When you talk about the future of the mountain bike industry, there are some individuals who are changing the whole landscape. Roman Arnold, founder and owner of Canyon is one of those people. While he may not have been the first to pioneer this business model, he is certainly the most successful. Forget what you think you know about direct sales. Canyon are far and away the biggest fish in those waters, several multiples larger than their competitors. As online sales become an ever greater part of the industry, many people are looking to Canyon to understand how direct sales could work when you start to shift serious numbers of bikes. From his boyhood days racing road bikes and selling trackside from a trailer to owning his first bike shop and its evolution to a direct sales manufacturer. We sat down to talk with him about the roots of the business and the challenges of growth and expansion across the Atlantic.






Where did the business begin, where was it born?

The business began when I was a child. When I was 14 years old, I started a small career as a road racer. My parents were typical Germans, so we went to summer holidays to Italy, Rimini and Catholica. At this time, people usually went by car over the Alps and over the old Brenner Pass. Before the summer holiday I wanted to have a moped, but after that summer holiday, I told my father that I did not want a moped anymore because I saw some cyclists up there in the mountains, I wanted a road bike. He was pretty happy about that. We went to the local shop and I got a Peugeot PX10 and started racing.

When I started racing my father was working as a sales rep, he worked for an American company that sold technical ceilings to chemical companies and on the weekends we went to the races with me. At the time, we did not have too much money and it was pretty boring for my father at races, so he told me he would import stuff from Italy to sell at the races. We started to sell on a trailer, which you can see today in our showroom, and that was how the business started. During my cycling career, I was good but not too good because of my size - in my age group, I was one of the very best in Germany in time trial racing.

When I was 18, I finished high school and I should have gone to the army and I already had the invitation to join. But, because my father died two days after I finished high school I did not have to go, so I decided with my younger brother to do our garage business selling bikes and parts. So it started with road bikes and we became pretty famous in our area for road bikes, and five or six years later the whole mountain bike thing started, so we started selling mountain bikes too.

Was this still from your selling garage or from somewhere else?

In 1985, we moved our business to our first shop and it was at this time that the first mountain bikes started. The first mountain bikes in Germany were Kettler mountain bikes, the green ones. We started selling them and pretty soon we started selling Fat Chance and Yeti too. One of our product guys, Michael Staab, who is still working for us today, was the guy who brought the blood for mountain bikes to us. At that time, we were a normal retail shop, and we were pretty excited about sport bicycles, we more or less sold only road bikes and mountain bikes at this time, but all the good brands.

We were a Specialized dealer, we were a Trek dealer, we were a Cannondale dealer, so we knew all of the big brands. For a long time, we were the biggest Trek dealer in Germany. After a while we had meetings with the product managers because we were an important dealer for them, they would come to us and ask our opinion on the bikes. They needed a few key dealers who were close to the end consumer. It is a whole circle, they make the bikes, the dealers have to make the pre-orders and they want to be closer to the customer, so they asked what we would like the spec to be, changes we would want to make. After a while, our shop got bigger and bigger, we saw that we were a bit limited by what they were offering, so we thought it would be good to start our own bike brand.

Was Canyon your first bike brand?

No, the very first one was Radical. It was only for one year, around 20 years ago, and we thought we were radical. After the first season, we realised that Radical was not the right name for some of our consumers. We wanted to have our own brand, but we also said that we wanted to have something more aggressive, but our Radical brand was not too special; it was more or less a frame where we could choose the geometry, we chose the specs, but we did not have any engineering behind it. In the second year, we saw the dream of having a brand come closer. We said that if we want a bigger brand someday, we need to have the right name. So we chose the Canyon name because we felt it was very unique and will last for a long time and leave a big impression on people. A canyon is very wide, it is something very big. It does not mean that we wanted to be a big company, it was more about the feeling of being in the canyon and the wide open space.

We started our first bikes as Canyon and I would say they were good quality, good price and sold to the consumer direct. In the first years, it was mail order as the internet was not so big. Very early on I was thinking about a global brand, with the US in mind. When the internet started, very early on I realised that it was important that we get canyon.com. I bought the canyon.com domain in 1998, around then. We realised we could have a canyon.de, but it was difficult to have the canyon.fr because you need to register the company in France, and so on. With Canyon.com, we realised we could have a global company.

We we wanted to be more unique, so in the very beginning, we worked with Lutz Schaeffer, who is a pretty famous designer in the German bike industry. He had his own small company for aluminium frames and he worked on the first Porsche bike. He was a designer above all else. We worked with Lutz and we were pretty successful. Suddenly our bikes were not only good in specs and price, but very unique too. Working with Lutz was going better and better, but we came to understand that to have a real bike brand you need a whole team of engineers. Lutz was really good in engineering, because although his background was in design, his father was a physic professor or something like this. We learned many things the hard way, we did some things and we got the feedback telling us whether or not it had worked. The reason we started to do serious engineering is because at this time we had our first recall. In our history, we had two recalls and these recalls have always helped us move to the next level. You saw the testing facility we have here, it all came because we said we had to do something very good because we failed in the past. This is how we are learning from these things.


There are not too many brands that are that open about talking having a recall.

In the end, a recall depends on how you deal with it. Both our recalls were voluntary. Lutz did such great bikes for us. Then carbon fiber started, before we did all our bikes in aluminium, which was a material we and he could work very well with and, as a partner, he also did the first carbon bikes for Porsche very well. But our first carbon bike failed. We did our own testing here in Germany, you have two or three companies to do the test. We gave it to one company and we passed the test, but in a magazine test, one bike cracked. We had sold 100 to 200 of this bike and we had to take them all back. It was not easy for us to make the recall and it almost forced us out of business because we had to give the money back to the customers, we had to replace the bikes. So I said, "Ok, I want to learn. I want to learn everything about carbon fibre."

There were two big suppliers for raw carbon fibre, Tore and Toro, today there is also Mitsubishi. At this time, there were only these two that could make the raw carbon fibre. I figured out that one of these two companies had a subsidiary in Germany, so I went there and I told them that I wanted to learn everything about carbon fiber, but it was only a sales office. They told me that while they could not tell me much about carbon fibre, there was a pretty good university pretty close by and maybe they could help me. At the university, I met the professor there and I said we really want to know everything about carbon fiber and I want to learn as much as I can. At this point we had shifted our focus from carbon mountain bikes to carbon road bikes. Working with the university our goal was not to do the lightest road bike, but best road bike in comparison to weight. The university said that they could help us, and because we were in their Bundesland [region], we could ask the government for support. We had to find something like €100 or €125,000 for the project, then they could ask the government for an additional €2 or €300,000 to invest in this project. We found the money and the guy we worked most closely with at the university was a young engineer doing his degree, Michael Kaiser, who today is the leader of our product development team.

Michael developed the bike with us. In the end, it was super light, about 1kg, but it was super stiff. I would say that it was pretty successful for us, we really learned a lot. When Michael finished his degree in carbon fiber I asked him if he wanted to work for our company. His professor said, "You'd better not! This company is too small for you, you better go to Airbus." He had offers from Airbus, from Toyota, but he said that he wanted to stay with us and he became our number one engineer. He became our leader of development, although at this time there was nobody else, but it is from there we started.

Today, in the development team we have something like 50 people and more that 20 of them are engineers. We really invested a lot. The idea at the very beginning was that we were a dealer, but for us, it was pretty clear that if you want to make the things well, we had to setup our new company and we had to be a manufacturer. We wanted to be different from other guys like Chain Reaction, Wiggle, or in Germany we have Rose, they all came from the same roots as us, but we decided we did not want to act as a dealer anymore, we want to set up our company like a manufacturer. This is why you see our success today. This is why we have such good testing, we have all the engineers, we did not focus too much on parts and accessories, we mainly focused on bikes and our main turnover is on bikes. This is how we developed our vision. Our dream is that we want to make the best bikes. We decided that we want to be an online company and we developed most of those things step by step, sometimes we have to go one step back because we are too fast, we did something wrong. In the end, I am pretty happy that now we are a role model for the industry.

You must be the largest direct sales company?

I would say we are the largest in the world right now, but for us, the main thing is to strive to make good products.

In Germany, with family run businesses like this, there seems to be a very different way of doing things than people see in the US. For example, you were thinking of going to America back in 1998 and nearly 20 years later it is only just coming to fruition. That's a 20-year plan, which is maybe something you cannot do when you have shareholders demanding things to be done now.

Everything has its good and bad things. Right now I am still the sole owner of this company and hopefully, it will be like this for a while. If you work like this you have the freedom of making your own choices every day. But on the other hand in the US or Canada, they are asking why Canyon is not coming? How long will it take? For this new market, I think we have to be very well prepared as it is further away than the Euro countries. If we want to be independent, we have to do it right. Earlier I said we made some mistakes in the past, so on one hand we want to be aggressive and on the other hand pretty cautious also, to do it right.


As a family-run business, do you feel that you have more freedom, in some ways, to maybe make decisions that aren’t solely focused on the immediate bottom-line?

Of course we have to make our profit, we are financed by ourselves, but we are also financed by banks, so we have to show that we are profitable. But the other side is that we do not have someone behind us that says, "This is what we expect." We pretty much think that if we invest in good products, sooner or later it will come back. We only do things that we like, so this is the reason why, so far, you do not see any e-bikes here, which is a big trend in the industry, but we said that we started our business from things we liked because we are racers. Two years ago, we decided to have a commuter bike here because many people in the company came to our facility here on a modified road bike, on a modified mountain bike. They are really sportive guys, but they also want to show this in their everyday bikes they wanted something for their kind of culture. Therefore, we figured out how to develop a bike that ended up in our urban bike range. It is a very nice bike. It is a super bike, we did it because we had the motivation, to do a bike that we liked.

With direct sales, how are you keeping a high level of customer service? How have you approached that challenge?

You have to see that we are kind of a role model, for many other guys. In the very beginning, nobody liked us. We were the enemy of every dealer because they said this model was disruptive, the prices are too good. You saw that we have a big service department, so people shipped the bikes back here, or in each country in France and in the UK, we have a service partner. But I think the whole industry is changing. If you look at the whole market, more and more people buy their spare parts online, especially for mountain biking. So this puts pressure on regular dealers, so today there are different kinds of dealers, and I think the future of dealers is to concentrate more on service. This means that they do not have to have the stock inventory, and I think this is a good combination and I think it can be good for the dealer and good for us. We are working, especially on our entry to the US, on a service concept where we can integrate the dealers. In some areas the dealer can help us do the service, this way we also can bring business to the dealers. There are some areas where the dealers cannot beat online, not on a complete bike, not if it goes direct from manufacturers to the main consumer, and also not on components. This is why companies like Chain Reaction or Competitive Cyclist, like Wiggle, grew as big as they are. But there are some areas where online cannot follow, there is no black and white and I think in the future there will be room for many guys. There will be many different levels and we are working on concepts on how to bring business to the dealers and the dealers can help us offer the right service.

I do not want to give too many details, but we have a pretty clear idea in which direction we want to go and I think this will beneficial for all of us, for the whole industry and beneficial for the consumer as they get the best products at a reasonable price. If they need service, they have to pay for it and so the dealer can also make money. There will be a lot of dealers in the future that will concentrate on good service and the small dealers are actually the ones who like this business, who like cycling and I believe they can make good money from that.

There is a joke running at the Lake Garda trails, you get the map and you run it backwards as it is initially designed for the Germans you like to go up steep trails and down fire roads. Germany is quite a different market, have you found it difficult to transition from a German to a more global brand.

I would say it is an evolution. Today because of the internet it is one community - we all have the same hobby. There are some things special to a German guy but it is more or less, in the end, to do with how the terrain is in each country. We have to adapt and we have different platforms depending on the country. We have an idea of what the customer needs, for example, in Canada or in the US because there are trends of only running 1X and these sort of things. But we are following these things, and also it is about how to offer the right product for the right market, so some of the bikes will be different in specs that we see here in Germany.


With your Enduro World Series team, it really stands apart, you clearly have a huge passion for having the team there. They arrive and they have a definite presence in the race village.

When you are an entrepreneur you want to show yourself and your dream. When we did the enduro team, we said that we wanted to look different from the other guys, so we were looking for the vehicle we want to have, how the jerseys will look. On one hand we are German, we want to keep our identity. Racing is very important for us, from there we have the feedback, so we learned a lot with Fabien Barel and we have very good engineers who go on the trails. With Fabien, I think we can go to the next level there. There are also some longer travel bikes in the pipeline...

With the warehouse, there are a lot of people in yours and it is not really automated like some others. Is this a conscious decision?

You do have more people than you might expect because our assembly quality has to be different from what other factories offer. We have to offer factory and dealer quality at one time, so we do a lot of steps in there. But in the warehouse, it is pretty efficient as there are a lot of computers, and it is pretty new and we still have to work on it. We have to make some improvements, we just started with the new warehouse and software four weeks ago and we have to make some modifications. And it is already too small. What is important here is that the people who work there are people who like the sport. The key thing is that we make really good products, world class products at reasonable prices. Logistics are something we have to improve. We are good there, but we are not Amazon. We have to improve there, but it is difficult as we offer so many different products. In our industry, every year we have new models, new parts, and customers expect we change every year and every few years we have new colors. So many models… At the dealers, if there is a small delay you do not see it, but with direct sales you do. I think we are at a pretty good level, but we are working on it and we are trying to improve. We are also really proud of our reputation in Germany, there is Bike magazine and Tour magazine, they do a survey every year and we are one of the brands people want to buy in the future. What we are even more proud of is that if the customer owns a Canyon bike, they want another one as their next bike. This says to me that our service is not too bad in the big picture...

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