Spokesmen Cycling Podcast
Rags To Riches: Head to Head with Le Col’s Yanto Barker
Sunday 24th November 2019
SPONSOR: Jenson USA
HOST: Carlton Reid
GUEST: Yanto Barker, CEO and founder of Le Col cycle apparel.
TRANSCRIPT
Welcome to episode 230 of the Spokesmen Cycling Podcast. This show was published on Sunday 24th November 2019.
The Spokesmen Cycling Podcast is brought to you by Jenson USA, where you’ll always find a great selection of products at amazing prices with unparalleled customer service. For more information, just go to Jensonusa.com/thespokesmen. Hey everybody, it’s David from the Fredcast cycling podcast at theFredcast.com. I’m one of the hosts and producers of the spokesmen cycling roundtable podcast. For show notes, links and all sorts of other information please visit our website at the-spokesmen.com. And now, here are the spokesmen.
Carlton Reid 1.00
Hi there I’m Carlton Reid and on today’s show we’ve got a head to head interview with Yanto Barker, the former pro cyclist who rebooted a racing career to promote his fledgling premium cycle clothing brand, Le Col. As you’ll hear in this hour-long show, at first Yanto did all of the jobs in his startup, from designing to dispatching, but as Le Col grew he delegated to experts. Le Col now employs 33 people, including 8 in Italy — early in the company’s trajectory Yanto bought the Italian factory that had been making his high-end apparel, and it’s fascinating to hear how and why he did this. He’s affluent now, he says, but Yanto explains how he didn’t start loaded — his, then, is a rags-to-riches story.
I dig into the company’s financials, asking how Le Col raised money through crowdfunding as well as attracting venture capital. In the chat we don’t stop to explain terms so here are two acronym explainers: HMRC is Her Majesty’s Revenues and Custom, in other words the UK’s tax authorities. And EIS is the Enterprise Investment Scheme in which investors can claim up to 30% income tax relief on their investments, something that’s key to crowdfunding campaigns that sell shares in a business – so think Crowdcube not Kickstarter.
As you’ll hear, Yanto a driven individual and this interview was conducted for a profile I shall do on him for Forbes.com. You can check out all of my Forbes articles at Forbes.com/sites/carltonreid
Carlton Reid 3.00
That link, and a bunch of others, can be found on the shownotes for this episode at the-spokesmen.com And as with all of the latest shows, that website has a full transcript of this episode.
Carlton Reid
So Yanto, tell me about your racing career before you started Le Col.
Yanto Barker
So I was a very single minded young man. And at the age of 16, I was pretty clear that I wanted to be a cyclist, and at 17 I was going to college and decided that – coming back from college one day – I didn’t want to go there anymore. I thought I could do a better job, racing my bike for a career. And that’s what I wanted to concentrate on. So I came home to tell my parents who have always been very open with me and and supportive of my choices as long as I understood the implications and seriousness and that I wasn’t overlooking any serious details, then they will support me to do whatever I wanted. At the time, I was I was in a very modest financial situation with my parents. My mum was a single parent and she brought me and my sisters up on her own, basically, and she was receiving Family Credit for me attending higher education. And she made it very clear that if I stopped then that that income would stop. And therefore I would need to pick it up and contribute it from a personal point of view. So I basically asked her how much that was, and I think was about 30 pounds a week. And I said, Fine. I’ll get a job part time, couple days a week and I’ll cover it, which I did. So I think I went to college one more day, picked up my stuff, told my tutors, that’s what I was doing. And from then on, I was 100% full time as a cyclist. I was a junior at the time, I was writing for the national team. So the GB national team, I was in a team with Bradley Wiggins, and I was actually riding and racing all around the world already as part of the junior national series, international series and you know, writers like Tom Boonen, Fabian Cancellara were my generation as juniors. And, you know, that was the world I lived in and I was looked after like an athlete, given bikes, kit, travel, expenses, you know, hotels and flights booked from from then on.
Carlton Reid
It’s still a hell of a leap though. That’s a very brave decision you took and your your mum, you’re taking that kind of decision at that kind of age that had, obviously financial implications.
Yanto Barker
Yeah, I did. It was brave, actually. And I look back and actually the bravery was probably overshadowed by naivety. And that theme we’ll come back to if you ask a few more questions of more recent times, I would say it’s a similar characteristic in that I am brave, almost a little bit too brave for myself sometimes, but luckily, I’m quite resourceful and determined, and I do love a challenge. And I’m often challenging myself. And that was the first one that was the first big occasion that was the first big challenges: can I earn my living from my passion, my cycling passion? And the answer was yes, I can. Can I, you know, look off myself financially and, and live that life that I really want to and I did and I’m very proud of myself that I was able to.
Carlton Reid 6.17
So tell me what years we talking about here
Yanto Barker
1997, 98, 99 and onwards basically, I mean 97 that was I was my first ride for a GB team was 1997. I remember it very clearly there was the Tamworth Two-Day in the Midlands, with Bradley Wiggins and a number of other riders who didn’t, didn’t continue as long as we did. And from that was from then on, I was looked after as part of the GB setup. And later I moved to France to ride for a semi pro team and continue my career that way.
Carlton Reid
And then when did you have the idea to start a clothing brand at the same time as as racing.
Yanto Barker
So they actually happened independently because by the time I was 25, I’d been on the podium of the Nationals the national men’s I was a junior national champion at 18. And then I’ve been on the podium and best British finisher at the tour of Britain. And I wasn’t getting paid and wasn’t getting the contracts for the next year that I really felt like I needed to to demonstrate that I was going to continue on a trajectory that would enable me to relax financially at the end of my career, which was sort of 35, 36, 37 depending on which age you choose to stop racing full time. And that made me really nervous and I felt like I wanted to stop and reinvent myself sooner rather than later. I think as a younger adult, you are a bit more flexible, you’re not so set in your ways. And as I described earlier, from the age of 17, I was looked after, like a little pop star in a bubble where pretty much everything was given or supplied to me.
Yanto Barker 8.00
Now, while that’s a real luxury to some people, it’s equally quite a institutional conditioning. That means when it comes to looking after myself on some basic adult grown up logistics like paying rent and bills, and you know, council tax and all that kind of stuff. I wasn’t, I wasn’t needing to do that it was all covered for me I was looked after. So at 25. I actually did the Commonwealth Games in 2006, on the 25th of March in Melbourne. And that was my last race from the first half of my career. I then took three years out, 2006, 07 and 08, where I didn’t race my bike or even exercise for half of that time at all, which was a real shock to the system actually. But I’m a very all or nothing kind of person. So when I stopped, I didn’t touch my bike for 18 months, I didn’t even do any kind of exercise for 18 months. And I was really keen to change my focus and create a gap in my life that was going to get filled from the next phase.
Carlton Reid
How did you make money?
Yanto Barker
Exactly, how to make money? And I never actually intended to come back to cycle so at this point 2006, middle of 2006 and 2007, I, I’m I’m ignoring cycling. I watch a little bit on the telly, but I’m really not intending to have anything more to do with it and actually researching what other jobs could I get? What other businesses maybe I could start? What ways can I earn my living and how am I going to, you know, look after myself financially going forward. So, get to middle of 2008 and I come up after doing a bit of a feasibility on a couple of different businesses. One, I’d had a couple of jobs and I didn’t like having a job. I like to be self-employed and like to look after my own my own time and responsibilities. So I did a feasibility on a couple different projects like cycling training/coaching, which is quite popular for ex-athletes at the moment. Travel which was another one and then the clothing equally bikes and and parts I also looked at, and the clothing idea was the one that felt like the most potential and the one that I thought could actually go the furthest. So I started to give that quite a bit more attention. So really middle of 2008, I was starting to focus on researching suppliers, fabrics, designs, brand names, I was going through the logistics of what it takes to set up a business, including registering at Companies House on domain names, you know, all the things that have to be done before anyone even knows about it. These are the things that I was starting to look at.
Carlton Reid
And when did you actually physically found the business then but when do you actually physically have your product, right? So
Yanto Barker
Get to the end of 2008 and I am missing cycling and I started to think to myself, well, if I’m going to start a cycling brand, then I could, why don’t I go back to cycling and use my own profile to promote the business? So by this point, I come up with a name; I knew what I wanted what I wanted to achieve in terms of the price point, the position in the market, a lot of the fundamentals as in route to market, the products that I want to improve from what was available in other brands. And I started trading properly towards the end of 2008. And I began racing again early 2009. So I started to receive products and samples in early 2009. And continued developing the samples actually for another year in a bit until we started trading officially in 2011. And I had to continue to race full time as well. So I was from the beginning of 2009, I was running in parallel, a full time racing career again, although I rode for myself, I sponsored myself effectively with my brand name on my jersey, even though we weren’t officially trading yet. And then I was setting up all the foundations of what needed to be done for the business to begin trading in 2011.
Carlton Reid 12.00
So this is why, in some company profiles I’ve seen it says 2011, others says, no, 2009. So basically both both are correct?
Yanto Barker
Yeah. So the idea was formed earlier than 2011. But we weren’t a company trading until 2011.
Carlton Reid
Right. Okay. And then I want to go backwards a bit. Did you put on weight when you’d stop riding and and how did you find getting back into into into cycling? What physiologically happened to you?
Yanto Barker
So, no, I didn’t put on any weight. And I actually tried for a while. So some people reading this might might feel like that’s not fair. But basically, I didn’t put on a single kilo. I changed my body composition. So I had a lot less muscle when I wasn’t doing any exercise. But I actually didn’t change weight, and then when it came back to racing, and training properly, I mean, when I first started I was I was riding very slowly compared to what I used to, but I was very clear that to get back to a strong condition, physical condition, I just needed to focus on intensity and the speed would come back naturally. So I went out for my first few rides at the end of 2008 in preparation for the 2009 season, and I just pushed as hard as I could, but I was riding three, four, maybe even five miles an hour slower than I was used to. But I ignored the speed. I just focused on my intensity, and I pushed as hard as I could and I knew if I did that I would get fit quickly. Like I said, I hadn’t put on any weight so I wasn’t losing weight. And the form came back actually within six weeks, even after just under three years off. I was you know, back to being as fast as any club rider and then within another three or four weeks, I was doing 25, 30 hours in a week of training in the UK in January. And I was fully committed to making sure I was as fast as I could possibly be and as good as as close to as good as I was before I started so up until the age of 25. I got back there by the time I did my first race, which was in February 2009.
Carlton Reid
Interesting. So then you’ve got the brand up and running in 2011. You then have about five years of running the brand and racing at the same time.
Yanto Barker
Yeah, that was I mean that I look back now. I mean, I didn’t have a family than I’ve got two children now. But it was just myself and my girlfriend, who is now my wife. And I mean, it was a seven day a week job. I trained every single morning during the week. Sometimes up to 100 miles, I go from London to Brighton and back. And then in the afternoons, I’ve come to the office. And I’d look at spreadsheets, I’d look at designs, I’d sign off samples, I do all the things that need to be done in the work environment to make sure that the business continued.
Yanto Barker 15.00
And then a little bit later, so 2015 and 2016. I was racing more internationally again. I was taking part in World Tour races like Tour de Dubai, Tour of Poland, Kuurne–Brussels–Kuurne, those kind of races. And on the team bus between stages, you do 250 kilometre stages. And I was trying to check my emails after those kinds of stages, and it was really, really hard work. And I look back now and I think I was really committed. I’m very dedicated. And I did that for a number of years, like you say from 2011 until 2016. August 2016 was my last race. I was working virtually seven days a week and often late into the evenings and definitely weekends every single week.
Carlton Reid
And you are farming an awful lot of stuff out. So you’re you’re you’re getting somebody else to do the designs. You’re basically buying in expertise. Is that how you did it?
Yanto Barker
Yeah, but I always basically I did every single job in this business before I hired the person that now looks after that department or that that specific role. So as a founder and entrepreneur, your role is very adaptive to what needs to be done. And at an early stage, you know, there was me and a factory. So an early early stage, there was me on my own and I had a part-time secretary who just managed my emails while I was out training or if I was abroad or racing, internationally. And then the interesting thing is, because I, I never worked a full-time job in the office, I was always racing my bike. So it was a bit like I always had a morning meeting that took at least four hours. So I’ve been very good quite early on being quite good at delegating; delegating the responsibilities, delegating the jobs, and making sure that I checked up on them rather than did them myself. So that is how it started. But I did do every single job. So I did accounts, I did design. I did branding. I did website building, I did planning, I did forecasting, I did finances. I did investment, I did people managing, you know, I did product testing, you know, this, this is really, you know, fundamental to me knowing every part of this business is that I did that job in the beginning. So when it comes to hiring, it’s actually quite a luxury because I have someone who’s a specialist in each department and each role and they do a much better job than I did. So actually, it’s testament to me that I could adapt myself with no qualifications, to run and do all those different jobs at different times, just just enough to get it to where it needed to be until I could employ the person to come in and take that on full time and with the training and expertise, they have in their experience to do it, like it should be done instead of how I was doing it.
Carlton Reid
And how many people are you employing now?
Yanto Barker
We’re just over 30 now. I think we’re 32, 33 not everybody’s on a full five-day week, but that’s pretty much where we are 33 people.
Carlton Reid
That’s UK?
Yanto Barker
That’s UK and Italy.
Carlton Reid
Let’s go to Italy then. Tell me how you how you first of all contacted that factory in Treviso. So and then how you ended up owning it?
Yanto Barker
Yeah. So good, good question
Yanto Barker
I was contacted by them. So at the time I was looking for samples, I was actually getting them made in Pakistan in China, Italy in the UK. And I was looking for someone that I could trust and rely who would deliver the products that I needed reliably, both in quality control and timing and then manage me as a relationship because I was about to spend the most amount of money I’d ever had at one time, and it was about to be gone on my first order. So I had been contacted by them to say that they could do custom kit and I contacted them back again and said, Can you do more than custom kit, could you do a brand for me? I’ll give you all the files. I’ll give you the name I’ll give you the CADs so you can see what the artwork looks like and then if you make it then we can start to develop some samples and see how it goes. So that was the first contact I had with a lady called Sandra Sartori, who was an Italian lady based in Treviso, just outside Treviso, a place called Castelfranco. And I developed a relationship with her, she delivered some samples for me, and they were pretty good. I thought they needed a little bit of work. And I asked her can I come and visit you? And she said yes. She was an account manager in a in a factory. And I went to visit her, I got on really well with her. [[[[[[She was very straightforward, not Italian-like more Germanic. So turns out, she’s from the very, very north of Italy, which is close to the Austrian border. And she has a very Austrian feel to her character. As in she speaks Italian, she, she she sounds Italian, but she looks more Germanic. And she acts in a very structured, predictable Germanic way which actually was really useful from my point of view, I could, I could feel like not wanting to operate the operating as a business.]]]]] So we developed a relationship. See, she looked after me as an account. And supplied me all of my goods from the very, very first jersey that ever got made. right up until today, actually, she has managed that process. And I used that process and she was an account manager for me, and they were my supplier for about three years, until early 2014. When actually, late 2013, I first went there to say, I’ve got some, I’ve got some issues with quality control. I’ve got some issues with reliability in terms of timings, there, I want to I want to see the improvements, and I want you to give me some assurance how that’s going to happen. And she said, I don’t think it can happen. She was very frank. And I said, Well, what what you mean? And she said, because there is there are disagreements in how the business needs to be run and we’re just not going to get invested into the departments that need to be invested into to service you in the way you’re looking to be serviced at the standard that you that you want, and I said okay. So what what do I need to do? I don’t really want to look for a new factory, you’ve got to run through all your definitions again, you’ve got to find out, you know all of their strengths and weaknesses. And actually, it’s a very destabilising process for a brand that is moving to change its supplier, and then line it all up so no one notices, and you get the right quality product at the right time to sell. And she said, Well, you know, you could probably make an offer to buy the business. And I was like, really? I mean, I didn’t, I didn’t go there to do that. But during this meeting, when I’m complaining about timing and quality control, she said, well, why don’t you buy or invest into the business? And I said, Okay, let me think about it. And I’ll need some details. So I asked her a bunch of questions. She answered a bunch of questions. And I said, give me a few months I’ll come back to you. And so I basically pitched to raise investment to buy them out and and take on the factory as a going concern and about six months later, that’s exactly what happened. So I bought an order book, I bought a management team. And I bought all the contacts and facilities I needed to service my product so as no one would notice the transition from the company being registered as it was when I first started to it being incorporated into my business, and it being a version of Le Col Ltd. in Italy that was the manufacturing department.
Carlton Reid
And how many people in Italy?
Yanto Barker
We have aout 8 people there. And we do have a flexible outsourcing process there as well. So obviously cycling kit is very seasonal. I was very cautious about taking on fixed overheads, because that just creates a very hungry beast of a business that needs feeding, you know orders all the time so we can do the minimum but actually we outsource the real flex in peak season. we outsource to a cutting department who is literally a kilometre down the road and a sewing department who helped make sure that we can cater for that flex in peaks and troughs of the seasonality. And then I also service a whole bunch of international customers who came with the order book from the original business. And were, you know, transferred across, and we service them continually as well.
Carlton Reid
And these are all cycle?
Yanto Barker
Yeah, there was a little bit of yoga wear, there was a little bit of ski wear. But actually, we’ve tried to sort of steer away from that, because actually, cycling is our expertise. And I think it’s important that we do focus on the things that we do well, and yeah, so that’s what we’ve done really. So we now you know, 98% cycling.
Yanto Barker
{{{{And, yeah, we just continue in that way.}}}}
Carlton Reid
So you’re seeing what other brands are going to be bringing to market, potentially?
Yanto Barker
Kind of. More like we service sort of international custom customers. And I wouldn’t say there are any big recognisable brands, there are a few smaller, maybe southern hemisphere brands who use our manufacturing. But we don’t really share IP very much. I’m quite protective about what we develop, I spent a long, a long time, and a lot of money developing very technical products that I don’t really want anyone else to have. And likewise, I’m not hugely concerned with what anyone else is doing in terms of product development, because, you know, I know what a good product should do. I know what I want it to look like. And I’m very focused on delivering that as opposed to looking around at what other brands are doing and maybe sort of incorporating a little bit of this, a little bit of that from other areas.
Yanto Barker
So the investment you got to buy the factory in Trevisio was before the Crowdcube investment?
Yanto Barker
Yes, correct. The factory investment was about a third, a third: My savings, a bank loan and seed investors.
Carlton Reid
Okay. And then talk about how you got into doing … well. you got a million, just over a million pounds from 344 investors. You started in 2016. But then it finished in January 2017. Yes?
Yanto Barker
Yes, it did, yes. So we did, I mean, we started actually on that project to pitch for crowdfunding investment in February 2016. We didn’t get to launch on the site on Crowdcube until the 17th of November. And then we hit Christmas holidays and all sorts of things. It was a really, really challenging time probably one of the most stressful times I’ve ever encountered. And I’ll add that my wife gave birth to our first daughter in the middle and I was in the hospital corridor or taking phone calls for £250 investment. a £1000 investment £10,000 investment while you know, we’re trying to get through learning how to breastfeed, and, you know, the complications of her birth, it wasn’t straightforward either. So that was intense. And, you know, it needed quite special a special attention. But yeah, we completed in January 2017.
Yanto Barker 25.46
We had an issue with HMRC, complying with EIS (Enterprise Investment Scheme) submission. So that was actually a real challenge and they wouldn’t release funds until that came through which it thankfully did in about February, so a month later, and all the time is quite anxious, you know about people — they are only stating an intent of commitment, they haven’t actually paid any money yet. So it’s not until EIS compliance confirmation come through from HMRC that that turns into a actual investment and the money gets paid. So that was quite a stressful time.
Yanto Barker
So other companies have — other cycle clothing companies— have gone to Crowdcube and and got investment. I mean, there’s there’s been a couple of crash and burn companies there — who I have done stories on — that took that money and probably didn’t use it terribly wisely. So what did you use that that that million pounds for?
Yanto Barker
Yeah. So I was very clear that I bought a factory. So when I said in the very, very beginning that I was brave, this was a stupidly brave move. Because I had no idea just how big a deal that was to actually incorporate an international manufacturing facility into quite a small UK cycling clothing brand. They were turning over more than I was turning over in the UK, that’s for sure. And, and luckily, I’m resourceful. I made it work, but actually it was very, very close for a long time and it was quite stressful. So the reason I say that is I was quite clear through the intent to go to Crowdcube and raise that money that was about a marketing play, to build the brand to justify having a manufacturing facility in Italy, because that facility was too big for the brand that I’d incorporated it into the early stage in the beginning, but I always believed I will grow into that factory. And that’s what we have done. And actually we’ve surpassed that now we’ve grown almost, it’s had to expand to accommodate us. But in the early stage, it was much too big. So I was really keen that we raised a million pounds we invest a million pounds into marketing and sales and I employed a very senior marketing executive from Sky called Simon Creasey at the same time as completing that Crowdcube phrase. And then the the money that was raised was very much about improving our systems, software and processes, a strong push into product development and a very big play into marketing, PR and social media.
Carlton Reid
And then so that was 21% equity that those those 344 have got some of them gone on to become quite
Carlton Reid
active and really using that that leverage they’ve got or are they all sleeping investors?
Yanto Barker
They’re all excellent investors I will say and I’m I think I’m very fortunate actually because there are horror stories of Crowdcube, you know, crowdfunding stories of, you know, investors that are nightmare or, you know, knowing what to do with the money, all that kind of stuff is is a bit of a bit of a challenge and when you haven’t taken really much investment, and then when you you raise, you know, what looks like quite a lot, but actually, if you if you think about what we’re trying to achieve with a million pounds it isn’t that much and that’s where the danger is actually, it’s a everything moves a lot faster with investment, and you have to understand what that means for the economics of the business, your income versus outgoings, your salary bill each month, your income targets they, if they don’t get met, then you have to be really clear about what you’re doing about it and responsive to making sure that you have the answers. Because all of the answers need time to get to, and time to implement and execute.
Yanto Barker 29.48
And that’s, I think, the main hurdle that a lot of businesses that raise money for the first time fall over on, they don’t realise that you probably are going to need more money as well. And you have to understand the size of the business you’re trying to create before it becomes either breakeven or profitable. And they’re all very fluid, those those forecasts and you have to be very, very on top of your numbers, very, very on top of your expenses and ready to make some strong decisions very quickly. And I think yeah, we I’ve definitely been very aware of that and made sure that I’m always very close to the numbers, fully clear on what our targets are, and if we’re hitting them, and if we’re not hitting them what that means and how we have to respond to it. So yeah, I mean, it’s, it’s a, it’s a good thing to have lots of investors, we’ve actually only got 17. In our in direct answer to your question, we really got 17 direct shareholders, including my original seed investors of the 344. I think you mentioned I thought it was 335 or something. But yeah, that’s the that’s the number. They’re all very helpful. They often send me links to interesting articles that are relevant in my space. And equally, you know, very strong advocates of the brand. Quite quite a few of them are active cyclists. And I manage them very, you know, carefully in that I give them the right information at the right time. I respect them all. I make sure that, you know, they’re informed of the decisions that we’re making the big stuff and when I need their sign off, which I do occasionally, you know, I give them a heads up that it’s coming and inform them of the context of why I’m making that decision, and the timings and requirements from their side so as they’re clear on what their contribution needs to be, and if they need to get back to me within a certain timeframe, they know what that is. And they definitely appreciate that. And that helps keep the investor relations really slick.
Carlton Reid
So a second ago, you said that, even though you’ve raised a million pounds, you’re going to need more, so then talk about Puma Private Equity. So that raised £2.35 million from them, yeah?
Yanto Barker
So that’s where Puma come in. And quite quickly after raising the Crowdube I mean, I have financial consultants who helped us put our pitch together for Crowdcube. And I immediately after the completion of Crowdcube, kept them on a retainer because there are another set of eyes on the the numbers, there are another set of eyes on the trajectory of the business. And, you know, my job as founder and CEO is to make sure that I source the resources that this business needs to deliver its targets or its potential. And one of those is money. The other is, you know, the right people and expertise, and the other other projects and partnerships that we set up to, you know, really expand the business and get our names out there. So I kept my financial consultants on a retainer immediately after Crowdcube, because I could see the trajectory that we were going on, and it was likely that we were going to need more money. So I pre planned that in my, in my actions and kept them on board. And that’s exactly what happened. But you know, I think it shouldn’t be seen as a negative that we needed more money. What I was doing was I was negotiating really strong partnerships that need, you know, finance and investment to fulfil them. Because if you’ve got a really, really big strong partnership, but you can’t activate it, then it’s not really worth its full potential. And you’re wasting the money if you don’t join up all the dots to connect that partnership to the business and in turn to increase in sales. So I’m very, very black and white around what we do has to deliver growth in turnover. And if I can’t see that in a really obvious way, then either failing or it’s either failing in its contribution to the business.
Carlton Reid
So when was Puma brought on board?
Yanto Barker 33.36
Puma, we started talking to them in March, April 2018. And they completed their first tranche, so they actually committed to raise more money. They and they divided it into two tranches, so tranche one was October 2018. And tranche two was just this October just gone. And both for £2.35 and £2.5 million. So we’ve raised quite a lot of money now. And I think that gives us a really strong platform to push [[[[[COUGH]]]] continue to push up into our potential for the next coming the next couple of years. And I combine that with the partnerships that I’ve signed. for next year are also very strong. They very much warrant the investment, they very much warrant Puma’s financial contribution to us to be able to deliver those partnerships to their full potential and in turn allows as a business to reach our full potential in the cycling apparel market globally.
Yanto Barker
So when you said 2.5 million, was that a top-up to 2.5 million or was that plus 2.5 million?
Yanto Barker
No 2.35 million plus 2.5.
Carlton Reid
Right so they’ve got 5 million basicallyso what’s what’s the equity they’ve got? {{{{COUGH}}}}
Yanto Barker
Good question. I haven’t got those numbers of top my head but they raised on pre money valuation of tranche one of 5 million I think, so their 2.35 was
Yanto Barker
20 something percent, and then our pre money valuation for tranche two was based on a turnover metric 2.5 times our turnover. So I think our pre money was nine, just under eight and a half million. So the 2.5 and 8 and a half million valuation. So it puts us about 10 and a half million [pounds] now valuation, post completion of tranche two.
Carlton Reid
Now when I look at that Crowdcube video, yeah, it’s got it’s got you on there very nice. But it’s also got all of the headlines with you know, the Financial Times and with The Times and stuff saying how cycling is growing and you know, cycling is a new golf, all that kind of stuff, which was probably true at that time. I think they were lagging a little bit behind the curve. But that isn’t the case now. I mean, cycling has absolutely gone into a quite a bit of a trough. So how do your investors … how are you coping with that? Quite apart from your investors, how are you coping with that trough?
Yanto Barker
It’s a really good question and I actually was asked this recently as part of a Rapha article from The Times.because that journalist quoted the same kind of stat, and I don’t disagree with it. But actually from a trading point of view, I mean, if you’re going to try and win, you have to try and win against everybody, not just the first couple of people that you think are your competition. And what I mean by that is, when there’s a lot of excitement in the market, and it’s growing, there are a lot of people trying to service that excitement. So there are a lot of new businesses coming in, there are a lot of people thinking, ‘Oh, I’m going to jump on that bandwagon’. And ‘I’m gonna, I’m gonna make my fortune in that industry, because it’s exciting and it’s growing.’ And we’re, you know, we’re all sort of running on the back of the success of the GB cycling team in the Olympics and World Championships over the last 10 years. So actually, it gets very fragmented the market and as a brand, like we are now at the size we are you end up competing with lots of very small businesses. And this is the same for all the big established brands, they’re competing with lots of very small businesses, who are selling quite as a limited amount of product to their direct network, people they know, friends of friends, you know, but it doesn’t really expand much more than that, because they don’t have a proper marketing budget. They don’t have proper marketing and sales planning. And they don’t have the money to reach a wider audience of people to sell beyond their direct network. Now, when you get to a stage like this, and we are definitely in as you know, there’s a bit of a dip, but equally, I don’t think it’s a dip. I think it’s a slow down of acceleration. And I think it causes a lot of problems for brands that haven’t established a strong foothold with an ability to talk to a wide audience on a sustainable basis. And we’re past that now. So actually, what it what it turns out for us to happen is there’s a consolidation process and now I’m competing much more back to Castelli, Assos, Rapha, instead of the literally infinite number of very, very small brands trying to get a foothold in the apparel market by turning over £100,000, £150,000 to their friends, which is possible, which is what I did at the very beginning. And you end up having to compete in a very fragmented market. So it’s not, I don’t think it actually changes our need to be strong as a brand, have a far-reaching marketing message with a very clear link to why we are better, why we are good and why you want to buy Le Col cycling clothing. It’s just happening now in a slightly more consolidated market, if that makes sense
Carlton Reid
Do you think Puma are surprised at that? I mean, I’ve described as a trough you described it as a deceleration. Either one of those. Do you think they’re surprised at what’s happened with cycling?
Yanto Barker
I mean I’m not surprised, and in some ways it makes it a little bit easier, you know, because you’ve got less people to worry about. And, you know, I think if you can ride out, I think times like this, and if they are deceleration or a trough, I don’t mind You know, it’s only my opinion. I could be right, you could be right, I don’t mind. They really test the business. And actually, I’ve always run my business like it has to be optimum all the time. So that actually doesn’t make any difference. If it’s a decleration, a trough or a real boom phase in the market, it doesn’t make a difference because you have to run best practices all the time. And if you’re winning customers and market share, you know, we’ve grown 150% between last year and this year and 200%, between the year before and 2018. So actually, we’ve proven with those performances, those turnover performances, that we can win and achieve very strong growth in what anyone might describe as either a deceleration or a trough, and I intend that to continue because ultimately you know I’m trying to win customers off Rapha, Castelli, Assos, Santini, Attaquer, MAAP, you know all those brands, I just need to win a little bit, just a few percent of their customers and we grow another 150 to 200% next year. That’s exactly where our intentions are.
Carlton Reid
So you you’re always going to be you’re always be focused on premium, you’re not talking about bringing in lower levels of Le Col?
Yanto Barker
So I think that’s actually a good question for me to be able to answer like this: yes, the brand is premium because I am quite a perfectionist and an expert at cycling to know how to spec either a jersey, shorts, jacket, tights in a really quality way so you get value for money and it is at a high level, but I’m not a snob, I’m not a cycling snob. I’ve been involved in cycling since I was a junior before junior and I’ve come through every level of cycling on my own racing career, and I’ve, I’m now you know, a fairly affluent business owner, but still active keen cyclist with a passion for the sport just as much as it was when I was 17. So I really want the brand to be perceived as not snobby, not too premium, but quality. But equally, we do try and generate product development. That means we have the second tier and the third tier of price point that is more affordable. We try and deliver as much value and quality into those price points as we can within the margins that we have to work to. And ultimately, you know, if you start with our lowest level product, you should still feel positive about it. And you know, your aspiration is to work up into the higher quality products, but we embrace all cyclists at all levels. You know, there are cyclists in my office who ride to work only, and they’ve only just worn Lycra for the first time this year, yet they work for a cycling brand and you know, they love wearing the products as well as someone like my friend of mine like Jeremy Hunt, who’s ex Team Sky, ex-GB, professional for 19 years at the highest level at World Tour living in Australia and wears the product almost every day, you know, those are the ranges of cyclists that that are embraced by the brand and I think that’s really really important.
Yanto Barker
I think if I was going to use the simplest way to describe who Le Col is, is it’s genuine. You know, I am a cyclist. I was a cyclist. I left school at 17 to be a cyclist. I put my, you know, excuse the term, but I put my balls on the line to buy a factory to service my desire and ambition to create the best product, and I needed control of my manufacturing to be able to do that to the highest degree. And I am CEO and founder currently running the business er, you know, other turnover we’ve grown to and adapting my skill sets to what’s required of me every single day. And that’s exactly what I did in my own cycling career. And that’s exactly what I value in, in qualities of all sorts of different areas is about being genuine, being honest and having integrity and wanting the best for all of our customers. You know, that is central to when I come into the office, what am I thinking how can I deliver the value that I need to deliver to this business? So I would really be upset if people felt like it was snobby or premium in a way that was exclusive. Excluding sorry. So we are exclusive mainly ecause of a price point, but but we’re not excluding. And genuinely if you have any reader has a passion for cycling, then they share that passion with me and we have something in common. And I think that’s really a nice way to look at it.
Carlton Reid
US market you went in with was it like a separate company that that was taken on board on in 2015? Like a distributor, how did you get into the US market?
Yanto Barker 44.31
The US market started as connection on Linkedin of a distributor who felt like they could represent the brand and service the US market.
Yanto Barker
It was conversation that went on, and we went through a lot of detail and I was convinced that he had a network big enough and was able to do what he said. And so we basically funded an expansion plan in to the us, we did it through a subsidiary, so a US based company that was owned fully by the Le Col limited, UK company. And we began trading with on a distributor retail model into the US because we were still very small in terms of marketing spend from head office, and so we weren’t really generating reach to an audience internationally like we are now. And I felt like the distributor model was probably the right way to start and that would get caught up with by the direct to consumer model and route to market a little bit later, which which we’re doing more of now. It turned out, I my character judgement was off on the person, the individual that I backed to service that department. We also under under invested into the territory and underestimated the size of the US in terms of geographical size, and simply for a travel budget to get around the country to see all tour retailers, you probably need about $50,000 a year. And we just weren’t at a level to be able to sustain that without generating a higher level of sales from those retailers. And so we did the first year, but I had to stop and consolidate our expansion plan through a more direct to consumer model after about 18 months of trying to make that work in the US, it’s a bit of a scar to be honest, of one of my decisions that didn’t work. And you know, we unfortunately did waste a fair bit of money trying to get that up off the ground.
Carlton Reid
Yeah, fair few UK bike brands have had very similar story it’s just it’s a tough nut to crack. Two very different halves of the country two different coasts. So now you no longer have that kind of distribution in the US. It’s basically your website.
Yanto Barker
Yes.
Carlton Reid
Okay. So what is your expansion plans then? Is that online? Brick and mortar? Where do you you see there?
Yanto Barker
Yeah, so you saw the winding up of the US subsidiary in terms of it trading was happening in parallel to the Crowdcube raise in terms of timings and the hiring of Simon Creasey as a marketing director to build a stronger backbone to the business which is the direct to consumer market. So we’ve since really backed that channel, and grown as a proportion of sales, the direct to consumer volume of sales considerably across more so than the other departments so custom as a channel and retail as a channel. So the three main channels customer, we sell them online, and we will continue we have grown considerably on the online it will continue to back that as the main channel of income for the business for the foreseeable future, but that is not to say, we are not looking at international distribution again, but obviously with a bit more experience and a bit more resource behind the business, plus a lot more recognition internationally, which we’ve done a great job with our marketing over the last couple of years. So we are having conversations with Spanish distributors, Australian, we have an Australian distributor which has been up and running for the last couple of years and has grown considerably in that time. And like I said, with with a with a lot more experience and a lot more resource, we’re able to actually do justice to all those conversations.
Carlton Reid
And how do you cope — and this is absolutely the same for all online brands, certainly, clothing — is just it’s very, very difficult to sell clothing online because of the sizing issues. So you’re going to get an awful lot of returns. So how do you cope with with the demands there?
Yanto Barker
That’s a good question and it sizing is one of the most scruffy subjects I can think of and I explain what I mean by scruffy. Every single person has a slightly different shape body. And that’s just the fact that the medium is not a medium a medium is like six foot one or five foot nine, but one is, you know, nine stone, one is 11 stone, and you know, there could be three or four inches difference in height. Plus, we all have slightly different expectations of preference around what we want a product to feel like. And, and those are all things that need aligning for a brand to connect to the customer in the way that the customer is either expecting or wanting. And a lot of that is also down to the message.
Yanto Barker 49.47
So the brand has to be very, very clear and obvious about what you’re getting in terms of size and fit to make sure that the customers’ expectations align with what they will receive in the post. So we do have retailers, we don’t have a huge number. But we’ve found a way to connect to that consumer with the message that means actually, our returns are very, very low. So in terms of returns, because they’re not satisfied, they’re extremely low. Returns for exchange of size are vary between product and you know, worst it’s 15 to 20%. And on really good core products, it’s as low as 2 or 3%. So actually, those sort of numbers we can we can manage with and we could definitely service a very quick turnaround to exchange sizing for customers who didn’t quite get to the right size first time.
Carlton Reid
But then once you’ve got your in inverted commas, your Le Col size, you then know what to order from then on or does it go across the different categories and you’re you’re still going to have different sizes across the different categories?
Yanto Barker
Yeah, so basically, yeah, so we do. So basically, once you got your Le Col sizing dialled in for what you like and what you want, then yes, absolutely that’s easier for the return customer to know what they should get. I designed every product to mean that if you’re a size medium jersey, you should also be a size medium long sleeve and jacket, and gilet and under-vest, they should all be the same size. That’s not to say that everybody is but that’s how they’ve been designed. That’s taking into consideration there are race fit pro jerseys and there are relaxed fit luxury jerseys. You should be the same size in each but it will feel different. Now not everybody fully gets what that means and what that feels like. So sometimes they get the pro jersey and they want to size up because they wanted to feel like their luxury jersey. But there’s been a very purposeful design process and sizing process that means that really you are the same size. So an example of this would be someone in front of me puts on a jersey, zips it up and says, ‘oh, it doesn’t fit.’ And I say what you mean it doesn’t fit? They say ‘it’s too small’ and I’m like, it’s not too small you’ve got it on, and you’ve zipped it up. So it fits. And they say, ‘yeah, but what do I look like?’ And I say to them, you look aero, which is exactly what that jersey was designed for. And they say, ‘but I’m too big for this,’ and I’m like, but that’s your concept. That’s your own body concept. That’s not that’s not the product. So that’s just a classic interaction of the way I would describe how the jersey was supposed to fit and how someone, a customer of less experience would say, oh, it doesn’t feel right. And I’m like, well, you know, tight is aero, and that jersey is a pro jersey, they’re supposed to be aero.
Unknown Speaker
Mm hmm. {{{{{OUT}}}
Carlton Reid
Do you suffer from counterfeiting?
Yanto Barker
Not really, yes, in that there are counterfeit products out there. But we own our own factory so I know there are absolutely no grey products in the world, as in gone to one territory and then actually get transferred to the other through a no buyback from someone else to someone else. There are a few Chinese products on the market but in terms of volume and in terms of risk to the business it’s extremely small.
Carlton Reid
So you don’t take a proactive approach and trying to close them down with, you know, the standard solicitors that are out there doing that in the bike industry.
Yanto Barker
You’re talking about alibaba.com. And it’s something it’s so small, it’s almost almost not worth the time to even send the letter.
Carlton Reid
Because I’ve talked to some brands who, while they want to combat it also kind of semi pleased in that ‘well, if we’re being counterfeited, it must mean we have some brand recognition out there above and beyond what we think we’ve got.’
Yanto Barker
Yeah, I mean, I think it’s easy to see both sides to that, but ultimately you don’t want it to happen. But you know if, like I know Rapha have had some issues with counterfeit, I was with one of the founders of Rapha on a photoshoot, a separate photo shoot, not Le Col, not Rapha. And he was talking about someone he saw with a Rapha jersey on that wasn’t the right colourway, as in the bands didn’t match, you know, the embroidery logo. And I think it turned out this is just hearsay but this is an example they obviously don’t own their own manufacturing. So they use suppliers, and the supplier had accidentally made, you know, a couple hundred jerseys in the wrong colourway. And then obviously they wouldn’t be accepted, but he’s not going to waste the stock of a brand that’s got such a strong, you know, recognition in the cycling industry. So they were getting sold on eBay for 25 quid You know, that’s something that is a challenge if you’re using suppliers, but again, it’s a lot tighter when you own your own manufacturing because I can control that and police that much more closely.
Carlton Reid
And this is gonna be a sort of a double edged question here but was life better as an athlete, or as a running a business, but of course you do, it’s double edged because you did it both at the same time, you can actually see both sides of it at exactly the same time.
Yanto Barker 55.05
No one’s ever asked me that question before. So you’re the first, well done.
Yanto Barker
It is a difficult one to answer. So really keeping it simple. When people ask me, do I miss racing? My answer is a resounding ‘yes.’ If they say, do you want to go back and do it again, it’s a resounding no. So it’s a bit of a conflict inside me when it comes to my career. Now, I also didn’t get paid very much in my racing career, not entirely because I wasn’t good enough, but there’s a little bit of politics and a little bit of, you know, wrong place, wrong time kind of thing. I mean, I lived off my racing career for a long time, but I wasn’t affluent. And, you know, my business has provided me, or the business that I’ve built, has provided me a much better opportunity to make more money if I can keep doing a good job at it. So while it’s much more complex to run a business, because being an athlete is very singular, it’s, literally about you and your performance and your psychology and your physical performance as opposed to in the office, I’m thinking about every other person and their psychology, their, you know, satisfaction, their contribution to the business, the way they interact with each other, making sure that, you know, everyone gets on and everyone’s clear about what we’re trying to deliver. It’s very, not me. And actually, the business started to grow and we started to employ people at the same time as I started to have kids. And not that I look at my employees as kids, but, you know, there is a sense of responsibility to every employee, it’s my job to make a positive working environment. It’s my job to supply all the resources that every single individual that works for Le Col needs to do their job properly. And if I don’t do that, they can only do as well as the ingredients that I give them. So I do take that very seriously and actually it is a lot like having kids in the, you know, you’re looking out for them, you can’t do it for them but you obviously work your hardest to give them everything they need to be able to do the best job they can. You know, I view parenting in a similar way.
Carlton Reid
And is your mum happy that you took that decision to forego that 30 quid family credit?
Yanto Barker
Yeh, think so, I haven’t actually asked her directly. I mean, I’m laughing about it. But my mum is an interesting character in combination in comparison to me because I’m one of the most driven and ambitious people I’ve ever come across. I’ve met a few of me, but I’m one of the absolute highest. And I kind of make the caveat that my, my standard as a cyclist as a competitor wasn’t represented by my level of commitment and ambition. It was you know, the body I’m born into is only as good as it is kind of thing. So I didn’t win the Tour de France like Bradley [Wiggins] and you know, I’ve not won 30 stages of the Tour, like Cav [Mark Cavendish]. But I don’t believe they are more keen and more committed to achieve their results than I was. So my mum is like the opposite of that. She’s as as unambitious as I as I am. And she’s as undriven as I am. So she would never have a judgement about whether I made the right or wrong decision. She just wants me to be happy.
Carlton Reid
That’s a lovely place to end, I would say Yanto. Thank you very much.
Carlton Reid 58.23
And that was Yanto Barker, the founder and CEO of Le Col cycle clothing. Links to Le Col and more can be found on the hyphen spokesmen.com
The Spokesmen Cycling Podcast is brought to you in association with Jenson USA.
The next episode will be another head to head interview. I’ll be chatting with my son Josh, who picked up a gravel bike from the Giant factory in Shanghai, China, and has ridden it solo back to the UK. Well, at the moment he’s in the Netherlands and I will be joining him there next week so we can ride back together. The plan is to meet at Giant’s EU HQ in Lelystad and then to ride to the port of Amsterdam for the DFDS ferry back to Newcastle. I’m really looking forward to seeing Josh and finding out more about his many adventures. With a fair wind, that show should be out in the first week of December, meanwhile get out there and ride.
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