Back in November, 2017, Pinkbike reported
that Niner Bikes had filed for protection under chapter 11 bankruptcy rules and was seeking investors to stay in the game. At the time, Niner co-founder and CEO Chris Sugai walked us through the details of the court proceedings and was confident that Niner had indeed found a suitor that appeared to be a perfect fit. The Colorado-based investment group was reportedly assembled from bike friendly people who were sympathetic to Niner's rider-driven mission statement. Chapter 11, however, gives the court the final say, on who gets what and goes where. All bidders had to be considered before the process could be finalized.
What the court wanted was a fair deal that would compensate Niner's creditors, while giving the pioneer 29er bike brand a second chance to flourish. What Chris Sugai wanted was to ensure that nobody was tossed onto the street as a result of the sale, and that Niner's team would have the funds to implement future designs they had been working on before the firm faced the stark reality that they didn't have the money or the momentum to fulfill those dreams and remain competitive. Their Colorado connection was put on hold while the court waited to see if a better deal arose. Sugai and Niner had to hold their breath for months before negotiations ended and the deal was inked. In the end, a number of suitors appeared, and the prevailing bidder was an Asian investment consortium named United Wheels.
In the following interview, Chris Sugai talks about the details of Niner's purchase and what the future may hold for the brand.
How did you end up with more suitors for Niner? Were you in better shape than first expected? Are premium MTB brands in demand?Chris Sugai:
We did have multiple bidders surfacing during the process. At the end of the day the chapter 11 process is a very public procedure – everything has to be brought out into the open – so, I think, going forward, companies became interested for different reasons.
I can’t speak much about them because I am under non-disclosure agreements from all of the parties involved. I am not being secretive, all of the pertinent parts of the case are in public documents. I’m happy to speak about that, but I can’t talk about anybody’s individual wishes, because of the NDA’s I have to abide by.
I had never heard of United Wheels until the Niner sale. Are they a private equity firm or a larger cycling conglomerate like Pon?Sugai:
United Wheels is a large entity. One of their major holdings is Huffy Bicycles, obviously, and they own two other companies. One is called Allite, Inc. and another is VAAST Bicycles We are happy to be part of this group and they are looking at making other strategic acquisitions in the premium bike space to go along with Niner.
In your press release with BRAIN recently, they stated that United Wheels is an Asian conglomerate. Are some of those investors bicycle manufacturing facilities? Some other popular brands are partially owned by Asian manufacturers, which curtails their options to choose facilities to make their bikes. Could this purchase impose similar limitations?Sugai:
We have talked with United Wheels and we are in alignment as far as what we want to do going forward. They want to invest heavily in Niner’s R&D so that we can continue to produce our bikes. United Wheels really liked the fact that we were in Fort Collins, Colorado. It’s a great place to develop mountain bikes and a great place to attract talent to come out and live the mountain bike lifestyle. That meant a lot to them and played a part in their strategy in purchasing us.
So, you can’t say yes or no if they own factories and whether you would be magnetized towards using them…Sugai:
Huffy, obviously, has their own factory that is primarily designed to make [value-priced] steel and aluminum frames, so there is no cross-over for a company like Niner, which produces high-end bicycles and frames. Everything we’ve discussed so far is for Niner to make the best bikes possible using factories that will give us the best results. So, no, we won’t be sharing factories. We will remain independent.
eMTBs are the big question on every boutique bike maker’s mind. Most European dealers and distributors have made it clear they’ll only market mountain bike brands that have e-bikes. Is Niner under pressure to develop one?Sugai:
Yeah, e-bikes are one of the things that are being openly discussed, especially for the European market. It makes a lot of sense. It won’t happen anytime soon, but it was one of the things that we had been planning and this investment will allow us to go forward with it.
I understand that you had a number of new projects on the burner before you decided to seek chapter 11 protection. Can you talk about anything Niner may be releasing soon?Sugai:
During this whole [court proceeding] we have not stopped development. We are going to have some new stuff to show at Sea Otter.
It seems like the super elite, $10,000 price point is crumbling and the buying trend is strongly favoring bikes that we once considered second tier, where customers get much more performance for their money. Is that your perception?
I think that the customers who are buying $10,000 bikes are definitely the tip of the pyramid and that hasn’t gotten any wider over the past few years. That’s not our primary focus. Most of our bread and butter comes from riders out there who ride bikes in the $2500 to $4500 range. We will still offer bikes at that 10,000-dollar level for riders who want the best of everything, and we’ll have durable price-point bikes that have equipment on them that will last for years at prices that are affordable for most riders.
Who are Niner’s customers?
One thing we have always said is that we want to build bikes for the avid rider. It’s how we define ourselves here at Niner. We all ride. We have long meetings about things like where to clock cable guides, or how easy it is to take off a brake caliper. We fuss over that stuff quite a bit and I think that shows up in the details of our frames. When people ride our bikes, I hope they would notice those small details that we believe, make a difference.
Every brand is scrambling to launch a long-travel 29er, so it would seem that Niner is poised to take advantage of the industrywide march towards big-wheeled bikes. And in the middle of all that, enthusiasts on the vanguard of the sport seem to be downsizing towards lighter-weight, shorter-travel bikes. Does Niner have a fresh strategy to capitalize on those trends?Sugai:
I’ve been in the bike industry for 14 years and I’ve definitely seen some pendulum swings. Obviously we are at a point where everyone is trying to make longer and longer travel bikes. It’s been the hot thing for a period of time and I think (and this is my opinion) that a lot of riders are over-biked. Meaning, they are riding a bike that is well beyond their riding capabilities.
While It’s nice to have that additional amount of travel. I believe that having the right bike that matches the type of terrain that you ride most of the time leads to the best riding experience. So, I do think that there is pause to be taken – especially on the editorial side – that there are multiple kinds of terrain that can be ridden throughout the world and that one terrain isn’t the end-all, be-all for bicycle geometry. There should be consideration that there are different geometries that match different terrains, and that some riders might need less travel and maybe geometry that is more like a cross-country bike to achieve the most enjoyment.
Niner has an extensive range. With a new investor on board, will Niner be consolidating or expanding its portfolio?Sugai:
Right now, we have gravel adventure bikes that you can mount fenders and packs to, and models up and to the all-mountain range. We still haven’t got into the downhill market, but at the end of the day, Niner wants to be a boutique offering for anyone who wants to ride off-road. Whether that is gravel roads, trail, single-speeding, or enduro riding, we want to make a bike that makes those riders happy. And, it’s important to us that our riders also know that when they buy a bike from us, they are buying a bike from a company that also supports trail advocacy, so the areas that we like to ride are maintained for future generations.
One of the litmus tests I apply to the industry to evaluate whether a product is stagnant or promising is: if I gave its maker a million dollars to improve it, how much better could it become? For, example: if I wrote that check to one of the top four tire makers, I think it’s doubtful that we’d see a measurable improvement. I would assume, however, that a boutique bike brand would jump on the opportunity to innovate or improve its products. In effect, is this what just happened to Niner? What can we expect in the future?Sugai:
I understand that there is a perception that we have reached a pinnacle in design, but back in 1899, people thought that we should close the patent office because everything that could be invented, had already been invented. The cycling industry is incredibly innovative, and every time we think that we have reached its upper limits, something new comes along.
I think it’s going to be materials technology and suspension design. Even in the last three years, there have been rapid changes – wheel design, tires, one-by, a lot of things have been developed that have had major impacts on the bike. Dropper posts are ubiquitous. I don’t think it would be prudent to say that we’re done – and that five years from now, we are going to look back and say: “Holy Cow! Bikes have come a long way.”
So, you can say with confidence that Niner will be able to leverage this investment to make technological improvements…Sugai:
I think that United Wheels made the investment in Niner with the expectation that we would use most of that money for research and development, to come out with new and better products that will make the riding experience better. Not just to make a more expensive bike, but actually to improve the riding experience.
That’s a different take. Most industry acquisitions to date have been sales driven – leveraged borrowing to expand production volume, a focus on upper management, and expansion into global markets. This seems to be more unique, in that product development is the focus.
I can address that. The first thing we did after the ink dried on the deal was I hired another engineer. Literally, 24-hours after the deal, he was on his way to Fort Collins. Of course, we had been talking before that, but he’ll be starting in a few weeks. We are also investing in machinery and test equipment. Again, United wheels wants to make sure that we are entering the competitive field with both of our hands untied.
Are you under a lot of pressure to perform?
Especially, in this situation, the buck stops here. Niner will either succeed or fail and it’s my job to make sure than Niner will continue to grow and succeed. I’ve been operating the company for the past 14 years. Yes, we’ve run into some troubles over the last few years, but we were able to manage tremendous growth in the early days and bring forth some innovative products to the marketplace. The team here is fundamentally the same, I don’t think we will have any problems managing that kind of growth now that we have been given the chance to invest in the right areas.
So, you aren’t going to rush out and spend it all on an elite race team?Sugai:
Now that Niner is back on track and three months of court proceedings are behind you, how are you going to recover? Will you take a week off and just ride your bike?Sugai:
Well, I am lucky to have a wonderful and supportive wife who stood by me through all this, and everyone at Niner was a solidified group during this time as well. It was really nice to see that happen. Going forward, I think the people here at Niner are really happy about the acquisition. We’ve been given the authority and the trust to make the bikes we’ve been dreaming about. Now, we have to perform.
And, yes, I will definitely be taking some time off to ride my bike.
// More about the acquisition of Niner by UWHK Ltd. here