Nº299 How Community Grown Kona Lost Its Flavor with Private Equity Aroma. 👨🏼‍🍳 ♨

Without cosplaying too much as an investigative journalist, I'll do my best to succinctly set the stage here a bit:

January 2022 – Kona was sold to Kent Outdoors at the pinnacle of the post-corona bike boom.
December 2023 – Kona's new owners had alienated its decades-old dealer network now on a solely profit-driven private equity path, the brand went D2C & even offered a desperate buy one, get one free deal.
Apr 19, 2024 – Kent Outdoors Announces $100 Million Credit Facility From Eclipse Business Capital (source) ...This was a week before their Sea Otter snafu & plans to divest the brand were already shared.
April 23, 2024 – A cfodive.com story: 'Private Equity-backed Kent Outdoors seats new CFO, hunts for Kona Bicycles buyer'
- I included this one as it shows a lot of the moving parts & background of the people making decisions for the Kona brand then.
April 26, 2024 – Andrew Major's Bike Mag "not a lamentation for what Kona Bikes used to be, but a recipe for what the company could be again." weaves a tangible ode for the mystique & loyalty the brand commanded.
May 20, 2024 – Bell Lap Advisors Announces Buyback & a feel-good frenzy ensues:
- Notably, Matt Phillips' "Kona Is Back in Loving Arms and Facing an Uncertain Future" on Bicycling.com may be the most comprehensive piece I found. Chapeau!
- The Pink Bike comment sections goes on forever. Wow, in a good way.
- Kona founders Jake Heilbron and Dan Gerhard shared this letter to the industry & Steve Frothingham's takeaways of the reacquisition

A lot to take in, but it all clicked for me when I read the Lunch Ride's Parting Thought last issue:

"I won’t lie, it’s harder than people think to make money in the bike industry. [...] It’s the lifestyle and fringe benefits that keep us all here, definitely not the cash.

I think it’s largely because this is such a passion industry. When a bike brand is driven by the numbers, and numbers alone, it doesn’t usually work out well. The people who are most passionate about the brand and the products are often the first to go, replaced with bean counters and outside consultants.

There are very few industries that have so many brands competing for the same consumer dollars. There are literally hundreds of bike brands…can you name another industry like that? Maybe fashion, but those are low ticket items.

Bikes, however, are a relatively high ticket recreational item, which means each brand has to really stand out and connect on an emotional level. When that connection disappears, I’d argue that their competitive advantage (and reason for anyone to care) does, too."

Which brings me to my conclusion from this whole fiasco: brand comes first!
Like the Lunch Ride wistfully espouses, the elusive emotional connection people build with your brand is your most vital life force because trust comes by foot but leaves by horse! Starting by scrapping D2C & going back to dealers, supporting athletes, rehiring recently laid off staff: they're already back on track.

I'm wishing Jake & Dan all the best and I already feel like I'm part of the story with their recent repost of me on my Ute with two kids from a decade ago. 🥰

Thank you for reading! I've been getting some great responses to the newsletter recently and it really makes my day & it is the number 1 means of new business coming our way. I'm very grateful for that. So thank you for taking the time to read, forward and support!

Thank you,

Jon