Trek Bicycle Corp.
Pedaling a bike is one of John Burke's favorite things to do, and it plays an important role in creating "the world's best bikes and cycling gear," which is how his company, Trek Bicycle, brands itself.
Richard Burke, John's father, cofounded Trek in 1976 in a barn in Waterloo, Wisconsin. John Burke joined his father's company in 1984 and became president of the privately owned corporation in 1997.
Today, Trek is a billion-dollar company with 2,000 employees, half of whom work in Wisconsin, and it still makes custom road bikes by hand in the US. Trek owns several brands, and it sponsors or owns eight racing programs, including the Trek-Segafredo team, which competes in the Tour de France. Trek is also an industry leader in bicycling advocacy.
Things haven't always been so rosy. Lance Armstrong made Trek a richer company in the 2000s, but Trek officially terminated its relationship with the disgraced sports icon in 2012 after it was found that he had doped during his Tour victories. Around that time there was also a bitter legal dispute between Trek and partner Greg LeMond, the former American cycling champion, but that was eventually resolved. The company has moved on, and it appears to be at the top of its game again with renewed energy and purpose.
In a Business Insider interview at Trek headquarters in Waterloo — "the Silicon Valley of high-end and custom-built bicycles" — Burke talked about Steve Jobs' influence on Trek, "the Lance effect," making bicycling safer, and President Trump's tax plan.
Daniel McMahon: Trek started back in '76 in a barn with five people. Today it's a billion-dollar company with 2,000 employees. Did you ever imagine it would grow this big?
John Burke: My dad was always focused on the sales number and I never really was, even though I was the sales guy. To me the size doesn't matter. What matters is your body of work. How good are the products? How incredible is the service? How are we taking care of our customers? If we do an amazing job on the product side and we do an amazing job taking care of our customers, the business will grow, and that's what I like to focus on.
McMahon: Does that become more challenging as you grow bigger and bigger?
Burke: It becomes more interesting.
In one way it becomes more challenging because there's so much turmoil in the market. And as companies get bigger, the natural tendency is to become slower and to not change. And in other ways it's incredibly interesting because we've never had more opportunities and we've never moved faster as a company. There isn't a day that I don't get up and I'm not fired up to come to work. There's a lot going on here.
Trek Bicycle Corp.
Trek Bicycle Corp.
McMahon: So getting better is what motivates you?
Burke: Somebody once said that a successful life is living up to your potential and giving back to others, and I think that from a business standpoint, I always want us to live up to our potential. And you're always chasing your potential. The more you improve, the more potential there is. It's just a game. And we have a massive amount of potential.
McMahon: Trek has been around for about 40 years now. What does success look like for Trek today?
Burke: I would define success for Trek as living up to its potential and giving back to others. One of the things we do at Trek that I'm really proud of is how we use the bicycle company for other people. My mother and my father were huge believers in "To whom much is given, much is required," and neither one of them started off with a lot of money. We've been able to take that philosophy and move it into the business.
Take a look at Dream Bikes, which we've had for 10 years now. We did that in Madison and it became successful, and then added a second location there. We've got one in Milwaukee. We just added one in New Orleans and two or three others, including one in Chicago. That's a big thing for us. Look at NICA [National Interscholastic Cycling Association]. They got 7,000 kids and it's been growing like a weed. We got a guy here, Aaron Mock, and his wife, and they do an amazing job volunteering for NICA, and they really made the Wisconsin NICA happen. There are 450 kids in Wisconsin in NICA, and so I became more interested in this, and we said, "We're going to put the full force of Trek behind NICA." Last year we gave them a million dollars, and we're giving them our time and energy.
We did research. We asked, "How many golfers are there in the United States?" Well, there are 400,000 golfers in the United States. Mountain biking should be able to exceed golf by 2030. Get your kid outside, get your kid exercise. The family can get involved, and it's a no-drop sport. There's a high school in Utah that has 300 kids in high-school mountain biking.
Another program we're working on is PlacesForBikes. In June we're having a conference here in Madison, and we're going to take leaders in bicycle advocacy and say, "How can we move faster to make America more bicycle-friendly in cities?" And the only way that program could happen is because of Trek. We put a bunch of resources in it, we worked with a bunch of companies, and now we're getting our competitors involved in supporting that program. We love to do great things with the bike company.
Daniel McMahon/Business Insider
Daniel McMahon/Business Insider
McMahon: Do you ever feel as if Trek is growing too fast and going in too many directions? You talk about focusing on making great products and providing great customer service, and you've spoken elsewhere about how you admired Steve Jobs and his passion for quality.
Burke: I tell you, one of our failings is that we do too many things. And you're right, I'm a huge fan of Steve Jobs and what he did at Apple, and we've used those lessons very well here. But we do bite off a lot of different things. We have an appetite for change and we want to play. There are a lot of companies who've seen this advocacy stuff, and most of the bike industry sees it and they go, "That's not me — somebody else does that." And we see that and we say, "No, that's part of our reason for being." And so we do that kind of stuff. We do a lot of different things.
McMahon: Describe your decision-making process. You come off as a no-nonsense guy who makes decisions quickly.
Burke: Yeah. [Laughs] You know, my decision-making process happens in this room. There are these two whiteboards, and the reason there are two is that one usually gets filled up and we go on to the other. But my decision-making process is really simple: I get the best people in the room, I get a whiteboard and a bunch of markers, and I listen to what everybody has to say, and I write it all up on the board, and then we figure it out, and we go. I love getting people's input — that's why you have people. And we have so many smart people around here.
We have an appetite for change and we want to play.
When you can put stuff up on a board you can visualize it; it just helps me think the problem through and it becomes clearer. I thought I was weird that I always had to have this whiteboard. Then I Googled "Steve Jobs whiteboard" and he was a huge fan of it. So in all the Trek offices around the world there's a big whiteboard.
McMahon: How do you pick the right people? And what's an "awesome bus"?
Burke: We have this thing where we say, "Get the right people, in the right seats, in the awesome bus." The whole philosophy of the awesome bus is a great place to work. We do everything we can to make Trek a great place to work.
If you look outside the door here, we've got the best 15 miles of mountain-bike trails. They're not in Whistler, they're not in Colorado — they're right across the street here in Waterloo. And you see people go over by the hundreds every day to go ride their mountain bikes. We have this amazing café — it's frickin phenomenal. And the largest ESOP [employee stock ownership plan] in the state of Wisconsin is Trek. Employees own a good piece of the business here. And if you take a look at our health program, we do everything to make this a great awesome bus.
So what we look for and who that's up to are our great individual leaders who are tasked with hiring their teams. I hire my team, but those people go and hire their teams.
If you take a look at the guy in charge of legal at Trek, he's been here for 22 years. The guy in charge of our international business, he's been here 28 years. Guy in charge of product, 29 years. Guy in charge of US sales, 31 years. If you take the woman in charge of global customer service, she's been here 28 years. The woman in charge of the international distributor market, 28 years. We've got a core group of people who have been here a long time.
And when you go down in the organization, people spend a lot of time here, and they do so for a good reason. I always thought, if you take a look at the ballplayer who plays for the same team his whole career, that's something special. People move around in companies more today than they ever have, but when you just take a look at some of these people who have worked at Trek for a long time, I look at that and I say, that's really cool. And you won't find that anywhere else in the bike business.
Daniel McMahon/Business Insider
Daniel McMahon/Business Insider
Daniel McMahon/Business Insider
McMahon: How do you feel these days about Specialized, one of your fiercest rivals?
Burke: I think Specialized is a great competitor. They make us better.
McMahon: You've been candid about wanting to beat them.
Burke: I respect all the brands we compete with. Specialized does some good stuff. We have a great competition with Specialized and with other companies. The one thing I like the most about Trek is we're not focused on Specialized; we're focused on Trek. If we do what Trek needs to do, we're doing great. We have so many great plans on the drawing board; we have so many platforms to execute on.
Let's focus on what we're doing. That was one of the keys at Apple: They stopped focusing on Microsoft and they did their deal. What Trek needs to do is focus on Trek.
McMahon: It's been over decade since the beginning of the end of "the Lance effect." Armstrong's influence was clearly a critical chapter of Trek's business and history. Now that you've had that distance, how do you look back on the Lance effect today?
Burke: The best thing about the Lance effect is probably two things. One, it got a lot of people riding their bikes. Not just riding around the neighborhood — I mean, it got a lot of people into serious riding. Marathon riders picked up cycling. It got a lot of people into the serious side of the sport. That had a huge impact, not just on the business but on the sport itself.
And then what he did for the Tour de France and the way that brought bike racing to the masses. I mean, I frickin love bike racing. Bike racing is an amazing sport. People would not have seen as much bike racing if Lance wouldn't have raced in the Tour de France. He got a lot of people to tune in and see what racing was about.
McMahon: There are many examples of successful and unsuccessful business relationships — Armstrong and Tiger Woods spring to mind. What business lessons did you learn after working with Armstrong?
Burke: Lance did for cycling what Tiger Woods did for golf. When the sea rises so do all the boats. That's what Lance did. And it wasn't just Trek: It was anybody who was doing road bikes. Before Lance started riding there were really only two companies selling road bikes — Trek and Cannondale. Then all of a sudden everybody and their brother was selling road bikes in the United States. So it definitely grew the market and brought a lot people into the game.
The thing that excites me is, I've been lucky enough to ride my bike in some amazing places and to really enjoy cycling. It got people into the sport who I thought would never ride.
McMahon: Last year, your second book, "12 Simple Solutions to Save America," was well received. It "challenges Americans to resist the status quo and change what elected officials are unwilling or unable to change." Trump is now president, and he promised to bring about great change. What do you think so far?
Burke: We're 100 days in and he finally comes out with a tax plan — and it was 250 words? And there was no bad news. Here's this huge opportunity to simplify everything and to have massive change, and you get 250 words. Look, I don't need a tax break — Trek doesn't need a tax break. We're going to succeed and fail in the market based on how good our products are and how good our services are. But as a member of the community, we have a moral duty to be a good corporate citizen, and one way you're a good corporate citizen is you pay your taxes.
You have General Electric, a great American company, which made a profit of $12 billion. They filed a 57,000-page tax return and paid zero in taxes. So if you want to reduce corporate taxes, that's fine, reduce them, but Trump wants to reduce them from 35% to 15%, and I think that's too big a decline. But then he doesn't want to get rid of any of the deductions? Why do oil companies get deductions and bicycle companies don't? Why do certain industries get deductions and shoemakers don't? The brewer doesn't get a deduction. It doesn't make sense. You're leaving in place this super-complicated tax system.
So it's treats for everybody. For corporate America, you get a lower rate, and you get to keep your deductions. And for all the individual taxpayers, you get a lower rate. We're 19 trillion frickin dollars in debt and everybody got a treat. And I just go, "You're kidding me." You call that leadership? I don't.
When you're the president of the United States and you come out with this "American First" theory, what are you saying to the rest of the world? I've been so fortunate here in growing the business. When I started here, we were doing $16 million and now we do over a billion dollars, and I've worked with an incredible team to do that. We took the business from just being in the US to right now — 60% of our business is around the world.
And one of the reasons why American is as strong as it is, is there are a lot of great American companies who have access to markets all around the world — General Electric, Coca-Cola, Apple, Trek, Harley-Davidson. The whole American First thing ... I just don't find that conducive to America's future or anyone else in the world.
The best definition I ever heard of leadership is, leadership is the ability to make the dream a reality at the grassroots level. But leadership is also, "Here's the vision, and I'm going to convince people where we need to go." And what we've come to in American politics is saying, "Well, I need to get elected, so I'm going to tell all these people whatever they want to hear." If you're the richest person on the playground and you're the biggest person on the playground ... we usually lead like, "Talk softly and carry a big stick," and when we're walking around with a blow horn, that's not the way we roll.
We're a leader in the world, but to maintain that status over the long haul, you actually need a leader who can look at the people and say, "You know, we've got problems here," and whether your talking about tax codes, gun control, nuclear proliferation, big issues, "Here are the problems, and here are the solutions, and this is why we need to do it." And more than just a sound bite, we've got to educate people and say, "This is why we need to move here." And I think we lack that right now, and I think we've lacked it for a while.
McMahon: Going back to advocacy, it's obviously good for business, but what specifically got you interested in it?
Burke: I got involved when [Minnesota congressman] Jim Oberstar called me in 1997. There was a transportation bill and they said they needed some industry help. And I was like, "What?!" He said, "I really want you to come down to Washington." So I went down there and he's like, "You need to get involved." I had been to Europe, and I had seen what cycling could do — it's amazing. And the more I got into it, I'm like, "This just makes sense for the country — it makes sense for the people." And it's not going to happen unless you get people involved.
When you have good bike infrastructure, people ride their bikes.
So I got involved in advocacy and I got other people involved. You went from the federal government spending $20 million a year to spending over a billion dollars a year on cycling infrastructure. And it happened because of Oberstar and the support he got, and it's made an incredible difference. That goes back to the bicycle's been really good to me, and it's like, what can I do? I can do many things. There's NICA, for example. We're doing PlacesForBikes, and that stems from the advocacy.
McMahon: One product I really like is the Flare R taillight. How did it come about?
Burke: I was out in San Diego about five years ago, and I was driving along Highway 1. There was a guy riding a road bike and he had a light on the back of his bike, and it was the first light I'd ever seen on the back of a road bike. And yet you really couldn't see it at all — the light it was emitting, you just couldn't see it. And I go, "That's a great idea."
I came back and I said to the guys, "We need light on the back of road bikes that do this." So we came up with the Flare R. I think that is the most awesome product. I have a sketchy stretch on my way to work here, and as soon as I put that thing one, I could tell that I was getting more space. Whenever I have to drive my car in to work here, I have so much pride when, all of a sudden, you can see, from a mile and a half away, this lineup of lights going into Trek.
McMahon: How optimistic are you for the future of bicycling? There's lots of hype about autonomous cars, ride-sharing, and the rest. You once talked about how in the US only something like 1% or so of all trips are made by bicycle, and that the goal should be 5% by 2025.
Burke: I'm still optimistic. You see this in places like New York, where they put in the infrastructure and a ton of people ride their bikes. You see it in DC. Whoever thought there would be a bike lane from the Capitol down Pennsylvania Avenue? If you would've told people that 10 years ago they would have said you're crazy, and that happened. You see places like Portland and here in Madison. When you have good bike infrastructure, people ride their bikes.
I just take a look at the bike's impact on the environment — people just don't understand how big a problem we have with the environment. It's a really big deal. And the No. 1 choice a consumer can make is what kind of gas mileage their car gets. I ride my bike to work and back every day in the summer. That's what kind of gas mileage my car gets in the summer. And you look at 40% of car trips being less than 2 miles, and you just go — bikes can have a huge impact. And I still think all of that can happen.
The next 20 years are going to be really kind to the bicycle.
McMahon: What assumptions do people have about you or Trek?
Burke: One thing about Trek is, some people see it as this big bike company. I had an ex-competitor walk up to me last week, and he said, "John, you have the most amazing company." He goes, "The values you guys have are just unbelievable." And I was like, "Wow, that was really cool." This place has an amazing heart and an amazing soul.
So when you buy a Trek you get an owner's manual. If you open it up there's a note from me. Usually when you open up an owner's manual there's this sh-- you can't even understand, and ours used to be like that. I said, I want to write our owner's manual. You got all these legal people writing the frickin owner's manual, and I was like, I want to write it.
My manual says: Thank you for buying a Trek. Welcome to the Trek family. If you ever have a problem with your Trek, see your Trek retailer and they'll take care of you. And if they don't, call Trek and we'll take care of you. If Trek's not taking care of you, send me an email and I will take care of you. And I signed it.
So every year I can tell you when the bike season kind of kicks off because I start getting emails. I just think it's kind of interesting that you can send an email to the CEO of Trek and you'll get a response that day, that if you got a problem, you're always going to be taken care of — always.
I got an email from a guy last night, and he got a response in 30 seconds. I replied — I do that stuff all the time. One customer at a time, because that's how we roll. I don't care how big we are. I'm more concerned about how great our products are and how great our service is. If we nail that, we'll do really well.