Vanhawks: How a small company is mastering global logistics and manufacturing to bring “connected” bikes to the world

Vanhawks: How a small company is mastering global logistics and manufacturing to bring “connected” bikes to the world

ExportWise is counting down our 10 best performing stories from 2016. This story, first published on April 19, is #2 on our list.

When Vanhawks cofounder Sohaib Zahid dropped out of medical school to start a bike company his parents, both surgeons, didn’t understand.

“You’re not going to change the world with a bike,” Zahid recalls his parents saying when he announced his decision back in 2013.

What’s worse, in their opinion, was that he also recruited his brother Ali, a computer science student at Queen’s University, to also set aside his education to help build the first fully connected commuter bicycle.

While the Vanhawks Valour – a bike with sensor integration, GPS navigation and Wi-Fi connectivity – may not save lives, at least not directly, it’s saving commuters time and helping them to stay healthy.

Toronto-based Vanhawks, which started with a $50,000 venture capital investment and shifted into high gear after raising more than $820,000 through a crowdfunding campaign on Kickstarter in 2014, is now shipping its product to customers in 42 countries.

About 85 per cent of the firm’s current sales are outside of Canada, including markets such as the U.S., Europe and soon Japan.

Zahid says Vanhawks is still a “puny dot” in the estimated $60-billion global bike market, with sales of about $1.5 million to date. Still, the company has big plans to change not only how people commute, but how cities plan future transportation routes based on the data collected by its connected bikes.

“It took us two years to really understand the supply chain and manufacturing, by selling bikes to more than 1,000 customers, but we think we’ve nailed it,” says Zahid. “Our goal now is to become a mobility company for congested urban centres.”

It has been a long road to get the Vanhawks Valour on city streets, and a steep learning curve for Zahid and his cofounders about how to turn a concept into a commercial product. The biggest hurdle, he says, has been navigating the complex global supply chain.

The Valour, an ultra light carbon fibre bike that can connect to a smartphone and alert the owner if it’s stolen, is designed and engineered in Canada. Zahid said they were manufacturing the electronics in China, but moved that part of the process back to Canada, where the company believed it had more expertise to draw from.

“We also wanted to bring something home to support Canadian manufacturing,” says Zahid.

Other parts also come from around the world; the seats, grips and pedals sourced from Germany, while the drive train and gears come from the U.S. All parts are shipped to Taiwan for assembly. From there, the bikes are shipped to three different global warehouses in Oakland, Cali., Scarborough, Ont. and Munich, Germany. Once ordered, the bikes are then shipped to local distributors, which are local bike shops that help customers with final assembly.

Zahid says the logistics across the supply chain – from building and manufacturing to shipping and delivery – have been a challenge along the entrepreneurship journey that he could never have anticipated.

“If my pitch to our first investor back in the day was ‘Hey, we’re building a business that is a logistics and manufacturing nightmare; we still need to build the software architecture, algorithms, sensors and, by the way, I’m not an engineer. But if you give me $50,000 I can do it.’ Can you imagine that pitch?” Zahid says.

Fortunately, his investors had faith.

A major lesson he and his team have learned is how each market is unique, with different requirements. For example, some European countries categorize Vanhawks’ bike as a technology product, while others see it as a simply a bike. They are lessons Zahid says they had to learn by doing.

“You can’t learn to swim until you jump in the water,” says Zahid.

While Zahid’s parents are proud of the company he and his brother have built, they are still holding out hope he may someday go back to school to be a doctor.

“I don’t know if they will ever make peace with it,” he says.

Five Questions

1) What was your first export sale?

It was in the U.S. as part of our Kickstarter campaign, followed by Europe.

 

2) How did that first export opportunity arise?

It was through our Kickstarter campaign. We didn’t use that platform just to raise money, but to confirm there was a market for our product, that people wanted to buy it.

 

3) When it comes to exports, what do you know now that you wish you knew then?

Everything from customs to tariffs to certification and logistics. I wish I had known it all in advance, but there is no book for this kind of thing. There are companies doing it, but everyone is different.

 

4) How has the trading world changed since you started in business?

Technology keeps changing, and will continue to do so. For us, what’s changed a lot in the past few years is how bikes are sold. More consumers are moving online, which is good for us since that’s how our sales happen

 

5) What is the No. #1 thing new SMEs need to know about export and trade?

You need to know the market you’re going into. It ties back to the bureaucracy, customs, software, etcetera. You need to know the market before you launch. It’s not an easy task, but not knowing can be market suicide. There is a higher probability of failure than success. So far, we’ve beaten the odds.

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