Taking the Back Road
How one CEO’s love of travel inspired a company that offers vigorous activity with all the comforts of home.
January 1 2003 by Catherine Fredman
Jim Bildner used to organize his own bicycling vacations. He would plan the itinerary and book accommodations, make reservations at restaurants, hire guides and arrange for equipment. But as chairman and CEO of Tier Technologies, a Boston-based consulting firm, he no longer had time for such details. Then he heard about the trips offered by Backroads.
“I have to confess, the first time I signed up, it was a large leap of faith,” Bildner recalls. “It’s very difficult for me to take any time off, so when I do, I want to maximize the experience. Heretofore, I’d done all the planning. Now, I was ceding everything to them.”
After a week of pedaling 500 miles through southern Alaska, Bildner was hooked. “They do a wonderful job in the planning, and the bikes are great. It turned out to be a perfect decision,” he says.
The path to Bildner’s decision began nearly 25 years ago in another man’s dream. Tom Hale woke up at 2 a.m. on a spring night in 1979 with the then-unheard-of idea of making a living by guiding people on bicycle trips. He bounded out of bed and scribbled his thoughts, eight pages of chicken-scratch that ultimately created a company and pioneered an industry. “I had a respectable career as an environmental planner and I threw it all away to ride my bike,” Hale recalls. “My friends and family thought I was crazy.”
When Hale founded Backroads, the active-travel market was defined by extremes. At one end were luxury safaris to exotic destinations; at the other were rough-and-ready camping trips. There was no middle ground of tour companies that linked inn-to-inn itineraries, provided a support van and enhanced the trip with meals at good restaurants, stops at points of interest and guides chosen as much for their knowledge of local culture as for their ability to fix a broken sprocket. If you wanted to pedal through Provence or hike the hills of Vermont, you had to make all the arrangements yourself. “We quickly established a niche as a company offering the nicer hotels and cuisine and diversity of experience,” Hale says. “We introduced the notion that you could have a physically active vacation but still have creature comforts.”
Nearly 25 years later, Hale’s dream has become the model for an active-travel vacation, and Backroads, based in Berkeley, Calif., is the world’s leading active-travel company. With more than 1,500 annual departures on 134 different bicycling, walking, hiking and multisport trips to 105 destinations around the globe, Backroads tops the charts in market share, in revenue and in number of guests, many of whom are executives looking to make the most of their prized vacation time.
Plenty of other tour operators offer similar trips to Burgundy, Tuscany, the great national parks of America’s West, the Canadian Rockies and other perennially popular spots. Backroads doesn’t gravitate to the ultra-luxurious hotels that are de rigueur on a Butterfield & Robinson trip, for example, nor does it match the lower prices of The World Outdoors. It differentiates itself through a combination of planning, people and personal choice.
“You experience a place in a lot more depth than you would if you were planning your own trip,” says Michael Brown, a Backroads three-peater and chairman of Quantum, a $1 billion data storage company in Milpitas, Calif. His cycling trip in Burgundy was marked by private wine tastings in candlelit caves, a customized tour of the cathedral in Vezelay and a stroll through the 12th-century Clos de Vougeot vineyards guided by local wine experts, interspersed with afternoons pedaling along lesser known byways. “Backroads is in an area so frequently that they can make all the local connections,” says Brown. “You’d never be able to know exactly where to go to find that on your own.”
Fellow cyclists are another perk. The self-selecting nature of active trips ensures that group members-the average group size is 18-are people with similar interests and diverse backgrounds. “What I like about Backroads is that it isn’t just a bunch of CEOs,” says Bildner, who has five Backroads trips under his belt, including hiking and biking in the Swiss Alps with his 16-year-old daughter. “It’s not a country club experience.”
Managers especially like the fact that no one manages them on a Backroads trip. “There’s a lot of choice, so you can customize each day to fit whatever you’re looking for,” Brown says. “If you want to bike 100 miles a day, you can do it. Or you can do 30 miles and spend more time at lunch or seeing some site along the way. If you want to sit the day out in the hotel, you can do that, too. You don’t feel the rigidity of having to get 10 miles done in the next hour. And they have a sag wagon, so if that hill is a lot tougher than you thought, you can hitch a ride in the van.”
David Pottruck expected that kind of choice-it’s now the norm on most active-travel trips-but the president and co-CEO of San Francisco-based Charles Schwab was surprised by how readily the guides accommodated spontaneity, which is usually sacrificed to the demands of the itinerary. When someone spotted a golf course en route through Italy’s Veneto region, Pottruck and a bunch of fellow cyclists had no problem stopping for nine holes before dinner. “You’re really the master of your own destiny,” he says.
An uphill ride
For a long time, Hale’s own destiny was in doubt. After his early morning epiphany, Hale abandoned his day job as an environmental planner in Las Vegas, pumped up his bike tires and pedaled more than 5,000 miles around the Western states to scout routes and plan Backroads’ first trips. His initial advertising campaign yielded six customers for the inaugural biking and camping trip to Death Valley the following March. It was so windy one night on the trip that a tent blew away during dinner. But a feisty 65-year-old woman signed up for the next tour-and Backroads had a future.
It was an uphill ride and a wobbly one at that. Backroads was a quintessential start-up, capitalized on credit cards and loans from friends and family. The bikes were stashed in the basement of Hale’s house in Oakland and the office was in the garage. “I ran out of money every winter for the first five years,” Hale remembers. But by the late 1980s, active travel took off and Backroads blossomed.
Then, like many entrepreneurial ventures, it tripped over its own success. “When you’re in a growing, thriving business, there’s the temptation to think that you can do everything better than everyone else,” Hale muses. “Beginning in 1990, we branched out into other areas with a vengeance.” Backroads started a retail bike shop in Berkeley to unload the used bikes from a fleet of custom-built Cannondales that completely turns over every three years. It sold T-shirts, bike gloves, helmets and other merchandise on trips and by mail order. It segmented its offerings with trips for students, for people over 50, for solo travelers and for families, as well as bike trips focusing on art, photography or fitness. It pioneered a multisport concept with a “Go Active Sampler” featuring 15 sports in five exhausting days. There were both camping and inn-based trips to the same destinations. There were even walking trips.
“It’s fun getting into new things,” Hale says. “But while there were good reasons for Backroads to get into certain activities, about four years into our diversification it became apparent that there were even better reasons for getting out.”
The “Go Active” trips were a perfect example. “A bunch of us were out taking a trail run and thought, €˜Wouldn’t it be great if we could put all the things we like to do into a one-week trip?” Hale recalls. “The trip we developed was great, but the market was too small for that kind of experience.” Similarly, while the retail bike shop was one of the best in San Francisco’s East Bay, Hale and his team realized that a nationally oriented company had no business focusing so much attention on a local enterprise, especially when it was not as profitable as the core trip business. Meanwhile, management expertise was stretched to the limit, threatening the efficiency of the operation and the customer trip experience.
Hale pulled the plug. “Our theme before was that we could do anything, and we would do whatever it took to make it happen. If you apply that to what matters, that’s great. But if you apply it to the whole wide world, it will put you under,” he says. “We now focus our energy only on the things that make a great deal of difference to Backroads, and we’re able to leverage our expertise in a manner that really plays off our strengths. When we add trips, we already have the great leaders and hotels, we’re often in areas where we have regional expertise and we use the same equipment. The marketing channels and demographics among all those offerings are quite similar. It makes sense to expand into those areas.”
But while Hale now takes a cautious approach to expansion, he maintains that risk-taking is essential for success. “You need to experiment to come up with home runs,” he notes. “Some of the programs that have really worked were initially niches we feared getting into because we were afraid to compete with ourselves. How would moving into walking tours impact our bicycling trips? How would multisport trips impact the other offerings? But we would rather compete with ourselves and create a competitive edge than have someone else compete with us and win.”
Strengthening customer bonds
So far, Backroads is winning hands down. It is not posting the annual 20 percent growth of the late 1990s, but Backroads, with more than 80 employees in Berkeley and many more overseas, has been able to maintain revenues of nearly $40 million despite 9/11 and the economic downturn.
Still, Hale is aware that customer loyalty is only one trip deep. Although 75 percent of Backroads customers are repeats or referrals, Hale constantly looks for ways to strengthen the bond further. The company is developing advanced customized software that will enable it to analyze its database of routes, hotels and restaurants, and segment its trip offerings to an even deeper degree. “We’re more competitive, more guest-focused and more organized,” Hale says. “Folks often fail to realize what a complex service the travel business is. It isn’t that complex if you don’t go to our level of complexity, but if you don’t go to that level, you miss the boat.”
To attain that level of complexity, Hale relies on a hand-picked group of employees. He still interviews every one. Although he hasn’t led trips in quite some time, he signs up for five Backroads trips a year and samples every type of trip the company offers, from solo trips to multisport adventures to family-focused itineraries.
One crucial decision Hale made was not to go public, even though in the late 1990s initial public offerings were popping up practically every day in his neighborhood. Hale credits his colleagues in the local chapter of the Young Presidents Organization, which he joined in the wake of Backroads’ identity crisis, with steering him clear. “I received enough firsthand impressions of what going public means,” he says. “It sounds great on the surface but I’m not sure it would contribute to my lifestyle or the growth of this organization.”
Similarly, he has avoided the acquisitions and consolidations that have been rippling through active-travel companies as the market has matured. “It’s not about being the biggest company. It’s about how good we can be,” he says, and adds with a laugh: “That’s one of the few life lessons I didn’t have to go through to realize that I’m good where I am.”
Where he is is a very good place indeed. Backroads is not just Hale’s livelihood but his lifestyle. Now 50, he makes every day a multisport adventure, biking with his 8-year-old daughter and 19 of her friends to school in the morning or taking a run with his wife in the afternoon. And then there’s the travel. “We drag our kids all over the world,” Hale says. This summer, the family itinerary calls for biking through the Netherlands, then hopping down to France for trips through Provence and the Dordogne river valley, and ending up in Paris for the finale of the Tour de France.
These days, Hale’s greatest challenge is maintaining a balance between work and family. “When I first started Backroads, I worked 12 hours a day, 365 days a year. I loved every minute of it,” he says, “but now that I have three kids, I am much more strategic about separating work and home life. I have thought a great deal about how to structure my time to make sure I’m in balance. I don’t get pulled into excessive commitments, I do virtually nothing that I don’t want to do and I stay incredibly focused. I’m in this business as a lifestyle, not to make a ton of money. I refuse to get caught in that lack-of-balance trap that is so common to so many people in business.”
Without realizing it, Hale himself may be one of Backroads’ most powerful attractions for busy executives. He embodies their ultimate desires. As Pottruck puts it, “It’s wonderful to see a guy who got a chance to build a business out of his dream.”