When John Burke graduated college, he had his heart set on joining the company his father, Richard, had founded almost a decade earlier: Trek Bicycle Corporation. It was 1984, and Trek's biggest year to date. Sales were up 30 percent from the prior year, around $20 million.

Richard told John, "Your last name gets you in the door; the rest is up to you." He was given a title and sent out West as the field sales rep for the Rocky Mountain region. In an old Chevrolet Cavalier, he drove to Colorado--and almost immediately experienced a shock.

"I joined the company, and it spent the next year and a half just crashing," Burke says. Trek Bikes had grown steadily since its founding, but now its service had gotten poor, orders were rarely filled on time, and product quality was faltering. It was a far cry from the business he had seen his father create from the ground up. In 1975, Richard, who had previously owned two bicycle shops, bought a red barn in Waterloo, Wisconsin, and began building bikes there. In his first year, he sold 906 of them.

The problems may have started as a result of Richard (often known at Trek and to his son as "The Big Guy," though John was several inches taller) stepping away from day-to-day operations. He had other business interests, and was also pursuing an MBA from the Sloane School of Management at MIT. But after seeing the company's financials tanking and its roster of stores thinning--it dropped from 900 to 450 in just a year--he stepped back in. He replaced much of the management, and put then-24-year-old John in charge of sales and marketing. "I think I was the only one on the bench when he went to pick somebody," Burke jokes.

Richard studied the company for a few months and made it Trek's mission to build a quality product at a competitive price and to deliver it on time. Simultaneously, it would begin striving toward creating a great atmosphere for the employees. That may sound like a simplistic formula, but it worked. "The reason why it was so effective is because we had been doing none of those things," John Burke says. For his part, John also sharpened Trek's customer service, with the aim of becoming "home to the happy customer," with "customer" meaning both bicycle retailer and rider. (Today he includes a note with his personal email address on information that comes with every product sold.)

By 1996, Trek's radical path to self-improvement had turned the company around: It had more than $300 million in sales. Today, it's doing more than $1 billion annually. Trek Bicycles is now one of the largest private companies in the United States, with more than 3,000 employees, 1,200 of whom are based in its Waterloo headquarters. The company has 17 offices all over the world, and gets 60 percent of its business from outside of the United States. It sells in 5,000 retailers globally, and owns about 100 stores itself. 

Empowering employees.

Over the years, the company has expanded from mid-and high-end bicycles and components to children's bikes, custom bikes, racing bikes, electric bikes, city bike-sharing and e-bike programs, and sponsoring teams. To fill one of its social missions of getting more people on bikes, Trek has become the lead sponsor of the middle school and high school mountain bike league, in which 20,000 kids across 20 states participate. 

The Big Guy, Richard, died in 2008. John has been president since 1997. He steered the company through a rocky period in 2006, when innovation sputtered. He saw competitors creating groundbreaking products while Trek stagnated. This time, it turned around by investing heavily in product engineers and facilities, bolstering its engineering team to 115 employees who, Burke says, are "obsessed with delivering the best riding experience." Trek once again began releasing high-end, innovative bike frames, and sales resumed their climb.

One of the secrets to Trek's resilience may be that the company's employees are loyal, even during rocky times. The company has had an Employee Stock Ownership Program for 40 years. According to Burke, longtime employees who keep a good amount of the Trek stock they amass can retire with an extra $750,000 (for, say, a factory-floor worker) to $3 million (which is what an employee whose compensation was in the upper quartile but not at the very top, recently left with).

Burke seems highly motivated by that fiduciary duty to employees--and also says he loves that they have skin in the game. He's never considered going public, saying he has the same philosophy about IPOs that his father did: "I don't need the money and I don't need the headaches. Done."

What Burke is proudest of, though, is having nurtured a company culture that's fitness- and health-focused, independent-natured, and centered around a "do-the-right-thing" mentality. He loves to tell the story of a customer-care representative named Jed Gunn:

Around 5 p.m. one evening in 2018, Gunn took a call from the University of Vemont cycling team. A FedEx truck that had been carrying their high-end mountain bikes to the national championships in Missoula, Montana, had burned to the ground. Jed called a Trek dealer in Montana and asked if he could take on a massive task: assemble a bunch of bikes overnight. He got a yes, and got eight mountain bikes shipped from California. He'd spent some $32,000 of the company's money within minutes--without asking management.

"Jed just pulled the trigger," Burke says. "Sure, there's marketing value in something like that--but the bigger lesson is the one it's taught the rest of the team. Do the right thing. You don't need to ask."

It's just one of the stories from the company's history told in a 142-page book--a tome that began as the marketing department's brand guide, but is so rich in stories of hospitality, giving back, and company culture, that Trek's management is pondering distributing it to its retailers, and perhaps even customers.

The book features the "10 Non-Negotiables of Trek Culture," which include "Have Good Energy" (a subcategory of which is the company's "no assholes" policy); Think Global, Give Back; and Ride the Awesome Bus. It includes a 50-item glossary of Trek-isms, a mix of sports metaphors, standard business jargon, and a few that are unique to the company.

Numbers 48 and 49 in the glossary hark back to the early days of the company, when Richard Burke, on a whim, bought the red barn in Waterloo to create a bike-making company from scratch. They read: "What would The Big Guy do?" and "When someone shows you a barn, see something bigger."

Published on: May 28, 2019