Serotta, Divine, Leaving it Behind

Serotta, Divine, Leaving it Behind

Prometheus

Saratoga Frameworks has shut down. Last week, Brian Case, the owner of Saratoga, informed the remaining eight employees the factory was shutting down and they were to remove their personal possessions. The factory that produced thousands of Serotta bicycles is now shuttered. So ends one of preeminent frame building enterprises the world has known.

Of course, that’s not all there is to this story. While any cyclist might think that a world without new Serottas is as surreal as having the apes take over, this tale gets weirder.

At the end of January the assets of Mad Fiber went on the auction block. Anyone who rode those wheels spoke of them in the same reverential tones people reserved for Serotta. As a result, there was a good deal of interest in what used to be that operation. It was just revealed that ex-T-Mobile team owner Bob Stapleton bought the intellectual property for Mad Fiber. He’s revealed only that he’s at the “talking-to-smart people stage.” He considers the existing technology as a start point.

While SRAM’s Scott King bid $5000 for the patents and other intellectual property, Stapleton won the auction, claiming the goods for $31,000. John Reichstein, bidding on behalf of a company called Econ won the auction for Mad Fiber’s tooling and non-IP assets. He bid $7000. Econ Equipment Solutions is a Washington-state-based company that is best known as an equipment provider for paint and finish work for everything from large vehicles to aerospace. For a company that once claimed assets of $1.21 million (and $1.65 million in liabilities), $38,000 is a paltry remittance.

Divine Cycling Group’s other entity, Blue Competition Cycles, is busy writing the most interesting footnote to this story. Blue’s overseas factory formed an LLC in the U.S., called Minds Group, and re-hired Steven Harad as CEO. Harad’s first move was to bring back Daniel Stallings, Blue’s once and future sales manager. He also changed the brand’s name to Blue Bicycles to broaden its appeal.

When I contacted Harad, he said, “We are excited about the future, bikes have arrived, dealers are opening their doors to Blue Bicycles and 2014 is looking strong.” Blue will be at Interbike this year. It’s on.

He has every right to be optmistic, as do the company’s owners. It’s an odd state of affairs, though. Of the three brands, the one most likely to slip under the waves, never to return, seemed to be Blue. Surely someone would save Serotta or Mad Fiber, right?

In talking to any number of people as I’ve chased this story for the last eight months or so, two names come to the fore in every conversation—Bill Overbay and Brian Case. Both have been accused, off the record, as being the reason these companies went under. Some point the finger more at Overbay, while others point the finger more at Case; perspective tends to depend on whether the person’s relationship was closer to Blue, Mad Fiber or Serotta. Everyone has an opinion and all the opinions are strong and no one is willing to go on record.

You wouldn’t want to be called the names I’ve heard used in conjunction with Case and Overbay, though I will say the worst vitriol does seem to be reserved for Case. Snake-oil salesman is perhaps the kindest thing he was called. Everyone I talked to described the tactics he used to stall people on payments for services rendered and everyone was universally concerned that going on the record would only create greater headaches for them in trying to get paid.

Meanwhile, Bill Watkins, Serotta’s former CEO has challenged the bankruptcy filing by Case on behalf of DCG back in December. The bankruptcy filing for Divine includes no Serotta assets. None at all. Case claimed that he didn’t know the disposition of the Serotta IP when last we spoke. Someone has to know who owns the Serotta IP and whether or not Case owns it himself, I’m convinced he knows who does and was lying to me when he said he didn’t. While we were never that tight, I go back more than 20 years with Case and I’m disappointed he would insult me with such a dance.

Watkins and Serotta haven’t been laurel-sitting, either. Serotta is consulting with Alchemy Bicycle while Watkins has been assisting Catrike, a maker of recumbent tricycles. The duo is also aligned with Gluskin Townley Group, an industry research firm.

Several people I’ve spoken to have observed that they suspected Case of being more interested in short-term profits at the outset. If they were right on that score, then it would fit that his strategy might have been (as two people suggested to me) to wind the company down, sell the equipment, then sell the real estate.

The last time RKP reported on an industry squabble, Fuji Bikes‘ owner, ASI, wrote the epilogue. ASI swooped in and embarrassed Specialized by reminding the world that they owned the trademark for Roubaix. It was a forehead slapper.

Guess what? ASI owns a trademark for the name Saratoga in the bike industry. Srsly. They have produced a bicycle by that name for nearly 30 years; back in the ’80s it was a road bike, but these days it’s a cruiser.

Folks, you can’t make this stuff up.

Any effort by Case to try to sell any intellectual property connected to Saratoga Frameworks will have to overcome ASI’s objections. And they will object; an effort to reach a settlement deal with Case last fall was never completed; given what everyone tells me about how he does business, this isn’t remotely surprising.

The closest thing we can offer to ending this post on a good note is the news that the Canadian Bike Brand No. 22 has hired four of the former Serotta/Saratoga employees. Apparently, the young company (launched in 2012) plans to open a production facility in New York state. The four employees are Scott Hock, head welder Frank Cenchitz, welder Caleb Sesselman and Bill McDonald for finishing and paint. No. 22 offers road and track bikes made from titanium, which would be why you don’t see the names of any brazers mentioned.

Such an announcement should have a powerful effect on the regard for the quality of bikes from No. 22.

When I think of the number of people who have had to file for unemployment, the number of people who lost dream jobs, I want to weep. What’s especially disquieting about this is how three people have said to me, ‘Patrick, you have to warn the industry not to do business with these guys.’

At the end of the Ridley Scott film “Prometheus” the character Elisabeth Shaw, played by Noomi Rapace, says in the film’s closing shot, “Final report of the vessel Prometheus. The ship and her entire crew are gone. If you’re receiving this transmission, make no attempt to come to its point of origin. There is only death here now, and I’m leaving it behind. It is New Year’s Day, the year of our Lord, 2094. My name is Elisabeth Shaw, last survivor of the Prometheus. And I am still searching.”

It’s like that.

 

Image: Twentieth Century Fox

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13 comments

  1. Pingback: Saratoga Frameworks . . . dead already? - Page 4

  2. Randall

    .entry-headline { height: 2.0em; overflow:none } or a JS substring to truncate class=”news-item” please!
    Whenever the headline is to wide, that resizes, causing the text being read to move up and down!

  3. kurti_sc

    Bob Stapleton continues to impress. Not only does he do a good job at what he does, he seems committed to do the right thing, and lucky for us his interest is in bike related businesses. If you’re reading this Bob, thanks again.
    @Randall, thanks to you, too man. this jumping up and down business stinks. absolutely cannot read it on my phone; only on my desktop.

  4. hoshie99

    An odd ending for investors with PE firm roots. They usually buy mature or cash flow viable businesses, institute cost control and reap cash, pay themselves back first or modest growth then exit, so not sure why all 3 tanked so quickly. I guess it’s new playbook time for those “investors.”

    On a side note, I think MadFiber’s approach had theoretical promise. We’ll see if they can use those patents and techniques to create some sexy, and more scalable, product. I wish Bob Stapleton good luck!

    J

  5. Chris

    I took delivery of a Lynskey made 22 Bicycle frame in February. Every interaction I’ve had with 22 bikes has been fantastic. If former Serotta employees can elevate the frames even further, then their quality, customer service, and value should merit a look from anyone shopping for a quality metal frame.

  6. Shawn

    “What’s especially disquieting about this is how three people have said to me, ‘Patrick, you have to warn the industry not to do business with these guys.’”

    You should probably clarify who “these guys” are, especially since that passage follows a seemingly positive discussion of No. 22 and its new employees.


    1. Author
      Padraig

      Given that the sentences immediately preceding that one concern jobs lost, it would be difficult for anyone to think I’m referring to No. 22, but for anyone who didn’t follow the switch, I am very specifically referring to Brian Case and Bill Overbay. No one has said anything negative about No. 22. Conversely, no one has said anything positive about Case or Overbay.

  7. Judge

    Under the operations owned or executed by Brian Case, the nonexempt employees were paid in a consistently timely manner despite whatever else was wrong with the business. He may not be online goading the press about the strength of his position in order to preserve a certain part of his reputation, but it doesn’t mean that he did nothing right and everything wrong. Because it hasn’t been fed to you does not necessarily mean that it hasn’t been said.

  8. randomactsofcycling

    Wow, what a shame. I hope the good people can find their feet somewhere in the bike industry again. There are already too many people that work jobs just to get by. I hope these guys can continue living the dream.

  9. fred

    Everyone needs a scapegoat.

    Who ran Serotta in the ground? At least twice? Why not interview Ben with a hard hitting but simple question of “why or how did you allow your company to go bust, and what would you do differently?”

    And how about Watkins’ mid 6 figure salary while he was trying to resussitate the DOA company? Comical.

    Case may be an asshole and inept and nobody likes him, but he got there because somebody prior destroyed the company, slowly but surely. You should report on that.

  10. Jamie Brock

    Here is a question i have a customer that just sent there bike there around a month ago to get a repaint, whats going to happen with that? Any advice would be great
    Jamie


    1. Author
      Padraig

      Jamie: That sounds tough. I’d be willing to bet seeing that bike again, even unpainted, will require a lot of diligent chasing.

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