Margins, Maxims and Managing Growth: The plan for 2026

I am just going to get this out right at the beginning. I ran the numbers. AProto Bike lost money in 2025.

The problem isn't growth or gross margins in Q4 of 2025. By those metrics, this business is booming. The problem is the cost of new product development, rising costs, and the switch to a business model that requires carrying inventory.

Margins

To keep pricing simple, we use a cost-of-goods multiplier model. During the initial phase of the business, this allowed us to focus on other things while knowing we were delivering fair value to our customers. 

2025 brought on the chaos caused by tariffs. Despite the vast majority of our products being made in the US, our suppliers saw increased costs and raised prices. In some cases, the production cost tripled before dropping back to about double.

This cost increase was accompanied by the expected drop in quality. Political views aside, tariffs increased both the cost to acquire and the cost of poor quality. Even though the rework was at our supplier's expense, we still lost orders due to longer lead times and delays.

May, June, and July saw us operating with negative cash flows. We seriously considered shutting down this business and walking away. In an effort to find a way out, we spent a significant portion of our reserves on finding new suppliers and reducing costs on key items by expanding the inventory we held. This allowed us to lower prices and speed up lead times, even when accounting for the cost of capital. By September, we were once again making money.

Money which we promptly spend on developing new products, including a handlebar (the lion's share of the money), new computer mounts, and a few other expensive experiments with 3D printed metal.

Maxims

This business's main goal is not to make money for its founder (me!), they are:

1. Help out my fellow riders with solutions that make their riding better.
2. Drive experimentation and eventually innovation, both small and large, and fund, largely off our balance sheet, the ideas that enable that innovation to life.
3. Accomplish the above at a fair value to cyclists.

These were present at the launch of AProto Bike and still hold today. They are the reasons we cap gross margin in our pricing model and why we seek to continue to create value. They drive us to make new designs with attention to detail that keep prices low while delivering products that do not compromise on their key functions.

Managing Growth

We are excited for 2026. Despite spending a few thousand dollars more than we made in 2025, in reflection, it made sense to give the business a small loan to keep it running. Why?

1. Despite some challenges and delays, the handlebar will finally be launched in Q1 of 2026. I started the process by asking a Chinese company to make what became the BikeDoc HB24 in 2023. Because of its price point and design, it has been a major contributor to helping riders, especially smaller ones, experiment with narrower and longer fits. Since that product came to market, the meme-fit bike has become a thing that helps people. While it will be our first branded bar, it's our second time through the product design process, and we have learned a lot. The new bar will be 100mm reach, short drop, and flared, and will be focused on helping gravel riders get narrower and lower. It's been tested to exceed ISO 4210-2 for both road and off-road applications using the TBIS 4210-2 tests, which both test to increased values and require more fatigue tests. As such, it's expensive to produce and can't be a low-priced product, but we are aiming for value at a retail price of <$330 USD, including a computer mount. We will see if we get there.
2. Bike positions remain in flux, and people need options. Originally, when the domain was secured for this business, it was supposed to make frames for smaller riders. Frames that followed the forward fit, / what is now known as the meme-fit philosophy. For a lot of reasons, that business case didn't make sense, and the business evolved into one where we try to give cyclists more choice to better tune their fit. This need is growing, and while more businesses are now offering solutions, it is also increasing as bikes are increasingly restricted by proprietary components.
3. Our new inventory-based model is profitable, while the quality is up and lead times are down. We have strong margins and expect forward-looking cash flows to remain strong. Our new suppliers now account for ~80% of our volume, and they are doing a great job. The nylon printing is still US-based to help with fast inventory turns and consistent quality.
4. We have a brand that people trust, and we expect to partner with other companies to bring new products to life in 2026. It's taken work on our end,  but more importantly, our customers have spread the word regarding our solutions and products. We hope to collaborate with a bike brand for the first time this year and will also start reselling Zeno Q-Connector V2 couplers. Becoming a reseller is a scary step for us, but we expect to design and sell Q-Connector V2-compatible products, so selling them is a natural way to help our customers.
5. We still have big ideas for small riders to explore. True to our roots, both in gravel riding as well as our focus on smaller riders, in addition to the handlebar, we are experimenting with solutions that move the position of the saddle mounts, as well as a stem solution.

The investments in new products will be determined by cash inflows, as we also intend to keep things simple and manage our growth largely off-balance sheet. 

Always happy to chat, so drop us a line with ideas, feedback or general thoughts!