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When we say... Don't know bikes. Do we mean like he doesn't understand how to effectively run an entire bike company or are we implying he knows NOTHING about bikes?
Because he is a rider who is now serving on Propain's board: https://www.instagram.com/spnicols/
Or are we just referencing that in between PE's stupid interests and Sam not being an industry veteran the final product is a woefully under prepared board of members...
I guess I'd be impressed if he went from having never touched a mountain bike to racing enduros and catching air in only one year. (Though it's definitely possible with an athletic person with a background in like roading or any other cycling.)
To be fair to what you are saying, I'm making a big assumption: Sam doesn’t have the level of nuanced understanding that someone who has been in or around the industry their whole life would have. I very well could be wrong, but usually if you go to work at Amazon, you aren’t also spending govs of time to understand all the ins and outs of how the (esoteric) bike industry functions. From afar, being a supply chain wizard at Amazon should bring a lot of synergy (yes, I’m using that word) to a company like YT, and I bet there is a world it really does help build a lot of value. However, I feel pretty strongly you'd have to pair Sam with someone who is incredibly well networked in the industry and has been around the block for at least a decade. The devil is in the details, you can't miss.
I can say with confidence the bike industry isn't as cookie-cutter as it looks. We're applying aerospace-level engineering, materials, and manufacturing to what is essentially a hobby. The end buyers are incredibly discerning, competition is fierce, and the product is not a necessity for most people, which means demand is highly elastic.
It’s a hard business, and the more nuance and expertise you can apply, the better. I'm not so convinced he had that level of touch. Again, could be wrong.
PS - I would happily bring a guy like Sam onboard any real bike company, be it on the board or as an advisor. He's Amazon-esque supply chain knowledge IS valuable, I'm just not convinced its the most important thing in being successful, especially right now.
For sure, particularly during that post-covid era. Not understanding the relationship between manuf and oem supplier (sram, shimano, fox, etc) would be super risky. In so far as you are handcuffed to them and they still hold you at gunpoint.
Otherwise I really did feel like the YT 'model' could nearly run itself. As far as brands go maybe some of the least innovation from a major brand (ignore Orange in the corner) and yet some of the most success without going high pivot or gear box or 'MX flip chip' (tho i literally run an MX jeffsy in high BB with dual 27s) I'm not even sure if they do in frame storage on the carbon models. I know they swapped to threaded BB on alloy rigs and that was seen as like a big step forward for them. Carbon models are still PF lol.
I do think it's a shame cuz imo they finally 'fixed' their model line up and were offering the best bikes on the market even if they were the same price, but obviously they were cheaper. A threaded BB alloy frame with conti kryptos hayes dominions and something that isn't SX/NX drivetrain out the box?? Almost seemed too good to be true.
I guess surviving in the industry maybe does mean speccing an atrocious SRAM SX and Level brakes recon forked XC/trail tweener bike. Seemed to work for almost everyone else lol. That aio sram/rockshox package must look nice on the books
imho the biggest problem they have right now is an ebike with a motor nobody wants and another that’s ancient compared to the rest of the market. and they are still german centric but have not the right product mix for the german market
Jeff, respectfully, there's this theme in your posts where you assume (I'm paraphrasing) "if only these companies had a good CFO things would turn out differently."
If only YT had "sophisticated financial planning and analysis tools," if only they were "watching macro indicators to understand where consumer demand is headed," and "looking at appropriate comps to learn from," if only they'd "started to stress test their model and realized they had a problem with respect to volume and turns against their debt obligations while running a low margin business." Instead, it looks like "CFOing was absent. Nobody was ringing the alarm bells as things went off the rails."
I don't share your confidence in the power of specialized knowledge or advanced analysis to keep the ship afloat. Yes, it's the little old bike industry, and I'm confident you're right that there isn't enough financial forecasting and CFO'ing in these oddly shaped small and medium-sized businesses that populate the bike space. But forecasting and planning is only as good as the decision maker acting on that information. It's possible and likely that someone (a CFO, an employee, a friend, a partner, a spouse) was questioning the wisdom of irrational exuberance for not just YT but for every bike company that went under in the last few years, and that person wasn't being listened to.
There's an old saying in off-roading that the more money you put into your rig, the farther out you'll be when you get stuck. Similarly, in backcountry skiing, the same advanced avalanche training and protective gear can be used to either keep you out of trouble or to rationalize getting you into it.
Was YT run by the sort of people who look at the avalanche conditions and decide to stay home on an iffy day? The evidence I see is: helicopters, boats, expensive houses and cars, an Amazon-exec brought in to facilitate growth, and a PE-firm buyout at peak irrational exuberance. Imma go with no.
You yourself have shared stories of being brought in for CFO stuff only to find the same leaders who hired you "not wanting to take their medicine." Wise isn't sexy. Safe isn't sexy. Careful isn't sexy. Nobody gets on the cover of Forbes for having a company that's stable and middle of the pack. Meanwhile customers, workers, and product suppliers all get screwed when the ship sinks.
Speaking of ships sinking, the Titanic didn't sink for lack of engineering or sea-faring knowledge. It sank because it was sexier to blast through the night at full steam and arrive in port early then to go slow and be careful. At least the captain of the Titanic had the decency to go down with the ship.
Last line is absolute poetry. You missed your calling as a best-selling author.
Obviously the biggest issue is speculation on a situation we know very little of. But to me the big red flag is Markus did not leave, he was still fully on board at the time, and then the rumors of personal lending (regardless of not re-investing buyout earnings back into the company). If he actually comes from money, that we are not aware of, and this is not 'his problem' I'll gladly eat crow.
But continuing (or increasing) that lifestyle after the buyout when YT was far from the first to fail post-covid is dubious. There was more than writing on the wall in this scenario. Unless he's totally ok with what's happening and saw fit to allow it (for the sake of 'playing PE' or just to 'get out at the right time' while keeping your money, regardless of what happens to all the YT employees/riders).
But yes I am in the 'not likely to blame Sam/PE camp' in so far as YT had a great model going on. As far as I'm concerned, similar to Canyon/Commencal/Polygon. At most their bikes are 'niche' by comparison but otherwise I don't see the blatant reason for failure. They don't have the biggest rider contracts/names, they shouldn't have a ton of overstock by focusing on gravity models that they are known for, the mills opened in the US seem to be a good thing not only as far as their US dealings are concerned but if you've ever visited one, constantly people in and out.
This is also me just clarifying I know nothing about their PE dealings, and how that could drain the already slim margins. I'm more so just wondering why not Commencal/Canyon/Polygon/etc. if it's "just about the bike market being bad". Did they operate in a weird tweener spot? I'd assume Polygon's spending is very low, very simplified model. And on the other end Canyon and Commencal have huge contracts, tons of models, lots of complexity but in a good way. What did YT NOT do that led them here?
I have no idea on Nichols’ career beyond Amazon. But it seems that since that is what yt’s press release touted as his resume then you have to assume that was what attracted them to him. And I don’t see how being an executive in a division of a company of that size really compares to trying to head a relatively small company in a ultra competitive retail market. But I’ve certainly used roles in well known restaurants to get a job even if experience at unknown ones would be far more comparable. I often find playing to an owner’s ego is a great way to get a job. And I imagine it’s also a good way to incentivize a money drunk pe group into taking a bet on you vs whoever else they are willing to bet on. Cause it doesn’t matter if yt and two other companies fail as long as they limit losses and the fourth company hits. The pe company comes out ahead in the end. Flossman got paid and got to live lavish. Nichols gets a new high paying job. And as team robot pointed out for the employees and customers are the ones who really get left out in the lurch in this situation. When they were the ones who really made it possible.
Somewhere there is an alternate timeline where yt reinvested in itself, Aaron gwin, cam zink, etc, rather than flossman’s hubris. And well in that timeline nobody bought a bike that wasn’t delivered or refunded with a weak apology.
Unfortunately there is some “young talent” out there that learned the hard lesson that you should potentially consider the morals of a company rather than just the price on the product they are offering. Cause many companies these days only want the money and could care less about you or the future of their employees.
I wonder how much money some of these companies lost by speccing Shimano vs Bosch in the early e bike days. It didn't take very long to figure out that one one of the choices was pretty solid, and the other had a lot of compromises and reliability shortcomings. That means those early adopters of Shimano left a lot of money on the table when fewer people wanted to buy their bikes during the bike boom. Some of those companies ended up completely changing their design when they gave up on Shimano and went Bosch. That couldn't have been cheap. Makes you wonder if Horst Link Santa Cruzes, and YT clone Polygons was more of cost cutting measure VS practical design choice.
Kinda wild that the other site is giving YT a huge banner ad for a new launch when they have hoodwinked heaps of people out of 1000's
love the titanic-analogy, 100% spot on :D
I don't have a huge sample size and thankfully encounter almost exclusively PON-type purchasers than the cesspool that is pure "PE," but normally a substantial outside investor would condition their investment/purchase on the company spitting out any of the owner's personal-use assets. In legitimately run businesses, this seems to most often be the plane. I'd suspect any loans to the owner would need to get cleaned up as well, and any new loans would be a no-no.
If the purchaser isn't assimilating the acquired business into a larger business, it's pretty standard (at least in the PON-world) for the investor/purchaser to insist that the selling owner keep some financial skin in the game and stay on to help with the transition. This can be a whole host of things, but it's hard to imagine a combination of them that wouldn't result in the selling owner having full insight into the company's financials in the first few years after the sale.
I've got no clue how any of this stuff works in Germany and it's only tangential to my what I do everyday, but the more I think about what Flossman said in that video, the less I believe most of it. How could he have not known what was going on?
I'm not enough of a finance guy (and we don't have near enough facts) to start assigning blame. My criticism of Flossman and that video was the complete lack of personal responsibility and ownership of the situation and an attendant apology to those who will be negatively affected.
Whether it's actually his fault is completely irrelevant. He was the owner who picked his successors and the CEO when it went under, so the buck stops with him. To paraphrase one of the great philosophers of our time, "That's what the huge CEO salary is for."
High odds that the company issued a debt funded dividend, this is very common with PE. The company gets a loan from a group of banks knowing that all of the cash will be used for a dividend to the owners and the company will get leveraged up to a very high level. If the PE was the majority owner and didn't want to provide more equity when cash flow decreased, the minority owners would never provided equity even if they wanted to.
Wrote a reply and deleted it. While I'm sure i've beat my drum a bit too loudly, I really don't agree with a lot of what Robot has written and feel its a bit mischaracterizing. That's fine, its a forum after all and disagreeing is a great way to evolve thought, I just don't see how I can counter or rebuttal this without it turning into a dissertation (that nobody is going to read). Conversation would be a higher bandwidth way to go through these ideas in a more enjoyable back and forth, but that isn't going to happen.
Y'all have at it from here as its probably clear my perspective on this matter is well known (and perhaps repetitive). I'm sure YT won't be the last company you guys end up discussing. If you want to read any thoughts I have on any idea or topic you can find it on my own site.
Cheers
Hey Jeff, I'm so sorry that my forum post bummed you out so much. It sounds like you want to stop posting on Vital entirely based on what I wrote. I'm so sorry it was so disrespectful.
I have really appreciated your insights and analysis, and I think everyone has, and this bike industry forum in particular has been like a mini "intro to finance course" over the last 3 years based on everything you and other people (who know way more about this stuff than me) have contributed.
Rereading what I wrote, I can see how my words may have sounded super disrespectful about you and your very specialized expertise, something like "your tools are dumb and your profession is stupid." That's not what I was trying to say, and I'm so sorry if that's what I communicated.
I think I was trying to communicate the opposite, that I agree with you that most bike industry companies probably need better financial analysis but the most important thing they need to do is LISTEN to their financial guides and CFO-type people and try to invite them into decision making, however un-bold and un-unplugged that might feel.
I'm reading a philosophy book right now by Wendell Berry called "Life is a Miracle" that's all about the limits of scientific knowledge and the mystery of life, and over and over again he talks about how scientific inquiry solves humans problems and creates new ones, and ultimately the toughest questions are ultimately "un-solvable" in the scientific sense. Anyway, the book doesn't bash on the importance of science, it places it as one of the important tools in the toolbox of decision-making in life. The idea I took away is that tools are important, but in use they're only as good as the one using them.
I was trying to communicate something like that, and it sounds instead like I communicated "What you do is dumb and misguided." Sorry.
We've never met or even talked on the phone, and I've really enjoyed listening to your insights and have always harbored the hope that we'd get to meet or do a podcast together, or maybe I'd even get to ride with you in the Tetons or SE Idaho sometime. So I'm bummed if I nuked that possibility before even meeting you.
Just sent you a DM, too. Sorry again,
-SAD ROBOT
Jeff, thank you for your insightful contributions on here, they are much appreciated.
As someone who was out of work for a while due to the bike industry implosion it has been great to get a deeper understanding of the global and organisational factors that resulted in me and many of my colleagues finding ourselves out of work. It's been useful to rationalise the personal lived experience against some objective analysis from yourself and others.
While I'm now working in a different industry I can see a lot of similar factors at play here and have my eyes open to it to a greater extent than I would have done without your posts.
I thought Jeffs initial reply was brilliant. And I value both jeffs and robots posts, particularly as an owner of a YT bike. I'd much rather read this back and forth convo than tire/tech talk. Along with the fact that when you are addressing a company failing, it's fairly likely you are in a 'both things are right' scenario. A la, the things that could go wrong went wrong.
As easy as it would be to look at Markus' social media and point the finger solely at him (despite running the company fine for many years, Gwin fans need not reply to this post btw)... Chances are each and every entity at YT doing something slightly wrong that coalesced into failure during a time where bike companies are, well... Failing.
And again, a weird part of me wants to see them shutter YT EU to continue operations in YT US because that would just be outright funny to me. Not only in a sorta 'reverse Scott USA' moment but also given the current landscape of US economics.
I imagine it was my reply to Jeff’s reply which also was a factor in his decision to delete his post. (It was deleted when he deleted his). And I hope he didn’t take it at all indicitive of what I think of Jeff. (Who seems entirely reasonable and decent) versus what I think about flossman, Nichols, and the other key decision makers at yt. I certainly was very harsh in my assessment of them versus what I think a good business owner should surround themselves with. And very harsh with my assessment of certain tropes I commonly see among people who are in Jeff’s field. Even if there is nothing he has posted here that has made me think he is at all immoral or his responses aren’t interesting and meaningful. And I can definitely see he how he is far more inclined to have a certain amount of empathy and benefit of doubt than I am willing to when it comes to discussing the downfall of a business like yt. And I wish I had also done a better job differentiating between the fact his words aren’t at all wrong even if to me they seemed “wrong” to me in the context of discussing this specific company and the choices they made.
Lots of companies going under in the bike industry, not just YT. Lots of companies in the West are struggling, going under, not just the bike industry.
We've been living on cheap credit, easy money, and the world holding its collective breath as Baby Boomers have been preparing for retirement, and the bill is coming due.
I don't have a horse in this race other than being very sad if Jeff stops posting his type of posts, and interacting with all of us in reply to help us along. It seems to me Jeff's posts were (are) nearly universally loved here, there's a reason I started jokingly referring to this thread as "bike industry talk and lessons in finance with Jeff". It would be a different landscape without Jeff and I hope he reconsiders.
Jotegr +1
This thread is one of the main ones I read regularly and I became a member purely to contribute to it.
Sure hope Jeff comes back. Completely agree a forum is a tough place to debate this type of stuff (especially when we're all just speculating with very little info), but I thought we were doing a pretty good job!
If any of you guys are going to be in Whistler for Crankworx, I'm down to debate over some beers!
This might be the only mtb forum where people actually get along 84 pages in, talk about REAL books in both finance and philosophy, and say sorry. Long live vital
Very much this; I've learned a tremendous amount from this thread alone, and have been delighted and surprised at how civil and thoughtful the conversation has been.
Jeff, I hope you reconsider and feel welcome to return but either way, thank you for sharing your time and expertise so freely, it's a been a real pleasure to be a beneficiary!
Most likely booked for them from their media agency and already invoiced to the agency, rather than direct to YT.
Not sure about that, I am on YT mailing list and recieved the same memo today
hmm i dont get the confusion. yes pinkbike has region specific pages so it would be tone deaf to have a big YT ad for EU users (but an understandable oversight)
otherwise ya, YT absolutely has to push forward with NA/US sales and advertising, not just to stay afloat but to potentially bail out YT EU if at all possible. given lead times for products, whatever they are releasing was arguably planned before they had confirmed the insolvency path in the EU.
maybe i'm misinterpreting what is being discussed. but YT is not gonna advertise LESS while they are faltering. tho they probly shouldnt advertise 'more' at the moment in terms of spending. every brand markets through PB. (well most) and has done so for years. (its smarter ad dollars spent then marketing through generic social media, imo, which they still do. i got an ig ad about the same thing)
From my perspective it’s a little questionable for pinkbike to have the banner up. It directed me (as an American) to the eu site. The eu site seemingly has bikes you can add to cart.
Now admittedly it isn’t exactly a far scroll down to where their article on yt entering administration. But in a world where multiple people have paid for bikes they haven’t gotten. And nobody really knows what yt is going to look like. I think it’s kind of a bad look for them to run a banner ad without a disclaimer. But then again I have very similar opinions of outside as I do of yt. And I’m pretty sure pinkbike staff have directives to not rock any boats when it comes to politics or advertisers.
All I want to say is, Jeff, please don't leave!
and
Robot/Charlie, we still love you!
Hey everyone, not mad at anyone in this thread (besides maybe myself). I clearly have ideas and a delivery style that probably isn’t ideal for a mountain bike forum. Robot wrote a genuinely great post (he’s a better writer than me), and I realized there was no way for me to counter it. Not because I didn’t have anything to say, but because I started turning into this (actual photo Tucker took of me this morning):
Any frustration you see from me is with myself, not anyone else. I like friction. I like debate. What I don’t like is knowing that in trying to express myself, I become a caricature, chasing too many threads at once, overwhelming to read, and impossible to defend. I’m not trying to win. I’m open to changing my mind, and I have, several times in this thread alone. But I really don't like the feeling of knowing I want to communicate something and being unable to do so in a meaningful way.
Last thing, and I hesitated to post this, but it’s the truth: the last few years have been brutal professionally. A few lowercase “w” wins, but mostly I’ve gotten my ass handed to me. I know I have something valuable to offer, but I’ve been left at the altar by nearly every company I’ve engaged with. So when someone as sharp as Robot writes what he did and sees financial leadership as something that probably won't move the needle, it stings. Because if someone like him doesn’t see the value, how can I expect anyone else to?
Anyway, I'll keep posting but I'll probably do so a little more pragmatically and methodically. Believe it or not, this thread has been one of the only bright spots for me, in that people can kind of see how I think, which you can't parse from a resume or even a case study. Its on that note I end up taking things a bit too seriously, and grabing the handlebar a bit too tightly...which never works well.
Cheers
/crashout
If you stopped providing your input, I'd probably stop reading this thread for the most part. By far the most intriguing content I've read in a long time regarding the bike industry. Have you ever worked in Finance in the aerospace industry? I will tell you...they take Finance VERY seriously. The CFO of my company has a lot of power in the decisions we make, and the CEO leans on him quite a bit. We'd love to have someone with your passion and thought process. And this is coming from an Engineering Manager!
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