Mike Sinyard, 59, has been riding bicycles ever since he took apart, painted and rebuilt an old girl's bike his father bought at the local charity shop. But it was only as a student, riding the seven or eight miles into San Jose State University every day, that the Californian hit on a way to make a living from his passion. Three decades later, that brainwave has materialised as Specialized, a $500m-a-year firm whose bikes appear everywhere from the Tour de France to Scottish mountain bike trails.
The son of a machinist, Sinyard paid his way through university by buying old bikes at flea markets, fixing them up and selling them through local newspapers. But "in those days it was not easy to find well-made components for my own bike, and I knew my friends wanted them too". Quality ten-speed racing bikes and their components were easily available in Europe, but not in the US.
So with $1,500 raised from the sale of his old Volkswagen bus in 1972, Sinyard bought an array of components from Campagnolo and Cinelli, two big Italian bicycle manufacturers. These he stored under an 8ft by 30ft trailer rented for $60 a month in California. He then put together a hand-written catalogue and sold the parts to independent bike-frame builders on the US west coast for a total of $1,800.
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With banks initially unwilling to finance him, he persuaded his dealer-customers to pay in advance for orders. This move paid off when a bank advanced him $1,500 secured on his trailer once he was selling to 25 shops. Sales in 1974 were $64,000, on which he just broke even. But then he began making his own tyres. "The ones we were importing from Italy weren't very good. They'd have bubbles along the treads and didn't last." Sinyard started researching rubber compounds so that he could develop his own tyres. After a year, the result was the company's first product: the Specialized Touring Tyre. It was "a breakthrough for us. Suddenly, we were more than just importers. We were innovators."
Sales grew to $128,000 in 1975 and $1m by 1978. In 1981, he developed the Stumpjumper the first mountain bike available in bike stores after watching cyclists equip their bikes to deal with the rugged trails of northern California. "I had never seen anything like them. Intuitively, I knew this mountain bike was going to be the next big thing."
The company grew rapidly. But during the 1990s, rather than focusing on its core customers, Specialized started slapping its name on "hastily-made bike helmets, water bottles, etc". The result? By the end of 1996 "we had lost about 30% of the bike store business and came within a few hundred dollars of bankruptcy".
It took three years to get the company back on track. In 2001, 49% of the company's shares were bought by Merida Bikes, Taiwan, for a reported sum of $30m, while Sinyard wrote a book emphasising Specialized's mission and passed it out to each employee. "This was the most valuable thing I had done in my 20 years of business. It gave the company clear direction." But he isn't about to retire and relax: "I love what I do, I want Specialized to be here forever."
Jody studied at the University of Limerick and she has been a senior writer for MoneyWeek for more than 15 years. Jody is experienced in interviewing, for example in her time she has dug into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.
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