Serotta lays off 40% of workforce, planning shutdown

[Climb01742]

at a certain management/decision-making level, if you don't have skin in the game, should you be in the game?

speaking from experience, risking my money and risking someone else's are two very different things.

[Charles M]

Hopefully, in the case Ben was fired, it also voided any potential conflict with his doing something on his own and smaller.


Saratoga Cycles?


Business wise, with as many missteps as have happened over the past decade or so, it's VERY hard to argue that Ben's forte is in business management.

But product quality wise, from steel to Ti to Carbon/metal and full carbon, it's hard to argue that he didn't have a passion for making a very good product from multiple materials.


I would think a smaller operation with less grand intent would work. I think it's been 3 tries with overly optimistic direction that were simply never going to pay off...

But I would buy a bike from Ben.

[sitzmark]

Originally Posted by weatherman

Absolutely think you are on to something here. Also saw an earlier comment (and I know for a fact as I was also approached to invest in this deal) that neither Bill nor Ben have any equity---I really struggled with that one and how incentives could be properly aligned......lots of issues here, but does clearly appear (IMHO) to be a power play here and, in my opinion, some unprofessional moves on both sides of the table.

My contacts (a former employee who was let go here recently) also noted that there seemed to be a chasm between the ownership group and management group (as noted above, with no equity at all) about the proper sales/marketing plan with the later wanting to subscribe to a build it and they will come approach......

This was a mess of a situation, and appears to be even more of a mess now. Unfortunate for all, to say the least.

Everything is a mess ... for DCG.

In the big bicycle market, Serotta is virtually unknown. DCG has a mountain to move to brand Serotta and start priming the order pump again. In the cycling community word is out ... Ben and Bill have shut it down - they fired the first round and DCG is left to navigate the lesser of bad options at this point. (Unless they're flush with capital and can build a brand overnight) The fastest place to re-prime the order pipeline is the Serotta community - but it is a community with enough allegiance to Ben that it will wait for the fall out and reward Ben wherever he lands. No incentive to buy a Serotta not built under Ben's watch.

If Ben retains no past equity (or liability) and his only payout is from future sales or earned equity, then he has no incentive to bring in sales that he will have to repurchase in a buyout. He obviously doesn't believe in the direction DCG has mapped out for the future of Serotta. If you're Ben, you believe customers only buy Serotta because of Ben Serotta, so perfect time to force DCG's hand. With no sales pipeline, DCG is only left with negative cash-flow or a mad scramble to ramp back up.

Ball's in DCG's court. Ben loses nothing either way.

[firerescuefin]

Thanks for sharing your takes . ...well thought out.

Originally Posted by sitzmark

Everything is a mess ... for DCG.

In the big bicycle market, Serotta is virtually unknown. DCG has a mountain to move to brand Serotta and start priming the order pump again. In the cycling community word is out ... Ben and Bill have shut it down - they fired the first round and DCG is left to navigate the lesser of bad options at this point. (Unless they're flush with capital and can build a brand overnight) The fastest place to re-prime the order pipeline is the Serotta community - but it is a community with enough allegiance to Ben that it will wait for the fall out and reward Ben wherever he lands. No incentive to buy a Serotta not built under Ben's watch.

If Ben retains no past equity (or liability) and his only payout is from future sales or earned equity, then he has no incentive to bring in sales that he will have to repurchase in a buyout. He obviously doesn't believe in the direction DCG has mapped out for the future of Serotta. If you're Ben, you believe customers only buy Serotta because of Ben Serotta, so perfect time to force DCG's hand. With no sales pipeline, DCG is only left with negative cash-flow or a mad scramble to ramp back up.

Ball's in DCG's court. Ben loses nothing either way.

[Elefantino]

Originally Posted by sitzmark

<snip>In the big bicycle market, Serotta is virtually unknown.</snip>

Which is why comparisons to other brand purchases (Schwinn, for one example) don't seem to be applicable here.

DCG obviously had a plan for the brand when it purchased. Ben and Bill may or may not have been parts of that plan, but it appears now that there is sufficient distrust on both sides to warrant a break and, mostly likely, new plans for all.

It makes me sad nonetheless.

[Israelt]

It sounds to me like Mr. Serotta will survive. Anyone with his reputation and skill should be able to find a way back intot he business.

[BumbleBeeDave]

Originally Posted by sitzmark

. . . (Unless they're flush with capital and can build a brand overnight)

. . . that unless they have located it in the last two weeks, DCG is NOT "flush with capital."

BBD

[Rada]

Originally Posted by sitzmark

Everything is a mess ... for DCG.

In the big bicycle market, Serotta is virtually unknown. DCG has a mountain to move to brand Serotta and start priming the order pump again. In the cycling community word is out ... Ben and Bill have shut it down - they fired the first round and DCG is left to navigate the lesser of bad options at this point. (Unless they're flush with capital and can build a brand overnight) The fastest place to re-prime the order pipeline is the Serotta community - but it is a community with enough allegiance to Ben that it will wait for the fall out and reward Ben wherever he lands. No incentive to buy a Serotta not built under Ben's watch.

If Ben retains no past equity (or liability) and his only payout is from future sales or earned equity, then he has no incentive to bring in sales that he will have to repurchase in a buyout. He obviously doesn't believe in the direction DCG has mapped out for the future of Serotta. If you're Ben, you believe customers only buy Serotta because of Ben Serotta, so perfect time to force DCG's hand. With no sales pipeline, DCG is only left with negative cash-flow or a mad scramble to ramp back up.

Ball's in DCG's court. Ben loses nothing either way.

Not sure where DCG would have much if any negative cash flow with Serrota shut down. Might actually be losing less money now.

[Charles M]

DCG's decision may have nothing at all to do with their lacking dollars.

[firerescuefin]

Originally Posted by Charles M

DCG's decision may have nothing at all to do with their lacking dollars.

Beat me to it.

[Jeff N.]

Originally Posted by BumbleBeeDave

Ford has their Fiesta-Focus-Fusion-Taurus-Lincoln progression of price points and models so less affluent owners can start with the Fiesta or Focus and move up as they get older and gain wealth.

Serotta has never done this successfully, IMO. They were getting a good start on it with the Pronto/Fondo, but perhaps way too late. I was originally optimistic about the merger with Blue, who I understood have Asian carbon experience. A $2000-2500 carbon Serotta, designed by Ben here and built in Taiwan, might not have been a bad thing to supply a lower end price-point.

BBD

Yep, just like Parlee seems to be doing...and quite well. Jeff N.

[ultraman6970]

Usually never does, and the problem with merges and corporate crap going on, who knows which were their plans from the beginning, not that they buy companies to close them (thing that happens too) but probably their plans changed and they had to do what they had to do, for example they had in their plans to get 80% or 210% earnings and they were getting like 45% or even less that is a reason for the corporate crap to kick in and do something about it. Many times crap like that happens just because board of directors are just greedy, financial reports arent in the numbers they want, they notice that will be too hard to get the numbers as good as they want and they pull the plug and close the stuff... we wont know the real truth behind anyways maybe ever, sure even serotta doesn't know either.

Complicated when the guy that is saying that is broke has 10 millions in the bank compared with the other guy that is broken with only 50 bucks in his pocket. Corporate bs IMO.

Originally Posted by Charles M

DCG's decision may have nothing at all to do with their lacking dollars.

[Keith A]

It is interesting that DCG only lists two cycling companies on it's website...Madfiber and Serotta, Blue isn't there.
http://www.divinecycles.com/

[SpokeValley]

Originally Posted by Keith A

It is interesting that DCG only lists two cycling companies on it's website...Madfiber and Serotta, Blue isn't there.
http://www.divinecycles.com/

Well, now. That is interesting.

[jlwdm]

I had not checked this thread for a few days and reading a number of pages all at once I was astonished at how many posts speculate about what is going on without facts. There are lots of problems and issues here and, we do not know them all. In the age of the internet lots of people love to speculate without facts. Personally, I am happy to wait and find out what is really going on.

Jeff