The Exchanges

Q Got it. Ok, so you would come back to the U.S. and import them, and then resell them how? You would just go door to door to bike shops?

A Yes, that's right. I knew some of the best stores. And they go, wow, where did you get this? And I go, well, I've got connections. And so then I sold those products. I sold the 1500 dollars worth of product for probably 2000 dollars or 1800, but that wasn't much, right? And so to get more, then I told the bike shops, I said, look, if you pay in advance for the product, I'll give you even a better price. And so I got advance money, bought those products, and with the profit I made, I bought more product and sold those at a higher price, and that was the start. I think the first year, the sales were 64,000 dollars.

AI assessment note: “Yes, that's right. I knew some of the best stores.”

Q And, um, what were you interested in maybe doing with your life? Do you, do you remember?

A Yeah, well, I did go to a college, La Mesa College, it was a junior college, and I had to then take remedial everything. We called it bonehead, bonehead reading, bonehead math, bonehead English, and at the same time, I got a job at the airport, fueling planes and things like that, and I thought, oh, that's pretty interesting, and then I thought, well, Maybe I'll, I'll work to be an airline pilot. And then I went to San Jose State, applied for that program there, and started in the aviation program, and before that I had got a pilot's license, which I thought, hmm, that was if, you know, kind of from how unaccomplished I was before, that felt like, hey, I actually did something.

AI assessment note: “then I thought, well, Maybe I'll, I'll work to be an airline pilot.”

Q That's amazing. How did you find the bike shops? Because presumably, you, you, you were, I think you were back in San Jose, but you couldn't, I mean, were you just selling to bike shops in the Bay Area?

A Well, So I sold to bike shops in the Bay Area, and then at that time, of course, there was no internet, so I went to the library and looked at the yellow pages for bike stores in New York and places like that, and I would send each of them a letter and say, hey, I've got these parts, and so that's how I got it started, because the suppliers weren't about to give me credit. The first credit I had Was from the Bank of America. I came upon this European banker. He goes, I tell you what, we'll give you a loan against your, I lived in that little mobile home, the eight by 30 trailer with two roommates. He says, we'll give you a loan against the trailer, and you give me the pink slip to the trailer. And he made me do all of these incredible cash flow projections, which actually I realized I was pretty good at. And, and I paid the money back, so that was kind of the starting.

AI assessment note: “I went to the library and looked at the yellow pages for bike stores”

Q Ok, so you're, you're a student at San Jose State, and how, did you, uh, what, what point did you start to get into cycling, into just being a casual cyclist?

A Well, I was a little bit of a rider early on, and I always liked the two wheels thing and the balance of it. In fact, one of the things I could add that might be relevant to this that was really formative for me is since my dad was a machinist when I was a kid, we'd come up with these crazy ideas for things, and he would make it, we'd make it together, because he was very good at that, or buying old junk bikes and fixing them up. And actually, as I was going through school, one of the ways to earn money, kind of going back to what my dad would do, I'd go to the flea market and buy these old bikes. It was kind of fun picking through and finding the good ones, and then taking all these parts and putting a bike together. And I loved painting the bikes and coming up with something that would look pretty good. So that was really the spark of the interest in bicycles.

AI assessment note: “So that was really the spark of the interest in bicycles.”

Q established, you know, bicycle brand, but I guess something at, around that time you felt like you needed more help. Managing the company. And you started to look for executives, professionals who had a management experience in other industries. Tell me, first of all, why you felt that way. What was happening that you felt that you weren't capable of really running the company in the, in the right way?

A Yeah, as the company grew, I realized everything I was doing, I was doing it for the first time. So I'd always reach out to other people to see what I could learn. And I knew that I didn't know very much how to do different things, and so I thought, wow, you know, I feel like I'm really holding the company back, and if I hire somebody who's really kind of a finance operations person, and then somebody who really is a marketing person, the company can really develop. So then I brought in some really key people One came from, ah, a leasing company, was a finance expert. Another person came from marketing, worked at a ski company before, and then worked at Citibank, and I thought, oh, they could really help level us up. But it didn't work out. That was probably my first lesson, and it's not about the skills that somebody have, but it's about the culture and the belief they have.

AI assessment note: “as the company grew, I realized everything I was doing, I was doing it for the first time.”

Q How did that happen? How did you go from, how did you go from a 150, a hundred million dollars in sales just a few years earlier to being almost out of business?

A Uh, bad decisions. Again, trying to grow and trying to offer the, the bike shops lower price product, but then also selling it to them at a very low margin, you know. Good intention, but really put us in a very tight situation, and then we ended up having a lot of inventory, and, um, We had got into such a trouble, we were in the workout group of the bank. That's when the bank transferred me to kind of the, the bankruptcy group, and they make you report the information every day. And at that time, I was able to get this guy, Mike Haynes, came in, and he was a really calm, smart guy, and when the bank was, was pushing on us like that, Mike, who was a saint of a person, would never cuss or anything, but he told the bank, look, if you're gonna be after us like that, come here and get the fucking keys.

AI assessment note: “trying to offer the, the bike shops lower price product, but then also selling”

Q You, I mean, did you have like a formula, or a certain kind of ingredient, kind of rubber?

A Well, you know what? I didn't really know. We had landed on this one configuration of rubber compound that was good, and at that time, I knew this one guy in Portland who was a big, big cyclist, and he was riding from Portland all the way down to Panama, and his name was Jim Merce, and I sent him the tires, and he goes, these work pretty good. He goes, well, I'm going to be going on this trip, and if you send me the tires, I'll write them, and I'll give you a test report, and so that was, that was the first of doing those tires, and many years later, I hired him as the first engineer, and, um, that's how we developed the first tire.

AI assessment note: “I didn't really know. We had landed on this one configuration of rubber compound”