Engineers told this Israeli entrepreneur that his idea would be impossible to pull off. He soon proved them wrong.
The number of assumptions involved in designing any product is staggeringly large, and usually fundamental. Take bikes. You know they'll probably be made out of some kind metal, whether aluminum or steel, unless you're talking about the very expensive racing types built from lightweight carbon fibers.
That's what soldier and entrepreneur Izhar Gafni heard from engineers when he asked about using cardboard to make a truly green--or would it technically be brown?--bicycle. He asked because he heard about a canoe made of cardboard. If that was possible, why not a bike?
So, Gafni didn't listen to the experts. Here are the results:
As impressive as making his idea work was, some of the business figures behind the project are as worth noting. Gafni estimates that the cost of the raw materials for a bike would be between $9 and $12, with a likely selling price of between $60 and $90 to the consumer.
Time for a little extrapolation. You could double the high end of materials costs to get $24, which could be a distribution price. Double it again and you've got $48 to a store. If Gafni is right about the retail price range, that's a minimum of a 25% mark-up, and as much as an 85.5% margin at the top end. In other words, this could be commercially viable for the existing retail distribution structure, which is an important consideration when bringing a product to market.
Also, the product characteristics and price combination could be very attractive to consumers. If some economies of manufacturing scale could bring the product to the lower price, you could have a cheap bike for adults that could withstand moisture and also be lightweight. If someone stole the bike (and it's hard to believe that something so cheap would have appeal to thieves), the replacement cost would be negligible. This might be the type of product that would appeal to the hospitality industry--a good choice perhaps for B&Bs, inns, and even resorts.
It's a great reminder that smart, innovative business is often not business as usual.