eBike Biz: eBliss Global CEO Bill Klehm

Sea Change Radio

If you live in a hilly city (like I do), riding a bike for a quick errand can be an arduous proposition – at least that was true until the advent of electric assist. E-bikes now comprise a healthy 5% share of the bicycle market in the U.S. And as many new owners are discovering, e-bikes can offer a viable transportation alternative, reducing or even eliminating the need for a car. This week on Sea Change Radio we speak with e-bike executive Bill Klehm to get a snapshot of the industry, hear where he believes e-bikes are heading, and learn about his company’s unique distribution model.

Narrator | 00:02 – This is Sea Change Radio covering the shift to sustainability. I’m Alex Wise.

Bill Klehm (BK) | 00:20 – I do think that the ride share investment that’s now being doubled on is going to drive up the adoption of e-bikes, because more people will be trying them. You know, IBM in 1973 talked about this whole notion of the seven times rule. You don’t truly change until you’ve experienced and can do something seven times. So with that, the more times we can create these experiences, the more opportunities we have to touch a customer and to have them consider our product.

Narrator | 00:52 – If you live in a hilly city (like I do), riding a bike for a quick errand can be an arduous proposition – at least that was true until the advent of electric assist. E-bikes now comprise a healthy 5% share of the bicycle market in the U.S. And as many new owners are discovering, e-bikes can offer a viable transportation alternative, reducing or even eliminating the need for a car. This week on Sea Change Radio we speak with e-bike executive Bill Klehm to get a snapshot of the industry, hear where he believes e-bikes are heading, and learn about his company’s unique distribution model.

Alex Wise (AW) | 01:37 – I am joined now on Sea Change Radio by Bill Clem. Bill is the CEO of e Bliss Global Bill. Welcome to Sea Change Radio.

Bill Klehm (BK) | 01:47 – Well, thank you very much for having me. Um, wonderful opportunity to kind of talk about one of my major passions, and that’s e mobility and e-bikes. So thank you.

Alex Wise (AW) | 01:57 – Pleasure to have you on the show. So maybe you can give us a backdrop on the industry and where eBliss Global’s model fits in all of this.

BK | 02:06 – So, in 2016, there was 60,000 e-bikes sold in the US this year, by all stretches of the imagination, it’s gonna be about 2.5 million. Keeping in mind that Toyota sells about 1.8 to 1.9 million cars. So e-bike industry in the United States has no, has now crossed over to a mass market product. Um, and it is now what I call a market segment of one. So that means that different channels of distribution, different product segments are starting to emerge. And what we, what we’ve done is taken a clean sheet approach to the industry. So in 2003, I started a company and made transmissions. So I made transmissions for the bike and e-bike industry, largely in Europe. So I got to sit around the campfire and watch Europe go from basically nothing to four or 5 million e-bikes a year over the period that I was, I was there with selling product. And so we decided to take a different approach to the US as we see the US taking a similar approach now to Europe in that e-bikes are becoming a fundamental piece of transportation, not just a toy. So one of our taglines is we are, we are transforming toys into transportation. So our, our approach is to take a and redesign the entire experience. So products are interesting, but what products do is create an experience for the consumer. And that experience, in our opinion, for a mass market product means one of no compromises. So customers who are buying these products today aren’t really interested. They aren’t in cyclist enthusiasts, they aren’t people who like chains. They aren’t people who like derailers. They aren’t people who like maintenance. They want to like the experience of riding an e-bike and or a bike. And so we’ve designed our bikes to be as maintenance free as possible. We’ve redesigned the system. We put a VIN on all of our bikes. We trace all manufacturing issues. There’s 73,000 component manufacturers around the world of e-bike components. There’s 73 manufacturers of e-bikes in the us. What we do differently than almost everybody that I’m, I’m aware of, um, is, is I believe that we design and manufacture bikes for consumers to enjoy. And that is to enjoy for a long time. So the majority of maintenance that’s required on our bikes are brake pads and tires. We don’t have chains, we don’t have derailers. Everything is sealed. We put, like I said, a VIN on all of our bikes and trace all manufacturing. Our bikes are UL listed. So that’s our, our approach is we wanted to create an experience for a customer that is an experience where the ownership experience is one that does not have compromises. So that’s, that is our approach to the industry today.

AW | 05:03 – And your distribution model is interesting. You, you’ve been piggybacking on, you mentioned Toyota, there are car companies that are selling Always Bikes as well.

BK | 05:15 – So we have, so we have several channels of distribution. So one, we sell a private label, um, group of bikes to a, to a company called Tomberlin that makes, um, very nice low speed vehicles. So neighborhood electric vehicles, um, we’ve private labeled with them. They were our kind of our launch partner so we could get the products right, the supply chain nailed down control distribution. And then what we decided to do is we decided to launch with automotive dealerships. So there are 17,000 automotive dealerships in the United States. Last year they did $1.2 trillion of revenue. The US auto dealer market is the largest distribution system on the planet for tra for selling transportation equipment. They’re the healthiest, um, every single vehicle in the last 150 years save Tesla has been sold to a car dealership. So they already have all the customers. And what we’ve done is we’ve created a line of bikes that kind of look, feel, behave like a car. They’ve got a vin, um, you know, we, we manage maintenance. We, we, we make these things as trouble free as possible from an engineering standpoint. And then we believe that auto dealers, um, we believe auto dealers are very attracted to this. We’ve got dealers in Hawaii, we’ve got dealers in Los Angeles, we’ve got dealers in Michigan, got dealers in New York. We’re rolling out dealers across the United States as we speak and we’ve had an amazing welcome by the 17,000 auto dealers in America.

AW | 06:48 – And so how would a prospective customer at an auto dealer come to buy one of your bikes?

BK | 06:57 – Sure, absolutely. So there’s, there’s, there’s four primary channels right inside the auto dealer. One is the dealership employees. There’s 1.8 million dealership employees that work at car dealers. So the first thing that we do is we make the dealership employees owners.

AW | 07:12 – And they’re usually pretty good salespeople.

BK | 07:15 – You know, they’ve sold a few things in their lives, right? But we believe strongly that auto dealer personnel can’t sell something they don’t experience and don’t live they live cars. Um, but what they really are beginning to live are transportation solutions. By the way, just as an aside, there’s 119 million solo rides in a car every day with 30 million of those, or less than one mile. So one of our mantras is we want to own the one mile ride. And that mantra works really well with the car dealers because they understand this whole model, right? Car consumers, you know, they’re, they’re a little bit tired of getting in a car, driving in a traffic jam for a mile. So what we want to do is to help them own the mile. So our job is to provide the auto dealers with a set of solutions that they can sell to their customers as a part of their customer’s garage, right? We call it a hybrid garage. We believe that the garage of the future is going to, is going to have an internal combustion engine vehicle. It’s going to have some form of an electric vehicle, and then it’s going to have some form of urban mobility or e mobility. And that’s where we believe we fit in. So as a car dealer, what you really want to do is to sell them a package of transportation equipment so that the consumer can then satisfy all of their needs to get from point A to point B.

AW | 08:38 – You mentioned the vehicle, uh, actually before I ask that question, so you brought up Tesla as one of the exceptions to the dealer model. I, I’ve been to a Tesla dealer and was very surprised by the experience in that their salespeople are not car people. Like if you were a 20 year veteran of selling cars at Chevy, I don’t think you would necessarily be able to just slide right into that job at Tesla. It seemed like these people selling the car were just there to as almost like a, it was almost like an Apple genius bar. They were there to just connect people to their phone, to the app, to the car. They were just like, any questions they had, they were like, oh, it’s in the app. It’s, it’s all in the app. . Like they, they didn’t care about the brakes or the, the transmission or whatever might be involved in this, uh, in, in the, in the guts of the car, which is what a lot of car people tend to think of themselves. Like, we, we wanna know about the engines and things like that, but they were just like, Nope. Just, uh, you know, you, you gotta put your Bluetooth on and then you connect it and you’re on, you know, off and running. It was very interesting kind of, shift from, from a consumer standpoint, which obviously has resonated with people.

BK | 09:56 – Well, again, you know, so whether there going to be 16 million cars sold in the US new 35, 40 million used cars, 106 hundred 86 million people with cars in the us. So Tesla is still a drop in the ocean. It’s a great drop, right? So, don’t get me wrong, I’m, I’m a huge fan of Elon Musk and the effort that he’s put in to redesign the industry. Um, but I do think, you know, car dealers have the most capital of any distribution system, a $880 billion on their balance sheet. But the other thing that’s happened to car dealers in the US is their margins have been squeezed, right? The average car dealer makes $716 on a new vehicle. The average vehicle is $50,000. So how many businesses would you start to take $50,000 and make 715? Not many. So we believe giving an attractive margin on a 3000, $3,000 on average e-bike, um, we believe that that’s a, uh, we believe there’s a fantastic opportunity. So one, we target the employees. Two, we look for opportunities to bundle an e-bike on a new vehicle purchase. So typically a pickup owner, a Bronco, a Ram truck owner.

AW | 11:14 – Oh, where they could throw the bike into the car easily without a rack?

BK | 11:18 – Or you sell them a rack and a, and a and a couple bikes. Again, you’re not going to sell a ton of them, but you know, but it’s 17 million new vehicles sold. You don’t need to sell an awful lot of them to kind of create a tipping point. Mm-hmm, the third, the, the, the third are 1.1 million consumers every day walk into an auto dealership and spend money. 1.1 million people a day walk in and spend money. That is the largest traffic in the transportation, uh, segment in the US that are going in and spending money. So now you offer them an opportunity for a test ride while they’re in the dealership. And now the dealership has an opportunity to sell them. As I mentioned, the numbers 2.5 million e-bike sales this year. Their customers are buying these. So one of my conversations with a car dealer is, do you want to sell them or do you want somebody else to sell them because if you want to sell them, we’ll sell you. The third big subsegment is when you look at the, the demographics of the ridership in America, and you understand that the average 25-year-old, between 18 and 25, only 60% of them have their driver’s license. The young people aren’t getting their driver’s license anymore.

AW | 12:32 – But they all have a phone.

BK | 12:33 – They all have a phone, and you know what? And they all ride share and they all scooter share and lots of them are buying e-bikes. So we think that, so that’s another segment that we offer for the dealers to be able to now, so one of my comments to a car dealer is, do you want to be the first person to sell that young person a vehicle? because when they are going to buy a car and they eventually will, don’t you want to be the person that sold them their first vehicle? And, and that pitch has gone over very successfully. Again, one, the product needs to be unquestionable, needs to be low maintenance. Two, it needs to be intuitive because the, the consumer itself, they don’t want to figure out derailers and chain rings and gears. They don’t want any of that stuff. They don’t want noises. They want a experience, right? They want somebody to engineer a product to create an experience. And that’s what we do, right? It’s never what you say to people, it’s how you make them feel. It’s never what the product is built for. It’s how the product makes you feel as a consumer. And our product, we believe is one of the best ones in the marketplace because it makes you feel fun. So that’s important.

(Music Break)

AW | 14:43 – This is Alex Wise on Sea. Change Radio, and I’m speaking to Bill Clem, he’s the chairman and CEO of e Bliss Global. So Bill, you mentioned earlier about targeting these auto dealer employees. Can you expand on that? Do you give them bikes or just a big discount? How do you target them?

BK | 15:03 – So, you know, we make it easy for the dealers to, to have the employees join. You know, si similar to when I worked at Ford, I worked at Ford Motor Company for a long time. Love the company, love the industry. But one of the things that we did very successfully is we offered friends and family of the company, um, discounts called a plan B Plan X plan. So very similarly, we offer for the dealership employees an introductory offer for a sub-segment of that dealership employee base, because we want them to be owners. We want them to be able to communicate the experience of riding and experiencing our product to a consumer. Nothing will sell the genuineness of who you are if you are coming from the experience of the product itself. So we think that that’s a, we think that that’s a hugely important step.

AW | 15:51 – When somebody’s thinking of buying a bike, why would they want to buy an e-bike versus a regular bike, for example, in San Francisco, it’s very appealing with the hills to be able to kind of flatten the world.

BK | 16:05 – So e-bikes are, you know, so what 20% of the US population has a bike or an e-bike of some kind in their garage. Whether they’ve ridden it or not is another question. But there’s lots of bikes and e-bikes out there. I call them analog bikes versus digital bikes. The e-bikes are the digital bikes. Um, I think one e-bikes, um, have captured the imagination of the consumer because they give the consumer the confidence that this bike is, you know, they can just take off, right? It’s just, it gives them a little bit more, uh, they’re, they’re not intimidated by the hill. Your San Francisco example is a great one, right? They aren’t intimidated by that hill. So the average E-bike rider rides 30 to 50% longer than the average analog bike rider. They get about the same amount of exercise because they ride longer. And the e-bike gives them confidence. It’s kind of that bridge between a motorcycle and a bicycle is what the e-bike is, right? So non-Dept. of Transportation (DOT) approved doesn’t have a license, doesn’t have all that stuff. So those things that consumers see that as a nice interim step.

AW | 17:09 – And also you don’t necessarily have to prepare for a workout with an e-bike. When I first moved to San Francisco, I lived on the top of a hill, a big hill, a San Francisco hill, like a mountain, basically . And if I want, and you mentioned earlier about how you want to try to really focus on that one mile. I wasn’t riding my bike just to go down to the store and get a gallon of milk, you know, I, I, that would be a workout. So once I got an e-bike, that changed, you know, I, I found myself using it much more for errands. And then similarly, people do that with commutes. You know, they don’t wanna get all sweaty if they don’t have like a shower to use at the office. So they may wanna be in their, their business attire, and they can do that with an e-bike.

BK | 17:52 – So again, you’ve, you’ve done a great job of laying out the case for an e-bike. So the biggest, the biggest hurdle for e-bikes is trial. So if customers, I can’t even tell you how many consumers that we’ve done ride and drive events, and they’ve said the same thing. I’ve been looking at these, I didn’t know what a good one was. I see these things ranging from, you know, $200, $700 to $7,000. What’s for me? So they don’t, they, a lot of times they don’t have somebody to talk to about that. And then quite frankly, the other thing is they haven’t been made, it hasn’t been made easy to test drive the product. And trial is, this is a trial based market. If you, if you are at all in the market for a, for an e-bike and you try one of our bikes, it’s an experience, right? I talk about the feeling, right? The design guys for my bikes, you know, their, so their requirement is the drive train has to feel like it has to feel like the hand of God is pushing you along, right? So that’s, so that’s, that’s the requirement of the design of the system that we’ve created.

AW | 19:03 – And the lowest hanging fruit for this trial system is this rental network that exists. Lyft is doubling down on, on their investment in this. And I know Uber’s also made big investments in this space. I remember the thing that introduced my wife to e-bikes was we rented a, a Lyft bike and she drove it around the city and was just over the moon about it. It was like, I remember her saying, everything’s downhill. Why don’t you expand on, on the opportunity that these rental bikes afford?

BK | 19:37 – So one, let me reframe your wife’s comment. Your wife felt confident in that bike to flatten the hills and to have, and to create an experience that she wanted to enjoy. She could see the experience she got on the bike and that experience connected with her. We do think that rental, rental and ride share bikes and these kinds of things, this definitely opens the door. Lyft I think, I’m not sitting in the boardroom, I’m not making financial decisions, but Mike can only assume that they look at the trends of what’s happening in the marketplace. The second thing I think they’re looking at is the safety factor. These scooters with the small little wheels on streets, and they, they, they aren’t all that safe, right? So consumers wiped out, and lots of them in Austin, Texas, I can tell you where I live, you know, the emergency rooms on Saturday and Sunday night have a long line of people that have spilled out on those small wheeled scooters. E-bikes are definitely safer than those are. So I do think that the, the ride share investment that’s now being doubled on is going to drive up the adoption of e-bikes because more people will be trying them. You know, IBM in 1973 talked about this whole notion of the seven times rule. You don’t truly change until you’ve experienced and can do something seven times. So with that, the more times we can create these experiences, the more opportunities we have to touch a customer and to have them consider our product.

AW | 21:10 – You mentioned the addition of a VIN number on your bikes. Why have traditional bikes not included them? And, and I’m assuming that the advantage of this is reducing property crime or what, why is this important?

BK | 21:25 – For sure. So one, the 17 characters of a VIN on an automobile are used for several things. One, it’s a unique identifier on the vehicle itself. So you track, you track everything on that car, what was in that car. So there’s a decoder that will tell you what came in that car based on that vin, we do the same thing. So one, where do the, where do those parts come from? One of the largest problems in the e-bike industry in the US today is getting replacement parts with 73,000 component manufacturers in Asia and around the world, getting components is hard. So we put full traceability on every part we make, right? We know every component. We know the operators that touch those bikes. We know what was put together. We have a recording from the bike being taken out of the box and the inventory of parts to the bike being assembled and dropped to the customer. We use that VIN as an anchor point to do that. So when I was setting up the company I went to go see in China, happens to be a very large bike manufacturer, e-bike maker, huge. And when I made the pitch on what we were planning on doing, he said to me, well, why are you putting a VIN on this? This isn’t a car. And when we walked out of the room, I turned to my team and said, okay, we’re not going to go with this guy because they don’t understand the market. They don’t understand what consumers are wanting. Consumers want traceability, they want accountability of the manufacturer. Um, they want to know that the manufacturer thought enough about them as a consumer to trace and track everything associated with that product. I call it a vehicle. So with that vehicle, you know, we take the time to trace all of those elements so that we can manage that customer’s experience. How in the world can you manage a relationship, you know, an extended relationship over time with a consumer if you don’t know how to be able to get consumers the parts and you don’t know what the failures are going to be of those parts and you don’t have all of that stuff in a database where you can talk to customers about it.

AW | 23:26 – I think one of the challenges that customers face in choosing e-bikes, and, and I would imagine one of the challenges you’re speaking about in terms of maintenance is that the industry in terms of service has really bifurcated itself into analog and digital bikes. There’s a lot of shops who won’t touch an e-bike and vice versa. I remember test driving a Van Moof, which was like a closed loop system, beautiful bikes, very affordable and like, but it was very tech oriented. It everything connected with your phone. But one of the reasons I didn’t buy one was they said, all service is free, but you have to bring it to one of our Van Moof dealers. And to me that seemed like a, if you were out in the middle of nowhere and your bike breaks down, you want to bring it into a local bike shop and have them fix it. Like, I was like, well, how many Van Moof dealers are around? They were like, there’s like two or three in northern California that didn’t seem like that was going to be super convenient if I was stuck on the side of the road somewhere. So you, you mentioned that your bikes are, they’re not just an electrified traditional bike. So how would a consumer deal with getting stuck on the side of the road and being able to come into any bike shop and getting somebody to help them out?

BK | 24:51 – So we believe one that you design and engineer an experience. So all of our bikes go through a full battery of testing. Typically when a manufacturer puts a bike through a test, one test is done per bike. We take one bike and put it through all the tests. So we want to test the entire bike to complete failure. So that’s a, that’s an automotive technique in which the systems and subsystems are tested and validated. So one, we know when the bike’s going to fail and that’s engineered in. So to your point, this is not a bicycle that you put electric components on it. This bike is specifically designed to go through a consumer’s lifetime and experience and should only have to replace brake pads and tires for the usable. So we have a three year bumper to, I call a bumper to bumper tip to tail warranty. Um, again, maintenance of brake pads and tires aren’t covered, but pretty much everything else is lifetime on the frame.

AW | 25:44 – But if you pop a tire, you can go into a regular bike shop.

BK | 25:47 – With a tire, you go into a bike shop and get your tire patched, right? So again, it’s it, most bike shops will do non-electrical components on replacements like tires, right? Tires are the number one thing that fails. If I can come up with a pop proof tire that’s affordable and has a good experience, I’m going to tell you we will have one. And if I can come up with a way to break the bike without having brake pads, we’ll do that as well. So we think that is what consumers want. Remember we flipped over from 60,000 to 2 million e-bikes. The customers who are buying those, they’re not mountain bikers, right? They’re not going to change their chain ring and they’re not, they’re not going to do any of that stuff and they’re not going to tolerate having to do it. They want an experience.

AW | 26:31 – They don’t have their own toolkit that they’re traveling around with like a, a cycling enthusiast.

BK | 26:37 – Yeah. And, and so, so again, that is, so that channel of distribution is a car dealer. So we’re not going to sell E-mountain bikes because those are very technical sales. I love them, but that’s not going to be our market. Our market is the commuter. The second market that we have is cargo and delivery. So cargo and delivery vehicles and replacing those vehicles, cargo and delivery bikes. That’s a, that’s our second segment that we’re going to be approaching here this year. Um, and again, all those fleet vehicles who deliver today, they’re all sold through car dealers. So those same fleets, those same dealerships are calling on those same fleets to sell them now a cargo bike versus a, versus a regular versus a regular cargo van, um, for various usage cases. Back to your other question. So the dealer’s responsible for taking care of the customer. We’ve got a logistics network for service and things like that. Some of our dealers already have service vans that they have on the road today to do remote service, which is a huge trend in automotive. Wonderful thing. They can also sell, deliver and service e-bikes. So again, it just, it allows the dealer, he’s driving the vehicle out anyways. Why not improve the revenue per minute while the dealership employee is running around?

AW | 27:54 – Bill Klehm is the CEO and chairman of eBliss Global. Bill, thanks so much for being my guest on Sea Change Radio.

BK | 28:00 – Thank you very much. Enjoyed it.

Narrator | 28:16 – You’ve been listening to Sea Change Radio. Our intro music is by Sanford Lewis. And our outro music is by Alex Wise. Additional music by Moby, Harry Manx and Kevin Breit. To read a transcript of this show, go to SeaChangeRadio.com to stream or download the show or subscribe to our podcast on our site or visit our archives to hear from Doris Kearns Goodwin, Gavin Newsom, Stewart Brand, and many others. And tune in to Sea Change Radio next week as we continue making connections for sustainability. For Sea Change Radio, I’m Alex Wise.