Bicycle Network: Support & Promote

I want to talk to you today about what I think the biggest opportunity is in the bicycle industry, and most people who are here are involved in the bicycle industry, and there are so many things going on in our industry that today is kind of a good time to step back and take a look at the big picture. So I’m going to talk a little bit about how our business has grown over the years.

The past

So there’s two major things that have happened in the past 25 years. The first one has been the mountain bike boom, which started in the mid-eighties and it lasted through the mid-nineties, and that really grew the business; and the second piece that really grew the business it the road bike boom, and when Lance Armstrong won his first Tour de France in 1999, that kind of started the road bike boom and that’s really lasted for the last seven years. Many people in here who are part of the bicycle industry have grown their business along with those two events.

Now if you take a look at many people in the industry, they take a look at growing the business for the next 20 years based on two things: the first one is product, and over the next 20 years, the industry will come up with a lot of great ideas and a lot of great products, and we’ve spent the past two days walking around this show and you see a lot of really cool products, you see a lot of carbon fibre things, you’ve seen a lot of new wheel sets, you’ve seen a lot of new folding bikes; there’s a lot of ideas, and consumers love ideas and that’s a great way we can grow our business.

The only thing is it’s really not that unique; it’s the same thing we’ve been doing for the last 20 years is we’ve had a lot of new ideas and a lot of new products.

So the other way we grew our business is based on marketing, and if you take a look at the bicycle industry, the bicycle industry is doing better marketing today than we’ve ever done. You can take a look at people at Giant or Specialised or Track or Duro, and people are spending a lot of time and effort and money to go out there and market their product. The only thing about marketing is it’s basically the same thing that we’ve done for the last 20 years, a focus on product and a focus on marketing, and what I believe is that a focus on marketing is good, and a focus on product is good, but there’s more to our business than those two things.

Obesity

So what I want to talk about now is I want to talk about some interesting global trends children between 6 and 11 have grown by 11 pounds. Men over 20, by 24 pounds, and the average woman, over the past 42 years has gained 24 pounds, and this is not just happening in the United States; it’s happening in Western Europe and it’s happening in other places around the world as we have less activity than ever before.

If you want to take a look, this is a very interesting map, and this map is from 1985 and it shows the amount of people who are overweight and obese in the United States (http://health.msn.com/reports/obesity/). In 1985, that’s three years later, 1988, 1990, 1992, 1994, 1996. In 1997 we have our first red state, 1998, 1999, 2000, first yellow state, 2001, 2, 3 and 4, that’s where we are at 2004. Now the interesting thing about taking a look at those series of maps is there is an obesity epidemic. It’s happening in the United States and it’s happening in other parts of the world.

There’s a huge government spend in terms of health care to take care of these obese people, and it’s going to become a bigger burden on the government and the people as time goes on. I spend a number of days a year in Washington DC, and some of those days are talking about health, and in the United States, there is a couple of interesting things, and that is, is the people who really know about health in the United States say that this problem cannot be solved by money. There is no money that can do it. It’s going to become such a burden on the government and the people that the only way that the United States will solve this problem is physical activity, is it’s really preventative health; there’s not going to be a drug that can do it. So that’s the first global trend if we take a look at it.

Congestion and urbanisation

The second global trend is traffic congestion, all right, and this is the case in Taipei, it’s the case in Amsterdam, it’s the case in New York, it’s the case all around the world is traffic congestion. In 2003, traffic congestion delayed people worldwide for seven billion hours and wasted five billion gallons of fuel. There’s something very interesting here, and it’s the same as the obesity epidemic, and that is this problem is getting worse, it’s not getting better, and there’s really no amount of money that people can spend to solve this problem. The more roads and the more freeways that are added, they can’t keep up with congestion.

Our third trend is urbanisation. Now there’s a couple of statistics here that I think are pretty interesting, and the first is in 1950, the world had two mega cities of over 10 million people. Today that number is over 20. In China, there are 200 cities alone that are over a million people. The United Nations estimates that 180,000 a day are moving into the cities. Today more people live in cities than live in rural areas, and that trend is continuing. Those are the three major trends.

The fourth major trend is the environment. Three key facts about the environment is emissions from cars far outweighs that from power plants, vehicles contribute 60 to 70 per cent of air pollution, and 60 per cent of the pollution created by car emissions happened in the first few minutes of operation. One of my favourite statistics is that 50 per cent of car trips are less than two miles. You take a look at all of this pollution being caused by automobiles and 50 per cent of it is less than two miles.

The answer: the bicycle

What kind of a product is going to address all these problems? It’s an amazing statistic, and I go back to what we’re spending all of our time doing, and that’s developing products and spending money on marketing, and yet, there’s a product that we can develop to address all of these things. The best thing about the product is that we already have it; it’s the bicycle.

Let’s take a look at how the bicycle can solve problems; health issues, bicycling you burn 500 to 700 calories an hour. I’m told that driving a car you can burn 5 to 20 calories. Bicycling promotes healthier lifestyle, strength and family bonds and provides for recreational activities for all sorts of people.

A four mile journey in London is 40 minutes. If you take it by bicycle it’s 22 minutes, and you can put seven to twelve bicycles in one parking spot of a car. That’s a product that we already have. It’s nothing new, it’s something that’s been around for quite some time.

So in my view of the industry’s greatest opportunity is to create a bicycle friendly world, and to me, the best thing about that is we don’t need to reinvent the wheel. Take a look at it, a bicycle friendly world already exists in a number of places. It already exists in the Netherlands, it already exists in London and it exists in Portland, Oregan. All of those communities are very bicycle friendly, and they’re also spending time and money to make those communities even more friendly, but this can be done.

Creating a bicycle friendly world is not a pipe dream. So let’s take a look at some statistics here. Trips taken by bicycle: in the Netherlands, trips taken by bicycle are 30 per cent; in Denmark it’s 20 per cent, German it’s 14, Switzerland it’s 10, in Austria it’s 9, in Canada it’s 2 and in the United States it’s less than 1 per cent. I take a look at that and you take a look at the United States and you say well that’s a problem. I take a look at it and I say well that’s an incredible opportunity.

If you take a look at the rest of the world, the rest of the world is closer to the United States than it is to the Netherlands, and that’s why I believe that as a bicycle industry, there’s such an incredible opportunity in making a bicycle friendly world. In Minneapolis, Minnesota, it’s at 2 per cent, in Washington DC it’s at 1 per cent, and again the average is less than 1 per cent.

The London experience

So what if the world’s bike usage was more like it is in the Netherlands or in Boulder, and I found a great quote from the Mayor of London here, and for people who have not been to the UK, the UK ten years ago was not the most bicycle friendly place, and even today it’s got a long way to go, but the issue is it’s moving in this direction, and the Mayor of London said “'Cycling is the fastest, cheapest, most healthy and environmentally friendly way to get around London, which is why we are investing almost £20m this year to improve cycle facilities in the capital. The number of cyclists on our roads has doubled since 2000 and we've already exceeded our cycling targets five years ahead of schedule, on top of achieving a shift from car use to public transport. I will now be looking at setting tougher targets so we can continue to build on this success and encourage many more cyclists in London.'”

Now the beauty of this is this is the Mayor of London. So here we are as the bicycle industry, and we have the benefit of having politicians who get it, who understand what the bicycle can do, and they’re working for us, and these are things that can be done.

I took a look at just the US market, I see that bicycle trips in the US grew from one half of one per cent, to five per cent, what would happen to the size of the bicycle industry in the US? It’s really an amazing statistic. Today it’s $6.2 billion. That would grow to $31 billion, it would multiply it times five.

So remember, that in Boulder, Colorado, it’s already 21 per cent. In Davis, California, it’s 25 per cent and in the whole country of Holland it’s 25 per cent. So this is achievable, and that’s what can happen.

Look at Louisville

Now if you were to ask this question five years ago and you would have said where is the last place that you could create a bicycle friendly community, one of the last places you would have said would be Louisville, Kentucky, and about a week ago, we were at a national bike summit in the United States and the mayor of Louisville was there, and the mayor of Louisville had been in Colorado three or four years ago. He had seen the bike pass, he had seen people riding on the bike pass, and he said “I’m going to make Louisville a bicycle friendly city”.

And so his job as he came back to Louisville, he says “I want to make that a bicycle friendly city”. He said “I want to get bicycling fully integrated into the transportation network, and I want to get all these people feeling comfortable and safe about riding their bicycles, and he worked with business leaders, he worked with bicycle advocates, he worked with the community and they’ve got a few major projects.

They built a 27 mile bicycle path through the middle of the city, and then they took this path and created this blue path all around Louisville, that’s 100 mile path that they’re creating around Louisville. This is what’s been done in three years time, and in three years, this is one of the statistics that they point out is bicycle annual boardings on buses. In 2001 it was 9000 units and in 2005 it grew to 91,000. That’s an indication of how people are using their bicycles in Louisville. There’s a basic simple premise for the bicycle business, and that if you build the facilities and if you build trails, people will use them.

Bicycle advocacy

I showed you the numbers where bike trips are less than one per cent, but the US really got it about ten years ago when the industry got involved with the government, and we said “We really want to create more bicycle friendly country”, and pointed out here a key figure said “How much money did the industry get for bicycle advocacy?” and I figure that before 1995 it was zero.

Every once and a while bicycle advocates would come to the industry and they’d ask for money; they used to come to me and they’d ask for money and I would shoo them away. I’d say “No thank you, I’ve got other things that I need to worry about” and then I kind of figured it out in 1997 and I said “We’re going to support these people” and other people in the industry said “We’re going to support advocates, and we’re going to use this money to go lobby the government”, and we came up with about $2 million.

That’s what we spent on a yearly basis – not once a year, it’s on a yearly basis. And then we start working on the government, because there are people in the government who believe that bicycles were a simple solution. In 1995, the government spent about $20 million a year building bicycle trails, and thought they could do more, and we went and we told people throughout the government that bicycles are a great thing.

Ten years ago those people thought we were nuts when we went and we talked to them and we told them how great bicycles were. I was there last week and we had a number, a whole group of people throughout the industry – I think there were 425 of us. We went and we talked to the government, we’re no longer nuts; people have figured out that the bicycle is a simple solution of complicated problems. Today the government is spending almost $800 million a year on bicycle facilities. That’s a major change.

If you talk to people who have seen this and you talk to the politicians, they say that if the industry never spent the $2 million, you would never get the $800 million; that people had to go there and spend some time and money to get that done. In the last transportation bill that was passed, the government is spending $100 million a year on safe routes to school. The woman who runs this program, Deb Hubsmith, I saw her last week and when the transportation bill comes up in five years, her goal is not to get $100 million a year; her goal is to get $500 million a year. I’m not sure she’ll get $500 million a year, but no one ever thought she’d get $100 million a year. It’s an amazing program and there are some amazing things that are being done.

Make world bike friendly

Now let’s take a look at our product, the bicycle. We’ve got the perfect product at the perfect point in time. What should we do with that? And it’s my belief that there’s a lot that we can do with it.

The first one is for the industry to understand that the number one to grow the bicycle business is to realise that it’s by creating a bicycle friendly world. We could spent a lot of time here on eight speed, nine speed, ten speed, working with carbon fibre to get it down to a 14 pound bicycle; we can work on the next folding bike, and all those things are great things to do, but what we really need to understand through all the different bicycle companies and people involved in the industry, is this fact: that the fastest way you can grow this business, and the biggest way that we can have an impact on society is to understand that creating a bicycle friendly world is a very good thing.

Name me any other group that can have an impact on health, that can have an impact on congestion, that can have an impact on obesity, and that can have an impact on all those different areas and the environment – there aren’t a lot. We can do that, but you have to go talk to law makers. You know, it’s like if you want to sell something, you’ve got to go talk to your customers. If you want to make the bicycle – if you want to have a bicycle friendly community, you have to go talk to government leaders. Government leaders will listen to you. Get involved with advocates. There are a lot of people who put in a lot of hours working to make the bicycle a very popular thing. In the United States, there is a few key things, there is Bikes Belong, there is IMBA, which is the International Mountain Biking Association. If there are no places to ride your mountain bike, you’re not going to sell any mountain bikes. If there are places to ride your mountain bike, chances are a mountain bike business will go up.

I had an opportunity to talk to a bunch of leaders in the industry this morning is I believe that the industry really needs to redirect resources away from traditional spending to advocacy. For every hundred dollars that a company spends, or for every hundred dollars in sales, a company will spend $3.90 on marketing. A company in the bicycle industry will spend $1.60 on product development, and that same company will spent 10 cents on bicycle advocacy.

So I take a look at that and I kind of go, I don’t think that makes sense. We keep doing the same thing and that’s not always the best thing to do, so I really think as an industry, we need to kind of step back and take a look at how we spend money, and so if you take a look at leaders in the bicycle business, including me, why do we spend the amount of money we spent on marketing and the same amount on product and a little on advocacy. We kind of do a lot with advocacy, and I think we’ve kind of taken a leadership role there, but then I look at this graph and I go “I don’t think we’re making the right decision here” and so that was a point of conversation this morning, and that’s something I’ll try and get done over the next year is to spur that debate within the industry as to where we’re spending our money.