A year ago, the Electric Bike Co. was going great guns with a 78% year-over-year rate of revenue growth.
Now, thanks in part to the coronavirus, the Newport Beach-based company is clipping along at an even faster rate, 228% to $10.5 million for the year ended June 30.
“We’re busier than we’ve thought we’d be,” founder Sean Lupton-Smith said during a tour of his facility along Superior Avenue.
“COVID has helped a lot. People want to get out and exercise.”
That revenue growth translates into 483% over a two-year period, ranking the Electric Bike Co. No. 2 in the Business Journal’s annual list of the fastest-growing companies for firms between $10 million and $99.9 million (see Special Report, starting on page 15).
It’s one of two notable local makers of pedal-assisted bikes seeing a boost in sales amid the pandemic.
Fountain Valley’s Pedego Electric Bikes ranks No. 37 on the same list, with two-year revenue growth of 27% to $24 million.
Quite the Ride
Lupton-Smith, a 51-year-old native of South Africa, has had quite the ride to end up in Newport Beach.
He arrived in Atlanta 24 years ago with $900 in his pocket at the invitation of his brother Mark Lupton-Smith, a former professional tennis player (ranked 600th in singles, 200th in doubles) to help him run his restaurant.
The pair eventually built their business to five restaurants before tragedy struck.
“My brother was killed in a hit-and-run accident in Atlanta,” Lupton-Smith recalled. “That was a shocker. He was my best friend.”
Lupton-Smith eventually built his business to about 15 different restaurants in Georgia, including a couple that operated 24/7 at the Atlanta airport. He was involved in a non-compete lawsuit that eventually went all the way to the Georgia Supreme Court.
While he won that case, he decided to leave the restaurant business, taking his winnings from the lawsuit and remembering what Mark once told him.
“My brother said Southern California was the best place in world,” he said. “I left Atlanta with my duffel bag, my cellphone, a watch from my brother and my wallet.”
He eventually made his way to Newport Beach because of its environment for kayaking, which is one of his passions.
“I fell in love” with Southern California, he said.
He started his bike building as a nonprofit organization to donate vehicles to poor people in Zimbabwe.
After a couple of years as a nonprofit, Lupton-Smith thought he could turn it into a profitable venture. He established the company in 2014 and was able to grab a great name.
“We were lucky to get it,” he said. “We were among the first to realize years ago that electric bikes would become popular.”
The electric bike industry has taken off, by all accounts, as homebound people look for exercise and fresh air.
Ontario-based Aventon Bikes, which are in hundreds of shops across Southern California, told the Orange County Register recently that its sales in the state were up 681% in July compared to the same month a year prior.
The popular Mammoth Mountain resort in July opened a nearly mile-long track specifically for electric bikes.
Among his biggest competitors is the William Shatner-endorsed Pedego, which Lupton-Smith jokes about having “a love-hate relationship.”
Other big competitors getting into the field are Trek Bicycle Corp. of Wisconsin, Cannondale of Connecticut and Raleigh America of Washington. Their websites show some of their bikes can cost upward of $10,000.
150 Bikes a Week
When Lupton-Smith began his company, it built one bike a week at a cost of $1,000 and was able to sell it for $2,000.
Nowadays, it’s pumping out 150 bikes a week, with prices that range from $1,699 to $2,199. A year ago, the bike prices started at $1,500.
Online backlog is eight to nine weeks. He’s almost tripled the headcount from 16 a year ago to 43. He’s running two shifts and is considering a third shift, he said.
His shop has expanded from 1,000 square feet when he began to about 14,000 square feet. His office is the antithesis of the corner splurge as it’s about a 4 feet by 4 feet cubicle, with the faux leather peeling off his chair.
While his factory space is running out, he doesn’t want to leave his Newport Beach facility, which is about a mile from the ocean.
“I just love it here. You feel the breeze.”
Customers custom order the bikes online, picking the model and the colors. The company offers extras such as baskets and fenders that are reminiscent of the old “Woodie” surf wagons and are quite popular with the Southern California crowd, he said.
“We build every single bike to order,” he said. “You design it online exactly the way you want it and we’ll build it. There is an unlimited amount of color choices.”
He’s constantly experimenting, such as hiding the battery at the bottom of a basket in front of the steering wheel.
“Everyone asks ‘where is your battery?’ It’s uniquely done.”
In the past six months, his engineering staff has doubled the range a bike can go without charging to about 250 miles and is working on a 300-mile range.
Some models can go as fast as 28 miles per hour.
This month, he’s launching a $600 product to convert a conventional bicycle into an electric one.
“The more people can see what we do, it’s something that is worthwhile.”
A Level Field
It gets 180 parts from 11 different countries. He said his biggest challenge is competing against Chinese-made electric bikes that have zero tariffs, thanks to a government ruling earlier this year.
“That puts us under a lot of pressure because we pay tariffs on every single part we import,” he said. “We don’t want any handouts. We just want a level playing field.”
Since he’s been in the franchise world via restaurants, he’s not interested this time around. Instead, he sells to about 60 dealers and this summer opened a 1,000-square-foot showroom in Huntington Beach where customers can get assistance building their bikes online. It’s near the corner of Brookhurst Street and Hamilton Avenue.
The showroom generates $600 a square foot in sales, which is “Apple territory,” he said.
About 50% of sales are from online while 35% come from its showroom and another 15% from dealers.
Since other companies making electric transportation vehicles have gone through the roof on public markets like Tesla Inc. and Nikola Motor Co., he might consider an initial public offering. He said plenty of private equity investors have said they’re ready to buy his firm.
“We’ve had a lot of people knocking,” he said. “But what else am I going to do? This is my passion.”