Nirve Carves Out Niche With Hip Bikes Cruz, Sherri 1,192 words 28 June 2004 Orange County

Business Journal 1 Dan Bon, chief executive of Nirve Sports Ltd., is flipping through GQ magazine's May beach issue. "Here it is," he said. Nirve's $680 "Fifty Five" bicycle is featured popping a wheelie. The magazine picked the bike as one of its "best new rides." "That would cost $90,000 if it were an ad," Bon said. But Bon and Fountain Valley-based Nirve didn't dole out anything for the exposure. The magazine contacted him, he said. In fact, Nirve quit doing print advertising a few years ago as part of an effort to rescue the company from near death. These days, Nirve relies on reviews, product placements and partnerships to sell its bikes. Nirve ships 3,000 to 4,000 bikes a month from its 12,000-square-foot warehouse and office building off the San Diego (I-405) Freeway. During the summer, Nirve ships 5,000 to 6,000 bikes a month. All of the company's designs are done in Fountain Valley, where Nirve employs 11 people. Contractors in China and Taiwan make the bikes. Bon declined to say what Nirve's yearly sales are. The company's bikes sell for $240 to $680 apiece. The Business Journal estimates Nirve's annual revenue at about $15 million. That's a small piece of yearly U.S. bike sales, which last year were $571 million, according to Bicycle Product Suppliers Association of

Montgomeryville, Pa. But Nirve, which makes stylish beach cruisers, is big on cachet. It's made a bike with Costa Mesa clothing designer Paul Frank Industries Inc. "The O.C." uses Nirve bikes on its set as props. Irvine-based surf and sportswear retailer Tilly's featured the bikes in its catalog. "They're super popular in the Huntington Beach area," said Ben Lassanske, manager of the Surf City store of Irvine-based Jax Bicycle Center. Nirve is swimming against the tide of the bike industry, which saw sales slip 12% last year. Bike makers sold 500,000 fewer models last year than they did in 2002. Bikes by Nirve and Electra Bicycle Co. of Carlsbad are the biggest sellers at Jax's in Huntington Beach, Lassanske said. On a given weekend, Lassanske said his store sells 50 to 60 beach cruisers. Other rivals include Wisconsin's Pacific Cycle LLC, maker of Schwinn, GT and other brands; Ohio's Huffy Corp.; Taiwan's Giant Manufacturing Co.; and Sausalito-based Simplicity Cycle Co., maker of Breezer bikes. Bon, a bike veteran who came to Nirve in 2001, said his strategy is to look beyond the traditional market to niche riders, including followers of surf and fashion. Take Nirve's Paul Frank model. The red bike with black fenders features Paul Frank's trademark cartoon monkey Julius. "The Paul Frank aficionado might not have bought a bicycle," Bon said. "But if they're going to buy a bike, then they're going to buy this one." Hello Kitty bike: sales surged after Ashley Judd auctioned one for charity Nirve also did a bike with Japan's Sanrio Co. featuring Hello Kitty, Sales were slow at first, Bon said.

Then in December, actress Ashley Judd appeared in US magazine with a photo of a Hello Kitty bike she auctioned for charity. "Next thing you know our phone lines are. lit up," he said. Nirve reaches a different audience with its yellow Mooneyes bike, done with Mooneyes USA Inc. in Santa Fe Springs, a seller of highend auto parts. "It wasn't our intention to sell bikes," said Chico Kodama, manager of the Santa Fe Springs store. "They approached us. I said, 'Yeah, why not.'" Nirve recently debuted a green and yellow John Deere bike "that reaches a whole different consumer," Bon said. Illinois-based Deere & Co., known for tractors and lawn motors, was a question mark at first, according to Bon: "How does a piece of agricultural equipment fit into the Southern California lifestyle?" Nirve found that John Deere, like Hello Kitty and Paul Frank, has a big following. "We've been sort of a cultural trend for a while," Deere spokesman Ken Golden said. Actor Ashton Kutcher wears a John Deere cap. Musician Kid Rock showed up on Men's Health magazine donning his John Deere hat. Paul Frank, which is launching a line of John Deere clothes and accessories next month, introduced Nirve to the company, Golden said. Licensing pacts land Nirve's cruisers in places bikes don't normally tread-South Coast Plaza, the Beverly Center, Nordstrom, surf shops and trendy boutiques. The MGM Grand Hotel and Casino in Las Vegas sells Nirve's Pink Panther 40th anniversary bike.

Nirve is big on details-decorated saddle seats, stamped bike treads, flared-tip fenders, colored rims. The top tube of Nirve's bike frames are wedge-shaped, rather than round, to better display graphics. Cormac O'Modhrain, general manager at the Hyatt Regency Resort and Spa in Huntington Beach, calls Nirve bikes "works of art." Newport Beach-based surfwear maker and retailer Toes on the Nose rents and sells Nirve bikes at a store inside the Hyatt. Bon and two others design Nirve's bikes. One of them is Aaron Bethlenfalvy, vice president of product design. He is big on custom car culture, Bon said. That shows up in Nirve's Cannibal Chopper, the Pyro and its hand painted Skulls model. Bon said his inspiration comes from clothing. He said he spends time at the surf shops on Main Street in Huntington Beach, noting colors and styles. One surf-inspired model is Nirve's Island Flower bike, which has brown fenders and coral Hibiscus flower graphics on a teal frame. The bike is one of the better selling of Nirve's some 40 models, he said. Nirve was started by Bill Duehring in the late-1990s as a dot-com. Back then, everyone thought retail's future was online, Bon said. The company even raised venture capital. Duehring stepped aside when Bon came on and later went to Lake Forest-based Felt Racing LLC. Nirve was struggling when Bon took over, he said. He cut Internet and media staff in Century City. "We got rid of all that," said Bon, who used to work for Santa Anabased GT Bicycles Inc., which was bought by Schwinn in 1998.

Today, Nirve has a full-time warehouse manager. Everyone works in the warehouse, including Bon, who prides himself on running a lean operation. "The game we're playing is called the dollar sign," he said. "Figure out how this game piece can make more dollar signs." During the busy summer months, Nirve hires high school students to unload shipments. If needed, the company hires day laborers waiting for work outside the local Home Depot. "It's just what a company has to do to thrive in Southern California," he said. The long-term plan is to build the company and sell it, he said.