From Instant Sensation to Near Collapse: The Rollercoaster Journey of Rad Power Bikes

Once the biggest e-bike seller in North America and a Seattle-based unicorn valued at $1.65 billion, Rad Power Bikes now teeters on the edge of collapse. Following several rounds of staff cuts and operational downsizing, the company acknowledges it could cease operations as soon as next January.

Rad’s ascent and decline perfectly illustrate the survival hurdles confronting the e-bike sector as its "boom-era dividends" diminish.

The Rise: Timing, Product, and Market Alignment

Rad’s achievements originated from releasing the perfect product at an opportune moment, capitalizing on a vast underserved market. Back in 2015, it rolled out e-bikes costing less than $2,000, embracing a direct-to-consumer (DTC) approach. Instead of targeting professional cyclists, it focused on casual commuters and leisure riders—carving out a distinct new market niche. “They made e-bikes accessible to folks who might never have set foot in a bike shop,” observed an industry insider.

After its initial crowdfunding effort, Rad quickly found its product-market match. Sales soared: “We sold thousands of bikes in mere seconds; we could never keep up with stock,” recalled Collins. This precise positioning fueled skyrocketing revenue, with the company hitting the $100 million mark in 2019 and securing investments from former Zulily and Blue Nile executives Darrell Cavens and Mark Vadon.

The COVID-19 pandemic acted as a driving force: in May 2020, demand spiked by 297% compared to the previous year, as individuals sought secure commuting and outdoor recreational options. “Rad essentially created the mass-market e-bike category,” noted overseas media, with “fleets of Rad bikes” growing common on daily commutes.

The Fall: Misjudging Growth and Mounting Crises

Confronted with skyrocketing demand, Rad made a critical choice: confusing short-lived success with enduring stability and chasing growth regardless of the cost. In 2021, it raised over $300 million in funding, doubling its workforce to more than 600 employees. To tackle supply chain disruptions, it even chartered shipping containers to transport goods from Asia to non-traditional ports.

“We only made one error—being overly optimistic that Rad’s growth path would never end,” later summed up former supply chain chief Leah Hinkins. By the summer of 2022, the demand surge had slowed dramatically. “Prices and profit margins declined, impacting Rad—and everyone else in the space,” said Pruess.

As the pandemic dividend faded, the consequences of aggressive expansion came to a head. The hundreds of millions of dollars’ worth of inventory accumulated for “non-stop growth” turned into an overwhelming liability. “Our inventory obligations were so massive that we couldn’t adapt nimbly,” Pruess emphasized. Selling bikes below cost to clear stock was unworkable: “The more you sell, the more you lose.”

Rivalry heated up as emerging brands (such as Lectric and Aventon) entered the marketplace, while established bicycle manufacturers unveiled electric versions. Rad became trapped in an awkward middle ground—neither the most affordable nor the highest-quality option. “Differentiating our products grew much more challenging,” shared a rider who once witnessed Rad dominating routes now filled with competing brands.

While the DTC model initially reduced costs, surging sales transformed after-sales service into a heavy burden. Supporting hundreds of thousands of bikes in the market forced Rad to build an expensive, complex service network. “It worked until users started encountering issues with proprietary parts,” further eroding thin hardware margins. In 2022, Rad shut down its mobile service division and laid off 100 staff; later that year, founder Mike Radenbaugh stepped down as CEO. By 2024, the company had withdrawn from Europe and closed several service locations.

Industry Lessons: Beyond Rad’s Plight

Rad’s dilemma is far from unique. After 2022, the venture capital landscape shifted, making the “unicorn” model of pursuing rapid valuations unsustainable. Prior to 2022, VC firms focused on building unicorns, with hardware companies securing high-valuation funding thanks to elevated prices and margins. “Post-2022, overvalued firms struggled,” explained Clayton Wood, former CEO of startup Picnic. Unlike software, hardware carries high production and development costs, leaving little room for strategic pivots.

Consumer hardware brands relying on low-margin, scale-driven business models face unique risks. “Brands selling products above $250 depend entirely on consumer demand and economies of scale,” noted Patel, a startup studio general manager. “Without software, services, or subscription offerings to offset shrinking margins, their businesses become extremely fragile.”

“Hardware success requires patient capital—which has been in short supply in recent years,” Wood added. For low-margin, scale-dependent hardware brands, a demand downturn leaves almost no room to maneuver. “It’s strange that companies like this can’t sustain themselves without massive cash injections,” said David Johnson, owner of an e-folding bike company. “It seems fundamentally unsustainable.”

The Takeaway

Rad’s trajectory provides a stark lesson for the industry: overcommitting to occasional demand spikes is risky. Maintaining vigilance over cash flow and inventory during boom periods is just as crucial as pursuing growth. While the industry outlook remains positive—with the U.S. market projected to grow from $54.1 billion in 2025 to $87.1 billion by 2032—Rad’s fate serves as a warning to all players. The company is still exploring survival options, aiming to “protect the brand and the community that built it.”