Fixing RAd Bikes: Inside Edition
When I wrote Fixing Rad Power Bikes, I was looking from the outside in. Then an industry insider with a front‑row seat to the company’s travails filled in some gaps. Enter: a new antagonist.
Rad’s early playbook was sharp: $1,500 for 750‑watt motors, pure DTC, skipping hardcore cyclists to target RV owners, KOA campers, lifestyle buyers. Cheap acquisition, explosive growth.
But selling full bikes DTC is trench warfare. At peak, 300 customer service reps just to keep up. Home assembly was inconsistent. Returns were expensive, damage‑prone, and margin‑killing. Even with ~40% gross margins, the economics were fragile once you factored in the cost of keeping customers whole.
The insider’s view: the real fault line wasn’t the model — it was the money. During the pandemic, Rad raised big from Vulcan, Durable, T. Rowe Price, and founders from Blue Nile and Zulily. Those checks came with billion‑dollar expectations — a tech‑style growth curve in a category that doesn’t scale like software. Rad could have been a strong, cash‑flowing $100M brand; the financing made that path harder to choose.
In 2022 or 2023, the CFO/CRO was replaced with an IPO‑seasoned exec — a clear signal. But the market was already turning. Europe was saturated. Pandemic pull‑forward left excess inventory. Industry‑wide discounting put Rad up against Specialized, Trek, and Canyon blowing out bikes at 40% off.
Retail didn’t help. Shops want 35–40% margins, which means raising prices and killing your value prop or eating unit economics that don’t work. On the floor, no reason to push a challenger when incumbents own the space. Industry insider perspective: commoditization wasn’t the killer — Rad’s brand could beat low‑cost imports. The financing model, and the expectations baked into it, were what damaged Rad the most.
By 2025, IPO off the table, the board brought in Kathi Lentzsch, likely to find a buyer and get investors their money back.
How great it was to get this info - and analysis from someone with a front-row seat. Some good lessons here for any business:
• Raise for the business you have, not the one your investors wish you had.
• Don’t let capital structure dictate your strategy.
• Hype is not a business model.
The wrong money will push you to grow in ways your category can’t sustain. And by the time you realize it, you’ll be grinding up a mountain you’ll never ascend.
In that first post, I said I’d do a bunch of things to fix Rad: closing all company‑owned stores, exiting Best Buy and going all‑in on bike shops, doubling‑down on Rad Care subscriptions, focusing on one or two breakthrough models, cleaning up sales channels and fixing the DTC portal, building a community hub, and applying maniacal cost cutting. Given what I’ve since learned, I wouldn’t change that strategy — just tweak it: I’d move maniacal cost cutting to the top, and use that breathing room to prioritize (1) DTC improvement and (2) add-on services that improve unit economics.
