Businessweek Extra - John Burke

and it's a wide ranging conversation. What I liked about it is certainly on brand for both of us, as you say, we love this company. I think we both have Trek Bicycles and we followed the company to some extent. But it was an emotional interview and in some ways talking about his father, but also talking about how you run a company in this day and age, how you hold onto your employees, how you treat your employees, and

even how you treat your customers. Check it out. Started by his dad, Dick Burke and a partner some forty years ago created their own brand of bikes. They did it building them in a barn. The barn is still around, so is the brand, so we want to bring in um John Burke. He's president of the family owned in Wisconsin based Trek Bicycles. UM, so nice to have you here. Thank you so much for having me. It's great to be here. All right. So take us back to the beginning,

because this is, as Carol said, this is a family business. Candidly, there aren't a lot of those around anymore, certainly that have stayed in this way. But it's also employee owned. There's something special about this company. Tell us what it is. You know for sure, it's a family company. Um, the family owns the business. There's an esop, the SAP owns percent of it. But I think it's more than the ownership.

It's the feeling. It's the feeling when you come to Trek that it's a family and we make sure we take care of everybody in the family and it's just an amazing place. But how do you do that, Johnny? In a day where I feel like so many companies are focused on the bottom line and I know, I'm guessing being family owned, it gives you some some leeway to do that. You got to be profitable. I think it starts with values. Um, you know it's my mother and my father. Um, we're are My mother is still alive.

They're amazing people and they really started out with to who much has given, much is required, and you know, our family has been so fortunate. But you take a look at everybody a track, and I always view all those people as they're part of the family, and being part of the family their high expectations. But it also means that we're there to support everybody, that everybody gets taken care of, and that we try and do some amazing things together. And luckily, over forty forty plus years

we've done some pretty incredible things. And you've been there for thirty plus years. He joined the nineteen eighty four. Was that a foregone conclusion that you were going to go into the business or were you one of those kids like, I'm not sure I'm gonna go work for the old man. You know, I wasn't sure I was going to do that. And then I worked a summer. I was working in the warehouse, and when I got done working in the warehouse, when I got all the

packages out, when the ups I came. It was Frank, the UPS guy. He came at three thirty UM after I got all the box, I'd run into the sales office. I can get on the phone and I'd sell. And I was pretty good at selling. And that summer the bug bit me and I knew i'd go into the business. There were no conversations Mom, Dad, I think I want to go paint or be a lawyer or something like that. You know, my father, My father had one simple really, so your your last name will get you in the

door and the rest is up to you. And my last name got me in the door. And um, I did pretty well. But it was also at a time. You know, I started Trek in Ur and Trek was doing great seventies six to eighty four, and almost the minute I start, it just crashed. What happened? Oh, you know, my father owned the company, but he didn't run the company, and and the customers didn't really like the company, and the company didn't really like the customers. And so I

was a sales rep. I was. I had like twelve states and I drive around in my little Chevrolet Cavalier and uh, it was the greatest education you could ever have. And you know, I saw every all the wrong things that we were doing. And I said, you know, if I ever got in a position of power, I'd be able to change those things. And you know, because the company was small at that time, my father ended up

coming out. He replaced the management and I was twenty four and all of sudden I was in charge of sales and customer service and we can make changes and we did really, really fast. My father loved customers. We changed the culture of the company, and uh, it was

a good thing. What's the dynamic I always think about with the family owned business and you bring in, you know, the kids into the business, how are they perceive, especially when you're younger and even though you grew up in it, and you've got employees who've been at the company for a long time, what's that interaction like? Well, you know, my one of one of my nicknames, and I have a number of them, was kid Burke, and uh, you know I was. I was always just so proud of

my father, so really it never bothered me. I didn't see the expectation as even though I'm sure they were there there there was work to be done, and uh, I always looked at it as as an honor that I was, that I was his son. I never looked at it as a burden. Did you feel like you had to work harder though, Yeah, because you were his son. No, Well, because I was his son and because the family owned the business, I had to you know, you had to lead from the front. You had you had to get

the job done. And tell us about your relationship with your father, because you wrote a book about it. I mean, this was I mean it's something I actually looked at the book a little bit. I'm definitely buying it. Sorry, dad, I'm giving you the like a preview of your Christmas rest, like I'm gonna buy this book from my dad. Uh, tell us about why you wrote the book, what it was that inspired this relationship. You know, he was he was an amazing person and uh, you know I spent

my you know, I spent my life with him. But you know, he and I also built trek and it was you know, he and I were really close and uh we were the last two people in the room, and you know it was, you know, a great highlight of my life. But he was super fit. You know, he ran five New York City marathons. He and I ran Boston together three times. Um, he was super fit.

And when he was seventy three, he had a problem with valven his heart, and he went in to get it fixed, and he was one out of the hundred who didn't come out. But at his seventieth birthday party, he said, pulled out out of his suit, Jack, I'll never forget. He pulls out these yellow legal pat He had six pages. He wanted to give a speech to his birthday party. Only the family was there, and you know, he talked, and the one thing I always remember, he says,

I have one last great thing to do. He goes, I'm not sure what it is, but I got one last great thing in me. And he had done a number in his life, but in the end, the last great thing was the way he died. He was in the hospital for eighty eight days. He taught amazing life lessons throughout his life, but those last eighty eight days were his best days. And so after he passed, I thought, I'm just going to write a book for my two kids because I really want them to understand their grandfather.

And I got it finished at and a couple of people read the read the proof, and they say, you should turn this into a book. So I did. What what did your kids say? About that book. Well, you know, it's interesting because I had both of them after I decided to make it a book. I had both of them, you know, proof the book, and they came back with a couple of suggestions. But I think they're as proud of him as I am. And so how does his

sort of legacy pervade the company at this point? Because obviously he was larger than life for you and and obviously for the for the company. There aren't that many. Again, as we've been talking about family owned companies, especially where it's imprinted. You know, someone said to me recently, there are a lot of family companies out there, but there aren't that many like Sam Walton's. I mean this is a an example of that in many ways that the

personality of the place reflects the founder. Yeah, I think. Um, you know, somebody told me before they before he died, that his body would die, but his spirit would live on. And uh that is so true. And so you know, I have a conversation with him a couple of times a week, but his legacy at Trek is um do the right thing, and for sure his legacies take care of the customer. I mean, he was just he was

all about the customer. If you do the right thing for the customer, if you run a really good business, the rest will take care of itself. And he was really strong on that. Is the next generation of your family involved or how involved are they? Well? My daughter, Um, she works at Track, she works in the marketing department. She's in charge of the women's advocates program right now. Spent a year working at retail, so she's involved in

the business. Um, My mother is on the board at Trek, and my son he runs a marketing company in Milwaukee. All right, So let's talk about the scope of the company a little bit, because you know, from four to now, a lot of things have changed in the broader market clearly. Um, when it comes to the broader fitness movement, you know you were involved, I believe with Bush forty three to President George W. Bush and in physical fitness. What have you seen in the sort of mega trends that are

underneath all this that have helped propel Track forward. I think there's I think there's a couple. If you just take a look at cycling in general. Um, you've got health issue, especially in this country. You've got an incredibly high obesity rate, people not moving, you know, people looking at screens. And that's one mega trend. The other mega trend you have is congestion. And here we are in New York and you know there's a lot of congestion here in New York, but there's cities all around the

world who face this big issue of congestion. And the third thing, which is going to end up being, you know, the issue of the century here is just climate change. And if you put all those three together, there there's one, uh simple solution that doesn't solve all those things, but there's a simple, cheap, partial solution all those issues, and

it's the bicycle. And you know the bicycle. You know, if you go to a place like Copenhagen, UM, if you measure a trip by going to work, going to school, um, going to a friend's house, of trips are taken by bike. In the United States, it's one point three. If you go take a look at the health of those people, it's significantly better than ours. So I think, you know, those three trends make the future of the bicycle look

really good. Talk to us little about working with cities and municipalities to make it much more bike friendly, because I think that's a big problem. It's a big problem, and it's also a big opportunity because you know, if you take a look at New York today, new York's got a long ways to go. But if you took a look at New York twenty years ago, it didn't exist. Um, New York has made a lot of progress. Um, there's

a long way to go. Every single city you go to today, as opposed twenty years ago, most cities hadn't done anything. If you take a look at them today, a lot of cities have a decent foundation. There's a lot of people who are looking to answers for congestion, for climate change, for health issues. So more and more cities are getting interested and we're seeing I think if you take a look at the last twenty years, there's over thirty thousand bicycle projects that have been completed around

the United States. It's a it's a lot. There's a lot more to be done, but we're moving in the right direction and the foundation has been laid. How much electrification of bicycles is going to really help in that Momentum, Okay, great question. Um. We own a bike sharing business and one of the places that we have a bike sharing installation is one of our hometowns, Madison, Wisconsin. So Madison,

Wisconsin has three fifty b cycles UM in play. We just switched the entire system on June fifteenth from regular bikes over to electric bikes. Ridership is up four x four times if you ever go out to test ride an electric bike, if you're at a bike shop and you go in and you want to test ride an electric bike, you will come back and out of a hundred people, you will see a hundred smiles. I have to tell you I've tried it and loved it on the West Coast. It was so much fun. I was thinking,

I'm not gonna like this. It's amazing and it allows ordinary people to do extraordinary things. You can ride in e bike wherever you want. We were in the French Alps this summer at Tour de France, and we were with a couple of friends, um and you know, we had one person wasn't a strong cyclist, and she rode with us every day. She went up Alp Duez, she went up the biggest climbs and she absolutely loved it. Yeah, it's amazing. So let's talk about one of the other

mega trends. And Carol and I have spent a lot of time on our shows and in our respective journalism thinking about this, which is the wellness and the health piece there that you talked about. We seem to amid all of the talk of the OBC right and things like that, there at least is a part of society, a part of the culture that is really embracing this idea of a much more holistically healthy lifestyle. How do you take advantage of that as a company and be

a part of it? Okay, Well, I think we're not only a part of it, I think we're a leader in it. And it all happened at trek I think it was maybe twelve years ago, and three things happened in the space of two months. We had a truck driver have a massive heart attack um driving across Iowa and it ended his career. He survived, but it was a huge bill and it ended his career, and he loved working at trek Um. We had a woman in our international department who had we had come out with

a health program. She lost twenty pounds, great shape. Her husband not so much worked at a different company in his late forties, he had a stroke totally shook up her entire life. And then we had a warehouse manager, Craig Omlin, one of our best UH workers. He managed one of the warehouses. UM. He was a big guy. He was really tall and really wide and UH. He died in his forties and the death certificate was on

my desk and cause of death was obesity. I had the HR guy come into my office and I said, I've had it. We're done. I go, I want a new health program. We're gonna put this thing together and we're gonna introduce it in less than a month. And in less than a month, I stood in the Ahri m at Trek and I said to everybody, we're changing the way we look at health. These are the four things we're doing, and we're gonna make sure that you're healthy.

And that was it. Chang ange um It said everybody at Trek has to get a health risk assessment every year. We used to make it optional and we get the people zero percent Body Fat Club at Trek would all rush in there and get there get their health risk assessment done. We said everybody has to do it, and not only you, but your family because if you're on our health insurance, your families on the insurance program. Um, we did that. We turned the cafe into a healthy

cafe for people who were not healthy. We got them UH coaches for a year. We said we're gonna help you get healthy. Um. We eliminated smoking from anywhere near Trek. We did everything we could and the impact of it unbelievable. So, well, you're taking a look at health healthcare costs tracks. Healthcare costs over the last five years have gone down. Wow, okay, so okay, we keep we have a score for our health because we have all the health risk assessments are

scores on up. Every year. Trek has become a healthier workplace every single year. You take a look at this country. We pay almost of g d P as health and we have the worst results in the industrialized world. The most unhealthy people are in America. And we have a government that spends all of its time talking about how we can spend more money on health, and we never talk about how our citizens can become more healthy. Well, I think about how often we have that conversation. I mean, Jason,

I both embrace this world big time. You know, what is it going to take to change kind of our approach when it comes to taking care of ourself, this whole idea of wellness and taking care of yourself so that it doesn't become a problem. And I do wonder incentives usually get people to where you need them to be. Yeah, well, I think you know if you just one is we

have a twenty two trillion dollar death set um. Number two is we're spending twice as much money as any other country on health and something has to change in that equation. To me, it needs to be leadership from the government because this can't keep going on. But John, do you penalize employees if they don't do well or

they don't sign up for How does it work? The way it works is that we have a program and based on your health risk assessment, if you score really well on your health risk assessment, you pay less for your health insurance. Okay, So that's what I wondered, because you really need to incent but we also take a leadership role and we say we're going to help you get healthy. We don't leave people out on on an island.

We come a big hug and we say here we go, and it's it's part of the culture at track and people go, well, you're just a bunch of people who ride bikes. Carrot and stick. We have a carrot and a stick, but there's also a culture. And I think that's what we need in this country, is we need

a culture of health. Well, speaking of cultures, and we talk about this a lot too, about the importance of diversity and equality and you are in town, you're getting the inaugural Champion for Equality Award at this year's Women Sports Foundation gala. Talked about equality at Trek. Yeah, yeah, I think, UM, you know, equalities uh an important issue at Trek and when you take a look at it,

we're involved in a sport UM. We're also just involved in running a business, and we want to make sure that we provide opportunities for everyone, regardless of color, regardless of gender. We want to put the best team on the field and we're really serious about that. When you

take a look at sport UM. We're sponsoring a women's cycling team sponsor UM and somebody came back from one of the races and they walk into my office and we're having an executive meeting and they're like, do you know what's going on with the women's team we're sponsoring. And I'm like no, and he's like, well, they don't get paid very much. They show up for the race the day before because the team can't afford to get

him there earlier. They're only given one bike. They stay in allows your place, and I'm just like, I was embarrassed. I just sat in there and I was embarrassed. So we took a different approach to men's cycling where we actually bought a team, and I just said, we're gonna buy a team, and so we went out there and we you know, we totally changed the paradigm in that sport, and we said we're going to buy a team, and we're going to treat the men and the women the

same way. And so more broadly in sport, we spent a lot of time Caroline I did over the summer, obviously rooting for talking about the US women's national team in soccer. It felt like a moment. Then there have been a few sports that have started to figure out, tennis being one. Are we at a moment where this is starting to change or is this something where there's a danger of sort of falling back when it comes

to equal compensation. You know, just the very basic sort of equal pay and equal opportunity across sport, you know, and I can only talk for the sport that that we're in, and you know, the sport of cycling is really an old man's sport. It's controlled that way, and so um. You know, when you take a look at the prize money men's compared to women's, when you take a look at TV, men's compared to women, it's not

it's it's embarrassing. It still is embarrassing. We're taking our the portion that we control and we're saying, hey, we're going to make sure they're on an equal level here and we're going to be an example for everybody else. We host a World Cup in Waterloo, a World Club Cup cycle cross race, and it's it's equal price money. First cycling event ever to have equal price money. We make a big deal out of it, and all of a sudden, other races are changing. People are seeing what

we're doing in professional and people are making changes. Well, I have to think this is got to be at least partially an element of enlightened self interest, right, I mean, because you want to sell bikes to women and say like this is great that you're doing your job, but you've got to be thinking about, like, what's your demographics in terms of where your seal is it mostly men's, you know, it's a lot, it's a lot of men um,

but there's a huge potential market with women. And you know, women who are in the sport absolutely love being in the sport um and there's there are more and more women who should ride bikes and trek can there is there's definitely some self interest too well, and especially when guilty right well, I mean when you okay, but when you start to synthesize this a little bit with again, so sort of going back to the mega trends around fitness,

you think about boutique fitness, You think about everything that we've seen the success of even like a Lulu Lemon. You know, this is women driven in a lot of ways. The market is massive. So I have to think and I'm not this isn't a criticism. This is just smart business. A lot of ways it is. And you know, one

of my favorite charts is the running business. And if you if you take a look at running and you go back to nineteen it was something like a marathon ors it was something like men, five percent women, and all of a sudden you take a look at the running business just explode over the last twenty five years. It's all women today. There are more women who finished marathons and men. It went from five percent to fifty And I really believe that that could happen in cycling.

And so there's there's a moral issue here. There is also a business opportunity well, and in keeping with that, were Bloomberg, we'd like to hear about opportunity. Where where is your biggest growth market. I'm just curious because you do sell around the world. You sell around the world, you know. One of the things is, you know, I've worked the Trek for over thirty five years. I've never seen the amount of opportunities that Trek has today everywhere,

almost everywhere. I mean, we have so many great things going on as a business. If you go to Europe, the European business is almost three times bigger than the US business. Our market share in the US for premium bikes is is, you know, in the high twenties. Our market share in in Europe is around six Our business in Europe is growing like a weed. We have a lot of opportunities in Europe. If you go to Asia, UM, massive opportunities in Asia. If you take a look at

electric bikes, UM, that's booming all over the world. What about you the trade ward that we're seeing because that you do also manufacture around the world, right, So tell me is that impacting you? You know we uh, we manufacture really high on bikes in the US. We have a large UM manufacturing facility in Germany which supplies uh the European market, but we produce a bunch of bikes in China, both for all over the world and also the U S. We're a global company that has a

global supply chain chain. So yeah, the the tariff has had a huge impact on Trek. The one thing I want to ask you, because I think about your world private equity, I mean they I do wonder family owned for a long time. I know you want to keep it that way, but I do. I'm curious if you've got people who are knocking on your door looking at this business, especially as we see the growth in fitness.

You know, my father, UH, people would ask him about going public and he'd also have the same answer, and the answer is I don't need them, and I don't need the headaches, and I've inherited that few. What's your biggest, single strategic initiative that you as the president set out for this company today. You know, one thing that's become really obvious to me over the last three months is

just sustainability. UM. One of the things we have UM different objectives inside the company and I have my list of ten and we changed those two months ago. We added becoming a leading sustainability company fast and right now we're moving. Trek is moving fast in a lot of different areas, but the area we're moving fastest in and sustainability because because I know it's the right thing now,

the earth needs it. I mean, if you there's a great move the great documentary Above and Beyond, UM, it's amazing. And I saw that documentary and I just that was a moment for me. I had the you know, the top hundred thirty leaders a Trek watch that. UM. We had Sir Robert Swann, who's walked to both poles and he's a big environmentalist. He was at Trek two weeks ago. UM. We've put together a plan and I think there's about

I went through each item. I think there's about a hundred and fifty seven ideas, and I think we narrowed it down to about fifty. But we're going to make a difference and we're gonna do it fast. So that was John Burke. He's president of the family owned Wisconsin based Trek Bicycle again, a company that was co founded

by his dad. And I just love it because he's really thinking about first of all, his future consumer uh and certainly thinking about diversity at the firm and the company h and thinking about where this market is going. We talked about diversity, we talked about electrification, we talked about so much. Right, it's hard to run a company these days. Twenty nine team keeps you on your toes, but a good conversation with them, we really enjoyed it.

You've been listening to Bloomberg Business Week Extra. We showed it. Tun into Bloomberg Business Week Radio. That's live Monday through Fraunday at tpm Wall Street Time. I'm Bloomberg Radio. I'm Carol Masser, and I'm Jason Kelly. This is Bloomberg