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Sunday, December 10, 2023

Cowboy insists it’s not the following VanMoof because it raises costs to ‘keep wholesome’

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Cowboy and VanMoof are two very related e-bike corporations, which is why we’re all questioning if Cowboy shall be next to file for bankruptcy now that the period of free VC cash is over and profitability is essential to survival. This week Cowboy launched a less expensive no-frills e-bike configuration forward of yet one more worth improve. Strikes which have solely intensified scrutiny of the boutique Belgian startup.

However, Cowboy CEO Adrien Roose tells me that the electrical bike maker is on safer footing, regardless of all of the similarities.

For instance, each European e-bike makers took on millions from buyers in recent times whereas posting heavy losses during times of speedy scale up. Each concentrate on direct-to-consumer gross sales of premium, software- and sensor-laden e-bikes assembled from plenty of customized components, and each Cowboy and VanMoof needed to safe further funding earlier within the yr to take care of unexpected operational challenges in a post-pandemic e-bike market that has cooled off significantly.

From left-to-right: the Cruiser ST, Cruiser, and Traditional.
Picture: Cowboy

This week, Cowboy launched a cheaper (however nonetheless not low cost) $2990/€2490 “Core” configuration of its Classic, Cruiser, and Cruiser ST models that gives fewer options, like changing the maintenance-free Gates Carbon belt drive with an oily chain-drive, because it raises costs elsewhere. That’s eerily much like VanMoof’s product trajectory with the launch of the cheaper scaled-back S4 after elevating costs on its overwrought S5 flagship, all simply two months earlier than the corporate went public about its dire financial situation.

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Cowboy’s Core e-bike configurations solely are available black, lack a wi-fi charger beneath the built-in cellphone mount, and ship with a slower charging brick. Cowboy informed Dutch-language Bright magazine that the upcoming worth improve from $3490/€2990 to $3790/€3290 on August 1st for its belt-driven (now referred to as “Efficiency” configurations) e-bikes was required to “keep wholesome” (extra on that later). Those self same e-bikes had been priced at €2490 when launched in Europe two years in the past and as little as $1990 when first introduced to the US — again when startups might promote their electrical bikes at a loss because of the seemingly limitless provide of investor capital.

Cowboy goals to additional justify the distinction between the Core and Efficiency configurations via software program. Shifting ahead, Cowboy e-bikes configured for Efficiency will profit from the in any other case elective $300/€300 Cowboy Join software program options like adaptive energy, crash detection, and three new Google Maps options to share dwell journey information, alert the rider to approaching hazards, and the power to decide on a route primarily based on the perfect air high quality. Cowboy Join additionally unlocks the e-bike maker’s first Apple Watch app. All good to have, I suppose, however definitely not important to the operation of an e-bike.

So yeah, like VanMoof, Cowboy e-bikes are high-tech proprietary computers-on-wheels with a function set that may, at instances, verge on gimmickry. However, Cowboy needs you to know that it’s completely different.

“Cowboy is in a really completely different place to VanMoof,” insists Cowboy CEO Adrien Roose in an e-mail change with The Verge. “Our key stakeholders together with our buyers, provide chain and distribution companions and workers are absolutely supportive of the marketing strategy we’re executing.”

The large distinction between Cowboy and VanMoof is the prospect of profitability: Cowboy has repeatedly stated that it’s shut, after having posted EBITDA losses of round €21 million over the previous couple of years; however VanMoof by no means was, having reportedly misplaced almost €80 million in every of the final two years. 

Final week, Cowboy issued a press launch titled “Cowboy on monitor to profitability with break at the same time as of Q3 2023.” Nonetheless, Roose now tells me that the corporate is “on monitor to realize our aim of profitability throughout the present quarter, and on a full yr foundation subsequent yr.” In fact, profitability could possibly be €1, however even that can be a primary for the six-year {old} firm after a historical past of losses. A worthwhile 2024 will surely be notable.

Cowboy co-founder and CEO Adrien Roose on a C4, aka Traditional again at its launch.
Photograph by Thomas Ricker / The Verge

Roose cites “significant income progress” for every month this yr up to now for his optimism concerning the quarter ending on September thirtieth, in addition to “sturdy gross sales” via July following the launch of its more upright and comfortable Cruiser e-bike on July third. “We count on gross sales to exceed our goal which can make it the perfect month of the yr up to now.” 

Roose lists a couple of different notable variations between Cowboy and VanMoof:

  • Cowboy assembles near its clients in Europe. (VanMoof’s e-bikes had been assembled and distributed to clients from its manufacturing unit in Taiwan.)
  • Cowboy has advanced from a D2C-only enterprise and now distributes its bikes via an increasing vary of unbiased bike sellers and retailers. Via these bike sellers the corporate can also be reworking its after-sales mannequin. (VanMoof’s direct-to-consumer assist was nearly completely carried out at about 50 branded shops in choose cities, whereas Cowboy is at the moment working with over 100 unbiased bike shops to promote, restore, and repair its bikes with one other 200 scheduled to come back on board in Europe this yr.)

To “keep wholesome,” Roose candidly explains that the August 1st worth improve is required to make sure that cheap revenue margins exist for each Cowboy and its new community of unbiased bike store companions. Roose additionally cites a number of different metrics to exhibit the corporate’s relative operational well being: 

  • Cowboy stock is down 50 p.c from a yr in the past and its working capital place is secure.
  • Cowboy is attaining 40 p.c gross margin on new bikes bought.
  • Manufacturing prices are down 20 p.c.

So, when you won’t like Cowboy’s worth improve, that coupled with operational efficiencies throughout the board could possibly be the distinction between your costly e-bike working for years, and, nicely… VanPoof! [Editor’s Note: credit to ex-Verge Dieter Bohn for sliding that and “VanOOF” into my DMs on the day VanMoof declared bankruptcy.]

Regardless of the chance VanMoof’s exit presents, which was acknowledged by Cowboy’s cheeky release of the Bikey app (that has earned the corporate oodles of goodwill in VanMoof communities), Roose appeared genuinely distraught over VanMoof’s demise after I met with him on a video name, a sense that was additionally expressed by fellow Cowboy co-founder and CTO Tanguy Goretti.

“Whereas a whole lot of people shall be fast to leap weapons and criticize VanMoof, I feel they nonetheless deserve some recognition for his or her achievements,” wrote Goretti on Linkedin. “They’ve helped change the face of the business and the notion of e-bikes since they began 14 years in the past (!). They made it cool when it was a product primarily utilized by our grandparents. They really had a Positive influence on cities and never a small one.”

RIP, VanMoof — you’ll always be my first.

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