Thursday, January 26, 2006

Kool-Aid exclusive; interview with Ibis founder Scot Nicol.

You may remember that I wrote a piece about Ibis Bicycles a while back. Well, it turns out that Scot Nicol was reading and we got to talking and an interview ensued. That interview is below for a great read.

I openly admit that I am no Barbara Walters, but I think that the questions and answers do a pretty fair job of being insightful as well as entertaining. This is an exclusive interview and I am way, way, way excited to be able to provide it here.

So without further delay...

Bike stuff;

How many bikes was Ibis making during its peak?
Never more than 1500 per year, usually far less. At our peak we capped in-house production at about 1200 bikes a year. We didn’t make them very fast. Google’s third core value is “fast is better than slow”. We didn’t do too well on that one, but should have. Off subject already—we did share many of their other core values including their philosophy of “never settle for the best”. Other commonalities we shared with Google’s 10 things they found to be true: #1-focus on the user and all else will follow, #2, it’s best to do one thing really really well, #6 you can make money without doing evil, and really close to home #9 you can be serious without a suit.


Why the move to carbon?
It’s a move back to Carbon. We did a few custom carbon bikes in 1988. Built them with the highest tech tubing you could get at the time. Apparently, most of the fiber we spec’d for the bikes “ended up in space” according to the people who built the tubes. There’s a picture of one on our website (http://ibiscycles.com/tech_faqs/technology/), and we have one hanging in our office. They were pricey.
There used to be a lot of reasons not to build in carbon, and now there are no reasons to not build in carbon. I’m not saying that we won’t use other materials, it’s just that carbon makes a lot of sense.


Any plans for steel in the future?
No plans, but that doesn’t mean yes or no. It has been talked about.


How much can I get for my Ibis Hand Job bottle opener on eBay?
They will keep becoming more valuable, because we are not going to do them again. I hope we do other cool things like that, but we’re not planning on merely duplicating old Ibis stuff, as cool as some of those things were.


Any plans to bring back details like the Hand Job and Toe Jam to the bikes?
V-brakes and now disc brakes have sort of rendered the hand job useless. And CO2 has kind of rendered the toe jam useless. So we’ll need to be clever and come up with the next thing…


What's the warranty on the Mojo - which I think I'm correct in saying is one of the first two "all mountain," all-carbon frames (the other being the Scott Ransom)?
Three years, and we have a pretty generous no-fault replacement policy. You could make the case that Carbon is more repairable than Aluminum (which is really the only other widely used material in full suspension bikes). Calfee repairs them, we have a link to his repair page on our site. Many of the Aluminum FS bikes are solution heat treated, and would need to be re heat treated after a repair. It’s not easy to find a manufacturer who will repair and re heat treat a bike for you. Carbon is quite repairable, and you don’t need to put the frame back in an oven or mold to cure the repair. Because cured carbon re-melts at a much higher temperature than pre-preg, you can do spot repairs without affecting the surrounding area.
Scott has the Ransom, I’m not sure where Specialguys is positioning their S-Works carbon (except expensive) and BCD has been making their downhill carbon frames since 1996.


Are there bikes in stock? Can you talk numbers?
Mojos begin shipping in April, and are sold out until November. We had to turn a lot of dealers away who wanted them this first year. Silk Carbons are easier They’re selling well, but we have a better supply and our back orders only go to late spring. Our current production is 50 Mojos and 100 Silks a month. We’re hoping to bump those numbers dramatically in the next …let’s just say soon. We’re working on it.


Seems like everyone has a carbon road frame this year, what's the reaction been to the new Ibis road frame? Any indication it's getting lost in the shuffle and can you give a hint as to how the product line is going to evolve?
While the Mojo is clearly getting more attention-as it should-the reaction to the Silk has been excellent. You’ve got to remember that the two markets (road & mountain) are still very different. The road market does not adopt change as quickly as the mountain bike side of things. So if you introduce radical departures of technology or aesthetics too quickly, you’ll be fighting a battle of acceptance. What’s radical about the Silk Carbon is the price. We had long talks about the pricing of that bike. We could easily have charged a lot more and sold all the bikes we could build.
This leads us to an interesting marketing discussion about the positioning of the company. There is a lot of history in the Ibis brand. The luddites wanted to see more steel hardtails from us. Same old same old. But that’s not what we wanted to do. It’s like a musician who only plays the hits from 20 years ago. You appeal to the same crowd time and time again, but any sort of creative process is hibernating. That’s fine if it’s what you want to do. The continuity to old Ibis is that we’re still building bikes that we want to ride, and like Kip in Napoleon Dynamite, we like technology. And we embrace change. Since we (my partners and me) also seem to be serving a life term in the bike industry, we’re no strangers to poverty. So another aspect of the company is that we’re building bikes that we would actually purchase at retail. We’re not pricing them at what price we might be able to get. We’re amortizing development costs over a longer period of time to kept the cost down. We’re taking a much smaller margin that what we could get, because we want to make the bikes affordable (this is a relative term obviously). This goes along with Google # 6, making money with out being evil. We’re not charging what the market will bear, but what we think is fair. This might sound like a bunch of hooey, but these were the actual reasons we chose the prices we did. Some of the other manufacturers aren’t too happy with our pricing.


Industry stuff;


Where do you see the future of the industry? (Nice big, vague question for the old grey matter to ponder.)
From a rider’s standpoint, I like what I see. Clearly there are tons of choices for good suspension bikes and good carbon road bikes. That’s where the main thrust of the market is. But I think looking elsewhere is a good indicator of health of the industry. I absolutely love the whole cruiser movement. And the commuter/city bike scene is great. Sky’s (Sky Yeager of Bianchi USA- Ed)Castro Valley is my current favorite. Trek’s Soho, the Breezers, and the custom guys doing fun stuff like the Sycip’s Java Boy.
Cycling is still too exclusive. And I mean that in the truest meaning of that word: we exclude people. I don’t have a solution to this problem. It’s more of an observation. I think the new incarnation of Ibis will be a lot less exclusive than the old Ibis. See the McBikeshop question below for more on this subject, where the industry is going.


Did Interbike make sense just as a launch pad or is there use for it past that? Is Interbike dead?
Interbike worked very well for us for the launch. And I suspect that it will continue to work for us if the present state of the industry stays more or less as it is. Interbike was our only advertising/promotional expense for the entire year, and it was money well spent. That might not be true for others. It’s actually a benefit that Trek and Specialized aren’t there (see below for elucidation).


How's the dealer base coming along? Will Ibis eventually hold it's own dealer pow-wows in lieu of Interbike?
We are having no trouble signing up dealers. Interbike was great for that. It’s been much harder for us turning away really good dealers because we don’t have the capacity. How the effectiveness of Interbike will play out in the future is not visible in my crystal balls.


Interbike's effectiveness has been questioned for a number of years now, but with Trek and Specialized both moving away to one extent or another, the question seems to be getting bigger. What do you see as the "point" of Interbike now? Social function or is real business still being done at the show?
We did a ton of business. I think the limited presence or outright absence of Trek and Specialized only helps all the small guys. Everybody is fighting for the attention of the dealers and press before Interbike, which has made Interbike an ideal launch pad (again) for new products. We very purposely waited and didn’t say a peep about Ibis until the show. It worked well; we weren’t at all lost in the shuffle.


Is Dirt Demo now replacing the exhibit as the real reason to go to the show?
Not at all. In reality there are long lines to ride the hot bikes. We didn’t do Dirt Demo last year and will do one day this year. Don’t get me wrong, it’s a fantastic venue, but by no means replaces the exhibit.


Does the show need to leave Las Vegas?
It doesn’t matter to me. We stay in a condo, get up, make breakfast, walk to the show, jabber for 10 hours, then find a quiet spot off the strip for dinner, come home, go to sleep and do it again the next day. It could be in Des Moines or Dearborn for all I care. On the other hand, a lot of the industry is on the west coast, so there’s some sense to having it in Vegas. Flights are reasonable and frequent.
Nobody is holding a gun to your head and telling you to be a part of the excess that is Vegas. It can be avoided. Conversely, you probably can’t get as good a lap dance in Des Moines.


How big do you and your partners want Ibis to become?
We have big plans to keep it small. We think there’s a sweet spot with around 10 people in the company, plus or minus a couple. Hans wants to avoid having layers of bureaucracy. Direct communication between all involved contributes to efficiency. We’re going to run it pretty lean.
Coming back into the game after sitting out awhile, what's the most striking change you see?
I was never gone. I only missed one trade show during the hiatus. We were planning new Ibis for almost three years before the actual launch, so we were paying close attention.


From a macro level, the number of shops keeps going down and with Trek and Specialized honing their McBikeshop approach, where does Ibis fit in?
This is really the big question about the future. Where are the bike shops going to be in a few years? If the two 400-pound gorillas (do the math) are capitalizing 70-80% of floor space in the successful dealerships, that leaves a lot of small guys fighting for the crumbs. Is it similar to the Wal-Mart’s kicking in the heads of the mom and pop stores on main street, USA? I don’t know. I could start to talk about American Culture here and why our kids don’t ride their bikes to school anymore and why people live a long way from their jobs and live instead in their cars and why their lives are out of balance and so there’s road rage and obesity and ugly things like that. But that would make me very angry and then I’d start drinking. So what I will do instead is talk about my other favorite non-essential luxury item industry: Wine.
Seriously, there are a lot of parallels. Bikes and wine, both non-essential luxury items that people have tons of passion for. Both make you feel good. Both have three (and sometimes four) tiered distribution systems involving manufacturers, distributors and retailers. Neither do a lot of online business (wine.com and others continue to flounder and there is no Amazon of either the wine or bike world). OK, so you’re a bike manufacturer, your choices are sell direct to a dealer who then sells to a retail customer, or possibly you sell to a distributor (in our case only in other countries) and then they sell to a dealer who sells to the end consumer. There are always two or three margins in there. This is pretty much true for all of us. The big wine producers are pretty much in the same distribution boat as everyone in the bike industry (big or small). There are arcane prohibition-era laws that are only now being challenged in the highest court of the land, so some of this may change soon. What I think is an interesting trend to follow though, is how the smaller boutique producers of wine (the Ibises and Sevens and Moots’ and IF’s of the wine world if you will) sell a lot of their wines directly to consumers through their wine clubs. And this number is only going to increase with the aforementioned Supreme Court rulings. Let me make up some numbers for illustrative purposes. You might sell a 40-dollar retail bottle of wine to a distributor for 20, to a retailer for 30 and you already know the retail price. The wine guys know that they need to have presence in stores and restaurants. But they also know that certain numbers of their customers don’t need the wine retailer or restaurant guy because they know more about the wine than the person selling it to them does. It’s not always true, but is frequently true. And when you blend the margins, if you’ve sold a significant percentage of your wine at retail as opposed to distributor, your bottom line looks a lot better. The exact scenario is true in the bike industry. Now don’t jump down my throat here, because I’m generalizing; there are always exceptions. There are some consumers who know far more than the guy selling them the bike. Our customers are not entry-level customers. Trek and Specialized have a lot more entry level customers than we do. So it makes sense to have a bike shop person hold their hand through the sale. And sometimes it makes sense for this to happen with our bikes. But does it always? The high-end wine guys have a nice little component of their business that delivers them a spectacular margin with their customer, someone who they’re also in direct contact with. The numbers are purposely kept small, as they don’t want to cannibalize their other distribution venues. Like the small bike guys, they don’t have big (or any) ad budgets, so they rely on reviews to inform consumers about their product. I know that building a bike is more complicated than opening a bottle of wine, but there are plenty of customers who are capable of and actually want to build their own bikes. An obvious question is what about test rides? I’d be curious to know what percentage of customers who will buy our bikes through retailers will actually ride a perfectly set up bike: the right sag, air pressure, stem configuration, etc. How many will actually get to try it on a trail? I think we can trust the magazines to give us good reviews. Just like the wine industry (unless in a restaurant), you don’t get to sample the product first. I’m just rattling a few of the common reasons we here for not selling directly to a consumer. I guess I end up this little observation with a question, why not do it like the wine industry?
This whole scenario might make more and more sense moving forward as the Trekification of the IBD continues. I think we small guys need to keep our eyes on this excellent question you bring up.


Marketing stuff;


What are you doing to advertise the brand?
It’s all guerilla, word of mouth, and hopefully some decent magazine reviews. No magazine ads or race teams in the foreseeable future.


Someone was telling me about an hilarious ad a while back, playing off the Clif Bar ads featuring prominent athletes who had "converted" from Powerbar. I was told the ads had a picture of the athlete with "CONVERT" written on top. Word has it you sent in an ad of yourself with "PERVERT" as a headline. Nice job. Can we expect more of that sort of shake-it-up-a-little advertising?


What are your plans to reconnect to your old fans? On the flipside of that, how are you planning to grab new fans? What sort of magic are you hoping to entrance people with this time?
I’m satisfied with how word is spreading about Ibis. All the little things we’ve been doing to announce the relauch over the last 10 months. New fans are going to be sucked in by the beauty of the bikes. Particularly when the realize how reasonably priced they are. This is really where the dealer comes in, because when you see the bikes, your jaw drops.


How is the Chuck Ibis blog coming along? Is the traffic growing still or has the traffic been steady from day one and stayed pretty much level?
I’m not a very good blogger. I don’t keep track. Nor do I make regular entries. I make irregular entries.


What has the feedback been from the "Old Ibis" fans? Since I have a brand that is very similar in the cult-like following, I know how hard it is to deal with the obstacles that come from history while still trying to use that history to sell bikes. Do you feel you have a tough battle or is it proving to be as easy as it always was?
I don’t think it was ever easy. It’s actually easier now that it has been. Part of that might be experience, part is having such a kick ass product. The good thing about Ibis is that we were constantly changing and evolving, so what we are doing is only a natural progression of where the company would have been anyway. I really believe that. And to that end, there will always be people who associate us with one thing or another and want us to just keep building that product. Those people are in the extreme minority though. What has been very successful is keeping our old base very loyal, while catching the eye of an entirely new audience. The challenge is to keep doing that, and not to keep referring to history. Innovation creates value.


What roll does blogging play in your over all strategy? People used to love to interact with you and Ibis in the past and now blogging can do that much more "real time" without being on the phone all day and night with people who want to be your buddy. The blog existed before anybody saw the bikes, so I would assume you see a value in blogging, but has that role diminished some now that the bikes exist?
It’s a great tool to stay in touch. I will see a lot more opportunity in the future as products, reviews and customer feedback comes rolling in. We haven’t delivered a single bike at the time I’m writing this, so there’s less to talk about. All the stuff happening now is sort of mundane production related issues. Not the great stuff of entertainment.


What role does print advertising play now? Has web-based advertising replaced it or will it?
No advertising for us right now. But that will change. Web has not replaced print. TV didn’t replace radio, but it shook things up. We can be certain that things will continue to change. For Ibis in the immediate future, we’ll rely on our dealers, on reviews and word of mouth.

Will company websites replace catalogs? (This has been a big question for us the past few years.)
For me as a consumer they have completely replaced them. You can put so much more info on the web, include motion graphics and it’s easier to show engineering concepts. If I want to learn about a car or a shaver or a camera, I go online.


Thank you Scot for this exceptional conversation. The pleasure was all mine... and I'm stealing your ideas!

Tim Jackson
Chief Kool-Aid Dispenser
(Editor's note; I failed to mention on the original posting of this interview that the questions for the interview were provided by the Krew's Karl Wiedemann, myself and future contributor Chris Lesser- formerly of Bicycle Retailer and Industry News. My apologies to both for the initial omission.)

Posted by Tim Jackson at 8:29 PM

6 Comments

  1. Anonymous Carlton Reid posted at 5:01 AM  
    If you get bored at Masi, Tim (I know that's not going to happen) you can have a job at BikeBiz.com! Great interview.

    I used Jill's first posting on here in a feature for the new mag, I can see I'll want to quote from this interview, too.

    Just one small point. I know Calfree repairs carbon, but what about when you crash a carbon bike? I was rammed by a car last year and my carbon Giant did a somersault onto the road. I got lots of expert advice on the seemingly undamaged frame and everybody said ditch the frame, it'll have hidden damage.

    Is a carbon frame more of a throwaway item than a steel or alu frame?
  2. Anonymous Mike B. posted at 7:11 AM  
    Great interview Tim. I'm a long time Ibis fan and I enjoyed hearing Scot's take on some of the current issues.
  3. Blogger Donna Tocci posted at 6:39 AM  
    Tim - you are amazing. I don't know how you fit everything you do into a day!
    Carlton - you'd be lucky to get Tim! :)
  4. Blogger Guitar Ted posted at 8:20 PM  
    Great interview, Tim! I remember the "old" Ibis, and I really can agree that this is likely how Ibis would have ended up anyway. Awesome insight here.

    To Carlton: Trek has just recently made an initiative to get information out regarding their posistion on crash damage to OCLV frames. Directives were sent out to all the shops detailing how shops should inspect OCLV frames for possible damage. The bottom line is that if in doubt- replace it! That's pretty much the safest route, not the cheapest! That said, it might behoove you to check into what Trek is telling it's dealer base, and apply the same scrutiny to your situation. Just a thought.
  5. Anonymous Anonymous posted at 1:30 PM  
    I was considering an Ibis Silk SL, now I am certain. Very nice and informative interview.
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