The [MIT] innovation center gave our bicycle project a $20,000 grant to see
if there was a business there. Each of the partners put up $1,000 and we began to produce,
promote and market small batches of aluminum bike frames in the machine shops and our
basement office of MIT. After a year and a half, the batch sizes had grown. The two active
partners, Jim Williams and myself had bought out the inactive partners. We were hiring
students to help machine parts for the frames. We needed a more commercial location.
So I borrowed some money from my parents, purchased some used tools and an old truck, loaded up
our jigs and belongings and moved to San Martin, California. My parents let me use some abandoned
dehydrator buildings on their former orchard. The free rent was needed, as we were not making and
selling very many frames at that point. The racers whom we had targeted as our market were not buying
many frames. And the feedback from the recreational riders indicated that they thought the big
tubes and lumpy welds were ugly. So we began to work at improving the appearances of our bikes as
well as the performance. Just making a technically superior product it seemed was not enough.
Science without art did not sell well.
During this period of low income, Jim and I split up. Since I had invested the most, I ended up with
the business. I started looking for an engineering job and as a last resort, almost doubled the price of
the frames we made from $325 to $575. I was making too little margin on them, and the customers
wanted us to spend even more time and effort on the frames, so I figured that raising the price would
dry up the orders and would make the decision to close the business easy.
Instead of reducing the demand for the Klein frames, the orders increased markedly. At a premium
above the steel frames, somehow the technical advantages of the aluminum frames were more credible
to the typical purchaser. I had to hire some help and increase production.
We worked to further improve the cosmetics of the frames and make them more custom. Improving
the visual appeal turned out to be a crucial element in creating a viable business. By 1980, I was building
custom frames for over $2000 each.
