“Most funded E-Bike company in the world” Vanmoof has reportedly been exploring a sale as it has run into liquidity woes this week. While this is undoubtedly a bummer for anyone associated with the brand (or owner of the pricey commuter oriented e-bike) it is exactly the outcome I would have expected. Here are the core reasons Vanmoof’s fate was sealed for a (very) long time.
- True TAM: Vanmoof was aiming directly at the urban city dweller who needs a bike to get from A to B (and back again). While positioning e-bikes within this segment may make a lot of sense, one has to be incredibly careful with offering the right blend of performance & pricing if they want to be successful. To add, its worth commenting that VanMoof isn’t just competing against other e-bike manufacturers, but any sort of bicycle that can be utilized within a city (no motor). For a vast number of people, an $800 Giant is going to get the job done just fine (while being lighter/easier to bring into an apartmnet). For others, taking an old city bike and bolting an e-bike conversion to it (every single gig worker in NYC – $499) is a much better solution. Either way, at $4,000, (without accessories) VanMoof’s offering priced them well outside the grasp of most people looking for a bike to cruise the city.
- Proprietary Parts: The bike industry is unique in that most bike companies are in fact frame companies. From there they leverage an infinite number of SKUs across a bazillion vendors to accomplish the right blend of performance & price against whatever the mission of the bike is. Vanmoof decided to go a totally different direction, leveraging a very high number of proprietary parts all the while gaining next to no real improvement in performance. One big lesson from the bike industry is simple – if you are going to in house something, it needs to be materially better. Otherwise, going proprietary is a surefire way to relegate your product to “no man’s land”. (See also: how much money Cannondale burned over the years going “proprietary” – on far fewer parts mind you).
- Limited Customization: Don’t like the handlebar? Too bad, its part of the “integrated” bike. Want to change the gearing? Sorry, can’t do that. Looking for a little more stopping power? Those brakes are proprietary and you can’t find any kind of better aftermarket pad. The list goes on. (I recognize this is a continuation of point 2 but I felt it deserved its own paragraph.)
- Theft Prevention: Unique to the brand, you could buy a monthly subscription to basically insure your bike in the case of theft. Problem is, it ended up costing the company an immense amount of money (and often just resulted in poor CS) because it turns out its very difficult to prevent bike theft in a city. To that point, a number of buyers on Reddit suggested buying the most expensive/crazy lock to go alongside the bike. Ultimately, all the capital invested here ended up being more of a dog and pony show than a real solution to a real problem.
- Competition crushes them on price: This is perhaps the biggest problem. While I’m sure the VanMoof rides fine, I can go to any number of manufacturers, either via a bike shop or direct to consumer (website) and order something that is ~70-50% the cost of the VanMoof and accomplishes the exact same goal. To add, I can upgrade it if I want, change parts if something isn’t too my liking, comes in more sizes and have any bike shop in the world fix it. Read those two sentences again. This, more than any other reason, is why VanMoof is failing.
The company was often compared to Tesla, which is a terrible analogy. Tesla was first to actually bring an EV to market at scale. VanMoof was the 131st (arbitrarily guessing) electric bike manufacturer to bring a bike to market. All of the Tesla-esque features Vanmoof brought to the eeb market are not disruptive but more “nice to have” (if even that). You can’t build a company on “nice to haves”, especially at a higher price.
The irony is I do believe you can build a bike company aimed at city dwellers. But you take the exact opposite approach of VanMoof in most ways. Build a low maintenance, mission specific, cost effective solution for those looking to efficiently move around a city environment. Identify the core shortcomings in the market, move from there….but don’t pretend cool design & deep venture backing alone will get you to the promised land.