Why are electric bike companies suddenly betting on Detroit?
A few years ago, Justin Cosmides was working in an investment bank and (in his words) hating life. The only bright spot was his daily commute. He rode an electric bike from Brooklyn to Midtown, which turned into a coffee-hunting expedition. “I wanted to be cool and European, so I wanted to stop at different espresso shops,” he says with a laugh. But a chance encounter with a Brazilian e-bike entrepreneur turned Cosmides’ hobby into a side hustle and something more: a leap of faith. In late 2021, Cosmides left his cushy bank job to become co-founder and CEO of Vela, a company that makes great-looking, high-end electric bikes starting at $1,800.
In some ways, the pandemic has been great for business. (Remember how hard it was to get Any bicycle? ) But then the slowdown happened. Bella’s Chinese producers have halted development of Bella in favor of Walmart. In a way, that was a good sign. Even if Walmart had gotten into electric bikes, the category probably wouldn’t have been trendy. (An estimated 1 million electric bikes were sold in the U.S. last year, a market he predicts will reach $46 billion by 2026.) But Cosmides and his business Victor Hugo’s partner, Mr. Cruz, had to look for a new supplier. It was closer to home. In the fall of 2022, the company moved its production line from Ford’s River Rouge plant to Detroit, a few miles away.
It seems counterintuitive to make a high-end product in small quantities in the United States. But as Cosmides explains in Forbes’ new series, “Serial Entrepreneurs,” the move has given Vera’s team better control over quality. Over breakfast, Cosmides talks about big money, bigger mistakes, and what women really think while riding electric bikes.
Mickey Luckin: What will you eat today?
Justin Cosmides: I brought a mug full of granola, my personal favorite. And sure, you can also eat cereal from a bowl. But when I eat it outside with a mug, it somehow reminds me of my school days.
Luckin: Eric has Fruit Loops. He brought Honey Nut Cheerios because they reminded him of his childhood and riding bikes. Justin, you met your business partner at a wedding in Italy. Want to relax and enjoy an Aperol Spritz?
Cosmides: Our conversation definitely included an Aperol spritz, as well as boats and music. However, there was too much talk about bicycles.
Eric Ryan: That’s always a sign that you’re on to something. Vela When did you make the transition to full-time? People take different approaches to crossing that chasm. Some people really need the safety net of a paycheck while they chase their dreams. Some subscribe to the belief that the hungriest wolves hunt best.
Cosmides: (Laughs) Is this a circle of trust?
Ryan: absolutely. It’s just us. And the reader is Forbes.
Cosmides: I’m not ashamed to let you know this.i worked at a bank and Launched this brand and became CEO. But my investors let me know that if we were going to go all in, we needed to go all in together. It was a scary jump. It causes a lot of anxiety. I didn’t grow by means of anything. Both my parents were entrepreneurs.
Luckin: How tight was money when you were growing up?
Cosmides: My mother was a yoga teacher. She started her own practice. My father ran several computer companies. What I’m saying is 90% fail and 1 succeed. Then one of them got really bad. My sister is only a few years older than me, but she grew up with vastly different experiences due to the timing of whether or not a company would be successful. I supported most of my university life with student loans. He also bought, sold and traded sneakers.
Luckin: Where did you buy your sneakers? I went to school in Vermont during the early days of e-commerce.
Cosmides: I have built mini-networks from Japan, Brazil, South America, and Europe. I still have kids who come up to me and comment about the time when they had 160 pairs of sneakers piled up in their dorm room.
Luckin: Do you have any nostalgia for your time in investment banking?
Cosmides: expense account. First class on flights of 4 hours or more. I miss my daily schedule and how my day goes.
Bella vs. China
Luckin: OK, then go all in. But then the Chinese factory that produces Vera bikes basically fires you to work at Walmart.
Cosmides: Walmart came in and bought the entire supply chain in two years or something, and we were forced out of the factory. Let me preface this by saying that I didn’t see it coming. But literally from day one, we had problems getting inventory into the United States. There were quality issues. Everything from rotating brake pads to installing the wrong components were to blame. We took the bike to Brooklyn, reworked the bike, and then shipped it from here. It was a very expensive endeavor.
Luckin: However, making high-end products in small batches in Detroit isn’t cheap. I’ve read that it costs about $300 per bike. Have you passed that cost on to your customers?
Cosmides: We split it. We took the damage and gave half of it to the customer. It’s definitely expensive to produce in Detroit. But when you look at a bike’s lifecycle, that’s just one piece of the puzzle. Or focus on inventory management, shipping, and customs duties. More and more industries are realizing that globalization that relies entirely on external sources may not be a good idea. Onshoring, nearshoring, these terms are all becoming more common in the manufacturing industry. As you scale up, your costs will naturally come down.
Luckin: Is “Made in the USA” the same selling point for Gen Z and Millennials as it is for baby boomers? Or do young people see it as some kind of patriotic thing?
Cosmides: Great question. Let’s take a look at Gen Z and their approach to fashion. Recycled and vintage are very popular there. They really identify with this idea of quality.it’s ours [as a country] I used to do really well. Moving production to the United States results in higher quality. It’s actually just confirming that the message exists.
Ryan: What’s stopping more Americans from adopting electric bikes? Is it price?
Cosmides: We are always trailing Europe in terms of cycling statistics. There’s clearly a price point. But if you look at Europe, there are markets like Switzerland and Germany, where 50, 60, 70 percent of the bikes being bought are electric bikes. In America, they are still in their early teens. However, 94% of the population knows how to ride a bicycle. You have this huge opportunity for growth. During my trip to Detroit, I read a lot about the early automobile industry. There are many similarities. People don’t look at bicycles from an asset perspective, but from a consumption perspective.
Luckin: Does that mean we need to think about the resale market?
Cosmides: These are great devices to have on the road.We have unique opportunities because we have production here 1697562991 To keep those bikes on the road. It is both a sustainable small S and a sustainable big S from an economic and environmental perspective.
Ryan: I was an early adopter of e-bikes. I bought an electric mountain bike. I was surprised that many of my analog mountain bike riding purist friends scoffed at it. Now everyone has switched. It is very fun.
Luckin: Oh, but you’re in Marin County. I’m in LA and everyone here is staring at their phones and driving huge SUVs. I want an electric bicycle. But I also want to not die.
Cosmides: It’s unfortunate that that is also a factor. When I was a banker in Los Angeles, I had an electric bike.
Luckin: When you came here for work?
Cosmides: I rode my bike from Venice to Century City. And then I beat up a colleague in a suit and took him to the office. It surprised people. I would go out on dates and show up on my bike. Girls will say, “Wait a minute, I thought you worked at a bank?” “I think it’s the most efficient way to get around the city.”
Luckin: Were women interested in this?
Cosmides: The jury is out. That’s a good reason I moved back to the East Coast. But back to the topic. Cities like LA are really great bike cities. Bike lanes and safety are only going to get better. We will continue to get better and better.
learning curve
Luckin: Can you tell me about a mistake you made and what you learned?
Cosmides: Starting a new company damages not only your friendships but also your closest relationships with your partners. And I would like to be less careful and less attentive to that fragile relationship — that’s a tough sacrifice for everyone around you. you don’t realize it. But it’s like the splash zone at SeaWorld. Everyone feels it.
Ryan: Thank you for sharing that. That’s true. I think entrepreneurs are always very influenced by location. What has Detroit taught you?
Cosmides: Resilience, to keep fighting no matter what. Moving to Detroit was a bit of a hurray. The brand was not doing well due to its dependence on China. But it doesn’t feel like a coincidence.
Ryan: There’s an old cliché that entrepreneurs who fail simply give up too quickly.
Cosmides: Before Henry Ford built cars, he built bicycles. There is no reason why the United States cannot become the absolute leader in electric mobility. For an industry projected to exceed $94 billion by the end of the 2010s, Detroit has a real opportunity.
Ryan: When we were building Method, Adam Lowry and I were trying to do it in Detroit. I grew up in Grosse Pointe and still have strong roots there. The city was on the verge of bankruptcy and they were directing us to the wrong site. They just couldn’t get their act together. I went to downtown Chicago instead. But Detroit now seems to be figuring out how to actually attract companies.
Luckin: What’s the ending for Bella? Are you selling it to Schwinn? What is an off-ramp?
Cosmides: Offramp is about having a beautiful brand that is stable, solid, profitable, and slowly expanding. That’s really all I can ask for.
Luckin: got it. If I’m in Detroit on a Friday night, where is Team Vera having a beer?
Cosmides: (Laughs) UFO bar. Great funky records, $1 beer. The Anthony Bourdain episode in Detroit is a must-watch. I still feel cold. If you get tired of reading about the early automobile industry, replay it on the plane.
Luckin: Back to cereal, what is your morning routine? Do you meditate?
Cosmides: As the son of a yoga teacher, it’s definitely important to stretch well. My combination is a good stretch, coffee as soon as possible and then taking the dog out. You don’t want to talk to me before drinking coffee.
This conversation has been edited and condensed for clarity.in episode 3Blank Street founders Issam Freiha and Vinay Menda talk about cold beer, the surprising reason it won’t open in Los Angeles, and — yes — trolls.