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Welcome to the Decoding Innovation podcast series, brought to you by EY-Nottingham Spirk Innovation Hub, where we explore the innovative technologies, business models and ideas that are shaping the future of industries. During each episode, Mitali Sharma, a principal in the EY-Parthenon Strategy practice, meets with stakeholders at the cutting edge to discuss innovations in their space, challenges they need to overcome and their outlook on the future.

Mitali Sharma

Hello and welcome. I'm your host, Mitali Sharma. And today, we will be talking about e-bikes with the Founder and CEO of Ohio-based company LAND Energy, Scott Colosimo. Scott, welcome to the show.

Scott Colosimo

Thanks for having me here.

Sharma

To start, Scott, for the benefit of the audience, would you mind taking us a little bit through your background, and how you came to be designing and manufacturing e-bikes?

Colosimo

Sure. It's a good primer. So, my way to entrepreneurship was through design. I did not go to business school. I went to design school and entered the automotive design world right out of school. I stayed in that world for a short period of time and then moved to Germany. So, I was doing some automotive design in Germany, and decided it was too big of an iceberg and too slow for me to actually effect change. I'd been dreaming about becoming an automotive designer since I was ten years old, so it was quite a big change for me to say, “Okay, I don't want to do this anymore.” I moved back to the US, started working for a very large consumer brand company, and during then the apocalypse in 2008, decided there were no jobs, so, I started my first manufacturing business, where we designed and manufactured all of our own products. That was 2008; I sold that first company in 2020. And then, you know, right during the pandemic, I decided to completely pivot from gas motorcycles to electric. And that electric journey, that discovery has really been eye-opening. And I think being a designer and inquisitive and having a team that was still is super curious have really helped us in our process.

Sharma

Tell me more about that. From a designer background like an art background to a fairly technical product, what do you think are the advantages or disadvantages of your particular background?

Colosimo

Well, I'll start with the disadvantages, because those are obvious. And I spent 12 years figuring out the business side of things with my first business. So, in some ways, I could have been farther ahead if I had both design and business degrees. But given the split, I think design has taken me much farther than a general business degree would have. And then I just kind of learned all the international trade, logistics, manufacturing and contracts — I just kind of learned all that on the job. But I will say that creativity and the ability to think nonlinearly like think of it as not segregating issues, but solving a bunch of issues at once. That really helped me in the founding of the first company.

And all those lessons learned, I think design has been pivotal to me, mostly because the design process is one of critiques. You're constantly getting critiqued and at the end of the day, anybody can give their opinion on the visual, if they like it or don't like it. So, it helps you form a very thick skin and helps you take critique constructively, right? Because if you don't take it constructively, you will be out of design school. But I think there’re different paths you can take in your — there’re different parts of design, right? It could be fashion, it could be styling, it could be very focused on a product, and that was my path. I was really focused on solving problems. So, I would say I'm kind of one part designer, one part engineer, where you sketch it, but then you also have to build it. And because I'm such a control freak with the design, I would create as much as I could to get my desire and my thought as far as possible, so an engineer wouldn't come in and just kind of destroy the look or the value or whatever we wanted the consumer to see.

Sharma

Let's talk about that transition from a traditional motorcycle, which was your Cleveland Cyclewerks to e-bikes. First of all, why and then, what were the challenges as you were thinking about it?

Colosimo

Sure. So, I think first, we need to get the terminology correct just so if there's anyone in the industry listening, so they understand exactly what we're doing. We are not doing e-bicycles. That is not our thing. We do everything other than a pedal bike.

So, pedal-less throttle-controlled bicycles to electric mopeds to full-blown motorcycles. And we slant toward this new category that we are calling eMoto, which is a transitional vehicle. So, it's not a 3 to 700 pound motorcycle that's meant to go on the highway or go super long distances. And it's not a traditional bicycle that's only meant to go around 20 miles per hour. So, there's this new emerging category, which is city dwelling or in the country, it can go have speeds excess of 40, but can live in both environments. And we see that as a big growing market. So, what we're doing is we're coining eMotos. They used to exist in abundance and in the form of a moped. It's just that as things are moving, the eMoto offers much more benefit. So, I'll just briefly talk about the transition. With Cleveland CycleWerks — with my first company, we entered an existing market that the product hadn’t really changed in 100 years. I mean, basically, we went from human-powered bicycles to small gas engines to bigger and bigger gas engines that went faster and faster. Throw some technology on top of it, and 100 years later, you've got the same thing. And when you're talking about vehicles, packaging is everything. And when you're talking about motorcycles, packaging is two wheels and there's a big, heavy thing that sits in between those two wheels. There's only so much you can do to change that paradigm. So with Cleveland CycleWerks, we looked at making the entry level into motorcycling desirable. The whole industry was kind of using the entry-level bikes to step people into their very expensive, you know, what we call bike mortgages. And they weren't looking at the entry market as the product. That was always the product to get the consumer to the next level. And we said, “Well, this is the product and how we build a whole business around a beautiful performance-focused, but not race bikes, high style and customizable.” Like a tailored suit. And it was just that. So, we disturbed this whole industry that had grown up forever with this kind of step-up approach. And we just looked at it from a very, call it simple perspective, and we kind of stayed in that lane, but we couldn't effect too much change. The transition from gas vehicles to electric was, to me, a natural progression. Just because there's only so much you can do with the packaging of a gas motor. It's been the same for 100 years, right? It's got this big gas motor that's just between two wheels. And you can't really do much with that other than centralize it and make it as low as possible. So, the packaging limitations are there for sure. And moving to electrification, it gives us a lot more freedom, because there're a lot more choices. Now, you still do have a battery. It's fairly large and you do have an electric motor, but you now have freedom to move these components around. You can design them differently, you can mold them, and in our case, you can make them removable. So, the swappable batteries were kind of the big focus of all of our design. The transition from gas to electric, I think, was natural for us, especially if you're running a small business and you're looking at “Okay, the government's going here, the whole auto industry is going here, and all the regulations going here.” There's a tail wind, right? And there's a head wind trying to keep producing gas motorcycles. And being a small company, you want to look for as much benefit as possible. So, there was an obvious benefit for us just on the business side, to make the transition. And as soon as we made that transition, all the benefit became clear and that's what we didn't realize is exactly how big of a change this was going to be in the opportunities that it afforded us outside of the vehicle, especially on the energy side. And that's why the company is LAND Energy, because that's the bigger vision.

Sharma

Let's move to the concept of this new category that you created — Moto. Now, electric bikes by themselves is a huge category, growing at a very fast clip. And I'm just curious why you decided to bifurcate into a narrower category and what led you there?

Colosimo

Well, this is a good question. So, let's say, at first, that we see ourselves as curators of what we want to do. And we're not trying to take the whole market. We're playing in a niche. So having said that, what we do when we go to design a product first and foremost is we test everything that's out there. So, we did a two-week process, where our whole R&D team tested almost — I want to say we had everything above bicycle, because there're hundreds of bicycles, but we did have a couple substantial e-bikes.

So, we tested e-bicycles, e-mopeds and every available electric motorcycle that existed, on top of, not just looking at that, but existing products. And what we did was just say, “What do we like?” And “What we don't like?” And we used them over and over in various terrains — in the city, out of the city, in the mountains, in the woods and on the highways.

And we decided, first and foremost, where the technology was. And I think that's the biggest mistake that a lot of what we call the tech pros make — designing a widget and trying to figure out a market that fits the widget.

Our process was, “Where's the market? Where's the technology? And how does the consumer demand the technology? How does it fit together without ‘drinking the Kool-Aid?’” And we are in this world of electrification that is almost reached like a religious fervor. And we had to cut through so much of that chatter and decide what our path was. And the only way to do that was to test the product, test the product, test the product, test the product, test the technology, and really get a robust understanding of what it's good at and what it's bad at. I can tell you, electrification — and anyone else who's gone into two- or four-wheel electrification — we know the drawbacks. The drawbacks are weight. The drawbacks are speed.

There're certain things, at least in the two-wheel space, that electrification is really good at — small city, high torque and 0 to 60. There’re certain things it's amazing at. There’re certain things it's not great at, such as going very long distances at very high speeds. So, I say, consumer insights are important. Doing our own insights are important, but then curating all that down and saying, “What direction do we want to go?” Taking all that information, that was very important. And through that process, we came up with swappable batteries are a must, because the technology's moving so quick. Lightweighting was a must. Keeping the vehicle under 100 miles per hour was an absolute. Not trying to get too aggressive with the range was an absolute. We figured about 120 miles was the maximum distance we can push with today's technology and still keep the bike lightweight. And then how to offer more benefit than the existing thing? And that's where electric motorcycles right now are failing.

The whole industry is just trying to convince a gas motorcycle rider that this big 1000cc motorcycle is as good as this gigantic heavy gas motorcycle. And the unfortunate thing is the reality is the gas motorcycle, when you get bigger and faster, is better at doing what motorcycles do than electric. So, the approach we took was just really simple. It's use it, don't lie to ourselves, don't believe the fervor, validate, validate, validate and then curate. And that's kind of how we got to where we are today.

Sharma

Let's double click on a couple of things you said. One was prototyping. I want to understand your prototyping journey that led you to the two models that you have in two aspects. One is how many prototypes did you actually have? How did you test them? And did you have partnerships in creating those prototypes?

The second question, maybe it's connected, you let me know, is around your swappable batteries. What influenced you in thinking about that? And it's become a major part of your design now. So, want to understand those two aspects.

Colosimo

We started the company in the height of COVID-19 pandemic and that culture that we had to create, which is no one else is going to save us, it stuck with the company. In terms of anything that we wanted done, we had to bring in-house, and it was very difficult to get any kind of really anything at that time.

So, if we wanted something, it was very much created and that's how we got here. My previous company — we couldn't produce anything, we couldn't manufacture anything for almost a year. I wanted to keep everybody employed, wanted to keep the company moving. And since everybody was highly focused on new product development, that's where we started going really, really heavy into the R&D process in the prototyping. So, let's call it that culture of innovation. We did nothing but innovate for a year — rapid changes, Rapid changes and rapid changes. And this is where the benefit of having in-house 3D printers became clear, because if you're completely relying on yourself, when you get a design to a certain stage, you have to build it, are there right tolerances? Are things working? How does it look? How does it feel?

That quick iterative process allowed us to move very quick. And then where we didn't quite have enough people power, we leaned on Nottingham Spirk on the battery side to help us get our looks-like, feels-like prototypes to market.

We figured it was about six months for us to do it internally. Nottingham Spirk did that in 23 days. They took our cad, they took our whole package, and they were able to very quickly prototype. And again, because they have that full vertical innovation stack in-house. They had the whole team right there. So, when we had everything ready and we handed that package off, they had a whole team of about 40 different people working on their little piece to bring it together very quickly.

And that was shocking, because usually when you go out of house, the process takes a lot longer. Usually, when you do it in-house, you shorten the process. But because they've got that full vertical innovation stack, it moved that process along very quickly. Keep in mind that is the first time in 15 years that we went out of house for any design- or engineering-related activity.

That was the first time we ever outsourced any of it, and it integrated really, really well. It was just an extension of our team and obviously speeding up that innovation track from six months to 30 days was a huge step up for us.

Sharma

So, double clicking on this aspect, when do you know when a design is done? You said rapid prototyping, but I've seen a lot of inventors were passionate about the product that they're creating, which seems like that’s you.

They don't know when to stop, when is it perfect, because their vision invariably is slightly different than what is being produced. So, tell me how you realized, “Okay, I'm done. This is the one that I'm going with.”

Was there a timeline that you would set up or was it driven by some other aspects?

Colisimo

I'm a big believer in artificial timelines driving real deadlines. That's really important and that drives everything we do. I put a pin on a roadmap and say, “This is when the deliverables going to happen.” And we have been able to deliver 15 years on that process. Our situation's a little unique, because we're a startup and we have some money now, but in the beginning, we had literally no money. So, it's pretty clear we're out of money.

We got to get into production by month five and we've got to have product to sell by month eight. The need has always driven the output. And that's the beauty of it. I mean, in the corporate space, we were spending three years, if we threw a ton of money at it, five to seven years, if you had time to develop a new vehicle platform.

So, if your life depends on getting this product to production, you get it as perfect as you can, you hit your milestones and you just get the thing to production. And that's not to say it ends. I believe in continuous improvement and once the products get to production, that's when the real hell starts, right? That's when the real, the hardcore engineering and lessons learned happen. And they happen in real time, and they happen very quick.

So, getting to production isn't the end. That's the beginning of a whole another journey.

Sharma

Talk to me more about your team that you built. How did you come up with what skills you needed? How did you attract the right talent and maybe lessons learned during the process?

Colisimo

Sure. So, the team came together quite organically. I put a board together to help me understand at least where we needed to position the company from a vision standpoint. So, that's where I started — kind of top down, which seems maybe a little backward, but knowing myself over 12 years on my own, I needed a support group.

When I couldn't solve an issue on my own, I needed someone I can turn to you to say, “Hey, what could I do here?” And not that I always took their advice, but it was great to be able to have back and forth with someone who's been through the battle — been through that kind of process. The rest of the process was pretty organic.

I was at a pretty low point, coming out of my first company. We were just ramping up production again and then COVID-19 pandemic hit, so we put a bunch of money back into production. I bought out all my partners, so cash-wise, I was at one of the lowest points I'd ever been, because we just started rebuilding the company. So, we started reinvesting and then we couldn't produce any product for a year.

I was at a really low point in terms of — most of my team had left. Everyone was at home, nobody was working. And the first person that stood by me stuck around here was Evan Painter, who was a young designer who just graduated college. He was a transportation designer and we're both like, “Well, what are we going to do?” There's nothing to do right now.

When I was trying to work with, a former classmate of mine, Zack Simmering, I was trying to work with Zack for years. I mean, we were trying to figure out a way to work together for probably 15 years. Nothing ever aligned. He was running his own consultancy and COVID-19 pandemic put a huge strain on everything he was doing in the consumer packaged goods (CPG) space. So, he was at a really low point as well. And we met up and I said, “Well, I want to do these e-bikes. Let's just start prototyping some stuff.” So, the company was super organic.

What exists today was not planned. There was an opportunity, we can't do what we were doing. And then keep in mind the trailing effect of all that supply chain collapse globally — the whole Chinese system collapsed. I mean, we went from being able to make any part in 15 days, if there was a complete disaster, it would take us 45 days, all of a sudden it took six months to procure material, so the whole business, everything I built up for 15 years just collapsed. And we had to rebuild the whole thing.

All these things that happened led us to where we are now. I wanted to replace myself as the designer. So, I moved out of my desire to design the things and I wanted to put a team together so I could design the business, so I could design the parts of the business to scale it, rebuild our supply chain, rebuild how we do business and all the back-end stuff — the ERP systems the CRM.

I wanted to have time to build and of course, raise capital. So, do all the CEO things and then put this team below me to do what I think is the most important thing is the product. But being product first, being consumer first is where we're at.

So of course, building that expertise for product and consumer first was important, and then we padded around that. So, I'm now having to think visionary big. I've got to go way out there and I'm like, “Okay, this is a path to destruction. I need a person to tell me, this is your budget.” Help me with timing. Then we plug that in. So, we brought our CFO, Ethan Cohen. He was introduced through another relation, who then became an investor.

These all happened organically and the one thing throughout the process is I said no B players, we don't hire B or C players. Everyone needs to be A plus. They need to be the best at what they do, and we just kept attracting these same kind of people that were like, “I really want to do something different. I want to change. I want something that means something to me, something I can be proud of.”

And we just kept attracting more and more talent. And that's how the team's grown.

Sharma

Thank you, Scott. This was a fascinating conversation.

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The Decoding Innovation podcast series is a limited production of EY-Nottingham Spirk Innovation Hub, based in Cleveland, Ohio. For more information, visit our website at ey.com/decodinginnovation.

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