If you missed the live interview Chris MacAskill, aka. Baldy, did with Zero Motorcycles CEO Sam Paschel, you can now watch the recording (embedded above). Sam did not shy from answering tough questions posed by the live audience and touched on battery technology, H-D entering the market and rumors about Tesla using Zero parts in their CyberQuad.
Zero Motorcycles was born in a garage in Santa Cruz, California and has since grown to become the US’s leading electric motorcycle manufacturer. Where other electric motorcycle manufacturers have come and gone, Zero continues to grow.
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Full transcript below …
Baldy: Alright, here we are with Sam Paschel and it’s a good thing I checked with him on the pronunciation because I would have said PASCHEL. How are you Sam?
Sam: I’m good. How are you?
Baldy: Good. And so, you’re the CEO of Zero and you’ve been there 4 years?
Sam: 3 years this past February, so a little more than 3 years.
Baldy: And right now, you’re holed up homeschooling, you’re homeschooling dad in Vermont?
Sam: I am. I am.
Baldy: So, and when you’re CEO, you’ve picked some pretty great places to live in your life, Vermont, you were in Park City for a while?
Sam: I was Park City for 4 years. So, I actually I’ve done this loop of the United States where it was, I went to University in Philadelphia, not I mean phenomenal city, but not as fantastic as some of the other places. And then lived in the Bay Area, I lived in Santa Cruz for a number of years. Left and lived in Vermont for 12 and then moved to Park City, Utah for four years and now I’m back in Santa Cruz again the last 3 at Zero.
Baldy: Yeah, that’s cool. And you’ve been a motorcyclist since, well you were for a while when you were 8 and then your bike got taken away because you laid it down and grabbed hold of something like that.
Sam: Yeah. I had a Suzuki RM80 and we took it to my uncle’s farm in Wampum, Pennsylvania, I grew up outside of Pittsburgh and Wampum is in the middle of nowhere in Pennsylvania and there was a small farm. And I try to make a turn, that was too sharp on some gravel. I laid the bike down, I scraped up my knee, no serious injuries at about 8 years old. And the motorcycle was in the garage for about another week and then I went out one day and it was gone and there was no discussion or conversation. So, I like to say that getting to the place around the CEO of a motorcycle brand is just sort of the ultimate revenge, because my parents took away a little 8, you want to…
Baldy: And that’s what happened because they took it away because they were afraid about your injury?
Sam: Yeah, that was just like, I think that it was one of these things where my dad had gone out and bought it and just showed up and I think that was a point of tension between him and my mother. And when there was finally an accident, that gave her the opening to sort of push…
Baldy: That make sense. My mom always hated me riding a motorcycle, I feel bad about that now. But when you became an adult, he started riding?
Sam: I did. I started riding again in my early 20s just after college and it had gone through a bunch of old vintage bikes, like some CB550 CB750s and then a Bonneville and then a Triumph Thruxton, like it’s sort of like the beginning and like an 04 when the Cafe Racer Phenomenon was first happening and I just got tired of going out and you know, having to spend as much time wrenching on the bike as I was riding. And I just I still had the 550, like 1974 CB550. But then I like to having a bike, you could just go out and you know, push the button, ride it and have something to on. I kept the 550 all original, I never went to an electric ignition and so I was just struggling. It’s ironic. I was struggling with electrical demons for the entire time that I owned it and now the CEO of an electric motorcycle brand, so…
Baldy: That’s the ultimate irony. Maybe your revenge, yeah you make it reliable. So, your career, you studied mechanical engineering?
Sam: I did.
Baldy: As a mechanical engineer graduate, but then you’ve had an interesting, it seems like combination product and marketing. Can you talk about how that your careers progress where you worked?
Sam: Yeah. So, I started out, so I went to school and got a mechanical engineering degree and I focused, I had a concentration in biology as well, so a lot of like physiology, kinesiology and what I really decided, I was a multi-sport athlete in college and I really wanted to combine what was going on and from an engineering standpoint and my passions for sports. And I thought like, well if I could work for a company that made products that I was passionate about, sports equipment, you know and now motorcycles, it’d be a fantastic blend of figuring out how things come together and how these products work and stuff that I actually really liked and liked being around.
So, after college, I got a job as a design engineer for Bell Helmets, mostly on the bicycle side. So, I worked for Bell Motorcycle Helmets for, I think 7 years in the Bay Area. That was my first job out of school and I got into the role and very quickly realized that I didn’t have all the tools to be a great design engineer. This was before they would teach CAD/CAM, so I came up with no computer assisted drafting skills, a lot of analytical skills. And went through a series of roles at Bell where I was a design engineer and then I worked in the test lab, sort of helping to draft the certifications for helmet testing and validation and also was on the committees to write some of the standards. And then from there, ended up in a manufacturing engineering role, which took me all over the world to sort of figure out how to solve problems and source products. And then I think I really found a niche there, sort of getting things made and understanding how they are made, developed.
From there, actually, I left Bell and started my own design and engineering consultancy with a friend, where we’d go and just sort of help companies that were trying to make their way into some different sourcing environments develop products. After doing that for a short period of time, I got recruited by Burton Snowboards to come in and run their helmet and accessories divisions. And that was really the time where I took off my engineering hat as a pure engineer and leverage to this understanding of how to get things made and what it cost to build these products. I got to leverage that to get a job that was actually now running a business making some of these products. And I knew a lot about the product on how to get it made. I knew how to negotiate the costing of it and I’d get questions like, hey, how do you think we’re going to drive margin that we’re more P&L based as a business director and manager? And I would always be like, well, we got to get the product right first just to like buy time to learn these other parts of the job.
And then at Burton, I had a series of jobs. I started out in their helmets and accessories division and then I got the opportunity to run the snowboard binding division which is one of their three big divisions. And then from there, I actually was promoted to be the General Manager of a series of brands that they had acquired and ended up running those brands through the subprime sort of market collapsed and how to manage a business through that. And that was my first real time having product sales marketing creative finance like the full picture of what it takes to run a business. And I realized I loved the breadth and depth of that job that I’d kind of found what I wanted to do in some form for the rest of my career.
And then got an opportunity while I was still at Burton to move into the Vice President of marketing or the EVP of marketing role for, you know, really well-respected brand with a passionate user base snowboarding. The day that I walked in was primarily an engineering hat on and somebody that you know, had come from that background, going from that to being as a Vice President of marketing for that same brand, if you told me that would happened day one, I told you there was no way I was the last guy that was ever going to end up in a marketing seat, but I think that experience for me. And it was born from the brands that I had been running as a GM were very marketing-offense based, like that was really the storytelling, the narrative, the professional team, the sponsored athletes, they were the core of what drove that business and we did some great things with them because I had a strong team. That’s what opened the door to a marketing role.
And then I got to dive very deeply for a very well-respected and established brand on the marketing side. And then when I left, I’d left with a bunch of tools beyond what I’d walked in with, which was just how to make stuff. I understood the fundamentals of how to run a business with some really nice deep dives into sourcing and manufacturing, engineering, product management, product line management and marketing. They kind of set me up to have a background that would make me capable of doing the kind of job that I’m doing now. And I got to take that to another level at Skullcandy.
So, I leveraged a similar consumer, the action sports athlete, snowboard athlete and the Skullcandy consumer were very, very similar. So, I knew who the consumer was, I’d been working with them and connecting with that consumer for 12 years in Burton. But now, was consumer electronics products, it was a fundamentally different retail base. We were working with, you know, the consumer electronics global market is essentially controlled by 8 large global retailers. And so you have these really intense situations where you’re pitching to one of these big 8 customers that are going to make or break your year as a public company. So, that was a phenomenal experience. My job there was product marketing and creative for the whole offering. Now, was publicly traded different distribution, different market, different product category, but a similar consumer.
Baldy: That’s a name with a whole lot of attitude. Skullcandy, I mean, you hear that name, you can’t forget it. Did the name work well for you guys?
Sam: There was an irreverence to the brand that I think in the time that it was there as it was coming up that I think worked really well. There was an attitude and the people there and then sort of how it positioned itself and it was a little edgy or counterculture. As it moved into some of the larger distribution, I think it brought an edginess to, it was just that name of the products. But the products fundamentally, you know prior to Skullcandy, you could get a headphone or any color you wanted as long as it was black or white. In fact, when the iPod came out and there were white earbuds, like that, everything that was not black was a statement, so Skullcandy brought like color graphic attitude to a category that had been really flat and colorless for a while and that kind of blended well with the name and with a cultural movement at the time that was working.
Baldy: Yeah, that’s cool. So, then you got on your Thruxton and rode 50 miles to provo, right? How do you find it Zero in provo, was it a dealer?
Sam: Well, luckily, the website then and now has a really good find a dealer function that steered me that way. It’s funny, like you know all my stories, you’ve done your research. So, like I’d been in conversations about, so we were moving towards a transaction at Skullcandy, it was going to be purchased from being a publicly traded company to go in private. And at that time, I knew that I was going to be moving on to something else, so I’d started sort of a recruiting process and just putting feelers out.
And I’d been in the process, just talking to, first, the recruiter and then the inventors on multiple rounds for, maybe three months, before I was like, okay, this has gone on long enough and I spent enough time on and they’ve spent enough time with me, I really should ride one of these products and see what it’s all about.
So, the closest dealer I looked it up on their website and there was like find a dealer near me and it was 50 miles, heck, can be 50 miles on a beautiful ride, like through a canyon, like next to [crosstalk 11:28] that’s an amazing ride, you go down through Heber and then you make the cut. So, I rode the 50 and parked and you know, went in and unannounced, didn’t tell them why I was there, I was going on, I just wanted to try a Zero and they put me on a DSR. And in a 15-minute demo ride, I went from being curious about what was going on at Zero to desperately wanting to be a part of what they had going on. It was a transformational riding experience; for me, it was a transformational moment. I would have taken a job as the janitor, like I would have swept floors.
Baldy: Why was it so transformational, what was it that hooked you?
Sam: So, like I’ve been asked this and I’ve had to try to figure out ways to describe it and explain it to people. And I think the easiest way for me to talk about it, is riding a motorcycle, any motorcycle is an experience that engages all five senses. And the sense of sight, the sense of taste, those two actually are exactly the same on internal combustion engine vehicle as they are on an electric motorcycle. The other three: the sense of touch, the sense of smell and the sense of hearing are just fundamentally different on electric motorcycle than they are on a gas. So, obviously, from a smell standpoint, no fumes, nothing to deal with. On the sense of hearing standpoint, the engine makes a sound, the motor makes a sound, but it doesn’t make engine noise, it’s not drowning out what’s going on around you.
But the thing for me that flipped it, both on that first test ride and the thing that still I appreciate the most. After that 50 miles on a Thruxton and they vibrate a bit, but no more than any other bike, it’s not a huge displacement motorcycle, my hands were numb and you know, you have that after a ride and like you just kind of get used to it as a rider. And I hopped on the Zero and there was no vibration and it was the most pure connection between me and the machine and the road that I’d ever experienced. And all these things that I thought were central to the motorcycle riding experience, a lot of those were stripped away and what I found out is they weren’t central the things that I loved as this alternate experience was given to me, some of the things I think actually took away from my prior experiences were laid bare. But at the top of that pile for me is, it was the most pure connection between me and the road that I’d ever felt. To go back to my experience in the snowboarding business or as a rider as a snowboarder, it was the difference between snowboarding on chopped-up snow or crust or groomers where there’s a lot of vibration, there’s a lot of noise and just dropping into a powder field and having everything just your flying low and it’s this really surfy feeling and experience.
The other way I have to describe it to people is, if you’ve ever gone the outboard motor and the whole boat stops vibrating and it just kind of gets pulled along by the wind and now conversation is easier and there’s just like tension that just gets stripped away. So, for me, like that ride, I realized one, it wasn’t a golf cart, there was a ton of torque, there was a ton of acceleration, it was an exhilarating ride. And it was a fundamentally different experience than what I’d had on an internal combustion engine bike.
And I think when you think about business in general, there are a handful of strategies, actually, two basic strategies you can employ. You can either be a cost leader or you can drive at differentiation and find a consumer and differentiate yourself from the market and for that differentiation, it cost you money, but then you can either own a piece of the market or you can charge a premium to make more money, whatever it is.
And there are all these brands, Skullcandy among them where you spend all this time trying to create a story and a narrative and talk to a consumer and convince them that your product is just fundamentally different from somebody else’s. Nike spends billions that convince you that their Nike branded white cotton t-shirt is different from everybody else’s. And here was this brand and this product that at the very core of its DNA, what moves it forward, what creates the locomotion and the experience of riding it was completely differentiated from anything else that I’d ever been on. And on top of it, at that point, they were hiding that story, they were hiding that narrative. They weren’t doing a great job of articulating and living up to how phenomenal and how different the riding experience was.
So, with my background and experience, you know, across the business, but on the marketing side, on the product side, I realized that if I could just have the ability to articulate the story and drive to get as many butts and seats and to drive as many rides as possible, if I could get that moving, but the product already at the very base of what it was fundamentally differentiated from 95% of the market and it was a better and transformational riding experience for a rider like me.
Baldy: So, I had a similar experience you got a good dealer in San Jose BMW, I like those guys a lot. And they have a nice display area for Zeros and everything else. So, as I went in there and I was drooling, they said you want to test drive, that seems to be your thing is to get them into a lot of dealers and get test drives and all that. And I said sure, I want to turn down a test ride, so was it an FSX, which I want…
And they were a little nervous about me coming out of the parking lot, because they thought if I gased it or I know what you call it read it, if I went too hard on the throttle that, you know, I could lose the back end. But then, oh my God, you know, just went like a bat out of hell. So, and it was just a great experience, it felt light and you know, just it seemed like a good commuter bike. But some people like the sound, you know, what do you say to people who say well, I want to feel the sound of a Ducati, you know, monster in my chest you know, and some people like them silent?
Sam: Yeah, so the sound, if it wasn’t so much for me, I was a vintage bike guy. I like tooling on them, like I wasn’t somebody that was buying latest and greatest and then shifted with this new technology, so I came from that space. First, I think if the sound of the motorcycle on that engine rumble are central to the experience for you, you may not be my consumer and that’s okay. I mean, people ride for different reasons. We’re part of a broader community. I’m not going to tell anyone down to a person, this is why you ride and this is what central, I know you’re wrong, that isn’t what you love about it, like you love what you love, sometimes the heart wants what it wants.
For us, we have an incredibly vibrant and growing business, even if I capture a relatively small percentage of the global motorcycle market. If somebody is a holdout and they love the rumble of a Harley or they want that Ducati sound and the sound and the vibration and the fumes and the maintenance and all the things that we think are extra and their selling points for us that make it just a much easier machine to have in your life, if those are the center of what it is for you, they’re going to be people that won’t make the transition, they’ll be people that transition very, very late to electrics and they aren’t my consumers… We self-segment at some level to somebody who is forward-thinking and early adopter of new technology.
Baldy: So, I’ve got three motorcyclists in my neighborhood and two of them have Zeros SRs or some things or in others, they just who’s by me, you know and when I’m out on my skateboard or bicycle or whatever…
Sam: Where are you?
Baldy: What’s that?
Sam: Where are you?
Baldy: So, I live in Mountain View, it’s not too far from… I’m between Google and it’s a very residential neighborhood. It’s 25 miles an hour. There’s lots of kids and things and we live right on a 90-degree corner, our house is removed from. And so, we have this guy in a Harley, you know, must ride a late shift and he must be a lot of pipe save lives kind of guy. And he’ll come home at 1:00 in the morning, he must live a few blocks away and he gasses it around the corner and blah, blah, blah at 1:00 in the morning and we like to leave the windows open for ventilation and all that. And all I can think of is, asshole. He was just jerk, you’re waking everybody up, the dogs are barking and everything, he seems to enjoy it. But the two guys with Zeros, I never hear them, except unless I’m out there on the road and I really liked that.
Also, off road, we had a rally that I went to last year in Wisconsin and one of the guys is really good at getting trail openings and during the time we had the rally, we had a trail opening and the county commissioners were there and so on. And one of the things they seem to like is that off-road motorcyclists just go into the forest and kind of disappear. But everybody hates the noise off-road. I mean on-road, you know, I have to admit it, Ducati Monster sounds pretty sexy. But off-road, it’s like, I’d rather be quiet. So, hey, Paul, I forgot to upload images to show, I wonder if I share my screen, if I get to see something. Let me see if and does that work? Are you seeing? Alright, can you nod up and down?
Sam: I can see, I don’t know if other folks can.
Baldy: Oh, I see, okay. Paul is saying no. So, I’m going to stop sharing. Am I better now? Yeah, so can you just talk about the sort of the overview of your product? There’s a lot of, so I’m going to reveal a little bit of my bias here. I really like names like Black Forest and Bonneville and Monster and Tesla Cybertruck. I have trouble keeping track of model names that are numbers and letters and things like that. So, you have a D-line, you have an F-line and I should start with that F-line, I guess and D-line and S-line and they’re sort of grouped together. Right? The F is light and less expensive with the smaller battery and more Enduro and Motard and anyway, take it away and tell us what you got.
Sam: Yeah. It took me a minute when I came into. One, is like searching and clearance for names in the category, is actually really, really challenging, especially for a small brand. And when I came in and we started talking about how we do the naming, we felt like there were some bikes that like we were a leader in the space, we sell more full-size electric motorcycles every year than all of the electric competitors combined. So, if there is an iconic motorcycle on the market, the SR would be it. So, I just think about it as we have a range of street motorcycles, we have a range of dual sport motorcycles and then we have the sort of Enduro and Supermotard that are built on this platform that are the FX and FSX. Well, we’ll hold those aside right now.
But fundamentally, you come in and if you want to ride on road, it’s the S-line. So, we have the SRF, which is the new flagship that we launched a little over a year ago, pinnacle bike for us. We have the SR and we have the S. And we’ve simplified that line a lot around battery capacity and range, that sort of those two go together, so we have those models. And then we have the dual sport blind of the Black Forest sitting at the top, which is the sort of fully equipped all the accessories. The Black Forest is a version of the DSR and then we have the DSR and then we have the DS.
Baldy: The Black Forest looks so badass, by the way. As soon as I saw that, it’s like, oh, that fits our audience really well too, but you know, being an adventure bike.
Sam: It’s funny. And it’s interesting as a global brand, that bike was the brainchild and was actually first launched in Europe as a Europe only model. The European team looked at it, they looked at how the consumers were engaging with the motorcycle, the accessories they wanted most often, what the needs were from a comfort and a seat standpoint. And they came to us and said, like we’d love this new pinnacle model on the dual-sport side, we believe we can be successful with it.
And we launched it for the first year as a Europe only model and the response, you know, human beings are pretty predictable, absolutely, you want the things you can’t or shouldn’t have. So, as soon as people in the States heard, that’s European only model, you can’t have it. Like oh man, on the request we got from really rabid fan base drove us to launch it as a global model last year. And actually, the very first event that we did in the Black Forest in the Schwarzwald, which is like the German riding area, that’s where the first press event of the bike launch, so where the name had come from.
Baldy: So, if it looks like, I’m distracted, I’m not, I’m listening very intently. But I wanted to upload the photos to Paul that I had forgotten before to show off your bike, is because they’re getting it look pretty badass now.
Sam: Thank you.
Baldy: So, Paul is going to flash some on the screen while we talk some more things. So, when you were at Skullcandy, you talked a lot about telling the story, you’re telling a brand story and that that was one of your primary missions when he came to Zero is telling the brand’s story. And at Skullcandy, you had some celebs to tell the story with. Did you have Kyrie Irving?
Sam: Yeah, we did.
Baldy: And so, do you have any celebs for Zero or you know, how come Jay Leno hasn’t done a Jay Leno’s Garage thing on Zero yet, are the bikes just not exotic enough? I mean, I’m not that leveling a criticism, but he just super cars and super exotic bikes.
Sam: Jay had done something with the brand years ago. And I don’t want to give him away, we were very, very close to going seeing him again and it was really right when the shelter-in-place stuff was going on that the conversations were happening and they were put on pause. I’d love to get down there, I’d loved as much to like you know, it’s a great thing for the brand and it’s a great thing from a promotion and a reach standpoint, but also just to see all the machines that he has in his garage, like I’d love to get down there.
So, at Skullcandy when I came in, we had this celebrity athlete endorsement model and I think there are a lot of brands that still run that way. It’s a really expensive model to run. And I think when you have a product that you’re fighting to differentiate, primarily through marketing and marketing efforts, you need the leverage and weight of people that have an audience and a fan base that they can bring in and they can introduce and their spokespeople for the brand and they helped to elevate it. It’s an expensive offense to run. It’s a marketing differentiation offense.
We have really natural people who own and ride the motorcycles. Woody Harrelson bought an SR/F Rider after it came out. Don Cheadle owns a ton of Zeroes. We have relationships with those guys. But nothing that’s been formalized or that’s pay to play. They just love the products and love the brand and they come into it.
So, the answer is twofold. One, I don’t believe we need it. We’re seeing like mid double-digit, 50- 60% compound annual growth rates and who knows what’s going to happen with [crosstalk 27:13]. We’re seeing massive growth. Like there are a couple of dynamics at play in the business. There is the dynamics of the motorcycle market, which is still recovering from the 2008, 2007 subprime collapse and is climbing back. And then there’s the dynamics of the electric vehicle market. We’re very lucky, you know, we’ve been following the curve and the dynamics of the electric vehicle market with this massive tailwind of adoption.
When we do PR on a new motorcycle launch, the amount of press and interest we get, because we’re just in a really sexy category. From a high concept standpoint, electric motorcycle, it’s just a really cool thing. I get to talk to people, like you guys, we get attention or we get connections that are much bigger than you would expect as a brand that’s an emergent category. So, those are helpful and also, so that’s the answer for us.
More broadly, I feel like consumers have really evolved and I think that when an athlete gets up there and says, like hi I’m you know, when you use Kyrie, hi, I’m Kyrie Irving and I use Skullcandy headphones, that I think there was a time when that kind of celebrity and athlete endorsement really worked and I think now it’s been run so long and unless that relationship are really deep and really genuine, the consumers see right through it and be like you’re getting paid to say that. Because on the athlete side, they switch teams so often and on the product side, they’re [inaudible 28:39] the latest wear. So, the idea of paying somebody money so I can get access to their audience, I’m not interested in that. What we started to run at Skullcandy before I left and what I think does work is a spokesperson or a celebrity with reach who is truly passionate about your products and then ends up with an ownership stake in the company at some level that they have equity, that they’re part of what’s going on, they’re part of the brand and they’re part of building it and they’re in it and I think you see those relationships work really well. I think in a totally separate business, like Oprah and Weight Watchers, she’s on the board and active and engaged as an example. And I know that, because the investors in Zero had a stake in Weight Watchers.
When he looked at LeBron James and Beets who was a competitor of Skullcandy, LeBron was one of the founders. He had a significant ownership stake in that business. And there’s an authenticity down to the ground level that you need in order to really connect with an audience in a way that has integrity that those types of relationships have. So, I feel like the pay-to-play athlete celebrity endorsement model is pretty vapid and I feel like it’s dying and its impact is diminishing as people look for, if you’re doing this and you’re engaged with a brand, how is it done in an authentic way? And I think for us, it’s one of the things we always want to do to make sure that it rings true and if there’s somebody that loves the product and is engaged and they can help us and have reach, I like that those are more organic things that come from a passion for the products that we make and the experiences we create, as opposed to I’m going to pay you a bunch of money so you say good things about my brand.
Baldy: So, I was thinking maybe it was your background at Skullcandy, but maybe it’s just the concept of an electric bike. You’ve gotten a lot of media attention outside of traditional motorcycle magazines. Why have magazine called you, the ‘Tesla of Motorcycles’. I don’t hear you positioning yourself as the ‘Tesla of Motorcycles’, but it had a ring to it. And I noticed Mike that told of electric he did a review of the FSX… see I can’t do the alphabet too…
Sam: No, I hear you…
Baldy: And that thing got like 725,000 views or something. You really promoted the bike as a good commuter bike and a lot of fun and things like that.
Sam: That was a long-term loan. Mike had spent a lot of time in that saddle and he’s infinitely curious, he’s been connected to the brand. So that’s been a great relationship for us and a great a great media contact. So yeah, I’d love to take credit for that. I’d be like yes, I brought in all the media attention. It has very little to do with me, I think. I came into a business with an incredibly talented team at a really good time and I think the idea of a two-wheel Tesla and us being the brand that is the protagonist for electric into wheels, I think the idea of a two-wheel Tesla and especially at a price range for a consumer group that’s fundamentally less expensive than what a Tesla is, it gets a lot of people out of their seat, it gets a lot of people very interested.
Like I said earlier, the idea of like an electric motorcycle, a purely electric motorcycle is just a really sexy and interesting thing. And I think we benefit from Tesla and like the roads that it’s making and what’s happening in electric adoption. I think that we get to ride on that wake a little bit as far as like just awareness of electric mobility what’s going on.
Baldy: On the other hand, do people worry about you? I know I did for a while. You have a pretty big financial backer. But you know, like Alto went out of business and it just seemed like it was hard going for quite a while with electric motorcycles and you don’t release your numbers and so we didn’t really know how they’re selling and so on. It sounds great that it’s growing and everything else. But do you think that’s… I’m not sure what question I was going for, but I know I had the feeling. Like I need a little comfort if I’m going to shell out to know they’re going to be around and what would you say to that?
Sam: Yeah, I mean there’s a history of mission Ulta Brammo, there’s been a lot of brands that came in and we’re making headway. We’ve been in it for 14 years. So, one, there’s the stuff that I don’t know how well it’s going to translate to a consumer group. We have an investor that’s been in it for a very long time and they have a ton of capital and they’re strong believers in the idea of making an investment over a long period of time to transform…
Baldy: I think, you told TechCrunch $250 million or is it something like that?
Sam: $250 to 300 million to cross that chasm. That’s what it’s going to take. But to think about it this way. So, in the transition from gas to electric, you’re going to have more fluidity in market share than has ever existed in the history of the motorcycle industry and they’re going to be on this side of electrification, they’re going to be one set of winners and losers. And I’ll tell you that having worked with the team that spent 14 years solving these problems technically and with an engineering background, these are non-trivial problems to solve, making sure that when you get on a motorcycle that has this much torque, 135 foot pounds in this, the top you know over 110 horsepower top speeds, 125 miles an hour and you twist that throttle, you need to have a very reliable and consistent response from the motorcycle. And to have that happen at high states of charge and low states of charge, at high temperature and at low temperature and in all these corner cases, it takes time in the field to sort of sort that out. So, these are non-trivial problems to solve and you have one set of winners and losers on this side of electrification and a totally different set of winners and losers on the other side of electrification.
Would you rather be a couple of years early in developing a mature and reliable product for that transition or a couple of years late? And yes, there’s a lot of money that you need to invest, $250 million to get to a mature product at this point and the timing is really good in that adoption is happening and accelerating. The money it would take you to capture the market share or that you can get now in that transition for an $8 billion global market, you’d spend a lot more of that in marketing to get the 20%, 30% of share in a rapidly growing transportation space in motorcycle alone. Those are the fundamentals of the investment thesis.
And so, that’s one thing to say. If you were considering buying a Zero motorcycle today, what I would say and my very sort of off-the-cuff answer is after spending 14 years developing the technology in the brand at this point as we’re on this ramp now and infrastructure is exploding in a positive way with all these level two charging stations and Tesla is pulling people forward and adoption is going through the roof and we’re growing it you know 50-60% compound annual growth rates, I don’t think this is when an investor says I’m out. I just definitely don’t. Like we’re diminishing the burn rate, we’re seeing an acceleration and adoption of products. You just saw us launch in two years in a row two groundbreaking brand new motorcycles. And you’re not making those investments in the next generation platform if you’re somebody that’s stumbling you’re allowed to go out of business.
Baldy: So, we’re getting a lot of questions in the chat, they look like pretty interesting questions.
Sam: I see that [crosstalk 36:10], but I don’t know how to cut in so I’m happy to answer anything that…
Baldy: I’ll just ask you Sam Jones is asking how battery development is coming along? Tesla talks about battery development lap and wonders where you’re headed?
Sam: You know, for us, battery development, we’ve been on a cycle and we’re a little behind on where we were introducing a new chemistry every two to three years. So, one of the fundamentals of the business is that from a battery standpoint, so it’s a really good question from Sam, he asked essentially what time is it and instead of just telling the time, I want to build a little bit of a watch, so you’re going to hang… To believe in the future of Zero motorcycles, you had to believe in a handful of things and this is why I took the role.
Number one, you had to believe that electric vehicles were going to grow as a percentage of global transportation. Number two, you had to believe that motorcycles would be a part of that transition. Now, three years ago, that was if motorcycles go the way that cars go, you guys might have a really good run. Now, it’s a question of when? Third, and this is something that I didn’t really know until I got into the interview process. Is that there’s this very natural tailwind of an 8-10% improvement in energy density and power density which gives you performance improvements and range improvements. It’s happening on a biannual, every two years or so basis. You’re going to see that continue to run for another three or four cycles before you get to some of the limits of physics.
We have a phenomenal chemistry cell supplier. We work very, very closely with them. And before we launch any new batteries, we make sure that we go through a full validation process and we understand from an algorithm standpoint, how is that battery going to behave at various states of charge and how is it going to behave as it ages? We’ve got to artificially age the battery to see what happens and what kind of impedance we get and what kind of performance you get over time and what you can lose this range. We’re constantly working with that supplier on better and better chemistries and better products,
Beyond that, if I were to announce like yeah, hey, we’re going to launch a new chemistry on this date or this year or that year, I have the potential of freezing the market… And where I think we’ve gotten to on batteries, people want to get to a certain level, but the average commute or recreational ride globally is typically less than 100 miles and even sort of maxed out our largest capacity motorcycles now will easily handle that round-trip and that.
Now, if you’re going point-to-point and we had talked about this sort of before we went live, if you’re going point-to-point, you want to grab a bug-out bag and go out the door and think about it. An electric motorcycle for a long adventure ride and point-to-point ride with no planning may not be for you. If you’re willing to do some planning which generally you do for those kinds of rides anyway, we have people that have ridden across Africa, we have people that have ridden around the United States, had done cannonball runs, cannonballs run I’m not sure what the plural is. So, we have people that have done that and do it really successfully and have amazing adventures. And the charging isn’t generally one of the things that trips them up. So, where I think we are is the range and a single charge for most of the uses is really, really good. I think what you’re going to start seeing…
Baldy: About how many miles?
Sam: About 200 miles. And now, that’s [inaudible 39:32] limited, well that’s like 35 to 40 miles an hour [crosstalk 39:35]. And actually, the largest determinant of range on an electric motorcycle is speed, because it’s really aerodynamically inefficient if you’re pushing a human torso through the air. So, the faster you go, the more you’re going to chew up battery. I think what you’re seeing is we going to get to this pivot point, we’re going to continue to always want to be leading in battery capacity and usable range in the vehicles, we’ll always continue to bang away with. That it’s a constant churn, we never hit a finish line on that. It’s fundamental to our business.
We’re above a range now where these vehicles are charging much faster and have, you know, up to 200 a miles of range in the city, you know, call at 120 at freeway speeds at 65 miles an ‘hourish’. Charge speed and infrastructure availability are much more practical concerns for a consumer having a great experience on our motorcycle…
Baldy: This is for level 2 charging?
Sam: For level 2 charging. And I think, you know, there’s going to be a time in the next few years where DC to DC fast charging becomes more important. You pick up a bit of speed on charge. I think the challenge now is still over 90% of the global infrastructure is level 2. You know, we are not Tesla and aren’t putting our own superchargers out there in places, that’s a huge public company cash you up infrastructure investment.
So, we built motorcycles from the very beginning to be ridden used in the real world. Right now, the best solution from a cost and charge speed standpoint is for us to max out what we can get from level 2, which lets our consumers take advantage of 90% of the global infrastructure. I wouldn’t be doing my job, our engineers wouldn’t be doing their job if they weren’t working on DC to DC fast charge and working to get that at a cost level where it makes sense for our consumers…
Baldy: Having spoke level 3 or what’s the deal?
Baldy: Okay. So, Vezin has a question, is Zero going to come out with a budget bike?
Sam: Man, a budget, what does budget mean? We have motorcycles all the way down to $8,500. Like that’s not a $5,000 motorcycle. But right now, the thing that drives that fundamentally is battery cost. The cost of the battery is roughly half the cost of building the motorcycle for us and it’s another reason to Sam Jones question earlier, we’re constantly working on both battery, power density, energy density range and cost for us.
As you work down that cost curve, one of the other benefits for us is that as those processes get more efficient, as demand is higher and there are more suppliers out there producing really good cells, that competition drives cost down and we can potentially offer some savings to our consumers. What we have done instead, is we’ve kind of held price over the course of the last ‘14ish’ years we’re calling 10-8. But the capacity of the motorcycles has continued to grow dramatically as we gone, so we passed that on to the consumer at a stable cost.
I’m a huge believer in inspiring consumers of the pinnacle product and then having a broad range of prices where people can interact with your brand and purchase it, but we’re always working on that. We of course, want to get to a higher volume motorcycle that’s significantly under $8,500. All the work we do on the battery side is what’s going to allow us to open this vehicle and this experience up to people at lower prices and it’s absolutely on the roadmap and something that we work on.
Baldy: Yeah, very cool. So, in your pitch, do you try to say yeah, but electricity is lot cheaper than gas and it’s no maintenance?
Sam: So, it’s interesting. Yes. When I came in the door, Zero was selling on an almost purely rational differentiating [crosstalk 43:36] positioning statement, like we were selling with just rational data points and I think that great brands interact with consumers across emotional, cultural and rational levels. Emotional, being the heart, like the look of the bike, the color, the experience. The cultural being the movement, what movement are you a part of? We’re part of you know early adoption of new technology, ecology and conservation, electric vehicle adoption and movements. There are a lot of cultural, so I was not to mention power sports and a really passionate user group.
And then you have the rational elements, we were leading with rational. You come to our website and we would talk about all of those things. The cost of electricity versus the cost of gasoline. The cost of maintenance. We would total cost of ownership. The state federal and international grants and tax deferrals that are available with electric vehicles with huge drop-down menus. And it was like the price makes sense, the price makes sense, the price makes sense when you factor in all these things and it was leading from a position of weakness. I believe that first and foremost, people buy and ride and live with motorcycles in their life because they dream of an experience or a life that may be a little bit different from the one that they have and they sit on a bike and they twist that throttle and they have these moments of freedom and lightness where everything else falls away and like you just have this feeling of joy and gratitude in your heart and it’s an exhilarating experience.
I did a lot of like sort of research and reading on flow states and like for me riding electric motorcycle, it’s a flow state machine, I’m not thinking or doing anything else, I’m just in that moment and all of that was lost for us. We were leading with dollars and cents and like trying to justify a price that justified itself if you had the experience. I believe we need to throw those rationale levers on cost of oil fuel changes, maintenance. I mean, do you have one fluid, brake fluid, you’ll have to put new tires on and put new brake pads on it. That’s all the maintenance you have. There are a ton of grants both federal and at the state level to make like cheaper, electricity is significantly cheaper than gasoline and you can generally charge in a bunch of places that don’t even charge you like work and everywhere else. So, and every time you come out to it, it’s full.
But we lead with emotional and cultural connection elements for the brand that get you imagining a life with this motorcycle in it and wanting to have an experience. Then when you walk up and you’re really thinking about making a purchase decision in store, that’s when this sort of like a very rational part of your brain is like we work really hard for this money. Is this a good decision and not just a fun decision? And then we get to roll out, like well, look at all of these like when you do the math and do the factoring, it’s a much better investment.
Baldy: I think that’s what I liked about Mike’s YouTube when he reviewed the FSX, it was all emotion. I just liked it. I just liked it. It’s not necessarily the specs. It’s not, you know, you can’t go 120 miles an hour on it or anything, like you can on your other bikes. But he said, I just love it and I just love the experience. So, Scott Ferguson is asking, if you can confirm that a motor from Zero was used in the Tesla ATV has seen in the Cybertruck reveal?
Sam: I’d heard this as well. Anybody can buy one of our motorcycles, take it apart and try to do something with it. That isn’t a program that we ran with Tesla. That isn’t something that was planned. It’s not something that we collaborated with him on. If it was, I would be fighting Elon to make sure we could talk about it from rooftops because I think they’re a great ambassador for electric and a phenomenal brand. So, nothing that we did. This has come back to me with photos a number of places, it sure looks like it, but it isn’t something that we did brand to brand or that we had any part of directly. But we have a ton of examples of other motorcycle competitors taking our bikes, tearing them apart and putting the power trains and other things as their own experiments.
Baldy: Wow! So, David Moochie says, what do view as Zero’s unique selling point and why will people choose Zero once the big OMS have an electric offering?
Sam: That’s a great question. I think that as a leader you’d have to ask that. I think we’ve got a great leadership position now, but those brands have enough resources that they could catch us in some period of time, three years, five years. Right? And one of the things that’s really interesting about Zero and it’s the most complex business [inaudible 48:15] a part of, one, is we’re a vehicle company, we design motorcycles and this is all we’ve done on the electric side now from the beginning, it’s just electrics. So, we’re a vehicle design company. We’re an industrial company. We build all the motorcycles right there in Scotts Valley California.
But more than anything else, we’re a software company and I think that’s the fundamental difference. Where the OEMs are going to lag is putting together these power trains and getting them to work well and reliably in all these corner cases and situations, is a really big challenge and we’ve had 14 years to sort of sort that out and put vehicles out in the world in a way that’s very hard to replicate in test tracks. So, from a reliability standpoint and a performance standpoint, in a systems integration standpoint, we’ve got a very significant lead.
So, the way that we talk about this is we have the Cypher III, which is our fundamental operating system on our next-gen motorcycles. And it’s a motorcycle with a brain, it’s a motorcycle with a central nervous system. And that central nervous system is a mature central nervous system. Any OEM that comes out, no matter how much work they do especially with adoption ramping, is going to be coming out with fundamentally an immature brain, an immature central nervous system. This is much bigger than your standard VCU as far as all the things you need to control within the motorcycle in addition to keeping an ion battery health.
We have the brain of a fully formed adult, they’re going to have the brain at least initially of a toddler. I don’t know if you guys could hear it in the background, my kids are stomping around the house while we’re doing this.
Baldy: I can you here, but I thought I heard a dog earlier…
Sam: You know, it was a dog, so they’re not toddlers anymore. But like I’ve been around toddlers and they’re adorable, but they’re really fundamentally unreliable human beings. They fall asleep at weird times, they soil themselves, they start crying, they throw tantrums. And with the torque and power that are possible now was the electric power trains, having that, you know it’s much easier to connect a controller or inverter, a motor, a battery and spin the back tire of the vehicle now, now it’s an electric powertrain and it was what we started 14 years ago. But putting out a vehicle with the kind of power that we have and the kind of power that is possible and the kind of performance that’s possible, without a mature central nervous system instead of control systems that are tested in the marketplace, is potentially irresponsible. So, there are things you can do and things you should do.
So, fundamentally for us, it’s to give you a shorter answer. One, electric is all we do every day. If we don’t make the best electric motorcycle in the world, we don’t get to continue to grow, we’re not as successful as we could be as a brand. Number two, we’ve had 14 years in millions of miles of experience to fundamentally drive the central nervous system, the brain Cypher III for us, all of this vehicle in a way that is going to give you reliable, consistent performance and ever reliable consistent experience and the problems you’re solving there are so fundamentally different from what they’re dealing with on the internal combustion engine side that we have a pretty significant lead for a while.
Baldy: So, it’s kind of like Tesla. To me anyway, it looks a little bit like Tesla. I’ve always, a guy I know started Tesla, Martin Eberhard, I know Elon declares himself the founder. But Martin was heard through the creation of the Roadster and it’s a nice car. And so, but then I got worried about them with the Model S, you know, blah, blah, blah and Jaguar is coming out and electric mini cooper and everything else, but they keep producing these great cars and the cars are just so damn good. Everybody buys and [inaudible 51:53] is just awesome.
Sam: I mean, I think automobile companies understand what’s at stake and as they’ve gotten under the hood, so to speak and really try to figure out how to compete with Tesla and somebody that’s been living in a pure electric world for the whole time, they realize that they’re not going to catch them in a short period of time, that the types of challenges are not just different in degree, they’re different in kind as far as what you’re dealing with and the expertise you need and the types of teams you need are really, really different from what they’ve done. I think the other thing they struggle with is, it’s sort of the innovator’s dilemma, which is they’re obsoleting their own product line which they have a ton of infrastructure and factories built up and all of their margins sits in and all of their sales sit in.
So, they have to come at it a little bit balanced as far as like, how much do we want to replace are very mature and very profitable internal combustion engine business with electrics that aren’t as well-known? So, they’re in a really weird spot. I think, the other thing to look at is how successful have other automobile companies been at dethroning Tesla? And then from our standpoint, you know, we had a major competitor and Harley that launched that teased it years ago and launched a bike…
Baldy: Was that good or bad for you?
Sam: So, there are a couple of answers of that. One is and I think the fundamental answer is a rising tide lifts all ships. We have been lead-protagonist and leading the charge and been the brand that defined, there’s one thing to say that you’re the leader, but we’re the brand that define the category of the high-performance electric motorcycle. And we’ve been carrying that load and being the champion for it in all fronts and trying to build awareness on our own. We never expected to have the whole market to ourselves in perpetuity forever. That doesn’t happen. So, we’ve been waiting for a large competitor to come in and to join the fight.
Any other competitor that’s out there that wants to build a high-quality and reliable electric motorcycle so that more people have that experience, beyond trying to build a great business, trying to transform what transportation is on two wheels, I welcome it. The more electric motorcycles there are in the world, the better place it’s going to be. So, I welcome that competition.
And the attention that Harley brought to the space with their launch was phenomenal. Some of our best days on our website track, look at the days that Harley launches and announces and I actually felt a little bad. Consistently, in all the articles that came out, they’d be like Harley livewire, this, this, this, price tags super high, the range is super low. Even the ones that were glowing would be, like but Zero launch the SRF and it’s $10,000 cheaper and here’s what’s up. And it was just like, even when they got great press, we were 14 years of experience ahead even the leading us-based motorcycle company. And I think there are some lessons there, like they’d put a lot of time energy and money into it. And I applaud them for the effort. I think they’re visionary for coming and trying to do it. I want as many brands that want to come into this space and compete with us to do it. It signals a different kind of competition which will force the Zero to elevate its game and continue to be the best electric motorcycle in the world. But the problems you’re trying to solve are fundamentally different than the ones you solved in the past.
Baldy: Yeah, that’s great. They need you and McGregor to say, when they come out with long way up, you need them to say dang, I wish we’d done this on the Zero’s. So, Jonathan Hong has a question, will Zero create a racetrack bike?
Sam: You know, there are a lot of things. We’ve done it, so not from a commercial standpoint, but not like a flat tracker. A racetrack bike from a performance standpoint or a road track standpoint, those are very specific and specialized machines and to do that, well, I think you have to have a race program. And I think a race program is a great way to make a small fortune if you start with a large fortune. All of our time and energy and effort is spent on making the best commercial motorcycles for use in the real world that we can. We still have a burn rate, we’re not profitable yet as a business, we’re continuing to try to cross that chasm. Every day, every minute we’re spent on in the real world with these motorcycles, how do we make the best motorcycle at the best price we possibly can so consumers can come out there and have a commercially viable amazing experience in the real world?
At the same time, we did a Pikes Peak race. And like if you look at the cross-section of engineers in our company, there’s a helmet on almost every desk and we have a vibrant race culture inside of Zero’s and some really fast guys, it is a passion point, it’s a project. It’s something we support at a grassroots level and we do enter events. But the time, energy and effort that we would spend developing a track bike or a high-performance motorcycle like that, I’d rather put into making the best commercial and consumer motorcycles in the world and use the passion we have as a business to continue to drive the limits of what’s possible for us with our engineers who are nearly all the [inaudible 56:56]. That’s a great question.
Baldy: Okay, yeah. So, what about as battery tech improves, BBQ2DI4 as a username…
Sam: Okay, [crosstalk 57:12] talk about a specific battery technology and I was like you have outstripped my technical knowledge. Like I don’t know what…
Baldy: Yeah. What about those BBQ batteries?
Sam: That’s okay.
Baldy: Anyway, as battery tech improves, will newer batteries work in older bikes?
Sam: Yeah. So, we make everything forward and back [inaudible 57:30] on all of our chemistry’s as long as our powertrain is seeing 102 volts nominal, they would be fine. And we’ve done a number of battery chemistry changes, as we continue to improve, all of that stuff needs to be forwards and backwards compatible and it is.
Baldy: Okay, cool.
Sam: Like even if in the future, somebody came, like yeah, there’s been a lot of talk of carbon capacitive batteries and what those could mean and like you would expect to see those on concept vehicles and they’re not there yet. So, like there’s nothing out there even in the concept space that feels like it’s going to supplant lithium-ion in the near or mid-term not really. You would see that round like even at very high exotic costs for these multi-billion dollar automobile brands you’re not seeing, which says we’re in lithium ion for a bit and it’s going to continue to improve at that 8 to 10% level which is great. In the future…
Baldy: No hydrogen fuel cells?
Sam: Has it really made the dent? And if you look at that and it’s like the argument between high-DEF DVD or Blu-ray, like lithium ion is one for this round. Like it is. But in the world where a carbon capacitive happens and it becomes cost-effective and we can adopt it, I don’t care what the battery this. As long as I can drive 102 volts nominal into my system, I am forward and back with compatible on and technology agnostic. And there will be a day very, far in the future where we look back at lithium ion and we’re like I thought that was like leaded gas.
Baldy: Yeah. So, we should winddown, we’ve advertised an hour, it’s been 59 minutes. Do you think there’s going to be…
Sam: Fantastic conversation, I really appreciate it…
Baldy: Oh, and I can tell our users love it too.
Sam: I love the questions coming in from the user group, I appreciate them. I think, they’re all really good questions. This is awesome.
Baldy: Yeah, good. I’ve always been curious about what the inside of your factory was. In fact, I talked to or David did talk to….
Sam: Like Willy Wonka’s?
Baldy: Yeah, well, you actually allowed TechCrunch in there and they had an aerial camera and they kind of scooted around fast, so I guess, they didn’t reveal any secrets or something. But it looked like, I mean you got, there were 140 people on the factory or something like that?
Sam: It’s about right.
Baldy: Yeah, and looked like a pretty advanced operation.
Sam: So, no robotics. I think that the investments on that front the Tesla has done, those are huge investments, had volumes that were not at yet. The idea of automation for automation sake is an appealing, but automation as it makes a more consistent and better product at volume does. We do a lot in not a huge space. We’re building in the Bay Area and real estates at a premium, but we have a phenomenal and dedicated team that make amazing motorcycles and they’ve done a great job of, that Factory was special built around how you put together our motorcycles that were designed. So, like those two came together in really good way.
Baldy: Have a very good friend who’s one of your neighbors, he has a manufacturing plant down there too. Bay Photo, you know about Bay Photo?
Sam: Like they’re literally right across the way. Yeah.
Baldy: Yeah, love those guys, down there a lot. And so, you’ve had to close the factory now until further notice?
Sam: So, it’s an evolving thing every day like everybody else with the coronavirus. We’ve been following the county mandates and which is sort of trailing, I’m not sure what happened in San Francisco and the Bay Area around shelter-in-place. So, the MIC did a great job the motors, have a Councilor did a great job of lobbying that the motorcycles and power sports are in essential business.
So, at a federal level, we’ve been deemed essential. We have a fleet and authority and police bikes that we do build. And actually, there was a Cares Act grant about $850 million that went towards equipment for the prevention of the spread, the response and the recovery to COVID-19 and we have six grants that are in process and pending for that as well as a bunch of other first responder and fleet motorcycles.
We have continued to operate after we got clearance that we were considered an essential business and we talked to people from the county and talked to people from Scotts Valley. But we’re doing, it’s like what can you do and what should you do? We’re doing it in a way that we have temperature checks before anybody checks in for a shift. We’re running a skeleton shift and keeping people much more spaced out than the ordinarily would be. The production volumes are significantly lower and focused primarily on those first responder products and vehicles that may be helpful in the crisis. Even when we went out and looked, you know, told people like, hey, this $850 million of Care Act money can be used for this equipment, of course, you should defer to PPP and ventilators and things that are on the front lines in response to the health crisis. But these vehicles do have use cases that we can see emerging that would be really, really useful, for crowd dispersement and this, this and this. So, not a hard push in trying to make a grab for it, but making sure that if it’s helpful as we’re all kind of coming together that we’re making those vehicles available.
So, we’ve continued to run, but only the production line right now that it was responsible for the police motorcycles and for the first responder stuff and in a way that was fundamentally much more spread out. We’ve also spent the time just getting on the offense on reorganizing the warehouse, reorganizing the production line in ways that we move very slowly but we have a skeleton crew in there that’s cycling through day to day to get ourselves ready for when it turns back on.
In the last 18 months, the largest challenge I faced the CEO is that we couldn’t produce enough motorcycles to meet demand. Now, if I could choose for exactly, but if you ask me to pick a problem, that’s the problem I’d choose. But it’s still very much a problem in the business. You spent 14 years to get to this point and you have this opportunity now to really make sure that as many people that want to have this experience can get it and from a business standpoint, to take advantage of the momentum and we can’t produce enough bikes. So…
Baldy: And that’s [crosstalk 01:03:22] dealers when they can’t get stock.
Sam: Especially Europe which has been growing even at a more rapid rate than North America. And they’ve been phenomenally patient and amazing partners and we take it super seriously. So, we’ve used this time when we shut down to also again with safety first in mind, to reconfigure some of the production environment, to take on these projects so that when we come back the efficiency level can be even higher and that our throughput can go even higher and that our tact time or the time at each station can drive down. So, we’ve spent that time, you know, we’re generally… to use a metaphor, we’re too busy cutting wood to stop and sharpen the saw when it comes the operations environment. And we’ve been sharpening the crap out of the saw over the course of the last month or so as a shelter-in-places is in place in the [crosstalk 01:04:17]
Baldy: And you have like 200 dealers?
Sam: Yeah, it’s about a little less 100 in North America, 100 in Europe and then some distributors, both in South and Central America as well as in distributed countries in Europe. And then on top of that, we have almost exactly 200 fleet and Authority customers where we sell police bikes to military, private security organizations, police patrol that are in there as well.
Baldy: So, you’ve been so good, to thank you unselfishly offer to demo a Black Forest and actually, we had arranged that and we had a date set and everything else and I was going to write a review of it. But I ended up with a conflict and when I could get the bike, it was down in LA and so we never made it happen. But as soon as I saw that bike, I loved it. I’m not that much into hard side cases in top cases, but in fact they were black, they look so ready and…
Sam: But look, nothing but time, I can get somebody in there. I’ll make sure we have one in the showroom. We can definitely get a bike up. Now is a great time, it’s a phenomenal social distancing activity. Anybody that’s listening, I’m assuming you’re a rider. Amazing thing to go out there, like don’t be cooped up, get out there keep the rubber downs, like…
Baldy: Especially around here in the Santa Cruz Mountains and Coast Highway and everything else. I guess you get to commute to work on the Coast Highway, right, you go through Davenport?
Sam: Yeah. My kids would ask like, why do you ride motorcycle to work every day? And I’m like it’s like riding a rollercoaster to my job and they were [crosstalk 01:05:49]
Baldy: I know. Somebody said it, our at [inaudible 01:05:50] rally, dogs understand, because they put their heads out the windows and they know the feeling. So, what do you ride to work? Do you rotate it around or do you have a favorite?
Sam: One of the reasons I took the job, man, is I have access to all the electric motorcycles I can want. So, the SRS which is our most recent launched motorcycle, it’s a fully faired, you know, sort of sport commuter bike if you will. That SRS is just a more comfortable riding position, the fairing does an amazing job. It’s the most beautiful bike we’ve made in my opinion. I love it. It’s like, you know, it’s a shiny new toy. My day to day bike that I love and ride, I love the FX. My commutes not that far, it’s our Enduro. It’s a really tall riding position, you can lean split in California. It’s like I’m up tall, it’s narrow, it’s super light. If I want to be a bit of a hoo again, there are things that I can do on that, but I wouldn’t do [crosstalk 01:06:41] You know, honestly, it’s one of the bikes that not from a high-performance standpoint, it’s one of the bikes that you see a lot of the people at Zero do ride and love. So, I’m more often, like grab it and go in Supercross town. I live in Santa Cruz, so I’m not going that far generally. I’m going to the beach, I’m going the store and hop on an FX. But anytime, I want to go further than like 10 to 15 miles off, right now, I’m going to hop on an SRF or SRS.
Baldy: That’s awesome. Well, thank you so much for being here and that was fascinating. I’m told I need to thank Dan Quick also for behind the scenes to help for people…
Sam: Dan put all this together. Even if he didn’t tell me where to go [crosstalk 01:07:22] and who to talk to and what to say, I wouldn’t get anything done. So, Dan is a rock star, I really appreciate it.
Baldy: Well, I’m glad he got you on. This was quite fascinating. So, for people who enjoyed it, make sure you press, ‘Like’ and subscribe so you can get notified. And I have the CEO, a founder of Climb coming up, they make some pretty…
Sam: Oh, cool. They make some great stuff. I just got a pair of their pants, like [crosstalk 01:07:45]
Baldy: Yeah, I did too, I did a big ride in Morocco and I got a new jacket and pants and loved him.
Sam: So, that place is on the list, man, it sounds amazing. Hey, let’s get you set up on the Black Forest ride. I want to thank your viewers and listeners. Thank you, guys so much for tuning in. It’s gratifying to know that you’re interested in what that entire team at Zero and what I have a chance to be a part of, you know, what we’re building. We love the interest. I love the questions. Thanks for tuning in.
Baldy: Yeah, it’s good to hear from you. I thought you were a little press shy or something, because I didn’t see very many interviews that were very long of you. You tend to have your CTO talk during a product intro or something like that, so it was good to hear from you for the whole hour.
Sam: Well, thanks, I hate the CTO, he built most of it. So, when it comes to that stuff, I mean he’s earned the spot to be the guy that gets to tell the stories.
Baldy: He’s the doctor Fauci.
Sam: Absolutely. It makes me so gasp some questions about how you’re casting me in and what role that I would take.
Baldy: I didn’t mean that way. But I did ask who would you choose to play yourself on this and how oh… Anyway, I don’t know if people saw that skip, it was funny. So anyway, thanks a lot.
Sam: Alright. Thank you, guys very much. Take care. Everybody, be safe. Stay healthy.