late? What happened? So it was our first time importing anything, and U.S. Customs held all of our containers for random inspection.

You just got unlucky. You just got picked. Yeah, yeah, we got unlucky. There was nothing more to it. But that's a stressful time because we're going into Christmas. We promised everybody they'd get it at Christmas. Your bike's going to ship in two weeks. And then two weeks later, we say, we don't know when your bike's going to ship because customs held our containers and they won't tell us anything.

And you just have to wait until they were inspected. You couldn't expedite. You couldn't make it go faster. No one you can call. You couldn't drive to the port. I threatened some of our importing guys that I would drive to the port in Newark and be there in half hour, but they told me that wouldn't help. That would only make things worse. And we waited, and that was incredibly stressful time because customers who bought these for Christmas gifts were not happy.

And so they were just eventually finally inspected and saw that there was nothing illicit in there and then released? That's it. And you get to pay for the time that they were held to. Oh, you have to pay them for the storage fees, right? Yeah, yeah, yeah, exactly. I mean, you're still a small company. And now once you sell a product to people, you also have to sell the customer service to them. I mean, were the bikes working? Were there issues that were cropping up? No, the bikes worked great. The problem was getting the customer the bike they ordered more than anything. Yeah. We had this task of eight labels, eight boxes, and somehow they got it all wrong.

And so somebody that ordered a white small got a black large. And someone that ordered a black large got a white small. And that was really stressful. I was doing all but 100 percent of the customer support at that time. And that was a really stressful time. And especially because we didn't have spare bikes yet. So, you know, if one customer got a white one that ordered a black one, we had to find out how to get that white one to the person that ordered it. All right. So the bikes arrived to customers. And in that first year, do you remember what you're, I mean, you launched in July. So, you know, sort of that half year of 2014. Do you remember how much you guys brought in? You brought in 550,000 from the Kickstarter. But I'm assuming you didn't sell another half a million.

with the bikes that first year. Yeah, that was disheartening because you do, like I said, you do have a Kickstarter where you raise half million dollars in 30 days. Yeah, we're going to be two. The next 30 days will be another half million, right? No, but it was more like 10,000 maybe or 20,000. Yeah, if I remember correctly, we sold about 2,000 bikes that year at 1,500 in the first month and then 500 in the next six months that follows.

Right. So probably about $600,000 in total. revenue that maybe that year. Yeah, yeah, that sounds right. So 600,000 is pretty great for your one, but I'm assuming you had loftier goals for the first full year in business. Yeah, we did. And the first thing we realized is that while we had this amazing model,

we probably need more than one. Yeah. So the next lesson learned came in a bike. I wanted to design the next bike. and at that point I had a two-year-old, and so I couldn't think of anything better than designing a bike for him. A kid's bike.

Absolutely. So I made him a training wheel bike. And I made it with all the features I want. A belt drive, of course, all these rust-free aluminum features. I made it with puncture-resistant tires. The whole tire didn't need any air. So as a parent, you could just get the bike and go.

you have to worry about putting air in the tire every month. It was just a solid rubber tire. Yeah, yeah, exactly. And it was an awesome bike that totally failed. So what happened? I mean, just kids' bikes, not, it didn't connect with people? Yeah, I think there were a variety of problems. One is I built a bike that I wanted, not a bike that our customers were telling us they wanted.

And so the first lesson there was, you know, listen to your customer because as much customer support as I was personally doing at the time, I was hearing from customers what they wanted all day. And I didn't deliver it. I delivered something that I wanted. And also to make a $300 bike for a three-year-old is a tall number for a lot of parents as it should be. You know, now you're a full year end, the business, right, August of 2015. And that must have been disheartening and I wonder, I mean, the business was not far from being profitable at that point. You were not paying yourself anything. Correct.

Were you stressed out at all? I mean, you're a full year in and you had that really successful initial Kickstarter, but a year later, not much action. Yeah, the classic bike was still doing well. So I knew that we had a win that could carry the company, though it couldn't carry me. Yeah. And when you say we're doing pretty well, like, what do you remember about 2015, like $20,000, $30,000 a month in revenue? I would say that's about right.

Okay. And now I'm pretty deep. I have one successful product. I have one unsuccessful product. I know that the way I can grow this business is simple in theory and hardened reality. I need to have a bike that changes again, that changes everything. So basically, you had this challenge, which was you needed to make a new, you know, you need to make more models. And I guess sort of in 2015, you start to work on a new bike that would become a commuter bike.

Yeah, that's right. In listening to our customer, we learned that a lot of people were using the classic as a commuter because it was low maintenance. and anyone who rides their bike to work every day needs the most reliable bike they can because they get up and they've got however many minutes they have to ride their bike to the office and the bike can't let them down. And we needed to make this bike to turn it up to make it more aggressive and how someone sits on the bike so the geometry needed to change. The brakes needed to change.

You can't go fast on a city street, for example, with a coaster brake. You need disc brakes, just like you'd see on a motorcycle or any other high-end bicycle. You needed disc brakes, and it needed more gearing. And it needed a belt drive system that scaled to the type of power that a everyday cyclist could put out. That bike, right, now you had, you know, really just many more expensive components on it. So what, I mean, what were the margins? Like, I know what the margins on, like, clothing is, for example. We've done a lot of clothing brands.

But, like, I mean, is it, was it under 10% for you guys? No, we were getting it up to the 30s. We were getting the margin up there. But we were also starting to buy in volume. At that point, we knew that we weren't going to make 100 of these. We needed to make a thousand of them. And like anything else, when you buy in volume, you do get better pricing. And we also knew that if we were going to make a run at this,

We had to give it our all. Yeah. And at the same time, we started to go into hotels, which were really good for us. You started to go, tell me about hotels. I mean, this 2015, how did you work with hotels? Yeah, so one of the things we started in our Kickstarter was you could buy 10 bikes and get your brand name on them. Oh. And we did that thinking there were companies.

And there were. There were companies that bought 10 bikes and wanted their name on it. You know, how I built this, right on a bike. Yeah, let's put on a bike. Yeah, wouldn't that look good? So we had never thought about hotels until the Viceroy, Santa Monica, was our first hotel, and they called. And Connor and I had actually lived together briefly in Santa Monica, so we knew the area, and that was a very cool hotel. They contacted you, and they said, hey, we want your bikes for our hotel?

Yeah, you know, they're right there across the street from the other. ocean and they said we have a bike program and our guests use our bikes to ride around the beach. But the problem is we bought some six months ago and they're rust buckets. Yeah, because they're by the ocean. That's right. Yeah. They started looking online and they found our Kickstarter and they found this idea of a no rust bike. And they were really intrigued.

And they were our first hotel and they were a wonderful customer that helped our brand look good. And we started to open up a sales department in priority that just focused on selling to hotels. And really, this idea came from the hotel, not from you guys. I mean, they approached you. It turned out to be a great, like a sort of stroke of luck because then you kind of thought, well, this is a great way to advertise our bikes. That's it. It goes back to listening to the customer.

If you pay attention, I think a lot of times your customers will tell you. tell you exactly what you need to do. Dave, and I read that you guys also, one of the struggles you had was with manufacturers. Like, you went through different manufacturers over the first three years, like three different manufacturers. This is not uncommon, but what were the issues you were having with manufacturers? Reliability was at the forefront. None of them made bad products, but they made unreliable products.

And the timing wasn't always what we expected. The first three assembly. factories were not meeting our timeline. I was going to every single one of our productions, and they might have the wrong components. They didn't know how to assemble a bike the way I would expect them to, and it was taking much more of my time than I could ever imagine. And we needed to do too much rework on the bikes that were coming in. And it became to the point where not only was it not sustainable for our current bikes, but we worried that we were going to add these higher-end commuter bikes,

and how could we grow with this company? So what did you do? I did the same thing I did before, but I did it differently, right? So I went to China and Taiwan, and I met with 10 different manufacturers. I narrowed it down a three. I asked the three to make the exact same thing and waited. It was the exact same process I did earlier, but the difference was we were a bigger company. We now had a bank account.

We now could come and say, all right, we need to order a few thousand bikes. We now have three models, not one. You know, we actually had a website and an email address and articles that say that our bikes are good. And so we were able to go to a different tier of manufacturing. and found three great factories that could all do the job and wound up settling with one, I think, around 2016, 2017. So as, I mean, as you were sort of growing year over a year, did you, were you able to reach profitability within a few years or not quite yet? Yeah. In year three, I started to take home a salary and started to realize that we had a real company. We had a handful of employees at that time.

And, you know, I could take vacation both financially and physically. And in terms of like growing the business, did you ever, in those first few years, did you ever think about going out and raising money? Or did you? I didn't in those first few years because I didn't see yet how it could help us. Right. You look at a business and you say, well, if we had more money, we could grow faster, right? But did we want to?

Did we want to grow that fast? Yeah. And we were getting approached by VC and PE firms rather consistently. And a lot of the people that run those companies ride bikes and they were hearing about us and they were reaching out. And the timing just didn't feel right. We didn't have enough staff to even think that through. We just wanted to keep growing slowly and happily. And slowly is probably the wrong word.

We were growing at 50 to 100% year over year. And when you're that small, you should be, right? You can't grow at 10% when you're a brand new company or something's wrong. So we're growing substantially. But we didn't feel the need to bring in outside money yet. And your price point was basically that high end, the priority eight was under $1,000, but you also had like $400 bikes. That's right. We'd launch the Beach Cruiser at that point, too, which was really successful for us. That was a huge seller. So probably by year three or four, you were probably doing about at least $5 million in annual revenue.

I don't know if it was five. I would say it was a little south of that, but it was a couple million dollars. And we were cash flow positive. Not by much, but we were cash flow positive every year. And I love the organic nature of growing the company. And I didn't feel any need at that point to put gas on the fire. Yeah. All right. So 2020 hits. And what happened right when the pandemic hit? What happened to your business? Yeah.

So in the beginning, our business fell apart. Nobody was thinking about buying a bike. When COVID started, everybody was thinking about buying eggs, buying milk. And what was it? Lysol wipes. Right. And it was really hard. Our employees didn't want to come to work. Nobody was emailing in asking about bikes.

Certainly they weren't coming to our showroom in Manhattan to look at bikes. It was really scary. I mean, you went from shipping bikes every day, probably 100 or so, to none. None. I mean, there would be a trickle, but it was nothing that could keep us in business. How long did that last? Probably the better part of three months. And all of a sudden, everything started to sell.

And the emails, you couldn't stop them from coming in. The media was saying, you know, you can't go to the office, but you surely can ride the bikes outside with your family. And people were doing it. And, you know, when the media started to send that message, it wasn't just us. Every single bike company had no inventory. We sold out of everything quickly.

You sold out, right, because there are no shipments coming in either for a while. Our factories were shut down. Your factories were shut down. And so your website was sold out, sold out, sold out and everything. Every single model. Wow. And our warehouse, at the time we had about a 50,000 square foot warehouse, it was empty. So 2020 turned out to be a good and bad year.

a good year in the sense that your orders were way up, but bad because you couldn't actually deliver them. You couldn't fulfill those orders quickly. That's right. And when did it become, when did the supply chain issues start to work themselves out by 2022? The last half of 22. Wow. It took that long. We're right around a year.

And even, you know, I'll say that, not on a high end components. So about a year ago, we started to get basic inner tubes and tires and things like that. But the higher-end gearing system that we're using on our higher-end bikes, some of them, we still are six months out. Wow. And meantime, you were making, you were producing different models, right? I mean, like, this is part of your whole approach. You've got, like, what, 20, 25 different models? Yeah, we've got about 25 now.

From kids' bikes to commuter bikes to adventure bikes to gravel bikes. and now we're working with cargo bikes as well. By the way, I should mention during COVID, you actually did take on some outside investment from a private equity group. That's right. And you were probably able to take a little bit of money off the table after presumably putting in lots of years into the business.

But I also want to ask you about this year because it's been a challenging year for a lot of consumer brands. consumer products. I mean, COVID was just, it was like a shot of steroids for probably every bike company. Yeah. It's not, it's no secret. There's been a significant slowdown in bike sales in 2023. And even even some bike companies, some well-known ones, I think it's like Van Moof, I think, have gone out of business. Yeah. The, you know, everything we read with industry data says that most bike companies are down 30 to 60 percent. Wow. And at the same time, a lot of

companies and there were a lot of new companies that started. They invested some money. They bought a lot of inventory and now they're selling it really cheap trying to turn that inventory into cash as quick as they can. And so there's a lot of sales going on because people need to move their inventory. And so it's just a, it's a much harder time to sell a bike than it's been in our nine years. And this will be our first year that we don't grow. And, you know, we're not. doing what we hope to do this year, but I think not losing right now is winning. And we're doing a good job of not losing. And, you know, it means while our competitors, some of them are shutting down locations, some of them are laying off staff. We're not doing that. Yeah.

But we also know that the industry will rebound. We know we got to keep our head down and and keep working at it. You also had another challenges here, challenge and understanding. statement. You had an accident or pretty bad bike accident, which is, of course, you know, it's unfortunate for somebody who's been in this industry and devoted his life to cycling, but you got you got doored in New York City, right? Yeah, on January 11th, I was riding to my kid's school to volunteer at an event, and I got doored. Somebody opened their door. without looking, which laid me on the street. And, you know, what followed was not good.

So there was a couple of incidents that followed that. But, you know, I wound up in the hospital for four weeks and over a week in ICU. Wow. So you spent four weeks in hospital and obviously had to step away from the business for some time this year. I think I stepped away from life for some time this year. Yeah. It was talking about the business, it was really comforting to know that the business was doing great, that Connor and my team have totally taken over and that everyone missed me on a personal level, but didn't miss me in the business. And they were continuing to do everything they could to run the business responsibly, especially in a bad time.

And it showed me today how fortunate I am to have an amazing partner at work and family at home and great people behind me every step of the way. Yeah. Last night I was at an event in San Francisco and I was in an elevator. Somebody recognized me in the elevator and said how much she loves this question I'm about to ask you. And it is polarizing because about 20% of our listeners hate it, but it's going to come anyway, which is when you. think about your journey and all the things that have gone into it where you are now, we're almost 10 years in. You've got a great brand that people know.

You've got 20 plus different models, price points from 300, all the way to 5,000, so to something of everybody. How much of where you are today do you think has to do with the work you put in and the time and the planning and the project management? How much do you think has to do with just getting lucky? I think it's all hard work. we have been in the right place at the right time, but we wouldn't have been in the right place at the right time

if we didn't work our butts off. And, you know, what I learned in doing business systems, and I think I probably was involved in implementing close to 100, what I learned is that some of the most successful businesses were just the ones that worked really hard. We work really hard at everything we do. And so we have got, lucky sometimes, but I think that's because we're prepared for the situation and always being

prepared for the situation. That means that when those opportunities come and when luck hits us, that we're able to capitalize on it. That's Dave Wiener, founder and CEO of Priority Bicycles. By the way, is there a world where we bring back the playing card in the spokes? Like, why isn't that back? Like, why? I'm not doing that anymore. You know, I have actually thought about that before. And I have taped the card to my kids' bikes, and they find it amazing. They like it.

Oh, yeah, they love it. Yeah. But then five other people on the street find them annoying. Yeah. It's just sad. Maybe that's the thing. Maybe we should just like, maybe it's a business. Maybe somebody listening.

Just make that business. A playing card that you put in the spokes of a bike. I think we need a guy Ross Dave Weiner playing. card that'll go out with a series of text. We'll have to think about that. All right. That's a very possible. See if the sells. I love it. Hey, thanks so much for listening to the show this week.

Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. This episode was produced by Josh Lash with music composed by Ramtina Arablui. It was edited by Neva Grant with research help from Carla Estevez. Our production staff also includes J.C. Howell. Casey Herman, Kerry Thompson, Alex Chung, John Isabella, Chris Messini, Sam Paulson, and Malia Agudelo. Our audio engineers were Gilly Moon and Robert Rodriguez. I'm Guy Raz, and you've been listening to How I Built This.