A while back, we posted about the no-nonsense, opinionated, shopping/educational content at Rivendell, a small specialty bicycle business based in San Francisco. Recently, we talked with Rivendell owner Grant Petersen to find out more about his business. (Grant also answers some reader questions in the comments.)

What custom means
When Grant Petersen was 19, he ordered a custom bamboo fly rod made by Doug Merrick of the Winston Rod Company. “I wanted red winding on the guides — ‘Like a Leonard rod,’ I said — and a cork grip shaped like a Payne rod. They were two other fancy rods,” explains Peterson. Merrick refused. “I won’t do it,” he told Petersen. “It wouldn’t be my rod, then.”

Petersen says, “I felt ashamed for having asked, but glad to have been told that. And it made me appreciate the details that made a Winston a Winston.” Decades later, Petersen points to that interaction as inspiration for how he deals with customers at Rivendell, his biking business. “I don’t want anybody to feel ashamed for asking us to drill holes in forks or make a bike with low ‘trail,’ but I’m resolved not to do it for the same reason Doug Merrick held his ground.

“To a customer, a custom frame can mean ‘I pay you money and you let me design the bike,’ but that’s not what custom means here. We’ve turned down ‘custom’ orders when it’s meant all we do is collect the money and facilitate the customer’s own design. It can be seen as not customer-friendly, but in the end it means I know that every custom has the qualities I value and a certain amount of integrity. If you stand for something and are committed to it, then you dilute it if you introduce something that’s less pure or hard-core.”

If you stand for something and are committed to it, then you dilute it if you introduce something that’s less pure or hard-core.

Opinions are mandatory
Rivendell sells the kinds of bikes and bike gear you can’t get in a normal bike shop. According to Petersen, “99 percent of the bike market — designers, buiders, distributers, retailers, buyers, and riders — are selling the wrong bikes to the wrong people for the wrong reasons.”

Strong opinions are at the heart of Rivendell’s mission. “Specs are fine, but they take two seconds, and opinions, if they’re based on experience, are more interesting. If you know about something, you have an opinion about it.

“There’s always a story behind the pure specs of something. Does it mean anything to anybody that a Nitto handlebar may be made from 2014 T6 aluminum? If you leave it at that, it doesn’t. It not only doesn’t, it’s a bad thing to just say that, because it’s really saying, ‘I read that this is true. It sounds important. I don’t know what it means. But I hope you think that I do.’ But I can add that Nitto handlebars are the strongest and safest and most rigidly tested in the world and if Nitto says it can’t make a strong enough bar that weighs less than 265g, then you can believe nobody else can.’”

Grant Petersen (photo by Martin Sundberg)

The opinionated path is one that has long appealed to Petersen. “In the ‘70s and early ‘80s, I worked at REI in Berkeley and there was a rule: No Handwritten Signs. We had a sign-making machine, and the store wanted a consistent look in all the signs. There’d be a sign for ‘Camping Books’. It was yellow-brown with dark brown letters and that’s all it said. But there was one book with the unfortunate title of ‘Pleasure Packing’ that seemed super soft-core by its title and cover, but was actually really radical inside with stuff I didn’t even know. And I thought I knew everything.

“I looked up sales on that book. Berkeley sold about 10 a year; Seattle (the only other REI at the time) sold about 20. I wrote a note about the book on a piece of cardboard, put clear packing tape over it so it wouldn’t smear, installed a grommet in the corner of it, and hung it in the book section. The first year after that we sold 215 of them. To me, it wasn’t about the sales. It was about getting the information out there.

“When I’m interested in something and want to know about it, or at least want to, or need to, get a good one — whatever it is — I want to talk to somebody who knows everything about it. Specs don’t tell me that, but the guy who sells them, or has sold them for 20 years, or the guy who repairs them — he knows. And I want to know what he does. Who doesn’t?”

The rest of the Rivendell team is encouraged to speak out too. “Everybody here has opinions,” says Petersen. “You can’t work here without them, because if you don’t have opinions, you’re just going to be a spec-reciting mannequin and no help to anybody. People want more than specs. They want specs, for sure. But they aren’t robots, so they want more than that.”

If you don’t have opinions, you’re just going to be a spec-reciting mannequin and no help to anybody.

One thing Petersen avoids is the word “very.” He explains, “In 16 years of newsletters, catalogues, brochures, and web stuff, I have never used the word ‘very.’ It’s not a bad word. But I read once that it’s a weak word and that if you describe around it, the reader will feel the ‘very.’ And it’s more effective to have them feel it.

“Spencer here once put a new item up on the site and wrote a few lines describing it and used the V word. And I changed it and felt bad and explained to him that I wanted to keep a clean nose, that it was just a dumb obsession of mine, and don’t be mad or feel scolded. Just try to understand.”

bike The Roadeo from Rivendell

Formed out of Bridgestone’s ashes
Before Rivendell, Petersen worked at Bridgestone Cycle (U.S.A.) for ten years as Marketing Director. He also had design input, wrote ads, was the media contact, and served as in-house technical guy. While there, he spearheaded Bridgestone’s attempt to bypass dealers and sell what he calls “out there gear” directly to customers via direct marketing and newsletters. When Bridgestone shut down, Petersen had developed a reputation that allowed him to start Rivendell with a built-in audience.

As for money, Petersen got by with his severance package and a little help from his friends. “I left Bridgestone with $23,500 in after-tax severence pay. I took that, cashed in some IRA money, made Rivendell an S-Corp, and sold stock at $1 a share to friends (before we made our first sale). All that combined came up to $89,000 to start the business, with me owning about 60 percent of that.

“I got some office supplies from Bridgestone, had my used Mac, and hired an outside company to put together a customized Filemaker program to run the business. I sent out a mailing with flyer and a letter saying ‘Hey, I’m in over my head, help out, let’s go!’ I hired one guy, we worked out of my garage and kept inventory in my backyard and in a 10×10 storage facility, and two years later we moved to a small warehouse.”

One thing Petersen didn’t worry about while starting up: how to get out. He says, “When you write a business plan, the last thing you address is your exit strategy. And when I started Rivendell and got a book of business plan templates, I’d never even heard the term. My reaction was, ‘What’s this stuff about getting rid of the business? I want to make a business and have a job!’”

Profit isn’t the only thing
From there, revenue began climbing. According to Petersen, sales last year were about $2.7 million dollars. Still, much of the company’s value is in its inventory. “I’d say we’re wildly successful, but don’t have wild profits to show for it. We’re established, more people know about us, and we have loyal customer who tell their friends about us. And, especially important to me, we employ about 13 terrific people, and I think every one of them would tell you this is the best job they’ve ever had.

“I think, if your main reason for being in business is to maximize profitability, you must hate the work itself. We recently got in some custom-made-for-us tiddly winks made out of tagua nuts. They cost us $13 a set (of 25) and we sell them for $20 and donate the difference to charity. A profit-first business could never do that. It would miss out on the fun.

I think, if your main reason for being in business is to maximize profitability, you must hate the work itself.

“It sounds stupid, but little unprofitable projects that aren’t huge time-resource sucks can pay their way without being profitable. Because they add to the fun, the make the business more interesting, and sometimes when you’re working on several projects that take a year or more to mature, you need quickies like this to keep you going. I value sustainability over that kind of profitability. I really want to be here as a business, because employing people is more important to me than super profitability.”

That attitude helps to explain the company’s charitable streak too. It raised over $50,000 for Smile Train last year and gives money to other charities too. Petersen says, “Everybody here knows he or she can give a bike away to somebody who, for whatever reason, clearly warrants a free bike and can’t afford it. They’re expensive bikes, too.”

Running hot and cold
One thing employees must deal with is a workplace that runs hot and cold. Literally. “We have six continguous 900-square foot units in an uninsulated building intended for car repair businesses,” explains Petersen. “Our record cold morning was 38 degrees — cold enough to solidify the olive oil. Our record heat was 111F, and I’m talking about in the work area, not outside. At this moment, I’m freezing. Bad planning, clothes-wise, today.”

treeEmployees know what they’re in store for when they start. Petersen says, “Every new hire gets told the story before they commit, and nobody’s left because of the weather. You have your main task, and you can grow it as you like, or take on other work as you’re interested in it. Everybody works really hard, and that feeds on itself. We’re all friends, and it makes work fun.

“We spend $20,000 a year on employee lunches, because even though everyone is free to take the hour the law allows, it’s rare that anybody does that. There’s great food around here, and anybody who leaves and gets another job may make more money there, but their lunches will be way worse.

“Also, everybody here knows they have the power to do anything they want for any customer. They know to always take the customer’s side, and that the worst thing they can do is take the company’s side in a quibble involving service or money or anything else.

“I want to sell it to the employees within ten years, continue to have some involvement, but see them continue the direction and increase our influence.”

Pick something the big guys don’t care about
Petersen’s advice for others who want to get a business off the ground: “Don’t copy anybody else. So many businesses look at the trends and follow the leaders hoping they can be a leader, or can at least live in the wake of the leader. There’s a cliche that, ‘If it’s a good idea, it’s too late,’ and I go along with that. Pick something the giants in that industry don’t care about, or something they can’t get into without shooting themselves in the foot.

“For instance, we do hand-made lugged steel bikes with decidedly anti-racerlike qualities to them. They’re comfortable, strong, versatile, and will last 20 to 50 years. We hate carbon fiber, and we can say that. Now, if Trek or Giant or somebody catches wind that a certain segment of the bike market is getting into lugged steel bikes, they still won’t be attracted to it, for two reasons. One, it’s so small. That shouldn’t matter to a new business, but it limits the appeal to an established leader. And two, we can position lugged steel bikes as the better-safer-smarter alternative to carbon, but they can’t, because carbon’s their bread and butter. It would be like a smoke shop selling anti-oxidants or jumpropes. It can’t work.

“So for anybody starting up, I’d say don’t copy. Find a weakness in the giant, something they can’t cover. And make it important enough to you that even if it doesn’t work out great at first, you can at least know it matters enough to do. And do it in a way that allows you a large measure of self-respect. The worst thing I can imagine, as a business owner, is doing something I don’t believe in and having no customers to boot.

“Do something that matters enough to you that you can honestly tell yourself that if business is bad, if nobody’s buying, it’s because they’re misinformed, backwards, or just dumb. You have to have a purpose that keeps you committed, independent of success.”

The Rivendell Bikes “classroom.”

This is part of our “Bootstrapped, Profitable, & Proud” series which profiles companies that have over one million dollars in revenues, didn’t take VC, and are profitable.

Related: Interview with Grant Petersen of Rivendell Bicycle Works [Push Button For]