Founder Profile: Upcycling the Bicycle Market with GeoOrbital CEO Michael Burtov

I have a non-political background in government organizations working on international development. I spent some time working for Workers United under Bill Clinton. I was an investment banker trading derivatives for UPS and RVS after. Following the crash in 2008, I started my first personal business. Now I’ve been running GeoOrbital, my fourth company, for about 4 years.

GeoOrbital is a sub-powered electric wheel that can make any vehicle into an electric vehicle. Our current focus is on bicycles, where you can just take your front wheel off and replace it with our wheel. It can also be used for wheelchairs and anything else with a similar wheel size. We’re also developing methods for cars and alternative vehicles that don’t exist yet in the marketplace.

It’s the same size as a regular analog wheel except it has an entire powertrain and computer inside. We launched about a year and a half ago and command about 5% to 10% of the U.S. electric bikes market, which is impressive for a startup. We’re looking to increase our funding to keep that momentum going.

We’re a mobility company, not a bike company. There’s already too many bikes in the world—we’re looking to upcycle by letting you take your old bike from the basement and turn it into an electric bike.

It’s a different business than making bikes; it requires less manufacturing and with fewer parts that can break. It also opens up a world to distribution for retailers that have limiting agreements for bike parts.

The market is pretty large—it’s projected to be a twenty-five billion dollar market globally within two years. The market is already huge in Europe and growing over here. There’s been a lot of demand, especially as cities become more and more crowded.

There’s the advantage of a bicycle versus an electric skateboard, for example, in that many people don’t know how to ride electric skateboards and they are generally more dangerous. On the other hand, almost everybody knows how to ride a bike.

So we’re just taking that vehicle that you’re already comfortable with and that you already own and we’re making it a super vehicle by adding a wheel to it. That’s the unique difference between us and electric skateboards or scooters. Electric bikes were by far the most popular electric vehicles in the world.

We have three partnerships right now with bike share companies. We divide our bicycle wheel product line into two major categories: a direct-to-consumer product line and a fleet product line.

Although we’re doing pilots with bike sharing companies, we see the primary focus of our fleet as having employees of a company or members of an organization ride our bikes. That could mean anything from a college campus to law enforcement. We’ve been having a lot of success with law enforcement because it’s an accessory and doesn’t require buying a new bike.

And we’re also still exploring bike sharing options. There’s new entrants as we speak, though, as Uber just bought a company called Jump Bike. It’s an electric bike bike-share to add to their bike-share offering, which is mostly manual bikes at the moment.

The dockless bikes are not like the bike-share options that are popular in big US cities. We’re working on a pilot right now for a dockless e-bike. The opportunity is there, but there’s certainly challenges with the charging infrastructure that we hope to tackle.

We’ve sold about three thousand wheels so far, so we’re certainly a large vendor. We disclose everything to the customers, so we are certainly the most trusted in the space. We’re in an emerging market, so our competitors have started benchmarking to us. Our proxies do tell us that we’re the largest player in this particular space.

We initially assumed that people would consider the product a luxury accessory, but we were wrong. Once people were able to look at the cost of the wheel with respect to how much they pay for a car, it makes much more sense. Especially as cities become more dense it becomes more challenging just to drive the car.

The other concern we hear is safety. It’s a valid concern, but there’s a lot more infrastructure being developed, globally, to support bikes. As protected bike lanes become the norm and drivers become more educated, we’ve seen the concern for safety slowly going away.

The advantage of us having over a thousand investors is that they are actual people who believe in us and our vision. The word of mouth that happens when our investors buy stock has been a great way to build the brand.

That’s something we chose to do. From the very first day, we’ve been very transparent in letting the world see our financials. Everything about us; our faults, our advantages, they’re public and we allow the crowd to decide whether it’s something they believe in.

I’m very happy with this decision. That being said, we do have venture capital investors and angel investors. We’re not saying no to VC, we’re saying we want everyone to participate.

We need to buy inventory so that we can fulfill demand when we properly expand internationally. We had international expansions, but we had to back away from it because they weren’t logistically viable.We moved everything back to in-house inventory.

The second endeavor is to invest in making high volume molds for our products to decrease our costs of development. Our margins aren’t great right now, so when our costs go down we can logistically expand into Europe.  

Right now we keep assembly close by importing components from overseas and assembling them here. It’s good for maintaining quality, but we expect to have to manufacture in Europe when we expand over there. Whether or not we’ll continue to manufacture in the US isn’t clear, we have to see what the cost is and compare. Having a first and second generation product will make the process easier because we’ll have a tighter grip on quality control.

We make our wheels for about five hundred dollars and we sell for about a thousand, which works well in the D2C model. However, in order to expand our footprint and sell into retailers we have to go through two-step distribution where we sell to distributors, which then sell to retailers.

We were able to negotiate well with Best Buy and have a great cost structure with them. But, in order to continue to become a more traditional player we need significant cost reductions on our end in order to make two-step distribution work from a financial perspective.

They’ve tried, but they can’t use our technology because it’s patented. The thousand dollar retail price is actually much less than anyone else can put out there for a similar product. Most bike manufacturers already make their own ebikes, so they wouldn’t risk cannibalization. We’re a developed company at this point, if somebody wants to copy us, it will probably be more affordable to work with us rather than combating us.

If we choose to we can definitely be profitable. What we’re doing to supplement our losses is raising money from the crowd, which has helped us grow and capture more of the market. And that’s what we’re focusing on now. 

We could sell to break even if we wanted to now, but the value of the brand in its early stages is really important to us. Depending on how the market plays out, we could be profitable this year.