Entrepreneurs riding the road to success thanks to growing bike-based economy

Travis Peebles, is a tattooed, flannel-wearing 27-year-old who opened a bike shop in Detroit Shoreway, an urban neighborhood in gritty, snowy Cleveland. A year ago, he and partner James Rychak launched Blazing Saddle Cycles, which repurposes old steel-frame bikes instead of the more common aluminum.

“Lug steel is desirable for our climate,” Peebles says of the 30-year-old bicycle he currently is fixing up. “It can weather potholes or motorists that don’t watch out for us. It can take the beating of a grown man and withstand the rigors of Cleveland.”

The steel bikes that Blazing Saddle Cycles fix up and sell are like the vinyl records of bicycles: cooler, sturdier, better. Peebles and Rychak buy the bikes at yard sales or off of Craigslist. The older bikes are more durable than the carbon or aluminum bikes rolling off assembly lines in China, they say.

“It’s a dying art form that’s coming back among custom builders,” explains Peebles. “Buying an old steel bike is similar to buying vinyl records instead of CDs – there's a cool factor.”

Blazing Saddle is one of many new bike-based businesses springing up in Cleveland and other U.S. cities that are slowly shifting gears away from years of auto-based development. These cyclists-turned-entrepreneurs are building successful businesses that are both banking on and promoting a growing interest in riding, and in the process they are revving their city's economy.

Cities grow more bike-friendly

Bike shops are just the tip of the iceberg. From bag makers in Philadelphia to custom frame builders in Detroit and a bike-share startup in Tampa, the new bike-based economy is flourishing. The startup ecosystem includes tour companies, pedicabs, mountain bike parks, artisan rack welders, bike rental outfits, bike-friendly bars and app developers.

According to Alison Dewey, Program Manager for the League of American Bicyclists’ Bicycle-Friendly Business program, these businesses are feeding off the rise in bike commuting and the fact that young people are now driving less. A recently released report from U.S. PIRG shows that car usage is declining after climbing for six decades straight. Meanwhile, bike commuting grew 39 percent on average from 2000-2010.  

“Many cities are moving in the direction of trying to make streets more bike-friendly,” says Dewey, citing the growth of bike lanes, cycle tracks and bike parking in many cities, which has made bike commuting safer and more popular. “Studies show that people arriving by bike will spend more money at businesses."

Bikes and all of the trades that feed off of them are now big business. Cycling generates $6 billion per year in the U.S. alone, according to the National Bike Dealers Association.

New York City has gotten a lot of well-deserved credit for developing over 250 miles of bikes lanes since 2006 and launching this spring a bike share program, which debuted with 10,000 bikes spread among 600 stations. Now, cities such as Philadelphia, Tampa, Detroit, D.C. and Pittsburgh are following New York's lead by adding more bike infrastructure.

While many cities have a lot of catching up to do, city leaders are realizing that bike infrastructure is important and are stepping up efforts to create more bike-friendly communities. “Just to keep up with our peer cities, we need to add bike lanes more quickly,” says Jacob VanSickle of Bike Cleveland, citing Indianapolis and Memphis as leaders.

Rust Belt cities shift gears

Even in cities that historically have been known as car-culture havens, entrepreneurs are tapping into the growing momentum of a youth-fueled bike culture. There perhaps is no more car-centric city than Detroit – but even its reputation is changing.

In addition to a cluster of frame builders, gear makers and urban bike shops, the Motor City now has at least six different bike tours, including the annual Tour-de-Troit, which last year attracted over 5,000 riders. Two bike manufacturers, Detroit Bikes and Detroit Bicycle Company, recently set up shop there, and Shinola now makes bikes in Midtown.

Kelli Kavanaugh and Karen Gage are the entrepreneurs behind Wheelhouse, a rental, sales and repair shop that helped pioneer Detroit’s bike scene when it first opened in 2008.

“Detroit is absolutely a good place to be a cyclist,” says Kavanaugh, who offers tours that expose locals and visitors to Detroit’s hidden gems. “It’s not very dense, but on a bike you can pretty much get anywhere quickly. The infrastructure we have here was built for more than double the population; we have wide roads with very little traffic.”

Pittsburgh is another city with a burgeoning bike scene. Although it was once known as an old-school town that was inhospitable to cyclists, the city has won the recognition of the League of American Bicyclists with a bronze-level bike-friendly community award. The advocacy group Bike Pittsburgh also has paved the way for more bike infrastructure.

This year, bike enthusiasts hailed the opening of the Great Allegheny Passage, a 150-mile trail linking Pittsburgh and Cumberland, MD. Warmer months are full of biking events like the Keg Ride, when cyclists pedal across Pittsburgh to a secret destination to drink East End Brewing's Pedal Pale Ale, and the Dirty Dozen hill climb.

"I’ve seen a big change in the last four to five years,” says Gene Nacey of Cycling Fusion, an indoor cycling studio in Oakmont, a suburb of Pittsburgh. Nacey caters to cyclists who want to ride year-round and has developed an innovative “virtual cycling” approach with video footage. He’s also developed a fitness app for cycling instructors.

“It used to be that I could take my own secret shortcuts and never see a soul,” says Seth Gernot of Events Unlimited, an events planner who will lead excursions between Pittsburgh and Washington D.C. along the new trail. “Now I take my shortcuts and there's two to three people in front of me. There are more and more cyclists on the streets.”

Uphill climb in a flat market

But is the U.S. bike economy actually growing? Bike sales have remained flat for years, as has overall ridership. Despite impressive gains, less than one million Americans cycle to work. With the market saturated, competition for bike sales is fierce – in fact, the overall number of bike shops is declining as a result of consolidation.

Although Wheelhouse Detroit has grown each year, Kavanaugh says operating a bike-based business is not for the faint of heart. “Every retailer has to have a niche,” she says. “We also have to deal with competition from the Internet and big box stores.”

Despite razor-thin margins, some bike-based businesses are expanding by catering to the commuter market and offering niche products that are cool, authentic and unique. In D.C., for instance, cyclist Philip Ankney started building bamboo bikes out of his home studio a few years ago. He’s since launched District Bamboo Bikes.

“It’s such a mature market, there’s not a huge difference in innovation – the bicycle now versus 100 years ago is pretty much the same,” explains Ankney, who has revived a style that was first patented in the late 1800s. Bamboo is more resilient than aluminum or carbon fiber. “To maintain your business, you have to do evolutionary innovation.”

“This is a bootstrap business,” he says. “I have a workshop in my house, and I sell bikes at farmers markets and pop-up venues. We’re growing slowly mostly by word of mouth.”

The rise of bike commuting also has created opportunities for businesses to generate products geared towards these customers. R.E. Load bags, a 15-year-old messenger bag company based in Philadelphia, continues to grow as the city’s blossoming bike culture fuels new interest in its products. Founder Roland Burns says he has diversified beyond messenger bags and is now shipping his bags to more countries than ever.

“People have filled in the gaps around us,” he says of the increasingly diverse bike business ecosystem in Philadelphia. “There’s now a pretty good range of stuff that’s made here – panniers, rack bags, clothing, cycling gear. All these little companies.”

Growing the bike-economy pie

As the bike-based economy continues to grow in urban areas where bike commuting is becoming more prevalent, there are signs that its economic impact could be even more far-reaching. Bike-sharing systems have the potential to reach a very wide audience. There currently are about 30 U.S. systems, with D.C.’s Capital Bike Share the largest. When Tampa adds its bike share program later this year, it will join this list of cities.  

“More cities are seeing the value of bike sharing in generating economic activity,” says Andrew Blikken of Tampa Bay Bike Share, which recently contracted with Cycle Hop of Miami Beach, Florida to install a 30-rack, 300-bike system in the Tampa area. The system is now in its final stages of development and should open later this year.

Tampa Bay Bike Share will operate on a privately-financed model in which advertising revenues help pay for the cost of the system. The rest will be paid for by riders, who will be charged $5 per trip, $25 per month or $80 a year to access the system. The bikes have GPS tracking systems and can be locked up pretty much anywhere in the city.

Like New York City, Tampa is not forking over any taxpayer dollars for the system. Such private investment shows the growing clout of the bike economy, says Blikken. “Once bike sharing begins to generate returns for investors, it will explode,” he argues.

For entrepreneurs like Burns, however, size really doesn’t matter. Although he enjoys seeing the growth of bike lanes and other cycling infrastructure in Philly and says that’s good for business, he’s completely fine with his modest, three-person shop. That’s because he enjoys the craft of making bags and working directly with customers.

“We have a small showroom, and past that you can see us making stuff in full view,” he says. “We like making bags that actually mean something. The reactions on people’s faces – it’s rare these days to actually go in a place and see things getting made.”