Rad Power Bikes Founder Mike Radenbaugh on the E-Bike Revolution
The Genesis of Rad Power Bikes: A Founder's Story
Mike Radenbaugh, the founder of Rad Power Bikes, was raised amidst the Redwood forests of Northern California’s Lost Coast, instilled with environmentally conscious values by his “tree hugger parents and tree hugger neighbors.” This upbringing fostered a deep connection with nature and an awareness of sustainable living practices, alongside an early interest in alternative energy sources.
Early Experimentation and the Founding Vision
As a young teenager, Radenbaugh observed the emerging electric vehicle market, becoming enthusiastic about electric motorcycles and cars. However, he felt frustrated by the slow pace of their commercial development. In 2007, at the age of 15, he constructed his first e-bike, assembling components sourced from Radio Shack and eBay using funds earned from a bellboy position at the town’s only hotel.
Radenbaugh considers this year to be the official founding of Rad Power Bikes. He recounted to TechCrunch how he secured his first advertisement in the local newspaper, receiving it free of charge due to the sympathetic response to his youthful endeavor.
Building a Bespoke E-Bike Business
For several years, Radenbaugh operated as a sole proprietor, crafting custom e-bikes for customers seeking powerful alternatives to car travel. Through this direct engagement, he gained valuable insights into customer needs and identified gaps in the existing marketplace.
Relaunch and Expansion
Leveraging this accumulated knowledge and practical experience, Radenbaugh relaunched Rad Power Bikes in 2015 as a direct-to-consumer business. He and his expanding team focused on refining the business model, establishing company-owned retail locations and mobile service centers, forging partnerships with a broad network of bike shops, and constructing a large-scale supply chain.
Current Scale and Growth
Currently, Rad Power Bikes employs 615 individuals and has plans for further hiring. The company serves over 350,000 customers and manufactures bikes in six countries. Reported sales reached $100 million in 2019, demonstrating significant growth.
The year 2020 witnessed a further surge in sales, largely attributed to the increased demand for e-bikes during the COVID-19 pandemic. Earlier this year, the company secured $150 million in funding to facilitate global expansion, marking the largest funding round for a U.S. electric bike startup.
Interview with Mike Radenbaugh
We spoke with Radenbaugh to discuss the e-bike revolution, supply chain diversification, and the development of products tailored to user needs.
The following interview, part of a series featuring founders in the transportation sector, has been edited for brevity and clarity.
Rad Power Bikes: A Unique Business Model
What differentiates your business model from competitors like VanMoof, who are also attracting substantial funding?
User-friendliness is a consistent characteristic across our entire product line. We were instrumental in popularizing fat tires and throttles on e-bikes, providing our customers with increased power. These features were largely undeveloped, existing primarily within the DIY community, until we brought them to market.
These features are pivotal to our business’s DNA. We recognized early on, by listening to our customers, that bikes shouldn’t be solely pedal-assisted; they should offer substantial power to efficiently transport riders from one location to another.
We analyze our competition extensively, and many e-bike brands prioritize marketing and advertising. We, however, allocate more resources to supply chain development, innovation, research and development, team building, expansion, and after-sales service and support.
Operational Focus and Customer Service
Our business now comprises over 600 employees, with more than half dedicated to customer-facing roles. We believe in fueling the revolution by building a robust operational business capable of delivering a large volume of bikes to customers.
This approach is reflected in our growing customer base, which has more than doubled annually. We offer a consistent experience across our stores, mobile service vans, and in-person interactions. Value, innovation, and standardization are key to our products, designed for how people actually use them, rather than adhering to traditional bike design conventions.
Standardization, with similar parts used across our models, reduces costs, streamlines operations, and enhances product quality and reliability.
Sustainability and the Product Lifecycle
How do you address the full lifecycle of your vehicles, particularly considering the potential for waste as your customer base expands?
We are committed to managing the entire chain, including secondary and tertiary use. Our mobile service centers and retail stores currently service bikes and facilitate resales. We plan to expand our offerings of refurbished bikes in the future.
We are also actively involved in recycling programs and leadership initiatives related to battery recycling, industries that have grown alongside e-bike adoption. Our service team plays a crucial role in after-sales support and extending the lifespan of our products.
Financial Performance and Future Funding
You’ve raised $150 million this year and $25 million last year. Do you believe this is sufficient funding?
Our business is largely profitable year after year, allowing us to operate independently. This funding is used to expand key growth areas, such as retail operations, research and development, and long-term battery recycling and care.
Are you currently profitable?
We prefer not to disclose this year’s profitability at this time, as we are still mid-year, but we have been profitable for most of our operational years.
Do you anticipate raising additional funds in the future?
Our strong financial position and supportive shareholder base provide us with flexibility regarding future funding. We expect to continue investing heavily in expanding our physical presence, complementing our successful e-commerce platform.
Our investors are committed to the long term, with a track record of supporting companies through various growth phases. We were the first to receive institutional investment in an e-bike company of this size, demonstrating our maturity and attracting investors who typically focus on earlier-stage ventures.
The Future of E-Bike Sales
The COVID-19 pandemic significantly boosted e-bike sales. With cities reopening and a return to normalcy, are you still optimistic about continued growth?
We have experienced triple-digit percentage growth annually since 2015, and this trend continues. The industry as a whole is currently facing supply chain constraints, but we have diversified our supply chain to mitigate these challenges.
The European market is ten times larger than the North American market, and it relies on a supply chain that was not designed to handle the current surge in e-bike demand. E-bike growth is akin to the smartphone revolution, with bikes finally being designed to meet consumer needs.
Our direct-to-consumer model, highly utilitarian e-bikes at competitive prices, and scalable supply chain position us to capture a significant share of the market. E-bikes have the potential to become the primary mode of transportation for a majority of trips, as 60% of daily trips are less than five miles.
Supply Chain Scalability
How does your supply chain differ from others in terms of scalability?
We have Rad-employed product managers, engineers, and sourcing professionals stationed in our production facilities across all countries. We also have director-level leadership overseeing these disciplines throughout Asia. This direct involvement, rather than relying on consultants or third parties, is a key differentiator.
Our factories are primarily dedicated to Rad production, ensuring focused attention and resources. Furthermore, we have multiple sources for every component used in our bikes. When the Delta variant disrupted one of our Southeast Asian production facilities, we seamlessly transitioned to a different vendor in another country, allowing us to maintain consistent product shipments.
We also partner with a diverse range of manufacturing partners, from Tier One electronics manufacturers to traditional bike component manufacturers.
Semiconductor Shortages
Are you experiencing any impact from the semiconductor shortage?
This year, components like field-effect transistors and battery cells have been severely constrained. We have proactively validated additional components to expand our supply base, minimizing the impact compared to industries like automotive, which have experienced production shutdowns.
Growth Strategy
What is your current strategy for continued company growth?
We are rapidly expanding our customer-facing organization. Each new retail store adds 40 employees, and each mobile service center adds 10. Our primary focus is ensuring we can meet customer demand with exceptional service.
Logistics is currently the biggest bottleneck in the supply chain, so we are expanding our logistics team to maintain affordability, accessibility, and inventory levels. Innovation remains a priority, with dozens of new accessories and multiple new bikes launched this year.
Unlike many e-bike companies that are slowing down product releases, we are continuing to launch multiple bikes annually.
Logistics and Technology
Are you implementing any specific logistics approaches or technologies to improve supply chain tracking?
We have begun chartering vessels instead of relying on traditional shipping lines. Much of our logistics strategy is proprietary, providing a competitive advantage and enabling us to capture increasing market share.
New Products and Future Plans
You recently launched the RadCity 5 Plus at $1,700. Are you considering developing premium bikes, or does that conflict with your ethos?
Our Plus lineup represents our premium offerings. The RadCity 5 Plus outperforms bikes priced at $4,000 or $7,000. The pricing provides a surprising value proposition, which is why retail stores and word-of-mouth marketing are so effective.
We have successfully built a profitable business that delivers exceptional value in the e-bike market.
Going Public
Do you have any plans to go public?
Our flexible shareholder base allows us to explore various paths for the future. We are not making any announcements at this time, but we have significant flexibility.
Looking Ahead
Where do you expect Rad Power Bikes to be a year from now?
Hopefully, with the pandemic fully behind us! We are building so much that the world hasn’t seen yet. Next year, we will announce numerous new business and product innovations. Our team of over 600 employees will continue to grow, and their hard work will benefit our customers and transform the way people move.
We aim to remain the clear leader in the North American e-bike market and make a significant impact on e-bike adoption in Europe.
