Michael Fishman and his colleagues caught the business bug as seniors in college four years ago. He was taking an entrepreneurship course at the University of Wisconsin, Madison, and, he says, “looking to start a business doing anything.”
Inspiration struck when Fishman and Austin Stoffers, a fellow Los Angeles transplant in Madison, went shopping for bicycles. Their plan was to get to classes faster and spend less time in the frigid outdoors. “We just wanted something really simple. There are no hills in Madison. We didn’t need anything fancy,” he says. But it was hard to find a decent bike for less than $700.
They thought they could do better. Fishman and Stoffers conducted some informal market research and read about the bike industry online. They reeled in another childhood friend, Jordan Schau, a tech wiz at Columbia University, and his older brother Zach, a recent Madison graduate, to help. And they designed a simple, single-speed, brakeless, fixed-gear bike from a generic hybrid road-track frame. They thought there was a market for stylish, quality-built, customizable bikes at an accessible price point.
They settled on a manufacturer in China, where they say more than 95 percent of the world’s bikes are made and the most technically advanced factories exist, to produce a stellar street bike that could retail for half the price of an entry-level mountain bike. And without telling their parents, Fishman says he and his business partners pooled their savings, including monetary gifts from their bar mitzvahs, to put down nearly $18,000 on a shipping container full of 165 bikes to arrive at Stoffers' father's furniture warehouse in L.A. during winter break.
Their mission: to get more people onto bikes. It was the birth of Pure Fix and Pure City Cycles. Profitable from day one, the company now sells 3,000 bikes per month, employs 30 people, and opened its first European office, in the Netherlands, this summer.
Jackson Lynch, the company’s director of brand strategy and marketing, says the NYC bike messenger culture helped to boost the popularity of fixed-gear bikes, affectionately known as fixies. “Michael and Austin and Zach and Jordan were looking at taking a simple design that was becoming more popular in urban areas and blending the design and functionality and simplicity with pops of bold colors and unique color combos with the wheels,” Lynch says. “They’ve done a darn good job of blending all those things without compromising aesthetic or the technical mission, and they deliver at an incredibly affordable price point.” The fixed-gear bikes retail for $325, and a new line of bikes with up to 8 gears, Pure City Cycles, retail for up to $499. Lynch calls them "bikes that speak to the free spirited, the aesthete, utilitarian, the commuter, the person who might need a few more gears or wants to carry groceries, a laptop, a bouquet of flowers, or even take the dog for a ride."Pure Fix introduced the Pure City line to appeal to style-minded consumers
Fishman says the first year of business was "a gold rush," with bike shops pulling U-Haul trucks up to their shipping container to carry away new bikes. They saved just 10 units to sell back on campus, and Fishman and Stoffer spent the rest of the school year going to industry trade shows, learning about wholesale prices and margins and how bike shops buy from dealers. “Our main problem was inventory,” he says. “We couldn’t get enough money to place the size order we wanted to place until we were able to get a line of credit from a bank.”
So the partners reinvested all their profits in buying more bikes. They placed their second order for 330, and subsequent orders for 600, then 1,200, then 3,000 bikes. By the time they secured a loan to order 5,000 bikes, investors came knocking. In one lucky break, an investor became enamored with a Pure Fix bike when an employee rode it to work at his New York City incubator. He flew to L.A. to meet with the team and is now a close advisor.
Has starting a business been everything Fishman dreamed it would be? "This is way more work than I could have ever imagined, fighting the competition, learning how to have employees, and being a manager," he says. "But I'm doing exactly what I wanted to be doing. This job, the company, is my life."
A recent Forbes report put Pure Fix Cycles' 2012 revenues at $4 million. But asked if he's living like a rock star, Fishman responds, "No. But I don’t think we should be right now. We're still investing almost everything back into the company. We have a lot more to prove and we’re in it for more than taking out a lot of money every year. If we had been, we wouldn’t have grown." That University of Wisconsin entrepreneurship course taught him well.