Serotta lays off 40% of workforce, planning shutdown

[dumbod]

Before we get too misty-eyed here, (oops, too late) let's remember that Ben Serotta is not an innocent victim. The company's failure is not due to DCG or Bradway Capital or those evil financiers who didn't warn Ben that a crash was coming in 2008.

Every problem that the company has had is due directly to his poor decisions; the less charitable might say his arrogance. As far as I can tell, Ben Serotta is the latest in a long, long line of wonderful craftsmen who couldn't manage their way out of a wet paper sack.

The only victims here are the employees who are soon to be unemployed despite their superlative skills and efforts.

I'm certain that Ben Serotta could start a one-man shop a la Kellogg, Sachs, Strong and build great bikes and even make a little money if that's what he wants to do. But I be willing to bet that anything more ambitious than that will wind up the same way as the Serotta Competition Bicycles.

[WickedWheels]

Originally Posted by dumbod

Before we get too misty-eyed here, (oops, too late) let's remember that Ben Serotta is not an innocent victim. The company's failure is not due to DCG or Bradway Capital or those evil financiers who didn't warn Ben that a crash was coming in 2008.

Guys like Bradway Capital are the ones that buy a struggling company up for dirt cheap not in the hopes of making a great product, but in the hopes of making money on someone else's reputation. There's no tolerance for "break even" and to time to allow growth or a "rebirth". The bike business is tough... too tough for "financiers" unless they buy a brand dirt cheap, take just enough time and effort to try to show some sort of an upswing, and then flip it for a profit. There was no long term plan for owning a bike company because there simply isn't enough money in it.

[2LeftCleats]

It's maybe a tad pretentious to compare a hand-built custom bicycle to a work of art, but it occurred to me that one potential measure of the value of the Serotta brand in the face of reduced or absent supply is whether the value of existing bikes has increased on the secondary market. And whether those who may have planned to sell their Serottas are reconsidering. I don't visit ebay et al but if prices are trending upward, it may indicate a certain respect for the brand. If not, the market may be indicating apathy for its resurrection.

[oldpotatoe]

Originally Posted by BumbleBeeDave

. . . pretty much my feeling. I strongly doubt they are just making plans to go lie on the beach. But they're not going to present them here for us to critique.

BBD

Posted in the 'note from Ben' thread...

"My employee, who works the Courage Classic as support, heard this 2 weeks ago from a relative thru marriage of Ben, who stopped at his booth. Sister in law??

She mentioned that Ben and ?? are trying to buy the company."

If Ben and ? get the funds, I wouldn't be surprised that Ben emerges as a much smaller, frame building company, owned by him and ?. Few of the manufacturing staff come along...

More than a few mid sized frame builders thrive today. "Do one thing and do it well', comes to mind as does really taking care of a small and dedicated dealer network. All ti and all steel frames, from this tiny bike shop owner's perspective, do well. Going toe to toe with trekspecializedgiantcannondale is dumb. Economy of scale. Sounds like ben wants to make great frames, I think he and others will do that. Smaller, more directed, kinda doing the things that Moots and Waterford are doing.

Doing one thing and doing it well.

My opinion is all. When I was in a couple of previous shops, we sold serotta. In the era of all steel CSI, CR/L, and Legend. Concours. Pretty easy to sell these. Do a fit, buy a frame, build, what 'pro' shops are supposed to do.

my 2 lira.

[dumbod]

Originally Posted by WickedWheels

Guys like Bradway Capital are the ones that buy a struggling company up for dirt cheap not in the hopes of making a great product, but in the hopes of making money on someone else's reputation. There's no tolerance for "break even" and to time to allow growth or a "rebirth". The bike business is tough... too tough for "financiers" unless they buy a brand dirt cheap, take just enough time and effort to try to show some sort of an upswing, and then flip it for a profit. There was no long term plan for owning a bike company because there simply isn't enough money in it.

I'm not going to defend Bradway Capital. A lot of us who do this sort of thing for a living were skeptical about Bradway from the beginning. But keep in mind that the only reason Bradway was ever involved was because the company was, to use your word, struggling and the primary reason that the company was struggling was because of mismanagement. Ultimately, the responsibility for mismanagement is with the CEO and the primary shareholders.

I will admit to not knowing very much about the internal workings of Serotta Competition Bicycles. It is possible that Ben Serotta has been a figurehead for the last decade or so, sort like Eddy Merckx after he sold Merckx Cycles. But if Ben Serotta was more involved in the company, as CEO, Chairman and/or major shareholder, he deserves a great deal of the blame for the demise of a company that has been coming for 10 years or more.

I am always sorry when any company fails and, from experience, I know how painful that is for everyone, including the executive management. But it's way too easy to blame the Bradways and DCGs of the world when the actual fault lies elsewhere.

[marsh]

Just as Waterford arose from the ashes of Schwinn, I'm sure Serotta will be reborn in some form. I fret not their future. Excelsior!

[MattTuck]

Originally Posted by dumbod

I'm not going to defend Bradway Capital. A lot of us who do this sort of thing for a living were skeptical about Bradway from the beginning. But keep in mind that the only reason Bradway was ever involved was because the company was, to use your word, struggling and the primary reason that the company was struggling was because of mismanagement. Ultimately, the responsibility for mismanagement is with the CEO and the primary shareholders.

I disagree a bit with this. There may well have been mistakes made with regard to management, strategy or positioning, but that doesn't mean it was mismanaged. And that might depend on our respective definitions of 'mismanage'. The industry changed around them, it bifurcated and they were left trying to make a bespoke product with the overhead of a line manufacturer.

Looked at another way, a struggling company is not a symptom of mismanagement anymore than a successful company is a sign of good management. Sometimes luck, good or bad, or market dynamics outside of your control play a part in the success of a business...

[BumbleBeeDave]

Originally Posted by dumbod

. . . I will admit to not knowing very much about the internal workings of Serotta Competition Bicycles. It is possible that Ben Serotta has been a figurehead for the last decade or so, sort like Eddy Merckx after he sold Merckx Cycles. But if Ben Serotta was more involved in the company, as CEO, Chairman and/or major shareholder, he deserves a great deal of the blame for the demise of a company that has been coming for 10 years or more. . . .

. . . I think this is very reasonable critique. Maybe not a "great deal" of the blame, but I think he's made business mistakes. Of course, I'm also not privy to the inner workings and so could never be totally familiar with the reasoning behind some of their business decisions--or even know if they were indeed Ben's decisions. But that would apply to all of us, as far as I know.

But also living close to the factory and being involved in local media, I have likely seen more local media coverage of the company's problems than many forum members, and I know he has been very candid in those local stories about mistakes being made and him making his share.

Again, only in my own opinion (not as a mod), it's a situation that has indeed been abuilding for while. I just hope they are able to continue to build bikes in some scaled down operation, because I know they ARE good at that.

BBD

[Ahneida Ride]

As I understand events (and I could be wrong)

Serotta was owned by Serotta for a period of about 10 years.

from the purchase back from Archibald Cox to the recent involvement
with Stan and Bonnie Mavis.

Stan, Howard and Bill are all recent personalities.


(speaking for myself and not as a mod)

[Charles M]

Guys,

This isn't just Serotta...

Blue Bicycles and Madfiber Wheels are not confirming that DCG's deal is done and that they are well funded and off and running either...

This may be about DCG's failure to execute as easily as it could have been about any or all of the three brands being in far worse shape than due diligence exposed early on.


This might be Devine Cycling Group bridge collapse versus Serotta getting tossed off the bridge.

[biker72]

In my opinion what doomed the company was their incredibly poor customer service.

The shop where I work was the #1 Serotta dealer in the USA around 2000-2001. Even back then when customers would ask about their bikes we would call the factory and no one would answer the phone. No emails would be returned. Rather than throw Serotta under the bus we would have to make something up.

Even recently people on this forum have had the same complaints. This changed only after Bill Watkins took over. By then the company was almost over the cliff. Too little too late.

[PQJ]

Or it could be that conditions to closing weren't satisfied and so no closing. Deal docs dammit. We need dem deal docs!!!

My $.000002 - not clear to me that Ben and rusty have been getting good professional advice. Of course, w/o knowing players or deal terms or having deal docs, I could be dead wrong.

[dumbod]

Originally Posted by MattTuck

I disagree a bit with this. There may well have been mistakes made with regard to management, strategy or positioning, but that doesn't mean it was mismanaged. And that might depend on our respective definitions of 'mismanage'. The industry changed around them, it bifurcated and they were left trying to make a bespoke product with the overhead of a line manufacturer.

Looked at another way, a struggling company is not a symptom of mismanagement anymore than a successful company is a sign of good management. Sometimes luck, good or bad, or market dynamics outside of your control play a part in the success of a business...

You say potato, I say potato (OK, it makes more sense orally than it does on the written page but you get the point.)

My point is this: Ben Serotta was apparently intimately involved with a series of decisions that turned out catastrophically. Did the market change? Absolutely. But Serotta reacted in exactly the wrong ways to those changes. That's why Moots, Seven, Parlee etc, have faced exactly the same "bad luck" and survived while Serotta has not.

A company that struggles repeatedly (which seems to have been the case with Serotta) and/or struggles over long periods of time is not failing due to bad luck because, over time, luck evens out. It's poor management.

[Charles M]

The Key issue doesn't take 13 years to kill small companies... Not saying that the customer service side could not have been different, but I hear a lot of complaints about virtually all custom bike makers with regard to the trillion questions a customer can ask every day about their new baby.

I think unreasonable communication expectation from dealers to custom builders is just as big an issue as customer service from the builder.

At some point the shop people will learn what is and isn't a needed communication to the builder and will develop the skill set to manage the end user. Sometimes that doesn't happen and it can frustrate both sides...

[cnighbor1]

''Tim Parker Vienna, VA

Jul 31 (15 hours ago)


What's odd is the fact that they had a business plan approved and had proceeded to launch a moderately priced Ti racing bike named Pronto.
Rumor had it that a US pro team would be it next season.
Perhaps there's an angel investor with the foresight to back an American icon of the bike industry?
http://www.bikeradar.com/road/news/a...usiness-38029/
''
charles