How I Disrupted The Cycling Industry And Grew My Business To $300K/Year

Brian De Groodt
$25K
revenue/mo
1
Founders
1
Employees
Dispatch Custom C...
from Longmont, CO, USA
started August 2017
$25,000
revenue/mo
1
Founders
1
Employees
1.93M
alexa rank
5.34K
followers
41
followers
24
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How I Disrupted The Cycling Industry And Grew My Business To $300K/Year

Hello! Who are you and what business did you start?

Hey Starter Story. My name is Brian De Groodt and I’m the founder of Dispatch Custom Cycling Components. Our customers are some of the most passionate cyclists in the world and we allow them to make their bicycle one-of-a-kind with our customizable headset caps, bar-end plugs, and other tailored additions to their bicycles.

Our flagship product is a laser-engraved bicycle headset (or stem) cap that we make for our customers with our artwork or custom text. It’s the ultimate bike-bling! Our customers use them as motivation during their rides–or as reminders of what they are riding for. We’ve even been privileged to engrave a couple of marriage proposals on headset caps—which is pretty cool to think we played a part in someone’s future like that.

We celebrated 5 years of business in 2022 and count over 20,000 cyclists who have made their bicycles one of one instead of many millions. This year we’ll do over $300,000 and grow our business by approximately 40% vs 2021.

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What's your backstory and how did you come up with the idea?

I’ve largely spent my professional career in enterprise software sales. I’m personally responsible for over $250M in software sales–I traveled extensively, made good money, and was recognized for performance at some of the largest software companies in the world.

Yet I wasn’t fulfilled.

Software exists in the ether and the more I sold it, the more I started to think about my legacy. I wanted to focus on real artifacts that last beyond the next sales cycle and make a difference in the lives of individuals outside the workplace. Physical products have their tradeoffs, but one thing you can’t argue with is when your hands touch that product and it goes to a customer, there’s a real physical bond that takes place.

I’ve always been an entrepreneur at heart, and I felt like my years of sales experience were an excellent way to prove to myself that if I can sell, I could start my own business. It was just a matter of finding the right product.

As they say, nothing happens until something is sold. (Of course, it turns out selling something is only the beginning of a series of tasks you have to navigate–but that’s Chapter 2!)

So in my journey to find the right thing, I wanted it to be:

  • Outdoors focused
  • Something I could bootstrap
  • Primarily online
  • Capable of getting to $1M as a single-person company

I met a bicycle frame builder several years before starting Dispatch while preparing to ride the Tour Divide—a big ole race from Banff, Canada, to Antelope Wells, NM, down the North American Continental Divide. He built a custom mountain bike frame for me for the event. I loved the bike so much that I bought the company from him and I was officially in the bicycle business.

And man is that a tough world. Custom bicycle frames are a small niche of the bicycle market. Margins are ultimately very thin. Those margins introduce all sorts of ridiculous and unnecessary stress on the health of the business. Depending on where you make your money in that industry segment, you’re almost always going to be a craftsperson doing what you (hopefully) love. Rarely are custom frame makers able to scale to a significant size.

Moving along that path for a couple of years, I started looking at ways to further diversify our revenue. I had a bunch of spare bicycle parts on hand and took them to a local laser engraving shop. We messed around with some artwork, and I posted them on our bicycle frame company's Instagram site.

They sold out instantly.

So I reordered. This time in a larger quantity—and they sold out again.

While that was great, we soon started to be known as the company that sold bicycle headset caps instead of a bicycle frame company. It was a good news/bad news situation – and in business, I strongly believe you have to try a lot of things before you find lightning in a bottle.

So I made the difficult decision to shut the frame manufacturing down and give my full attention to Dispatch.

I bought a laser engraver, and like any impatient founder, plugged it in, sent the job to the engraver, and promptly lit the shop on fire. Literally.

After cleaning that mess up and reading the manual, we were off to the races. We turned off the lights on making frames–and went full time on making headset caps.

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THIS CART AND THE LASER ON TOP WERE THE ENTIRE BUSINESS ON DAY 1. WE SPLIT SHOP SPACE WITH A COFFEE ROASTER. WINTERS WERE GREAT WITH FRESH COFFEE. SUMMERS WERE SWELTERING. LITERALLY, SWEAT EQUITY

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FROM FUNNY TO DEEP MOTIVATION, OUR HEADSET CAPS KEEP OUR CUSTOMERS RIDING THEIR RIDE

Take us through the process of designing, prototyping, and manufacturing your first product.

Our primary mission at Dispatch is to get more people to ride bicycles, more often. Our customers tell us their custom headset caps are great motivators. From getting a laugh to helping them dig deeper when the tank seems empty, their custom headset caps are what they see and where they draw inspiration from. So our products have to meet this expectation consistently.

We get a lot of credit for “knowing who our customer is.” I think that’s because it’s me. I saw a cycling industry that was pushing something disconnected from who their real customer is.

I spend a lot of time on my bicycle or running. For me, it’s the place I’m able to leave behind the distractions I’m very prone to indulging and just let my mind relax into the place it needs to be in the moment. Sometimes that place is personal and sometimes, it’s business.

The best products we release are almost always something I think of while out on a ride or running. My mind goes to some pretty deep places while out on rides. Usually, I’m pondering some life lesson or trying to push a little harder. That being the frame of mind, I think a lot about motivations, stoicism, or sometimes just random nuggets. Those make for some pretty pithy and popular engravings. (Our most popular seller is a very direct statement, but not safe for work, so you’ll have to head over to www.dispatch.bike and see for yourself.)

While I never use headphones during a ride, I will often plug in and listen to music while running. I like a lot of 80s and 90s rock (punk, metal, post-punk), and there are some absolute gems in the lyrics of these songs. Like real wisdom—only delivered by a messenger with suspicious decision-making skills.

When inspiration hits, I’ll usually beeline back to the studio and start designing the initial artwork. Because we do everything in-house, it’s very easy to go from inspiration to the first article. If it’s the right idea, we can typically have a new product released before the sun sets.

This ability to produce in-house has its pluses and minuses. On the plus side, fulfillment begins and ends with us. If we make it available for sale, it’s going out the door in under 72 hours from the time the order is placed. This gives us a couple of strategic advantages, like limited editions, rapid prototyping, domestic fulfillment times, and the ability to limit the downside to any non-performers.

It also means being attached to a physical location because we can’t reasonably outsource it to a third party and still hit our standards of time, price, margin, and flexibility. So that’s a real constraint I face versus my peers that work off a laptop anywhere they roam.

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THIS IS WHERE THE IDEAS HATCH

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OUR EARLIEST PACKAGING WAS MADE OF SCRAP CARDBOARD BOXES WE LASER CUT. EVERYONE GOT A HEADSET CAP IN PACKAGING THAT SMELLED LIKE A CAMPFIRE

Describe the process of launching the business.

Our first sale was for $12.99 and shipped free on August 18th, 2017. That order and the first hundred, or so were all from people I knew personally or that knew us from our bicycle manufacturing days. The momentum of being in the bicycle industry and having made connections at races and events for the last few years was our early confirmation we had the right products for the market we wanted to serve. It’s great, because to this day I see those names coming across in our orders regularly. The saying about getting a hundred true fans is something I believe should get more attention. It’s the first phase every new business should focus on. It’s digestible and easily measured.

That said, we had some learning to do around our product prices and growing the business.

For one, the price was ridiculously low and left little room for many things we need to run the business. Things like shipping, marketing, customer acquisition, replenishing product, supplies, software, taxes, insurance, equipment leases, and on and on.

If we took too long to establish our presence online with our bicycle company, we moved way too fast on Dispatch. If I had it to do over again, I’d make the same choice, because being in over your head is way better than not being in the game at all—but it’s not all champagne and roses.

I learned a lot quicker once we started trying to scale the business. Customer acquisition is very affordable at first. You tell your friends, family, and fellow enthusiasts, and you feel great at a low cost. Try to scale with paid marketing and you’re suddenly left with a loss.

So we raised prices, put in some incentives to increase the average order value, and quickly doubled our AOV.

I financed Dispatch from my bank account, so I am always tuned into every dollar we spend.

We launched on Shopify with a standard free template—and it was fine. Did the job, but wasn’t building the brand image I envisioned.

So it was time to break out the checkbook and work with an agency on our marketing assets. It took $10,000 to get that dialed, but when it was done, it could have cost double, and I’d still have been over the moon.

The vision of a “less posh, more punk” bicycle industry brand was born.

We unleashed the new brand on the cycling world and the crowd roared.

Well, at least that’s the way it felt. It turns out, while we enjoy great repeat customer business, you’re never done pushing to get new eyes on the site and our products.

Since launch, what has worked to attract and retain customers?

We get a lot of credit for “knowing who our customer is.” I think that’s because it’s me. I saw a cycling industry that was pushing something disconnected from who their real customer is.

Images you’ll see in cycling ads are so often about a pro cyclist or some guy that looks like he never eats—but is Tour de France bound. While I get the aspirational sale they are trying to make in their ads, in 20,000 customers and thousands of emails from our customers, no one has ever told me they are heading to Paris for the start of The Tour.

More likely, they are getting some much-needed time on the trail or local bike path to get their mind right, get a little bit of exercise in and enjoy hanging with a few friends. Or maybe their bicycle is their only way to get around. Or that they used to ride daily and then had a family and gained weight and are looking to get back in shape.

I get emails that are so intimate, so personal, that I truly consider it a privilege to be in a position to have inspired so many to ride more often and to feel better while riding their bicycles. Their stories of inspiration, reflection, and healing are ones I always remember when it gets rough in my own w. They truly keep me going when it gets difficult.

Tell your story to as many as you can get to listen. If you have a product-market fit and you can tell compellingly tell the storyenough people, you have a winner on your hands.

Sales realled to increase for us when we started focusing on building our social media presence and paid media exposure. We started a real push in January 2020. A little late to the game, but we had good returns on our investment. We've since backed off a lot of that investment given the changes in the platforms, and have invested that in multiple other areas of marketing. These include more direct sales efforts to event promoters and bicycle shops, as well as working with creators in our industry through seeded product placements and one-of-a-kind collaborations.

In addition, we started to learn many of our customers are truly fans of Dispatch and they were interested in buying more from us. Fortunately and unfortunately, a headset cap will last a lifetime. So we don't have a product that lends itself naturally to subscriptions. But, we do have a brand that we've been able to leverage and currently benefit from a 20%+ repeat customer (by transactions) base.

We've added much more to our product catalog. It's all cycling-focused, but we've introduced branded items like drinkware, shirts, hats, and jerseys. We have also done collaborations with companies like Handup Gloves and cycling kit manufacturers. This year we'll add another 30 items to our lineup, so we're doing all we can to serve the desires of our customers while maintaining financial discipline.

Some of these products may be added to Amazon’s catalog, but we’ve been cautious about doing this due to it calling attention to our products and introducing fakes/knock-offs (something we already deal with), and giving up some control over our brand voice and image. Certainly, we can’t do this for our most customizable products, but items like shirts and jerseys might be something we consider in 2023.

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REVENUE HAS HAD SOME UPS AND DOWNS AS WE FIGURED OUT OUR CUSTOMER ACQUISITION STRATEGIES

How are you doing today and what does the future look like?

We're currently maintaining an 80% gross profit margin. We take that margin and invest in new customer acquisition quite heavily. This includes content, product seeding, paid social, in-person events, and similar. On a monthly basis, new customer acquisition is our largest expense. We make this investment a strategic one. Given our desire to build a larger brand in the industry, we're up against some pretty big spending by way of a consolidated group of industry titans.

We'll typically spend around $14 to acquire a new customer, so this accounts for approximately 1/3 of our AOV. Being calculated about our investment in nCAC (new customer acquisition) is a primary daily objective. Testing new creative, telling our story, and connecting in person with customers. They all pay off in the long run--but have risks we have to manage in the near term.

We use Shopify on a couple of different domains and feed all of these orders into a consolidated Shipstation fulfillment interface. We have some Make automations that help to create our order manifest. This has to be done digitally and then again physically, so reducing order entry errors and streamlining this is important.

The reason we have a couple of domains is that we do work with some creators and not-for-profits that would rather have an unbranded presence than that of Dispatch. This makes sense since we started the brand to not be for everyone, but we still have the same process and machines to make our headset caps for companies or organizations that don't want a skeleton logo on their orders. No problem!

Given we produce and fulfill all orders in-house, we have a lot of flexibility in how that's done. We typically consolidate production runs to 3 times a week. This allows us to hit our 72-hour goal of getting all orders into the USPS system, but also to batch production and focus on specific production runs on alternating days. This seems to be the most efficient way to accomplish this.

On any given day, the majority of my time is spent on speaking with prospective large-order customers, emailing and chatting with current customers, creating and pushing new ad and social media creatives,s and making sure we're adding new products to the lineup with regularity.

We have some real super fans and I'd say I speak with at least 5 of them a day. By phone, email, or in the social media DM apps. It's always cool to hear from them and about their rides. At least half of our catalog has come from our customers asking for something specific.

We're working through some product testing on a couple of entirely new product lines we'll bring into the catalog this year. They are major bets for us. Contrary to many people's belief, a lot of successfully running a business is about risk reduction vs risk-taking. This is especially true for us. We're still bootstrapped, so any major product investments that don't land are tough losses. I don't like losses. Risk reduction helps that issue.

Short term, we're looking to get over the half-million dollar mark by sprinthe g of 2023 while maintaining our margins (which improve as we increase our volume to a certain amount). From there, by the end of the year, I'd like us to see a seven-figure TTM. Depending on the economic situation, we'll look for strategic options at that point. I believe with our product pipeline and the market we have available to us, we reasonably have a 10-figure/year business opportunity without getting too unnatural with what we do.

Through starting the business, have you learned anything particularly helpful or advantageous?

I’ve learned so much. For starters, read the manual so you don’t burn your shop down.

In all seriousness, when I got into this, I knew how to sell million-dollar software licenses to big companies. This wasn’t a like-for-like transition of skills when it came to selling sub-$100 orders of bicycle components to 300 million people in the U.S. So I’ve learned a lot about micro-persuasions, how people shop online, the nuances of this color and this bundle offer vs that. Always testing. Testing my assumptions and letting the data be the arbiter of truth. I might be our ideal customer, but I’m not every customer—not even the majority. So I have to put aside my assumptions and test them constantly.

A perfect example of this is regarding price. If I could tell any aspiring entrepreneur my best advice it would be: Start before you’re ready and whatever you think your price should be, it’s too low. Raise it. It’s really easy to think you’re asking for too much. You might even have some prospective customers tell you that you’re asking for too much. But here’s the thing: The few that tell you rarely know the true cost of what it takes to make your product or service. They see a widget, assign a value to it, and think your number is either right or wrong. What they don’t know about is how much more goes into that product. Hidden things like leases, equipment, insurance, taxes, research and development, spoilage, and on and on. We doubled our prices in 2021 and I was certain it was the end of us—but it turned out to be the healthiest thing we did for the business since starting it. And the backlash was near zero. Trust me: You’re not charging enough.

We had a fortunate boost from COVID. Bicycles took off as a hobby and also a method of safe, efficient transportation. I hate to think we benefited from something so disruptive (or worse) to so many, but it’s undeniable that a lot more people dusted off their bicycles or bought new ones. And every one of those bicycles has a place for Dispatch on them.

I’m grateful for all the experience I gained in my sales career. It’s helped tremendously in direct sales to shops, events, and manufacturers. Having overcome the fear of picking up the phone at the age of 14, when I started selling trash bags to people out of the white pages of a phone book, I’m not intimidated by the concept of someone saying “no.” I think this is a business owner's number one skill. Telling your story to as many as you can get to listen. If you have a product-market fit and you can compellingly tell the story, to enough people, you have a winner on your hands.

What platform/tools do you use for your business?

We’re on Shopify as our primary platform. We use it on a couple of different domains and for different markets we serve. Shipstation takes all orders from every domain and consolidates that into our production manifest. We’re in Adobe’s Creative Cloud nearly all day, every day and it’s the best $50 a month we could spend. I doubt we’d have this business without it.

We use Klaviyo for our email marketing. I’m fond of saying that if we’re short on a given period of revenue, send an email. We almost always make it up off that send alone. Klaviyo replaced our first email platform and I doubt we’ll ever move off it. The data science they are investing in understanding our customers is next-level stuff.

We use a couple different business development tools including Mixmax and Copper CRM. These are purely for large orders or proactive sales processes to shops and event promoters.

We have contractors we work with in New Zealand, India, and Vietnam for a variety of different services. They are wonderful members of our team and I’m truly blown away (and grateful) that we live in a time where this is even possible.

As part of our media strategy, we’ve launched a couple of different blogs to help us connect with more bicycle frame manufacturers, so we use Wordpress for content management. We interview and write everything in-house.

Of course, Xero is for financials. I consider Xero an order of magnitude more capable than the next closest option.

What have been the most influential books, podcasts, or other resources?

I’m a member of eCommerce Fuel and find their membership to be a great resource for all questions related to eCommerce. From product design, sourcing, logistics, technology, marketing and just generally being able to hang out (in person and virtually) with minds of a similar type has been great. Entrepreneurship can often seem like a world of one and quite lonely. ECF has been valuable in helping me keep connected and growing.

I think Robert Cialdini’s Pre-Suasion and Influence are rich reads on messaging and using human behaviors to your advantage.

Simply Said is great for helping to clarify the most important point you’re trying to make.

Copywriter’s Handbook has been really helpful to me lately in trying to get our message across in all of our ads/emails/product descriptions/etc.

Great Mental Models series has been helpful for reframing problems:

Exitpreneur’s Playbook (beginning with the end in mind—for me)

Profit First (plays into the above)

I regularly refer to all of these books.

Also, not so much a consumption book as it is a creation/exercise book, but Pilgrim Soul’s Creative Thinking Journal is full of creative exercises. I find them helpful when I’m looking for creative solutions or need to do product creation work.

Advice for other entrepreneurs who want to get started or are just starting out?

My number one piece of advice is to get started now! This might be interpreted as going head-on and throwing caution to the wind. That’s not my intention. Rather, if you’re going to take this journey into entrepreneurship, do it. Use what you’re currently doing as leverage (now or in the future) to make this happen.

Keep your eyes open for applicability to your journey. Running a business takes a lot of different skills initially. As they say, when you first start a business you ask how to do something. As you mature your business you ask who can do something. Getting across that gap is the real pursuit of the early days.

But also to GET STARTED. I’ve seen far too many aspiring entrepreneurs who have an idea, maybe even a burning desire, but they squander time. Wasting time on technically setting up a business and names and logos and websites and colors and, and, and. I’m a big believer in Reid Hoffman’s (LinkedIn) quote: "If you are not embarrassed by the first version of your product, you've launched too late.” Shipping is the only way you get feedback that counts. It’s the only real way to test your assumptions.

The good news: When you’re starting hardly anyone is paying attention, so it’s unlikely to be noticed if you botch the job anyway. So it’s the safest time to try things. Also, it’ll never be perfect. So ship!

Similarly, Steve Jobs is attributed with saying “Real artists ship.” (See above.) But real artists steal, as well. There’s so much that’s already been done before you. There’s a time and a place to be original and rethink processes. Invest where that makes sense, but otherwise leverage the learnings of those that came before you. It’s an advantage afforded to you for absolutely no cost. There’s not much you can say that about, so take that gift as a cosmic investment in your start-up and go! Go fast!

Are you looking to hire for certain positions right now?

We're actively seeking storytellers for our creative pieces (film, photography, copy) as we expand our offerings and move from a single hero product to many more products. Keeping the company on brand and moving people from customer to fandom through storytelling is our focus right now. A creative director is in our future hiring plans.

We also have plans for a brand activation manager as we move back into more "real world" events. Being in front of our customers at events is always a fantastic time, but we want to do it better--the Dispatch way. We'll be looking into pop-ups, major cycling events, and other ways to generate attention for the brand.

Finally, we're actively seeking independent sales reps with a book of cycling shops as customers. Our products are finding their way into more shops as we grow and we'd like to formalize that sales process with proven professionals.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

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Brian De Groodt, Founder of Dispatch Custom Cycling Components
Pat Walls,  Founder of Starter Story
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