Specialized Bicycle's Hippie Capitalist

In Silicon Valley the Volkswagen bus is legendary. Steve Jobs sold his hippie wheels for $1,300 in 1976 to buy parts for the Apple I.Before Jobs there was Mike Sinyard, a ponytailed graduate of San Jose State. He was suffering an identity crisis. "I didn't want a business career. White shirts and ties were not for me."

So in 1974 Sinyard sold his VW bus and bicycled around Europe. In Italy he saw his future: Cinelli bike parts--handlebars and stems that were hard to get in America. Sinyard moved back to the States and began importing Cinelli parts, marking them up 10% to 15%.

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Bikes are booming today--industry sales in 2011 are up 37%. (Fitness products do well during bad economic times.) Driving the trend are two American companies, Trek Bicycle of Waterloo, Wis. and Sinyard's Specialized Bicycle Components.

Specialized is still situated in Morgan Hill, Calif., but it's now ensconced in a two-story building that looks like a modern art museum. In Specialized's visitors lobby is a replica of Sinyard's VW, along with Specialized's racing bikes ridden by time-trial world champion Fabian Cancellara and the 2010 Tour de France winner, Alberto Contador.

Sinyard is now 61 and rail thin from his two-to-six-hour daily bike rides. He sits in a small, second-floor cubicle among his tattooed and earringed bike designers. Now and then a dog walks by. The quickest way to the main floor is down a fire pole. Nearly everyone at Specialized rides a bike. Vast men's and women's locker rooms facilitate daytime rides, including a low-key lunch race.

Specialized's brand of hippie capitalism has lifted the company to an estimated $500 million in sales of bikes and accessories. I recently chatted with Sinyard at Specialized's headquarters.

Describe your first year in business. "To my surprise I did $64,000 in sales in 1974. I had no capital. I didn't need any. I got the Cinelli bike parts on credit, and then I got cash from customers in the U.S. I kept costs low by living in a little trailer with two buddies. I had no car."

With no car, how did you pick up your Cinelli shipments? "I would ride my bike from Morgan Hill to the San Francisco airport Customs office--140 miles round-trip. Long day."