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Is anyone surprised by this? From what I can tell the parent company isn't emerging out of bankruptcy protections and the creditors are liquidating assets (including goat heads). Maybe the hope is the creditors are able to liquidate enough to make them whole, and the equity holders are given back the company? This doesn't seem likely. This is why Markus needed investors, to effectively buy the company out of bankruptcy.
TL;DR - The parent is done, hence every regional distributorship is also done.
Am I missing something?
I have no idea how it would work, but it seems like the US team (Jeff Taylor and crew) were attempting to somehow separate YT USA from YT Germany and take over operations as a “new” and separate entity. No clue how that would work legally or financially, but the part about US and Germany not being able to come to an agreement seems that was the intent. No clue if Flossman was for or against the move, though. The memes that showed up on the San Clemente Mill page briefly make me think that he was not part of the group trying to make that happen.
At first I thought the US entity was trying to hold on long enough for the German situation to get worked out, but they ultimately ran out of cash flow / inventory and had to fold.
But it does sound like something more was being attempted.
Regardless of how challenging it would be... There's just no way Markus was gonna basically sign over the rights to his brand to the US division, especially at a discount.
Truly, he is prepared to 'go down with the ship'... But not before saving himself financially and pushing all the staff and riders (and customers) off the life boat first lol
(All for the life boat to sink as well?)
I called out the YT-US only concept a while ago, or what I called the oppo-Scott. But ya he was never gonna let that happen. I think it woulda been cool. :/
From a commenter on PB:
“ Everyone needs the hear the facts. Markus flossman is an egotistical freak and scammer. After insolvency there was a handshake deal for YT USA to purchase exclusive brand rights and be independently operated. Truth is Markus couldn’t stand the idea of US branch not being under his control. Continued to shoot over shitty deals, 1 year contracts, and insane royalty payments. We as a staff chose not to sign up for a shitty deal that would ultimately kill us anyways. Everyone thinks private equity killed this brand. That’s wrong. Markus single handedly killed YT. He wanted US to go bankrupt. Purchase the bikes for pennies on the dollar and reopen YT USA with new staff aka new victims. Look at his track record. Burns what ever and who ever he touches. I can only recommend staying away from anything related to Markus flossman. Straight up predator.”
I'm with you on the thought that it seemed like the US division was looking to take over the show.. Markus was probably looking to sell at a profit again.. But, with the market being at such a low, working with the US office probably would have been his best bet..
Damn.. That Pinkbike comment section is really on fire on the YT story..
The truth is probably somewhere in the middle. I’m trying to think of a situation where a distributor continued selling a company’s product while the parent company was in bankruptcy, I can’t recall one, let alone a situation where the distributor bypassed the parent and kept operating.
To be clear Flossman comes off (is) like a sociopath, but if the parent is actually in bankruptcy, I don’t see how any real deal gets done. It’s not that he wouldn’t say a deal could happen...he always looks out for himself but unless the U.S. distributorship could satisfy the creditors, there would inevitably be litigation down the road. Total mess.
Honestly, this probably has to burn to the ground. It’s the only way Markus goes away.
Side note... take a look at the homepage of the Euro site. How is Vali not furious?
Even with TS/SCI, they have access to very limited information from the DoD. Just enough that they can produce hardware/software that the government needs. That's how it works. Just because Anduril has deployed systems in the battlefield, it doesn't mean they know anything beyond the requirements for the systems they develop. When I mention decision makers, I'm specifically talking about those making decisions on what hardware/software is required by the military. Palantir and Anduril aren't making those decisions; they're being told what to do with very limited information.
That's the thing is... The only way YT US was going to move forward was by basically buying out YT entirely, fully taking over. And it seems even if the deal worked out in Markus' favor (long term) that was just never gonna happen.
I really hope when Markus had said "offers that came in were laughable" or whatever... That he was only talking about outside investors and not referencing anything going on between him and YT US.
(Not to diminish the value of EU employees who designed/planned the bikes, nor overestimate the US' ability to fully take over. But at the end of the day they were hardly re-inventing the wheel. I mean hell just switching to threaded BB felt like a decent step forward during YT's last generation...)
Whether he made that handshake deal in good faith or bad it's unlikely that Flossman had autonomy in the subsequent negotiations. Those "shitty deals" would have had input and required approval from the administrators.
Without knowing what else was happening behind the scenes, if YT USA had the financials to take over, it wouldn't be like starting from scratch. They would already have all the IP, relationships with vendors, and an established brand. There is also a chance that they could keep working with the same designers. In the US market, the transition might not even be noticeable.. Maybe over time, they could expand back into Canada and Europe.. But, I guess we'll never know...
That's kind of what my thoughts about this was, allow YT USA to keep operating, transfer the manufacturing contracts over to them while the insolvency works itself out so the bikes can continue to be made, and then in a year or so, restart the European side. It would make the process of restarting a lot easier because the brand and manufacturing wouldn't be interrupted. They could make a contract with the US side stipulating some eventual transfer of ip and branding back to the euro side after a certain period of time.
If that post from Pinkbike is mostly true, im guessing Markus was hoping to turn another big profit like he did the first time he sold.. Not going to see that in the current market conditions..
You're Toast
Not for nothing, this was exactly how it went down with the last YT USA operation. Lies, breach of contract, hubris- it all has a common denominator: Markus. There is much more to the story, but I ain't Brines, won't type it all out...haha!
It sucks that so many people were affected by one guy's ego. Hopefully the crew can pick up the pieces and move to greener pastures.
A response to a post I left on the PB thread...
"you are correct. We had an entire organization of employees based in the US that were ready to keep this brand alive. Most of us have been there for 5 plus years and made North America over 50 % of YTs business. Instead Markus choose to screw us over and will try and reopen with all new staff and under his control. We are all at peace with it. We took care of so many customers the best we could. US was constantly bottle necked from YTG. We had very little power to make our own decisions. All we wanted was to run our own business."
Nice sesamoid bones! How did you manage that?
Jeff, I appreciate your reminder that maaaaaaaybe things aren't as simple as they appear, and maybe don't break down into good guy vs. bad guy storylines as clearly as we would like.
Perhaps this is a simple story of a sociopath with too much power ruining people's lives on purpose, or maybe it's more complicated than that.
i'd put forward a vote for weaponized incompetence too
I’ve never met Markus. All I know of him is what anyone can see online, an Instagram account, a few YouTube clips, and the ripple effects of his decisions. Still, there’s a recognizable pattern here, one as old as business itself, fueled by ego, greed, selfishness, and (yeah) incompetence.
There’s real research showing a correlation between traits in the "dark triad" and founder/CEO personalities. Add in that around five percent of the population shows sociopathic or psychopathic tendencies, and that building any company requires a certain level of delusion, and well...you see what I'm trying to say.
From 30,000 feet, two things can be true: I could be wrong, I’m not trained in psychology, and I’m reading (noisy) signals from the outside. But even with that disclaimer, it’s hard to escape the conclusion that his talent as an operator is significantly outweighed by his own self-interest. And that combination rarely ends well.
Like you, I don't know much about Markus. But, I've dealt with people in the industry that feel they are the brand. That is the vibe I'm kinda getting here...
I find the whole YT thing kinda boring since we've seen this behavior before with Ellsworth. I've met Tony and Markus comes off the same way, as someone I have zero desire to sit and have a cup of coffee with. A positive self-image is a good thing to have but a grandiose one is highly detrimental to anyone near the blast radius.
I had a customer back in the day that had Ellsworth making frames for him.. They started breaking at the brake mount.. Tony said he couldn't find anything wrong, and my customer responded "I've already sent you 3, how many more do you want?"
That business relationship didn't last much longer..
bankruptcy folk only have an obligation to the creditors. If the perceived value of liquidating the physical products and selling the ip at auction outweighs any offers they are not obligated to force a deal to keep employees employed. Especially if Markus is willing to overpay for the ip to keep it his.
I have little doubts that liscencing to yt USA was entirely possible if Marcus had the goal of making it happen.
I think it’s entirely plausible those “laughable” offers did bid low versus auctioning every physical asset and Marcus buying the ip. But they were probably meant to make the company profitable keep some people employed and would pay back creditors a certain additional sum over time. And likely could have been approved if that was Marcus’s goal. Except he explicitly stated his intention to buy back the ip with a new ownership group.
Marcus comes off like a cartoon villains disliked sidekick. Throws the treasure in the lifeboat and makes a run for it while everyone is too busy with the battle. Or gets killed in the treasure room when he could have escaped. The one you really hope get their comeuppance.
I also saw the Ellsworth similarities and I personally would think YT USA would've been about as successful as the attempts to resurrect that brand. Why would you buy into a brand with such a troubled history when there are so many out there where you don't need to take that risk?
If YT USA was in fact 50% of the company's sales, they could have kept the brand relevant and designs current while things got sorted out in Europe..
Anyone see the news that Forge + Bond has come back as a pickle ball paddle manufacturer?
they were a distributor. they didn't own the IP
No, they couldn't. They have none of the design or product staff, they own none of the existing designs, carbon moulds, alloy tooling, or physical assets. They don't even own the trademarks or anything to rightfully carry on the business. They can't simply go and order more Jeffsy's from their asian manufacturing partners, without first paying off the (presumably) millions owed to them.
So yeah, there was never any realistic shot for them to carry on as a standalone business. I laughed when they said YT USA will carry on, business as usual. Yeah, sure, for how long? And now we have our answer.
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