Mad Fiber, last DCG Company, in liquidation

[BumbleBeeDave]

Looks like Dandy Dan & Co. are now 3 for 3 . . .

http://www.bicycleretailer.com/north-america/2013/12/17/mad-fiber-files-bankruptcy#.UrO3xfZQ2Do

http://business-bankruptcies.com/cases/divine-cycling-group-inc

BBD

[ultraman6970]

I'm under the impression that we will see a bunch of those wheels going below market price quite soon. Company is gone better get rid off of them.

[zzy]

They've been getting blown out on ebay since Serotta dissolved. Can't blame retailers wanting to get rid of ultralight carbon wheels they can't support or warranty.

[lemondvictoire]

Company and product was flawed before DCG got into the picture! What's more crazy is that buyers are still buying the wheels on ebay for $1700-1800. Maybe the wheels will be collector items.......................:confused:

[Louis]

Can someone please explain this to me:

Did DCG purposely go out and acquire companies that they knew were about to fail? If so, why? If not, they sure did a piss-poor job of choosing.

Or might all three companies have survived, had the managers been semi-competent in running them?

On the surface, it doesn't make any sense to me.

[Threshold]

Can anyone say Spinergy? Exactly same set of criteria, just without the rivets. Looked cool, but...These things reminded me of the ill fated Spinergy as soon as I laid eyes on them. I have no idea how they rode, but aerodynamically they had to be awful unless you had perfect 0 yaw. Big wide flat spokes and traditional V rims. What is sad is that Serotta got suckered in and taken down by these wankers.

[ultraman6970]

IMO they probably knew, probably was a stunt to get some investors for themselves?, this is something that many times big companies do, they get a company with not too many perspectives really cheap, that will help them locally to the image (shares) with the investors and after a year or two bye bye.

We won't know for sure maybe ever if this was a stunt knowing what they were going to do or because they were just naive.

Anybody have some insights?

Can someone please explain this to me:

Did DCG purposely go out and acquire companies that they knew were about to fail? If so, why? If not, they sure did a piss-poor job of choosing.

Or might all three companies have survived, had the managers been semi-competent in running them?

On the surface, it doesn't make any sense to me.

[CunegoFan]

Can someone please explain this to me:

Did DCG purposely go out and acquire companies that they knew were about to fail? If so, why? If not, they sure did a piss-poor job of choosing.

Or might all three companies have survived, had the managers been semi-competent in running them?

On the surface, it doesn't make any sense to me.

Each company was available because it was about to fail. They could not pay their bills and would have folded in months. Along comes a wheeler-dealer and wannabe bike mogul who thinks he sees $$$ in them thar hills if the companies can be turned around. He talks a good line. The management of the companies believe it in part because they are so desperate they don't have the option not to. The wannabe gets the companies for song. He does not have the money to stay afloat long but he does have an audacious plan. He can bundle several companies together into an entity large enough to attract attention of those with enough money to fund a turnaround and if he wheels and deals deftly enough, he'll still be left with a piece of the action. He strings the companies along, telling them that funding is coming. Ultimately it turns out that those with that money don't see the low cost to get in. They see a precarious industry and a monthly nut that has to be paid for at least two or three years, the length of time it will take a rather dubious plan for recovery to hit break-even. The wannabe cannot get the funding so everything collapses.

[oldpotatoe]

I'm under the impression that we will see a bunch of those wheels going below market price quite soon. Company is gone better get rid off of them.

Pro's Closet has some...

[BumbleBeeDave]

CunegoFan nails it . . . My understanding is this is almost exactly what happened. A speculative venture where Devine and Co got enough capital to acquire and then would pursue with other people's money. They couldn't get any investors to sign on and that was that after a few months of heaving stuff and people over the side to stay afloat and putting on a happy face for the PR.

So the net result is they declare bankruptcy and walk away to incorporate another day and leave the dead companies and employees without jobs. But somehow I don't imagine they're too worried about that part.

Looks like Pro's closet also has the leftover Serotta frames.

BBD

Each company was available because it was about to fail. They could not pay their bills and would have folded in months. Along comes a wheeler-dealer and wannabe bike mogul who thinks he sees $$$ in them thar hills if the companies can be turned around. He talks a good line. The management of the companies believe it in part because they are so desperate they don't have the option not to. The wannabe gets the companies for song. He does not have the money to stay afloat long but he does have an audacious plan. He can bundle several companies together into an entity large enough to attract attention of those with enough money to fund a turnaround and if he wheels and deals deftly enough, he'll still be left with a piece of the action. He strings the companies along, telling them that funding is coming. Ultimately it turns out that those with that money don't see the low cost to get in. They see a precarious industry and a monthly nut that has to be paid for at least two or three years, the length of time it will take a rather dubious plan for recovery to hit break-even. The wannabe cannot get the funding so everything collapses.

[1centaur]

Each company was available because it was about to fail. They could not pay their bills and would have folded in months. Along comes a wheeler-dealer and wannabe bike mogul who thinks he sees $$$ in them thar hills if the companies can be turned around. He talks a good line. The management of the companies believe it in part because they are so desperate they don't have the option not to. The wannabe gets the companies for song. He does not have the money to stay afloat long but he does have an audacious plan. He can bundle several companies together into an entity large enough to attract attention of those with enough money to fund a turnaround and if he wheels and deals deftly enough, he'll still be left with a piece of the action. He strings the companies along, telling them that funding is coming. Ultimately it turns out that those with that money don't see the low cost to get in. They see a precarious industry and a monthly nut that has to be paid for at least two or three years, the length of time it will take a rather dubious plan for recovery to hit break-even. The wannabe cannot get the funding so everything collapses.

This is pretty true. Anybody who thinks that it's really profitable to acquire companies and then shove them into bankruptcy within months needs to think again. (Note we are not talking here about acquiring the debt of companies already heading for bankruptcy at a big discount and thereby getting the post-reorganization equity cheaply.) Tiny companies that go into bankruptcy are likely to liquidate and leave nothing of real value for owners and most creditors. "Deal guys" who are trying to work a deal to create value come in two basic forms: real, and not real. Real deal guys understand the levers of value in companies at a deep level and have access to money sources that believe in that understanding. Not real deal guys have nice suits if they are lucky, have some clue of how value might get created, and are looking to cobble something together that might work so they can progress to higher levels of the game, all the while assuring themselves (and their wives) that they are already real deal guys. Desperate sellers are willing to convince themselves that non real deal guys are real, kind of the way lottery ticket buyers are willing to convince themselves they have a shot.

In a way, DCG's sad venture into cycling really just shows how tiny most of the bike business is. Mad Fiber is to Trek as non real deal guys are to real deal guys.

[oldpotatoe]

CunegoFan nails it . . . My understanding is this is almost exactly what happened. A speculative venture where Devine and Co got enough capital to acquire and then would pursue with other people's money. They couldn't get any investors to sign on and that was that after a few months of heaving stuff and people over the side to stay afloat and putting on a happy face for the PR.

So the net result is they declare bankruptcy and walk away to incorporate another day and leave the dead companies and employees without jobs. But somehow I don't imagine they're too worried about that part.

Looks like Pro's closet also has the leftover Serotta frames.

BBD

And creditprs w/o $.

Yep, Pro'sCloset does have some setottas also..good guys, BTW-used them frequently for dead/outdated/excess inventory.

[Climb01742]

Greater fool theory? Lipstick on a pig?

Thread drift alert...

To pick up on 1centaur's real deal guys vs not real deal guys...one thing about Warren Buffet that I've always admired is his principle that he only invests in companies that make products that he understands. If I had the brains, inclination and money -- in other words if frogs had wings -- I'd try to be a value investor. It's something that makes sense. Buffet's approach and his yearly shareholder letters have always struck me as common sense damn well executed.

Too many wheeler dealers in business just seem like modern day snake oil salesmen trying to make a quick, kinda sketchy buck. See above.

[54ny77]

that made me laugh.

very true words spoken here.

This is pretty true. Anybody who thinks that it's really profitable to acquire companies and then shove them into bankruptcy within months needs to think again. (Note we are not talking here about acquiring the debt of companies already heading for bankruptcy at a big discount and thereby getting the post-reorganization equity cheaply.) Tiny companies that go into bankruptcy are likely to liquidate and leave nothing of real value for owners and most creditors. "Deal guys" who are trying to work a deal to create value come in two basic forms: real, and not real. Real deal guys understand the levers of value in companies at a deep level and have access to money sources that believe in that understanding. Not real deal guys have nice suits if they are lucky, have some clue of how value might get created, and are looking to cobble something together that might work so they can progress to higher levels of the game, all the while assuring themselves (and their wives) that they are already real deal guys. Desperate sellers are willing to convince themselves that non real deal guys are real, kind of the way lottery ticket buyers are willing to convince themselves they have a shot.

In a way, DCG's sad venture into cycling really just shows how tiny most of the bike business is. Mad Fiber is to Trek as non real deal guys are to real deal guys.

[pbarry]

Looks like Pro's closet also has the leftover Serotta frames. BBD

PC purchased the remaining Serotta frames from SF. There were a dozen or so available.

[nicrump]

Bluestar Airlines!

[54ny77]

"Man looks in the bottom bracket, there's nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the bottom bracket."

Bluestar Airlines!

[zap]

snip


Yep, Pro'sCloset does have some setottas also..good guys, BTW-used them frequently for dead/outdated/excess inventory.

drift.

I see that on ebay…..but have to ask why would you use a middle man to sell product on the bay. Selling on Ebay is not that time consuming and heck, OldPotatoe reputation might have eked out extra $ in addition to saving commissions.

[oldpotatoe]

snip



drift.

I see that on ebay…..but have to ask why would you use a middle man to sell product on the bay. Selling on Ebay is not that time consuming and heck, OldPotatoe reputation might have eked out extra $ in addition to saving commissions.

Don't know..ask them..maybe they are busy with 'other' things right now, like bankruptcy.

For a fee, you give these guys the stuff, they clean, photograph, run the auction, do everything..and a check is delivered..seems pretty simple to me..

[Ahneida Ride]

If ya going to go bankrupt, don't be a small fry ...

be a Long Term Capital Management

[Brian Smith]

For a fee, you give these guys the stuff, they clean, photograph, run the auction, do everything..and a check is delivered..seems pretty simple to me..

That's an interesting concept. I wonder if a similar scheme would work for machinery used to make carbon parts into assemble-able bicycle frames? (http://www.ebay.com/itm/VF-3D-HAAS-High-Column-5-Axis-CNC-Vertical-Machining-Center-New-2005-/271304641851?pt=LH_DefaultDomain_0&hash=item3f2b044d3b)
I don't know who would claim interest in such things, but it looks neat.

[WickedWheels]

That's an interesting concept. I wonder if a similar scheme would work for machinery used to make carbon parts into assemble-able bicycle frames? (http://www.ebay.com/itm/VF-3D-HAAS-High-Column-5-Axis-CNC-Vertical-Machining-Center-New-2005-/271304641851?pt=LH_DefaultDomain_0&hash=item3f2b044d3b)
I don't know who would claim interest in such things, but it looks neat.

That machine is down the street from me, so if anyone needs help with pick-up let me know ;)

[CaptStash]

That's an interesting concept. I wonder if a similar scheme would work for machinery used to make carbon parts into assemble-able bicycle frames? (http://www.ebay.com/itm/VF-3D-HAAS-High-Column-5-Axis-CNC-Vertical-Machining-Center-New-2005-/271304641851?pt=LH_DefaultDomain_0&hash=item3f2b044d3b)
I don't know who would claim interest in such things, but it looks neat.

Not too sure that's what you'd want for messing about with carbon fiber, but you could use it to make your own wicked cool chain rings and cassettes!

CaptStash....

[nicrump]

Not too sure that's what you'd want for messing about with carbon fiber, but you could use it to make your own wicked cool chain rings and cassettes!

CaptStash....

actually to my recollection brian smith(the poster you quote) used a very similar if not that actual machine(sold off) to do exactly what he said in prep to assemble a certain carbon fiber frame no long available due to the subject of this and many threads like it.

[CaptStash]

actually to my recollection brian smith(the poster you quote) used a very similar if not that actual machine(sold off) to do exactly what he said in prep to assemble a certain carbon fiber frame no long available due to the subject of this and many threads like it.

Hi Nick, That sounds very cool, but why the mystery about that " certain" manufacturer. Not trying to be a smart a$$ here, just really curious. Is the CNC mill used to make the lugs?

CaptStash....

[nicrump]

Hi Nick, That sounds very cool, but why the mystery about that " certain" manufacturer. Not trying to be a smart a$$ here, just really curious. Is the CNC mill used to make the lugs?

CaptStash....

no mystery... read this http://www.pezcyclingnews.com/serottas-meivici-custom-carbon/#.UrWiYCjXG0Y

and this pic is interesting. who is that guy?

http://www.pezcyclingnews.com/photos/tech/serotta/meimiter1.jpg

[jlwdm]

Hi Nick, That sounds very cool, but why the mystery about that " certain" manufacturer. Not trying to be a smart a$$ here, just really curious. Is the CNC mill used to make the lugs?

CaptStash....

It wasn't a mystery as Nick pointed out. ...Brian Smith...

Jeff

[Brian Smith]

We have a winner, Nick takes the prize.
It is, in fact, the very same machine we used for years, still loaded with programs, tools, and fixtures. Put power and parts in, get Meivicis out.
It does appear that it was transported without the spindle head being bolted to the table, which is not the way the factory and its distributors do it.

[carpediemracing]

A question if anyone knows or even wants to guess at the answer.

When I saw the Mad Fiber wheels I liked the design, thought there were a few shortcomings, but got a bit floored by the price. The $2000-2500 wheel sets are out there, ditto the $500, but there was a distinct hole at about $1200-1500.

My initial thought was that if they could do a less-frills $1000 wheel set, direct, that they could do okay. They'd sell a lot of wheels, a lot more than they would have (or did) at whatever their retail was. Even the super cool shop discount price was well above a Zipp or HED or Bontrager wheel set.

So the question remains - what sort of margin exists on wholly in-house manufactured wheels? For example if they sold 4x as many wheels at $1000 would that have covered the materials/labor to manufacture the extra 300% more wheels?

Whenever I see a "quality vs quantity" type pricing I think of the old Sim City game. You can raise taxes and make more money per resident but you lose residents. You can lower taxes to attract more residents but you make less money (and whenever I played I'd bankrupt myself doing that). I never got the balance of taxes vs growth/sales/etc, whether in Sim City or at my now-defunct shop.

Is it possible that a Mad Fiber might have become the "Cat 3 wheels" company? The lower-cusp priced, ubiquitous, not-quite-so-prestigious wheel set?

Just to set things clear I make no claims on expertise on business, I have no idea how much it costs to even lease those fancy machines, and this is definitely a Monday morning quarterback kind of thought process. Still, though, it's a thought.

[oldpotatoe]

A question if anyone knows or even wants to guess at the answer.

When I saw the Mad Fiber wheels I liked the design, thought there were a few shortcomings, but got a bit floored by the price. The $2000-2500 wheel sets are out there, ditto the $500, but there was a distinct hole at about $1200-1500.

My initial thought was that if they could do a less-frills $1000 wheel set, direct, that they could do okay. They'd sell a lot of wheels, a lot more than they would have (or did) at whatever their retail was. Even the super cool shop discount price was well above a Zipp or HED or Bontrager wheel set.

So the question remains - what sort of margin exists on wholly in-house manufactured wheels? For example if they sold 4x as many wheels at $1000 would that have covered the materials/labor to manufacture the extra 300% more wheels?

Whenever I see a "quality vs quantity" type pricing I think of the old Sim City game. You can raise taxes and make more money per resident but you lose residents. You can lower taxes to attract more residents but you make less money (and whenever I played I'd bankrupt myself doing that). I never got the balance of taxes vs growth/sales/etc, whether in Sim City or at my now-defunct shop.

Is it possible that a Mad Fiber might have become the "Cat 3 wheels" company? The lower-cusp priced, ubiquitous, not-quite-so-prestigious wheel set?

Just to set things clear I make no claims on expertise on business, I have no idea how much it costs to even lease those fancy machines, and this is definitely a Monday morning quarterback kind of thought process. Still, though, it's a thought.

There are actually quite a lot of carbon wheels at that $1500 price point. Like Boyd wheels...guys that source Asian components, like hubs and rims, some bring them to the US and build, some have them built over there..

http://www.boydcycling.com/carbon-clinchers

http://www.rolwheels.com/wheels/wheel/m45

http://www.neuvationcycling.com/product/neuvation-c80-carbon-tubular-set-1496.htm

[dumbod]

CunegoFan nails it . . . My understanding is this is almost exactly what happened. A speculative venture where Devine and Co got enough capital to acquire and then would pursue with other people's money. They couldn't get any investors to sign on and that was that after a few months of heaving stuff and people over the side to stay afloat and putting on a happy face for the PR.

So the net result is they declare bankruptcy and walk away to incorporate another day and leave the dead companies and employees without jobs. But somehow I don't imagine they're too worried about that part.

Looks like Pro's closet also has the leftover Serotta frames.

BBD

In fairness, the companies almost certainly would have been dead and the employees without jobs whether or not Devine stepped in.

My first thought when I originally read about Serotta's acquisition was that Bradway was all hat and no cattle. Unfortunately, I was right but I suspect that Devine was the investor of last resort for all three companies. Assuming that Bradway didn't pull out lots of "consulting," "management" and "investment banking" fees they didn't do any real harm in the long run. The companies were going to fail anyway.

[sitzmark]

Bradway (Brian Case) seems to be the only entity that knew how to pull out of the spiral. He traded assets for DCG shares and a Director position.

He still retains a DCG Director's position, regained the assets/employees/inventory of "Serotta" (now Saratoga FW), and only the Serotta brand remains wholly owned by DCG. I presume BC still owns shares of DCG - whatever value might be.

[BumbleBeeDave]

There are actually quite a lot of carbon wheels at that $1500 price point. Like Boyd wheels...guys that source Asian components, like hubs and rims, some bring them to the US and build, some have them built over there..

http://www.boydcycling.com/carbon-clinchers

http://www.rolwheels.com/wheels/wheel/m45

http://www.neuvationcycling.com/product/neuvation-c80-carbon-tubular-set-1496.htm

I got a pair of the Boyd 58mm carbons this past spring and they have been GREAT wheels so far. $1450 for the pair and are 90% of ZIPP 404's for half the price. I'd buy another pair of their wheels in a second.

BBD

[CaptStash]

no mystery... read this http://www.pezcyclingnews.com/serottas-meivici-custom-carbon/#.UrWiYCjXG0Y

and this pic is interesting. who is that guy?

http://www.pezcyclingnews.com/photos/tech/serotta/meimiter1.jpg

Thanks, that was a very interesting read. I had no idea that Brian Price was from Serotta. Mystery solved, but again, why the obfuscation? Just curious if we're not supposed to say Serotta anymore or something.

CaptStash....