What happened to Rad Power Bikes? That’s the question on many minds in Seattle and beyond after the startup revealed Monday it is facing a potential shutdown due to “significant financial challenges.” Rad started as a scrappy hardware startup and grew into the largest e-bike seller in North America. The company’s co-founders won Young Entrepreneur of the Year honors at the GeekWire Awards. Rad raised more than $300 million in 2021 and hit a $1.65 billion valuation — a rare unicorn in Seattle.
But a series of missteps and macroeconomic challenges led to more than seven rounds of layoffs and a remarkable downfall. Rad said it could shut down as soon as January. “We are still exploring every viable option to preserve the brand and the community that helped build it,” the company said in a statement to GeekWire.
During a ride along the Burke-Gilman Trail in Seattle this week, we met John Ward, who was cruising on his Rad City electric bike. “It’s a bummer,” Ward said of the hometown company’s struggles. “I’m 76 and I don’t like climbing up the hills anymore, and I got this Rad bike and I’ve been very happy.” Ward, one of nearly 700,000 Rad riders around the globe, is a longtime cyclist who said he uses the e-bike for regular rides with friends and also trips to the swimming pool, the grocery store and the farmers market. He said he’s concerned that if the company goes out of business it will be tough to get parts or service.
We spoke with former Rad execs, industry experts, bike shop owners, and hardware startup leaders to understand what went wrong at the company. Rad’s story is a case study in what happens when a breakout hardware brand bets its future on a once-in-a-century pandemic demand spike — and then gets hit with a supply chain storm and the realities of venture-backed consumer hardware.
Rad gave customers “that feeling like they were a kid again,” co-founder Ty Collins told GeekWire this week. The company, born from founder Mike Radenbaugh’s teenage tinkering, launched a direct-to-consumer model in 2015 with an e-bike at an approachable price. “They made bicycles accessible to people that may be intimidated going into a bike shop,” said Peter Clancy, business partner at Westside Bicycle in Seattle.
Rad opened up a new “lifestyle” market segment — sub-$2,000 e-bikes for regular people, not hardcore cyclists. “Rad kind of built the e-bike space,” said Justin Taylor, editor at Electric Bike Report. Marty Pluth, general manager at Gregg’s Cycle, remembers commuting over Seattle’s 520 bridge and seeing “a ton of Rad bikes” owned by people in a ski jacket or baggy shorts — a sign the company had unlocked a new kind of customer.
Scrappy and scaling The company’s early team was a ragtag crew doing multiple jobs at once. It was also methodical. “We just really efficiently scaled our spend,” Collins said. Rad quickly found product-market fit after an initial crowdfunding campaign. From there, sales kept booming, from Ballard to Berlin. “We’d sell thousands of bikes in seconds,” Collins said. “We literally couldn’t keep bikes in stock.” The company reported $100 million in revenue in 2019 and landed investment from Darrell Cavens and Mark Vadon, former Zulily and Blue Nile execs. Later that year it inked a delivery partnership with Domino’s. “I see a business with super passionate customers, a cool product, and awesome entrepreneurs,” Vadon told GeekWire that year. “That’s what you want to be investing in.”
Pandemic boost Then the e-bike market exploded as the pandemic hit. People wanted to get outside and have fun. There was also a climate-friendly element. Rad cited a 297% increase in demand in May 2020. COVID brought the classic “is this a blip or a new normal?” dilemma for Rad and many other e-commerce companies experiencing a surge of orders. “The thought was that this was a catalyst in the electric bike boom,” Collins said. No matter what, “we had to make sure that we had inventory for it,” Collins said. “If people wanted to buy bikes, we needed bikes.”
Step on the gas Rad raised more than $300 million from investors in 2021, doubled headcount to more than 600 employees, and bet big on sustained demand. But like many other businesses during the pandemic, Rad dealt with supply chain delays and disruption. The company went to great lengths to meet demand — in mid-2021, it bought 64 containers and chartered its cargo from Asia into a non-traditional port near Seattle. Bike companies over-ordered on long lead times assuming COVID demand would keep going, according to Pluth. But he said the surge slowed dramatically by the summer of 2022. “Prices were driven down, margins were driven down,” Pluth said. “Rad was affected — everybody was.”
As the pandemic demand settled, Rad was saddled with hundreds of millions of dollars of inventory. “We just had too much inventory liability that we couldn’t be flexible,” said Leah Hunkins, a former supply chain leader at Rad. “It’s like walking around with a bowling ball around our ankles and going for a run — you can’t move.” A growth-at-all-costs mindset may have made sense while Rad’s bikes were selling faster than they could be built. But it ended up causing problems down the road as the company started missing revenue expectations. “The only thing we’re probably guilty of is being overly optimistic that Rad was on this trajectory of growth that would never stop,” Hunkins said. Collins, who stepped down in 2021, said the scarcity mindset began to shift once the company started raising outside capital. “When you have more money to spend … it does present a lot more doors that, in theory, could be opened,” he said. “It gives you a lot of keys to a lot of doors.” He added that the “internal secret sauce” to Rad’s success was allowing employees to “take real ownership over the brand and feel like they were really a part of everything.”
New kids on the block At the same time, Rad faced an influx of strong competitors — Lectric, Velotric and others — plus traditional brands finally moving into e-bikes, all slicing off pieces of the pie. As more options arrived — from cheap Amazon imports to higher-end brands — Rad was squeezed in the middle: not the cheapest, not the most premium. “The differentiation of our product got more challenging,” Hunkins said. Ward, the rider on the Burke-Gilman, agreed that a saturated market may have created trouble for Rad. During his short stop to talk to GeekWire, cyclists riding e-bikes from Aventon, Lectric, Emotion, Super 73, Gazelle, Urban Arrow and more passed by on a trail that’s been dominated by Rad in recent years.
Lawsuits, layoffs, recalls The company faced other speed bumps including a wrongful death lawsuit, a lawsuit related to property damage, and the recall of nearly 30,000 units due to a safety issue. More recent online posts about Rad highlight customer service issues. While Rad’s direct-to-consumer strategy was an advantage early (shorter supply chain, bypass bike shops), it carried long-term service obligations. Rad’s scale meant tens of thousands of riders looking for service in markets where independent shops had to juggle labor costs, parts sourcing and warranty expectations on bikes they didn’t sell. “It worked in the beginning, until people started having problems with proprietary parts,” said Matt Thomas, owner of The Polka Dot Jersey bike shop in Seattle. Over time Rad had to stand up its own stores and service network to support hundreds of thousands of bikes in the wild — an expensive, operationally complex layer on top of already thin hardware margins. Rad shut down its mobile services arm in 2022 and cut 100 jobs. Later that year, Radenbaugh stepped down as CEO. Rad pulled out of Europe starting in 2024 and closed some service shops. Meanwhile, the company went through multiple rounds of layoffs under new CEO Phil Molyneux, the former Sony president who stepped down earlier this year. The company is now led by CEO Kathi Lentzsch, who previously ran Bartell Drugs as CEO before the company sold to Rite-Aid in 2020. Hard times for hardware Rad’s challenges reflect broader difficulties facing consumer hardware startups in the post-2022 investment climate. “Hardware success requires patient capital as it will take a long time and money to build an enduring brand,” said Clayton Wood, former CEO of Seattle-based cooking automation startup Picnic. “That capital is very scarce in the last few years.” Wood noted that pre-2022, venture capital focused on creating unicorns, and hardware companies could raise on high valuations because of high price points and gross profits. “In 2022 the game changed, leaving anyone who raised prior with overvalued companies,” he said. It’s easier to pivot in software, he said, but hardware has high production setup and development costs. Amish Patel, managing director at Conduit Venture Labs, a hardware-focused startup studio, also pointed out structural challenges. Patel said consumer hardware companies with unit-margin-based business models face particular challenges. Hardware brands selling $250+ products rely almost entirely on consumer demand and scale, he said, and when margins tighten — with no software, service, or subscription revenue to offset — the business becomes extremely fragile. RELATED: Seattle’s long history of hardware heartbreak: Big raises, high hopes, hard landings