Rapha. The pioneer pays for everyone's education.
Rapha turned cycling kit into a luxury product and has lost money for eight years straight, in a market that has never been bigger. It taught every rival who to target.
THE GIST ON RAPHA: "Tight Squeeze"
How can Rapha lose money in a booming market?
Rapha is a British brand that turned cycling kit into a luxury product. A jersey costs 180 quid. They've been losing money for eight years straight, and the cycling kit market is bigger than it's ever been. Because they taught all their competitors who to target.
Where did Rapha come from?
Simon Mottram founded Rapha in 2004. He'd spent years marketing luxury brands like Aston Martin. His insight was that cyclists were obsessed with the smallest differences in their kit. Make cycling clothes a status signal, and you can sell jerseys for 180 quid. He sold the company to US investors ten years ago for 200 million pounds.
Who came after?
Competitors arrived. Pas Normal Studios from Copenhagen. MAAP in Australia. Cafe du Cycliste in France. Each one sells the same idea Rapha invented: premium kit at premium prices, for cyclists buying status off other cyclists. The differences between them are tiny, but the signals are everything.
Last year, Rapha lost 15 million pounds. The year before, 21 million. Eight years of losses in a row, and the company valuation has dropped by 102 million pounds. It's bleeding cash in the category it created.
What is the pioneer's trap?
You teach the market what it wants. Competitors arrive who can make almost the same thing without paying to educate anybody. The category outlives the brand that built it. Lululemon did it with yoga. The pioneer pays for everyone's education and the competitors reap the benefits.
Would you pay £180 for cycling kit?
Your take. One tap, then see how everyone else voted.
Quick answers
Who founded Rapha?
Simon Mottram, in 2004. He had spent years marketing luxury brands like Aston Martin.
How much has Rapha lost?
15 million pounds last year and 21 million the year before, eight years of losses in a row, with the company valuation down by 102 million pounds.
Who are Rapha's rivals?
Pas Normal Studios in Copenhagen, MAAP in Australia and Cafe du Cycliste in France.
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