A couple of years ago a friend forwarded a video of a NorCal road race, one of those early-season shindigs where everyone hopes to blow the cobwebs out of the legs and get the first indications of how the season might shake out. The video in question was shot from the finish line and showed the bunch screaming into the finish over rollers when suddenly—as you guessed—there was a crash. This wasn’t one of those one guy goes down and takes two others with him. No, this was one of those body shrapnel explosions wherein the crash gets bigger and bigger, taking down ever more bicycles and guys escape one bit of carnage by running off the road only to go over the bar when their front wheel augers into a gopher hole. The crash lasted more than 30 seconds.
You’ll pardon me if I summon that image as a means of comparison for what’s been happening with Serotta over the last year. Or depending on your outlook, for the last 24 years. If you’re wondering just what I’m talking about (and I respect that not everyone reads Bicycle Retailer and Industry News or spends all their waking hours on the Serotta forum), Ben Serotta has been fired from Serotta.
No, that wasn’t a massive, gravity-generating typo.
Ben Serotta, the man with one of the most admired names in bicycle construction, has been fired from the company he has led for 41 years. It’s probably fair to say that things aren’t so heavenly at Divine Cycling Group, the latest owners of Serotta. It’s also worth noting that while Serotta says he and CEO Bill Watkins were fired, Brian Case, the chairman of Serotta and one of the directors of Divine, says the pair left the company.
The way I keep score is that any time there are competing narratives I award the point to ugly back-room dialog. This one ain’t pretty.
By “this one” I mean this version of Serotta. Serotta was sold back in ’89 to Archibald Cox, Jr. who went on to purchase Fat City Cycles in ’94. He consolidated the whole thing in Serotta’s factory in South Glens Falls, New York, only to learn that there were going to be few, if any, economies of scale. The Serotta/Fat City, LLC, merger became a classic money pit and management flail-fest. The company went through five CEOs in six years. Ben Serotta was able to buy the company back in ’97, while Fat City would survive on life support for three more years. The experience so demoralized Chris Chance, he left the industry.
Things seemed to be going well for Serotta post buy-back. He seemed to have climbed out of the problem that consumes so many businesses: the founder’s trap. Simply put, founder’s trap is where the entrepreneurial zeal of a founder cannot match the necessary management skills needed to grow a company. The Pon Holdings purchase of Cervelo suggests that they might have suffered a dollop of that as well. But Serotta had been running well for nearly 15 years when word began filtering through the industry that delivery on bikes was getting slow and erratic. Events escalated quickly.
I think it’s worth going over the timeline of what’s taken place:
- June 2012, Serotta sells building tooling and brand to Bradway Capital
- Mar. 28, 2013, Serotta lowered prices
- June 2013, consolidated under Divine Cycling Group with Mad Fiber and Blue Competition Cycles
- July 31, 2013, Serotta lays of 40 percent of workforce
- August 6, 2013, Serotta fired
As I mentioned, there was some disagreement between Divine’s announcement and Ben Serotta’s version of events. Bicycle Retailer and Industry News ran a letter he penned in the wake of his departure. While the entire letter is fascinating, I think his version of events is worth reprinting:
“Early last Sunday evening while stopped at the side of the road looking at a paper map with Marcie, thinking about where we should head to enjoy the remaining hours of a beautiful sunny, mid-summer evening, my cell phone rang and I instinctively answered it. One of the current company owners was on the other end and he coldly started, ‘I am terminating you. Your email password has been changed and your building access code has been deleted. You can arrange to get your personal things on Tuesday.’ And with that (no cause was given, aka terminated without cause) my life at Serotta the company, came to an abrupt end.”
Serotta’s letter revealed that Bill Watkins, Serotta’s CEO, had received the same treatment. Of Watkins Serotta wrote, “I’ve viewed as the company’s long missing link—someone who had the skills to lead the business end of the business, while I focused on brand and product.” It was a telling comment less for Watkins treatment than for Serotta’s explicit acknowledgement of where his strengths are and the company’s recurring issues with management.
CEOs get replaced in company purchases the way people put gas in cars. That Watkins might be tossed aside, despite having the confidence of the founder, is more surprising than it ought to be. However, tossing Ben Serotta aside strikes me as being as silly as the Dave Matthews Band touring … without Dave Matthews.
Divine’s Case says that Serotta should be back in full production shortly. The press release did contain a second bombshell, though. Case revealed plans to open Serotta to contract work.
Here’s where it’s useful to go back over the facts at hand. Serotta has had trouble delivering bicycles on time. Before waiting to get the company back on a firm foundation in capital and production, they announce they are going to … make even more bikes. That alone was pretty silly, but when you really consider his statement, it seems a bit ludicrous. How many companies are out there that need American-made frames produced on contract? The only name that comes to mind currently is Rivendell, and I think Grant Peterson has his thing running pretty well. Likely candidates aside, just which bikes are we talking about? Well, it would seem that we’re talking about steel, titanium and hybrid ti/carbon bikes. I don’t think anyone would want to stick another company’s decal on a Meivici, due to its distinctive look.
Case may have had what he believes are good reasons to jettison Serotta. A portion of his statement, which was obtained like the previous quotes from Bicycle Retailer and Industry News, suggests that he has some awareness of the importance of Ben Serotta to Serotta.
Who wants a Serotta with which Ben was not affiliated?
It would be different if he were dead and the staff was carrying on his legacy. That’s not the case. It would also be different if Serotta had been a serial entrepreneur and his departure was just him moving on to his next thing. But the name Serotta conjures high-quality bicycle frames, and his departure comes at the end of some ugly dealings, the PR battle over which Serotta has taken a decisive lead. The trouble for Divine is that Serotta’s personal DNA and the company’s are nearly impossible to tell apart. That’s part of what has given the company its caché. This isn’t Pete Best being dumped for Ringo Starr, this is Apple firing Steve Jobs.
So what of Divine Cycling Group’s other properties, Mad Fiber and Blue Competition Cycles? Well, Mad Fiber reports that all is well, nothing to see here. Maybe things are fine, but it’s hard to take that statement on face value once you read what Steven Harad, CEO of Blue, wrote in the comments following Serotta’s letter to the cycling community.
“Here’s hoping we aren’t next but it looks like we are. Lets catch up Ben Serotta.”
Word in the industry is that Blue has a shipping container full of bikes that they can’t pay for, which brings us back to one of the initial reports about just how bad things were at Serotta. Serotta said he had no operating capital for the company. An injection of capital which was to have materialized, did not.
My money says that customer interest will track in line with Ben Serotta’s location. If he extricates the name, people will be happy to continue buying Serottas, but if not, I suspect there will be far more interest in a line called “BEN” than one we all used to lust after. I’ll go a step further and say that I think Divine has badly miscalculated Ben Serotta’s value and the likelihood of this ugly breakdown to go public and not just tarnish, but ruin Serotta’s reputation. I’m aware that several of Serotta’s competitors have received a number of new orders because dealers lost faith that they will receive the custom bikes currently on order.
In almost any other circumstance, I’d be arguing for all life-support measures for Serotta, but this time I say leave the paddles in the crash cart.
Image: pilfered from Ben Serotta’s Facebook page.