Specialized Bicycles Inc - a review

Anyone who has taken notice will have seen the name ‘Specialized’ on a bike at some stage. It has grown into one of the world’s most recognizable industry names. So, how has it gotten there?

As usual, let’s start at the start.

Specialized Bicycles

The company now known as Specialized Bicycle Components, Inc., was originally founded in 1974 by cycling enthusiast Mike Sinyard. The story of how Mike went from selling bicycle parts on a trailer to creating Specialized, is one of the most fascinating in the industry. He famously sold his Volkswagen Kombi (that icon of California in the 60s and 70s) to pay for a trip to Europe on pedals, visiting places such as The Netherlands, Spain, Italy and all of the mystical places where cycling was engrained.

During his travels in Europe, he came across the legend that is Cino Cinelli in Milan. This was another name synonymous with the bike world, and founder of the Cinelli brand. Sinyard speaks of becoming obsessed with the Italian, and he bought as many parts and bikes as he could, and transported them back home to sell in California. According to himself the name came from the Italian word ‘Specialista’ which means Specialist.

In 1976 the brand began producing and branding its own bike components, beginning with the Specialized Touring Tire. Shortly after that a fruitful collaboration with Tim Neenan began which resulted in the production of their first frames and full bikes, which they had manufactured in Japan. Those first 2 bikes were called the Sequoia which was a sport-touring bike and the Allez, a road bike.

Arguably the company’s biggest early success came in 1981 when Specialized launched the iconic Stumpjumper (also designed by Tim Neenan, based on an earlier Tom Ritchey design) which was the world’s first large production mountain bike. And what a success this bike has been. Specialized continues to produce bikes under the Stumpjumper name to this day, including both hardtail and full-suspension models. The bike is so iconic that an original Stumpjumper is displayed in the Smithsonian Institution in Washington, D.C. I’m sure that a lot of us recognize this beauty, if not in person, definitely from some famous 80’s movies.

Essentially it was a hybrid in every sense. A steel frame designed by Neenan and made in Asia, handlebars inspired by those made by Magura for certain bikes, brake levers taken from other bikes, the Tomaselli, a SunTour ARX GT road derailleur... That brilliant medley weighed 13 kg and sold for 750 dollars. They had found the formula for success. Apparently the first batch of 250 units sold out in just two weeks and the mountain bike craze began.. It’s fair to say that the design has evolved somewhat.

In 1984 the company moved to Morgan Hill, CA and in 1989, Specialized introduced the Epic, the world's second mass-production carbon fiber mountain bike. The Globe range of urban bikes came in the 90’s and relaunched in 2009.

In 1995, Specialized launched the Full Force brand, which it’s fair to say was a mistake. Full Force was a lower-end mountain bike brand sold through sporting goods stores and discount retailers such as Costco. The move really pissed off a lot of Specialized dealers. In 1996, Specialized withdrew the Full Force line, and Mike Sinyard wrote a personal letter of apology to dealers. By the end of 1996, Specialized had lost 30% of its bike shop sales and, according to Sinyard himself, "came within a few hundred dollars of declaring bankruptcy". This goes to show that all successful brands have a ‘nearly’ story to tell. In 2001, Merida Bikes of Taiwan bought 49% of Specialized (initially reported as 19%) for a reported US$30 million. Mike Sinyard remained majority owner and CEO of the company. Sinyard possibly decided a partner would help ward off such crises in future, plus it probably gave him the chance to take some money off the table.

From a distance, Specialized seems to be absolutely obsessed with protecting its IP, in particular trademarks. Litigation or threatened litigation against a host of perceived competitors (some successful, some not so) such as RockShox Inc., Mountain Cycle, Epic Designs (now Revelate Designs), NASCAR driver Robby Gordon, Epic Wheel Works, Volagi Cycles (founded by ex Specialized employees)

“In 2013, Specialized mailed a small bike shop owner in Canada a cease and desist letter over its use of the city name Roubaix in its shop name and wheels, the name of a town in France that rose to prominence as a textile center in the 15th century and has hosted a bicycle race since 1896. This follows on from Specialized's trademarking of the word in Canada. The situation and behavior towards the shop owner caused some reactions from cyclists worldwide after an article was published by the Calgary Herald in early December 2013. On 9 December Fuji Bikes owner, Advanced Sports International said that they are the legal owner of worldwide rights to the Roubaix trademark. Fuji has had a Fuji Roubaix road bike model in its lineup since 1992, and has licensed the name to Specialized since 2003. The dispute between Specialized, ASI and the Canadian shop owner was resolved in December 2013, and Specialized vowed to be more cautious in its pursuit of trademark violators in the future.” Wikipedia.

And there are others. So, fair to say, they take their names seriously!

Recent times have been more challenging for the company. Early 2023:

Scott Maguire, Specialized CEO – “We are transforming the company around our purpose to Pedal the Planet Forward. Our priority is to better serve riders, retailers and communities, and to be the best place for our teammates to innovate and grow. The time is now to adapt to the current environment and ultimately that has led us to make some extremely tough decisions today. I want to recognize those teammates who departed and thank them for all of their contributions, hard work and dedication to Specialized. We are focused on ensuring that they are fully supported during this difficult time. It may be tough to see in the moment, but the future of cycling and the future of our brand is bright.”

The announcement further reads: “Over the last three years, the industry has changed at an incredible pace and shown that cycling is more powerful than ever. It’s clear the time has come for transformation and shifts for the future.

“This past week, Specialized made the incredibly difficult decision to say goodbye to 8% of teammates around the world. With the global economy changing faster than anticipated and rapid changes within cycling, the organization adjustment will allow the brand to be adaptive whilst still investing in innovation.”

The original appointment of Maguire from Dyson in 2022, along with David Schriber as CMO (formally of NIKE) has raised speculation that the company may be positioning itself for a sale. Indeed, looking at some of the recent revenues vs profits figures would suggest that, like many other consumer products, aggregation and M&A roll ups are crucial to maintain growth. (E.g. £94 million in UK sales 2021, with a profit of £3.7 million.) Otherwise smaller entities can spend much too long sailing too close to the wind, or even doing an ‘Icarus’, and fall between two stools. Even at about $500m revenues per annum, Specialized is not insulated from this uncertainty, especially in these uncertain times. That said, Specialized has innovated the hell out of things, and has learnt along the way. Here’s to a bright future, either way.

Gone Fishing?

A Special Report on Recreational Angling in the USA was published in July 2024.

The annual report was produced by the Recreational Boating & Fishing Foundation (RBFF) and the Outdoor Foundation, and provides detailed information and trends on angling participation by gender, age, ethnicity, income, education and geographic region.

1. In 2023, 57.7 million Americans ages 6 and over took to the nation’s waterways to enjoy recreational fishing, a 6 percent increase from 2022.

2. Following modest declines in 2021 and modest gains in 2022, there was a sizable net increase of 3.2 million fishing participants in 2023.

3. The average annual spend of an angler is $1,500.

4. The data underscores the critical importance of introducing fishing at a young age.

5. Retaining newcomers is a crucial part of the continued success of recreational angling.

6. The industry can support in various ways: remind newcomers about great fishing experiences, highlight convenient water access, provide beginner educational resources, emphasize the social aspects of fishing and boating, and recommend cost-effective equipment.

You can download the full report here if you’d like to see more: https://www.takemefishing.org/getmedia/db64f719-d1b6-4fcb-97bd-7725c35235c8/2024-Special-Report-on-Fishing_Web.pdf

There is a lot in this. More people fishing, but spending less as reported elsewhere. We’ve heard this in a lot of other verticals within the industry such as camping and biking. And like other verticals, I think the challenge becomes how to keep the new participants engaged, and hence convince them to become consistent investors in their gear and trips.. And that is up to us. This demographic is not hardcore and usually participates in multi activities. So making multi activity trips and gear available at relatively affordable prices is a big part of the jigsaw. Could the middle market price be what is required here? Or can we get more people fishing cross forms?

An interesting table to finish: