Trek was born during the closing days of the 1970s American bicycle boom to fill the high-end niche long neglected by Schwinn. South African emigrant Bevil Hogg got his start in the bicycle industry importing French bicycles and parts to the U.S. in the early days of the boom at the beginning of the 70s. He opened his own retail store and before long had five bike shops selling mainly Stella (France)
road bikes in various college towns (including Madison, Wisconsin ). But Hogg had decided that there was no real money to be made in retailing and wanted out. Plus,
the Stella factory burned down (gnat23.livejournal.com/267071.html).
Richard Burke was operator and part owner of the Milwaukee, Wisconsin based appliance distributor Roth Corporation. Burke assumed the retailer's debt and paid Hogg an additional $100,000 for the five store chain. But Burke didn't have much more success than Hogg and he too sold the small chain.
Together, the two decided that they knew more about the demands of the American market than the European companies who were selling so many bikes in the U.S. during the boom years. They conceived of a high-end ride designed for touring (multi-day rides), with wheels further apart for better balance with heavy gear. The frames would have eyelets for accommodating a rack. And the American made cycles would carry more cachet with American buyers during a time when Japanese products were flooding the country. A good thing too, because Schwinn's midrange road bikes—made in Taiwan — were going to be $100 cheaper. The name “Trek” was a passing suggestion from the aptly named Tom French, who was managing Hogg's retail chain.
In 1975, Bevil Hogg was just 23. He and Richard Burke (and $150,000 of Burke's money) moved into a small warehouse (the red barn) in Waterloo, WI, midway between Madison and Milwaukee and began manufacturing chrome-moly frames. They adorned their high-end frames with the best parts from around the world and went looking for retailers. Penn Cycle of Richfield, MN (just blocks south of the Minneapolis border), a major Schwinn seller, became Trek's first dealer.
Trek sold a paltry 1,000 bikes that first year. But Hogg, Burke, and crew were determined, and in 1978, Trek sold a paltry 2,500 bicycles. Volume was so slow that Treks were virtually custom made. (Penn Cycle, in might be noted, continued to be a strong Schwinn seller, but did very well with Treks. It helped drive their expansion to a modest six store chain around the Twin Cities metro, making them a household name in the area.)
Trek's virtually custom made rides were awesome. They were the top-of-the-line that Hogg and Burke had sought. The bikes were gaining cult-like status among Trek owners and fostering strong relationships with established dealers. Trek continued to grow at a modest pace and the top American road-bike seller, Schwinn, continued to allow the small company room at the top.
With no serious competition, Trek started to see rapid growth. Trek was grossing more than $15 million per year at the start of the 1980s. By 1985, the touring and road bike markets had long since faded away. Trek was grossing $30 million and experimenting (unsuccessfully) with carbon-fiber frames and aerospace adhesives. Trek produced an aluminum racing bike that just didn't hold up and Trek lost money for two years. Bevil Hogg cashed in his chips and left Trek for California with his old shop manager Tom French. The two started Kestral, a company that produced carbon-fiber frames.
Burke put his thinking cap on, attempted to sell Trek to Schwinn and Specialized in 1986, toyed with simply closing the Wisconsin factory, and decided that a turnaround was in order. All he did was refine production to improve quality and lower costs, insure that his employees were happy to be working for Trek, and start paying real attention to his dealers. Employees quickly got on board and that was all it took for Trek to take its place in history.
In 1986, Trek was ready for the next big step. It began to expand into less expensive models and go head to head with Schwinn. Trek had something like 500 dealers peddling Treks in 1987 and Burke began adding 200 or so more dealers every year. As the company grew, so did its clout. Trek asked for and received discounts from suppliers who wanted Trek as a customer and knew the established company could pay its bills.
No Hands, The Rise and Fall of the Schwinn Bicycle Company, An American Institution, by Judith Crown and Glenn Coleman