Cowboy and VanMoof are two very similar e-bike companies, so we’re all wondering if Cowboy will be next to file for bankruptcy now that the era of free VC money is over and profitability is key to survival. This week Cowboy introduced a cheaper and simpler electric bike setup ahead of yet another price hike. Moves that have only intensified the scrutiny of the Belgian boutique startup.
However, Cowboy CEO Adrien Roose tells me that the e-bike maker is in a more secure position, despite all the similarities.
For example, both European e-bike manufacturers have received millions of investors in recent years and posted heavy losses during periods of rapid growth. Both are focused on direct-to-consumer sales of premium software- and sensor-laden e-bikes assembled from many custom parts, and both Cowboy and VanMoof had to raise additional funding earlier in the year to deal with unforeseen operational challenges in a post-pandemic e-bike market that has cooled considerably.
This week Cowboy released a less expensive (but still not cheap) $2990/€2490 “Core” configuration of its Classic, Cruiser and Cruiser ST models that offers fewer features, like replacing the maintenance-free Gates Carbon belt drive with an oiled chain drive, as it drives up prices elsewhere. That’s eerily similar to VanMoof’s product trajectory with launching the cheaper, shrunken S4 after raising prices for its flagship S5, all just two months before the company went public with its dire financial situation.
Cowboy’s Core e-bike setups only come in black, lack a wireless charger under the integrated phone mount, and ship with a slower charging block. Cowboy said in Dutch Bright magazine that the upcoming price increase from $3,490/€2,990 to $3,790/€3,290 on August 1 for its belt-driven electric bikes (now called “Performance” setups) was necessary to “stay healthy” (more on that later). Those same electric bikes were priced at €2,490 when they launched in Europe two years ago and as low as $1,990 when they were first introduced in the US, when startups could sell their electric bikes at a loss due to the seemingly endless supply of capital from investors.
Cowboy aims to further justify the difference between Core and Performance configurations through software. Going forward, Performance-configured Cowboy e-bikes will benefit from optional $300/€300 Cowboy Connect software features such as adaptive stem, crash detection, and three new Google Maps features for sharing live ride information, alerting the rider to upcoming hazards, and the ability to choose a route based on the best air quality. Cowboy Connect also unlocks the e-bike maker’s first Apple Watch app. It’s nice to have, I suppose, but it’s certainly not critical to the operation of an electric bike.
So yes, just like VanMoof, Cowboy e-bikes are high-tech, proprietary computers on wheels with a feature set that can, at times, border on gimmicky. However, Cowboy wants you to know that he is different.
“Cowboy is in a very different position than VanMoof,” Cowboy CEO Adrien Roose insists in an email exchange with the edge. “Our key stakeholders, including our investors, supply chain and distribution partners, and employees, fully support the business plan we are executing on.”
The big difference between Cowboy and VanMoof is the profitability outlook: Cowboy has repeatedly said it’s close, having posted EBITDA losses of around €21m in recent years; but VanMoof never was, as he reportedly lost nearly $80 million in each of the past two years.
Last week, Cowboy issued a press release titled “Cowboy on track for break-even profitability as of Q3 2023.” However, Roose now tells me that the company is “on track to achieve our target profitability in the current quarter and a full year next year.” Of course, the return could be €1, but even that it would be a first for the company after six years of a history of losses. A profitable 2024 would certainly be remarkable.
Roose cites “significant revenue growth” for each month this year so far for his optimism about the quarter ending September 30, as well as “solid sales” through July following the launch of its more upright and comfortable Cruiser electric bike on July 3. “We expect sales to exceed our target, making it the best month of the year so far.”
Roose lists a few other notable differences between Cowboy and VanMoof:
- Cowboy assembles close to its customers in Europe. (VanMoof’s electric bikes are assembled and distributed to customers from their factory in Taiwan.)
- Cowboy has grown from a D2C-only business and now distributes its bikes through a growing range of independent bike dealers and retailers. Through these bike dealerships, the company is also transforming its aftermarket model. (VanMoof’s direct-to-consumer support was done almost entirely at some 50 brand-name stores in select cities, while Cowboy is currently working with more than 100 independent bike shops to sell, repair and service their bikes with another 200 slated to join Europe this year.)
To “stay healthy,” Roose candidly explains that the August 1st price increase is necessary to ensure reasonable profit margins exist for both Cowboy and his new network of independent bike shop partners. Roose also cites several other metrics to demonstrate the company’s relative operational health:
- Jeans inventory is down 50 percent from a year ago, and its working capital position is stable.
- Cowboy is achieving a 40 percent gross margin on new bikes sold.
- Production costs are down 20 percent.
So while you might not like the Cowboy’s price hike, that, coupled with operational efficiencies across the board, could be the difference between your expensive e-bike running for years and, well… VanPoof! [Editor’s Note: credit to ex-Verge Dieter Bohn for sliding that and “VanOOF” into my DMs on the day VanMoof declared bankruptcy.]
Despite the opportunity presented by the departure of VanMoof, which was recognized for Cowboy’s brash launch of the Bikey app (which has earned the company a great deal of goodwill in the VanMoof communities), Roose seemed genuinely distraught over VanMoof’s demise when I caught up with him on a video call, a sentiment also expressed by Cowboy co-founder and CTO Tanguy Goretti.
“While many people will be quick to criticize VanMoof, I think they still deserve some recognition for their accomplishments.” Goretti wrote on Linkedin. “They have helped change the face of the industry and the perception of electric bikes since they started 14 years ago (!). They made it great when it was a product mainly used by our grandparents. They really had a positive impact on the cities and not a small one.”
RIP, VanMoof: you will always be first.
