When Ryder Hesjedal rode across the finish line in Milan in May, he made history—the first Canadian ever to win a Grand Tour in the Giro d’Italia. For two cycling fans in Canada, the victory was particularly sweet: Hesjedal had won one of the most prestigious road-bicycle stage races in the world riding bikes they’d designed.
Phil White and Gérard Vroomen met in a lab at McGill University in 1995—two engineering students who just happened to like bikes. They rented a room in Montreal—White slept on the floor—and worked on their first project, an innovative time-trial bike for two-time world champion Gianni Bugno. The result was a bike called Baracchi, a huge success with the rider and his team, but not, unfortunately, with the team sponsor. White and Vroomen realized the only way to get their designs to market was to start their own company, and that year Cervélo was born.
Great designs didn’t automatically mean great success, as the two young men quickly realized. Even though they were producing a good product and were profitable, it wasn’t easy to get financing if you weren’t a tech or dot.com company. “We didn’t take a salary for three years,” says White, CEO of Toronto-based Cervélo. “We would up reinvest whatever we made. It was the only way we could finance it.”
And the two young upstarts were coming out of left field, reinventing a product the best of which had traditionally been made in the same place, Italy, out of the same material, steel. These were bikes made of aluminum. In Canada.
During the first few years of operation, White and Vroomen sold a lot of triathlon bikes. “That was our first big break,” says White, “finding a niche where the big boys hadn’t tried to hit it hard and establishing a foothold.” Then it was a matter of figuring out how to market their product. “It had to be a global model,” he adds. “But how do you do that with two kids basically working out of a dorm room? We weren’t selling anything out of our place. We hated dealing with customers and we were bad at it.” The solution—one they rely on to this day: build relationships with good vendors and let them do the work, particularly important when hands-on fitting by pros is essential when purchasing a high-end road or triathlon bike.
It was, as White says, “a no-brainer” for Cervélo to move into the United States early on. “From a business culture standpoint, we all think the same in Canada and the States.”
But Europe was a whole different ballgame—26 different markets with 26 different cultures. As a result, in 2006 the company set up its own facility there. “If you’re going to attack Europe,” says White, “you’ve got to be in Europe.”
A big boost for Cervélo came in February, after it was acquired by the Netherlands–based Pon Bicycle Group. That means a facility in Germany for Cervélo that will help service all the dealers and distributors in Europe, as well as handle sales and marketing
And the new financing relieves a huge headache for Cervélo’s co-founders. “The last few years have just been tough,” says White. “We were maxing out our capacity at suppliers. We should’ve built up inventory when it was down but we didn’t have the financing to do that. It was hampering our ability to grow.”
Indeed, with relief from the years of constant stress over cash flow, Cervélo—which has grown from two guys in a dorm room to 80 employees globally—has some real opportunities now. “We can think more strategically and longer-term with partners who want to help us,” White says. “The focus is not always on tomorrow but also on the future.”